Item 1.01. Entry into a Material Definitive Agreement.
On May 25, 2016, LaSalle Hotel Properties (the “Company”), as general partner of LaSalle Hotel Operating Partnership, L.P. (the “Operating Partnership”), executed an amendment to the limited partnership agreement of the Operating Partnership in connection with the Company’s completion of an underwritten public offering of 6,000,000 6.3% Series J Cumulative Redeemable Preferred Shares, par value $0.01 per share (the “Series J Preferred Shares”). The amendment to the limited partnership agreement establishes a series of preferred units (the “Series J Preferred Units”) that mirrors the rights and preferences of the Series J Preferred Shares described below. At the closing of the offering, the proceeds were contributed by the Company to the Operating Partnership in exchange for 6,000,000 Series J Preferred Units.
The foregoing description is qualified in its entirety by reference to the amendment to the limited partnership agreement of the Operating Partnership, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 3.03. Material Modification to Rights of Security Holders.
On May 25, 2016, the Company issued 6,000,000 Series J Preferred Shares. As set forth in the Articles Supplementary establishing the rights and preferences of the Series J Preferred Shares filed with the Maryland State Department of Assessments and Taxation on May 20, 2016, the Series J Preferred Shares rank senior to the Company’s common shares of beneficial interest, par value $0.01 per share (“common shares”), and on a parity with the Company’s 7.5% Series H Cumulative Redeemable Preferred Shares, par value $0.01 per share, the Company’s 6.375% Series I Cumulative Redeemable Preferred Shares, par value $0.01 per share, and any future equity securities that the Company may later authorize or issue and that by their terms are on a parity with the Series J Preferred Shares with respect to distribution rights and rights upon the Company’s liquidation, dissolution or winding up. Holders of the Series J Preferred Shares are entitled to receive, when and as authorized by the Company’s Board of Trustees, out of funds legally available for the payment of distributions, cumulative cash distributions at the rate of 6.3% per annum of the $25.00 per share liquidation preference, equivalent to $1.575 per annum per share. In addition to other preferential rights, in the event of the Company’s liquidation, dissolution or winding up, the holders of the Series J Preferred Shares are entitled to receive the liquidation preference, which is $25.00 per share, plus any accrued and unpaid distributions to, but not including, the date of the payment, before the Company distributes any assets to holders of the common shares or any other shares of beneficial interest that rank junior to the Series J Preferred Shares.
Generally, the Company may not redeem the Series J Preferred Shares until May 25, 2021. However, upon the occurrence of a “Change of Control” (as defined below), the Company may, at its option, redeem the Series J Preferred Shares, in whole or in part and within 120 days after the first date on which such Change of Control occurred, by paying $25.00 per share, plus any accrued and unpaid distributions to, but not including, the date of redemption. A “Change of Control” is when, after the original issuance of the Series J Preferred Shares, the following have occurred and are continuing:
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the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of the Company entitling that person to exercise more than 50% of the total voting power of all shares of the Company entitled to vote generally in elections of trustees (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and
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following the closing of any transaction referred to in the bullet above, neither the Company nor the acquiring or surviving entity has a class of common securities (or American Depositary Receipts representing such securities) listed on the New York Stock Exchange (the “NYSE”), the NYSE MKT or the NASDAQ Stock Market (“NASDAQ”), or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE MKT or NASDAQ.
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The Series J Preferred Shares are not convertible into or exchangeable for any other securities or property except as provided below. Upon the occurrence of a Change of Control, holders will have the right (unless, prior to the Change of Control Conversion Date (as defined below), the Company has provided or provides notice of its election to redeem their Series J Preferred Shares) to convert some or all of their Series J Preferred Shares (the “Change of Control Conversion Right”) into a number of the Company’s common shares equal to the lesser of:
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the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per Series J Preferred Share to be converted plus the amount of any accrued and unpaid distributions to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date for a Series J Preferred Share distribution payment and prior to the corresponding Series J Preferred Share distribution payment date, in which case no additional amount for such accrued and unpaid distribution will be included in this sum) by (ii) the Common Share Price (as defined below); and
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2.1404 (the “Share Cap”), subject to certain adjustments;
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in each case, subject to provisions for the receipt of alternative consideration, as described in the Articles Supplementary.
If the Company has provided or provides a redemption notice, whether pursuant to the Company’s special optional redemption right in connection with a Change of Control or the Company’s optional redemption right, holders will not have any right to convert their Series J Preferred Shares in connection with the Change of Control Conversion Right and any Series J Preferred Shares subsequently selected for redemption that have been tendered for conversion will be redeemed on the related date of redemption instead of converted on the Change of Control Conversion Date.
The “Change of Control Conversion Date” will be a business day that is no less than 20 days nor more than 35 days after the date on which the Company provides the required notice of the occurrence of a Change of Control to the holders of Series J Preferred Shares.
The “Common Share Price” will be (i) if the consideration to be received in the Change of Control by holders of the Company’s common shares is solely cash, the amount of cash consideration per common share, and (ii) if the consideration to be received in the Change of Control by holders of common shares is other than solely cash, the average of the closing price per common share on the 10 consecutive trading days immediately preceding, but not including, the effective date of the Change of Control.
The foregoing description of the Series J Preferred Shares is qualified in its entirety by reference to the Articles Supplementary, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On May 20, 2016, the Company filed Articles Supplementary
with the Maryland State Department of Assessments and Taxation establishing the rights and preferences of the Series J Preferred Shares. The Articles Supplementary were effective upon filing. The information about the Articles Supplementary under Item 3.03 of this Current Report on Form 8-K, including the summary description of the rights and preferences of the Series J Preferred Shares, is incorporated herein by reference. A copy of the Articles Supplementary is filed as Exhibit 3.1 to this Current Report on Form 8-K, and is incorporated herein by reference. A specimen certificate for the Series J Preferred Shares is filed as Exhibit 4.1 to this Current Report on Form 8-K, and is incorporated herein by reference.