Expands Hotel EBITDA Margin by 248 Basis Points
to 38.5%; Highest Ever Margin
Provides a Mezzanine Loan Secured by Shutters
on the Beach and Casa Del Mar
LaSalle Hotel Properties (NYSE: LHO) today announced results for
the quarter ended June 30, 2015. The Company’s results include the
following:
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Westin Copley Place Exterior (Photo:
Business Wire)
Second Quarter Year-to-Date 2015
2014 % Var. 2015
2014 % Var. ($'s in millions except per
share/unit data) RevPAR $ 219.76 $ 211.14 4.1% $ 190.34 $
181.88 4.7% EBITDA Margin 38.5% 36.1% 32.9% 30.5% EBITDA Margin
Growth 248 bps 241 bps Total Revenue $ 341.4 $ 313.1 9.0% $
592.2 $ 532.0 11.3% EBITDA(1, 2) $ 124.4 $ 148.8 -16.4% $ 178.8 $
191.7 -6.7% Adjusted EBITDA(1) $ 125.2 $ 109.6 14.2% $ 182.4 $
154.5 18.1% FFO(1) $ 101.8 $ 81.6 24.8% $ 144.4 $ 110.4 30.8%
Adjusted FFO(1) $ 102.6 $ 86.0 19.3% $ 147.9 $ 119.2 24.1% FFO per
diluted share/unit(1) $ 0.90 $ 0.78 15.4% $ 1.27 $ 1.06 19.8%
Adjusted FFO per diluted share/unit(1) $ 0.91 $ 0.82 11.0% $ 1.31 $
1.14 14.9% Net income attributable to common shareholders(2) $ 55.8
$ 85.6 -34.8% $ 55.5 $ 76.6 -27.5% Net income attributable to
common shareholders per diluted share(2) $ 0.49 $ 0.82 -40.2% $
0.49 $ 0.73 -32.9% (1) See tables later in press release,
which list adjustments that reconcile net income attributable to
common shareholders to earnings before interest, taxes,
depreciation and amortization (“EBITDA”), adjusted EBITDA, funds
from operations attributable to common shareholders and unitholders
(“FFO”), FFO per share/unit, adjusted FFO, adjusted FFO per
share/unit and 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.
(2) 2014 EBITDA and net income include a
$43.5 million disposition gain from the 2014 sale of the Hilton
Alexandria Old Town.
Second Quarter Results and
Activities
- RevPAR: Room revenue per
available room (“RevPAR”) for the quarter ended June 30, 2015
increased 4.1 percent to $219.76, as a result of a 4.4 percent
increase in average daily rate (“ADR”) to $252.51 and a 0.3 percent
decrease in occupancy to 87.0 percent.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin for the second quarter increased 248
basis points from the comparable prior year period to 38.5 percent,
a quarterly record for the Company.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $125.2 million, an increase of 14.2 percent
over the second quarter of 2014.
- Adjusted FFO: The Company
generated second quarter adjusted FFO of $102.6 million, or $0.91
per diluted share/unit, compared to $86.0 million, or $0.82 per
diluted share/unit, for the comparable prior year period, a per
share/unit increase of 11.0 percent.
- Dividend: On April 22, the
Company increased its common dividend 20.0 percent to $0.45 per
diluted share for the quarter ended June 30, 2015. The dividend
represents an annualized rate of $1.80 per diluted share and a 4.8
percent yield based on the closing share price on July 21,
2015.
- Westin Copley Place Debt: On
June 1, the Company repaid the $210.0 million mortgage secured by
Westin Copley Place in Boston, Massachusetts. The Company has no
remaining debt maturities in 2015. For details on a new loan
secured by Westin Copley Place, please refer to the Subsequent
Events section of this press release.
- ATM Program: The Company did not
sell any shares under its ATM program during the second quarter or
to date in the third quarter of 2015.
- Capital Investments: The Company
invested $33.5 million of capital in its hotels, including the
completion of the first phase of the rooms renovation at Westin
Michigan Avenue and deposits for the second phase of the rooms
renovation at Westin Michigan Avenue, which is scheduled to begin
during the fourth quarter of 2015.
“Second quarter performance excelled in the areas that matter
most,” said Michael D. Barnello, President and Chief Executive
Officer of LaSalle Hotel Properties. “Adjusted EBITDA and adjusted
FFO per share/unit both grew by double digit percentages during the
second quarter and were both above the high end of our outlook
range. Overall, the operating environment remains favorable.
Industry demand growth has been robust and fundamentals remain
strong.”
Year-to-Date Results
For the six months ended June 30, 2015, RevPAR increased 4.7
percent to $190.34, with occupancy growth of 0.2 percent to 80.6
percent and ADR improvement of 4.4 percent to $236.16. The
Company’s hotel EBITDA margin was 32.9 percent, which improved 241
basis points compared to the same prior year period.
