Completes Sale of Westin Philadelphia for
$135.0 Million
LaSalle Hotel Properties (NYSE: LHO) today announced results for
the quarter ended June 30, 2017. The Company’s results include the
following:
Second
Quarter Year-to-Date 2017 2016 %
Var. 2017 2016 % Var. ($'s in millions
except per share/unit data) Net income attributable to
common shareholders(1) $ 55.5 $ 55.2 0.5% $ 131.6 $ 61.2 115.0% Net
income attributable to common shareholders per diluted share(1) $
0.49 $ 0.49 0.0% $ 1.16 $ 0.54 114.8% RevPAR(2) $
227.31 $ 231.02 -1.6% $ 202.86 $ 203.27 -0.2% Hotel EBITDA
Margin(2) 38.2% 38.6% 33.5% 33.6% Hotel EBITDA Margin Growth(2) -40
bps -5 bps Total Revenues $ 307.0 $ 351.1 -12.6% $
561.4 $ 611.2 -8.1% EBITDA(1,2) $ 118.5 $ 127.6 -7.1% $ 254.1 $
190.5 33.4% Adjusted EBITDA(2) $ 110.4 $ 130.5 -15.4% $ 172.2 $
195.5 -11.9% Note: Adjusted EBITDA in the second quarter of 2016
included $15.6 million for assets that the Company sold between
July 2016 and April 2017. Year-to-date adjusted EBITDA in 2016
included $23.0 million for assets that the Company sold between
July 2016 and April 2017. FFO(2) $ 88.5 $ 104.1 -15.0% $
137.5 $ 157.7 -12.8% Adjusted FFO(2) $ 91.5 $ 107.0 -14.5% $ 142.8
$ 162.7 -12.2% FFO per diluted share/unit(2) $ 0.78 $ 0.92 -15.2% $
1.21 $ 1.39 -12.9% Adjusted FFO per diluted share/unit(2) $ 0.81 $
0.95 -14.7% $ 1.26 $ 1.44 -12.5%
(1)
2017 net income and EBITDA (as defined
below) include $85.5 million of gains from the sales of the Hotel
Deca, Lansdowne Resort, Alexis Hotel, Hotel Triton, and the Westin
Philadelphia.
(2)
See tables later in this 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 pro forma 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. Room revenue per available room
(“RevPAR”) is presented on a pro forma basis to reflect hotels in
the Company's current portfolio. See “Statistical Data for the
Hotels - Pro Forma” later in this press release.
“Despite softening RevPAR in the face of increasing hotel supply
in our markets, we remain proud that our teams are operating with
excellent efficiency across the portfolio, as evidenced by our
38.2% hotel EBITDA margin during the second quarter,” said Michael
D. Barnello, President and Chief Executive Officer of LaSalle Hotel
Properties.
Second Quarter Results
- Net Income: The Company’s net
income attributable to common shareholders was $55.5 million, which
increased 0.5% from the second quarter of 2016.
- RevPAR: The Company’s second
quarter RevPAR decreased 1.6% to $227.31, driven by a 0.5% decline
in average daily rate to $257.86 and a 1.1% reduction in occupancy
to 88.2%.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin was 38.2%, which was 40 basis points
below that of the comparable prior year period. The Company’s hotel
expenses declined by 2.1% from the second quarter of 2016.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $110.4 million, a decrease of $20.1 million
from the second quarter of 2016. Second quarter 2016 adjusted
EBITDA included $15.6 million from six assets the Company sold
between July 2016 and April 2017: Indianapolis Marriott Downtown,
the mezzanine loan on Shutters on the Beach and Casa Del Mar, Hotel
Deca, Lansdowne Resort, Alexis Hotel, and Hotel Triton.
- Adjusted FFO: The Company
generated adjusted FFO of $91.5 million, or $0.81 per diluted
share/unit, compared to $107.0 million, or $0.95 per diluted
share/unit, for the comparable prior year period.
