LaSalle Hotel Properties (NYSE: LHO) today announced results for
the quarter ended September 30, 2015. The Company’s results are
summarized below in two tables. The results in Table 1 reflect the
Company’s entire portfolio. Table 2 isolates the negative impact of
a one-time event at Park Central New York and WestHouse
(collectively “PCNY/WH”) and normalizes the Company’s third quarter
performance excluding this event. Throughout this release, the
Company estimates the negative impact based on the PCNY/WH actual
results for August and September 2015 versus their forecast for
that period as of August 1, 2015.
Full Portfolio
(Table 1)
Third Quarter
Year-to-Date 2015 2014 % Var.
2015 2014 % Var. ($'s in millions except per
share/unit data) RevPAR $210.74 $216.00 -2.4% $197.26
$193.45 2.0% EBITDA Margin 36.3% 36.4% 34.1% 32.7% EBITDA Margin
Change -9 bps 145 bps Total Revenue $ 329.7 $ 308.0 7.0% $
921.9 $ 840.0 9.8% EBITDA(1, 2) $ 106.5 $ 157.8 -32.5% $ 285.3 $
349.6 -18.4% Adjusted EBITDA(1) $ 114.6 $ 108.9 5.2% $ 297.0 $
263.4 12.8% FFO(1) $ 90.7 $ 87.6 3.5% $ 235.0 $ 198.0 18.7%
Adjusted FFO(1) $ 98.8 $ 88.3 11.9% $ 246.7 $ 207.5 18.9% FFO per
diluted share/unit(1) $ 0.80 $ 0.84 -4.8% $ 2.07 $ 1.90 8.9%
Adjusted FFO per diluted share/unit(1) $ 0.87 $ 0.85 2.4% $ 2.18 $
1.99 9.5% Net income attributable to common shareholders(2) $ 44.4
$ 98.2 -54.8% $ 99.9 $ 174.8 -42.8% Net income attributable to
common shareholders per diluted share(2) $ 0.39 $ 0.94 -58.5% $
0.88 $ 1.67 -47.3% (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) Third quarter 2014 EBITDA and net
income include a $49.7 million disposition gain from the 2014 sale
of the Hotel Viking. Year-to-date 2014 EBITDA and net income
include the Hotel Viking disposition gain and a $43.5 million
disposition gain from the 2014 sale of the Hilton Alexandria Old
Town.
Portfolio
Adjusted for Impact at Park Central New York and WestHouse (Table
2)
Add Back
Q3 2015 Q3 2015
PCNY/WH
Adjusted to
Q3 2015
Q3
Actual
Impact to Entire
Exclude
Outlook as of
Reported Portfolio Impact
7/22/15
($'s in millions except per share/unit data)
RevPAR
-2.4% 3.2% 0.8% 1% - 3%
Hotel EBITDA Margin ∆
-9 bps 125 bps 116 bps 100 - 150 bps
Adjusted EBITDA $114.6 $7.2
$121.8 $121 - $124 Adjusted
FFO(1) $98.8 $4.2 $103.0 $99 -
$102 Adjusted FFO per diluted share/unit
$0.87 $0.04 $0.91
$0.87 - $0.90 (1) As a
note to the PCNY/WH interruption impact, income taxes decreased by
approximately $3.0 million, which mitigated part of the $7.2
million adjusted EBITDA decline and led to an adjusted FFO
reduction of $4.2 million.
Park Central New York and
WestHouse
The Company transitioned management companies at three of its
hotels in San Francisco in July. As a result of these transitions,
in late August, the hotel workers’ union (the “Union”) alleged
health and safety violations at two of the Company’s hotels in
Manhattan: Park Central New York and WestHouse. These
allegations were a targeted attack against the Company. Despite the
fact that neither hotel has received any New York City or New York
State health or safety violations during or since the time the
allegations began, both hotels had no choice but to test against
all claims.
