LaSalle Hotel Properties (NYSE: LHO) today announced results for
the quarter ended December 31, 2016. The Company’s results include
the following:
Fourth Quarter
Year-to-Date 2016 2015 % Var.
2016 2015 % Var. ($'s in millions except per
share/unit data) Net income attributable to common
shareholders $ 21.3 $ 23.5 -9.4% $ 234.6 $ 123.4 90.1% Net income
attributable to common shareholders per diluted share $ 0.19 $ 0.21
-9.5% $ 2.07 $ 1.09 89.9% RevPAR(1) $ 193.10 $ 188.34
2.5% $ 204.08 $ 199.18 2.5% Hotel EBITDA Margin(1) 32.1% 31.6%
33.9% 33.5% Hotel EBITDA Margin Growth(1) 42 bps 37 bps
Total Revenues $ 289.5 $ 294.7 -1.8% $ 1,227.6 $ 1,216.6
0.9% EBITDA(1) $ 85.4 $ 85.3 0.1% $ 495.0 $ 370.6 33.6% Adjusted
EBITDA(1) $ 86.0 $ 89.5 -3.9% $ 396.8 $ 386.5 2.7% FFO(1) $ 69.2 $
69.3 -0.1% $ 322.6 $ 304.3 6.0% Adjusted FFO(1) $ 69.8 $ 74.4 -6.2%
$ 328.9 $ 321.1 2.4% FFO per diluted share/unit(1) $ 0.61 $ 0.61
0.0% $ 2.85 $ 2.69 5.9% Adjusted FFO per diluted share/unit(1) $
0.62 $ 0.66 -6.1% $ 2.90 $ 2.83 2.5%
(1) See tables later in this 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. Room revenue per available room (“RevPAR”) is presented on
a pro forma basis to reflect hotels in the Company's current
portfolio. See “Statistical Data for the Hotels - Pro Forma” later
in this press release.
“Throughout 2016, our portfolio performed well in a slow growth
operating environment, with softening industry demand and
increasing hotel supply. We are proud that our teams continue to
operate with excellent efficiency across the portfolio, as
evidenced by limited annual expense growth and our highest-ever
reported annual EBITDA margin,” said Michael D. Barnello, President
and Chief Executive Officer of LaSalle Hotel Properties.
“Following our opportunistic preferred share issuance with a
record low coupon, the disposition of three assets since July, and
our newly refinanced credit facility, the Company now has an even
stronger balance sheet, with a low debt-to-EBITDA ratio, an
excellent quality portfolio primarily in core locations, and a
well-covered dividend providing a high yield,” added Mr.
Barnello.
Fourth Quarter Results
- Net Income: The Company’s net
income attributable to common shareholders was $21.3 million – a
decrease of 9.4 percent from the fourth quarter of 2015.
- RevPAR: The Company’s RevPAR
increased 2.5 percent to $193.10, driven by a 3.7 percent growth in
occupancy to 80.7 percent. Average daily rate (“ADR”) decreased by
1.1 percent to $239.34.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin expanded by 42 basis points from the
comparable prior year period to 32.1 percent.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $86.0 million, a decrease of $3.5 million from
the fourth quarter of 2015, which included $6.1 million of adjusted
EBITDA from two assets the Company sold in July 2016: Indianapolis
Marriott Downtown and the mezzanine loan on Shutters on the Beach
and Casa Del Mar (collectively, the “2016 Asset Sales”).
- Adjusted FFO: The Company
generated adjusted FFO of $69.8 million, or $0.62 per diluted
share/unit, compared to $74.4 million, or $0.66 per diluted
share/unit, for the comparable prior year period, a per share/unit
decrease of 6.1 percent. The Company’s income taxes increased by
$2.2 million, or $0.02 per diluted share/unit, from the comparable
prior year period.
Year-to-Date Results
- Net Income: The Company grew net
income attributable to common shareholders by 90.1 percent to
$234.6 million, due in part to a $104.8 million gain relating to
the sale of the Indianapolis Marriott Downtown.
- RevPAR: RevPAR increased 2.5
percent to $204.08, driven by a 2.7 percent growth in occupancy to
83.9 percent. ADR was just below the prior year at $243.12.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin expanded by 37 basis points from the
comparable prior year period to 33.9 percent – a new full year
record for the Company.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $396.8 million, an increase of 2.7 percent over
2015. Excluding adjusted EBITDA associated with the 2016 Asset
Sales from both years, the Company’s adjusted EBITDA was $381.6
million, an increase of 3.9 percent over 2015.
