News for the Hospitality Executive
|BETHESDA, Md - July 18, 2007 -- LaSalle Hotel Properties
(NYSE:LHO) today reported net income to common shareholders of $19.4 million,
or $0.48 per diluted share for the quarter ended June 30, 2007, compared
to net income of $18.4 million, or $0.46 per diluted share for the prior
The Company generated funds from operations ("FFO") of $42.3 million in the second quarter of 2007 versus $37.9 million for the same period of 2006. On a per diluted share basis, FFO for the second quarter of 2007 was $1.05 versus $0.94 a year ago, an increase of 11.4 percent. The Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") for the second quarter was $65.0 million as compared to $58.7 million for the same period of 2006, an increase of 10.8 percent.
Room revenue per available room ("RevPAR") increased 5.3 percent for the second quarter of 2007 to $165.13 versus the previous year. Average daily rate ("ADR") climbed 4.8 percent to $208.57 compared to the second quarter of 2006, while occupancy rose 0.5 percent to 79.2 percent.
The Company's portfolio-wide hotel EBITDA increased 9.3 percent to $67.6 million in the second quarter compared with $61.8 million last year. EBITDA margins across the Company's portfolio increased 144 basis points from the prior year period.
"The lodging industry continues to strengthen from the recent lull in the current economic cycle," said Jon Bortz, Chairman and Chief Executive Officer of LaSalle Hotel Properties. "As the industry has strengthened, we have seen significant RevPAR growth at our properties not undergoing renovations as well as continued margin improvements across the portfolio."
The Company continues the process of repositioning and renovating many of the properties acquired in 2005 and 2006 as planned at the time of acquisition. This proven strategy of identifying and repositioning assets is expected to drive growth in operating income and long-term shareholder value. For the year, the Company expects to invest $120 million to $130 million into the portfolio including $90 million of repositioning capital investment. The second quarter total capital investment in existing properties was $30.2 million, bringing the year to date total capital investment to $56.8 million.
"The reception from our customers and guests at our repositioned properties has been very positive, resulting in significant gains in market penetration for these properties," said Mr. Bortz. "This positive response and resulting performance improvement reaffirms our belief that though these projects are difficult and negatively impact short-term results, in the long-term the portfolio will outperform the industry and the markets where our hotels are located."
As of the end of the second quarter 2007, the Company had total outstanding debt of $833.9 million. The Company's $300.0 million credit facility had an outstanding balance of $27.0 million as of June 30, 2007. Also, as of June 30, 2007, total debt to trailing 12 month Corporate EBITDA equaled 4.2 times (as defined by our senior unsecured credit facility).
For the six months ended June 30, 2007, net income to common shareholders decreased to $35.0 million from $51.6 million for the prior year period. EBITDA year to date through the end of June increased to $123.8 million from $121.5 million for the prior year period. Net income and EBITDA for the six months ended June 30, 2007 include the $30.3 million gain on sale of the LaGuardia Marriott and $3.9 million write-off of the non-cash costs associated with the initial issuance of the Company's Series A Preferred Shares that were redeemed in March 2007. Net income and EBITDA for the six months ended June 30, 2006 include the $38.4 million gain on sale of the Chicago Marriott. For the first six months of 2007, FFO decreased to $49.9 million from $50.1 million in the prior year period or $1.24 per diluted share from $1.27 per diluted share. FFO for the six months ended June 30, 2007 includes the negative impact from the $3.9 million non-cash write-off of the initial issuance costs of the Series A Preferred Shares due to their redemption in March 2007.
Second Quarter Highlights
On April 13, 2007, the Company announced an increase in its monthly dividend to $0.17 per common share of beneficial interest for each of the months of April, May and June 2007. This represents a 21 percent increase from the prior monthly dividend of $0.14 per common share. The April dividend was paid on May 15, 2007 to common shareholders of record on April 30, 2007; the May dividend was paid on June 15, 2007 to common shareholders of record on May 31, 2007; and the June dividend was paid on July 13, 2007 to common shareholders of record on June 29, 2007.