In order to adequately test for these alleged issues, the Park
Central New York and WestHouse were forced to close many of their
available rooms during the final six weeks of the third quarter and
for the first three weeks of the fourth quarter. As a result,
during September, both hotels combined ran 14.5 percent occupancy
and room revenue per available room (“RevPAR”) at the two hotels
decreased by 85.1 percent compared to the prior year. For the third
quarter, RevPAR at the two hotels decreased by 37.8 percent
compared to prior year.
Park Central New York and WestHouse Statistics
Actual Q3 2015
Forecasted Q3 2015 Q3 2014 Variance
Forecast as Variance to Actual
Actual to 2014 of 8/1/15
2014 RevPAR $ 156.70 $ 251.77 -37.8 % $ 245.43
-2.5 %
Total Revenue(1) $ 16.1 $ 24.0 $ (7.9 ) $ 24.4
$ 0.4
Hotel EBITDA(1) $ 1.3 $ 8.3 $ (7.0 ) $ 8.5 $
0.2
Hotel EBITDA Margin 8.2 %
34.4 % -2613 bps 34.8 % 45 bps
(1) $'s in millions.
This conflict with the Union is now resolved, all hotel rooms
are reopened, and both hotels are back to normal operations.
As shown above in Table 2, the temporary interruption at PCNY/WH
negatively impacted the Company’s portfolio-wide third quarter
results, including decreasing RevPAR by 320 basis points, reducing
hotel EBITDA margin by 125 basis points, displacing $7.2 million of
hotel EBITDA, and lowering adjusted FFO by $4.2 million, which was
partially offset by income tax savings. The Company also incurred
$4.6 million in one-time costs while testing for the alleged
issues, including guest relocation, clean up, legal, and payroll.
Excluding the negative impact from this isolated issue, the
Company’s third quarter results would have been within its
previously disclosed third quarter outlook range for adjusted
EBITDA.
Given that the disruption at PCNY/WH continued into October, the
Company’s portfolio-wide fourth quarter results will also be
impacted. The estimated fourth quarter impact to the portfolio is
150 basis points of RevPAR growth, 44 basis points of EBITDA margin
expansion and $3.0 million of hotel EBITDA.
Third Quarter Results and
Activities
- RevPAR: RevPAR for the quarter
ended September 30, 2015 decreased 2.4 percent to $210.74, as a
result of a 0.3 percent increase in average daily rate (“ADR”) to
$245.71 and a 2.7 percent decrease in occupancy to 85.8 percent.
Excluding the lost revenue at PCNY/WH in August and September
2015, RevPAR would have increased by 0.8 percent.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin for the third quarter decreased 9
basis points from the comparable prior year period to 36.3 percent.
Excluding the impact at PCNY/WH, the Company’s hotel EBITDA
margin for the third quarter would have increased by 116 basis
points from the comparable prior year period to 37.6
percent.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $114.6 million, an increase of 5.2 percent over
the third quarter of 2014. Excluding the impact at PCNY/WH, the
Company’s adjusted EBITDA would have been $121.8 million, which
would have been an increase of 11.8 percent over the third quarter
of 2014.
- Adjusted FFO: The Company
generated third quarter adjusted FFO of $98.8 million, or $0.87 per
diluted share/unit, compared to $88.3 million, or $0.85 per diluted
share/unit, for the comparable prior year period, a per share/unit
increase of 2.4 percent. Excluding the impact at PCNY/WH, the
Company would have generated third quarter adjusted FFO of $103.0
million, or $0.91 per diluted share/unit.
- New Mezzanine Loan: On July 20,
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 775 basis points, which
translates to 7.95 percent as of October 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.
- Westin Copley Place Refinancing:
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 175 basis points to LIBOR plus 200 basis points,
depending on Westin Copley Place’s net cash flow (as defined in the
loan agreement). At the current interest rate of LIBOR plus 200
basis points, which translates to 2.20 percent, the Company would
save approximately $6.0 million of interest expense annually
compared to its previous loan on Westin Copley Place. The loan
matures in January 2021, including three extension options,
pursuant to certain terms and conditions.
- Dividend: On September 15, the
Company declared a third quarter 2015 dividend of $0.45 per common
share of beneficial interest. The dividend represents an annual run
rate of $1.80 per share and a 5.8 percent yield based on the
closing share price on October 21, 2015.
