| 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
year.
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.
Subsequent Events
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.
2007 Outlook
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:
Current Previous
Change
--------------- --------------- -----------------
RevPAR Growth
5.5% - 6.5% 7.5% - 8.5%
(2.0%) - (2.0%)
Net
Income/Diluted
Share
$1.56 - $1.62 $1.60 - $1.66 ($0.04) - ($0.04)
FFO/Diluted Share $3.03 - $3.09
$3.03 - $3.09 0 - 0
EBITDA (millions) $238.3 - $240.7 $240.1
- $242.5 ($1.8) - ($1.8)
Excluding the $30.3 million gain on sale and the non-cash
write-off of the $3.9 million issuance costs in the 1st quarter, the Company's
outlook for the full year 2007 is as follows:
Current Previous
Change
--------------- --------------- -----------------
RevPAR Growth
5.5% - 6.5% 7.5% - 8.5%
(2.0%) - (2.0%)
Net
Income/Diluted
Share
$0.91 - $0.96 $0.95 - $1.00 ($0.04) - ($0.04)
FFO/Diluted Share $3.13 - $3.19
$3.13 - $3.19 0 - 0
EBITDA (millions) $208.0 - $210.4 $209.8
- $212.2 ($1.8) - ($1.8)
The outlook for the second half of 2007 is as follows:
3rd Quarter
-----------------------------------------------
Current Previous
Change
------------- ------------- -----------------
RevPAR Growth
6.5% - 7.5% N/A
N/A
FFO/Diluted Share $1.08
- $1.12 $1.12 - $1.14 ($0.04) - ($0.02)
EBITDA (millions) $64.9
- $66.1 $67.4 - $68.2 ($2.5) - ($2.1)
4th Quarter
-------------------------------------------
Current Previous
Change
------------- ------------- -------------
RevPAR Growth
9.5% - 10.5% N/A
N/A
FFO/Diluted Share
$0.71 - $0.73 $0.67 - $0.69 $0.04 - $0.04
EBITDA (millions)
$49.5 - $50.7 $48.1 - $48.9 $1.4 - $1.8
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
For the three months For the six months
ended
ended
June 30,
June 30,
------------------------- -------------------------
2007 2006
2007 2006
------------ ------------ ------------ ------------
Revenues:
Hotel operating
revenues:
Room revenue $
114,944 $ 100,918 $ 195,659 $
166,381
Food and
beverage
revenue
48,372 44,060
83,526 74,678
Other operating
department
revenue
13,017 12,235
22,355 19,630
------------ ------------ ------------ ------------
Total hotel
operating
revenues
176,333 157,213
301,540 260,689
Participating
lease revenue
7,143 6,525
12,660 11,752
Other income
1,240 2,804
2,438 2,830
------------ ------------ ------------ ------------
Total
revenues
184,716 166,542
316,638 275,271
------------ ------------ ------------ ------------
Expenses:
Hotel operating
expenses:
Room
24,054 21,413
44,895 38,181
Food and
beverage
31,050 29,032
57,199 51,438
Other direct
6,316 6,102
11,143 10,584
Other indirect
44,336 40,892
82,797 73,223
------------ ------------ ------------ ------------
Total hotel
operating
expenses
105,756 97,439
196,034 173,426
Depreciation and
amortization
22,945 19,064
45,085 35,723
Real estate
taxes, personal
property taxes
and insurance
8,299 6,993
16,445 12,212
Ground rent
1,728 1,553
3,169 2,947
General and
administrative
3,488 2,794
7,398 5,968
Other expenses
658 993
1,233 1,255
------------ ------------ ------------ ------------
Total
operating
expenses
142,874 128,836
269,364 231,531
------------ ------------ ------------ ------------
Operating income
41,842 37,706
47,274 43,740
Interest income
199 310
1,023 987
Interest
expense
(11,868) (10,223) (23,311)
(19,236)
------------ ------------ ------------ ------------
Income before
income tax
(expense) benefit,
minority interest,
equity in earnings
of joint venture
and discontinued
operations
30,173 27,793
24,986 25,491
Income tax
(expense) benefit
(3,632) (2,979)
(251) 681
Minority interest
of common units in
Operating
Partnership
(69) (8)
(143) (90)
Minority interest
of preferred units
in Operating
