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 LaSalle Hotel Properties Reports 2nd Qtr Earnings Up 79% to $18.4 million, 
Compared to $10.3 million in the Prior-year Period
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BETHESDA, Md. - July 19, 2006--LaSalle Hotel Properties (NYSE:LHO) today reported net income to common shareholders of $18.4 million, or $0.46 per diluted share for the quarter ended June 30, 2006, compared to net income of $10.3 million, or $0.34 per diluted share for the prior year period.

For the quarter ended June 30, 2006, the Company generated funds from operations ("FFO") of $37.9 million versus $20.8 million for the same period of 2005. On a per diluted share/unit basis, FFO for the second quarter was $0.94 versus $0.68 for the same period last year, a 38 percent increase. The Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") for 2006's second quarter rose to $58.7 million from $32.2 million during the prior year period.

Room revenue per available room ("RevPAR") for the quarter ended June 30, 2006 versus the same period in 2005 increased 10.6 percent to $155.39. Average daily rate ("ADR") rose to $196.09, an 8.5 percent improvement, while occupancy rose 1.9 percent to 79.2 percent from the prior year period. For the six months ended June 30, 2006, RevPAR increased 11.8 percent to $136.96 from the prior year period. ADR increased 8.8 percent to $185.09 and occupancy increased 2.7 percent to 74.0 percent from the prior year period.

The Company's hotels generated $59.4 million of EBITDA for the second quarter compared with $54.2 million for the same period last year. Second quarter portfolio-wide EBITDA margins increased 5 basis points ("bps") from the prior year. For the six months ended June 30, 2006, portfolio-wide EBITDA margins improved 110 bps from the prior year period.

"The Company's overall performance in the second quarter was in-line with our expectations," said Jon Bortz, Chairman and Chief Executive Officer of LaSalle Hotel Properties. "In the quarter, demand remained healthy, RevPAR growth was strong and FFO per diluted share/unit rose 38 percent. While hotel EBITDA margins disappointed us slightly, most of the quarter's margin pressures were anticipated and our hotel EBITDA margin growth outlook for the year remains within our prior range. Though we experienced some minor softness in leisure demand in June, fundamentals for the lodging industry and LaSalle Hotel Properties remain strong."

On April 13, 2006, LaSalle Hotel Properties increased its monthly dividend to $0.14 per common share of beneficial interest for each of the months of April, May and June 2006. This represented a 40 percent increase from the prior monthly dividend of $0.10 per common share.
On June 8, 2006, the Company successfully executed a $101.8 million secured loan with Bank of America, N.A. at a fixed annualized interest rate of 5.99 percent. The term of the loan is 10 years and is collateralized by the 615-room Indianapolis Marriott Downtown. Proceeds from the loan were used to repay the previous $57.0 million mortgage secured by the hotel and reduce the Company's outstanding balance on its credit facility. In conjunction with this refinancing, the Company recognized $1.1 million of income in the second quarter related to the termination of a swap for the $57.0 million mortgage, although a higher interest rate on the new loan will offset most of this income over the prior mortgage's remaining term.

On June 15, 2006, the Company acquired the Alexis Hotel in Seattle, Washington, for $38.0 million. The 109-room Four Diamond, independent full-service hotel is located on First Avenue in the heart of downtown Seattle. The purchase price included 19,000 square feet of retail space currently 100 percent leased to third-party tenants. The historic Alexis Hotel is located in the heart of the central business district of downtown Seattle, in close proximity to leisure and business demand generators. The hotel is managed by the Kimpton Hotel & Restaurant Group, LLC.

As of the end of the second quarter 2006, the Company had total outstanding debt of $730.1 million. The Company's $300.0 million credit facility had no outstanding balance as of June 30, 2006. Interest expense for the quarter was $9.4 million, resulting in a trailing 12 month Corporate EBITDA (as defined in the Company's senior unsecured credit facility) to interest coverage ratio of 4.5 times. As of June 30, 2006, total debt to trailing 12 month Corporate EBITDA equaled 4.1 times, one of the lowest debt to EBITDA ratios in the industry.

For the six months ended June 30, 2006, net income to common shareholders increased to $51.6 million from $7.3 million for the prior year period. EBITDA increased to $121.5 million from $45.7 million for the prior year period. FFO increased to $50.1 million from $29.1 million or $1.27 per diluted share/unit from $0.95 per diluted share/unit for the prior year period, which represents a 34 percent increase. Net income and EBITDA for the six months ended June 30, 2006 include the $38.4 million gain in joint venture equity pick-up related to the sale of the Chicago Marriott. Net income, EBITDA and FFO include the $1.0 million contingent litigation expense for the six months ended June 30, 2005.