- Share Repurchase: During the
third quarter, the Company acquired 184,742 common shares through
its share repurchase program at a cost of $5.7 million and a
weighted average price of $30.81 per share. The Company has $69.8
million of capacity remaining in its share repurchase program.
- Capital Investments: The Company
invested $31.8 million of capital in its hotels, including $14.3
million of deposits for renovations scheduled to begin during the
fourth quarter of 2015.
Year-to-Date Results
For the nine months ended September 30, 2015, RevPAR increased
2.0 percent to $197.26, with ADR improvement of 2.8 percent to
$239.54 and an occupancy decline of 0.8 percent to 82.4 percent.
The Company’s hotel EBITDA margin was 34.1 percent, which improved
145 basis points compared to the same prior year period.
Excluding the impact at PCNY/WH in August and September 2015,
for the nine months ended September 30, 2015, RevPAR would have
increased 3.2 percent to $199.61, with ADR improvement of 3.1
percent to $240.25 and an occupancy increase to 83.1 percent from
83.0 percent. The Company’s hotel EBITDA margin would have been
34.6 percent, an increase of 192 basis points compared to the same
prior year period.
Balance Sheet
As of September 30, 2015, the Company had total outstanding debt
of $1.4 billion, including $380.0 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 3.5 times as of September 30, 2015 and its
fixed charge coverage ratio was 4.9 times. For the third quarter,
the Company’s weighted average interest rate was 3.0 percent. As of
September 30, 2015, the Company had $23.3 million of cash and cash
equivalents on its balance sheet and capacity of $392.5 million
available on its credit facilities.
Fourth Quarter 2015
Outlook
The Company expects fourth quarter RevPAR to increase 1.0
percent to 3.0 percent. The Company’s outlook includes $3.0 million
of room revenue impact at PCNY/WH during October.
The Company expects to increase its fourth quarter hotel EBITDA
margin between 100 basis points and 125 basis points compared to
the same prior year period, generating adjusted EBITDA of $90.5
million to $93.0 million and adjusted FFO per share/unit of $0.65
to $0.68. A summary of changes to the Company's previous fourth
quarter outlook is included below.
(D) Midpoint D =
A B C
Midpoint A-B-C E = D +
B Current Implied Q4
PCNY/WH
Expected
Outlook
Current Outlook
Q4
2015 Outlook as
Impact to Entire
Change in
Q4 2015 as of
Excluding
of 7/22/15
Portfolio Operations
10/22/15 PCNY/WH
Impact ($'s in millions except per share/unit data)
RevPAR 4.0% - 6.0% -1.5% -1.5% 1% -
3% 2.5% - 4.5% Hotel EBITDA Margin ∆ 150 - 250
bps -44 bps -44 bps 100 - 125 bps 144 -
169 bps Adjusted EBITDA $94.5 - $101.0
-$3.0 -$3.0 $90.5 - $93.0 $93.5 - $96.0
Adjusted FFO $78.0 - $83.0 -$2.5
-$2.5 $74.0 - $77.0 $76.5 - $79.5 Adjusted
FFO per diluted share/unit $0.69 - $0.73
-$0.02 -$0.02 $0.65 - $0.68
$0.67 - $0.70
Full Year 2015 Outlook
The Company is updating its 2015 outlook to include its
performance during the third quarter, disruption at PCNY/WH, and
updated expectations for the fourth quarter. The outlook is based
on the current economic environment and assumes no additional
acquisitions or dispositions. The Company’s RevPAR growth and
financial expectations for 2015 are as follows:
(D) Midpoint D =
A B C
Midpoint A-B-C E = D +
B Previous
Current
Outlook FY
PCNY/WH
Expected
Outlook
Current Outlook
Full
2015 as of
Impact to Entire
Change in FY 2015 as of
Excluding
Year
7/22/15 Portfolio
Operations 10/22/15
PCNY/WH Impact ($'s in millions except per
share/unit data)
RevPAR 3.5% - 4.5% -1.3%
-0.7% 1.7% - 2.2% 3.0% - 3.5%
Hotel EBITDA Margin ∆
175 - 225 bps -47 bps
-15 bps
135 - 140 bps
182 - 187 bps
Adjusted EBITDA $398.0 - $408.0 -$10.2
-$4.0 $387.5 - $390.0 $397.7 - $400.2
Adjusted FFO $325.0 - $333.0 -$6.7
-$0.3 $320.5 - $323.5 $327.2 - $330.2
Adjusted FFO per diluted share/unit $2.87 -
$2.94 -$0.06 $0.00 $2.83
- $2.86 $2.89 - $2.92
The Company expects 2015 RevPAR to increase 1.7 percent to 2.2
percent. Excluding the lost revenue at PCNY/WH, the Company
expects 2015 RevPAR to increase 3.0 percent to 3.5 percent.