Subsequent Events
On July 20, 2015, the Company provided an $80.0 million junior
mezzanine loan (the “Mezzanine Loan”) secured by equity interests
in two hotels: Shutters on the Beach and Casa Del Mar, in Santa
Monica, California.
The interest only Mezzanine Loan bears interest at a variable
rate equal to LIBOR plus 7.75 percent, which translates to 7.94
percent as of July 21, 2015. The Mezzanine Loan has an initial
two-year term, with five one-year extension options. The Mezzanine
Loan is subordinate to a $235.0 million first mortgage loan and a
$90.0 million senior mezzanine loan secured by the properties that
both also have an initial two-year term, with five one-year
extension options.
“We are excited to renew our lending relationship with these two
iconic and irreplaceable assets,” added Mr. Barnello. “Furthermore,
the going in yield on our investment of approximately 8.0 percent
is very attractive. Based on the LIBOR curve for the duration of
the loan, we anticipate the average cash-on-cash return for the
full seven years will be approximately 9.7 percent.”
Also on July 20, the Company closed on a new $225.0 million loan
secured by the Westin Copley Place. The interest rate will range
from LIBOR plus 1.75 percent to LIBOR plus 2.0 percent, depending
on Westin Copley Place’s net cash flow (as defined in the loan
agreement). At the current interest rate of LIBOR plus 2.0 percent,
which translates to 2.19 percent, the Company would save
approximately $6.0 million of interest expense annually compared to
its previous loan on Westin Copley Place, despite a $15.0 million
higher loan balance. The loan matures in January 2021, including
three extension options, pursuant to certain terms and
conditions.
Balance Sheet
As of June 30, 2015, the Company had total outstanding debt of
$1.3 billion, including $531.0 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 3.4 times as of June 30, 2015 and its fixed
charge coverage ratio was 4.7 times. For the second quarter, the
Company’s weighted average interest rate was 3.3 percent. As of
June 30, 2015, the Company had $26.6 million of cash and cash
equivalents on its balance sheet and capacity of $241.5 million
available on its credit facilities. After closing on the Mezzanine
Loan and the new Westin Copley Place loan subsequent to the end of
the second quarter, the Company has pro forma capacity of
approximately $380 million available on its credit facilities.
Full Year 2015 Outlook
The Company is updating its 2015 outlook to include its
performance during the second quarter, updated expectations for the
balance of the year, the Mezzanine Loan, and the new Westin Copley
Place loan. The Company is increasing the midpoint of its adjusted
EBITDA outlook by $5.0 million compared to its previous outlook,
including approximately $3.0 million for the Mezzanine Loan and
$1.7 million for exceeding the midpoint of its second quarter
adjusted EBITDA outlook. The outlook is based on the current
economic environment and assumes no additional acquisitions or
dispositions. The Company’s RevPAR growth and financial
expectations for 2015 are as follows:
Full Year 2015 Outlook Low-end
High-end ($'s in millions except per share/unit data)
RevPAR growth 3.5% 4.5% Hotel EBITDA Margin Change 175 bps 225 bps
Adjusted EBITDA $ 398.0 $ 408.0 Adjusted FFO $ 325.0 $ 333.0
Adjusted FFO per diluted share/unit $ 2.87 $ 2.94
Third Quarter 2015
Outlook
The Company expects third quarter RevPAR to increase 1.0 percent
to 3.0 percent, which compares to 11.5 percent RevPAR growth during
the third quarter of 2014. The Company’s outlook factors in lower
citywide demand in the third quarter, resulting from a decline in
citywide events in many of its markets. Based on the Company’s
third quarter RevPAR outlook, the implied midpoint of the Company’s
fourth quarter RevPAR growth is 5.0 percent.
The Company expects to increase its third quarter hotel EBITDA
margin between 100 basis points and 150 basis points compared to
the same prior year period, generating adjusted EBITDA of $121.0
million to $124.0 million and adjusted FFO per share/unit of $0.87
to $0.90.
Earnings Call
The Company will conduct its quarterly conference call on
Thursday, July 23, 2015 at 10:00 AM eastern time. To participate in
the conference call, please dial (800) 946-0744.
