Completes Two Asset Sales in July 2016,
Resulting in $245 Million Gross Proceeds
LaSalle Hotel Properties (NYSE: LHO) today announced results for
the quarter ended June 30, 2016. The Company’s results include the
following:
Second Quarter Year-to-Date
2016 2015 % Var. 2016
2015 % Var. ($'s in millions except per
share/unit data) Net income attributable to common
shareholders $ 55.2 $ 55.8 -1.1 % $ 61.2 $ 55.5 10.3 % Net income
attributable to common shareholders per diluted share $ 0.49 $ 0.49
0.0 % $ 0.54 $ 0.49 10.2 % RevPAR $ 223.13 $ 219.31 1.7 % $
195.56 $ 192.11 1.8 % Hotel EBITDA Margin(1) 38.6 % 38.3 % 33.4 %
33.0 % Hotel EBITDA Margin Growth(1) 31 bps 45 bps Total
Revenue $ 351.1 $ 341.4 2.8 % $ 611.2 $ 592.2 3.2 % EBITDA(1) $
127.6 $ 124.4 2.6 % $ 190.5 $ 178.8 6.5 % Adjusted EBITDA(1) $
130.5 $ 125.2 4.2 % $ 195.5 $ 182.4 7.2 % FFO(1) $ 104.1 $ 101.8
2.3 % $ 157.7 $ 144.4 9.2 % Adjusted FFO(1) $ 107.0 $ 102.6 4.3 % $
162.7 $ 147.9 10.0 % FFO per diluted share/unit(1) $ 0.92 $ 0.90
2.2 % $ 1.39 $ 1.27 9.4 % Adjusted FFO per diluted share/unit(1) $
0.95 $ 0.91 4.4 % $ 1.44 $ 1.31 9.9 % (1) See tables later
in press release, which list adjustments that reconcile net income
attributable to common shareholders to earnings before interest,
taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA,
funds from operations attributable to common shareholders and
unitholders (“FFO”), FFO per share/unit, adjusted FFO, adjusted FFO
per share/unit and pro forma 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
income later in this press release.
“During the second quarter, our team and operators continued to
execute at record levels, delivering hotel EBITDA growth and a
best-in-class 38.6 percent hotel EBITDA margin,” said Michael D.
Barnello, President and Chief Executive Officer of LaSalle Hotel
Properties. “Concurrently, we have been able to further strengthen
the Company through a preferred equity raise and by completing two
non-core asset dispositions.”
“The preferred equity offering boasts the lowest-ever coupon for
a lodging REIT. The sale of Indianapolis Marriott Downtown capped
off an excellent long-term investment for us. We owned the hotel
for 12 years and it generated a 13.7 percent unleveraged IRR. We
also sold our non-core junior mezzanine loan on Shutters on the
Beach and Casa Del Mar at par. Each of these transactions has
reduced our debt, and as a result our debt-to-EBITDA ratio, further
bolstering our already solid balance sheet,” added Mr.
Barnello.
Second Quarter Results
- Net Income: The Company’s net
income attributable to common shareholders was $55.2 million.
- RevPAR: Room revenue per
available room (“RevPAR”) increased 1.7 percent to $223.13,
primarily driven by a 2.0 percent growth in occupancy to 88.7
percent. Average daily rate (“ADR”) was just below the prior year
at $251.58.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin expanded by 31 basis points from the
comparable prior year period to 38.6 percent.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $130.5 million, an increase of 4.2 percent over
the second quarter of 2015.
- Adjusted FFO: The Company
generated adjusted FFO of $107.0 million, or $0.95 per diluted
share/unit, compared to $102.6 million, or $0.91 per diluted
share/unit, for the comparable prior year period, a per share/unit
increase of 4.4 percent.
Year-to-Date Results
- Net Income: The Company grew net
income attributable to common shareholders by 10.3 percent to $61.2
million.