Year-to-Date Results
- Net Income: The Company’s net
income attributable to common shareholders was $131.6 million,
which increased 115.0% from the first half of 2016, due in part to
$85.5 million in combined gains relating to the sales of Hotel
Deca, Lansdowne Resort, Alexis Hotel, Hotel Triton, and Westin
Philadelphia.
- RevPAR: The Company’s RevPAR was
approximately flat, decreasing 0.2% to $202.86. Average daily rate
grew by 0.3% to $244.36 and was offset by a 0.5% decline in
occupancy to 83.0%.
- Hotel EBITDA Margin: The
Company’s hotel EBITDA margin was 33.5%, which was a 5 basis point
drop from the comparable prior year period. The Company’s hotel
expenses declined by 1.7% from the first half of 2016.
- Adjusted EBITDA: The Company’s
adjusted EBITDA was $172.2 million, a decrease of $23.3 million
from the first half of 2016. First half 2016 adjusted EBITDA
included $23.0 million from six assets the Company sold between
July 2016 and April 2017.
- Adjusted FFO: The Company
generated adjusted FFO of $142.8 million, or $1.26 per diluted
share/unit, compared to $162.7 million, or $1.44 per diluted
share/unit, for the comparable prior year period.
Disposition and Investment Activity
- Asset Sales: The Company
completed two asset sales during the second quarter for $149.3
million, at an average 7.8% trailing net operating income (“NOI”)
capitalization rate. The Company will use proceeds from the asset
sales for general corporate purposes.
- In April 2017, the Company sold its
leasehold interest in Hotel Triton in San Francisco, California for
$14.3 million, which reflected a 7.8% trailing NOI capitalization
rate.
- In June 2017, the Company sold the
Westin in Philadelphia, Pennsylvania for $135.0 million, which
reflected a 7.8% trailing NOI capitalization rate, adjusted for the
approximate impact of the Democratic National Convention in July
2016.
- Capital Investments: During the
quarter, the Company invested $24.7 million of capital in its
hotels, of which the majority was for upcoming renovations at the
end of 2017. The two largest projects upcoming are lifecycle rooms
renovations at Westin Copley Place in Boston, Massachusetts and
Paradise Point Resort & Spa in San Diego, California.
Balance Sheet and Capital Markets Activities
- Balance Sheet Summary as of June 30,
2017: The Company had total outstanding debt of $1.1 billion,
and total net debt to trailing 12 month Corporate EBITDA (as
defined in the financial covenant section of the Company’s senior
unsecured credit facility, adjusted for all cash and cash
equivalents on its balance sheet) was 1.9 times. The Company’s
fixed charge coverage ratio was 5.8 times, and its weighted average
interest rate for the second quarter was 2.8%. The Company had
capacity of $772.5 million available on its credit facilities, in
addition to $461.4 million of cash and cash equivalents on its
balance sheet.
- Series H Preferred Share
Redemption: On May 4, 2017, the Company redeemed all 2,750,000
of its issued and outstanding 7.5% Series H Cumulative Redeemable
Preferred Shares. The cash redemption price for the shares was
$25.00 per share, plus accrued and unpaid dividends through the
redemption date.
- Share Repurchase: The Company
did not acquire any common shares during the second quarter of 2017
or to date during the third quarter of 2017.
Dividend
On June 15, 2017, the Company declared a second quarter 2017
dividend of $0.45 per common share of beneficial interest. The
dividend represents an annual run rate of $1.80 per share and a
5.9% yield based on the closing share price on July 18, 2017.
Earnings Call
The Company will conduct its quarterly conference call on
Thursday, July 20, 2017 at 11:00 AM eastern time. To participate in
the conference call, please dial (877) 857-6163.
Additionally, a live webcast of the conference call will be
available through the Company’s website. A replay of the conference
call webcast will also be archived and available online through the
Investor Relations section of the Company’s website.