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 and a mezzanine loan
secured by two hotels in Santa Monica, California. 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
Company’s operating environment, the performance of the Mezzanine
Loan and 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 Income
(in thousands, except share data)
(unaudited)
For the three months ended
For the six months ended June 30,
June 30, 2015 2014 2015
2014 Revenues: Hotel operating
revenues: Room $ 242,447 $ 217,732 $ 413,038 $ 365,699 Food and
beverage 75,480 72,407 136,395 126,522 Other operating department
21,560 19,789 39,577
34,814 Total hotel operating revenues 339,487 309,928
589,010 527,035 Other income 1,899 3,177
3,179 4,934 Total revenues
341,386 313,105 592,189
531,969
Expenses: Hotel operating expenses:
Room 55,998 51,467 104,719 95,151 Food and beverage 49,069 50,144
94,187 91,844 Other direct 4,927 6,547 8,847 11,728 Other indirect
78,877 69,779 148,879
130,202 Total hotel operating expenses 188,871
177,937 356,632 328,925 Depreciation and amortization 45,916 39,306
88,794 77,066 Real estate taxes, personal property taxes and
insurance 16,352 14,378 32,286 29,332 Ground rent 4,011 3,807 7,673
6,740 General and administrative 6,501 6,034 12,768 11,526
Acquisition transaction costs (3 ) 1,744 444 1,851 Other expenses
1,259 3,050 3,604
6,257 Total operating expenses 262,907
246,256 502,201 461,697
Operating income 78,479 66,849 89,988 70,272 Interest income 1 10 7
1,799 Interest expense (13,895 ) (14,556 ) (27,540 ) (28,544 ) Loss
from extinguishment of debt 0 0
0 (2,487 ) Income before income tax (expense) benefit
64,585 52,303 62,455 41,040 Income tax (expense) benefit
(5,574 ) (4,883 ) (706 ) 1,509 Income
before gain on sale of property 59,011 47,420 61,749 42,549 Gain on
sale of property 0 43,548 0
43,548 Net income 59,011
90,968 61,749 86,097 Net income
attributable to noncontrolling interests: Noncontrolling interests
in consolidated entities (8 ) (8 ) (8 ) (8 ) Noncontrolling
interests of common units in Operating Partnership (139 )
(266 ) (154 ) (260 ) Net income attributable
to noncontrolling interests (147 ) (274 ) (162
) (268 ) Net income attributable to the Company 58,864
90,694 61,587 85,829 Distributions to preferred shareholders (3,042
) (4,142 ) (6,084 ) (8,249 ) Issuance costs of redeemed preferred
shares 0 (942 ) 0 (942 )
Net income attributable to common shareholders $ 55,822 $
85,610 $ 55,503 $ 76,638
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
and Comprehensive Income - Continued
(in thousands, except share data)
(unaudited)
For the three months ended
For the six months ended June 30,
June 30, 2015 2014 2015
2014 Earnings per Common Share - Basic:
Net income attributable to common shareholders excluding amounts
attributable to unvested restricted shares $ 0.49 $ 0.82
$ 0.49 $ 0.74
Earnings per Common Share -
Diluted: Net income attributable to common shareholders
excluding amounts attributable to unvested restricted shares $ 0.49
$ 0.82 $ 0.49 $ 0.73
Weighted
average number of common shares outstanding: Basic 112,728,085
103,698,332 112,688,122 103,695,013 Diluted 113,141,908 104,024,472
113,094,640 104,036,397
Comprehensive Income: Net
income $ 59,011 $ 90,968 $ 61,749 $ 86,097 Other comprehensive
income: Unrealized gain (loss) on interest rate derivative
instruments 26 (4,217 ) (4,372 ) (6,272 ) Reclassification
adjustment for amounts recognized in net income 1,069
1,101 2,139 2,184 60,106
87,852 59,516 82,009 Comprehensive income attributable to
noncontrolling interests: Noncontrolling interests in consolidated
entities (8 ) (8 ) (8 ) (8 ) Noncontrolling interests of common
units in Operating Partnership (144 ) (257 )
(150 ) (248 ) Comprehensive income attributable to
noncontrolling interests (152 ) (265 ) (158 )
(256 ) Comprehensive income attributable to the Company $
59,954 $ 87,587 $ 59,358 $ 81,753
LASALLE HOTEL PROPERTIES
FFO and EBITDA
(in thousands, except share/unit data)
(unaudited)
For the three months ended
For the six months ended June 30,
June 30, 2015 2014 2015
2014 Net income attributable to common
shareholders $ 55,822 $ 85,610 $ 55,503 $ 76,638 Depreciation
45,790 39,200 88,542 76,858 Amortization of deferred lease costs 72
88 147 175 Noncontrolling interests: Noncontrolling interests in
consolidated entities 8 8 8 8 Noncontrolling interests of common