- RevPAR: RevPAR increased 1.8
percent to $195.56, primarily driven by a 2.0 percent growth in
occupancy to 82.3 percent. ADR was just below the prior year at
$237.62.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin expanded by 45 basis points from the
comparable prior year period to 33.4 percent.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $195.5 million, an increase of 7.2 percent over
the first half of 2015.
- Adjusted FFO: The Company
generated adjusted FFO of $162.7 million, or $1.44 per diluted
share/unit, compared to $147.9 million, or $1.31 per diluted
share/unit, for the comparable prior year period, a per share/unit
increase of 9.9 percent.
Subsequent Events: Asset Sales
On July 8, 2016, the Company sold its junior mezzanine loan (the
“Mezzanine Loan”) secured by equity interests in two hotels:
Shutters on the Beach and Casa Del Mar, in Santa Monica,
California. The Mezzanine Loan sold for $80.0 million, which was
the principal amount. The Company originally provided the Mezzanine
Loan on July 20, 2015.
On July 14, 2016, the Company sold the Indianapolis Marriott
Downtown for $165.0 million, generating a 13.7 percent unleveraged
IRR. The Company acquired the hotel in February 2004 for $106.0
million. For RevPAR, hotel EBITDA, and hotel EBITDA margin detail
for this hotel for the trailing four quarters, please refer to the
supporting table at the end of this release.
Proceeds from both transactions were used to reduce borrowings
on the Company’s senior unsecured credit facility and for general
corporate purposes.
Capital Markets Activities
During the quarter, the Company issued 6,000,000 6.3 percent
Series J Cumulative Redeemable Preferred Shares for gross proceeds
of $150.0 million. The 6.3 percent coupon is the lowest-ever for a
lodging REIT.
Capital Investments
During the quarter, the Company invested $21.2 million of
capital in its hotels. As a result of fewer planned renovations at
the end of 2016 and the sale of Indianapolis Marriott Downtown, the
Company is lowering its 2016 anticipated capital expenditures to a
range of $110.0 million to $130.0 million. Previously, the Company
anticipated investing between $130.0 million and $170.0 million of
capital in its hotels during 2016.
Balance Sheet
As of June 30, 2016, the Company had total outstanding debt of
$1.3 billion, including $190.0 million outstanding on its senior
unsecured credit facility. Total net debt to trailing 12 month
Corporate EBITDA (as defined in the financial covenant section of
the Company’s senior unsecured credit facility) was 3.2 times as of
June 30, 2016 and its fixed charge coverage ratio was 5.6 times.
For the second quarter, the Company’s weighted average interest
rate was 2.5 percent, compared to 3.3 percent during the same prior
year period. As of June 30, 2016, the Company had $43.1 million of
cash and cash equivalents on its balance sheet and capacity of
$582.4 million available on its credit facilities.
Pro forma for the sale of Indianapolis Marriott Downtown and the
Mezzanine Loan, the Company’s total net debt to trailing 12 month
Corporate EBITDA is 2.9 times, with $98.1 million of cash and cash
equivalents on its balance sheet and capacity of $772.4 million
available on its credit facilities.
The Company did not acquire any common shares during the second
quarter of 2016 or to date during the third quarter of 2016. The
Company has $69.8 million of capacity remaining in its share
repurchase program.
Dividend
On June 15, 2016, the Company declared a second quarter 2016
dividend of $0.45 per common share of beneficial interest. The
dividend represents an annual run rate of $1.80 per share and a 7.0
percent yield based on the closing share price on July 19,
2016.
Appointment of Kenneth G. Fuller as Chief Financial
Officer
On April 25, 2016, Kenneth G. Fuller was appointed as the
Company’s Executive Vice President, Chief Financial Officer,
Secretary, and Treasurer. Mr. Fuller returned to the Company after
founding Vine Investment Partners (“Vine”) – a real estate company
focused on acquiring and developing multi-family residential
properties and hotels. Prior to founding Vine, Mr. Fuller served
the Company in various positions dating back to 2000, including
most recently as Treasurer from 2011 to 2015.