Subsequent Events

On July 14, 2006, the Company announced its monthly dividend of $0.14 per common share of beneficial interest for each of the months of July, August and September 2006. This represents a 3.5 percent annualized yield based on the Company's closing share price on July 19, 2006.

The July dividend will be paid on August 15, 2006 to common shareholders of record on July 31, 2006; the August dividend will be paid on September 15, 2006 to common shareholders of record on August 31, 2006; and the September dividend will be paid on October 13, 2006 to common shareholders of record on September 29, 2006.

2006 Outlook

The Company's current 2006 outlook is as follows:
Net Income    $72.0 million - $73.6 million
                    ($1.81 - $1.85 per diluted share);

FFO               $110.6 million - $112.2 million
                    ($2.78 - $2.82 per diluted share/unit); and

EBITDA          $220.0 million - $221.9 million.

This 2006 outlook is based on the following major assumptions:

  • Net Income and EBITDA include the $38.4 million gain in joint venture equity pick-up related to the sale of the Chicago Marriott;
  • FFO excludes the $38.4 million gain in joint venture equity pick-up related to the sale of the Chicago Marriott;
  • Portfolio RevPAR growth of 9.0 to 10.0 percent versus 2005;
  • Portfolio hotel EBITDA margins increase 120 to 140 basis points over 2005;
  • Corporate general and administrative expenses of $12.2 million;
  • Total capital investments of approximately $80.0 to $85.0 million;
  • Income tax expense of $0.2 million to $0.8 million;
  • Weighted average outstanding debt of approximately $720.0 million; and
  • Weighted average fully diluted shares/units of 39.8 million for full-year 2006. 
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)
(Unaudited)

                              For the                 For the
                         three months ended       six months ended
                              June 30,                June 30,
                       ----------------------- -----------------------
                          2006        2005        2006        2005
                       ----------- ----------- ----------- -----------
Revenues:
  Hotel operating
   revenues:
    Room revenue       $  106,605  $   57,627  $  176,510  $   99,559
    Food and beverage
     revenue               46,442      28,961      78,901      51,121
    Other operating
     department
     revenue               12,765       7,817      20,532      12,588
                       ----------- ----------- ----------- -----------
      Total hotel
       operating
       revenues           165,812      94,405     275,943     163,268
  Participating lease
   revenue                  6,525       5,490      11,752       9,415
  Other income              2,804         194       2,830         617
                       ----------- ----------- ----------- -----------
      Total revenues      175,141     100,089     290,525     173,300
                       ----------- ----------- ----------- -----------
Expenses:
  Hotel operating
   expenses:
    Room                   22,871      12,966      41,020      24,232
    Food and beverage      30,828      18,641      54,816      35,108
    Other direct            6,404       4,558      11,200       7,909
    Other indirect         43,820      24,758      78,466      46,343
                       ----------- ----------- ----------- -----------
      Total hotel
       operating
       expenses           103,923      60,923     185,502     113,592
  Depreciation and
   other amortization      19,554      10,305      36,713      21,269
  Real estate taxes,
   personal property
   taxes and insurance      7,514       3,363      13,249       6,951
  Ground rent               1,553         971       2,947       1,769
  General and
   administrative           2,801       2,478       5,991       5,243
  Lease termination
   expenses                     -       1,018           -       1,018
  Other expenses              993          71       1,255         172
                       ----------- ----------- ----------- -----------
      Total operating
       expenses           136,338      79,129     245,657     150,014
                       ----------- ----------- ----------- -----------
  Operating income         38,803      20,960      44,868      23,286
    Interest income           336         105       1,026         205
    Interest expense      (10,223)     (5,213)    (19,237)     (9,836)
                       ----------- ----------- ----------- -----------
Income before income
 tax (expense)
 benefit, minority
 interest, equity in
 earnings of joint
 venture and
 discontinued
 operations                28,916      15,852      26,657      13,655
Income tax (expense)
 benefit                   (3,106)     (2,749)        757         (45)
Minority interest of
 common units in
 LaSalle Hotel
 Operating
 Partnership, L.P.            (12)       (161)        (92)       (164)
Minority interest of
 preferred units in
 LaSalle Hotel
 Operating
 Partnership, L.P.         (1,065)          -      (2,129)          -
Equity in earnings of
 joint venture                  -         475      38,411         186
                       ----------- ----------- ----------- -----------
Income from continuing
 operations                24,733      13,417      63,604      13,632
                       ----------- ----------- ----------- -----------
Discontinued
 operations:
  Loss from operations
   of properties
   disposed of                  -           -           -         (45)
  Income tax benefit            -           -           -          19
                       ----------- ----------- ----------- -----------
  Net loss from
   discontinued
   operations                   -           -           -         (26)
                       ----------- ----------- ----------- -----------
Net income                 24,733      13,417      63,604      13,606
Distributions to
 preferred
 shareholders              (6,369)     (3,133)    (11,980)     (6,266)
                       ----------- ----------- ----------- -----------
Net income applicable
 to common
 shareholders          $   18,364  $   10,284  $   51,624  $    7,340
                       =========== =========== =========== ===========
 

