BETHESDA, Md., Jul 20, 2005 - LaSalle Hotel Properties (NYSE:LHO) today
reported net income to common shareholders of $10.3 million, or $0.34 per
diluted share for the quarter ended June 30, 2005, compared to net income
of $7.1 million, or $0.26 per diluted share for the prior year period.
For the quarter ended June 30, 2005, the Company generated funds from
operations ("FFO") of $20.8 million versus $17.2 million for the same period
of 2004. On a per diluted share/unit basis, FFO for the second quarter
was $0.68 versus $0.63 for the same period last year. The Company's earnings
before interest, taxes, depreciation and amortization ("EBITDA") for 2005's
second quarter increased 24 percent to $32.2 million from $26.0 million
during the prior year period. Excluding the impact of a $1.0 million contingent
litigation expense, FFO per share/unit would have been $0.71 and EBITDA
would have been $33.2 million.
Room revenue per available room ("RevPAR") for the quarter ended June
30, 2005 versus the same period in 2004 increased 11.7 percent to $130.77.
Average daily rate ("ADR") rose to $173.40, an 8.7 percent improvement,
while occupancy rose 2.7 percent to 75.4 percent from the prior year period.
"The dynamic growth in RevPAR we achieved in the quarter resulted from
robust demand from business travelers, a strong recovery in international
inbound travel and significant pricing power at the majority of our properties.
As a result, rate growth represented over 70% of our increase in RevPAR
for the second quarter," said Jon Bortz, Chairman and Chief Executive Officer
of LaSalle Hotel Properties. "In addition, a number of our properties are
benefiting from recent flag changes, renovations and repositionings, including
the Westin City Center Dallas and Sheraton Bloomington Minneapolis South."
The Company's hotels generated $34.3 million of EBITDA for the second
quarter compared with $29.5 million for the same period last year. Second
quarter portfolio-wide EBITDA margins improved 197 basis points ("bps")
from the prior year. EBITDA margins in the quarter increased primarily
due to the strong RevPAR growth.
"We are very pleased with the increased portfolio-wide operating margins
during the quarter," advised Mr. Bortz. "Despite greater than inflationary
increases in a number of expense categories, including labor costs, health
benefits, property taxes and energy, the portfolio continues to see margin
improvement driven primarily from RevPAR growth."
During the second quarter, the Company accrued $1.0 million for contingent
legal fees related to its ongoing litigation with Meridien and related
affiliates. As a result of this accrual, the net contingent lease termination
liability has a current balance of approximately $2.0 million as of June
30, 2005, which is included in accounts payable and accrued expenses in
its consolidated balance sheets. Based on the claims Lasalle Hotel Properties
has against Meridien, the Company is and will continue to seek damages
and reimbursement of legal fees, and therefore, ultimately any contingent
lease termination expense may be adjusted accordingly.
On May 18, 2005, the Company acquired the 112-room Onyx Hotel for approximately
$28.6 million. The hotel opened in May 2004 and is located in historic
downtown Boston in an up and coming area called The Bullfinch Triangle.
The hotel is also two blocks from the Fleet Center (TD Banknorth Garden)
and within a short walk of historical landmarks such as Faneuil Hall and
Bunker Hill. The Onyx Hotel has already received AAA's Four Diamond rating
for outstanding amenities and high-level services. The hotel offers wireless
high-speed internet access throughout, as well as other amenities and services
including the Ruby Room, a 45-seat bar and lounge serving breakfast and
dinner, valet parking, 24-hour room service and complimentary weekday morning
town-car service.
"Boston continues to be one of our targeted urban markets," remarked
Mr. Bortz. "With hotel occupancies in Boston surpassing 73% and with the
demand generators in place, the Boston market should continue to see significant
rate growth. As the Onyx Hotel ramps up to its stabilized rate and occupancy
levels over the next several years, we expect it to outpace the strong
rate growth of the market."
On June 8, 2005, the Company announced that it had successfully executed
a $59.6 million secured loan at a fixed rate of 5.35 percent. The term
of the loan is seven years and is collateralized by the Company's 282-room
Hilton San Diego Gaslamp Quarter. Proceeds from the financing were used
to reduce LaSalle's outstanding balance on its credit facility.
