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LaSalle Hotel Properties Reports Fourth Quarter And Full Year 2012 Results

Earnings Call

The Company will conduct its quarterly conference call on Thursday, February 21, 2013 at 8:30 AM EST. To participate in the conference call, please dial (888) 466-4587. 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 40 hotels and a mezzanine loan secured by two hotels in Santa Monica, CA. The properties are upscale, full-service hotels, totaling more than 10,600 guest rooms in 13 markets in 9 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, Thompson Hotels, Davidson Hotel Company, Denihan Hospitality Group, 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 outlook for RevPAR, adjusted FFO, adjusted EBITDA, hotel EBITDA margins and derivations thereof and the Company’s outlook for capital investments. 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 year ended
December 31, December 31,
2012   2011 2012   2011
Revenues:
Hotel operating revenues:
Room $ 146,015 $ 114,953 $ 595,330 $ 471,023
Food and beverage 54,008 50,333 210,306 193,332
Other operating department 14,405   12,276   56,510   49,650  
Total hotel operating revenues 214,428 177,562 862,146 714,005
Other income 1,236   1,417   4,929   5,002  
Total revenues 215,664   178,979   867,075   719,007  
Expenses:
Hotel operating expenses:
Room 38,361 28,946 150,564 115,839
Food and beverage 38,406 34,589 149,894 133,838
Other direct 4,935 4,653 20,778 20,390
Other indirect 54,276   46,306   212,001   182,771  
Total hotel operating expenses 135,978 114,494 533,237 452,838
Depreciation and amortization 31,452 27,710 124,363 111,282
Real estate taxes, personal property taxes and insurance 11,621 8,955 44,551 35,425
Ground rent 1,975 1,859 8,588 7,720
General and administrative 5,134 4,201 19,769 17,120
Acquisition transaction costs 441 1,997 4,498 2,571
Other expenses 626   778   3,017   2,527  
Total operating expenses 187,227   159,994   738,023   629,483  
Operating income 28,437 18,985 129,052 89,524
Interest income 2,397 26 4,483 48
Interest expense (14,505 ) (10,138 ) (52,896 ) (39,704 )
Income before income tax expense and discontinued operations 16,329 8,873 80,639 49,868
Income tax expense (2,142 ) (1,378 ) (9,062 ) (7,048 )
Income from continuing operations 14,187   7,495   71,577   42,820  
Discontinued operations:
Income from operations of properties disposed of, including gain on sale 0 388 0 829
Income tax benefit (expense) 0   79   0   (33 )
Net income from discontinued operations 0   467   0   796  
Net income 14,187   7,962   71,577   43,616  
Noncontrolling interests:
Redeemable noncontrolling interest in loss of consolidated entity 0 0 0 2
Noncontrolling interests of common units in Operating Partnership (57 ) (1 ) (281 ) (1 )
Net (income) loss attributable to noncontrolling interests (57 ) (1 ) (281 ) 1  
Net income attributable to the Company 14,130 7,961 71,296 43,617
Distributions to preferred shareholders (4,166 ) (7,402 ) (21,733 ) (29,952 )
Issuance costs of redeemed preferred shares 0   0   (4,417 ) (731 )
Net income attributable to common shareholders $ 9,964   $ 559   $ 45,146   $ 12,934  
 
 
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations and Comprehensive Income - Continued

(in thousands, except share data)

(unaudited)

   
For the three months ended For the year ended
December 31, December 31,
2012   2011 2012   2011
Earnings per Common Share - Basic:
Net income attributable to common shareholders before discontinued operations and excluding amounts attributable to unvested restricted shares $ 0.11 $ 0.00 $ 0.52 $ 0.15
Discontinued operations 0.00   0.01   0.00   0.01  
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares $ 0.11   $ 0.01   $ 0.52   $ 0.16  
Earnings per Common Share - Diluted:
Net income attributable to common shareholders before discontinued operations and excluding amounts attributable to unvested restricted shares $ 0.11 $ 0.00 $ 0.52 $ 0.15
Discontinued operations 0.00   0.01   0.00   0.01  
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares $ 0.11   $ 0.01   $ 0.52   $ 0.16  
Weighted average number of common shares outstanding:
Basic 87,186,328 83,417,987 85,757,969 81,155,228
Diluted 87,325,471 83,530,710 85,897,274 81,326,304
 
