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LaSalle Hotel Properties Net Income of $10.3 million
for the Quarter Ended June 30, 2005, Compared to
Net Income of $7.1 million for the Prior Year Period
.
RevPAR Increases 11.7 Percent / Hotel Operating Data
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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. 

.
Contact:
 

LaSalle Hotel Properties
Hans Weger
Chief Financial Officer
301-941-1500
www.lasallehotels.com

.
Also See: LaSalle Hotel Properties Posts 1st Qtr Net Loss of $2.9 million; RevPAR Up 10.3% Compared to Prior Year / Hotel Statistics / April 2005
LaSalle Hotel Properties Acquires the 112 room Onyx Hotel for Approximately $28.6 million; Kimpton Continues to Manage the Boston Hotel / May 2005


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