LaSalle Hotel Properties (NYSE: LHO) today announced results for
the quarter ended March 31, 2013. The Company’s results include the
following:
First Quarter 2013
2012
($'s in millions except
per share/unit data)
Entire Portfolio
(Including Park Central Hotel)
Total Revenue $ 191.7 $ 172.3 EBITDA(1) $ 39.8 $ 30.2 Adjusted
EBITDA(1) $ 39.8 $ 34.0 FFO(1) $ 25.7 $ 14.0 Adjusted FFO(1) $ 25.7
$ 17.8 FFO per diluted share/unit(1) $ 0.27 $ 0.16 Adjusted FFO per
diluted share/unit(1) $ 0.27 $ 0.21 Net loss attributable to common
shareholders $ (7.4) $ (16.1) Net loss attributable to common
shareholders per diluted share $ (0.08) $ (0.19)
Portfolio excluding
Park Central Hotel
RevPAR $ 134.64 $ 128.10 RevPAR growth 5.1% Hotel EBITDA Margin
23.1% Hotel EBITDA Margin growth
33 bps
Entire Portfolio
(Including Park Central Hotel)
RevPAR $ 132.89 $ 128.95 RevPAR growth 3.0% Hotel EBITDA Margin
22.2% Hotel EBITDA Margin growth
11 bps
(1) See tables later in press release, which list
adjustments that reconcile net loss to earnings before interest,
taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA,
funds from operations ("FFO"), FFO per share/unit, adjusted FFO,
adjusted FFO per share/unit and hotel EBITDA. EBITDA, adjusted
EBITDA, FFO, FFO per share/unit, adjusted FFO, adjusted FFO per
share/unit and hotel EBITDA are non-GAAP financial measures. See
further discussion of these non-GAAP measures and reconciliations
to net loss later in this press release.
First Quarter Highlights
Results excluding Park Central
Hotel
- RevPAR excluding Park Central:
Room revenue per available room (“RevPAR”) for the quarter ended
March 31, 2013 increased 5.1 percent to $134.64, as a result of a
1.8 percent increase in average daily rate (“ADR”) to $186.97 and a
3.3 percent increase in occupancy to 72.0 percent.
- Hotel EBITDA Margin excluding Park
Central: The Company’s hotel EBITDA margin for the first
quarter was 23.1 percent, a 33 basis point improvement compared to
the comparable prior year period.
Entire Portfolio Results
- RevPAR: RevPAR for the quarter
ended March 31, 2013 increased 3.0 percent to $132.89, as a result
of a 3.9 percent increase in ADR to $186.11 and a 0.8 percent
decrease in occupancy to 71.4 percent.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin for the first quarter was 22.2
percent, an 11 basis point increase compared to the comparable
prior year period.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $39.8 million, an increase of 17.1 percent over
the first quarter of 2012.
- Adjusted FFO: The Company
generated first quarter adjusted FFO of $25.7 million, or $0.27 per
diluted share/unit, compared to $17.8 million or $0.21 per diluted
share/unit for the comparable prior year period, an increase of
28.6 percent in adjusted FFO per diluted share/unit.
- Capital Markets: During the
quarter, the Company issued 4,400,000 of 6.375 percent Series I
Cumulative Redeemable Preferred Shares. The Company also announced
the redemption of 4,000,000 of its 7.25 percent Series G Cumulative
Redeemable Preferred Shares.
- Capital Investments: The Company
invested $16.3 million of capital in its hotels, including the
following projects:
- The completion of the guestroom
renovations at Hotel Monaco San Francisco, Hotel Madera in
Washington, DC and Hotel Deca in Seattle, WA; and
- The continuation of the Park Central
Hotel and Westhouse renovation in New York City.
- Dividends: On March 15, 2013,
the Company declared a first quarter 2013 dividend of $0.20 per
common share of beneficial interest.
“We were pleased with the results of the first quarter,” said
Michael D. Barnello, President and Chief Executive Officer of
LaSalle Hotel Properties. “Our Portfolio’s RevPAR performed in line
with our expectations, while adjusted EBITDA and adjusted FFO were
ahead of expectations and grew substantially year-over-year.
Furthermore, we were able to issue preferred equity at a record low
coupon and reduce our overall cost of capital.”
Balance Sheet
As of March 31, 2013, the Company had total outstanding debt of
$1.15 billion, including $51.0 million outstanding on its senior
unsecured credit facility. Total net debt to trailing 12 month
Corporate EBITDA (as defined in the Company’s senior unsecured
credit facility) was 3.9 times as of March 31, 2013 and its fixed
charge coverage ratio was 3.1 times. For the first quarter, the
Company’s weighted average interest rate was 4.4 percent. As of
March 31, 2013, the Company had $37.7 million of cash and cash
equivalents on its balance sheet and capacity of $721.7 million
available on its credit facilities.
Subsequent Events
On April 5, 2013, the Company redeemed 4,000,000 of the
6,348,888 outstanding 7.25% Series G Preferred Shares.
