Reports Adjusted EBITDA growth of 12.8% and
Adjusted FFO per share growth of 18.5%
Announces 34% increase in quarterly
dividend
LaSalle Hotel Properties (NYSE: LHO) today announced results for
the quarter ended March 31, 2014. The Company’s results include the
following:
First Quarter 2014
2013 % Var. ($'s in millions except per share/unit
data)
Entire Portfolio
(Including Park Central Hotel)
RevPAR $ 144.40 $ 138.81 4.0 % Total Revenue $ 218.9 $ 191.7
14.2 % EBITDA(1) $ 43.0 $ 39.8 8.0 % Adjusted EBITDA(1) $ 44.9 $
39.8 12.8 % FFO(1) $ 28.8 $ 25.7 12.1 % Adjusted FFO(1) $ 33.2 $
25.7 29.2 % FFO per diluted share/unit(1) $ 0.28 $ 0.27 3.7 %
Adjusted FFO per diluted share/unit(1) $ 0.32 $ 0.27 18.5 % Net
loss attributable to common shareholders $ (9.0 ) $ (7.4 ) 21.6 %
Net loss attributable to common shareholders per diluted share $
(0.09 ) $ (0.08 ) 11.6 % (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 Results and
Activities
Entire Portfolio Results
- RevPAR: Room revenue per
available room (“RevPAR”) for the quarter ended March 31, 2014
increased 4.0 percent to $144.40, as a result of a 6.2 percent
increase in average daily rate (“ADR”) to $201.36 and a 2.0 percent
decrease in occupancy to 71.7 percent. RevPAR for the portfolio
excluding Park Central and WestHouse increased 3.6 percent.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin for the first quarter was 22.7
percent, a 125 basis point decline compared to the comparable prior
year period.Excluding Park Central and WestHouse, the Company’s
hotel EBITDA margin for the first quarter was flat relative to the
same period last year. First quarter results were also impacted by
increases in property taxes and energy costs. Excluding these cost
increases, the Company’s hotel EBITDA margin increased 71 basis
points.First quarter hotel EBITDA margin results were in line with
the Company’s expectations and did not result in any change to the
Company’s full year 2014 outlook.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $44.9 million, an increase of 12.8 percent over
the first quarter of 2013.
- Adjusted FFO: The Company
generated first quarter adjusted FFO of $33.2 million, or $0.32 per
diluted share/unit, compared to $25.7 million or $0.27 per diluted
share/unit for the comparable prior year period.
- Capital Markets: In January
2014, 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. The maturities were extended to January 2019,
including two six-month extension options for the revolver, subject
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 up to $1.05 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 170 to 245 basis points over
LIBOR, based on the Company’s leverage ratio and is currently LIBOR
plus 170 basis points, or 1.86 percent. Pricing for the term loan
is LIBOR plus 160 to 235 basis points, based on the Company’s
leverage ratio. The term loan remains swapped, locking in LIBOR
through August 2017, resulting in a current interest rate of 2.38
percent.The Company did not sell any shares under its ATM program
during the first quarter or to date during the second quarter.
- Mezzanine Loan Repayment: On
February 10, 2014, the mezzanine loan on Casa del Mar and Shutters
on the Beach was repaid by the borrower. The Company received
repayment of the principal amount, which was $72.0 million. The
Company acquired the mezzanine loan on July 13, 2012 for $67.4
million. Inclusive of interest payments, the Company’s net profit
on its investment was $14.7 million, over 19 months, which
represented a 14.2 percent unleveraged IRR. Proceeds from the
repayment were used to reduce the outstanding balance on the
Company’s revolver.
- Capital Investments: The Company
invested $16.4 million of capital in its hotels, including the
completion of renovations at Onyx Hotel in Boston, Hilton
Alexandria Old Town, as well as Hotel George and Donovan House in
Washington, DC.
- Dividends: On March 14, 2014,
the Company declared a first quarter 2014 dividend of $0.28 per
common share of beneficial interest.
Second Quarter 2014 Common
Dividend
The Company’s Board of Trustees has declared that it has
increased the quarterly common dividend in the second quarter 2014
by 34 percent to $0.375 per diluted share, an annualized rate of
$1.50 per diluted share.
“First quarter performance was in line with our expectations,”
said Michael D. Barnello, President and Chief Executive Officer of
LaSalle Hotel Properties. “RevPAR was above the midpoint of our
outlook despite several winter storms that impacted our properties
in the northeast and Chicago. Our first quarter RevPAR was also
impacted by tough comparisons in Washington, DC, due to the
inauguration last year and New York, which benefited from post
Hurricane Sandy related business.”
