BETHESDA, Md. - --April 20, 2005 -- LaSalle Hotel Properties (NYSE:LHO)
today reported a net loss to common shareholders of $2.9 million, or ($0.10)
per diluted share for the quarter ended March 31, 2005, compared to a net
loss of $6.2 million, or ($0.25) per diluted share for the prior year period.
For the quarter ended March 31, 2005, the Company generated funds from
operations ("FFO") of $8.3 million versus $3.2 million for the same period
of 2004. On a per diluted share/unit basis, FFO for the first quarter was
$0.27 versus $0.13 for the same period last year. The Company's earnings
before interest, taxes, depreciation and amortization ("EBITDA") for 2005's
first quarter increased 82.0 percent to $13.5 million from $7.4 million
during the prior year period.
Room revenue per available room ("RevPAR") for the quarter ended March
31, 2005 versus the same period in 2004 increased 10.3 percent to $97.80.
Average daily rate ("ADR") rose to $152.45, an 8.9 percent improvement,
while occupancy rose 1.3 percent to 64.2 percent from the prior year.
"RevPAR growth for the portfolio exceeded our expectations, primarily
as a result of greater pricing power," said Jon Bortz, Chairman and Chief
Executive Officer of LaSalle Hotel Properties. "Our urban hotels, especially
our hotels located in Washington, D.C. and Boston led the portfolio's strong
performance. Our resort-oriented hotels also achieved impressive RevPAR
gains led by San Diego Paradise Point Resort and Seaview Resort. Both of
these resorts are poised for a good year, as booking trends are encouraging
and group demand is improving at both properties. Overall, we are pleased
with our portfolio's results during the quarter, especially since there
was significant disruption caused by the ongoing capital reinvestment programs
occurring at a number of our hotels."
In addition to the strong RevPAR growth in the quarter, portfolio-wide
food and beverage revenue increased 10.4 percent over prior year to $24.6
million. This growth was attributable to continued improvement in group
and corporate demand at several of the Company's hotels. As a result, total
revenue generated by the portfolio rose 8.5 percent over prior year to
$78.3 million.
The Company's hotels generated $15.0 million of EBITDA for the quarter,
which is an increase of $2.6 million or 21.3 percent over last year. First
quarter EBITDA margins across the Company's portfolio grew 202 basis points
from the prior year. The EBITDA margin increase was primarily due to the
Company's continued ability to raise rates at its urban and resort properties.
"We are pleased with the margin improvement our portfolio generated
during the first quarter, although as expected, we continue to experience
above inflationary increases in wages and benefits, property taxes, liability
insurance and energy," explained Mr. Bortz. "As we have historically done,
we will continue to employ aggressive and creative asset management efforts
in conjunction with our hotel management teams to minimize expense growth,
create efficiencies and improve operating margins."
On January 6, 2005, the Company acquired the Hilton San Diego Gaslamp
Quarter for $85.0 million. The upscale full-service hotel opened in 2000
and is located in the heart of the Gaslamp historic district in downtown
San Diego. Featuring 282 well-appointed guestrooms, the hotel is operated
pursuant to a Hilton franchise agreement and managed by Davidson Hotel
Company. The hotel is located directly across the street from the San Diego
Convention Center, two blocks from PETCO Park, the new home of the San
Diego Padres baseball team, and just three miles from San Diego International
Airport.
On January 10, 2005, LaSalle acquired the Grafton on Sunset for $25.5
million. The Grafton is an upscale full-service hotel with 108 guestrooms
and suites. The Grafton is located in the heart of West Hollywood, adjacent
to Beverly Hills and just a short distance from Melrose Avenue, Century
City, Santa Monica, Marina Del Rey and downtown Los Angeles. The Grafton
is managed by Outrigger Lodging Services ("OLS"), which also manages the
Company's Le Montrose Suite Hotel, also located in West Hollywood.
On January 14, 2005, the Company announced its monthly dividend of $0.08
per share of its common shares of beneficial interest for each of the three
months of January, February and March 2005. The January dividend was paid
on February 15, 2005 to common shareholders of record on January 31, 2005;
the February dividend was paid on March 15, 2005 to common shareholders
of record on February 28, 2005; and the March dividend was paid on April
15, 2005 to common shareholders of record on March 31, 2005.
In the first quarter, the Company invested $16.8 million of capital
throughout its portfolio, including $9.5 million for the redevelopment
and repositioning of Lansdowne Resort and the amenity additions related
to the development of the Golf Club at Lansdowne. The Company also continued
its renovations and repositioning programs at the Sheraton Bloomington,
the Westin City Center Dallas, Seaview Resort, Le Montrose Suite Hotel
and the Chicago Marriott Downtown.
