LHO Lasalle Hotel Properties (delisted)

Announces third quarter RevPAR growth of 5.1% and a 36.0 percent Hotel EBITDA margin (excluding Park Central)

LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended September 30, 2013. The Company’s results include the following:

                Third Quarter Year-to-Date 2013 2012 2013 2012 ($'s in millions except per share/unit data)  

Entire Portfolio (Including Park Central Hotel)

Total Revenue $ 270.0 $ 237.0 $ 725.3 $ 651.4 EBITDA(1) $ 90.7 $ 81.3 $ 222.0 $ 191.2 Adjusted EBITDA(1) $ 94.2 $ 81.7 $ 227.1 $ 201.1 FFO(1) $ 69.3 $ 58.1 $ 163.7 $ 128.2 Adjusted FFO(1) $ 72.8 $ 58.4 $ 168.8 $ 138.0 FFO per diluted share/unit(1) $ 0.72 $ 0.67 $ 1.71 $ 1.49 Adjusted FFO per diluted share/unit(1) $ 0.76 $ 0.68 $ 1.76 $ 1.61 Net income attributable to common shareholders $ 28.5 $ 26.5 $ 56.3 $ 35.2 Net income attributable to common shareholders per diluted share $ 0.30 $ 0.31 $ 0.59 $ 0.41

 

Portfolio excluding Park Central Hotel

RevPAR $ 186.48 $ 177.40 $ 171.10 $ 161.79 RevPAR growth 5.1 % 5.8 % Hotel EBITDA Margin 36.0 % 33.1 % Hotel EBITDA Margin growth 36bps 65bps  

Entire Portfolio (Including Park Central Hotel)

RevPAR $ 187.32 $ 180.42 $ 168.93 $ 164.63 RevPAR growth 3.8 % 2.6 % Hotel EBITDA Margin 36.3 % 32.8 % Hotel EBITDA Margin growth 52bps 20bps  

(1)

 

See tables later in press release, which list adjustments that reconcile net income 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 income later in this press release.

 

Third Quarter Highlights

Results excluding Park Central Hotel (see Park Central and WestHouse Update below)

• RevPAR excluding Park Central Hotel: Room revenue per available room (“RevPAR”) for the quarter ended September 30, 2013 increased 5.1 percent to $186.48, as a result of a 2.5 percent increase in occupancy to 87.5 percent and a 2.6 percent increase in average daily rate (“ADR”) to $213.07.
• Hotel EBITDA Margin excluding Park Central Hotel: The Company’s hotel EBITDA margin for the third quarter was 36.0 percent, a 36 basis point improvement compared to the comparable prior year period.

Entire Portfolio Results

• RevPAR: RevPAR for the quarter ended September 30, 2013 increased 3.8 percent to $187.32, as a result of a 3.1 percent increase in ADR to $215.46 and a 0.7 percent increase in occupancy to 86.9 percent.
• Hotel EBITDA Margin: The Company’s hotel EBITDA margin for the third quarter was 36.3 percent, a 52 basis point increase compared to the comparable prior year period.
• Adjusted EBITDA: The Company’s adjusted EBITDA was $94.2 million, an increase of 15.3 percent over the third quarter of 2012. During the third quarter of 2013, the Company’s financial results were impacted by $0.2 million of EBITDA displacement from the Park Central and WestHouse renovation project.
• Adjusted FFO: The Company generated third quarter adjusted FFO of $72.8 million, or $0.76 per diluted share/unit, compared to $58.4 million or $0.68 per diluted share/unit for the comparable prior year period.
• Acquisitions: The Company invested $303.8 million to acquire four assets:
  • The Harbor Court Hotel and Hotel Triton, both located in San Francisco, CA for $47.8 million;
  • The Serrano Hotel in San Francisco, CA for $71.5 million; and
  • The Southernmost Hotel Collection in Key West, FL for $184.5 million.

• Capital Investments: The Company invested $28.6 million of capital in its hotels, most of which pertained to the continuation of the Park Central Hotel and WestHouse renovation in New York City.
• Dividends: On July 17, 2013, the Company declared a third quarter 2013 dividend of $0.28 per common share of beneficial interest, which was a 40 percent increase over the second quarter dividend.

“We are very pleased with our results and activities during the third quarter,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “We acquired four outstanding assets in the markets of San Francisco and Key West, both of which benefit from significant supply constraints and very strong demand. Furthermore, our portfolio’s RevPAR, adjusted EBITDA, and adjusted FFO exceeded the high end of our expectations. As a result of our acquisitions and our performance during the third quarter, we have increased our full year 2013 outlook.”