The Company expects to increase its 2015 hotel EBITDA margin
between 135 basis points and 140 basis points compared to the same
prior year period, generating adjusted EBITDA of $387.5 million to
$390.0 million and adjusted FFO per share/unit of $2.83 to $2.86.
Excluding the impact at PCNY/WH, the Company expects to increase
its 2015 hotel EBITDA margin between 182 basis points and 187 basis
points compared to the same prior year period, generating adjusted
EBITDA of $397.7 million to $400.2 million and adjusted FFO per
share/unit of $2.89 to $2.92.
Earnings Call
The Company will conduct its quarterly conference call on
Friday, October 23, 2015 at 11:00 AM eastern time. To participate
in the conference call, please dial (800) 753-9057.
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,
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
nine months ended September 30, September 30,
2015 2014 2015 2014
Revenues: Hotel operating revenues: Room $ 233,993 $ 222,006
$ 647,031 $ 587,705 Food and beverage 68,688 63,399 205,083 189,921
Other operating department 24,472 21,291 64,049
56,105 Total hotel operating revenues 327,153 306,696
916,163 833,731 Other income 2,557 1,306 5,736
6,240 Total revenues 329,710 308,002 921,899
839,971
Expenses: Hotel operating expenses:
Room 56,283 52,344 161,002 147,495 Food and beverage 48,268 45,986
142,455 137,830 Other direct 4,960 6,772 13,807 18,500 Other
indirect 78,070 69,722 226,949 199,924
Total hotel operating expenses 187,581 174,824 544,213 503,749
Depreciation and amortization 46,208 38,821 135,002 115,887 Real
estate taxes, personal property taxes and insurance 17,045 13,878
49,331 43,210 Ground rent 4,491 4,279 12,164 11,019 General and
administrative 6,173 6,278 18,941 17,804 Acquisition transaction
costs 55 0 499 1,851 Other expenses 9,149 573 12,753
6,830 Total operating expenses 270,702 238,653
772,903 700,350 Operating income 59,008 69,349
148,996 139,621 Interest income 1,294 2 1,301 1,801 Interest
expense (13,250 ) (14,499 ) (40,790 ) (43,043 ) Loss from
extinguishment of debt 0 0 0 (2,487 ) Income
before income tax benefit (expense) 47,052 54,852 109,507 95,892
Income tax benefit (expense) 490 (2,997 ) (216 ) (1,488 )
Income before gain on sale of properties 47,542 51,855 109,291
94,404 Gain on sale of properties 0 49,657 0
93,205 Net income 47,542 101,512 109,291
187,609 Net income attributable to noncontrolling
interests: Noncontrolling interests in consolidated entities 0 0 (8
) (8 ) Noncontrolling interests of common units in Operating
Partnership (75 ) (297 ) (229 ) (557 ) Net income attributable to
noncontrolling interests (75 ) (297 ) (237 ) (565 ) Net income
attributable to the Company 47,467 101,215 109,054 187,044
Distributions to preferred shareholders (3,043 ) (3,042 ) (9,127 )
(11,291 ) Issuance costs of redeemed preferred shares 0 (9 )
0 (951 ) Net income attributable to common shareholders $
44,424 $ 98,164 $ 99,927 $ 174,802
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,
2015 2014 2015 2014
Earnings per Common Share - Basic: Net income attributable
to common shareholders excluding amounts attributable to unvested
restricted shares $ 0.39 $ 0.94 $ 0.88 $ 1.68
Earnings per Common Share - Diluted: Net income
attributable to common shareholders excluding amounts attributable
to unvested restricted shares $ 0.39 $ 0.94 $ 0.88
$ 1.67
Weighted average number of common shares
outstanding: Basic 112,731,358 103,798,853 112,702,693
103,730,007 Diluted 113,137,284 104,133,553 113,113,859 104,059,030
Comprehensive Income: Net income $ 47,542 $ 101,512 $
109,291 $ 187,609 Other comprehensive income: Unrealized (loss)