“Adjusted EBITDA was towards the high-end of our range and
increased 12.8 percent from the first quarter of 2013. Adjusted FFO
per share/unit increased 18.5 percent over last year.”
“We are very pleased with the Board’s decision to substantially
increase the dividend by 34 percent to an annualized rate of $1.50
per share in the second quarter. The increase reflects the strong
growth our portfolio has delivered throughout the recovery and our
expectation that there remains growth in the cycle. The dividend
represents a 4.6 percent yield on our stock price as of yesterday’s
close.”
Balance Sheet
As of March 31, 2014, the Company had total outstanding debt of
$1.2 billion, including $196.0 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, 2014 and its fixed
charge coverage ratio was 3.5 times. For the first quarter, the
Company’s weighted average interest rate was 3.7 percent. As of
March 31, 2014, the Company had $16.9 million of cash and cash
equivalents on its balance sheet and capacity of $576 million
available on its credit facilities.
Subsequent Events
On April 2, the Company closed on its acquisition of Hotel
Vitale in San Francisco for $130 million. Hotel Vitale is a
200-room hotel located on the Embarcadero. The Company funded the
acquisition with borrowings from its senior unsecured credit
facility.
“We are very excited to have acquired Hotel Vitale in San
Francisco,” said Mr. Barnello. “The quality of the physical asset
is outstanding, as is its location on the Embarcadero in the heart
of the Financial District. San Francisco is one of the strongest
lodging markets in the United States and this acquisition increases
our presence in the market to 10 percent of our EBITDA.”
2014 Outlook
The Company’s 2014 outlook is unchanged from the outlook
included in its fourth quarter 2013 earnings release, with the
exception that it includes the acquisition of Hotel Vitale. The
outlook is based on an economic environment that continues to
improve and assumes no additional acquisitions and no capital
markets activities. The Company’s RevPAR growth and financial
expectations for 2014 are as follows:
Current Outlook Low-end High-end
($'s in millions except per share/unit data)
RevPAR growth 5.0 % 8.5 % Hotel EBITDA Margin Change 0 bps
100 bps Adjusted EBITDA $ 327.0 $ 348.0 Adjusted FFO $ 243.0
$ 265.0 Adjusted FFO per diluted share/unit $ 2.33 $ 2.54
Second Quarter 2014
Outlook
The Company expects second quarter RevPAR to increase 7.0
percent to 9.5 percent and hotel EBITDA margins to range from
approximately flat to an increase of 50 basis points relative to
the same prior year period. The Company expects its portfolio to
generate adjusted EBITDA of $103.0 million to $109.0 million and
adjusted FFO per share/unit of $0.77 to $0.81.
Earnings Call
The Company will conduct its quarterly conference call on
Thursday, April 24, 2014 at 9:30 AM eastern time. To participate in
the conference call, please dial (800) 946-0715.
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 46 hotels. The properties are
upscale, full-service hotels, totaling approximately 11,600 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
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 Loss
(in thousands, except share data)
(unaudited)
For the three months ended March 31,
2014 2013 Revenues: Hotel operating
revenues: Room $ 147,967 $ 126,988 Food and beverage 54,115 49,846
Other operating department 15,025 13,384 Total hotel
operating revenues 217,107 190,218 Other income 1,757 1,486
Total revenues 218,864 191,704
Expenses: Hotel operating expenses: Room 43,684 37,584 Food
and beverage 41,700 37,304 Other direct 5,181 5,022 Other indirect
60,423 53,735 Total hotel operating expenses 150,988
133,645 Depreciation and amortization 37,760 33,121 Real estate
taxes, personal property taxes and insurance 14,954 12,354 Ground
rent 2,933 2,495 General and administrative 5,492 5,147 Acquisition
transaction costs 107 0 Other expenses 3,207 641
Total operating expenses 215,441 187,403 Operating
income 3,423 4,301 Interest income 1,789 2,369 Interest expense
(13,988 ) (14,017 ) Loss from extinguishment of debt (2,487 ) 0
Loss before income tax benefit (11,263 ) (7,347 ) Income tax
benefit 6,392 5,017 Net loss (4,871 ) (2,330 )
Noncontrolling interests of common units in Operating Partnership 6
0 Net loss attributable to the Company (4,865 )
(2,330 ) Distributions to preferred shareholders (4,107 ) (5,065 )