As of the end of the first quarter 2005, LaSalle Hotel Properties had
total outstanding debt of $372.0 million, including its $14.4 million portion
of the joint venture debt related to the Chicago Marriott Downtown. The
Company's $300.0 million unsecured credit facility had $90.9 million outstanding
as of March 31, 2005. Interest expense for the quarter was $4.0 million,
resulting in a trailing 12-month Corporate EBITDA to interest coverage
ratio of 5.2 times. As of March 31, 2005, total debt to trailing 12-month
Corporate EBITDA equaled 4.1 times, one of the lowest debt to EBITDA ratios
in the industry.
Subsequent Events
On April 15, 2005, the Company announced its monthly dividend of $0.08
per common share of beneficial interest for each of the three months of
April, May and June 2005. The April dividend will be paid on May 13, 2005
to common shareholders of record on April 29, 2005; the May dividend will
be paid on June 15, 2005 to common shareholders of record on May 31, 2005;
and the June dividend will be paid on July 15, 2005 to common shareholders
of record on June 30, 2005. This represents a 3.3 percent annualized yield
based on the Company's closing share price on April 20, 2005.
2005 Outlook
"As evidenced by our portfolio's strong first quarter performance, we
believe 2005 will continue to be an outstanding year for the hotel industry
and LaSalle Hotel Properties," said Mr. Bortz. "Demand growth should continue
to substantially outpace new room supply. As a result, we expect to continue
to exercise pricing power in many of the markets where we own hotels. This
should result in a meaningful improvement in RevPAR and property level
EBITDA. However, we expect that continued above-inflationary increases
in employee wages, benefits, insurance costs, property taxes and energy
will limit our ability to further improve property-level margins beyond
the 100 to 150 basis point increase we are currently forecasting for 2005."
The Company's current 2005 outlook is as follows:
-
Net Income: $13.8 million - $16.1 million ($0.45 - $0.53 per diluted share)
-
FFO: $61.6 million - $64.0 million ($2.01 - $2.09 per diluted share/unit);
-
EBITDA: $96.0 million - $98.3 million; and
-
Capital Expenditures: $60.0 million.
These forecasts assume a healthy economic environment and no unexpected
events negatively impacting the economy or the travel industry.
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
For the three months ended
March 31,
2005 2004
------------ ------------
Revenues:
Hotel operating revenues:
Room revenue
$41,932 $27,899
Food and beverage revenue
22,160 15,574
Other operating department revenue
4,771 3,695
------------ ------------
Total hotel operating
revenues
68,863 47,168
Participating lease revenue
3,925 3,573
Other income
421 81
------------ ------------
Total revenues
73,209 50,822
------------ ------------
Expenses:
Hotel operating expenses:
Room
11,265 7,997
Food and beverage
16,467 11,743
Other direct
3,351 2,727
Other indirect
21,585 15,699
------------ ------------
Total hotel operating
expenses
52,668 38,166
Depreciation and other amortization
10,964 9,045
Real estate taxes, personal property taxes
and insurance
3,588 2,748
Ground rent
798 771
General and administrative
2,766 2,143
Amortization of deferred financing costs
617 511
Other expenses
101 450
------------ ------------
Total operating expenses
71,502 53,834
------------ ------------
Operating income (loss)
1,707 (3,012)
Interest income
101 73
Interest expense
(4,007) (3,287)
------------ ------------
Loss before income tax benefit, minority
interest, equity in earnings of
unconsolidated entities and discontinued
operations
(2,199) (6,226)
Income tax benefit
2,705 2,862
------------ ------------
Income (loss) before minority interest,
equity in earnings of unconsolidated
entities and discontinued operations
506 (3,364)
Minority interest in LaSalle Hotel Operating
Partnership, L.P.
(2) 62
------------ ------------
Income (loss) before equity in earnings of
unconsolidated entities and discontinued
operations
504 (3,302)
Equity in loss of unconsolidated entities
(289) (248)
------------ ------------
Income (loss) before discontinued operations
215 (3,550)
Discontinued operations:
Income (loss) from operations of properties
disposed of
(45) 487
Minority interest, net of tax
- (9)
Income tax benefit
19 18
------------ ------------
Net income (loss) from discontinued
operations
(26) 496
Net income (loss)
189 (3,054)
Distributions to preferred shareholders
(3,133) (3,133)
------------ ------------
Net loss applicable to common shareholders
$(2,944) $(6,187)
============ ============
Earnings per Common Share - Basic:
Loss applicable to common shareholders
before discontinued operations and after
dividends paid on unvested restricted
shares
$(0.10) $(0.28)
Discontinued operations
- 0.02
------------ ------------
Net loss applicable to common shareholders
after dividends paid on unvested
restricted shares
$(0.10) $(0.26)
============ ============
Earnings per Common Share - Diluted:
Loss applicable to common shareholders
before discontinued operations
$(0.10) $(0.27)
Discontinued operations
- 0.02
------------ ------------
Net loss applicable to common shareholders
$(0.10) $(0.25)
============ ============
Weighted average number common shares
outstanding:
Basic
29,701,695 24,045,610
Diluted
30,202,017 24,729,272
LASALLE HOTEL PROPERTIES
FFO and EBITDA
(Dollars in thousands, except per share data)
(Unaudited)
For the three months ended
March 31,
2005 2004
------------ ------------
Funds From Operations (FFO):
Net loss applicable to common shareholders
$(2,944) $(6,187)
Depreciation
10,947 9,132
Equity in depreciation of joint venture
265 263
Amortization of deferred lease costs
11 11
Minority interest:
Minority interest in LaSalle Hotel
Operating Partnership, L.P.