Earnings Call
The Company will conduct its quarterly conference call on
Thursday, July 21, 2016 at 11:00 AM eastern time. To participate in
the conference call, please dial (888) 504-7953.
Additionally, a live webcast of the conference call will be
available through the Company’s website. A replay of the conference
call webcast will also be archived and available online through the
Investor Relations section of the Company’s website.
About LaSalle Hotel Properties
LaSalle Hotel Properties is a leading multi-operator real estate
investment trust. The Company owns 46 properties, which are
upscale, full-service hotels, totaling approximately 11,450 guest
rooms in 13 markets in nine 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 groups, including
Hilton Hotels Corporation, Marriott International, Starwood Hotels
& Resorts Worldwide, Outrigger Lodging Services, Noble House
Hotels & Resorts, Hyatt Hotels Corporation, Benchmark
Hospitality, Commune Hotels and Resorts, Destination Hotels,
Davidson Hotel Company, Kimpton Hotel & Restaurant Group, LLC,
Accor, 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," “may,” “plan,” “seek,” “should,” or similar expressions.
Forward-looking statements in this press release include, among
others, statements about the Company’s asset management strategies,
use of sale proceeds and capital expenditure program. 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) risks associated
with the hotel industry, including competition for guests and
meetings from other hotels and alternative lodging companies,
increases in wages, energy costs and other operating costs,
potential unionization or union disruption, actual or threatened
terrorist attacks, any type of flu or disease-related pandemic and
downturns in general and local economic conditions, (ii) the
availability and terms of financing and capital and the general
volatility of securities markets, (iii) the Company’s dependence on
third-party managers of its hotels, including its inability to
implement strategic business decisions directly, (iv) risks
associated with the real estate industry, including environmental
contamination and costs of complying with the Americans with
Disabilities Act of 1990, as amended, and similar laws, (v)
interest rate increases, (vi) the possible failure of the Company
to maintain its qualification 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, (ix) the risk of a
material failure, inadequacy, interruption or security failure of
the Company’s or the hotel managers’ information technology
networks and systems, and (x) 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.
LASALLE HOTEL PROPERTIES Consolidated Statements
of Operations and Comprehensive Income
(in thousands, except share data)
(unaudited)
For the three months ended For the
six months ended June 30, June 30, 2016
2015 2016 2015 Revenues:
Hotel operating revenues: Room $ 245,286 $ 242,447 $ 426,706 $
413,038 Food and beverage 79,025 75,480 135,372 136,395 Other
operating department 24,457 21,560
45,100 39,577 Total hotel operating
revenues 348,768 339,487 607,178 589,010 Other income 2,319
1,899 4,013 3,179
Total revenues 351,087 341,386
611,191 592,189
Expenses: Hotel
operating expenses: Room 58,963 55,998 111,254 104,719 Food and
beverage 49,994 49,069 92,902 94,187 Other direct 4,973 4,927 8,656
8,847 Other indirect 80,283 78,877
152,198 148,879 Total hotel operating
expenses 194,213 188,871 365,010 356,632 Depreciation and
amortization 48,841 45,916 96,469 88,794 Real estate taxes,
personal property taxes and insurance 16,919 16,352 33,110 32,286
Ground rent 4,108 4,011 7,921 7,673 General and administrative
7,643 6,501 13,473 12,768 Acquisition transaction costs 0 (3 ) 0
444 Other expenses 2,327 1,259
