Special Meeting to Approve Merger with
Blackstone Scheduled for September 6, 2018
LaSalle Hotel Properties (NYSE: LHO) (“LaSalle” or the
“Company”) today announced results for the quarter ended June 30,
2018. The Company’s results are summarized below.
Second Quarter Year-to-Date
2018 2017 % Var. 2018
2017 % Var. (dollars in millions except
per share/unit data) Net income attributable to common
shareholders(1) $ 31.6 $ 55.5 -43.1 % $ 20.5 $ 131.6 -84.4 % Net
income attributable to common shareholders per diluted share(1) $
0.28 $ 0.49 -42.9 % $ 0.18 $ 1.16 -84.5 % RevPAR(2) $ 230.96
$ 227.18 1.7 % $ 198.28 $ 203.13 -2.4 % Hotel EBITDAre Margin(2)
37.4 % 38.0 % 31.6 % 33.3 % Adjusted EBITDAre(2) $ 107.9 $
110.4 -2.3 % $ 155.5 $ 172.2 -9.7 % Note: Second quarter 2017
included $3.7 million and year-to-date 2017 included $7.3 million
of adjusted EBITDAre for assets that the Company sold in 2017.
Adjusted FFO attributable to common shareholders and
unitholders(2) $ 88.3 $ 91.5 -3.5 % $ 125.6 $ 142.8 -12.0 %
Adjusted FFO attributable to common shareholders and unitholders
per diluted share/unit(2) $ 0.80 $ 0.81 -1.2 % $ 1.12 $ 1.26 -11.1
% (1) 2017 year-to-date net income included $85.5 million of
gains from the sales of Hotel Deca, Lansdowne Resort, Alexis Hotel,
Hotel Triton, and Westin Philadelphia. (2) See the discussion of
non-GAAP measures and the tables later in this press release for
reconciliations from net income to such measures, including
earnings before interest, taxes, depreciation and amortization
(“EBITDA”), adjusted EBITDA for real estate (“EBITDAre”), adjusted
funds from operations (“FFO”), and pro forma hotel EBITDAre. 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.
Michael D. Barnello, President and Chief Executive Officer of
LaSalle said, “Our second quarter results exceeded our
expectations, as the industry and our portfolio benefitted from
strong lodging demand. LaSalle took an important step this quarter
to maximize shareholder value by entering into a definitive
agreement to be acquired by Blackstone in an all-cash transaction.
The transaction followed a thorough review of strategic
alternatives and we believe it represents a compelling opportunity
for LaSalle’s shareholders, delivering a significant premium with
immediate and certain cash value.”
Second Quarter 2018 Results
- Net Income: The Company’s net
income attributable to common shareholders was $32 million, which
decreased by $24 million from the same period in 2017. The second
quarter 2017 benefited from $11 million of gains from the sale of
two assets last year.
- RevPAR: The Company’s second
quarter 2018 RevPAR grew 1.7% to $231, driven by a 1.1% increase in
average daily rate (“ADR”) to $261 and an occupancy growth of 0.6%
to 88.6%. Excluding the Company’s hotels managed by Kimpton and
Marriott, RevPAR increased 3.7% versus last year. For reference,
Kimpton has been working on systems integration with the IHG
platform throughout 2018, and Marriott has been doing the same with
Starwood’s former systems.
- Hotel EBITDAre Margin: The
Company’s hotel EBITDAre margin was 37.4%.
- Adjusted EBITDAre: The Company’s
adjusted EBITDAre was $108 million, which declined $2 million
year-over-year. In the second quarter 2017, the Company earned $4
million of adjusted EBITDAre from assets sold in 2017.
- Adjusted FFO: The Company
generated adjusted FFO of $88 million, or $0.80 per diluted
share/unit, compared to $92 million, or $0.81 per diluted
share/unit, for the second quarter 2017.
Year-to-Date 2018 Results
- Net Income: The Company’s net
income attributable to common shareholders was $20 million, which
decreased by $111 million from the same period in 2017. During the
first half of 2017, the Company sold five assets for a combined
gain of $86 million, which distorts this comparison
year-over-year.
- RevPAR: The Company’s first half
2018 RevPAR decreased 2.4% to $198, driven by a 1.0% reduction in
ADR to $242 and an occupancy decline of 1.4% to 81.8%. Excluding
the Company’s hotels managed by Kimpton and Marriott, RevPAR was
flat to last year.