On June 9, 2005, the Company announced that it had successfully amended
and restated its $300.0 million senior unsecured bank facility. The terms
of the amended and restated facility are substantially the same as the
prior credit facility, except for the pricing reduction and the extended
maturity date of June 9, 2008, with an option to extend to June 9, 2009.
Additionally, LaSalle Hotel Lessee, the Company's taxable REIT subsidiary,
also amended and restated its $25 million revolver on similar terms as
the amended and restated senior unsecured credit facility.
As of the end of the second quarter 2005, LaSalle Hotel Properties had
total outstanding debt of $409.0 million, including its $14.4 million portion
of the joint venture debt related to the Chicago Marriott. The Company's
$300.0 million unsecured credit facility had $70.0 million outstanding
as of June 30, 2005. Interest expense for the quarter, excluding amortization
of financing fees, was $4.6 million resulting in a trailing 12-month Corporate
EBITDA to interest coverage ratio of 5.1 times. As of June 30, 2005, total
debt to trailing 12-month Corporate EBITDA equaled 4.3 times, one of the
lowest debt to EBITDA ratios in the industry.
For the six months ended June 30, 2005, net income applicable to common
shareholders increased to $7.3 million from $0.9 million for the prior
year period. EBITDA was $45.7 million compared to $33.4 million for the
same period in 2004. FFO was $29.1 million compared with $20.4 million
for the prior year period. Net income, EBITDA and FFO for the current year
include the Company's $1.0 million contingent litigation expense with Meridien
and would be $1.0 million higher but for that expense. RevPAR improved
11.2 percent, as ADR increased 8.9 percent to $163.86, while occupancy
improved 2.1 percent to 69.8 percent as compared to the same six-month
period in 2004.
Subsequent Events
On July 15, 2005, the Company announced a 25.0 percent increase in its
monthly dividend to $0.10 per common share of beneficial interest for each
of the months of July, August and September 2005. This represents a 3.5
percent annualized yield based on the Company's closing share price on
July 20, 2005.
The July dividend will be paid on August 15, 2005 to common shareholders
of record on July 29, 2005; the August dividend will be paid on September
15, 2005 to common shareholders of record on August 31, 2005; and the September
dividend will be paid on October 14, 2005 to common shareholders of record
on September 30, 2005.
2005 Outlook
The Company's current 2005 outlook is as follows:
-
Net Income $18.7 million - $20.2 million ($0.62 - $0.67 per diluted
share);
-
FFO $62.5 million - $64.0 million ($2.04 - $2.09
per diluted share/unit);
-
EBITDA $96.8 million - $98.3 million;
-
Capital Expenditures $60.0 million;
-
RevPAR 9.0% - 10.0% growth over prior year;
and
-
Hotel Level Portfolio-Wide EBITDA Margin Growth 150
- 180 basis points.
These forecasts assume a healthy economic environment and no unexpected
events negatively impacting the economy or the travel industry. These forecasts
for net income, FFO and EBITDA also include the reduction related to the
$1.0 million contingent litigation expense with Meridien and would be $1.0
million higher but for that expense.
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
For the three
For the six
months ended
months ended
June 30,
June 30,
----------------------- ----------------------
2005 2004
2005 2004
----------- ----------- ----------- ----------
Revenues:
Hotel operating
revenues:
Room revenue
$53,962 $39,299 $94,502
$65,912
Food and beverage
revenue
25,267 20,645
46,046 35,080
Other operating
department revenue
5,728 4,599
10,089 7,818
----------- ----------- ----------- ----------
Total hotel
operating
revenues
84,957 64,543 150,637
108,810
Participating lease
revenue
5,490 4,854
9,415 8,427
Other income
196 11
617 92
----------- ----------- ----------- ----------
Total revenues
90,643 69,408 160,669
117,329
----------- ----------- ----------- ----------
Expenses:
Hotel operating
expenses:
Room
12,182 9,226
22,832 16,634
Food and beverage
16,345 13,561
31,413 24,033
Other direct
3,234 2,369
5,885 4,425
Other indirect
22,387 17,002
42,156 31,004
----------- ----------- ----------- ----------
Total hotel
operating
expenses
54,148 42,158 102,286
76,096
Depreciation and other
amortization
10,032 9,035
20,352 17,315
Real estate taxes,
personal property
taxes and insurance
3,100 2,742
6,435 5,238
Ground rent
971 831
1,769 1,602
General and
administrative
2,467 1,970
5,234 4,113
Lease termination
expenses
1,018 -
1,018 -
Other expenses
44 133
130 583
----------- ----------- ----------- ----------
Total operating
expenses
71,780 56,869 137,224
104,947
----------- ----------- ----------- ----------
Operating income
18,863 12,539
23,445 12,382
Interest income
105 81
205 155
Interest expense
(5,209) (3,830) (9,832)
(7,627)
----------- ----------- ----------- ----------
Income before income tax
benefit (expense),
minority interest,
equity in earnings of
unconsolidated
entities, and
discontinued
operations
13,759 8,790
13,818 4,910
Income tax (expense)
benefit
(2,571) (1,187)
(766) 790
Minority interest in
LaSalle Hotel Operating
Partnership, L.P.