4,505 3,604 Total operating expenses
274,051 262,907 520,488
502,201 Operating income 77,036 78,479 90,703 89,988
Interest income 1,676 1 3,330 7 Interest expense (11,482 )
(13,895 ) (23,349 ) (27,540 ) Income before
income tax expense 67,230 64,585 70,684 62,455 Income tax expense
(7,610 ) (5,574 ) (1,990 ) (706 ) Net
income 59,620 59,011 68,694
61,749 Net income attributable to
noncontrolling interests: Noncontrolling interests in consolidated
entities (8 ) (8 ) (8 ) (8 ) Noncontrolling interests of common
units in Operating Partnership (81 ) (139 )
(96 ) (154 ) Net income attributable to noncontrolling
interests (89 ) (147 ) (104 ) (162 )
Net income attributable to the Company 59,531 58,864 68,590 61,587
Distributions to preferred shareholders (4,355 )
(3,042 ) (7,397 ) (6,084 ) Net income attributable to
common shareholders $ 55,176 $ 55,822 $ 61,193
$ 55,503
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations and Comprehensive Income -
Continued
(in thousands, except share data)
(unaudited)
For the three months ended For the six
months ended June 30, June 30, 2016
2015 2016 2015 Earnings per Common
Share - Basic:
Net income attributable to common
shareholders excluding amounts attributable to unvested restricted
shares
$ 0.49 $ 0.49 $ 0.54 $ 0.49
Earnings
per Common Share - Diluted: Net income attributable to common
shareholders excluding amounts attributable to unvested restricted
shares $ 0.49 $ 0.49 $ 0.54 $ 0.49
Weighted average number of common shares outstanding: Basic
112,784,976 112,728,085 112,766,734 112,688,122 Diluted 113,113,253
113,141,908 113,119,556 113,094,640
Comprehensive
Income: Net income $ 59,620 $ 59,011 $ 68,694 $ 61,749 Other
comprehensive income: Unrealized (loss) gain on interest rate
derivative instruments (5,971 ) 26 (20,223 ) (4,372 )
Reclassification adjustment for amounts recognized in net income
1,730 1,069 3,510
2,139 55,379 60,106 51,981 59,516 Comprehensive income
attributable to noncontrolling interests: Noncontrolling interests
in consolidated entities (8 ) (8 ) (8 ) (8 ) Noncontrolling
interests of common units in Operating Partnership (76 )
(144 ) (75 ) (150 ) Comprehensive income
attributable to noncontrolling interests (84 ) (152 )
(83 ) (158 ) Comprehensive income attributable to the
Company $ 55,295 $ 59,954 $ 51,898 $ 59,358
LASALLE HOTEL PROPERTIES FFO and
EBITDA
(in thousands, except share/unit data)
(unaudited)
For the three months ended For the six
months ended June 30, June 30, 2016
2015 2016 2015 Net income attributable
to common shareholders $ 55,176 $ 55,822 $ 61,193 $ 55,503
Depreciation 48,706 45,790 96,200 88,542 Amortization of deferred
lease costs 82 72 162 147 Noncontrolling interests: Noncontrolling
interests in consolidated entities 8 8 8 8 Noncontrolling interests
of common units in Operating Partnership 81
139 96 154
FFO attributable
to common shareholders and unitholders $ 104,053
$ 101,831 $ 157,659 $
144,354 Pre-opening, management transition and severance
expenses 2,518 303 4,064 2,150 Acquisition transaction costs 0 (3 )
0 444 Non-cash ground rent 471 487
948 980
Adjusted FFO attributable to
common shareholders and unitholders $ 107,042
$ 102,618 $ 162,671
$ 147,928 Weighted average number of
common shares and units outstanding: Basic 112,930,199
112,943,036 112,911,957 112,943,523 Diluted 113,258,476 113,356,859
113,264,779 113,350,041
FFO attributable to common shareholders
and unitholders per diluted share/unit $ 0.92 $ 0.90 $ 1.39 $
1.27
Adjusted FFO attributable to common shareholders and
unitholders per diluted share/unit $ 0.95 $ 0.91 $ 1.44 $ 1.31
For the three months ended For the six
months ended June 30, June 30, 2016
2015 2016 2015 Net income attributable to
common shareholders $ 55,176 $ 55,822 $ 61,193 $ 55,503 Interest
