LaSalle Hotel Properties Reports Comparable FFO of $0.64 Per Diluted
Share/Unit RevPAR Increases 1.4 Percent for the Quarter
BETHESDA, Md., Oct 21, 2002 - LaSalle Hotel Properties (NYSE: LHO) today
reported comparable funds from operations ("FFO") of $12.4 million for
the quarter ended September 30, 2002 versus $12.3 million for the third
quarter of 2001. On a per diluted common share/unit basis, comparable FFO
for the third quarter 2002 was $0.64 versus $0.65 a year ago. Comparable
FFO is defined as funds from operations before one-time items, including
the purchase of LaSalle Hotel Lessee ("LHL"), the transition expenses associated
with becoming a self-managed Real Estate Investment Trust ("REIT"), and
costs associated with terminating third-party tenant leases, all of which
occurred during 2001.
For the quarter ended September 30, 2002 versus the same period in 2001,
room revenue per available room ("RevPAR") increased 1.4 percent to $106.39.
RevPAR improvement was driven by an occupancy increase of 3.1 percent over
prior year to 69.9 percent, while average daily rate ("ADR") of $152.27
represented a 1.7 percent decrease over the prior year period.
"The RevPAR increase for our portfolio in the third quarter was in the
range of our expectations, largely due to the performance of our resort-
oriented properties, which experienced relatively stable leisure demand
during August and September," said Jon Bortz, Chairman and Chief Executive
Officer of LaSalle Hotel Properties. "Despite the weak economy, our hotels
continue to show a steady but very gradual improvement in demand. We continue
to aggressively asset manage our hotels and closely monitor operating expenses
as we attempt to maximize cash flow during this improving, but challenging
operating environment. "
For the third quarter 2002, the Company experienced net income applicable
to common shareholders of $4.4 million, or $0.23 per diluted common share/unit,
up compared with $3.9 million, or $0.21 per diluted common share/unit a
year earlier. The Company's Comparable EBITDA improved 7.7 percent to $19.5
million for the third quarter, compared to $18.1 million a year ago. Comparable
EBITDA is defined as earnings before interest, taxes, depreciation, amortization
and one-time items, including the purchase of LHL, the transition expenses
associated with becoming a self-managed REIT, and costs associated with
terminating third-party tenant leases.
The Company's hotels generated $19.6 million of EBITDA for the third
quarter, compared with $18.7 million for the prior year period. Third quarter
EBITDA margins across the Company's portfolio increased 172 basis points
from the prior year, largely due to savings in energy costs, property taxes
and ground rent. In addition, rooms and food and beverage departmental
expenses were well maintained, due to the Company's continued focus on
improving operating efficiencies and aggressive cost containment.
For the nine months ended September 30, 2002, RevPAR declined 7.7 percent,
as ADR declined 4.4 percent to $145.81 and occupancy fell 3.5 percent to
65.7 percent as compared to the same nine-month period in 2001. Net income
applicable to common shareholders decreased to $2.4 million from $5.2 million
for the prior year period. For the first nine months of 2002, the Company's
Comparable EBITDA was $46.8 million compared to $51.1 million for the same
period in 2001. For the year-to-date through September 30, 2002, interest
expense equaled $11.6 million, resulting in a Comparable EBITDA to interest
coverage multiple of 4.0 times, one of the highest coverage ratios in the
industry.
On September 23, 2002, the Company completed the renovation and repositioning
of the 82-room Hotel Madera, the third of LaSalle's four Washington, D.C.
properties being repositioned as upscale boutique hotels. The hotel is
managed by Kimpton Hotel & Restaurant Group, LLC and is located in
the trendy Dupont Circle area of Washington's Golden Triangle. In conjunction
with the opening of Hotel Madera, the hotel's full-service 100-seat restaurant
and bar, Firefly, opened with significant fanfare. The 178-room Hotel Helix,
which will also be managed by Kimpton, is slated to open in November. The
total redevelopment costs for the four hotels in the D.C. Boutique Collection
are anticipated to be approximately $31.5 million, with approximately $7.3
million remaining to be spent.
"We continue to be encouraged by the positive fundamentals exhibited
by the Washington, D.C. economy and lodging market," commented Mr. Bortz.
"During 2001, Washington, D.C. was the only metropolitan area in the country
that achieved GDP growth greater than 4.0 percent, and this was despite
the negative impact of the events of September 11. This further reinforces
our belief that the D.C. region has a diverse and expanding demand base,
which can grow even during challenging economic periods. Moreover, with
the expected completion of the new 835,000 square foot Washington Convention
Center in March 2003, combined with significant barriers to entry for new
hotel rooms, we expect that the city will be one of the strongest lodging
markets in the country for the next few years."