- Hotel EBITDAre Margin: The
Company’s hotel EBITDAre margin was 31.6%.
- Adjusted EBITDAre: The Company’s
adjusted EBITDAre was $155 million, a decrease of $17 million from
the first half of 2017. In the first half of 2017, the Company
earned $7 million of adjusted EBITDAre from assets sold in 2017,
negatively impacting the year-over-year comparison.
- Adjusted FFO: The Company
generated adjusted FFO of $126 million, or $1.12 per diluted
share/unit, compared to $143 million, or $1.26 per diluted
share/unit, for the first half of 2017.
Capital Investments: The Company invested $42 million of
capital in its hotels in the second quarter. Since March, the
Company has completed guestroom renovations at San Diego Paradise
Point Resort & Spa, Hotel Spero, Harbor Court Hotel, The
Heathman Hotel, Chamberlain West Hollywood, Montrose West
Hollywood, and Westin Copley Place. The Company also completed
lobby or restaurant renovations at Hotel Spero, Harbor Court Hotel,
The Heathman Hotel, Chamberlain West Hollywood, Montrose West
Hollywood, and Sofitel Washington, DC Lafayette Square.
Additionally, the Company renovated its meeting space at Hotel
Chicago and Hyatt Regency Boston Harbor.
Balance Sheet and Capital Markets Activities
- Balance Sheet Summary as of June 30,
2018: 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 2.6 times. The Company’s
fixed charge coverage ratio was 5.2 times, and its weighted average
interest rate for the second quarter was 3.3%. The Company had
capacity of $773 million available on its credit facilities, in
addition to $221 million of cash and cash equivalents on its
balance sheet.
- Share Repurchase Program: The
Company has not repurchased any common shares under its share
repurchase program since March 5, 2018.
Key West Impact Update: In the second quarter’s adjusted
EBITDAre, the Company recorded $1.3 million of business
interruption proceeds related to losses in 2017 and 2018 following
Hurricane Irma. Year-to-date through the second quarter, the
Company collected $2.6 million of business interruption proceeds
relating to Hurricane Irma. The Company will continue to process
business interruption claims for both of the Key West
properties.
Dividend: On June 15, 2018, the Company declared a second
quarter 2018 dividend of $0.225 per common share.
Blackstone Transaction: As previously announced on May
21, 2018, LaSalle entered into a definitive agreement with
affiliates of Blackstone Real Estate Partners VIII (“Blackstone”),
under which Blackstone would acquire all outstanding common shares
of LaSalle for $33.50 per share in an all-cash transaction valued
at $4.8 billion (the “Blackstone Merger Agreement”). The
transaction was unanimously approved by LaSalle’s Board of Trustees
after careful consideration of multiple proposals received. The
Company remains committed to completing the transaction with
Blackstone, which is subject to customary closing conditions,
including the approval of LaSalle’s shareholders. The LaSalle Board
recommends that shareholders vote “FOR” the proposal to approve the
merger and other transactions contemplated by the Blackstone Merger
Agreement in advance of the special meeting of shareholders, which
will be held on September 6, 2018. The transaction is expected to
close within a week of the special meeting and is not contingent on
receipt of financing.
2018 Outlook and Earnings Call: Given the pending
transaction with Blackstone, the Company is not updating its
outlook for the balance of 2018. The Company will not host an
investor conference call this quarter.
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 10,452 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 Access Hotels
& Resorts, Accor, Benchmark Hospitality, Davidson Hotel
Company, Evolution Hospitality, HEI Hotels & Resorts, Highgate
Hotels, Hilton, Hyatt Hotels Corporation, IHG, JRK Hotel Group,
Inc., Marriott International, Noble House Hotels & Resorts,
Outrigger Lodging Services, Provenance Hotels, Two Roads
Hospitality, and Viceroy Hotel Group.