About LaSalle Hotel Properties
LaSalle Hotel Properties is a leading multi-operator real estate
investment trust. The Company owns 41 properties, which are
upscale, full-service hotels, totaling approximately 10,400 guest
rooms in 11 markets in seven 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 groups, including
Hilton Hotels Corporation, Marriott International, Outrigger
Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels
Corporation, Benchmark Hospitality, Two Roads Hospitality, Davidson
Hotel Company, Kimpton Hotel & Restaurant Group, LLC, Accor,
HEI Hotels & Resorts, JRK Hotel Group, Inc., Viceroy Hotel
Group, Highgate Hotels, Access Hotels & Resorts, and Provenance
Hotels.
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," “may,” “plan,” “seek,” “should,” or similar expressions.
Forward-looking statements in this press release include, among
others, statements about the Company’s asset management strategies,
use of sale proceeds and capital expenditure program. 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) risks associated
with the hotel industry, including competition for guests and
meetings from other hotels and alternative lodging companies,
increases in wages, energy costs and other operating costs,
potential unionization or union disruption, actual or threatened
terrorist attacks, any type of flu or disease-related pandemic and
downturns in general and local economic conditions, (ii) the
availability and terms of financing and capital and the general
volatility of securities markets, (iii) the Company’s dependence on
third-party managers of its hotels, including its inability to
implement strategic business decisions directly, (iv) risks
associated with the real estate industry, including environmental
contamination and costs of complying with the Americans with
Disabilities Act of 1990, as amended, and similar laws, (v)
interest rate increases, (vi) the possible failure of the Company
to maintain its qualification 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, (ix) the risk of a
material failure, inadequacy, interruption or security failure of
the Company’s or the hotel managers’ information technology
networks and systems, and (x) 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, 2017
2016 2017 2016 Revenues: Hotel
operating revenues: Room $ 222,385 $ 245,286 $ 400,750 $ 426,706
Food and beverage 59,308 79,025 111,612 135,372 Other operating
department 22,118 24,457 42,485 45,100
Total hotel operating revenues 303,811 348,768 554,847 607,178
Other income 3,233 2,319 6,602 4,013
Total revenues 307,044 351,087 561,449 611,191
Expenses: Hotel operating expenses: Room 55,271
58,963 107,594 111,254 Food and beverage 40,132 49,994 79,280
92,902 Other direct 2,654 4,973 6,838 8,656 Other indirect 73,177
80,283 142,833 152,198 Total hotel
operating expenses 171,234 194,213 336,545 365,010 Depreciation and
amortization 44,066 48,841 91,329 96,469 Real estate taxes,
personal property taxes and insurance 14,089 16,919 30,204 33,110
Ground rent 3,823 4,108 7,208 7,921 General and administrative
6,917 7,643 13,471 13,473 Other expenses 1,559 2,327
3,477 4,505 Total operating expenses 241,688
274,051 482,234 520,488 Operating income
65,356 77,036 79,215 90,703 Interest income 315 1,676 457 3,330
Interest expense (9,423 ) (11,482 ) (19,250 ) (23,349 ) Loss from
extinguishment of debt 0 0 (1,706 ) 0 Income
before income tax expense 56,248 67,230 58,716 70,684 Income tax
expense (5,003 ) (7,610 ) (230 ) (1,990 ) Income before gain on
sale of properties 51,245 59,620 58,486 68,694 Gain on sale of
properties 11,156 0 85,514 0 Net income
62,401 59,620 144,000 68,694 Net income
attributable to noncontrolling interests: Noncontrolling interests
in consolidated entities (8 ) (8 ) (8 ) (8 ) Noncontrolling
interests of common units in Operating Partnership (83 ) (81 ) (193
) (96 ) Net income attributable to noncontrolling interests (91 )
(89 ) (201 ) (104 ) Net income attributable to the Company 62,310
59,531 143,799 68,590 Distributions to preferred shareholders
(4,387 ) (4,355 ) (9,792 ) (7,397 ) Issuance costs of redeemed
preferred shares (2,401 ) 0 (2,401 ) 0 Net income