Earnings per Common
 Share - Basic:
  Income applicable to
   common shareholders
   before discontinued
   operations and
   after dividends
   paid on unvested
   restricted shares   $     0.46  $     0.34  $     1.32  $     0.24
  Discontinued
   operations                   -           -           -           -
                       ----------- ----------- ----------- -----------
  Net income
   applicable to
   common shareholders
   after dividends
   paid on unvested
   restricted shares   $     0.46  $     0.34  $     1.32  $     0.24
                       =========== =========== =========== ===========

Earnings per Common
 Share - Diluted:
  Income applicable to
   common shareholders
   before discontinued
   operations          $     0.46  $     0.34  $     1.31  $     0.24
  Discontinued
   operations                   -           -           -           -
                       ----------- ----------- ----------- -----------
  Net income
   applicable to
   common shareholders $     0.46  $     0.34  $     1.31  $     0.24
                       =========== =========== =========== ===========

Weighted average
 number of common
 shares outstanding:
  Basic                39,776,207  29,822,566  38,919,318  29,767,699
  Diluted              40,170,665  30,287,688  39,315,706  30,245,373
 

                       LASALLE HOTEL PROPERTIES
                            FFO and EBITDA
              (Dollars in thousands, except share data)
                             (Unaudited)

                               For the                 For the
                         three months ended       six months ended
                              June 30,                June 30,
                       ----------------------- -----------------------
                          2006        2005        2006        2005
                       ----------- ----------- ----------- -----------

Funds From Operations
 (FFO):
Net income applicable
 to common
 shareholders          $   18,364  $   10,284  $   51,624  $    7,340
Depreciation               19,314      10,217      36,389      21,164
Equity in depreciation
 of joint venture               -         146         178         411
Amortization of
 deferred lease costs         196          12         232          23
Minority interest:
  Minority interest of
   common units in
   LaSalle Hotel
   Operating
   Partnership, L.P.           12         161          92         164
Less: Equity in gain
 on sale of property            -           -     (38,393)          -
                       ----------- ----------- ----------- -----------
  FFO                  $   37,886  $   20,820  $   50,122  $   29,102
                       =========== =========== =========== ===========

Weighted average
 number of common
 shares and units
 outstanding:
  Basic                39,809,737  30,159,942  38,974,203  30,127,805
  Diluted              40,204,195  30,625,064  39,370,591  30,605,480
 

Earnings Before
 Interest, Taxes,
 Depreciation and
 Amortization
 (EBITDA):
Net income applicable
 to common
 shareholders          $   18,364  $   10,284  $   51,624  $    7,340
Interest                   10,223       5,213      19,237       9,837
Equity in interest
 expense of joint
 venture                        -         195         317         341
Income tax benefit:
  Income tax expense
   (benefit)                3,106       2,749        (757)         45
  Income tax expense
   (benefit) from
   discontinued
   operations                   -           -           -         (19)
Depreciation and other
 amortization              19,554      10,305      36,713      21,269
Equity in
 depreciation/
 amortization of joint
 venture                        -         169         201         456
Minority interest:
  Minority interest of
   common units in
   LaSalle Hotel
   Operating
   Partnership, L.P.           12         161          92         164
  Minority interest of
   preferred units in
   LaSalle Hotel
   Operating
   Partnership, L.P.        1,065           -       2,129           -
Distributions to
 preferred
 shareholders               6,369       3,133      11,980       6,266
                       ----------- ----------- ----------- -----------
  EBITDA               $   58,693  $   32,209  $  121,536  $   45,699
                       =========== =========== =========== ===========
 

                       LASALLE HOTEL PROPERTIES
                    Statistical Data for the Hotels
                              (unaudited)