Year-to-date Highlights

Excluding the Park Central Hotel, for the nine months ended September 30, 2013, RevPAR increased 5.8 percent to $171.10, with occupancy growth of 3.6 percent to 82.2 percent and ADR improvement of 2.1 percent to $208.21. The Company’s hotel EBITDA margin excluding the Park Central Hotel was 33.1 percent, an increase of 65 basis points compared to the comparable prior year period. The Company invested $84.7 million of capital in the entire portfolio including the Park Central Hotel and WestHouse during the nine months ended September 30, 2013.

Park Central and WestHouse Update

The Company has nearly completed its renovation of the Park Central Hotel in New York City. As previously disclosed, the project consists of the full renovation and splitting of the original 934-room Park Central Hotel into two distinct hotels: the newly renovated 761-room Park Central Hotel and the upgraded 172-room premium WestHouse Hotel.

The Park Central Hotel portion of the renovation is complete, as its lobby, meeting space, restaurant and all 761 of the hotel rooms have been completely renovated. The Company has also completed the renovation of the vast majority of the WestHouse guestrooms, with the lobby to be completed by the end of November. EBITDA displacement on the entire project was $0.2 million during the third quarter and $8.0 million to date. The Company’s expectation for full year EBITDA displacement related to the entire project is $9.0 to $10.0 million.

Balance Sheet

As of September 30, 2013, the Company had total outstanding debt of $1.5 billion, including $461.0 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 4.6 times as of September 30, 2013 and its fixed charge coverage ratio was 3.3 times. For the third quarter, the Company’s weighted average interest rate was 3.8 percent. As of September 30, 2013, the Company had $15.5 million of cash and cash equivalents on its balance sheet and capacity of $311.7 million available on its credit facilities. During the third quarter, the Company did not sell any stock under its ATM program.

2013 Fourth Quarter Outlook

The Company expects fourth quarter RevPAR, excluding the Park Central Hotel, to increase 3.0 percent to 5.0 percent. The Company’s expectations assume a quick resolution to the government shutdown. The Company expects its portfolio, including the Park Central Hotel, to generate adjusted EBITDA of $71.0 million to $75.0 million and adjusted FFO per share/unit of $0.52 to $0.56.

2013 Outlook

The Company is updating its 2013 outlook. The revised outlook excludes any future acquisitions or equity issuances for the remainder of 2013. The revised outlook also assumes a quick resolution to the government shutdown. The Company’s revised financial expectations for 2013 are as follows:

        Previous Outlook Current Outlook Low-end     High-end Low-end     High-end ($'s in millions except per share/unit data) ($'s in millions except per share/unit data)            

Excluding Park Central

RevPAR growth 4.5% 6.0% 5.1% 5.6% Hotel EBITDA Margins 32.0% 32.5% 32.3% 32.4%

Hotel EBITDA Margin Change

50 bps 100 bps 80 bps 90 bps

Including Park Central

RevPAR growth 1.5% 3.0% 2.5% 3.0% Hotel EBITDA Margins 32.0% 32.5% 32.4% 32.5% Hotel EBITDA Margin Change 0 bps 50 bps 30 bps 40 bps  

 

Entire Portfolio (Including Park Central)

Adjusted EBITDA $ 285.0 $ 295.0 $ 298.0 $ 302.0 Adjusted FFO $ 204.5 $ 214.0 $ 219.0 $ 222.0 Adjusted FFO per diluted share/unit $ 2.13 $ 2.23 $ 2.28 $ 2.31  

Earnings Call

The Company will conduct its quarterly conference call on Thursday, October 17, 2013 at 10:00 AM EDT. To participate in the conference call, please dial (800) 261-2028. 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 45 hotels and a mezzanine loan secured by two hotels in Santa Monica, CA. The properties are upscale, full-service hotels, totaling approximately 11,400 guest rooms in 14 markets in 10 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, Commune Hotels and Resorts, 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 the renovation of the Park Central Hotel and WestHouse, outlook for RevPAR, adjusted FFO, adjusted EBITDA and derivations thereof. 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 Income

(in thousands, except share data)

(unaudited)

 

 