- Adjusted FFO: The Company
generated adjusted FFO of $328.9 million, or $2.90 per diluted
share/unit, compared to $321.1 million, or $2.83 per diluted
share/unit, for the comparable prior year period, a per share/unit
increase of 2.5 percent.
Park Central Hotel New York and WestHouse Hotel New York
Recovery
Excluding Park Central Hotel New York and WestHouse Hotel New
York from the fourth quarter 2016 and the comparable period in
2015, the Company’s fourth quarter RevPAR grew by 1.9 percent and
its hotel EBITDA margin increased by 18 basis points to 31.7
percent. During the fourth quarter, the Company regained $1.3
million of the $2.0 million of lost hotel EBITDA from the
comparable prior year period. For the third quarter and fourth
quarter combined, the Company regained $6.9 million of the $9.2
million of lost hotel EBITDA from the comparable prior year
period.
Disposition and Investment Activity
- Asset Sales: In July, the
Company completed two non-core asset sales for $245.0 million.
Proceeds from both transactions were used to reduce borrowings on
the Company’s senior unsecured credit facility and for general
corporate purposes.
- 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.
- On July 14, 2016, the Company sold the
Indianapolis Marriott Downtown for $165.0 million, generating a
13.7 percent unleveraged Internal Rate of Return (“IRR”). The
Company acquired the hotel in February 2004 for $106.0
million.
- Capital Investments: The Company
invested $102.1 million of capital in its hotels throughout the
year, completing renovations at the Chaminade Resort and Conference
Center in Santa Cruz, Gild Hall in New York City, Hotel Solamar in
San Diego, Hotel Amarano Burbank, The Liberty Hotel in Boston,
Lansdowne Resort in Lansdowne, VA, Hotel Palomar, Washington, DC,
the Mason & Rook Hotel in Washington, DC, and the second phase
of the rooms renovation at Westin Michigan Avenue in Chicago.During
the quarter, the Company invested $27.2 million of capital in its
hotels. The Company commenced room renovations at L’Auberge Del Mar
and Embassy Suites Philadelphia – Center City. Both renovations are
now complete.During 2017, the Company anticipates investing between
$130.0 million and $170.0 million of capital in its hotels.
Balance Sheet and Capital Markets Activities
- Current Balance Sheet Summary:
As of December 31, 2016, the Company had total outstanding debt of
$1.1 billion. 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 2.8 times, as of December 31,
2016 and its fixed charge coverage ratio was 6.0 times. For the
fourth quarter, the Company’s weighted average interest rate was
2.7 percent, compared to 3.1 percent during the same prior year
period. As of December 31, 2016, the Company had $134.7 million of
cash and cash equivalents on its balance sheet and capacity of
$772.5 million available on its credit facilities.
- Mortgage Repayment: During the
first quarter of 2016, the Company repaid $286.2 million of
mortgage debt on three of its hotels. On January 4, 2016, the
Company prepaid the mortgages on Westin Michigan Avenue in Chicago
and Indianapolis Marriott Downtown, which had remaining balances of
$131.3 million and $96.1 million, respectively. On February 11,
2016, the Company prepaid the mortgage on The Roger in New York
City, which had a remaining balance of $58.8 million.
- Preferred Share Issuance: On May
25, 2016, 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.
Dividend
On December 15, 2016, the Company declared a fourth 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 6.0
percent yield based on the closing share price on February 21,
2017.
Subsequent Events
- Credit Facility Refinancing: On
January 10, 2017, 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 and extending their maturities
to January 2022 (including the exercise of extension options
pursuant 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 of up to $1.25 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 150 to 225
basis points over LIBOR, based on the Company’s leverage ratio and
is currently LIBOR plus 150 basis points, or 2.28 percent. Pricing
for the term loan is LIBOR plus 145 to 220 basis points, based on
the Company’s leverage ratio. The term loan remains swapped, fixing
LIBOR until August 2017, resulting in a current interest rate of
2.23 percent.
- Hotel Deca Sale: Also in January
2017, the Company sold Hotel Deca in Seattle, Washington for $55.0
million. The Company acquired the hotel in December 2005 for $26.4
million. This investment generated an unleveraged IRR of 12.3
percent and an average cash-on-cash yield of 8.8 percent over 11
years. Proceeds from the asset sale were used for general corporate
purposes.
- Share Repurchase Authorization:
The Company’s Board of Trustees has authorized an expanded share
repurchase program to acquire up to $500.0 million of the Company’s
common shares. Including the previous authorization, the Company
now has $569.8 million of capacity remaining in its share
repurchase program. The Board of Trustees authorized the expanded
program to increase the Company’s flexibility to execute
opportunistic repurchases when it believes share buybacks are an
accretive use of funds that will enhance shareholder value. The
program does not obligate the Company to acquire any specific
number of shares and, as a result, there is no guarantee as to the
number of shares that will be repurchased (if any) or the timing of
such repurchases. The Company did not acquire any common shares
during the fourth quarter of 2016 or to date during the first
quarter of 2017.