Additional Information about the Proposed Merger Transaction
and Where to Find It
This communication relates to the proposed merger transaction
involving the Company and may be deemed to be solicitation material
in respect of the proposed merger transaction. In connection with
the proposed merger transaction, the Company has filed a definitive
proxy statement (the “Proxy Statement”) with the Securities and
Exchange Commission (the “SEC”), as well as other relevant
materials in connection with the proposed merger transaction
pursuant to the terms of the Agreement and Plan of Merger, dated as
of May 20, 2018, among BRE Landmark Parent L.P., BRE Landmark L.P.,
BRE Landmark Acquisition L.P., the Company and LaSalle Hotel
Operating Partnership, L.P. This communication is not a substitute
for the Proxy Statement or for any other document that the Company
has filed or may file with the SEC or send to the Company’s
shareholders in connection with the proposed merger transaction.
BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITY HOLDERS
OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE
PROPOSED MERGER TRANSACTION AND RELATED MATTERS. Investors and
security holders are able to obtain free copies of the Proxy
Statement and other documents filed by the Company with the SEC
through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed by the Company with the SEC are also
available free of charge on the Company’s website at
www.lasallehotels.com, or by contacting the Company’s Investor
Relations Department at (301) 941- 1500. The Company and its
trustees and certain of its executive officers may be considered
participants in the solicitation of proxies from the Company’s
shareholders with respect to the proposed merger transaction under
the rules of the SEC. Information about the trustees and executive
officers of the Company is set forth in its Annual Report on Form
10-K for the year ended December 31, 2017, which was filed with the
SEC on February 20, 2018, its proxy statement for its 2018 annual
meeting of shareholders, which was filed with the SEC on March 22,
2018 and in subsequent documents filed with the SEC. Additional
information regarding persons who may be deemed participants in the
proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, is included in the
Proxy Statement and may be included in other relevant materials to
be filed with the SEC. You may obtain free copies of this document
as described above.
Cautionary Statement Regarding Forward-Looking
Statements
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. The forward-looking statements contained in this press
release, including statements regarding the proposed merger
transaction and the timing of such transaction, are subject to
various risks and uncertainties. Although the Company believes the
expectations reflected in any forward-looking statements contained
herein are based on reasonable assumptions, there can be no
assurance that the Company’s expectations will be achieved.
Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the
Company, are generally identifiable by use of the words “believe,”
“expect,” “intend,” “anticipate,” “estimate,” “project,” or other
similar expressions. Such statements involve known and unknown
risks, uncertainties, and other factors that may cause the actual
results of the Company to differ materially from future results,
performance or achievements projected or contemplated in the
forward-looking statements. Some of the factors that may affect
outcomes and results include, but are not limited to: (i) risks
associated with the Company’s ability to obtain the shareholder
approval required to consummate the proposed merger transaction and
the timing of the closing of the proposed merger transaction,
including the risks that a condition to closing would not be
satisfied within the expected timeframe or at all or that the
closing of the proposed merger transaction will not occur, (ii) the
outcome of any legal proceedings that may be instituted against the
parties and others related to the merger agreement, (iii)
unanticipated difficulties or expenditures relating to the proposed
merger transaction, the response of business partners and
competitors to the announcement of the proposed merger transaction,
and/or potential difficulties in employee retention as a result of
the announcement and pendency of the proposed merger transaction,
(iv) changes affecting the real estate industry and changes in
financial markets, interest rates and foreign currency exchange
rates, (v) increased or unanticipated competition for the Company’s
properties, (vi) 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, (vii) the availability and terms of financing
and capital and the general volatility of securities markets,
(viii) the Company’s dependence on third-party managers of its
hotels, including its inability to implement strategic business
decisions directly, (ix) 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, (x) the possible failure of the Company
to maintain its qualification as a REIT and the risk of changes in
laws affecting REITs, (xi) the possibility of uninsured losses,
(xii) risks associated with redevelopment and repositioning
projects, including delays and cost overruns, (xiii) the risk of a
material failure, inadequacy, interruption or security failure of
the Company’s or the hotel managers’ information technology
networks and systems, (xiv) uncertainties regarding future actions
that may be taken by Pebblebrook in furtherance of its unsolicited
proposal and solicitation of proxies, and (xv) those additional
risks and factors discussed in reports filed with the SEC by the
Company from time to time, including those discussed under the
heading “Risk Factors” in its most recently filed reports on Forms
10-K and 10-Q. The Company undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Investors should not place
undue reliance upon forward-looking statements.
For additional information or to receive press releases via
e-mail, please visit our website at www.lasallehotels.com.