For the three months ended For the nine months ended September 30, September 30, 2013     2012 2013     2012 Revenues: Hotel operating revenues: Room $ 189,619 $ 167,437 $ 495,696 $ 449,315 Food and beverage 60,022 52,896 175,397 156,298 Other operating department 18,289   15,410   48,001   42,105   Total hotel operating revenues 267,930 235,743 719,094 647,718 Other income 2,056   1,254   6,156   3,693   Total revenues 269,986   236,997   725,250   651,411   Expenses: Hotel operating expenses: Room 44,911 39,662 124,789 112,203 Food and beverage 41,886 37,751 121,871 111,488 Other direct 6,146 5,659 17,166 15,843 Other indirect 62,121   54,532   175,045   157,725   Total hotel operating expenses 155,064 137,604 438,871 397,259 Depreciation and amortization 40,634 31,480 107,182 92,911 Real estate taxes, personal property taxes and insurance 13,489 11,254 38,623 32,930 Ground rent 3,249 2,627 8,535 6,613 General and administrative 5,513 5,172 16,224 14,635 Acquisition transaction costs 2,687 156 2,687 4,057 Other expenses 1,749   922   3,918   2,391   Total operating expenses 222,385   189,215   616,040   550,796   Operating income 47,601 47,782 109,210 100,615 Interest income 2,448 2,060 7,212 2,086 Interest expense (14,737 ) (14,110 ) (42,517 ) (38,391 ) Income before income tax expense 35,312 35,732 73,905 64,310 Income tax expense (2,564 ) (4,943 ) (2,481 ) (6,920 ) Net income 32,748   30,789   71,424   57,390   Net income attributable to noncontrolling interests: Noncontrolling interests in consolidated entities 0 0 (8 ) 0 Noncontrolling interests of common units in Operating Partnership (108 ) (116 ) (243 ) (224 ) Net income attributable to noncontrolling interests (108 ) (116 ) (251 ) (224 ) Net income attributable to the Company 32,640 30,673 71,173 57,166 Distributions to preferred shareholders (4,106 ) (4,166 ) (13,278 ) (17,567 ) Issuance costs of redeemed preferred shares 0   0   (1,566 ) (4,417 ) Net income attributable to common shareholders $ 28,534   $ 26,507   $ 56,329   $ 35,182             LASALLE HOTEL PROPERTIES Consolidated Statements of Operations and Comprehensive Income - Continued

(in thousands, except share data)

(unaudited)

  For the three months ended For the nine months ended September 30, September 30, 2013     2012 2013     2012 Earnings per Common Share - Basic: Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares $ 0.30   $ 0.31   $ 0.59   $ 0.41   Earnings per Common Share - Diluted: Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares $ 0.30   $ 0.31   $ 0.59   $ 0.41   Weighted average number of common shares outstanding: Basic 95,890,474 85,876,584 95,510,088 85,278,331 Diluted 96,082,340 86,056,957 95,681,763 85,449,543   Comprehensive Income: Net income $ 32,748 $ 30,789 $ 71,424 $ 57,390 Other comprehensive (loss) income : Unrealized (loss) gain on interest rate derivative instruments   (2,345 )   (3,839 )   10,255     (8,534 ) Comprehensive income 30,403 26,950 81,679 48,856 Comprehensive income attributable to noncontrolling interests: Noncontrolling interests in consolidated entities 0 0 (8 ) 0 Noncontrolling interests of common units in Operating Partnership   (101 )   (103 )   (275 )   (195 ) Comprehensive income attributable to noncontrolling interests   (101 )   (103 )   (283 )   (195 ) Comprehensive income attributable to the Company $ 30,302   $ 26,847   $ 81,396   $ 48,661       LASALLE HOTEL PROPERTIES FFO and EBITDA

(in thousands, except share/unit data)

(unaudited)

