LaSalle Hotel Properties Reports Third Quarter 2013 Results
LaSalle Hotel Properties Reports Third Quarter 2013 Results
Announces third quarter RevPAR growth of 5.1% and a 36.0 percent Hotel EBITDA margin (excluding Park Central)
|($'s in millions except per share/unit data)|
Entire Portfolio (Including Park Central Hotel)
|FFO per diluted share/unit(1)||$||0.72||$||0.67||$||1.71||$||1.49|
|Adjusted FFO per diluted share/unit(1)||$||0.76||$||0.68||$||1.76||$||1.61|
|Net income attributable to common shareholders||$||28.5||$||26.5||$||56.3||$||35.2|
|Net income attributable to common shareholders per diluted share||$||0.30||$||0.31||$||0.59||$||0.41|
Portfolio excluding Park Central Hotel
|Hotel EBITDA Margin||36.0||%||33.1||%|
|Hotel EBITDA Margin growth||36bps||65bps|
Entire Portfolio (Including Park Central Hotel)
|Hotel EBITDA Margin||36.3||%||32.8||%|
|Hotel EBITDA Margin growth||52bps||20bps|
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
Results excluding Park Central Hotel (see Park Central and WestHouse Update below)
- RevPAR excluding Park Central Hotel: Room revenue per available room ("RevPAR") for the quarter ended September 30, 2013 increased 5.1 percent to $186.48, as a result of a 2.5 percent increase in occupancy to 87.5 percent and a 2.6 percent increase in average daily rate ("ADR") to $213.07.
- Hotel EBITDA Margin excluding Park Central Hotel: The Company's hotel EBITDA margin for the third quarter was 36.0 percent, a 36 basis point improvement compared to the comparable prior year period.
Entire Portfolio Results
- RevPAR: RevPAR for the quarter ended September 30, 2013 increased 3.8 percent to $187.32, as a result of a 3.1 percent increase in ADR to $215.46 and a 0.7 percent increase in occupancy to 86.9 percent.
- Hotel EBITDA Margin: The Company's hotel EBITDA margin for the third quarter was 36.3 percent, a 52 basis point increase compared to the comparable prior year period.
- Adjusted EBITDA: The Company's adjusted EBITDA was $94.2 million, an increase of 15.3 percent over the third quarter of 2012. During the third quarter of 2013, the Company's financial results were impacted by $0.2 million of EBITDA displacement from the Park Central and WestHouse renovation project.
- Adjusted FFO: The Company generated third quarter adjusted FFO of $72.8 million, or $0.76 per diluted share/unit, compared to $58.4 million or $0.68 per diluted share/unit for the comparable prior year period.
Acquisitions: The Company invested $303.8 million to acquire four assets:
- The Harbor Court Hotel and Hotel Triton, both located in San Francisco, CA for $47.8 million;
- The Serrano Hotel in San Francisco, CA for $71.5 million; and
- The Southernmost Hotel Collection in Key West, FL for $184.5 million.
- Capital Investments: The Company invested $28.6 million of capital in its hotels, most of which pertained to the continuation of the Park Central Hotel and WestHouse renovation in New York City.
- Dividends: On July 17, 2013, the Company declared a third quarter 2013 dividend of $0.28 per common share of beneficial interest, which was a 40 percent increase over the second quarter dividend.
"We are very pleased with our results and activities during the third quarter," said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. "We acquired four outstanding assets in the markets of San Francisco and Key West, both of which benefit from significant supply constraints and very strong demand. Furthermore, our portfolio's RevPAR, adjusted EBITDA, and adjusted FFO exceeded the high end of our expectations. As a result of our acquisitions and our performance during the third quarter, we have increased our full year 2013 outlook."
Excluding the Park Central Hotel, for the nine months ended September 30, 2013, RevPAR increased 5.8 percent to $171.10, with occupancy growth of 3.6 percent to 82.2 percent and ADR improvement of 2.1 percent to $208.21. The Company's hotel EBITDA margin excluding the Park Central Hotel was 33.1 percent, an increase of 65 basis points compared to the comparable prior year period. The Company invested $84.7 million of capital in the entire portfolio including the Park Central Hotel and WestHouse during the nine months ended September 30, 2013.
