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LaSalle Hotel Properties Posts 1st Qtr Net Loss
of $2.9 million; RevPAR Up 10.3%
Compared to Prior Year
Hotel Statistics

.

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.
 

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. 

Contact:

LaSalle Hotel Properties
www.lasallehotels.com

Also See: LaSalle Hotel Properties Reports 1st Qtr Net Loss of $6.2 million, Compared to a Net Loss of $6.3 million for the Prior Year Same Period; Expects a Net Income for the Full Year 2004 Between $2.3 million and $4.5 million / April 2004
LaSalle Hotel Properties Acquires the Grafton on Sunset, West Hollywood, CA for $25.5 million / January 2005


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