LASALLE HOTEL PROPERTIES Consolidated Balance
Sheets
(in thousands, except share and per share
data)
June 30,
December 31,
2018 2017 (unaudited)
Assets:
Investment in hotel properties, net $ 3,288,558 $ 3,265,615
Property under development 14,781 49,459 Cash and cash equivalents
220,771 400,667 Restricted cash reserves 14,025 14,262 Hotel
receivables (net of allowance for doubtful accounts of $357 and
$404, respectively) 43,904 35,916 Debt issuance costs for
borrowings under credit facilities, net 2,729 3,274 Deferred tax
assets 2,136 2,136 Prepaid expenses and other assets 64,634
43,612 Total assets $ 3,651,538 $ 3,814,941
Liabilities: Borrowings under credit facilities $ 0 $ 0 Term
loans, net of unamortized debt issuance costs 853,488 853,195 Bonds
payable, net of unamortized debt issuance costs 0 42,494 Mortgage
loan, net of unamortized debt issuance costs 224,915 224,432
Accounts payable and accrued expenses 147,953 134,216 Advance
deposits 32,084 26,625 Accrued interest 2,295 2,383 Distributions
payable 28,984 55,135 Total liabilities 1,289,719
1,338,480 Commitments and contingencies
Equity: Shareholders’ Equity: Preferred shares of beneficial
interest, $0.01 par value (liquidation preference of $260,000),
40,000,000 shares authorized; 10,400,000 shares issued and
outstanding 104 104 Common shares of beneficial interest, $0.01 par
value, 200,000,000 shares authorized; 113,251,427 shares issued and
110,382,519 shares outstanding, and 113,251,427 shares issued and
113,209,392 shares outstanding, respectively 1,132 1,132 Treasury
shares, at cost (71,658 ) (1,181 ) Additional paid-in capital, net
of offering costs of $82,865 and $82,842, respectively 2,766,809
2,767,924 Accumulated other comprehensive income 22,042 10,880
Distributions in excess of retained earnings (359,894 ) (305,708 )
Total shareholders’ equity 2,358,535 2,473,151
Noncontrolling Interests: Noncontrolling interests in consolidated
entities 16 18 Noncontrolling interests of common units in
Operating Partnership 3,268 3,292 Total
noncontrolling interests 3,284 3,310 Total equity
2,361,819 2,476,461 Total liabilities and equity $
3,651,538 $ 3,814,941
LASALLE HOTEL
PROPERTIES Consolidated Statements of Operations and
Comprehensive Income
(in thousands, except share and per share
data)
(unaudited)
For the three months ended For the
six months ended June 30, June 30, 2018
2017 2018 2017 Revenues:
Hotel operating revenues: Room $ 219,666 $ 222,385 $ 375,088 $
400,750 Food and beverage 56,977 59,308 100,609 111,612 Other
operating department 24,521 22,118 44,628
42,485 Total hotel operating revenues 301,164 303,811
520,325 554,847 Other income 3,445 3,233 7,307
6,602 Total revenues 304,609 307,044 527,632
561,449
Expenses: Hotel operating expenses:
Room 55,885 55,271 105,071 107,594 Food and beverage 39,265 40,132
74,081 79,280 Other direct 3,439 2,654 6,372 6,838 Other indirect
71,053 73,177 133,247 142,833 Total
hotel operating expenses 169,642 171,234 318,771 336,545
Depreciation and amortization 46,857 44,066 92,172 91,329 Real
estate taxes, personal property taxes and insurance 16,308 14,089
32,336 30,204 Ground rent 4,245 3,823 8,074 7,208 General and
administrative 6,667 6,917 13,183 13,471 Costs related to the
Mergers and unsolicited takeover offers 8,680 0 11,331 0 Other
expenses 1,589 1,559 2,809 3,477 Total
operating expenses 253,988 241,688 478,676
482,234 Operating income 50,621 65,356 48,956 79,215
Interest income 569 315 1,403 457 Interest expense (10,458 ) (9,423
) (20,618 ) (19,250 ) Loss from extinguishment of debt 0 0
0 (1,706 ) Income before income tax expense 40,732
56,248 29,741 58,716 Income tax expense (4,993 ) (5,003 ) (966 )
