News for the Hospitality Executive
BETHESDA, Md.--October 17, 2012--LaSalle Hotel Properties
(NYSE: LHO) today announced results for the quarter ended September 30,
2012. The Company's results include the following:
Third Quarter Highlights
“We are pleased with the performance of our portfolio during the quarter,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “We continued to see the bulk of our revenue increases come through improved average rate. This, in conjunction with our diligent asset management practices led to outstanding hotel EBITDA margin growth of 180 basis points. On the capital markets front, we closed on a very favorable five-year term loan, which enabled us to further reduce the balance on our senior unsecured credit facility.”
For the nine months ended September 30, 2012, RevPAR increased 4.8 percent to $162.26, with ADR growth of 4.2 percent to $200.87 and a 0.6 percent improvement in occupancy to 80.8 percent. The Company's hotel EBITDA margin was 32.6 percent, an increase of 155 basis points compared to the comparable prior year period. The Company invested $48.9 million of capital in its hotels during the nine months ended September 30, 2012.
As of September 30, 2012, the Company had total outstanding debt of $1.21 billion, including $201.0 million outstanding on its senior unsecured credit facility. Total net debt to trailing 12 month Corporate EBITDA (as defined in the Company's senior unsecured credit facility) was 4.4 times as of September 30, 2012 and its fixed charge coverage ratio was 2.9 times. For the third quarter, the Company's weighted average interest rate was 4.3 percent. As of September 30, 2012, the Company had $22.4 million of cash and cash equivalents on its balance sheet and capacity of $563.1 million available on its credit facilities.
Park Central Renovation Update
The Company plans to commence the renovation and repositioning of the Park Central Hotel in New York City early January 2013 and continue through at least the third quarter and possibly into the fourth quarter of 2013. Of the hotel's 934 rooms, 761 rooms will be renovated as part of the main hotel, which will undergo a lobby, guestroom and corridor renovation. The remaining 173 rooms will be upgraded as part of the premium hotel, which will include a separate lobby on 55th Street, premium amenities and a more upscale guestroom product. The Company expects to invest between $60.0 and $70.0 million to complete the renovation.
“We are very excited about our plans for the Park Central. As would be expected from a renovation of this scope and size, in a property that operates with high occupancy, there will be EBITDA displacement during 2013. This displacement is expected to range between $8.0 and $12.0 million during 2013,” said Michael D. Barnello. “The displacement is one time in nature and it is our expectation that the property will be in a much better position in 2014 and beyond. This EBITDA impact will be partially offset by the January inauguration, which will be helpful for our DC portfolio and the rebound from EBITDA displacement at the Roger Williams and Le Montrose hotels, which occurred during the first half of 2012.”
The Company is updating its 2012 outlook, tightening the range to reflect its expectations for the one remaining quarter of the year. The revised outlook assumes no additional acquisitions or equity issuance for the remainder of 2012. The Company's revised financial expectations for 2012 are as follows:
The Company will conduct its quarterly conference call on Thursday, October 18, 2012 at 10:00 AM EDT. To participate in the conference call, please dial (888) 811-5421. Additionally, a live webcast of the conference call will be available through the Company's website. To access, log on to http://www.lasallehotels.com. A replay of the conference call will be archived and available online through the Investor Relations section of http://www.lasallehotels.com.
LaSalle Hotel Properties is a leading multi-operator real estate investment trust. The Company owns interests in 40 hotels of which 38 are owned 100 percent. The 38 wholly-owned properties are upscale full-service hotels, totaling 10,200 guest rooms in 13 markets in 9 states and the District of Columbia. The Company focuses on owning, redeveloping and repositioning upscale 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, Hilton Hotels Corporation, Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels Corporation, Benchmark Hospitality, White Lodging Services Corporation, Thompson Hotels, Davidson Hotel Company, Denihan Hospitality Group, the Kimpton Hotel & Restaurant Group, LLC, Accor, Destination Hotels & Resorts, HEI Hotels & Resorts, JRK Hotel Group, Inc., Viceroy Hotel Group, Highgate Hotels and Access Hotels & Resorts.
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 “will,” "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. Forward-looking statements in this press release include, among others, statements about outlook for RevPAR, hotel EBITDA margin, adjusted FFO, adjusted EBITDA and derivations thereof and the terms and the renovation plans and future expectations for the Park Central Hotel. 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, (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.
For additional information or to receive press releases via e-mail, please visit our website at www.lasallehotels.com.
Non-GAAP Financial Measures
FFO, EBITDA and Hotel EBITDA
The Company considers the non-GAAP measures of FFO (including FFO per share/unit), EBITDA and hotel EBITDA to be key supplemental measures of the Company's performance and should be considered along with, but not as alternatives to, net income or loss as a measure of the Company's operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO, EBITDA and hotel EBITDA to be helpful in evaluating a real estate company's operations.