attributable to common shareholders $ 55,522 $ 55,176
$ 131,606 $ 61,193
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, 2017
2016 2017 2016 Earnings per Common
Share - Basic: Net income attributable to common shareholders
excluding amounts attributable to unvested restricted shares $ 0.49
$ 0.49 $ 1.16 $ 0.54
Earnings per
Common Share - Diluted: Net income attributable to common
shareholders excluding amounts attributable to unvested restricted
shares $ 0.49 $ 0.49 $ 1.16 $ 0.54
Weighted average number of common shares outstanding: Basic
112,951,714 112,784,976 112,937,794 112,766,734 Diluted 113,342,151
113,113,253 113,347,580 113,119,556
Comprehensive
Income: Net income $ 62,401 $ 59,620 $ 144,000 $ 68,694 Other
comprehensive income: Unrealized loss on interest rate derivative
instruments (1,675 ) (5,971 ) (551 ) (20,223 ) Reclassification
adjustment for amounts recognized in net income 498 1,730
1,483 3,510 61,224 55,379 144,932 51,981
Comprehensive income attributable to noncontrolling interests:
Noncontrolling interests in consolidated entities (8 ) (8 ) (8 ) (8
) Noncontrolling interests of common units in Operating Partnership
(82 ) (76 ) (194 ) (75 ) Comprehensive income attributable to
noncontrolling interests (90 ) (84 ) (202 ) (83 ) Comprehensive
income attributable to the Company $ 61,134 $ 55,295
$ 144,730 $ 51,898
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, 2017
2016 2017 2016 Net income attributable
to common shareholders $ 55,522 $ 55,176 $ 131,606 $ 61,193
Depreciation 43,928 48,706 91,059 96,200 Amortization of deferred
lease costs 91 82 170 162 Noncontrolling interests: Noncontrolling
interests in consolidated entities 8 8 8 8 Noncontrolling interests
of common units in Operating Partnership 83 81 193 96 Less: Gain on
sale of properties (11,156 ) 0 (85,514 ) 0
FFO
attributable to common shareholders and unitholders $
88,476 $ 104,053 $ 137,522
$ 157,659 Pre-opening, management transition and
severance expenses 169 2,518 251 4,064 Issuance costs of redeemed
preferred shares 2,401 0 2,401 0 Loss from extinguishment of debt 0
0 1,706 0 Non-cash ground rent 460 471 925 948
Adjusted FFO attributable to common shareholders and
unitholders $ 91,506 $
107,042 $ 142,805 $
162,671 Weighted average number of common shares
and units outstanding: Basic 113,096,937 112,930,199
113,083,017 112,911,957 Diluted 113,487,374 113,258,476 113,492,803
113,264,779
FFO attributable to common shareholders and
unitholders per diluted share/unit $ 0.78 $ 0.92 $ 1.21 $ 1.39
Adjusted FFO attributable to common shareholders and unitholders
per diluted share/unit $ 0.81 $ 0.95 $ 1.26 $ 1.44
For the three months ended For the six months ended
June 30, June 30, 2017 2016 2017
2016 Net income attributable to common shareholders $ 55,522
$ 55,176 $ 131,606 $ 61,193 Interest expense 9,423 11,482 19,250
23,349 Loss from extinguishment of debt 0 0 1,706 0 Income tax
expense 5,003 7,610 230 1,990 Depreciation and amortization 44,066
48,841 91,329 96,469 Noncontrolling interests: Noncontrolling
interests in consolidated entities 8 8 8 8 Noncontrolling interests
of common units in Operating Partnership 83 81 193 96 Distributions
to preferred shareholders 4,387 4,355 9,792
7,397
EBITDA $ 118,492 $
127,553 $ 254,114 $ 190,502
Pre-opening, management transition and severance expenses 169 2,518
251 4,064 Issuance costs of redeemed preferred shares 2,401 0 2,401
0 Gain on sale of properties (11,156 ) 0 (85,514 ) 0 Non-cash
ground rent 460 471 925 948
Adjusted
EBITDA $ 110,366 $ 130,542 $
172,177 $ 195,514 Corporate expense 8,536
7,685 17,168 14,409 Interest and other income (3,548 ) (3,777 )
(7,060 ) (7,126 ) Pro forma hotel level adjustments, net(1) 939
(13,566 ) (1,743 ) (18,724 )
Hotel EBITDA $
116,293 $ 120,884 $
180,542 $ 184,073 (1)
Pro forma excludes Mason & Rook Hotel
for the period the hotel was closed for renovation during the first
quarter of 2016 and the comparable period in 2017. Pro forma
excludes Hotel Deca, Lansdowne Resort, Alexis Hotel and Hotel
Triton due to their dispositions in 2017 and Indianapolis Marriott
Downtown due to its disposition in July 2016. Westin Philadelphia
is included for all periods presented.
LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results -
Pro Forma(1)
(in thousands)
(unaudited)
For the three months ended For the six months
ended June 30, June 30, 2017
2016 2017 2016 Revenues: Room $
222,261 $ 225,827 $ 391,260 $ 394,045 Food and beverage 59,228
66,750 106,771 116,197 Other 22,728 20,338 40,833
38,263 Total hotel revenues 304,217 312,915
538,864 548,505
Expenses: Room
55,061 54,963 104,748 104,472 Food and beverage 40,298 43,693
76,015 82,109 Other direct 2,702 2,662 5,213 5,116 General and
administrative 20,753 20,635 39,186 39,027 Information and
telecommunications systems 4,059 4,022 8,284 7,970 Sales and
marketing 20,046 20,088 38,423 38,209 Management fees 10,938 9,857
17,722 16,631 Property operations and maintenance 9,153 9,012
18,240 17,877 Energy and utilities 6,348 6,264 12,801 12,559
Property taxes 12,531 14,074 26,372 27,600 Other fixed expenses(2)
6,035 6,761 11,318 12,862 Total hotel
expenses 187,924 192,031 358,322 364,432
Hotel EBITDA $ 116,293
$ 120,884 $ 180,542
$ 184,073 Hotel EBITDA Margin
38.2 % 38.6 % 33.5 %
33.6 % (1) This schedule includes the
operating data for the three and six months ended June 30, 2017 for
all properties owned by the Company as of June 30, 2017. Mason
& Rook Hotel is excluded from the first quarter in both 2016
and 2017 because the hotel was closed for renovation during the
entire first quarter of 2016. Pro forma excludes the results of
operations of Hotel Deca, Lansdowne Resort, Alexis Hotel and Hotel
Triton due to their dispositions in 2017 and Indianapolis Marriott
Downtown due to its disposition in July 2016. Pro forma includes
Westin Philadelphia. (2) Other fixed expenses includes ground rent
expense, but excludes ground rent payments for The Roger and Harbor
Court in all periods due to the hotels being subject to capital
leases of land and building under GAAP. At The Roger, the base
ground rent payments were $100 and $199 for the three months and
six months ended June 30, 2017 and 2016, respectively. At Harbor
Court, the base and participating ground rent payments were $298
and $586 for the three and six months ended June 30, 2017,
respectively, and $337 and $670 for the three and six months ended
June 30, 2016, respectively.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels - Pro
Forma(1)
(unaudited)
For the three months ended For the six months
ended June 30, June 30, 2017
2016 2017 2016 Total Portfolio
Occupancy 88.2 % 89.1 % 83.0 % 83.4 % Decrease (1.1 )% (0.5 )% ADR
$ 257.86 $ 259.23 $ 244.36 $ 243.72 (Decrease) Increase (0.5 )% 0.3
%
RevPAR $ 227.31 $ 231.02
$ 202.86 $ 203.27 Decrease
(1.6 )% (0.2 )%
For the three months endedJune
30, 2017
For the six months endedJune 30,
2017
Market Detail RevPAR Variance % Boston 5.8%
5.3% Chicago (5.1)% (3.2)% Key West (2.9)% (2.5)% Los Angeles
(2.1)% (6.7)% New York 1.1% (0.5)% Other(2) 0.7% 2.3% Philadelphia
4.6% 2.3% San Diego Downtown 1.3% 4.5% San Francisco (14.2)% (9.3)%
Washington, DC(3) 0.0% 8.3%
Total Portfolio (1.6)%
(0.2)% Total Portfolio Excluding San Francisco
0.8% 1.9% (1) Pro forma excludes Mason &
Rook Hotel for the period the hotel was closed for renovation
during the first quarter of 2016 and the comparable period in 2017.