Earnings Call
The Company will conduct its quarterly conference call on
Thursday, February 23, 2017 at 2:00 PM eastern time. To participate
in the conference call, please dial (877) 545-1407.
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 45 properties, which are
upscale, full-service hotels, totaling approximately 11,300 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, Outrigger
Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels
Corporation, Benchmark Hospitality, Two Roads Hospitality, Davidson
Hotel Company, Kimpton Hotel & Restaurant Group, LLC, Accor,
HEI Hotels & Resorts, JRK Hotel Group, Inc., Viceroy Hotel
Group, Highgate Hotels, Access Hotels & Resorts, and Provenance
Hotels.
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 year
ended December 31, December 31, 2016
2015 2016 2015 Revenues:
Hotel operating revenues: Room $ 203,419 $ 202,492 $ 867,882 $
849,523 Food and beverage 62,568 69,203 259,658 274,286 Other
operating department 22,080 20,733 93,072
84,782 Total hotel operating revenues 288,067 292,428
1,220,612 1,208,591 Other income 1,425 2,257 7,007
7,993 Total revenues 289,492 294,685
1,227,619 1,216,584
Expenses: Hotel operating
expenses: Room 55,753 54,942 226,349 215,944 Food and beverage
42,428 47,614 179,637 190,069 Other direct 3,760 3,707 16,978
17,514 Other indirect 74,333 74,055 305,265
301,004 Total hotel operating expenses 176,274 180,318
728,229 724,531 Depreciation and amortization 47,831 45,853 192,322
180,855 Real estate taxes, personal property taxes and insurance
16,383 16,107 63,406 65,438 Ground rent 3,696 3,912 16,187 16,076
General and administrative 6,980 6,256 26,529 25,197 Acquisition
transaction costs 0 0 0 499 Other expenses 771 4,472
6,283 17,225 Total operating expenses 251,935
256,918 1,032,956 1,029,821 Operating income
37,557 37,767 194,663 186,763 Interest income 56 1,637 3,553 2,938
Interest expense (10,094 ) (13,543 ) (43,775 ) (54,333 ) Loss from
extinguishment of debt 0 (831 ) 0 (831 ) Income
before income tax (expense) benefit 27,519 25,030 154,441 134,537
Income tax (expense) benefit (685 ) 1,508 (5,784 ) 1,292
Income before net gain on sale of property and sale of note
receivable 26,834 26,538 148,657 135,829 Net gain on sale of
property and sale of note receivable (71 ) 0 104,478
0 Net income 26,763 26,538 253,135
135,829 Net income attributable to noncontrolling interests:
Noncontrolling interests in consolidated entities (9 ) (8 ) (17 )
(16 ) Noncontrolling interests of common units in Operating
Partnership (38 ) (32 ) (337 ) (261 ) Net income attributable to
noncontrolling interests (47 ) (40 ) (354 ) (277 ) Net income
attributable to the Company 26,716 26,498 252,781 135,552
Distributions to preferred shareholders (5,404 ) (3,042 ) (18,206 )
(12,169 ) Net income attributable to common shareholders $ 21,312
$ 23,456 $ 234,575 $ 123,383
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
and Comprehensive Income - Continued
(in thousands, except share data)
(unaudited)
For the three months ended For the year
ended December 31, December 31, 2016
2015 2016 2015 Earnings per
Common Share - Basic: Net income attributable to common
shareholders excluding amounts attributable to unvested restricted
shares $ 0.19 $ 0.21 $ 2.07 $ 1.09
Earnings per Common Share - Diluted: Net income attributable
to common shareholders excluding amounts attributable to unvested
restricted shares $ 0.19 $ 0.21 $ 2.07 $ 1.09
Weighted average number of common shares outstanding:
Basic 112,821,939 112,633,429 112,791,839 112,685,235 Diluted
113,185,883 113,028,661 113,164,599 113,096,420
Comprehensive Income: Net income $ 26,763 $ 26,538 $ 253,135
$ 135,829 Other comprehensive income: Unrealized gain (loss) on
interest rate derivative instruments 12,891 2,935 (4,160 ) (5,682 )
Reclassification adjustment for amounts recognized in net income
1,478 1,625 6,625 4,835 41,132 31,098
255,600 134,982 Comprehensive income attributable to noncontrolling
interests: Noncontrolling interests in consolidated entities (9 )
(8 ) (17 ) (16 ) Noncontrolling interests of common units in
Operating Partnership (56 ) (38 ) (340 ) (259 ) Comprehensive
income attributable to noncontrolling interests (65 ) (46 ) (357 )
(275 ) Comprehensive income attributable to the Company $ 41,067
$ 31,052 $ 255,243 $ 134,707
LASALLE HOTEL PROPERTIES
FFO and EBITDA
(in thousands, except share/unit data)