The White Paper on FFO approved by NAREIT in April 2002, as revised in 2011, defines FFO as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of properties, impairment write-downs and items classified by GAAP as extraordinary, plus real estate-related depreciation and amortization (excluding amortization of deferred finance costs) and after comparable adjustments for the Company's portion of these items related to unconsolidated entities and joint ventures. The Company computes FFO consistent with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company.
With respect to FFO, the Company believes that excluding the effect of extraordinary items, real estate-related depreciation and amortization, and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of limited significance in evaluating current performance, can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common shareholders. However, FFO may not be helpful when comparing the Company to non-REITs.
With respect to EBITDA, the Company believes that excluding the effect of non-operating expenses and non-cash charges, and the portion of these items related to unconsolidated entities, all of which are also based on historical cost accounting and may be of limited significance in evaluating current performance, can help eliminate the accounting effects of depreciation and amortization, and financing decisions and facilitate comparisons of core operating profitability between periods and between REITs, even though EBITDA also does not represent an amount that accrues directly to common shareholders.
With respect to hotel EBITDA, the Company believes that excluding the effect of corporate-level expenses, non-cash items, and the portion of these items related to unconsolidated entities, provides a more complete understanding of the operating results over which individual hotels and operators have direct control. We believe property-level results provide investors with supplemental information on the ongoing operational performance of our hotels and effectiveness of the third-party management companies operating our business on a property-level basis.
FFO, EBITDA and hotel EBITDA do not represent cash generated from operating activities as determined by GAAP and should not be considered as alternatives to net income or loss, cash flows from operations or any other operating performance measure prescribed by GAAP. FFO, EBITDA and hotel EBITDA are not measures of the Company's liquidity, nor are FFO, EBITDA and hotel EBITDA indicative of funds available to fund the Company's cash needs, including its ability to make cash distributions. These measurements do not reflect cash expenditures for long-term assets and other items that have been and will be incurred. FFO, EBITDA and hotel EBITDA may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or the evaluation of the Company's operating performance.
Adjusted FFO and Adjusted EBITDA
The Company presents adjusted FFO (including adjusted FFO per share/unit) and adjusted EBITDA, which adjusts for certain additional items including gains on sale of property and impairment losses (to the extent included in EBITDA), acquisition transaction costs, costs associated with the departure of executive officers, costs associated with the recognition of issuance costs related to the calling of preferred shares and certain other items. The Company excludes these items as it believes it allows for meaningful comparisons with other REITs and between periods and is more indicative of the ongoing performance of its assets. As with FFO, EBITDA, and hotel EBITDA, the Company’s calculation of adjusted FFO and adjusted EBITDA may be different from similar adjusted measures calculated by other REITs.
LaSalle Hotel Properties
Hotel Properties Posts 2nd Qtr 2012 Net Income of $24.8 million
Compared to $16.7 million in the Prior Year Quarter: RevPAR Grew to
$180.14, an Increase of 3.8% / Hotel Operating Statistics / July
Hotel Properties Posts 1st Qtr 2012 Net Loss of $16.1 million Compared
to a Loss of $19.3 million in the Prior Year Quarter: RevPAR Grew to
$127.06, an Increase of 6.2% / Hotel Operating Statistics /April
Hotel Properties Posts 4th Qtr 2011 Net Income of $.6 million Compared
to a Loss of $17 million in the Prior Year Quarter: RevPAR Grew to
$140.10, an Increase of 5% / Hotel Operating Statistics / February
Hotel Properties Posts 3rd Qtr Net Income of $14.9 million Compared to
$10.1 million in the Prior Year Quarter; RevPAR Grew to $166.09, an
Increase of 6.4% / Hotel Operating Statistics / October 2011
Hotel Properties Posts 2nd Qtr Net Income of $16.7 million Compared to
$8 million in the Prior Year Quarter; RevPAR Grew to $168.97, an
Increase of 6.3% / Hotel Operating Statistics / July 2011
Hotel Properties Posts 1st Qtr Net Loss of $19.3 million Compared to
$25.8 million in the Prior Year Quarter; RevPAR Was $114.68, an
Increase of 7.1% / Hotel Operating Statistics / April 2011
Hotel Properties Posts 3rd Qtr Net Income $10.1 million Compared to
$3.4 million in the Prior Year Quarter; RevPAR Was $148.39, an Increase
of 6.3% / Hotel Operating Statistics / October 2010
|In Three Separate Transactions LaSalle Hotel Properties Acquires the Hotel Monaco San Francisco for $68.5 million, the Westin Philadelphia for $145.0 million and the Embassy Suites Philadelphia -- Center City for $79.0 million / September 2010|