gain on interest rate derivative instruments (4,245 ) 1,551 (8,617
) (4,721 ) Reclassification adjustment for amounts recognized in
net income 1,071 1,113 3,210 3,297
44,368 104,176 103,884 186,185 Comprehensive income attributable to
noncontrolling interests: Noncontrolling interests in consolidated
entities 0 0 (8 ) (8 ) Noncontrolling interests of common units in
Operating Partnership (71 ) (305 ) (221 ) (553 ) Comprehensive
income attributable to noncontrolling interests (71 ) (305 ) (229 )
(561 ) Comprehensive income attributable to the Company $ 44,297
$ 103,871 $ 103,655 $ 185,624
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,
2015 2014 2015 2014 Net
income attributable to common shareholders $ 44,424 $ 98,164 $
99,927 $ 174,802 Depreciation 46,080 38,715 134,622 115,573
Amortization of deferred lease costs 72 86 219 261 Noncontrolling
interests: Noncontrolling interests in consolidated entities 0 0 8
8 Noncontrolling interests of common units in Operating Partnership
75 297 229 557 Less: Net gain on sale of properties 0
(49,657 ) 0 (93,205 )
FFO attributable to common
shareholders and unitholders $ 90,651 $
87,605 $ 235,005 $ 197,996
Pre-opening, management transition and severance expenses (1) 7,562
193 9,712 3,878 Preferred share issuance costs 0 9 0 951
Acquisition transaction costs 55 0 499 1,851 Loss from
extinguishment of debt 0 0 0 2,487 Non-cash ground rent 483 498
1,463 1,323 Mezzanine loan discount amortization 0 0
0 (986 )
Adjusted FFO attributable to common shareholders
and unitholders $ 98,751 $
88,305 $ 246,679 $
207,500 Weighted average number of common shares
and units outstanding: Basic 112,876,581 104,095,153
112,920,964 104,026,307 Diluted 113,282,507 104,429,853 113,332,130
104,355,330
FFO attributable to common shareholders and
unitholders per diluted share/unit $ 0.80 $ 0.84 $ 2.07 $ 1.90
Adjusted FFO attributable to common shareholders and unitholders
per diluted share/unit $ 0.87 $ 0.85 $ 2.18 $ 1.99
For the three months ended For the
nine months ended September 30, September 30,
2015 2014 2015 2014 Net income
attributable to common shareholders $ 44,424 $ 98,164 $ 99,927 $
174,802 Interest expense 13,250 14,499 40,790 43,043 Loss from
extinguishment of debt 0 0 0 2,487 Income tax (benefit) expense
(490 ) 2,997 216 1,488 Depreciation and amortization 46,208 38,821
135,002 115,887 Noncontrolling interests: Noncontrolling interests
in consolidated entities 0 0 8 8 Noncontrolling interests of common
units in Operating Partnership 75 297 229 557 Distributions to
preferred shareholders 3,043 3,042 9,127
11,291
EBITDA $ 106,510 $
157,820 $ 285,299 $ 349,563
Pre-opening, management transition and severance expenses (1) 7,562
193 9,712 3,878 Preferred share issuance costs 0 9 0 951
Acquisition transaction costs 55 0 499 1,851 Net gain on sale of
properties 0 (49,657 ) 0 (93,205 ) Non-cash ground rent 483 498
1,463 1,323 Mezzanine loan discount amortization 0 0
0 (986 )
Adjusted EBITDA $ 114,610
$ 108,863 $ 296,973 $
263,375 Corporate expense 7,976 6,679 22,617 22,294 Interest
and other income (3,849 ) (1,310 ) (7,035 ) (7,280 ) Hotel level
adjustments, net (780 ) 4,804 (2,567 ) 11,336
Hotel EBITDA $ 117,957 $
119,036 $ 309,988 $
289,725
(1) Pre-opening, management transition and
severance expenses include $4.6 million for Park Central New
York/WestHouse one-time disruption expenses that include guest
relocation expenses, clean up, legal, and payroll; $1.7 million for
Park Central San Francisco severance in the food and beverage
department; and $1.2 million for management transitions at three
San Francisco properties.