On April 8, 2013, the Company provided notice to the servicer of
the $59.9 million mortgage secured by Hotel Solamar of its intent
to pay off the mortgage on June 3, 2013. The mortgage carries an
interest rate of 5.49 percent and the Company expects to fund the
mortgage pay off with proceeds from its senior unsecured credit
facility, which has an interest rate of 1.95 percent based on the
current leverage ratio.
2013 Second Quarter
Outlook
Based on the portfolio’s performance quarter-to-date, the
Company expects second quarter RevPAR, excluding the Park Central
Hotel, to increase 5.0 percent to 7.0 percent. The Company expects
its portfolio, including the Park Central Hotel, to generate
adjusted EBITDA of $90.0 million to $93.0 million and adjusted FFO
per share/unit of $0.70 to $0.73.
2013 Outlook
The Company maintains its 2013 outlook, which was provided in
conjunction with its reporting of 2012 results in February, 2013.
The Company’s financial expectations for 2013 remain as
follows:
Current Outlook Low-end
High-end
($'s in millions except
per share/unit data)
Excluding Park
Central Hotel
RevPAR growth 3.0% 6.0% Hotel EBITDA Margins 31.4% 32.4% Hotel
EBITDA Margin Change
0 bps
100 bps
Including Park
Central Hotel
RevPAR growth 0.0% 3.0% Hotel EBITDA Margins 31.5% 32.5% Hotel
EBITDA Margin Change
-50 bps
50 bps
Entire Portfolio
(Including Park Central Hotel)
Adjusted EBITDA $ 275.0 $ 295.0 Adjusted FFO $ 195.0 $ 214.0
Adjusted FFO per diluted share/unit $ 2.03 $ 2.23 Income Tax
Expenses $ 4.5 $ 5.5
Capital
Investments
Portfolio Excluding Park Central $ 70.0 $ 75.0 Park Central $ 60.0
$ 70.0 Portfolio Including Park Central $ 130.0 $ 145.0
Earnings Call
The Company will conduct its quarterly conference call on
Thursday, April 18, 2013 at 10:00 AM EDT. To participate in the
conference call, please dial (888) 663-2254. Additionally, a
live webcast of the conference call will be available through the
Company’s website. To access, log on to
http://www.lasallehotels.com. A replay of the conference call will
be archived and available online through the Investor Relations
section of http://www.lasallehotels.com.
LaSalle Hotel Properties is a leading multi-operator real estate
investment trust. The Company owns 40 hotels and a mezzanine loan
secured by two hotels in Santa Monica, CA. The properties are
upscale, full-service hotels, totaling more than 10,600 guest rooms
in 13 markets in 9 states and the District of Columbia. The Company
focuses on owning, redeveloping and repositioning upscale,
full-service hotels located in urban, resort and convention
markets. LaSalle Hotel Properties seeks to grow through strategic
relationships with premier lodging companies, including Westin
Hotels and Resorts, Hilton Hotels Corporation, Outrigger Lodging
Services, Noble House Hotels & Resorts, Hyatt Hotels
Corporation, Benchmark Hospitality, White Lodging Services
Corporation, Thompson Hotels, Davidson Hotel Company, Denihan
Hospitality Group, the Kimpton Hotel & Restaurant Group, LLC,
Accor, Destination Hotels & Resorts, HEI Hotels & Resorts,
JRK Hotel Group, Inc., Viceroy Hotel Group, Highgate Hotels and
Access Hotels & Resorts.
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" or similar expressions. Forward-looking statements in
this press release include, among others, statements about outlook
for RevPAR, adjusted FFO, adjusted EBITDA and derivations thereof
and the Company’s outlook for capital investments. 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, (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.