Net loss attributable to common shareholders $ (8,972 ) $ (7,395 )
LASALLE HOTEL PROPERTIES Consolidated
Statements of Operations and Comprehensive Loss - Continued
(in thousands, except share data)
(unaudited)
For the three months ended March 31,
2014 2013 Earnings per Common Share -
Basic: Net loss attributable to common shareholders excluding
amounts attributable to unvested restricted shares $ (0.09 ) $
(0.08 )
Earnings per Common Share - Diluted: Net loss
attributable to common shareholders excluding amounts attributable
to unvested restricted shares $ (0.09 ) $ (0.08 )
Weighted
average number of common shares outstanding: Basic 103,691,657
95,166,029 Diluted 103,691,657 95,166,029
Comprehensive
Loss: Net loss $ (4,871 ) $ (2,330 ) Other comprehensive (loss)
income: Unrealized (loss) gain on interest rate derivative
instruments (972 ) 1,519 Comprehensive loss (5,843 ) (811 )
Noncontrolling interests of common units in Operating Partnership 9
(5 ) Comprehensive loss attributable to the Company $ (5,834
) $ (816 )
LASALLE HOTEL PROPERTIES FFO and
EBITDA
(in thousands, except share/unit data)
(unaudited)
For the three months ended March 31,
2014 2013 Net loss attributable to common
shareholders $ (8,972 ) $ (7,395 ) Depreciation 37,658 33,011
Amortization of deferred lease costs 87 88 Noncontrolling interests
of common units in Operating Partnership (6 ) 0
FFO
$ 28,767 $ 25,704 Pre-opening,
management transition and severance expenses 2,495 290 Acquisition
transaction costs 107 0 Loss from extinguishment of debt 2,487 0
Non-cash ground rent 324 327 Mezzanine loan discount amortization
(986 ) (591 )
Adjusted FFO $ 33,194
$ 25,730 Weighted Average number of common
shares and units outstanding: Basic 103,987,957 95,462,329
Diluted 104,298,342 95,615,525
FFO per diluted share/unit $
0.28 $ 0.27
Adjusted FFO per diluted share/unit $ 0.32 $
0.27
For the three months ended March
31, 2014 2013 Net loss attributable to common
shareholders $ (8,972 ) $ (7,395 ) Interest expense 13,988 14,017
Loss from extinguishment of debt 2,487 0 Income tax benefit (6,392
) (5,017 ) Depreciation and amortization 37,760 33,121
Noncontrolling interests of common units in Operating Partnership
(6 ) 0 Distributions to preferred shareholders 4,107 5,065
EBITDA $ 42,972 $ 39,791
Pre-opening, management transition and severance expenses 2,495 290
Acquisition transaction costs 107 0 Non-cash ground rent 324 327
Mezzanine loan discount amortization (986 ) (591 )
Adjusted
EBITDA $ 44,912 $ 39,817 Corporate
expense 7,491 6,406 Interest and other income (3,334 ) (3,855 )
Hotel level adjustments, net (137 ) 7,617
Hotel
EBITDA $ 48,932 $ 49,985
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, 2014 for the
Company's period of ownership in 2014 and the comparable period in
2013.
LASALLE HOTEL PROPERTIES Hotel
Operational Data Schedule of Property Level Results
(in thousands)
(unaudited)
For the three months ended March 31,
2014 2013 Revenues: Room $ 147,967 $
142,253 Food and beverage 53,244 53,472 Other 14,740 13,341
Total hotel revenues 215,951 209,066
Expenses: Room 43,684 41,436 Food and beverage 40,828 40,003
Other direct 5,097 5,172 General and administrative 20,048 19,119
Sales and marketing 16,610 15,828 Management fees 6,164 6,091
Property operations and maintenance 8,988 8,877 Energy and
utilities 7,260 6,597 Property taxes 13,414 11,575 Other fixed
expenses 4,926 4,383 Total hotel expenses 167,019
159,081
Hotel EBITDA $
48,932 $ 49,985 Hotel
EBITDA Margin 22.7 % 23.9 % Note:
This schedule includes the operating data for the three months
ended March 31, 2014 for all properties owned by the Company as of
March 31, 2014. Harbor Court, Triton, Serrano, and Southernmost are
shown in 2013 for their comparative period of ownership in 2014.
LASALLE HOTEL PROPERTIES Statistical Data
for the Hotels
(unaudited)
For the three months ended March 31,
2014 2013 Total Portfolio Occupancy 71.7 %
73.2 % Decrease (2.0 )% ADR $ 201.36 $ 189.64 Increase 6.2 %
RevPAR $ 144.40 $ 138.81
Increase 4.0 % Note: This schedule includes
operating data for all properties owned as of March 31, 2014 for
the Company's period of ownership in 2014 and the comparable period
in 2013.
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 (excluding
amortization of deferred finance costs) 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. 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 A. Riggins or Kenneth G. Fuller,
301-941-1500
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