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, 2015 for the
Company’s period of ownership in 2015 and the comparable period in
2014, except for The Marker Waterfront Resort.
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, 2015 2014
2015 2014 Revenues: Room $
232,268 $ 237,641 $ 640,680 $ 627,452 Food and beverage 68,529
66,682 204,424 199,465 Other 23,763 22,377
63,189 59,639 Total hotel
revenues 324,560 326,700 908,293
886,556
Expenses: Room 55,824
57,366 159,701 161,417 Food and beverage 48,113 49,459 141,792
147,674 Other direct 4,795 6,807 13,498 19,029 General and
administrative 25,787 23,729 75,007 68,883 Sales and marketing
21,139 20,604 63,060 59,387 Management fees 10,507 11,790 29,431
30,243 Property operations and maintenance 10,001 10,016 29,294
29,440 Energy and utilities 8,185 8,261 23,190 22,944 Property
taxes 15,177 12,937 43,643 39,357 Other fixed expenses 7,075
6,695 19,689 18,457
Total hotel expenses 206,603 207,664
598,305 596,831
Hotel
EBITDA $ 117,957 $ 119,036
$ 309,988 $ 289,725
Hotel EBITDA Margin 36.3 %
36.4 % 34.1 % 32.7 %
Note: This schedule includes the operating data for the
three and nine months ended September 30, 2015 for all properties
owned by the Company as of September 30, 2015, except for The
Marker Waterfront Resort. Park Central San Francisco is included in
February through September 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. For the three months ended September
30, 2015 and 2014, the Park Central New York and WestHouse combined
had total hotel revenues of $16.1 million and $24.0 million,
respectively, total hotel expenses of $14.8 million and $15.7
million, respectively, and hotel EBITDA of $1.3 million and $8.3
million, respectively, all of which is included in this schedule.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(unaudited)
For the three months ended
For the nine months ended September 30,
September 30, 2015 2014
2015 2014 Total Portfolio Occupancy
85.8 % 88.1 % 82.4 % 83.0 % Decrease (2.7 )% (0.8 )% ADR $ 245.71 $
245.08 $ 239.54 $ 232.94 Increase 0.3 % 2.8 %
RevPAR
$ 210.74 $ 216.00 $
197.26 $ 193.45 (Decrease) Increase
(2.4 )% 2.0 % Note: This
schedule includes operating data for all properties owned as of
September 30, 2015 for the Company’s period of ownership in 2015
and the comparable period in 2014. The Marker Waterfront Resort
2015 ownership is excluded.
For the three months ended For the nine months
ended September 30, September 30, 2015
2014 2015 2014
Total Portfolio Occupancy 87.9 % 88.1 % 83.1 % 83.0 % Decrease (0.2
)% 0.0 % ADR $ 247.55 $ 245.08 $ 240.25 $ 232.94 Increase 1.0 % 3.1
%
RevPAR $ 217.65 $ 216.00
$ 199.61 $ 193.45 Increase
0.8 % 3.2 % Note: This schedule
includes operating data for all properties owned as of September
30, 2015 for the Company’s period of ownership in 2015 and the
comparable period in 2014. The operating data for Park Central New
York/WestHouse is adjusted for August and September 2015 to exclude
the interruption impact caused by the Union. The Marker Waterfront
Resort 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/20151022006571/en/
LaSalle Hotel PropertiesBruce A. Riggins or Max D. Leinweber,
301-941-1500
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