(unaudited)
For the three months ended For the year
ended December 31, December 31, 2016
2015 2016 2015 Net income
attributable to common shareholders $ 21,312 $ 23,456 $ 234,575 $
123,383 Depreciation 47,703 45,724 191,791 180,346 Amortization of
deferred lease costs 76 75 320 294 Noncontrolling interests:
Noncontrolling interests in consolidated entities 9 8 17 16
Noncontrolling interests of common units in Operating Partnership
38 32 337 261 Less: Gain on sale of property less costs associated
with sale of note receivable 71 0
(104,478 ) 0
FFO attributable to common
shareholders and unitholders $ 69,209 $
69,295 $ 322,562 $ 304,300
Pre-opening, management transition and severance expenses 123 3,796
4,418 13,508 Acquisition transaction costs 0 0 0 499 Loss from
extinguishment of debt 0 831 0 831 Non-cash ground rent 470
480 1,890 1,943
Adjusted FFO attributable to common shareholders and
unitholders $ 69,802 $
74,402 $ 328,870 $
321,081 Weighted average number of common shares
and units outstanding: Basic 112,967,162 112,778,652
112,937,062 112,885,094 Diluted 113,331,106 113,173,884 113,309,822
113,296,279
FFO attributable to common shareholders and
unitholders per diluted share/unit $ 0.61 $ 0.61 $ 2.85 $ 2.69
Adjusted FFO attributable to common shareholders and unitholders
per diluted share/unit $ 0.62 $ 0.66 $ 2.90 $ 2.83
For the three months ended For the year ended
December 31, December 31, 2016 2015
2016 2015 Net income attributable to common
shareholders $ 21,312 $ 23,456 $ 234,575 $ 123,383 Interest expense
10,094 13,543 43,775 54,333 Loss from extinguishment of debt 0 831
0 831 Income tax expense (benefit) 685 (1,508 ) 5,784 (1,292 )
Depreciation and amortization 47,831 45,853 192,322 180,855
Noncontrolling interests: Noncontrolling interests in consolidated
entities 9 8 17 16 Noncontrolling interests of common units in
Operating Partnership 38 32 337 261 Distributions to preferred
shareholders 5,404 3,042 18,206
12,169
EBITDA $ 85,373
$ 85,257 $ 495,016 $
370,556 Pre-opening, management transition and severance
expenses 123 3,796 4,418 13,508 Acquisition transaction costs 0 0 0
499 Gain on sale of property less costs associated with sale of
note receivable 71 0 (104,478 ) 0 Non-cash ground rent 470
480 1,890 1,943
Adjusted EBITDA(1) $ 86,037 $
89,533 $ 396,846 $ 386,506
Corporate expense 7,866 7,238 29,224 29,855 Interest and other
income (1,480 ) (3,895 ) (10,342 ) (10,930 ) Pro forma hotel level
adjustments, net(2) (1,481 ) (4,596 ) (13,231
) (14,971 )
Hotel EBITDA(3) $
90,942 $ 88,280 $
402,497 $ 390,460 (1)
For 2016, adjusted EBITDA associated with
Indianapolis Marriott Downtown and the mezzanine loan on Shutters
on the Beach and Casa Del Mar was $11.8 million and $3.4 million,
respectively. For the three months ended December 31, 2015,
adjusted EBITDA associated with Indianapolis Marriott Downtown
and the mezzanine loan on Shutters on the
Beach and Casa Del Mar was $4.5 million and $1.6 million,
respectively.
(2) 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 during the fourth quarter of 2015 through the first
quarter of 2016 and the comparable periods in 2015 and 2016. Pro
forma excludes Indianapolis Marriott Downtown due to its sale in
July 2016. Results for the hotels for periods prior to the
Company’s ownership, which would include January 1, 2015 through
January 22, 2015 for Park Central San Francisco and January 1, 2015
through March 15, 2015 for The Marker Waterfront Resort, were
provided by prior owners and have not been adjusted by the Company
or audited by its auditors. (3) Park Central Hotel New York and
WestHouse Hotel New York had hotel EBITDA for 2016 as follows: $0.5
million for the three months ended March 31, $7.4 million for the
three months ended June 30, $6.6 million for the three months ended
September 30, and $9.5 million for the three months ended December
31. Park Central Hotel New York and WestHouse Hotel New York had
hotel EBITDA for 2015 as follows: $(0.3) million for the three
months ended March 31, $9.2 million for the three months ended June
30, $1.0 million for the three months ended September 30, and $8.2
million for the three months ended December 31. For the three
months ended December 31, 2016 and December 31, 2015, Park Central
Hotel New York and WestHouse Hotel New York had total revenues of
$26.6 million and $24.6 million, respectively.
LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results -
Pro Forma(1)
(in thousands)
(unaudited)
For the three months ended For the year
ended December 31, December 31, 2016
2015 2016 2015 Revenues:
Room $ 200,410 $ 195,387 $ 849,131 $ 825,975 Food and beverage
61,721 64,001 247,983 257,241 Other 21,543 19,590
89,756 80,756 Total hotel revenues(2) 283,674
278,978 1,186,870 1,163,972
Expenses: Room 55,062 52,962 222,506 211,556 Food and
beverage 41,916 44,685 173,475 181,026 Other direct 3,642 3,496
16,096 16,107 General and administrative 21,150 20,717 84,769
81,881 Information and telecommunications systems 4,353 4,066
17,145 16,429 Sales and marketing 20,072 18,941 81,900 78,401
Management fees 10,013 9,671 38,906 38,346 Property operations and
maintenance 9,522 9,651 38,448 38,431 Energy and utilities 6,518
6,530 27,715 28,411 Property taxes 14,554 13,851 57,025 56,797
Other fixed expenses 5,930 6,128 26,388 26,127
Total hotel expenses 192,732 190,698 784,373
773,512
Hotel EBITDA(2) $
90,942 $ 88,280 $
402,497 $ 390,460
Hotel EBITDA Margin(2) 32.1 %
31.6 % 33.9 % 33.5 %
(1) This schedule includes the operating data for the
three months and year ended December 31, 2016 for all properties
owned by the Company as of December 31, 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 and fourth quarter in both 2015 and 2016
because the hotel was closed for renovation during the entire
fourth quarter of 2015 through the entire first quarter of 2016.
Pro forma to exclude results of operations of the Indianapolis
Marriott Downtown due to its sale in July 2016. (2) Park Central
Hotel New York and WestHouse Hotel New York had hotel EBITDA for
2016 as follows: $0.5 million for the three months ended March 31,
$7.4 million for the three months ended June 30, $6.6 million for
the three months ended September 30, and $9.5 million for the three
months ended December 31. Park Central Hotel New York and WestHouse
Hotel New York had hotel EBITDA for 2015 as follows: $(0.3) million
for the three months ended March 31, $9.2 million for the three
months ended June 30, $1.0 million for the three months ended
September 30, and $8.2 million for the three months ended December
31. For the three months ended December 31, 2016 and December 31,
2015, Park Central Hotel New York and WestHouse Hotel New York had
total revenues of $26.6 million and $24.6 million, respectively.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels - Pro
Forma(1)
(unaudited)
For the three months ended For the year
ended December 31, December 31, 2016
2015 2016 2015 Total Portfolio
Occupancy 80.7 % 77.8 % 83.9 % 81.7 % Increase 3.7 % 2.7 % ADR $
239.34 $ 242.07 $ 243.12 $ 243.69 Decrease (1.1 )% (0.2 )%
RevPAR $ 193.10 $ 188.34
$ 204.08 $ 199.18 Increase
2.5 % 2.5 %
For the three months
endedDecember 31, 2016
For the year endedDecember 31,
2016
Market Detail RevPAR Variance % Boston 5.2% 1.4%
Chicago 5.2% 1.7% Key West 2.1% 4.4% Los Angeles 8.8% 13.0% New
York 4.6% 6.7% Other(2) 4.5% (2.4)% Philadelphia (13.8)% 0.8% San
Diego Downtown 2.4% 1.4% San Francisco (7.1)% (1.3)% Seattle (4.4)%
(3.7)% Washington, DC(3) 11.8% 4.8% (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. Pro forma to exclude results of
operations of the Indianapolis Marriott Downtown due to its sale in
July 2016. (2) Other includes The Heathman Hotel in Portland, OR,
Chaminade Resort in Santa Cruz, CA, Lansdowne Resort in Lansdowne,
VA, L’Auberge Del Mar in Del Mar, CA, and The Hilton San Diego
Resort and Paradise Point Resort in San Diego, CA. (3) Washington,
DC excludes the Mason & Rook Hotel for the first and fourth
quarters of both 2015 and 2016 due to the closure and renovation of
the hotel.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels - Pro
Forma(1) - Continued
(in millions)
(unaudited)
Operating Data (Excluding Indianapolis Marriott
Downtown and Hotel Deca) - 2016 Comparable
First Quarter Second Quarter Third
Quarter Fourth Quarter Full Year 2016
2016 2016 2016 2016 Occupancy 76.7 %
88.8 % 89.7 % 80.9 % 84.0 % ADR $ 224.39 $ 257.17 $ 251.81 $ 240.07
$ 244.22 RevPAR $ 172.05 $ 228.24 $ 225.76 $ 194.11 $ 205.20
Total hotel revenues $ 246.0 $ 331.3 $ 320.4 $ 285.4 $ 1,183.1
Less: Total hotel expenses 181.7 204.0 203.0
194.5 783.2 Hotel EBITDA $ 64.3 $ 127.3
$ 117.4 $ 90.9 $ 399.9 Hotel EBITDA
Margin 26.1 % 38.4 % 36.6 % 31.9 % 33.8 % (1) Pro
forma to exclude the Mason & Rook Hotel during the first
quarter for comparable purposes, due to the hotel being closed for
renovation during the first quarter of 2016. Mason & Rook
Hotel’s fourth quarter operating results are included in the table
above. Pro forma to exclude results of operations of the
Indianapolis Marriott Downtown due to its sale in July 2016 and
Hotel Deca due to its sale in January 2017.
