Reports Adjusted EBITDA growth of 27.4% and
Adjusted FFO per share growth of 25.0%
Expands Hotel EBITDA Margin by 245 basis
points
LaSalle Hotel Properties (NYSE: LHO) today announced results for
the quarter ended March 31, 2015. The Company’s results include the
following:
The Marker Pool Deck (Photo: Business
Wire)
First Quarter 2015 2014
% Var. ($'s in millions except per share/unit data)
RevPAR $ 159.96 $ 151.70 5.4 % EBITDA Margin 25.2 % 22.7 % EBITDA
Margin Growth 245 bps Total Revenue $ 250.8 $ 218.9 14.6 %
EBITDA(1) $ 54.4 $ 43.0 26.5 % Adjusted EBITDA(1) $ 57.2 $ 44.9
27.4 % FFO(1) $ 42.5 $ 28.8 47.6 % Adjusted FFO(1) $ 45.3 $ 33.2
36.4 % FFO per diluted share/unit(1) $ 0.38 $ 0.28 35.7 % Adjusted
FFO per diluted share/unit(1) $ 0.40 $ 0.32 25.0 % Net loss
attributable to common shareholders $ (0.3 ) $ (9.0 ) Net loss
attributable to common shareholders per diluted share $ 0.00 $
(0.09 ) (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
- RevPAR: Room revenue per
available room (“RevPAR”) for the quarter ended March 31, 2015
increased 5.4 percent to $159.96, as a result of a 4.6 percent
increase in average daily rate (“ADR”) to $216.30 and a 0.8 percent
improvement in occupancy to 74.0 percent.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin for the first quarter increased 245
basis points from the comparable prior year period to 25.2 percent,
a first quarter record for the Company.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $57.2 million, an increase of 27.4 percent over
the first quarter of 2014.
- Adjusted FFO: The Company
generated first quarter adjusted FFO of $45.3 million, or $0.40 per
diluted share/unit, compared to $33.2 million, or $0.32 per diluted
share/unit, for the comparable prior year period, a per share/unit
increase of 25.0 percent.
- Hotel Acquisitions: The Company
invested $446.3 million to acquire two assets during the first
quarter, including the following:
- Park Central San Francisco in San
Francisco, CA for $350.0 million on January 23; and
- The Marker Waterfront Resort in Key
West, FL for $96.3 million on March 16.
- Capital Markets: The Company did
not sell any shares under its ATM program during the first quarter
or to date in the second quarter of 2015.
- Capital Investments: The Company
invested $26.8 million of capital in its hotels. The Company
completed renovations at Sofitel Washington, DC, The Grafton on
Sunset in West Hollywood, Hilton San Diego Gaslamp Quarter, Villa
Florence in San Francisco, Hyatt Boston Harbor, Westin Philadelphia
and most of the first phase of the rooms renovation at Westin
Michigan Avenue. During the quarter, the Company created 18 new
rooms, including 14 rooms in San Francisco and four rooms in San
Diego, which is a significant value enhancement to those hotels.
The average development cost per room was approximately $200,000,
which is a considerable discount to replacement cost, particularly
in high barrier to entry West Coast markets.
The Marker Waterfront
Resort
The Company acquired The Marker Waterfront Resort in Key West,
Florida for $96.3 million on March 16. The Company funded the
acquisition with borrowings from its senior unsecured credit
facility.
The Marker, which opened in December 2014, is a 96-room resort
ideally located on the end of the Historic Seaport in the Old Town
neighborhood. The Historic Seaport is the main location for sunset
cruises and fishing trips in Key West. The Marker is only three
blocks from Duval Street, which is home to numerous shopping and
dining destinations, museums, and theaters.
“We are thrilled to add The Marker to our portfolio of hotels,”
said Michael D. Barnello, President and Chief Executive Officer of
LaSalle Hotel Properties. “We believe the resort’s excellent
location, high quality amenities and brand new construction will
make it a popular destination for travelers to Key West. With very
limited new supply available in Key West and consistently strong
demand, we are excited about the outlook of our properties in this
market.”
The Marker was purchased fee simple. The asset will be managed
by Highgate Hotels, which also manages the Southernmost Hotel
Collection in Key West on behalf of the Company.
Second Quarter 2015 Common
Dividend
The Company’s Board of Trustees approved a 20 percent increase
to the quarterly common dividend in the second quarter 2015 to
$0.45 per diluted share, an annualized rate of $1.80 per diluted
share.
“First quarter performance exceeded our expectations,” said
Barnello. “RevPAR, adjusted EBITDA and adjusted FFO per share/unit
each were above the high end of our outlook range. Overall, the
operating environment remains favorable. Industry demand growth has
been robust and fundamentals remain strong.”
“We are very pleased with the Board’s decision to increase the
dividend by 20 percent in the second quarter. The increase reflects
the strong growth our portfolio has delivered throughout the cycle.
The dividend represents a 4.8 percent yield on our stock price as
of yesterday’s close.”