(138) (131)
(157) (93)
Equity in income of
unconsolidated entities
475 262
186 14
----------- ----------- ----------- ----------
Income from continuing
operations
11,525 7,734
13,081 5,621
----------- ----------- ----------- ----------
Discontinued operations:
Income (loss) from
operations of
properties held for
sale
2,093 2,018
(163) (327)
Income (loss) from
properties sold
- 973
(45) 1,459
Minority interest, net
of tax
(23) (41)
(7) (26)
Income tax (expense)
benefit
(178) (452)
740 451
----------- ----------- ----------- ----------
Net income from
discontinued
operations
1,892 2,498
525 1,557
----------- ----------- ----------- ----------
Net income
13,417 10,232
13,606 7,178
Distributions to
preferred shareholders
(3,133) (3,133) (6,266)
(6,266)
----------- ----------- ----------- ----------
Net income applicable to
common shareholders
$10,284 $7,099
$7,340 $912
=========== =========== =========== ==========
For the three
For the six
months ended
months ended
June 30,
June 30,
----------------------- -----------------------
2005 2004
2005 2004
----------- ----------- ----------- -----------
Earnings per Common
Share - Basic:
Income (loss)
applicable to common
shareholders before
discontinued
operations and after
dividends paid on
unvested restricted
shares
$0.28 $0.17
$0.23 $(0.03)
Discontinued
operations
0.06 0.10
0.01 0.06
----------- ----------- ----------- -----------
Net income applicable
to common
shareholders after
dividends paid on
unvested restricted
shares
$0.34 $0.27
$0.24 $0.03
=========== =========== =========== ===========
Earnings per Common
Share - Diluted:
Income (loss)
applicable to common
shareholders before
discontinued
operations
$0.28 $0.17
$0.23 $(0.02)
Discontinued
operations
0.06 0.09
0.01 0.06
----------- ----------- ----------- -----------
Net income applicable
to common
shareholders
$0.34 $0.26
$0.24 $0.04
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding:
Basic
29,822,566 26,395,156 29,767,699 25,220,929
Diluted
30,287,688 26,917,093 30,245,373 25,850,312
LASALLE HOTEL PROPERTIES
FFO and EBITDA
(Dollars in thousands, except share data)
(Unaudited)
For the three
For the six
months ended
months ended
June 30,
June 30,
----------------------- -----------------------
2005 2004
2005 2004
----------- ----------- ----------- -----------
Funds From Operations
(FFO):
Net income applicable
to common shareholders $10,284
$7,099 $7,340
$912
Depreciation
10,217 9,651
21,164 18,783
Equity in depreciation
of joint venture
146 262
411 525
Amortization of
deferred lease costs
12 12
23 23
Minority interest:
Minority interest in
LaSalle Hotel
Operating Partnership,
L.P.