Comprehensive Income:
Net income $ 14,187 $ 7,962 $ 71,577 $ 43,616
Other comprehensive income (loss):
Unrealized income (loss) on interest rate derivative instruments 775   0   (7,759 ) 0  
Comprehensive income 14,962 7,962 63,818 43,616
Noncontrolling interests:
Redeemable noncontrolling interest in loss of consolidated entity 0 0 0 2
Noncontrolling interests of common units in Operating Partnership (62 ) (1 ) (257 ) (1 )
Comprehensive income attributable to noncontrolling interests (62 ) (1 ) (257 ) 1  
Comprehensive income attributable to the Company $ 14,900   $ 7,961   $ 63,561   $ 43,617  
 
 
LASALLE HOTEL PROPERTIES
FFO and EBITDA

(in thousands, except share/unit data)

(unaudited)

   
For the three months ended For the year ended
December 31, December 31,
2012   2011 2012   2011
Net income attributable to common shareholders $ 9,964 $ 559 $ 45,146 $ 12,934
Depreciation 31,326 27,566 123,809 110,760
Amortization of deferred lease costs 100 93 371 318
Noncontrolling interests:
Redeemable noncontrolling interest in consolidated entity 0 0 0 (2 )
Noncontrolling interests of common units in Operating Partnership 57 1 281 1
Less: Net gain on sale of property 0   0   0   (760 )
FFO $ 41,447 $ 28,219 $ 169,607 $ 123,251
Management transition and severance costs (93 ) 0 1,447 579
Preferred share issuance costs 0 0 4,417 731
Acquisition transaction costs 441 1,997 4,498 2,571
Tax adjustment related to disposition 0 0 0 244
Non-cash ground rent 112 115 454 347
Mezzanine loan discount amortization (583 ) 0   (1,074 ) 0  
Adjusted FFO $ 41,324   $ 30,331   $ 179,349   $ 127,723  
 
Weighted Average number of common shares and units outstanding:
Basic 87,482,628 83,427,649 86,054,269 81,157,663
Diluted 87,621,771 83,540,372 86,193,574 81,328,739
 
FFO per diluted share/unit $ 0.47 $ 0.34 $ 1.97 $ 1.52
Adjusted FFO per diluted share/unit $ 0.47 $ 0.36 $ 2.08 $ 1.57
 
For the three months ended For the year ended
December 31, December 31,
2012 2011 2012 2011
Net income attributable to common shareholders $ 9,964 $ 559 $ 45,146 $ 12,934
Interest expense 14,505 10,138 52,896 39,704
Income tax expense (1) 2,142 1,299 9,062 7,081
Depreciation and amortization 31,452 27,710 124,363 111,282
Noncontrolling interests:
Redeemable noncontrolling interest in consolidated entity 0 0 0 (2 )
Noncontrolling interests of common units in Operating Partnership 57 1 281 1
Distributions to preferred shareholders 4,166   7,402   21,733   29,952  
EBITDA $ 62,286 $ 47,109 $ 253,481 $ 200,952
Management transition and severance costs (93 ) 0 1,447 579
Preferred share issuance costs 0 0 4,417 731
Acquisition transaction costs 441 1,997 4,498 2,571
Net gain on sale of property 0 0 0 (760 )
Non-cash ground rent 112 115 454 347
Mezzanine loan discount amortization (583 ) 0   (1,074 ) 0  
Adjusted EBITDA $ 62,163 $ 49,221 $ 263,223 $ 204,420
Corporate expense 6,618 4,823 23,622 19,792
Interest and other income (3,526 ) (1,442 ) (9,212 ) (5,093 )
Hotel level adjustments, net (806 ) 10,952   (2,818 ) 37,665  
Hotel EBITDA $ 64,449   $ 63,554   $ 274,815   $ 256,784  
 

(1) Includes amounts from discontinued operations.

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.

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