During 2002, the Company anticipates spending a total of approximately
$33.0 million throughout the portfolio, including the redevelopments of
the Hotel Madera and Hotel Helix. The cost of guest refurbishments for
the planned Westin conversions of approximately $6.0 million at the Dallas
and New Orleans properties is not included in this amount. The Company
still expects that the Dallas and New Orleans properties will be converted
to Westins; however, due to legal proceedings with Meridien, the anticipated
conversions at both properties have been delayed.
On October 3, 2002 the Company announced that it reinstated a normal
quarterly dividend of $0.21 per common share of beneficial interest for
the third quarter ended September 30, 2002, which will be paid November
15, 2002 to shareholders of record as of October 31, 2002. The Company
also announced that it expects the fourth quarter dividend to be $0.21
per share. Additionally, beginning in 2003, the Company plans to
pay monthly dividends in lieu of quarterly dividends to its common shareholders
of beneficial interest. The first monthly dividend is anticipated to be
paid in February for the month of January at a level of $0.07 per common
share of beneficial interest.
"We are pleased that the dividend limitations which our banking group
instituted in February 2002 have been eliminated because of the improving
operating fundamentals of our hotel portfolio, the strength of our balance
sheet and the conservative business practices of our management team,"
noted Hans Weger, Chief Financial Officer of LaSalle Hotel Properties.
"We operate with one of the most conservative leverage ratios in the industry
and our hotels continue to experience gradual improvements in cash flow.
Moreover, our balance sheet has been strengthened as a result of our approximately
$100 million preferred offering in March 2002, which was over subscribed,
and through the retention of cash over the past year. The reinstatement
of our dividend to a meaningful amount and the move to monthly dividends
in 2003 demonstrate our commitment to our mission of being an income company
foremost, with moderate long-term earnings growth."
At the end of the third quarter 2002, LaSalle Hotel Properties had total
outstanding debt of approximately $255.6 million, down approximately $95.1
million from a year ago. This includes its $11.9 million portion of the
joint venture debt related to the Chicago Marriott. For the quarter, the
Company's Comparable EBITDA covered its interest expense by approximately
5.7 times. As of September 30, 2002, the Company had $78.3 million outstanding
on its $210.0 million unsecured credit facility.
2002 Outlook
"We are encouraged by the steady and gradual improvements that our hotels
have demonstrated during this challenging operating environment," noted
Mr. Bortz. "However, the economic recovery has not been as pronounced or
immediate as expected earlier in the year. As a result, Corporate America
remains constrained in its spending, particularly relating to travel and
entertainment. Consequently, we anticipate that business travel, which
is highly correlated with corporate profits and employment growth, will
continue to experience only moderate growth during the next 12 to 18 months
as the recovery appears to be weaker and slower paced than previously forecasted.
Moreover, geopolitical uncertainty related to the war on terrorism and
the possibility of new military action in the Middle East seem to be having
a further dampening effect on business travel."
As a result, the Company now anticipates that its fourth quarter RevPAR
will increase by 5 to 7 percent, compared with previous expectations of
7 to 10 percent. RevPAR for 2002 is now forecasted to decline 4 to 5 percent,
down compared with previous projections of a 2 to 4 percent decline.
Operating margins are also expected to be more challenging in the fourth
quarter, due to these lowered RevPAR forecasts and difficult comparisons
resulting from the severe cost cutting that occurred after the events of
September 11. As a result, the Company now anticipates that fourth quarter
FFO will be $0.28 to $0.32 per share/unit and 2002 FFO will be between
$1.74 and $1.78 per share/unit.