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 Loss
(in thousands, except share data)
(unaudited)
For the three months ended
March 31, 2013 2012
Revenues: Hotel operating revenues: Room $ 126,988 $ 114,692
Food and beverage 49,846 44,615 Other operating department
13,384 11,856 Total hotel operating revenues
190,218 171,163 Other income 1,486 1,156
Total revenues 191,704 172,319
Expenses: Hotel operating expenses: Room 37,584 33,853 Food
and beverage 37,304 34,262 Other direct 5,022 4,626 Other indirect
53,735 48,041 Total hotel operating
expenses 133,645 120,782 Depreciation and amortization 33,121
30,152 Real estate taxes, personal property taxes and insurance
12,354 10,811 Ground rent 2,495 1,776 General and administrative
5,147 4,614 Acquisition transaction costs 0 3,594 Other expenses
641 551 Total operating expenses
187,403 172,280 Operating income 4,301 39
Interest income 2,369 10 Interest expense (14,017 )
(11,778 ) Loss before income tax benefit (7,347 ) (11,729 ) Income
tax benefit 5,017 2,992 Net loss (2,330
) (8,737 ) Noncontrolling interests of common units in Operating
Partnership 0 22 Net loss attributable
to the Company (2,330 ) (8,715 ) Distributions to preferred
shareholders (5,065 ) (7,402 ) Net loss attributable
to common shareholders $ (7,395 ) $ (16,117 )
LASALLE HOTEL PROPERTIES Consolidated Statements of
Operations and Comprehensive Loss - Continued
(in thousands, except share data)
(unaudited)
For the three months ended
March 31, 2013 2012 Earnings
per Common Share - Basic: Net loss attributable to common
shareholders excluding amounts attributable to unvested restricted
shares $ (0.08 ) $ (0.19 )
Earnings per Common Share -
Diluted: Net loss attributable to common shareholders excluding
amounts attributable to unvested restricted shares $ (0.08 ) $
(0.19 )
Weighted average number of common shares
outstanding: Basic 95,166,029 84,499,856 Diluted 95,166,029
84,499,856
Comprehensive Loss: Net loss $ (2,330 ) $
(8,737 ) Other comprehensive income: Unrealized gain on interest
rate derivative instruments 1,519 0
Comprehensive loss (811 ) (8,737 ) Noncontrolling interests of
common units in Operating Partnership (5 ) 22
Comprehensive loss attributable to the Company $ (816 ) $ (8,715 )
LASALLE HOTEL PROPERTIES FFO and EBITDA
(in thousands, except share/unit data)
(unaudited)
For the three months ended
March 31, 2013 2012 Net loss
attributable to common shareholders $ (7,395 ) $ (16,117 )
Depreciation 33,011 30,012 Amortization of deferred lease costs 88
86 Noncontrolling interests of common units in Operating
Partnership 0 (22 )
FFO $
25,704 $ 13,959 Pre-opening expenses 290 125
Acquisition transaction costs 0 3,594 Non-cash ground rent 327 114
Mezzanine loan discount amortization (591 ) 0
Adjusted FFO $ 25,730 $
17,792 Weighted Average number of common shares
and units outstanding: Basic 95,462,329 84,796,156 Diluted
95,615,525 84,945,595
FFO per diluted share/unit $ 0.27 $
0.16
Adjusted FFO per diluted share/unit $ 0.27 $ 0.21
For the three months ended March 31,
2013 2012 Net loss attributable to common
shareholders $ (7,395 ) $ (16,117 ) Interest expense 14,017 11,778
Income tax benefit (5,017 ) (2,992 ) Depreciation and amortization
33,121 30,152 Noncontrolling interests of common units in Operating
Partnership 0 (22 ) Distributions to preferred shareholders
5,065 7,402
EBITDA $
39,791 $ 30,201 Pre-opening expenses 290 125
Acquisition transaction costs 0 3,594 Non-cash ground rent 327 114
Mezzanine loan discount amortization (591 ) 0
Adjusted EBITDA $ 39,817 $
34,034 Corporate expense 6,406 5,270 Interest and other
income (3,855 ) (1,166 ) Hotel level adjustments, net (336 )
3,299
Hotel EBITDA $ 42,032
$ 41,437
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. We
believe property-level results provide investors with supplemental
information on the ongoing operational performance of our hotels
and effectiveness of the third-party management companies operating
our business on a property-level basis.
Hotel EBITDA includes all properties owned as of March 31, 2013
for the Company's period of ownership in 2013 and the comparable
period in 2012.
LASALLE HOTEL PROPERTIES Hotel Operational
Data Schedule of Property Level Results
(in thousands)
(unaudited)
For the three months ended
March 31, 2013 2012
Revenues: Room $ 126,988 $ 124,204 Food and beverage 49,846
51,067 Other 12,798 12,651 Total hotel revenues
189,632 187,922
Expenses: Room 37,584
36,503 Food and beverage 37,304 38,869 Other direct 4,958 4,987
General and administrative 17,724 17,063 Sales and marketing 15,093
14,955 Management fees 5,408 5,148 Property operations and
maintenance 8,139 8,092 Energy and utilities 6,160 6,112 Property
taxes 11,269 10,885 Other fixed expenses 3,961 3,871
Total hotel expenses 147,600 146,485
Hotel
EBITDA $ 42,032 $ 41,437
Note:
This schedule includes operating data for the three months ended
March 31, 2013 for all properties owned by the Company as of March
31, 2013. Palomar DC, L'Auberge and Liberty are shown in 2012 for
their comparative period of ownership in 2013. Hotel EBITDA margin
is calculated by dividing hotel EBITDA for the period by the total
hotel revenues for the period.
LASALLE HOTEL PROPERTIES Statistical Data for the
Hotels
(unaudited)
For the three months ended
March 31, 2013 2012 Total
Portfolio Occupancy 71.4 % 72.0 % Decrease (0.8 )% ADR $ 186.11 $
179.19 Increase 3.9 %
RevPAR $ 132.89 $
128.95 Increase 3.0 %
Note:
This schedule includes operating data for all properties owned
as of March 31, 2013 for the Company's period of ownership in 2013
and the comparable period in 2012.
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, impairment write-downs and items classified by GAAP as
extraordinary, plus real estate-related depreciation and
amortization (excluding amortization of deferred finance costs) 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 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. We
believe property-level results provide investors with supplemental
information on the ongoing operational performance of our hotels
and effectiveness of the third-party management companies operating
our 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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