Park Central and WestHouse Update
The Company has nearly completed its renovation of the Park Central Hotel in New York City. As previously disclosed, the project consists of the full renovation and splitting of the original 934-room Park Central Hotel into two distinct hotels: the newly renovated 761-room Park Central Hotel and the upgraded 172-room premium WestHouse Hotel.
The Park Central Hotel portion of the renovation is complete, as its lobby, meeting space, restaurant and all 761 of the hotel rooms have been completely renovated. The Company has also completed the renovation of the vast majority of the WestHouse guestrooms, with the lobby to be completed by the end of November. EBITDA displacement on the entire project was $0.2 million during the third quarter and $8.0 million to date. The Company's expectation for full year EBITDA displacement related to the entire project is $9.0 to $10.0 million.
As of September 30, 2013, the Company had total outstanding debt of $1.5 billion, including $461.0 million outstanding on its senior unsecured credit facility. Total net debt to trailing 12 month Corporate EBITDA (as defined in the Company's senior unsecured credit facility) was 4.6 times as of September 30, 2013 and its fixed charge coverage ratio was 3.3 times. For the third quarter, the Company's weighted average interest rate was 3.8 percent. As of September 30, 2013, the Company had $15.5 million of cash and cash equivalents on its balance sheet and capacity of $311.7 million available on its credit facilities. During the third quarter, the Company did not sell any stock under its ATM program.
2013 Fourth Quarter Outlook
The Company expects fourth quarter RevPAR, excluding the Park Central Hotel, to increase 3.0 percent to 5.0 percent. The Company's expectations assume a quick resolution to the government shutdown. The Company expects its portfolio, including the Park Central Hotel, to generate adjusted EBITDA of $71.0 million to $75.0 million and adjusted FFO per share/unit of $0.52 to $0.56.
The Company is updating its 2013 outlook. The revised outlook excludes any future acquisitions or equity issuances for the remainder of 2013. The revised outlook also assumes a quick resolution to the government shutdown. The Company's revised financial expectations for 2013 are as follows:
|Previous Outlook||Current Outlook|
|($'s in millions except per share/unit data)||($'s in millions except per share/unit data)|
Excluding Park Central
|Hotel EBITDA Margins||32.0%||32.5%||32.3%||32.4%|
Hotel EBITDA Margin Change
|50 bps||100 bps||80 bps||90 bps|
Including Park Central
|Hotel EBITDA Margins||32.0%||32.5%||32.4%||32.5%|
|Hotel EBITDA Margin Change||0 bps||50 bps||30 bps||40 bps|
Entire Portfolio (Including Park Central)
|Adjusted EBITDA||$ 285.0||$ 295.0||$ 298.0||$ 302.0|
|Adjusted FFO||$ 204.5||$ 214.0||$ 219.0||$ 222.0|
|Adjusted FFO per diluted share/unit||$ 2.13||$ 2.23||$ 2.28||$ 2.31|
The Company will conduct its quarterly conference call on Thursday, October 17, 2013 at 10:00 AM EDT. To participate in the conference call, please dial (800) 261-2028. 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 45 hotels and a mezzanine loan secured by two hotels in Santa Monica, CA. The properties are upscale, full-service hotels, totaling approximately 11,400 guest rooms in 14 markets in 10 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, Commune Hotels and Resorts, 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 the renovation of the Park Central Hotel and WestHouse, outlook for RevPAR, adjusted FFO, adjusted EBITDA and derivations thereof. 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)
|For the three months ended||For the nine months ended|
|September 30,||September 30,|
|Hotel operating revenues:|
|Food and beverage||60,022||52,896||175,397||156,298|
|Other operating department||18,289||15,410||48,001||42,105|
|Total hotel operating revenues||267,930||235,743||719,094||647,718|
|Hotel operating expenses:|
|Food and beverage||41,886||37,751||121,871||111,488|
|Total hotel operating expenses||155,064||137,604||438,871||397,259|
|Depreciation and amortization||40,634||31,480||107,182||92,911|
|Real estate taxes, personal property taxes and insurance||13,489||11,254||38,623||32,930|
|General and administrative||5,513||5,172||16,224||14,635|
|Acquisition transaction costs||2,687||156||2,687||4,057|
|Total operating expenses||222,385||189,215||616,040||550,796|
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