Partnership
(1,531) (1,065)
(3,057) (2,129)
Equity in earnings
of joint venture
27 -
27 38,411
------------ ------------ ------------ ------------
Income from
continuing
operations
24,968 23,741
21,562 62,364
------------ ------------ ------------ ------------
Discontinued
operations:
Income from
operations of
properties
disposed of,
including gain
on disposal of
assets
16 1,123
30,341 1,166
Minority
interest, net of
tax
- (4)
(1) (2)
Income tax
(expense)
benefit
- (127)
73 76
------------ ------------ ------------ ------------
Net income from
discontinued
operations
16 992
30,413 1,240
------------ ------------ ------------ ------------
Net income
24,984 24,733
51,975 63,604
Distributions to
preferred
shareholders
(5,624) (6,369) (13,095)
(11,980)
Issuance costs of
redeemed preferred
shares
- -
(3,868) -
------------ ------------ ------------ ------------
Net income
applicable to
common
shareholders $
19,360 $ 18,364 $ 35,012
$ 51,624
============ ============ ============ ============
For the three months For the six months
ended
ended
June 30,
June 30,
------------------------- -------------------------
2007 2006
2007 2006
------------ ------------ ------------ ------------
Earnings per Common
Share - Basic:
Net income
applicable to
common
shareholders
before
discontinued
operations and
after dividends
paid on unvested
restricted
shares
$ 0.48 $
0.43 $ 0.11 $
1.29
Discontinued
operations
- 0.03
0.76 0.03
------------ ------------ ------------ ------------
Net income
applicable to
common
shareholders
after dividends
paid on unvested
restricted
shares
$ 0.48 $
0.46 $ 0.87 $
1.32
============ ============ ============ ============
Earnings per Common
Share - Diluted:
Net income
applicable to
common
shareholders
before
discontinued
operations
$ 0.48 $
0.43 $ 0.11 $
1.28
Discontinued
operations
- 0.03
0.76 0.03
------------ ------------ ------------ ------------
Net income
applicable to
common
shareholders $
0.48 $ 0.46 $
0.87 $ 1.31
============ ============ ============ ============
Weighted average
number of common
shares
outstanding:
Basic
39,854,720 39,776,207 39,849,367 38,919,318
Diluted
40,133,572 40,170,665 40,132,087 39,315,706
LASALLE HOTEL PROPERTIES
FFO and EBITDA
(Dollars in thousands, except share data)
(Unaudited)
For the three months For the six months
ended
ended
June 30,
June 30,
------------------------ -------------------------
2007 2006
2007 2006
------------ ----------- ------------ ------------
Funds From
Operations (FFO):
Net income
applicable to
common shareholders$ 19,360
$ 18,364 $ 35,012 $
51,624
Depreciation
22,722 19,314
44,738 36,389
Equity in
depreciation of
joint venture
- -
- 178
Amortization of
deferred lease
costs
122 196
246 232
Minority interest:
Minority interest
of common units
in Operating
Partnership
69 8
143 90
Minority interest
in discontinued
operations
- 4
1 2
Less: Equity in gain
on sale of property
- -
- (38,393)
Net gain on sale
of property
disposed of
(16) -
(30,278) -
------------ ----------- ------------ ------------
FFO
$ 42,257 $ 37,886 $
49,862 $ 50,122
============ =========== ============ ============
Weighted average
number of common
shares and units
outstanding:
Basic
39,958,250 39,809,737 39,952,897 38,974,203
Diluted
40,237,102 40,204,195 40,235,617 39,370,591
For the three months For the six months
ended
ended
June 30,
June 30,
------------------------ -------------------------
2007 2006
2007 2006
------------ ----------- ------------ ------------
Earnings Before
Interest, Taxes,
Depreciation and
Amortization
(EBITDA):
Net income
applicable to
common shareholders$ 19,360
$ 18,364 $ 35,012 $
51,624
Interest
11,868 10,223
23,311 19,237
Equity in interest
expense of joint
venture
- -
- 317
Income tax benefit:
Income tax expense