Balance Sheet
As of March 31, 2015, the Company had total outstanding debt of
$1.4 billion, including $342.0 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 3.6 times as of March 31, 2015 and its fixed
charge coverage ratio was 4.4 times. For the first quarter, the
Company’s weighted average interest rate was 3.7 percent. As of
March 31, 2015, the Company had $17.4 million of cash and cash
equivalents on its balance sheet and capacity of $430.4 million
available on its credit facilities.
2015 Outlook
The Company is increasing its 2015 outlook to include its
performance during the first quarter, updated margin expectations
for the balance of the year and the acquisition of The Marker. The
acquisition of The Marker has the impact of increasing full year
adjusted EBITDA outlook by approximately $4.0 million, of which
$0.3 million was recorded during the first quarter. The outlook is
based on the current economic environment and assumes no additional
acquisitions or dispositions. The Company’s RevPAR growth and
financial expectations for 2015 are as follows:
Previous Outlook Current Outlook
Low-end High-end Low-end
High-end
($'s in millions except per share/unit
data)
($'s in millions except per share/unit
data)
RevPAR growth 4.5% 6.5% 4.5% 6.5% Hotel EBITDA Margin Change
50 bps 150 bps 125 bps 175 bps Adjusted EBITDA $ 377.0 $
395.0 $ 391.0 $ 405.0 Adjusted FFO $ 304.0 $ 322.5 $ 316.0 $ 330.0
Adjusted FFO per diluted share/unit $ 2.67 $ 2.84 $ 2.78 $ 2.90
Second Quarter 2015
Outlook
The Company expects second quarter RevPAR to increase 4.5
percent to 5.5 percent. The Company expects its portfolio to
generate adjusted EBITDA of $122.0 million to $125.0 million and
adjusted FFO per share/unit of $0.86 to $0.89.
Earnings Call
The Company will conduct its quarterly conference call on
Thursday, April 23, 2015 at 10:00 AM eastern time. To participate
in the conference call, please dial (888) 352-6793.
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 47 hotels. The properties are
upscale, full-service hotels, totaling more than 12,000 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, 2015 2014 Revenues:
Hotel operating revenues: Room $ 170,591 $ 147,967 Food and
beverage 60,915 54,115 Other operating department 18,017
15,025 Total hotel operating revenues 249,523 217,107 Other
income 1,280 1,757 Total revenues 250,803
218,864
Expenses: Hotel operating expenses: Room
48,721 43,684 Food and beverage 45,118 41,700 Other direct 3,920
5,181 Other indirect 70,002 60,423 Total hotel
operating expenses 167,761 150,988 Depreciation and amortization
42,878 37,760 Real estate taxes, personal property taxes and
insurance 15,934 14,954 Ground rent 3,662 2,933 General and
administrative 6,267 5,492 Acquisition transaction costs 447 107
Other expenses 2,345 3,207 Total operating expenses
239,294 215,441 Operating income 11,509 3,423
Interest income 6 1,789 Interest expense (13,645 ) (13,988 ) Loss
from extinguishment of debt 0 (2,487 ) Loss before income
tax benefit (2,130 ) (11,263 ) Income tax benefit 4,868
6,392 Net income (loss) 2,738 (4,871 ) Noncontrolling
interests of common units in Operating Partnership (15 ) 6
Net income (loss) attributable to the Company 2,723 (4,865 )
Distributions to preferred shareholders (3,042 ) (4,107 ) Net loss
attributable to common shareholders $ (319 ) $ (8,972 )
LASALLE HOTEL PROPERTIES Consolidated Statements
of Operations and Comprehensive Loss - Continued
(in thousands, except share data)
(unaudited)
For the three months ended March 31,
2015 2014 Earnings per Common Share -
Basic: Net loss attributable to common shareholders excluding
amounts attributable to unvested restricted shares $ 0.00 $
(0.09 )
Earnings per Common Share - Diluted: Net loss
attributable to common shareholders excluding amounts attributable
to unvested restricted shares $ 0.00 $ (0.09 )
Weighted
average number of common shares outstanding: Basic 112,647,715
103,691,657 Diluted 112,647,715 103,691,657
Comprehensive
Loss: Net income (loss) $ 2,738 $ (4,871 ) Other comprehensive
loss: Unrealized (loss) gain on interest rate derivative
instruments (4,398 ) 111 Reclassification adjustment for amounts
recognized in net income (loss) 1,070 (1,083 ) (590 ) (5,843
) Noncontrolling interests of common units in Operating Partnership
(6 ) 9 Comprehensive loss attributable to the Company $ (596
) $ (5,834 )
LASALLE HOTEL PROPERTIES FFO
and EBITDA
(in thousands, except share/unit data)
(unaudited)
For the three months ended March 31,