138 131
157 93
Minority interest in
discontinued
operations
23 41
7 26
----------- ----------- ----------- -----------
FFO
$20,820 $17,196 $29,102
$20,362
=========== =========== =========== ===========
Weighted average number
of common shares and
units outstanding:
Basic
30,159,942 26,819,842 30,127,805 25,645,615
Diluted
30,625,064 27,341,779 30,605,480 26,274,998
For the three For
the six
months ended
months ended
June 30,
June 30,
----------------------- ----------------------
2005 2004
2005 2004
----------- ----------- ----------- ----------
Earnings Before
Interest, Taxes,
Depreciation and
Amortization (EBITDA):
Net income applicable to
common shareholders
$10,284 $7,099
$7,340 $912
Interest
5,213 3,837
9,837 7,638
Equity in interest
expense of joint
venture
195 114
341 261
Income tax expense
(benefit)
Income tax expense
(benefit)
2,571 1,187
766 (790)
Income tax expense
(benefit) from
discontinued
operations
178 452
(740) (451)
Depreciation and other
amortization
10,305 9,678
21,269 18,836
Equity in depreciation/
amortization of joint
venture
169 302
456 593
Minority interest:
Minority interest in
LaSalle Hotel
Operating Partnership,
L.P.
138 131
157 93
Minority interest in
discontinued
operations
23 41
7 26
Distributions to
preferred shareholders
3,133 3,133
6,266 6,266
----------- ----------- ----------- ----------
EBITDA
$32,209 $25,974 $45,699
$33,384
=========== =========== =========== ==========
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(Unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
----------------- -----------------
2005 2004 2005
2004
TOTAL PORTFOLIO
Occupancy
75.4% 73.4% 69.8%
68.4%
Increase/(Decrease)
2.7%
2.1%
ADR
$173.40 $159.52 $163.86 $150.50
Increase/(Decrease)
8.7%
8.9%
REVPAR
$130.77 $117.12 $114.43 $102.93
Increase/(Decrease)
11.7%
11.2%
Note:
This schedule includes the operating data for all properties
leased to
LHL, and to third parties as of June 30, 2005, including
the Hilton
Gaslamp, Grafton on Sunset and Onyx Hotel 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, Grafton on Sunset
and Onyx Hotel
are shown in 2004 for their comparative period of ownership
in 2005.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(Unaudited)
Prior Year Operating Data
Full Year
1Q'2004 2Q'2004 3Q'2004 4Q'2004
2004
--------- --------- --------- --------- ---------
Occupancy
63.3% 73.4% 75.5%
63.2% 68.8%
ADR
$139.96 $159.52 $163.47 $151.76
$154.34
REVPAR
$88.65 $117.12 $123.39 $95.97
$106.14
Note:
This schedule includes historical operating data for
the hotels owned
as of June 30, 2005. Historical data is included in 2004
for the
hotel's comparative period of ownership in 2005.
LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results
(unaudited, dollars in thousands)
For the Three For the Six
Months Ended Months Ended
June 30,
June 30,
--------------------- ---------------------
2005 2004
2005 2004
Revenues
Room
65,541 58,645 113,701
102,969
Food & beverage
32,112 30,004 56,759
52,332
Other
8,696 8,779 14,150
14,256
---------- ---------- ---------- ----------
Total hotel sales
106,349 97,428 184,610
169,557
Expenses
Room
14,515 13,704 27,179
25,601
Food & beverage
20,541 19,812 38,739
36,520
Other direct
4,841 4,613
8,480 8,125
General & administrative
8,466 7,857 15,846
15,001
Sales & marketing
7,490 7,043 14,185
13,737
Management fees
3,428 3,106
5,605 5,147
POM
4,195 3,718
8,228 7,325
Energy
3,191 2,804
6,329 5,826
Fixed expenses
5,337 5,231 10,688
10,375
---------- ---------- ---------- ----------
Total hotel expenses
72,004 67,888 135,279
127,657
EBITDA
34,345 29,540 49,331
41,900
Note:
This schedule includes the operating data for all properties
leased to
LHL, and to third parties as of June 30, 2005, including
the Hilton
Gaslamp, Grafton on Sunset and Onyx Hotel 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, Grafton on Sunset
and Onyx Hotel
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 22 upscale and luxury
full-service hotels, totaling approximately 6,800 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, Hilton Hotels Corporation,
Benchmark Hospitality, White Lodging Services Corporation, Sandcastle Resorts
& Hotels, Davidson Hotel Company, and the Kimpton Hotel & Restaurant
Group, LLC.
This press release, together with other statements and information publicly
disseminated by the Company, contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
|