                                     For the             For the 
                               Three Months Ended   Six Months Ended
                                    June 30,            June 30,
                               ------------------- -------------------
                                  2006      2005     2006       2005
TOTAL PORTFOLIO
Occupancy                           79.2%    77.8%    74.0%      72.0%
     Increase/(Decrease)             1.9%              2.7%
ADR                            $  196.09  $180.67  $185.09  $  170.08
     Increase/(Decrease)             8.5%              8.8%
REVPAR                         $  155.39  $140.50  $136.96  $  122.50
     Increase/(Decrease)            10.6%             11.8%

Note:
This schedule includes the operating data for all properties leased to
LHL, and to third parties as of June 30, 2006, including the Le Parc
Suite Hotel, House of Blues Hotel, Westin Michigan Avenue and Alexis
Hotel for the Company's period of ownership but excluding the
Washington Grande Hotel (closed for renovations). The Onyx Hotel,
Westin Copley Place, University Tower Hotel, Hilton San Diego Resort,
Le Parc Suite Hotel, House of Blues Hotel, Westin Michigan Avenue and
Alexis Hotel are shown in 2005 for their comparable period of
ownership in 2006.
 

                       LASALLE HOTEL PROPERTIES
                        Hotel Operational Data
                  Schedule of Property Level Results
                       (unaudited, in thousands)

                                       For the           For the 
                                 Three Months Ended  Six Months Ended
                                 ------------------- -----------------
                                 June 30,   June 30, June 30, June 30,
                                   2006       2005     2006     2005
Revenues
    Room                           114,794  103,533  191,579  171,079
    Food & beverage                 49,995   46,985   85,707   79,998
    Other                           13,614   12,570   21,882   20,466
                                 ---------- -------- -------- --------
Total hotel sales                  178,403  163,088  299,168  271,543

Expenses
    Room                            24,365   22,522   43,799   40,683
    Food & beverage                 32,880   30,472   58,869   55,358
    Other direct                     6,741    5,886   11,789   10,320
    General & administrative        12,938   11,978   23,338   21,884
    Sales & marketing               11,797   10,789   21,600   19,746
    Management fees                  7,898    7,290   11,907   10,892
    POM                              6,877    6,171   12,752   11,792
    Energy                           5,733    4,854   11,624    9,483
    Fixed expenses                   9,745    8,889   17,798   16,599
                                 ---------- -------- -------- --------
Total hotel expenses               118,974  108,851  213,476  196,757

EBITDA                              59,429   54,237   85,692   74,786

Notes:
This schedule includes the operating data for all properties leased to
LHL, and to third parties as of June 30, 2006, including the Le Parc
Suite Hotel, House of Blues Hotel, Westin Michigan Avenue and Alexis
Hotel for the Company's period of ownership but excluding the
Washington Grande Hotel (closed for renovations). The Onyx Hotel,
Westin Copley Place, University Tower Hotel, Hilton San Diego Resort,
Le Parc Suite Hotel, House of Blues Hotel, Westin Michigan Avenue and
Alexis Hotel are shown in 2005 for their comparable period of
ownership in 2006.
 

                       LASALLE HOTEL PROPERTIES
                    Statistical Data for the Hotels
                              (Unaudited)

Prior Year Operating Data
                                                             Full Year
                    1Q'2005   2Q'2005   3Q'2005    4Q'2005      2005
                   --------- --------- ---------- ---------- ---------
   Occupancy          65.6%     77.8%      81.2%      67.9%     73.3%
   ADR             $ 156.02  $ 180.67  $  178.57  $  177.57  $ 174.34
   REVPAR          $ 102.34  $ 140.50  $  145.06  $  120.56  $ 127.80

Note:
This schedule includes historical operating data for the owned hotels
open and operating as of June 30, 2006 (excludes the Washington
Grande Hotel). Historical data is included in 2005 for each hotel's
comparative period of ownership in 2006.

LaSalle Hotel Properties is a leading multi-tenant, multi-operator real estate investment trust, owning interests in 29 upscale and luxury full-service hotels, totaling approximately 8,500 guest rooms in 15 markets in 11 states and the District of Columbia. The Company focuses on owning 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, Gemstone Resorts International, LLC, Thompson Hotels, 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. 

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Contact:

LaSalle Hotel Properties
Hans Weger, 301-941-1500
www.lasallehotels.com
 
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Also See: LaSalle Hotel Properties Acquires the 109 room Alexis Hotel in Seattle, Washington, for $38.0 million / June 2006
LaSalle Hotel Properties Reports Net Income to Common Shareholders of $20.8 million for the Year Ended December 31, 2005, Compared to Net Income of $10.7 million for the Prior Year; RevPAR Increases 11.2% / February 2006

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