Also on April 13, 2007, the Company amended and restated its $300 million senior unsecured credit facility. The terms of the amended and restated facility are substantially the same as the prior credit facility, except for a significant pricing reduction and the extension of the maturity date to April 13, 2011. The Company has an option to extend the facility to April 13, 2012. The interest rate spread over LIBOR has been reduced by 80 to 100 basis points as compared to the previous pricing grid. The unused fee for the facility was reduced by 7.5 basis points to 12.5 basis points. Additionally, LaSalle Hotel Lessee, the Company's taxable REIT subsidiary, also amended and restated its $25 million revolver on similar terms with similar pricing reductions to the amended and restated senior unsecured credit facility.
On July 13, 2007, the Company announced its monthly dividend of $0.17 per common share for each of the three months of July, August and September 2007. The July dividend will be paid on August 15, 2007 to common shareholders of record on July 31, 2007; the August dividend will be paid on September 14, 2007 to common shareholders of record on August 31, 2007; and the September dividend will be paid on October 15, 2007 to common shareholders of record on September 28, 2007.
The Company reaffirms its 2007 FFO per share outlook of $3.13 - $3.19 (excluding the $30.3 million gain on sale of the LaGuardia Marriott and the $3.9 million non-cash write-off of the initial issuance costs of the Series A Preferred Shares as a result of their redemption in March 2007) and its anticipated EBITDA margin improvement outlook of 100 - 125 basis points. However, due to the delays in certain renovation projects and related negative impact to revenues and EBITDA, offset by improved booking pace for the fourth quarter and the delay in opening the former Washington Grande Hotel as the luxury independent Donovan House until April 1, 2008, the breakdown of FFO and EBITDA between the two quarters in the second half of the year has changed.
Displacement for the year due to 92,000 room nights out of service and
public areas impacted by renovations is projected to lower total revenues
for 2007 by $14.5 million, room revenues by $9.5 million and EBITDA by
$8.0 million versus our previously projected impact of $11.5 million in
total revenues, $6.5 million in room revenues and $5.5 million in EBITDA
with 83,000 room nights out of service. Assuming no major geopolitical
events that might negatively impact the economy or the travel business,
the outlook for the full year 2007 is updated as follows:
LaSalle Hotel Properties is a leading multi-operator real estate investment trust, owning 31 upscale and luxury full-service hotels, totaling approximately 8,500 guest rooms in 14 markets in 11 states and the District of Columbia. The Company focuses on owning, redeveloping and repositioning upscale and luxury full-service hotels located in urban, resort and convention markets. LaSalle Hotel Properties seeks to grow through strategic relationships with premier lodging companies, including Westin Hotels and Resorts, Sheraton Hotels & Resorts Worldwide, Inc., Hilton Hotels Corporation, Crestline Hotels and Resorts, Inc., Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels Corporation, Benchmark Hospitality, White Lodging Services Corporation, Gemstone Hotels & Resorts, LLC, Thompson Hotels, Sandcastle Resorts & Hotels, Davidson Hotel Company, Denihan Hospitality Group 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. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. Forward-looking statements in this press release include, among others, statements about the performance improvements and timing related to renovations and repositionings, RevPAR, EBITDA, FFO and Net Income. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, (i) the Company's dependence on third-party managers of its hotels, including its inability to implement strategic business decisions directly, (ii) risks associated with the hotel industry, including competition, increases in wages, energy costs and other operating costs, actual or threatened terrorist attacks, downturns in general and local economic conditions and cancellation of or delays in the completion of anticipated demand generators, (iii) the availability and terms of financing and capital and the general volatility of securities markets, (iv) risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act and similar laws, (v) interest rate increases, (vi) the possible failure of the Company to qualify as a REIT and the risk of changes in laws affecting REITs, (vii) the possibility of uninsured losses, and (viii) risks associated with redevelopment and repositioning projects, including delays and cost overruns; and (ix) the risk factors discussed in the Company's Annual Report on Form 10-K as updated in its Quarterly Reports. Accordingly, there is no assurance that the Company's expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
LaSalle Hotel Properties
|Also See:||LaSalle Hotel Properties Acquires The Graciela Burbank, California for Approximately $36.5 million / December 2006|
|LaSalle Hotel Properties Acquires the 138 room Holiday Inn Manhattan Wall Street for Approximately $50.5 million; Plans to Reposition the Hotel as a Luxury Independent / November 2006|