expense 11,482 13,895 23,349 27,540 Income tax expense 7,610 5,574
1,990 706 Depreciation and amortization 48,841 45,916 96,469 88,794
Noncontrolling interests: Noncontrolling interests in consolidated
entities 8 8 8 8 Noncontrolling interests of common units in
Operating Partnership 81 139 96 154 Distributions to preferred
shareholders 4,355 3,042 7,397
6,084
EBITDA $ 127,553
$ 124,396 $ 190,502 $
178,789 Pre-opening, management transition and severance
expenses 2,518 303 4,064 2,150 Acquisition transaction costs 0 (3 )
0 444 Non-cash ground rent 471 487
948 980
Adjusted EBITDA $
130,542 $ 125,183 $ 195,514
$ 182,363 Corporate expense 7,685 7,656 14,409 14,642
Interest and other income (3,777 ) (1,900 ) (7,126 ) (3,186 ) Pro
forma hotel level adjustments, net(1) 15
(1,625 ) (33 ) 2,132
Hotel EBITDA
$ 134,465 $ 129,314
$ 202,764 $ 195,951
(1) Pro forma to include the results of operations of the
Park Central San Francisco and The Marker Waterfront Resort under
previous ownership for the comparable period in 2015, and exclude
the Mason & Rook Hotel for the period the hotel was closed for
renovation in 2016 and the comparable period in 2015.
LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results -
Pro Forma(1)
(in thousands)
(unaudited)
For the three months ended
For the six months ended June 30,
June 30, 2016 2015 2016
2015 Revenues: Room $ 245,286 $ 240,959
$ 426,708 $ 416,563 Food and beverage 79,025 74,970 135,372 137,660
Other 24,336 22,121 44,602
40,134 Total hotel revenues 348,647
338,050 606,682 594,357
Expenses: Room 58,963 56,175 111,253 105,640
Food and beverage 49,992 49,492 92,901 95,497 Other direct 4,854
4,860 8,515 8,666 General and administrative 22,426 21,768 42,608
41,737 Information and telecommunications systems 4,581 4,250 8,963
8,528 Sales and marketing 23,153 22,157 44,012 42,594 Management
fees 10,926 11,541 18,557 19,220 Property operations and
maintenance 9,907 9,817 19,736 19,643 Energy and utilities 7,180
7,300 14,451 15,048 Property taxes 15,275 14,579 29,654 28,709
Other fixed expenses 6,925 6,797
13,268 13,124 Total hotel expenses
214,182 208,736 403,918
398,406
Hotel EBITDA $ 134,465
$ 129,314 $ 202,764
$ 195,951 Hotel EBITDA
Margin 38.6 % 38.3 % 33.4
% 33.0 %
(1) This schedule includes the operating
data for the three and six months ended June 30, 2016 for all
properties owned by the Company as of June 30, 2016. Park Central
San Francisco and The Marker Waterfront Resort are included for the
full first quarter in both 2015 and 2016. Mason & Rook Hotel is
excluded from the first quarter in both 2015 and 2016 because the
hotel was closed for renovation during the entire first quarter of
2016.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels - Pro
Forma(1)
(unaudited)
For the three months ended
For the six months ended June 30,
June 30, 2016 2015 2016
2015 Total Portfolio Occupancy 88.7 % 87.0 %
82.3 % 80.7 % Increase 2.0 % 2.0 % ADR $ 251.58 $ 252.14 $ 237.62 $
238.05 Decrease (0.2 )% (0.2 )%
RevPAR $
223.13 $ 219.31 $ 195.56
$ 192.11 Increase 1.7 %
1.8 %
For the three months
ended June 30, 2016
For the six months
ended June 30, 2016
Market Detail RevPAR Variance % Boston 3.2% -1.8%
Chicago 2.4% -0.4% Key West 7.8% 3.7% Los Angeles 17.0% 18.1% New
York -6.5% -2.8% Other(2) 9.3% 3.1% Philadelphia -1.3% 0.2% San
Diego -2.6% -4.4% San Francisco -0.5% 5.1% Seattle 1.2% -0.7%
Washington, DC(3) 1.3% 1.6% Washington, DC excluding Mason &
Rook Hotel 2.8% 2.5%
(1) Pro forma to include the results of
operations of the Park Central San Francisco and The Marker
Waterfront Resort under previous ownership for the comparable
period in 2015, and exclude the Mason & Rook Hotel for the
period the hotel was closed for renovation in 2016 and the
comparable period in 2015.