Pro forma excludes Hotel Deca, Lansdowne Resort, Alexis Hotel and
Hotel Triton due to their dispositions in 2017 and Indianapolis
Marriott Downtown due to its disposition in July 2016. Pro forma
includes Westin Philadelphia. (2) Other includes The Heathman Hotel
in Portland, OR, Chaminade Resort in Santa Cruz, CA, L’Auberge Del
Mar in Del Mar, CA and The Hilton San Diego Resort and Paradise
Point Resort in San Diego, CA. (3) Mason & Rook Hotel is
excluded for the period the hotel was closed for renovation during
the first quarter of 2016 and the comparable period in 2017.
LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels - Pro
Forma(1) - Continued
(in millions)
(unaudited)
Prior Year Operating Data (Excluding
Hotel Deca, Lansdowne Resort, Alexis Hotel, Hotel Triton, Westin
Philadelphiaand Indianapolis Marriott Downtown) - 2016
Comparable
First Quarter Second Quarter Third
Quarter Fourth Quarter Full Year 2016
2016 2016 2016 2016 Occupancy 77.6 %
89.1
%
90.1 % 80.8 % 84.4 % ADR $ 226.48 $ 259.75 $ 253.38 $ 244.77 $
246.91 RevPAR $ 175.67 $ 231.49 $ 228.31 $ 197.81 $ 208.49
Total hotel revenues $ 229.2 $ 304.6 $ 295.0 $ 263.1 $ 1,091.9
Less: Total hotel expenses 168.0 187.4 187.1
179.4 721.9 Hotel EBITDA $ 61.2 $ 117.2
$ 107.9 $ 83.7 $ 370.0
Hotel EBITDA Margin
26.7
%
38.5
%
36.6 % 31.8 % 33.9 %
Current Year Operating Data (Excluding
Hotel Deca, Lansdowne Resort, Alexis Hotel, Hotel Triton and
WestinPhiladelphia) - 2017 Comparable
First Quarter Second Quarter 2017
2017 Occupancy 77.8 % 88.0 % ADR $ 229.92 $ 257.94 RevPAR $
178.81 $ 226.87 Total hotel revenues $ 233.6 $ 294.1 Less:
Total hotel expenses 169.6 182.2 Hotel EBITDA $ 64.0
$ 111.9 Hotel EBITDA Margin 27.4 % 38.0 % (1)
For prior year operating data, pro forma
excludes the Mason & Rook Hotel during the first quarter for
comparable purposes, due to the hotel being closed for renovation
during the first quarter of 2016. Pro forma excludes the results of
operations of Hotel Deca, Lansdowne Resort, Alexis Hotel, Hotel
Triton and Westin Philadelphia due to their dispositions in 2017
and Indianapolis Marriott Downtown due to its disposition in July
2016.
For current year operating data, pro forma excludes the
results of operations of Hotel Deca, Lansdowne Resort, Alexis
Hotel, Hotel Triton and Westin Philadelphia due to their
dispositions in 2017.
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. The
Company believes property-level results provide investors with
supplemental information on the ongoing operational performance of
its hotels and effectiveness of the third-party management
companies operating its 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.
Trailing NOI Capitalization Rate
The Company calculates the weighted average capitalization rate
by dividing the aggregate trailing 12-month net operating income of
the subject hotels by the aggregate sales prices for such
hotels. The Company defines net operating income as hotel
revenues (room and other hotel operating revenues) less hotel
expenses (hotel operating expenses, real estate and personal
property taxes, insurance, ground rent, FF&E reserve, and other
hotel expenses).
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version on businesswire.com: http://www.businesswire.com/news/home/20170719006270/en/
LaSalle Hotel PropertiesKenneth G. Fuller or Max D. Leinweber,
301-941-1500
LaSalle (NYSE:LHO)
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