LASALLE HOTEL PROPERTIES
RevPAR by Property - Pro Forma
(unaudited)
For the year ended December 31, Property
Detail 2016 2015 Westin Copley Place
$243.91 $241.04 The Liberty Hotel(3) $283.81 $273.16 Hyatt Regency
Boston Harbor $183.04 $183.18 Onyx Hotel $207.02 $211.04 Westin
Michigan Avenue(3) $152.69 $153.33 Hotel Chicago $163.32 $153.78
Southernmost Beach Resort $330.12 $322.37 The Marker Waterfront
Resort Key West(1) $276.40 $248.35 Chamberlain West Hollywood
$246.99 $225.52 Le Montrose Suite Hotel $223.27 $205.48 The Grafton
on Sunset $183.95 $124.71
Le Parc Suite Hotel
$229.24 $206.28 Hotel Amarano Burbank(3) $220.62 $180.68 Viceroy
Santa Monica $341.53 $325.10 Park Central Hotel New York/WestHouse
Hotel New York $216.64 $191.89 The Roger $224.53 $243.17 Gild
Hall(3) $195.17 $214.65 Westin Philadelphia $188.73 $180.75 Embassy
Suites Philadelphia - Center City(4) $152.05 $157.51 The Heathman
Hotel $160.99 $176.92 San Diego Paradise Point Resort and Spa
$155.52 $164.22 The Hilton San Diego Resort and Spa $171.41 $168.30
L’Auberge Del Mar(4) $277.58 $298.58 Hilton San Diego Gaslamp
Quarter $194.54 $193.27 Hotel Solamar(3) $171.62 $167.37 Park
Central San Francisco(1) $251.90 $251.11 The Marker San Francisco
$202.47 $225.20 Hotel Triton $172.12 $194.30 Harbor Court Hotel
$219.41 $227.94 Serrano Hotel $181.28 $173.35 Villa Florence
$180.16 $177.25 Hotel Vitale $344.96 $342.21 Chaminade Resort and
Conference Center(3) $135.56 $134.09 Hotel Deca $118.60 $125.21
Alexis Hotel $212.72 $218.20 Hotel Palomar, Washington, DC(3)
$181.77 $174.53 Topaz Hotel $169.39 $160.67 Hotel Madera $184.32
$181.78 The Donovan $183.08 $178.94 Hotel Rouge $165.71 $156.43
Mason & Rook Hotel(2) $162.05 $161.17 Hotel George $216.61
$211.60 Sofitel Washington, DC Lafayette Square $276.85 $243.44 The
Liaison Capitol Hill $155.16 $154.67 Lansdowne Resort(3) $118.57
$113.00
(1)
Pro forma to include the results of operating of the hotels
under previous ownership. (2) Mason & Rook Hotel closed for
renovation in October 2015 and reopened in April 2016. As a result,
RevPAR above excludes the first and fourth quarters of both 2015
and 2016. (3) Denotes a hotel that was under renovation in Q4 2015
- Q1 2016. (4) Denotes a hotel that was under renovation in Q4
2016.