(230 ) Income before gain on sale of properties 35,739 51,245
28,775 58,486 Gain on sale of properties 0 11,156 0
85,514 Net income 35,739 62,401 28,775
144,000 Net income attributable to noncontrolling
interests: Noncontrolling interests in consolidated entities (8 )
(8 ) (8 ) (8 ) Noncontrolling interests of common units in
Operating Partnership (61 ) (83 ) (59 ) (193 ) Net income
attributable to noncontrolling interests (69 ) (91 ) (67 ) (201 )
Net income attributable to the Company 35,670 62,310 28,708 143,799
Distributions to preferred shareholders (4,115 ) (4,387 ) (8,231 )
(9,792 ) Issuance costs of redeemed preferred shares 0
(2,401 ) 0 (2,401 ) Net income attributable to common
shareholders $ 31,555 $ 55,522 $ 20,477 $
131,606
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations and Comprehensive Income -
Continued
(in thousands, except share and per share
data)
(unaudited)
For the three months ended For the
six months ended June 30, June 30, 2018
2017 2018 2017 Earnings per
Common Share - Basic: Net income attributable to common
shareholders excluding amounts attributable to unvested restricted
shares $ 0.29 $ 0.49 $ 0.18 $ 1.16
Earnings per Common Share - Diluted: Net income attributable
to common shareholders excluding amounts attributable to unvested
restricted shares $ 0.28 $ 0.49 $ 0.18 $ 1.16
Weighted average number of common shares outstanding:
Basic 110,115,770 112,951,714 111,134,064 112,937,794 Diluted
110,552,220 113,342,151 111,552,469 113,347,580
Comprehensive Income: Net income $ 35,739 $ 62,401 $ 28,775
$ 144,000 Other comprehensive income: Unrealized gain (loss) on
interest rate derivative instruments 3,677 (1,675 ) 11,886 (551 )
Reclassification adjustment for amounts recognized in net income
(703 ) 498 (709 ) 1,483 38,713 61,224 39,952 144,932
Comprehensive income attributable to noncontrolling interests:
Noncontrolling interests in consolidated entities (8 ) (8 ) (8 ) (8
) Noncontrolling interests of common units in Operating Partnership
(65 ) (82 ) (74 ) (194 ) Comprehensive income attributable to
noncontrolling interests (73 ) (90 ) (82 ) (202 ) Comprehensive
income attributable to the Company $ 38,640 $ 61,134
$ 39,870 $ 144,730
LASALLE HOTEL PROPERTIES FFO, EBITDA and
EBITDAre
(in thousands, except share/unit and per
share/unit data)
(unaudited)
For the three months ended For the
six months ended June 30, June 30, 2018
2017 2018 2017 Net income $
35,739 $ 62,401 $ 28,775 $ 144,000 Depreciation 46,695 43,928
91,849 91,059 Amortization of deferred lease costs 123 91 243 170
Gain on sale of properties 0 (11,156 ) 0 (85,514 )
FFO $ 82,557 $ 95,264 $
120,867 $ 149,715 Distributions to preferred
shareholders (4,115 ) (4,387 ) (8,231 ) (9,792 ) Issuance costs of
redeemed preferred shares 0 (2,401 ) 0 (2,401 )
FFO attributable to common shareholders and unitholders
$ 78,442 $ 88,476 $
112,636 $ 137,522 Pre-opening, management
transition and severance expenses 927 169 1,135 251 Costs related
to the Mergers and unsolicited takeover offers 8,680 0 11,331 0
Issuance costs of redeemed preferred shares 0 2,401 0 2,401 Loss
from extinguishment of debt 0 0 0 1,706 Hurricane property
insurance proceeds, net of related repairs and cleanup costs (197 )
0 (552 ) 0 Loss from The Marker Waterfront Resort original
development deficiencies 0 0 145 0 Non-cash ground rent 449
460 903 925
Adjusted FFO attributable to
common shareholders and unitholders $ 88,301
$ 91,506 $ 125,598
$ 142,805 Weighted average number of common
shares and units outstanding: Basic 110,260,993 113,096,937
111,279,287 113,083,017 Diluted 110,697,443 113,487,374 111,697,692
113,492,803
FFO attributable to common shareholders and
unitholders per diluted share/unit $ 0.71