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
For the three months
ended September 30,
2002
2001
Revenues:
Hotel operating revenues:
Room revenue
$26,021 $21,461
Food and beverage revenue
12,773
9,352
Other operating department
revenue
4,139
4,165
Participating lease revenue
7,239
9,181
Interest income
74
129
Equity in income of joint venture
211
410
Other income
5
13
Total revenues
50,462
44,711
Expenses:
Hotel operating expenses:
Room
6,029
4,659
Food and beverage
9,225
7,014
Other direct
1,881
2,133
Other indirect
11,526
9,945
Depreciation and other amortization
7,303
6,757
Real estate and personal property
taxes and insurance
1,945
2,062
Ground rent
1,064
1,143
General and administrative
1,530
1,742
Interest
2,196
4,013
Amortization of deferred financing costs
553
502
Writedown of property held for sale
-
29
Lease termination, advisory transaction and
subsidiary purchase expenses
-
6
Total expenses
43,252
40,005
Income before minority interest,
income tax benefit (expense)
and discontinued operations
7,210
4,706
Minority interest in operating partnership
(154)
(135)
Income before income tax benefit
(expense) and discontinued operations
7,056
4,571
Income tax benefit (expense)
(516)
175
Income before discontinued operations
6,540
4,746
Discontinued operations:
Income (loss) from operations of
property held for sale
285
(873)
Minority interest
(9)
28
Income tax benefit
105
-
Net income (loss) from
discontinued operations
381
(845)
Net income
6,921
3,901
Distributions to preferred shareholders
(2,557)
-
Net income applicable to common
shareholders
$4,364
$3,901
Earnings per Common Share - Basic:
Income applicable to common shareholders
before discontinued operations
$0.21
$0.26
Discontinued operations
0.02
(0.05)
Net income applicable to common
shareholders
$0.23
$0.21
Earnings per Common Share - Diluted:
Income applicable to common shareholders
before discontinued operations
$0.21
$0.26
Discontinued operations
0.02
(0.05)
Net income applicable to common
shareholders
$0.23
$0.21
Weighted average number common
shares outstanding:
Basic
18,690,822 18,439,098
Diluted
18,826,814 18,503,506
LASALLE HOTEL PROPERTIES
Comparable FFO and Comparable EBITDA (Dollars in thousands, except per
share data)
(Unaudited)
For the three months
ended September 30,
2002
2001
Comparable Funds From Operations
(FFO):
Net income applicable to common
shareholders
$4,364
$3,901
Depreciation
7,615
7,987
Equity in depreciation of joint venture
243
236
Amortization of deferred lease costs
9
6
Writedown of property held for sale
-
29
Minority interest:
Minority interest in operating partnership
154
135
Minority interest in discontinued operations
9
(28)
FFO
12,394
12,266
Lease termination expense
-
6
Comparable FFO
$12,394 $12,272
Comparable FFO per common share and unit:
Basic
$0.65
$0.65
Diluted
$0.64
$0.65
Weighted average number of common
shares and units outstanding:
Basic
19,124,756 18,882,281
Diluted
19,260,748 18,946,689
Comparable EBITDA:
Net income applicable to common
shareholders
$4,364
$3,901
Interest
3,405
5,234
Equity in interest expense of joint venture
149
195
Income tax (benefit) expense:
Income tax (benefit) expense
516
(175)
Income tax benefit from
discontinued operations
(105)
-
Depreciation and other amortization
7,635
8,007
Equity in depreciation/amortization
of joint venture
269
251
Amortization of deferred financing costs
589
538
Writedown of property held for sale
-
29
Minority interest:
Minority interest in operating partnership
154
135
Minority interest in discontinued operations
9
(28)
Distributions to preferred shareholders
2,557
-
EBITDA
19,542
18,087
Lease termination expense
-
6
Comparable EBITDA
$19,542 $18,093
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
For the nine months
ended September 30, 2002 2001 Revenues:
Hotel operating revenues:
Room revenue
$66,285 $55,565
Food and beverage revenue
34,662
25,505
Other operating department revenue
10,160
9,420
Participating lease revenue
17,511
26,568
Interest income
228
533
Equity in income of joint venture
246
549
Other income
17
199
Totre income tax benefit,
discontinued operations and
extraordinary loss
5,619
4,362
Income tax benefit
769
143
Income before discontinued
operations and extraordinary loss
6,388
4,505
Discontinued operations:
Income from operations of property
held for sale
1,763
1,702
Minority interest
(44)
(46)
Income tax benefit
156
-
Net income from discontinued operations
1,875
1,656
Income before extraordinary loss
8,263
6,161
Extraordinary loss:
Extraordinary loss
-
(973)
Minority interest
-
28
Net extraordinary loss
-
(945)
Net income
8,263
5,216
Distributions to preferred shareholders
(5,853)
-
Net income applicable to common
shareholders
$2,410
$5,216
Earnings per Common Share - Basic:
Income applicable to common
shareholders before discontinued
operations and extraordinary loss
$0.03
$0.24
Discontinued operations
0.10
0.09
Extraordinary loss
-
(0.05)
Net income applicable to common
shareholders
$0.13
$0.28
Earnings per Common Share - Diluted:
Income applicable to common
shareholders before discontinued
operations and extraordinary loss
$0.03
$0.24
Discontinued operations
0.10
0.09
Extraordinary loss
-
(0.05)
Net income applicable to common
shareholders
$0.13
$0.28
Weighted average number common
shares outstanding:
Basic
18,683,243 18,314,367
Diluted
18,845,144 18,390,631
LASALLE HOTEL PROPERTIES
Comparable FFO and Comparable EBITDA (Dollars in thousands, except per
share data)
(Unaudited)
For the nine months
ended September 30,
2002
2001 Comparable Funds From Operations (FFO):
Net income applicable to common
shareholders
$2,410
$5,216
Depreciation
24,583
23,051
Equity in depreciation of joint venture
727
699
Amortization of deferred lease costs
25
31
Writedown of property held for sale
-
1,872
Minority interest:
Minority interest in operating partnership
151
128
Minority interest in discontinued operations 44
46
Minority interest in extraordinary loss
-
(28)
Extraordinary loss
-
973
Equity in extraordinary loss of joint venture 150
-
FFO
28,090
31,988
Advisory transition expense
-
600
Lease termination expense
-
796
Subsidiary purchase cost
-
533
Comparable FFO
$28,090 $33,917
Comparable FFO per common share and unit:
Basic
$1.47
$1.80
Diluted
$1.46
$1.79
Weighted average number of common
shares and units outstanding:
Basic
19,123,310 18,823,689
Diluted
19,285,210 18,899,953
Comparable EBITDA:
Net income applicable to common
shareholders
$2,410
$5,216
Interest
11,605
16,097
Equity in interest expense of joint venture
424
668
Income tax benefit:
Income tax benefit
(769)
(143)
Income tax benefit from
discontinued operations
(156)
-
Depreciation and other amortization
24,643
23,110
Equity in depreciation/amortization
of joint venture
788
744
Amortization of deferred financing costs
1,761
1,448
Writedown of property held for sale
-
1,872
Minority interest:
Minority interest in operating partnership
151
128
Minority interest in discontinued operations 44
46
Minority interest in extraordinary loss
-
(28)
Distributions to preferred shareholders
5,853
-
EBITDA
46,754
49,158
Advisory transition expense
-
600
Lease termination expense
-
796
Subsidiary purchase cost
-
533
Comparable EBITDA
$46,754 $51,087
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
For the For the
For the For the
three months three months nine months nine months
ended ended
ended ended
Sept. 30, Sept. 30,
Sept. 30, Sept. 30,
2002 2001
2002 2001
TOTAL PORTFOLIO
Occupancy
69.9% 67.7%
65.7% 68.1%
Increase/(Decrease) 3.1%
(3.5%)
ADR
$152.27 $154.89
$145.81 $152.45
Increase/(Decrease) (1.7%)
(4.4%)
REVPAR
$106.39 $104.93
$95.84 $103.85
Increase/(Decrease) 1.4%
(7.7%)
Note:
If a property was closed in either 2001 or 2002, its operating results
are excluded for the corresponding months in both the 2001 and 2002 reporting
periods. Additionally, this schedule includes the operating data
for the four properties leased to third parties and the Company's 9.9%
interest in The Chicago Marriott Downtown joint venture.
LASALLE HOTEL PROPERTIES
Hotel Operational Data Schedule of Property Level Results (unaudited, in
thousands)
For the Three Months For the Nine Months
Ending
Ending
Sept. 30, Sept. 30, Sept. 30,
Sept. 30,
2002 2001
2002 2001
Revenues
Room
40,756 40,329
114,839 124,598
Food & beverage
16,934 16,865
49,938 51,793
Other
5,983 6,989
15,348 17,060
Total hotel sales
63,673 64,183
180,125 193,451
Expenses
Room
8,813 8,790
26,647 28,488
Food & beverage
12,335 12,604
36,215 38,991
Other direct
2,685 2,930
7,512 7,951
General & administrative 13,467
13,787 41,291
44,199
Management fees
2,907 3,045
6,947 7,985
Fixed expenses
3,844 4,349
11,916 12,279
Total hotel sales
44,049 45,505
130,527 139,892
EBITDA
19,624 18,678
49,598 53,559
Note:
If a property was closed in either 2001 or 2002, its operating results
are excluded for the corresponding months in both the 2001 and 2002
reporting periods. Additionally, this schedule includes the operating
data for the four properties leased to third parties and the Company's
9.9% interest in The Chicago Marriott Downtown joint venture. |
LaSalle Hotel Properties is a leading multi-tenant, multi-operator REIT,
which owns 17 upscale and luxury full-service hotels, totaling approximately
5,900 guestrooms in 13 markets in 11 states and the District of Columbia.
LaSalle Hotel Properties focuses on investing in upscale and luxury full-
service hotels located in urban, resort and convention markets. The Company
seeks to grow through strategic relationships with premier internationally
recognized hotel operating companies including Marriott International,
Inc., Starwood Hotels & Resorts Worldwide, Inc., Radisson Hotels International,
Inc., Crestline Hotels & Resorts, Inc., Outrigger Lodging Services,
Noble House Hotels & Resorts, Hyatt Hotels Corporation, Interstate
Hotels Corporation, and the Kimpton Hotel & Restaurant Group, LLC.
Certain matters discussed in this press release may be deemed to be
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. |
