April 23, 2014 04:08 PM Eastern Daylight Time - BETHESDA, Md.---LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended March 31, 2014. The Company's results include the following:
(1) See tables later in press release, which list adjustments that reconcile net loss to earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, funds from operations ("FFO"), FFO per share/unit, adjusted FFO, adjusted FFO per share/unit and Hotel EBITDA. EBITDA, adjusted EBITDA, FFO, FFO per share/unit, adjusted FFO, adjusted FFO per share/unit and Hotel EBITDA are non-GAAP financial measures. See further discussion of these non-GAAP measures and reconciliations to net loss later in this press release.
First Quarter Results and Activities
RevPAR: Room revenue per available room ("RevPAR") for the quarter ended March 31, 2014 increased 4.0 percent to $144.40, as a result of a 6.2 percent increase in average daily rate ("ADR") to $201.36 and a 2.0 percent decrease in occupancy to 71.7 percent. RevPAR for the portfolio excluding Park Central and WestHouse increased 3.6 percent.
Hotel EBITDA Margin: The Company's hotel EBITDA margin for the first quarter was 22.7 percent, a 125 basis point decline compared to the comparable prior year period.
Excluding Park Central and WestHouse, the Company's hotel EBITDA margin for the first quarter was flat relative to the same period last year. First quarter results were also impacted by increases in property taxes and energy costs. Excluding these cost increases, the Company's hotel EBITDA margin increased 71 basis points.
First quarter hotel EBITDA margin results were in line with the Company's expectations and did not result in any change to the Company's full year 2014 outlook.
Adjusted EBITDA: The Company's adjusted EBITDA was $44.9 million, an increase of 12.8 percent over the first quarter of 2013.
Adjusted FFO: The Company generated first quarter adjusted FFO of $33.2 million, or $0.32 per diluted share/unit, compared to $25.7 million or $0.27 per diluted share/unit for the comparable prior year period.
Capital Markets: In January 2014, the Company refinanced $1.05 billion of debt, reducing the interest cost on its $750.0 million revolver and $300.0 million five-year term loan. The maturities were extended to January 2019, including two six-month extension options for the revolver, subject to certain conditions. The revolver and term loan include accordion features which, subject to certain conditions, entitle the Company to request additional lender commitments, allowing for total commitments up to $1.05 billion for the revolver and $500.0 million for the term loan.
The interest rate for the new revolver is based on a pricing grid with a range of 170 to 245 basis points over LIBOR, based on the Company's leverage ratio and is currently LIBOR plus 170 basis points, or 1.86 percent. Pricing for the term loan is LIBOR plus 160 to 235 basis points, based on the Company's leverage ratio. The term loan remains swapped, locking in LIBOR through August 2017, resulting in a current interest rate of 2.38 percent.
Dividends: On March 14, 2014, the Company declared a first quarter 2014 dividend of $0.28 per common share of beneficial interest.
Second Quarter 2014 Common Dividend
The Company's Board of Trustees has declared that it has increased the quarterly common dividend in the second quarter 2014 by 34 percent to $0.375 per diluted share, an annualized rate of $1.50 per diluted share.
"First quarter performance was in line with our expectations," said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. "RevPAR was above the midpoint of our outlook despite several winter storms that impacted our properties in the northeast and Chicago. Our first quarter RevPAR was also impacted by tough comparisons in Washington, DC, due to the inauguration last year and New York, which benefited from post Hurricane Sandy related business."
"Adjusted EBITDA was towards the high-end of our range and increased 12.8 percent from the first quarter of 2013. Adjusted FFO per share/unit increased 18.5 percent over last year."
"We are very pleased with the Board's decision to substantially increase the dividend by 34 percent to an annualized rate of $1.50 per share in the second quarter. The increase reflects the strong growth our portfolio has delivered throughout the recovery and our expectation that there remains growth in the cycle. The dividend represents a 4.6 percent yield on our stock price as of yesterday's close."
As of March 31, 2014, the Company had total outstanding debt of $1.2 billion, including $196.0 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 3.9 times as of March 31, 2014 and its fixed charge coverage ratio was 3.5 times. For the first quarter, the Company's weighted average interest rate was 3.7 percent. As of March 31, 2014, the Company had $16.9 million of cash and cash equivalents on its balance sheet and capacity of $576 million available on its credit facilities.
On April 2, the Company closed on its acquisition of Hotel Vitale in San Francisco for $130 million. Hotel Vitale is a 200-room hotel located on the Embarcadero. The Company funded the acquisition with borrowings from its senior unsecured credit facility.
"We are very excited to have acquired Hotel Vitale in San Francisco," said Mr. Barnello. "The quality of the physical asset is outstanding, as is its location on the Embarcadero in the heart of the Financial District. San Francisco is one of the strongest lodging markets in the United States and this acquisition increases our presence in the market to 10 percent of our EBITDA."
The Company's 2014 outlook is unchanged from the outlook included in its fourth quarter 2013 earnings release, with the exception that it includes the acquisition of Hotel Vitale. The outlook is based on an economic environment that continues to improve and assumes no additional acquisitions and no capital markets activities. The Company's RevPAR growth and financial expectations for 2014 are as follows:
Second Quarter 2014 Outlook
The Company expects second quarter RevPAR to increase 7.0 percent to 9.5 percent and hotel EBITDA margins to range from approximately flat to an increase of 50 basis points relative to the same prior year period. The Company expects its portfolio to generate adjusted EBITDA of $103.0 million to $109.0 million and adjusted FFO per share/unit of $0.77 to $0.81.
To view corresponding tables for this release please visit:
LaSalle Hotel Properties is a leading multi-operator real estate investment trust. The Company owns 46 hotels. The properties are upscale, full-service hotels, totaling approximately 11,600 guest rooms in 14 markets in 10 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, Commune Hotels and Resorts, 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.