$ 0.78 $ 1.01 $ 1.21
Adjusted FFO attributable to common shareholders and unitholders
per diluted share/unit $ 0.80 $
0.81 $ 1.12 $ 1.26
For the three months ended For the six
months ended June 30, June 30, 2018
2017 2018 2017 Net income $ 35,739 $
62,401 $ 28,775 $ 144,000 Interest expense 10,458 9,423 20,618
19,250 Income tax expense 4,993 5,003 966 230 Depreciation and
amortization 46,857 44,066 92,172 91,329
EBITDA $ 98,047 $ 120,893
$ 142,531 $ 254,809 Gain on sale of
properties 0 (11,156 ) 0 (85,514 )
EBITDAre
$ 98,047 $ 109,737 $
142,531 $ 169,295 Pre-opening, management
transition and severance expenses 927 169 1,135 251 Costs related
to the Mergers and unsolicited takeover offers 8,680 0 11,331 0
Loss from extinguishment of debt 0 0 0 1,706 Hurricane property
insurance proceeds, net of related repairs and cleanup costs (197 )
0 (552 ) 0 Loss from The Marker Waterfront Resort original
development deficiencies 0 0 145 0 Non-cash ground rent 449
460 903 925
Adjusted EBITDAre
$ 107,906 $ 110,366 $
155,493 $ 172,177 Corporate expense 7,787
8,536 15,798 17,168 Interest and other income (4,012 ) (3,548 )
(8,710 ) (7,060 ) Pro forma hotel level adjustments, net(1) 1,268
(3,364 ) 2,570 (6,253 )
Hotel EBITDAre
$ 112,949 $ 111,990
$ 165,151 $ 176,032
(1)
Pro forma includes all properties owned by
the Company as of June 30, 2018.
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, 2018
2017 2018 2017 Revenues:
Room $ 219,666 $ 216,061 $ 375,088 $ 384,236 Food and beverage
56,977 56,227 100,609 103,272 Other 25,555 22,400
46,647 40,784
Total hotel revenues
302,198 294,688 522,344 528,292
Expenses: Room 55,885 53,970 105,071 103,734 Food and
beverage 39,265 38,833 74,081 74,453 Other direct 3,434 2,544 6,365
4,941 General and administrative 20,521 19,958 38,736 38,533
Information and telecommunications systems 3,910 4,053 7,920 8,233
Sales and marketing 19,263 19,051 36,807 36,826 Management fees
10,635 11,055 16,589 17,806 Property operations and maintenance
8,901 8,920 17,824 17,986 Energy and utilities 6,253 6,124 12,505
12,590 Property taxes 14,573 12,302 29,060 26,087 Other fixed
expenses(2) 6,609 5,888 12,235 11,071
Total hotel expenses 189,249 182,698 357,193
352,260
Hotel EBITDAre $ 112,949
$ 111,990 $ 165,151
$ 176,032 Hotel EBITDAre
Margin 37.4 % 38.0 % 31.6
% 33.3 % (1)
This schedule includes the operating data
for the three and six months ended June 30, 2018 and 2017 for all
properties owned by the Company as of June 30, 2018.
(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 and six
months ended June 30, 2018 and 2017, respectively. At Harbor Court,
the base and participating ground rent payments were $330 and $565
for the three and six months ended June 30, 2018, respectively, and
$298 and $586 for the three and six months ended June 30, 2017,
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, 2018
2017 2018 2017 Total Portfolio
Occupancy 88.6 % 88.1 % 81.8 % 83.0 %
Increase (Decrease)
0.6 % (1.4 )% ADR $ 260.57 $ 257.75 $ 242.39 $ 244.78 Increase
(Decrease) 1.1 % (1.0 )%
RevPAR $ 230.96
$ 227.18 $ 198.28 $
203.13 Increase (Decrease) 1.7 %
(2.4 )%
For the three months ended
For the six months ended
June 30, 2018
June 30, 2018
Market Detail RevPAR Variance % Boston (2.0)% (4.0)%
Chicago 0.6% 1.3% Key West (3.7)% (6.8)% Los Angeles (9.1)% (8.7)%
New York 6.3% 4.9% Other(2) 0.6% 2.6% San Diego Downtown 3.9% 0.0%
San Francisco 14.8% 3.5% Washington, DC (1.2)% (11.8)%
Kimpton
and Marriott Integration Impact Detail Kimpton and Marriott
managed hotels (2.9)% (8.7)% All other hotels 3.7% 0.0%
(1)
Pro forma includes the statistical data
for all properties owned by the Company as of June 30, 2018.