LASALLE HOTEL PROPERTIES
Hotel EBITDA by Property - Pro
Forma
(in millions)
(unaudited)
Property Detail 2011 2012 2013
2014 2015 2016 Westin Copley Place
$23.5 $24.4 $25.8 $28.7 $32.7 $33.3 The Liberty Hotel 9.6 13.3 15.8
17.2 18.2 18.5 Hyatt Regency Boston Harbor 6.7 7.3 7.7 9.3 11.1
10.8 Onyx Hotel 2.3 2.6 2.6 3.1 3.6 3.6 Westin Michigan Avenue 15.8
16.7 16.0 18.0 19.4 17.9 Hotel Chicago(3) 5.3 7.3 8.4 8.5 10.4 12.4
Southernmost Beach Resort Key West 10.4 10.8 14.1 17.6 19.9 21.1
The Marker Waterfront Resort Key West(1) — — — — 4.8 5.8 Chaminade
Resort and Conference Center 3.6 3.7 4.3 4.7 5.0 4.8 Chamberlain
West Hollywood 3.4 3.8 4.1 4.8 4.8 5.2 Le Montrose Suite Hotel 4.3
4.2 5.5 5.9 5.9 6.5 The Grafton on Sunset 2.2 2.2 2.0 1.5 0.9 2.8
Le Parc Suite Hotel 4.5 4.7 5.3 5.6 6.1 7.0 Hotel Amarano Burbank
2.4 3.3 4.2 4.7 4.4 5.7 Viceroy Santa Monica 5.8 6.9 7.6 8.2 8.4
7.8 Park Central Hotel New York/WestHouse Hotel New York 26.6 30.1
18.8 25.0 18.1 24.0 The Roger 6.4 5.0 7.5 8.2 7.3 5.8 Gild Hall 3.7
3.9 3.7 3.9 3.8 3.2 Westin Philadelphia 10.8 11.9 10.9 11.8 10.8
11.9 Embassy Suites Philadelphia - Center City 5.4 6.6 6.9 7.3 8.0
7.7 The Heathman Hotel 1.6 1.9 2.4 3.0 5.7 4.4 San Diego Paradise
Point Resort and Spa 11.8 13.7 14.8 16.1 16.7 14.7 The Hilton San
Diego Resort and Spa 4.7 5.2 5.5 7.0 7.9 8.3 L’Auberge Del Mar 5.4
5.6 7.7 8.1 9.9 9.3 Hilton San Diego Gaslamp Quarter 8.5 8.8 8.9
9.5 10.5 10.9 Hotel Solamar 6.3 6.5 6.3 6.5 7.4 7.7 Park Central
San Francisco(1) 10.6 13.7 16.3 21.5 22.3 23.4 The Marker San
Francisco 5.3 5.7 6.9 7.7 7.6 5.9 Hotel Triton 2.5 2.7 3.6 4.8 4.9
3.9 Harbor Court Hotel 4.0 3.7 4.9 5.8 6.1 5.6 Serrano Hotel 1.9
3.5 4.4 6.3 6.2 6.5 Villa Florence 5.3 7.4 8.3 9.3 8.8 9.4 Hotel
Vitale 6.0 7.4 7.3 8.6 11.0 10.3 Hotel Deca 2.3 2.5 2.8 3.6 4.1 4.0
Alexis Hotel(3) 2.6 3.2 3.9 4.6 4.9 4.5 Hotel Palomar, Washington,
DC 10.3 10.6 10.5 9.8 9.5 10.8 Topaz Hotel 1.9 2.1 2.0 1.9 2.0 2.3
Hotel Madera 2.3 2.2 2.0 2.1 2.5 2.7 The Donovan 4.6 3.8 4.3 5.2
5.8 6.1 Hotel Rouge 2.9 2.9 2.8 2.8 3.1 3.5 Mason & Rook
Hotel(2) 3.6 3.4 3.2 3.2 3.0 3.6 Hotel George 4.6 4.1 4.1 4.3 5.2
5.7 Sofitel Washington, DC Lafayette Square 7.9 7.5 8.5 8.7 8.3
10.0 The Liaison Capitol Hill 9.3 9.1 8.6 4.4 6.9 6.8 Lansdowne
Resort(3) 8.0 8.8 9.7 10.6 9.5 10.0 Total Portfolio(4) $286.9
$315.0 $331.1 $369.7 $393.5 $406.2
Market
Detail 2011 2012 2013 2014
2015 2016 Boston $42.0 $47.7 $51.8 $58.3 $65.6 $66.2
Chicago 21.1 24.1 24.3 26.5 29.8 30.3 Key West 10.4 10.8 14.1 17.6
24.7 26.9 Los Angeles 22.5 25.1 28.8 30.7 30.6 35.1 New York 36.8
39.1 30.0 37.1 29.2 33.1 Philadelphia 16.3 18.5 17.8 19.1 18.8 19.6
San Diego Downtown 14.8 15.3 15.2 15.9 17.9 18.6 San Francisco 35.6
44.1 51.7 64.1 66.8 65.1 Seattle 4.9 5.7 6.7 8.3 9.0 8.5
Washington, DC 47.3 45.8 46.1 42.5 46.4 51.6 Other(5) 35.2 38.9
44.5 49.5 54.8 51.4 Total Portfolio(4) $286.9 $315.0 $331.1 $369.7
$393.5 $406.2 (1) Pro forma to include operating
results of the hotels under previous ownership. (2) Mason &
Rook Hotel closed for renovation in October 2015 and reopened in
April 2016. (3) EBITDA shown includes retail net operating income
for Hotel Chicago and Alexis Hotel and golf income at Lansdowne
Resort. (4) Totals may not foot due to rounding. (5)
Other includes The Heathman Hotel in
Portland, OR, Chaminade Resort in Santa Cruz, CA, Lansdowne Resort
in Lansdowne, VA, L’Auberge Del Mar in Del Mar, CA, and The Hilton
San Diego Resort and Paradise Point Resort in San Diego, CA.