2 (62)
Minority interest in discontinued
operations
-
9
------------ ------------
FFO
$8,281 $3,166
============ ============
Weighted average number of common shares and
units outstanding:
Basic
30,084,785 24,470,296
Diluted
30,585,107 25,153,958
Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA):
Net loss applicable to common shareholders
$(2,944) $(6,187)
Interest
4,007 3,290
Equity in interest expense of joint venture
146 147
Income tax benefit:
Income tax benefit
(2,705) (2,862)
Income tax benefit from discontinued
operations
(19) (18)
Depreciation and other amortization
10,964 9,158
Equity in depreciation/amortization of joint
venture
287 291
Amortization of deferred financing costs
617 511
Minority interest:
Minority interest in LaSalle Hotel
Operating Partnership, L.P.
2 (62)
Minority interest in discontinued
operations
-
9
Distributions to preferred shareholders
3,133 3,133
------------ ------------
EBITDA
$13,488 $7,410
============ ============
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(Unaudited)
For the Three Months Ended
March 31,
2005 2004
TOTAL PORTFOLIO
Occupancy
64.2% 63.3%
Increase/(Decrease)
1.3%
ADR
$152.45 $139.96
Increase/(Decrease)
8.9%
REVPAR
$97.80 $88.65
Increase/(Decrease)
10.3%
Note:
This schedule includes the operating data for all properties
leased to
LHL, and to third parties as of March 31, 2005, including
the Hilton
Gaslamp and Grafton on Sunset for the Company's period
of ownership,
and the Company's 9.9% interest in The Chicago Marriott
Downtown joint
venture. The Indianapolis Marriott, Hilton Alexandria
Old Town,
Chaminade, Hilton Gaslamp and Grafton on Sunset are shown
in 2004 for
their comparative period of ownership in 2005.
LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results
(unaudited, dollars in thousands)
For the Three Months Ended
March 31,
2005 2004
Revenues
Room
48,161 44,324
Food & beverage
24,648 22,328
Other
5,454 5,477
------------ ------------
Total hotel sales
78,263 72,129
Expenses
Room
12,664 11,898
Food & beverage
18,198 16,708
Other direct
3,639 3,512
General & administrative
7,380 7,144
Sales & marketing
6,695 6,694
Management fees
2,177 2,041
POM
4,032 3,607
Energy
3,138 3,021
Fixed expenses
5,351 5,144
------------ ------------
Total hotel expenses
63,274 59,769
EBITDA
14,989 12,360
============ ============
Note:
This schedule includes the operating data for all properties
leased to
LHL, and to third parties as of March 31, 2005, including
the Hilton
Gaslamp and Grafton on Sunset for the Company's period
of ownership,
and the Company's 9.9% interest in The Chicago Marriott
Downtown joint
venture. The Indianapolis Marriott, Hilton Alexandria
Old Town,
Chaminade, Hilton Gaslamp and Grafton on Sunset are shown
in 2004 for
their comparative period of ownership in 2005.
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LaSalle Hotel Properties is a leading multi-tenant, multi-operator real
estate investment trust, which owns interests in 21 upscale and luxury
full-service hotels, totaling approximately 6,700 guest rooms in 14 markets
in 10 states and the District of Columbia. The Company focuses on investing
in upscale and luxury full-service hotels located in urban, resort and
convention markets. LaSalle Hotel Properties seeks to grow through strategic
relationships with premier internationally recognized hotel operating companies,
including Westin Hotels and Resorts, Sheraton Hotels & Resorts Worldwide,
Inc., Crestline Hotels and Resorts, Inc., Outrigger Lodging Services, Noble
House Hotels & Resorts, Hyatt Hotels Corporation, Benchmark Hospitality,
White Lodging Services Corporation, Sandcastle Resorts & Hotels, Davidson
Hotel Company, 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.
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