(benefit)
3,632 2,979
251 (681)
Income tax expense
(benefit) from
discontinued
operations
- 127
(73) (76)
Depreciation and
amortization
22,945 19,554
45,136 36,713
Equity in
depreciation /
amortization of
joint venture
- -
- 201
Minority interest:
Minority interest
of common units
in Operating
Partnership
69 8
143 90
Minority interest
of preferred
units in
Operating
Partnership
1,531 1,065
3,057 2,129
Minority interest
in discontinued
operations
- 4
1 2
Distributions to
preferred
shareholders
5,624 6,369
16,963 11,980
------------ ----------- ------------ ------------
EBITDA
$ 65,029 $ 58,693 $
123,801 $ 121,536
============ =========== ============ ============
LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results
(Dollars in thousands)
(Unaudited)
For the three months ended For the six months ended
June 30,
June 30,
-------------------------- ------------------------
2007 2006
2007 2006
Revenues
Room
124,352 118,215 213,192
205,523
Food & beverage
52,257 49,784
90,700 88,743
Other
13,672 13,475
23,505 22,880
------------- ------------ ----------- ------------
Total hotel sales
190,281 181,474 327,397
317,146
------------- ------------ ----------- ------------
Expenses
Room
25,714 24,867
48,226 47,070
Food & beverage
33,247 32,505
61,433 60,712
Other direct
6,710 6,724
11,831 11,902
General &
administrative
13,210 13,091
25,405 24,807
Sales &
marketing
12,575 12,332
23,671 23,179
Management fees
7,643 7,707
11,874 12,281
POM
6,900 6,667
13,397 13,066
Energy
5,823 5,790
12,147 12,010
Property taxes
7,238 6,203
14,129 12,078
Other fixed
expenses
3,666 3,772
6,990 7,220
------------- ------------ ----------- ------------
Total hotel
expenses
122,726 119,658 229,103
224,325
------------- ------------ ----------- ------------
EBITDA
$ 67,555 $ 61,816
$ 98,294 $ 92,821
============= ============ =========== ============
Note:
This schedule includes the
operating data for all properties leased to LHL, and to third parties as
of June 30, 2007, excluding the former Washington Grande Hotel (closed
for renovations). The Le Parc Suite Hotel, Hotel Sax, Westin Michigan Avenue,
Alexis Hotel, Hotel Solamar, Holiday Inn Wall Street & Graciela Burbank
are shown in 2006 for their comparative period of ownership in 2007.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(Unaudited)
For the three months ended For the six months ended
June 30,
June 30,
-------------------------- ------------------------
2007 2006
2007 2006
------------- ------------ ----------- ------------
TOTAL PORTFOLIO
Occupancy
79.2% 78.8%
72.6% 73.6%
Increase/(Decrease)
0.5%
(1.3%)
ADR
$ 208.57 $ 199.06
$ 196.09 $ 186.42
Increase/(Decrease)
4.8%
5.2%
REVPAR
$ 165.13 $ 156.88
$ 142.34 $ 137.14
Increase/(Decrease)
5.3%
3.8%
Note:
This schedule includes the operating data for all properties
leased to LHL, and to third parties as of June 30, 2007, excluding the
former Washington Grande Hotel (closed for renovations). The Le Parc Suite
Hotel, Hotel Sax, Westin Michigan Avenue, Alexis Hotel, Hotel Solamar,
Holiday Inn Wall Street & Graciela Burbank are shown in 2006 for their
comparative period of ownership in 2007.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(Unaudited)
Prior Year Operating Data
1Q'2006 2Q'2006 3Q'2006 4Q'2006 Full Year 2006
-------- -------- -------- -------- --------------
Occupancy
68.3% 78.8% 79.2%
67.6% 73.5%
ADR
$171.65 $199.06 $200.07 $193.36 $
191.74
REVPAR
$117.18 $156.88 $158.51 $130.74 $
140.91
Note:
This schedule includes historical operating data for the
owned hotels open and operating as of June 30, 2007 (excludes the former
Washington Grande Hotel). Historical data is included in 2006 for each
hotel's comparative period of ownership in 2007. |
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. |