LASALLE HOTEL PROPERTIES
Hotel EBITDA
(in thousands)
(unaudited)
For the year ended December 31, 2011
2012 2013 2014
2015 2016 Net income attributable to common
shareholders $ 12,934 $ 45,146 $ 70,984 $ 197,561 $ 123,983 $
234,575 Interest expense 39,704 52,896 57,516 56,628 54,333 43,775
Loss from extinguishment of debt 0 0 0 2,487 831 0 Income tax
expense (benefit)(1) 7,081 9,062 470 2,306 (1,892 ) 5,784
Depreciation and amortization 111,282 124,363 143,991 155,035
180,855 192,322 Noncontrolling interests: Redeemable noncontrolling
interest in consolidated entity (2 ) 0 0 0 0 0 Noncontrolling
interests in consolidated entities 0 0 17 16 16 17 Noncontrolling
interests of common units in Operating Partnership 1 281 303 636
261 337 Distributions to preferred shareholders 29,952
21,733 17,385 14,333 12,169 18,206
EBITDA $ 200,952 $
253,481 $ 290,666 $ 429,002
$ 370,556 $ 495,016 Pre-opening,
management transition and severance expenses 579 1,447 6,420 3,884
13,508 4,418 Preferred share issuance costs 731 4,417 1,566 951 0 0
Acquisition transaction costs 2,571 4,498 2,646 2,379 499 0 Gain on
sale of properties less costs associated with sale of note
receivable (760 ) 0 0 (93,205 ) 0 (104,478 ) Non-cash ground rent
347 454 1,305 1,820 1,943 1,890 Mezzanine loan discount
amortization 0 (1,074 ) (2,524 ) (986 ) 0 0
Adjusted EBITDA $ 204,420 $
263,223 $ 300,079 $ 343,845
$ 386,506 $ 396,846 Corporate expense
19,792 23,622 29,112 29,056 29,850 29,224 Interest and other income
(5,093 ) (9,212 ) (16,340 ) (8,685 ) (10,930 ) (10,342 ) Hotel
level adjustments, net (2,228 ) (2,818 ) (1,082 ) (8,077 ) (4,164 )
(13,231 )
Hotel EBITDA as reported in respective year
$ 216,891 $ 274,815 $
311,769 $ 356,139 $ 401,262
$ 402,497 Acquisitions, dispositions and hotel
closure adjustments 67,813 36,869 15,882 10,140 (10,127 ) 1,156
Non-hotel other income adjustments 2,164 3,362 3,423 3,383 2,382
2,537
Hotel EBITDA Pro
Forma - all properties owned as of December 31, 2016 including
prior to ownership $ 286,868 $
315,046 $ 331,074 $
369,662 $ 393,517 $
406,190
(1) Includes amounts from discontinued
operations.
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.
Adjustments for Park Central Hotel New York and WestHouse Hotel
New York Disruption
In addition, the Company has presented hotel EBITDA and
RevPAR, excluding the negative impact of the union disruption
at the Park Central Hotel New York and WestHouse Hotel New York in
the third and fourth quarters of 2015. The union disruption was a
non-recurring item that the Company does not believe is reasonably
likely to recur within two years. The Company estimates the
negative impact of the disruption, including lost hotel EBITDA,
based on the actual results for the hotels for the third and fourth
quarters of 2015 versus their forecast for that period as of August
1, 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170222006529/en/
LaSalle Hotel PropertiesKenneth G. Fuller or Max D. Leinweber,
301-941-1500
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