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LaSalle Hotel Properties Reports Third Quarter 2012 Results

LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended September 30, 2012. The Company's results include the following:
Third Quarter Year-to-Date
2012   2011 2012   2011
($'s in millions except per share/unit data)
Total Revenue $ 237.0 $ 199.1 $ 651.4 $ 540.0
Net income to common shareholders $ 26.5 $ 14.9 $ 35.2 $ 12.4
Net income to common shareholders per diluted share $ 0.31 $ 0.18 $ 0.41 $ 0.15
EBITDA (1) $ 81.3 $ 63.3 $ 191.2 $ 153.8
Adjusted EBITDA (1) $ 81.7 $ 62.8 $ 201.1 $ 155.2
FFO (1) $ 58.1 $ 41.9 $ 128.2 $ 95.0
Adjusted FFO (1) $ 58.4 $ 42.4 $ 138.0 $ 97.4
FFO per diluted share/unit (1) $ 0.67 $ 0.49 $ 1.49 $ 1.18
Adjusted FFO per diluted share/unit (1) $ 0.68 $ 0.50 $ 1.61 $ 1.21
RevPAR $ 178.43 $ 169.80 $ 162.26 $ 154.80
RevPAR growth 5.1 % 4.8 %
Hotel EBITDA Margin 35.9 % 34.1 % 32.6 % 31.1 %
Hotel EBITDA Margin growth 180 bps 155 bps
(1) See tables later in press release, which list adjustments that reconcile net income to earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, funds from operations ("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.

Third Quarter Highlights
  • RevPAR: Room revenue per available room (“RevPAR”) for the quarter ended September 30, 2012 increased 5.1 percent to $178.43, as a result of a 3.3 percent increase in average daily rate (“ADR”) to $205.75 and a 1.7 percent improvement in occupancy to 86.7 percent.
  • Hotel EBITDA Margin: The Company's hotel EBITDA margin for the third quarter was 35.9 percent, a 180 basis point improvement compared to the comparable prior year period.
  • Adjusted EBITDA: The Company's adjusted EBITDA was $81.7 million, an increase of 30.1 percent over the third quarter of 2011.
  • Adjusted FFO: The Company generated third quarter adjusted FFO of $58.4 million, or $0.68 per diluted share/unit, compared to $42.4 million or $0.50 per diluted share/unit for the comparable prior year period, an increase of 36.0 percent in adjusted FFO per diluted share/unit.
  • Acquisitions: On July 13, 2012, the Company invested $67.4 million to acquire the performing mezzanine loan secured by the equity interests in the entities that own Shutters on the Beach and Hotel Casa Del Mar in Santa Monica, California. The Company purchased the debt instrument for 93.6 percent of the $72.0 million face value of the loan. The fixed-rate, interest only coupon on the mezzanine loan is 9.76 percent at par value, which translates to a 10.4 percent interest rate on the Company's investment. The mezzanine loan matures on May 11, 2014.
  • Capital Markets: On August 2, 2012, the Company entered into a new $300.0 million unsecured loan. The five-year term loan matures on August 2, 2017, including a one-year extension subject to certain conditions. The term loan was swapped to a fixed interest rate for the full five-year term. The term loan's interest rate will be 2.68 percent when the Company's leverage ratio (as defined by the term loan) is between 4.0 and 4.75 times. $200.0 million of the loan proceeds were funded at closing. The Company has the flexibility to draw the remaining $100.0 million any time during the 95 days following closing and expects to draw these funds toward the end of the 95-day period.
  • Capital Investments: The Company invested $13.7 million of capital in its hotels.
  • Dividends: On September 12, 2012, the Company declared a third quarter 2012 dividend of $0.20 per common share of beneficial interest.

“We are pleased with the performance of our portfolio during the quarter,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “We continued to see the bulk of our revenue increases come through improved average rate. This, in conjunction with our diligent asset management practices led to outstanding hotel EBITDA margin growth of 180 basis points. On the capital markets front, we closed on a very favorable five-year term loan, which enabled us to further reduce the balance on our senior unsecured credit facility.”

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