(2) Other includes Indianapolis, IN,
Portland, OR, Santa Cruz, CA and Lansdowne, VA.
(3) For the three months ended June 30,
2016 and 2015, Washington, DC RevPAR includes the Mason & Rook
Hotel. However, for the six months ended June 30, 2016 and 2015,
the Mason & Rook Hotel is excluded from the three months ended
March 31, 2016 and 2015, due to the hotel closure and renovation in
2016.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels - Pro
Forma(1) - Continued
(in millions)
(unaudited)
Prior Year Operating Data (Excluding
Indianapolis Marriott Downtown) - 2016 Comparable
First Quarter Second Quarter Third
Quarter Fourth Quarter Full Year 2015
2015 2015 2015 2015 Occupancy 74.7 %
87.9 % 86.2 % 77.8 % 81.7 % ADR $ 223.82 $ 255.01 $ 250.34 $ 242.07
$ 243.70 RevPAR $ 167.22 $ 224.26 $ 215.77 $ 188.34 $ 199.18
Total hotel revenues $ 245.5 $ 325.2 $ 314.3 $ 279.0 $ 1,164.0
Less: Total hotel expenses 182.4 200.8
199.6 190.7 773.5 Hotel
EBITDA $ 63.1 $ 124.4 $ 114.7 $ 88.3 $
390.5 Hotel EBITDA Margin 25.7 % 38.3 % 36.5 % 31.6 %
33.5 %
(1) Pro forma to include the results of
operations of the Park Central San Francisco under previous
ownership and The Marker Waterfront Resort for the full year. Pro
forma to exclude the Mason & Rook Hotel during the first
quarter and fourth quarter, for comparable purposes, due to the
hotel being closed for renovation during the fourth quarter of 2015
and the first quarter of 2016. Pro forma to exclude results of
operations of the Indianapolis Marriott Downtown due to sale in
July 2016.
Indianapolis Marriott Downtown: Actual
Trailing 4 Quarters Selected Statistics
Q3 2015 Q4 2015
Q1 2016 Q2 2016
Trailing 4Q RevPAR $ 110.29 $ 121.14 $ 117.37 $
150.64 $ 124.76 Total hotel revenues $ 11.3 $ 13.1 $ 11.7 $
15.6 $ 51.7 Less: Total hotel expenses 10.3
11.2 8.8 10.3 40.6
Net income 1.0 1.9 2.9 5.3 11.1 Interest expense 1.5 1.5 0.0 0.0
3.0 Depreciation 1.0 1.0 1.0
1.0 4.0 Hotel EBITDA $ 3.5
$ 4.4 $ 3.9 $ 6.3 $ 18.1
Hotel EBITDA Margin 31.0 % 33.6 % 33.3 % 40.4 % 35.0 %
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 and items classified by GAAP as extraordinary, plus real
estate-related depreciation and amortization and impairment
writedowns, 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 impairments, 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. The
Company believes property-level results provide investors with
supplemental information on the ongoing operational performance of
its hotels and effectiveness of the third-party management
companies operating its 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20160720006405/en/
LaSalle Hotel PropertiesKenneth G. Fuller or Max D. Leinweber,
301-941-1500
LaSalle (NYSE:LHO)
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