2015 2014 Net loss attributable to common
shareholders $ (319 ) $ (8,972 ) Depreciation 42,752 37,658
Amortization of deferred lease costs 75 87 Noncontrolling interests
of common units in Operating Partnership 15 (6 )
FFO
$ 42,523 $ 28,767 Pre-opening,
management transition and severance expenses 1,847 2,495
Acquisition transaction costs 447 107 Loss from extinguishment of
debt 0 2,487 Non-cash ground rent 493 324 Mezzanine loan discount
amortization 0 (986 )
Adjusted FFO $
45,310 $ 33,194 Weighted
average number of common shares and units outstanding: Basic
112,944,015 103,987,957 Diluted 113,349,541 104,298,342
FFO per
diluted share/unit $ 0.38 $ 0.28
Adjusted FFO per diluted
share/unit $ 0.40 $ 0.32
For the three months
ended March 31, 2015 2014 Net loss
attributable to common shareholders $ (319 ) $ (8,972 ) Interest
expense 13,645 13,988 Loss from extinguishment of debt 0 2,487
Income tax benefit (4,868 ) (6,392 ) Depreciation and amortization
42,878 37,760 Noncontrolling interests of common units in Operating
Partnership 15 (6 ) Distributions to preferred shareholders 3,042
4,107
EBITDA $ 54,393 $
42,972 Pre-opening, management transition and severance
expenses 1,847 2,495 Acquisition transaction costs 447 107 Non-cash
ground rent 493 324 Mezzanine loan discount amortization 0
(986 )
Adjusted EBITDA $ 57,180 $
44,912 Corporate expense 6,986 7,491 Interest and other
income (1,286 ) (3,334 ) Hotel level adjustments, net (665 ) 4,216
Hotel EBITDA $ 62,215 $
53,285 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, 2015 for the Company's period of ownership in 2015 and
the comparable period in 2014, except for The Marker.
LASALLE HOTEL PROPERTIES Hotel Operational Data
Schedule of Property Level Results
(in thousands)
(unaudited)
For the three months ended March 31,
2015 2014 Revenues: Room $ 168,880 $
160,074 Food and beverage 60,617 58,088 Other 17,475 16,156
Total hotel revenues 246,972 234,318
Expenses: Room 48,289 47,858 Food and beverage 44,794 45,531
Other direct 3,878 5,576 General and administrative 23,642 21,210
Sales and marketing 19,592 18,050 Management fees 7,266 6,820
Property operations and maintenance 9,535 9,405 Energy and
utilities 7,730 7,419 Property taxes 13,977 13,467 Other fixed
expenses 6,054 5,697 Total hotel expenses 184,757
181,033
Hotel EBITDA $
62,215 $ 53,285 Hotel
EBITDA Margin 25.2 % 22.7 %
Note: This schedule includes the operating data for the three
months ended March 31, 2015 for all properties owned by the Company
as of March 31, 2015. Vitale, Heathman and Park Central San
Francisco are shown in 2014 for their comparative period of
ownership in 2015. Park Central San Francisco excludes January 2015
ownership and the comparative period of January 2014. Hilton
Alexandria Old Town and Hotel Viking ownership excluded in 2014.
The Marker 2015 ownership excluded.
LASALLE HOTEL
PROPERTIES Statistical Data for the Hotels
(unaudited)
For the three months ended March 31,
2015 2014 Total Portfolio Occupancy 74.0 %
73.4 % Increase 0.8 % ADR $ 216.30 $ 206.75 Increase 4.6 %
RevPAR $ 159.96 $ 151.70
Increase 5.4 % Note: This schedule
includes operating data for all properties owned as of March 31,
2015 for the Company's period of ownership in 2015 and the
comparable period in 2014. The Marker 2015 ownership is excluded.
LASALLE HOTEL
PROPERTIES Statistical Data for the Hotels - Continued
(unaudited)
Prior Year Operating Data (Entire Portfolio) -
2014 Comparable First Quarter Second
Quarter Third Quarter Fourth Quarter Full
Year 2014 2014 2014 2014
2014 Occupancy 73 % 87 % 88 % 78 % 82 % ADR $ 206.75 $
241.90 $ 245.08 $ 235.70 $ 233.60 RevPAR $ 151.70 $ 211.14 $ 216.00
$ 184.52 $ 191.22 Hotel Revenues $ 234.3 $ 325.5 $ 326.7 $
289.0 $ 1,175.5 Hotel EBITDA $ 53.3 $ 117.4 $ 119.0 $ 90.4 $ 380.1
Hotel EBITDA Margin 22.7 % 36.1 % 36.4 % 31.3 % 32.3 % Note:
This schedule above includes operating
data for all properties owned as of December 31, 2014 and
February-December 2014 for the Park Central San Francisco
acquisition. Reconciliations of the Company’s net income (loss) to
hotel EBITDA and hotel EBITDA margin are generally included in the
Company’s earnings releases for each period, which are available
through the Company’s website.
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. 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.
Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20150422006535/en/
LaSalle Hotel PropertiesBruce A. Riggins, 301-941-1500
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