        For the three months ended     For the nine months ended September 30, September 30, 2013     2012 2013     2012 Net income attributable to common shareholders $ 28,534 $ 26,507 $ 56,329 $ 35,182 Depreciation 40,521 31,336 106,854 92,483 Amortization of deferred lease costs 95 97 269 271 Noncontrolling interests: Noncontrolling interests in consolidated entities 0 0 8 0 Noncontrolling interests of common units in Operating Partnership   108     116     243     224   FFO $ 69,258 $ 58,056 $ 163,703 $ 128,160 Pre-opening expenses 1,179 614 1,727 1,540 Preferred share issuance costs 0 0 1,566 4,417 Acquisition transaction costs 2,687 156 2,687 4,057 Non-cash ground rent 327 114 981 342 Mezzanine loan discount amortization   (647 )   (491 )   (1,855 )   (491 ) Adjusted FFO $ 72,804   $ 58,449   $ 168,809   $ 138,025   Weighted Average number of common shares and units outstanding: Basic 96,186,774 86,172,884 95,806,388 85,574,631 Diluted 96,378,640 86,353,257 95,978,063 85,745,843 FFO per diluted share/unit $ 0.72 $ 0.67 $ 1.71 $ 1.49 Adjusted FFO per diluted share/unit $ 0.76 $ 0.68 $ 1.76 $ 1.61     For the three months ended For the nine months ended September 30, September 30, 2013 2012 2013 2012 Net income attributable to common shareholders $ 28,534 $ 26,507 $ 56,329 $ 35,182 Interest expense 14,737 14,110 42,517 38,391 Income tax expense 2,564 4,943 2,481 6,920 Depreciation and amortization 40,634 31,480 107,182 92,911 Noncontrolling interests: Noncontrolling interests in consolidated entities 0 0 8 0 Noncontrolling interests of common units in Operating Partnership 108 116 243 224 Distributions to preferred shareholders   4,106     4,166     13,278     17,567   EBITDA $ 90,683 $ 81,322 $ 222,038 $ 191,195 Pre-opening expenses 1,179 614 1,727 1,540 Preferred share issuance costs 0 0 1,566 4,417 Acquisition transaction costs 2,687 156 2,687 4,057 Non-cash ground rent 327 114 981 342 Mezzanine loan discount amortization   (647 )   (491 )   (1,855 )   (491 ) Adjusted EBITDA $ 94,229 $ 81,715 $ 227,144 $ 201,060 Corporate expense 7,060 6,190 21,270 17,003 Interest and other income (3,918 ) (3,222 ) (12,303 ) (5,686 ) Hotel level adjustments, net   (347 )   7,859     (936 )   16,865   Hotel EBITDA $ 97,024   $ 92,542   $ 235,175   $ 229,242       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 September 30, 2013 for the Company's period of ownership in 2013 and the comparable period in 2012. The above numbers exclude partial ownership for the month of August for Serrano and Southernmost.     LASALLE HOTEL PROPERTIES Hotel Operational Data Schedule of Property Level Results

(in thousands)

(unaudited)

        For the three months ended     For the nine months ended September 30, September 30, 2013     2012 2013     2012 Revenues: Room $ 188,808 $ 181,889 $ 494,885 $ 483,557 Food and beverage 59,843 59,934 175,218 175,580 Other   18,305     16,510     47,413     44,538   Total hotel revenues   266,956     258,333     717,516     703,675     Expenses: Room 44,760 43,288 124,639 120,514 Food and beverage 41,758 42,353 121,743 124,260 Other direct 5,991 5,960 16,788 16,749 General and administrative 19,810 18,724 56,142 54,011 Sales and marketing 16,072 15,493 47,304 46,324 Management fees 9,152 9,187 24,060 23,288 Property operations and maintenance 8,442 8,371 24,573 24,759 Energy and utilities 7,194 7,068 19,358 19,465 Property taxes 12,123 11,077 35,014 32,658 Other fixed expenses   4,630     4,270     12,720     12,405   Total hotel expenses   169,932     165,791     482,341     474,433     Hotel EBITDA $ 97,024   $ 92,542   $ 235,175   $ 229,242     Hotel EBITDA Margin 36.3 % 35.8 % 32.8 % 32.6 %     Note: This schedule includes operating data for the three and nine months ended September 30, 2013 for all properties owned by the Company as of September 30, 2013. The above numbers exclude partial ownership for the month of August for Serrano and Southernmost. Palomar DC, L'Auberge, Liberty, Harbor Court, Triton, Serrano, and Southernmost 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 For the nine months ended September 30, September 30, 2013     2012 2013     2012 Total Portfolio Occupancy 86.9 % 86.3 % 80.8 % 80.8 % Increase (Decrease) 0.7 % (0.1 )% ADR $ 215.46 $ 208.96 $ 209.19 $ 203.70 Increase 3.1 % 2.7 % RevPAR $ 187.32 $ 180.42 $ 168.93 $ 164.63 Increase 3.8 % 2.6 %     Note:

This schedule includes operating data for all properties owned as of September 30, 2013 for the Company's period of ownership in 2013 and the comparable period in 2012. The above numbers exclude partial ownership for the month of August for Southernmost.

 

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.

LaSalle Hotel PropertiesBruce Riggins or Kenneth Fuller301-941-1500