LaSalle Hotel Properties Achieves 7.1% RevPAR Growth and a 225 Basis Point Improvement in Hotel EBITDA Margin in First Quarter 2011

2011-04-21

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LaSalle Hotel Properties 'Despite having four properties under major renovation and unfortunate weather in the Northeast during the quarter, both RevPAR and hotel EBITDA margins were strong for the portfolio, which resulted in a 53% increase in adjusted EBITDA for the Company'

LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended March 31, 2011. The Company’s results include the following:

“Despite having four properties under major renovation and unfortunate weather in the Northeast during the quarter, both RevPAR and hotel EBITDA margins were strong for the portfolio, which resulted in a 53% increase in adjusted EBITDA for the Company.”

	First Quarter
	2011			2010
	($'s in millions except per share data)

Total Revenue	$	138.4		$	108.2
Net loss to common shareholders	$	(19.3	)	$	(25.8	)
Net loss to common shareholders per diluted share	$	(0.26	)	$	(0.40	)
EBITDA⁽¹⁾	$	23.4		$	14.8
Adjusted EBITDA⁽¹⁾	$	24.9		$	16.2
FFO⁽¹⁾	$	8.5		$	1.5
Adjusted FFO⁽¹⁾	$	10.0		$	2.9
FFO per diluted share⁽¹⁾	$	0.11		$	0.02
Adjusted FFO per diluted share⁽¹⁾	$	0.13		$	0.05

First Quarter Highlights

RevPAR: Room revenue per available room (“RevPAR”) increased 7.1 percent to $114.68, as a result of a 6.0 percent increase in average daily rate (“ADR”) to $171.68 and a 1.0 percent increase in occupancy to 66.8 percent.
Hotel EBITDA margin: The Company’s hotel EBITDA margin was 20.9 percent, which was an improvement of 225 basis points compared to the same comparable prior year period.
Adjusted EBITDA: The Company’s adjusted EBITDA was $24.9 million, an increase of 53.1 percent over the first quarter of 2010.
Adjusted FFO: The Company generated adjusted FFO of $10.0 million, or $0.13 per diluted share, compared to $2.9 million or $0.05 per diluted share in the first quarter of 2010.
Acquisitions: The Company acquired the Viceroy Santa Monica in Santa Monica, California on March 16, 2011 for $80.1 million.
Dispositions: The Company sold the Sheraton Bloomington Hotel in Bloomington, Minnesota on January 12, 2011 for $20.0 million.
Capital Markets:
- During the first quarter of 2011, the Company sold common shares, raising $99.5 million, including the following:
  - During January and February, the Company sold 2,619,811 common shares through its previous at-the-market (“ATM”) offering program, which resulted in net proceeds of $72.3 million.
  - During March, the Company sold 1,019,844 common shares through its current ATM offering program, which resulted in net proceeds of $27.2 million.
- On January 19, 2011, the Company priced an underwritten public offering of 7.5% Series H Cumulative Redeemable Preferred Shares at $25.00 per share, for net proceeds of approximately $66.4 million, including the exercise of the underwriters’ overallotment option.
- On March 14, 2011, the Company redeemed its $27.5 million outstanding 8.375% Series B Cumulative Redeemable Preferred Shares. The redemption price was $25.00 per share, plus accrued and unpaid dividends.
Capital Investments: The Company invested $9.2 million of capital in its hotels, including the continuation of guestroom renovations at the Westin Copley Place hotel, Hotel Rouge, Topaz Hotel and Hotel Viking.
Dividends: On March 15, 2011, the Company declared a first quarter 2011 dividend of $0.11 per common share of beneficial interest.

“We are very pleased with the performance of our portfolio during the quarter,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “Despite having four properties under major renovation and unfortunate weather in the Northeast during the quarter, both RevPAR and hotel EBITDA margins were strong for the portfolio, which resulted in a 53% increase in adjusted EBITDA for the Company.”

Balance Sheet

As of March 31, 2011, the Company had total outstanding debt of $764.4 million, including $76.0 million outstanding on its credit facilities. Total debt to trailing 12 month Corporate EBITDA (as defined in the Company’s senior unsecured credit facility) was 4.0 times as of March 31, 2011. For the quarter, the Company’s weighted average interest rate was 5.0 percent. As of March 31, 2011, based on the Company’s covenants under its senior unsecured credit facility, the Company’s EBITDA to interest coverage ratio was 4.8 times and its fixed charge coverage ratio was 2.3 times. As of March 31, 2011, the Company had $31.9 million of cash and cash equivalents on its balance sheet and an aggregate of $393.1 million available on its credit facilities.

Subsequent Events

During April, 2011, the Company sold 417,037 common shares through its ATM offering program resulting in net proceeds of approximately $11.2 million.

2011 Outlook

The Company is maintaining its RevPAR growth and EBITDA margin expectations for the full year and has updated its outlook to include the purchase of the Viceroy Santa Monica and the issuance of common stock to date, as follows:

RevPAR growth of 6.0% to 8.0%;
Adjusted EBITDA of $196.0 to $206.0 million;
Adjusted FFO of $120.1 to $128.1 million;
Adjusted FFO per diluted share of $1.57 to $1.68;
Portfolio hotel EBITDA margins between 30.0% and 31.0%, an increase of approximately 100 to 200 basis points;
Total capital investments of $65.0 million to $70.0 million;
Outlook contains no acquisitions other than the Viceroy Santa Monica; and
$0.2 million of acquisition costs related to the Viceroy Santa Monica, $0.6 million of costs associated with the departure of the previous CFO and $0.7 million of recognized issuance costs associated with the redemption of the Series B Cumulative Redeemable Preferred Shares. These items are excluded from adjusted EBITDA and adjusted FFO.