(2) Other includes The Heathman Hotel in Portland, Chaminade Resort
in Santa Cruz, Embassy Suites Philadelphia - Center City in
Philadelphia, L’Auberge Del Mar in Del Mar, and The Hilton San
Diego Resort and Paradise Point Resort in San Diego.
Non-GAAP Financial Measures
The Company considers the non-GAAP measures of FFO (including
FFO per share/unit), adjusted FFO (including adjusted FFO per
share/unit), EBITDA, EBITDAre, adjusted EBITDAre and hotel EBITDAre
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, adjusted FFO, EBITDA, EBITDAre, adjusted
EBITDAre and hotel EBITDAre to be helpful in evaluating a real
estate company’s operations.
FFO, adjusted FFO, EBITDA, EBITDAre, adjusted EBITDAre and hotel
EBITDAre 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, adjusted
FFO, EBITDA, EBITDAre, adjusted EBITDAre and hotel EBITDAre are not
measures of the Company’s liquidity, nor are such measures
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 or will be incurred. FFO, adjusted
FFO, EBITDA, EBITDAre, adjusted EBITDAre and hotel EBITDAre 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.
FFO
The white paper on FFO approved by the National Association of
Real Estate Investment Trusts (“NAREIT”) 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 the 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.
EBITDA and EBITDAre
EBITDA represents net income or loss (computed in accordance
with GAAP), excluding interest expense, income tax, depreciation
and amortization. The white paper “Earnings Before Interest, Taxes,
Depreciation and Amortization for Real Estate” approved by NAREIT
defines EBITDAre as net income or loss (computed in accordance
with GAAP), excluding interest expense, income tax, depreciation
and amortization, gains or losses on the disposition of depreciated
property (including gains or losses on change of control),
impairment write-downs of depreciated property and of investments
in unconsolidated affiliates caused by a decrease in value of
depreciated property in the affiliate, and after comparable
adjustments for the Company’s portion of these items related to
unconsolidated affiliates. The Company computes EBITDAre consistent
with the standards established by NAREIT, which may not be
comparable to EBITDAre 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 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. In addition, the Company believes
the presentation of EBITDAre, which adjusts for certain additional
items including gains on sale of property, allows for
meaningful comparisons with other REITs and between periods and is
more indicative of the ongoing performance of its assets.
Adjusted FFO and Adjusted EBITDAre
The Company presents adjusted FFO (including adjusted FFO per
share/unit) and adjusted EBITDAre, which measures are adjusted for
certain additional items, including impairment losses (to the
extent included in EBITDAre), loss from extinguishment of debt,
acquisition transaction costs, costs associated with management
transitions or the departure of executive officers, costs
associated with the recognition of issuance costs related to the
redemption of preferred shares, non-cash ground rent 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 EBITDAre, the Company’s calculation
of adjusted FFO and adjusted EBITDAre may be different from similar
adjusted measures calculated by other REITs.
Hotel EBITDAre
The Company also presents hotel EBITDAre, which excludes the
effect of corporate-level expenses, non-cash items, and the portion
of these items related to unconsolidated entities. In addition,
hotel EBITDAre is presented on a pro forma basis to include the
results of operations of certain hotels under previous ownership
acquired during the periods presented and exclude the results of
operations of any hotels sold or closed for renovations during the
periods presented. Results for the hotels for periods prior to the
Company’s ownership were provided by prior owners and have not been
adjusted by the Company or audited by its auditors. The Company
believes that presenting pro forma hotel EBITDAre, 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 the
individual hotels and operators have direct control. The Company
believes these property-level results provide investors with
supplemental information on the ongoing operational performance of
each of the hotels and the effectiveness of the third-party
management companies operating the Company’s business on a
property-level basis.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180809005082/en/
LaSalle Hotel PropertiesKenneth G. Fuller or Max D.
Leinweber301-941-1500orMacKenzie Partners, Inc.Bob
Marese212-929-5405orMedia:Joele Frank, Wilkinson Brimmer
KatcherMeaghan Repko / Andrew Siegel212-355-4449
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