units in Operating Partnership 139 266 154 260 Less: Net gain on
sale of property 0 (43,548 ) 0
(43,548 )
FFO attributable to common shareholders and
unitholders $ 101,831 $ 81,624
$ 144,354 $ 110,391 Pre-opening,
management transition and severance expenses 303 1,190 2,150 3,685
Preferred share issuance costs 0 942 0 942 Acquisition transaction
costs (3 ) 1,744 444 1,851 Loss from extinguishment of debt 0 0 0
2,487 Non-cash ground rent 487 501 980 825 Mezzanine loan discount
amortization 0 0 0
(986 )
Adjusted FFO attributable to common shareholders and
unitholders $ 102,618 $
86,001 $ 147,928 $
119,195 Weighted average number of common shares
and units outstanding: Basic 112,943,036 103,994,632
112,943,523 103,991,313 Diluted 113,356,859 104,320,772 113,350,041
104,332,697
FFO attributable to common shareholders and
unitholders per diluted share/unit $ 0.90 $ 0.78 $ 1.27 $ 1.06
Adjusted FFO attributable to common shareholders and unitholders
per diluted share/unit $ 0.91 $ 0.82 $ 1.31 $ 1.14
For the three months ended For the six months
ended June 30, June 30, 2015 2014
2015 2014 Net income attributable to common
shareholders $ 55,822 $ 85,610 $ 55,503 $ 76,638 Interest expense
13,895 14,556 27,540 28,544 Loss from extinguishment of debt 0 0 0
2,487 Income tax expense (benefit) 5,574 4,883 706 (1,509 )
Depreciation and amortization 45,916 39,306 88,794 77,066
Noncontrolling interests: Noncontrolling interests in consolidated
entities 8 8 8 8 Noncontrolling interests of common units in
Operating Partnership 139 266 154 260 Distributions to preferred
shareholders 3,042 4,142 6,084
8,249
EBITDA $ 124,396
$ 148,771 $ 178,789 $
191,743 Pre-opening, management transition and severance
expenses 303 1,190 2,150 3,685 Preferred share issuance costs 0 942
0 942 Acquisition transaction costs (3 ) 1,744 444 1,851 Net gain
on sale of property 0 (43,548 ) 0 (43,548 ) Non-cash ground rent
487 501 980 825 Mezzanine loan discount amortization 0
0 0 (986 )
Adjusted
EBITDA $ 125,183 $ 109,600 $
182,363 $ 154,512 Corporate expense 7,656
8,124 14,641 15,615 Interest and other income (1,900 ) (2,636 )
(3,186 ) (5,970 ) Hotel level adjustments, net (1,122 )
2,315 (1,786 ) 6,531
Hotel
EBITDA $ 129,817 $ 117,403
$ 192,032 $ 170,688
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 June 30, 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
For the six months ended June 30,
June 30, 2015 2014 2015
2014 Revenues: Room $ 239,532 $ 229,737
$ 408,412 $ 389,811 Food and beverage 75,277 74,696 135,895 132,784
Other 21,952 21,105 39,426
37,261 Total hotel revenues 336,761
325,538 583,733 559,856
Expenses: Room 55,588 56,194 103,877 104,051
Food and beverage 48,885 52,683 93,679 98,214 Other direct 4,826
6,647 8,704 12,223 General and administrative 25,578 23,944 49,220
45,154 Sales and marketing 22,328 20,734 41,921 38,784 Management
fees 11,658 11,633 18,924 18,453 Property operations and
maintenance 9,759 10,019 19,293 19,424 Energy and utilities 7,275
7,264 15,005 14,683 Property taxes 14,490 12,954 28,467 26,421
Other fixed expenses 6,557 6,063
12,611 11,761 Total hotel expenses
206,944 208,135 391,701
389,168
Hotel EBITDA $ 129,817
$ 117,403 $ 192,032
$ 170,688 Hotel EBITDA
Margin 38.5 % 36.1 % 32.9
% 30.5 %
Note:
This schedule includes the operating data for the three and six
months ended June 30, 2015 for all properties owned by the Company
as of June 30, 2015, except for The Marker. Park Central San
Francisco is included in February through June of 2015 and 2014.
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.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(unaudited)
For the three months ended
For the six months ended June 30,
June 30, 2015 2014 2015
2014 Total Portfolio Occupancy 87.0 % 87.3 %
80.6 % 80.4 % (Decrease) Increase (0.3 )% 0.2 % ADR $ 252.51 $
241.90 $ 236.16 $ 226.11 Increase 4.4 % 4.4 %
RevPAR
$ 219.76 $ 211.14 $
190.34 $ 181.88 Increase 4.1
% 4.7 %
Note:
This schedule includes operating data for all properties owned
as of June 30, 2015 for the Company’s period of ownership in 2015
and the comparable period in 2014. The Marker 2015 ownership is
excluded.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150722006395/en/
LaSalle Hotel PropertiesBruce A. Riggins or Max D. Leinweber,
301-941-1500
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