LaSalle Hotel Properties Reports Fourth Quarter and Full Year 2012 Results
LaSalle Hotel Properties Reports Fourth Quarter and Full Year 2012 Results
Full year hotel EBITDA margin increased 113 basis points to Company's highest-ever reported margin of 32.1 percent
Company also reports highest-ever full year ADR, occupancy and RevPAR
|($'s in millions except per share/unit data)|
|Net income to common shareholders||$||10.0||$||0.6||$||45.1||$||12.9|
|Net income to common shareholders per diluted share||$||0.11||$||0.01||$||0.52||$||0.16|
|FFO per diluted share/unit(1)||$||0.47||$||0.34||$||1.97||$||1.52|
|Adjusted FFO per diluted share/unit(1)||$||0.47||$||0.36||$||2.08||$||1.57|
|Hotel EBITDA Margin||30.6||%||30.7||%||32.1||%||31.0||%|
|Hotel EBITDA Margin growth||-17 bps||113 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.
Fourth Quarter Highlights
- RevPAR: Room revenue per available room ("RevPAR") for the quarter ended December 31, 2012 increased 3.8 percent to $154.88, as a result of a 3.4 percent increase in average daily rate ("ADR") to $209.06 and a 0.3 percent increase in occupancy to 74.1 percent.
- RevPAR excluding Washington, DC: Excluding Washington, DC, RevPAR during the fourth quarter increased 5.8 percent, comprised of a 4.9 percent improvement in ADR and a 0.9 percent increase in occupancy.
- Hotel EBITDA Margin: The Company's hotel EBITDA margin for the fourth quarter was 30.6 percent.
- Adjusted EBITDA: The Company's adjusted EBITDA was $62.2 million, an increase of 26.3 percent over the fourth quarter of 2011.
- Adjusted FFO: The Company generated fourth quarter adjusted FFO of $41.3 million, or $0.47 per diluted share/unit, compared to $30.3 million or $0.36 per diluted share/unit for the comparable prior year period. Adjusted FFO per share/unit increased 30.6 percent.
- Acquisitions: The Company acquired L'Auberge Del Mar in Del Mar, California for $76.9 million. The Company also acquired a majority interest in The Liberty Hotel in Boston, Massachusetts through a joint venture with the original developer and co-owner, an entity controlled by Dick Friedman of Carpenter & Company, Inc. The total value of the Liberty transaction was $170.0 million.
- Capital Markets: On December 19, 2012, the Company sold 9,200,000 common shares of beneficial interest, including the full exercise of the underwriters' option to purchase additional shares, at a price to the public of $23.70 per share. The majority of the offering's $209.1 million of net proceeds were used to acquire a majority interest in The Liberty Hotel.
- Capital Investments: The Company invested $19.0 million of capital in its hotels, including the commencement of the renovation of the Park Central Hotel and WestHouse in Manhattan and Hotel Monaco San Francisco.
- Dividends: On December 14, 2012, the Company declared a fourth quarter 2012 dividend of $0.20 per common share of beneficial interest.
- Election of Board Member: The Company announced that Denise Coll has been elected to the Company's Board of Trustees, effective March 2, 2013.
"We are very proud of our accomplishments during the fourth quarter and for the entire year 2012," said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. "Our portfolio delivered another year of outstanding performance, setting portfolio records in average daily rate, occupancy, RevPAR and hotel EBITDA margins, resulting in substantial adjusted corporate EBITDA and adjusted FFO per share growth."
"We've continued to improve our already high-quality portfolio with acquisitions in key markets and by commencing value-creating projects like the work we are doing at Park Central and WestHouse in New York City."
"Furthermore, we have substantially reduced our cost of debt from 5.2 percent in 2011 to 4.3 percent in 2012 by executing on two term loans with very attractive interest rates."
Full Year 2012 Highlights
- RevPAR: RevPAR increased 4.6 percent to $160.38, as a result of a 4.0 percent increase in ADR to $202.82 and a 0.5 percent increase in occupancy to 79.1 percent. In 2012, the Company achieved its highest-ever reported ADR and RevPAR, while achieving its highest-ever reported occupancy for the second year in a row.
- RevPAR excluding Washington, DC: Excluding Washington, DC, RevPAR for 2012 increased 6.0 percent, comprised of a 5.3 percent improvement in ADR and a 0.7 percent increase in occupancy.
- Hotel EBITDA Margin: The Company's hotel EBITDA margin was 32.1 percent, which was its highest-ever reported margin and represents an improvement of 113 basis points compared to 2011.
- Adjusted EBITDA: The Company's adjusted EBITDA was $263.2 million, an increase of 28.8 percent over 2011.
- Adjusted FFO: The Company generated adjusted FFO of $179.3 million, or $2.08 per diluted share/unit, compared to $127.7 million or $1.57 per diluted share/unit during 2011. Adjusted FFO per share/unit increased 32.5 percent.
- Acquisitions: The Company invested $458.1 million to acquire three properties and the mezzanine loan secured by two Santa Monica, California hotels during 2012 bringing the three-year acquisition investment total to $1.5 billion. The 2012 acquisitions include the following:
- Hotel Palomar in Washington, DC for $143.8 million on March 8;
- The mezzanine loan secured by Shutters on the Beach and Hotel Casa Del Mar in Santa Monica, California for $67.4 million on July 13. The Company purchased the debt instrument for 93.6 percent of the $72.0 million face value of the loan;
- L'Auberge Del Mar in Del Mar, California for $76.9 million on December 6; and
- The majority interest in The Liberty Hotel in Boston, Massachusetts in a transaction valued at $170.0 million on December 28.
- Capital Markets: The Company completed several capital markets initiatives during 2012 including the following:
- Throughout 2012, the Company sold 2,359,108 common shares under its ATM program at an average net price of $27.11 per share for net proceeds of $64.0 million;
- On March 30, 2012, the Company retired $59.6 million of mortgage debt secured by Hilton San Diego Gaslamp Quarter using proceeds from its senior unsecured credit facility;
- On May 16, 2012, the Company entered into a new $177.5 million unsecured loan with a seven-year term maturing on May 16, 2019. The term loan was swapped to a fixed interest rate for the full seven-year term. The term loan's interest rate will be 3.87 percent when the Company's leverage ratio is between 4.0 and 4.75 times;
- On May 21, 2012, the Company redeemed all 7.5% Series D Cumulative Redeemable Preferred Shares and 8.0% Series E Cumulative Redeemable Preferred Shares. Total combined redemption value for the Series D and E Preferred Shares was approximately $166.8 million; and
- On August 2, 2012, the Company entered into a new $300.0 million unsecured loan with a five-year term maturing 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 is between 4.0 and 4.75 times.
- On December 19, 2012, the Company sold 9,200,000 common shares of beneficial interest, including the full exercise of the underwriters' option to purchase additional shares, at a price to the public of $23.70 per share, resulting in net proceeds of $209.1 million.
- The Company's cost of debt was reduced from 5.2 percent in 2011 to 4.3 percent in 2012. Also, the cost of debt and preferred was reduced from 6.0 percent in 2011 to 4.9 percent in 2012.
- Capital Investments: The Company invested $67.9 million of capital in its hotels throughout the year, completing the 33-room expansion and renovation of Hotel Amarano Burbank and the renovations of The Liaison Capitol Hill in Washington, DC, Le Parc Suite Hotel and Le Montrose Suite Hotel in West Hollywood and The Hotel Roger Williams in New York. The Company's capital investments also include the commencement of the renovation of the Park Central Hotel and WestHouse in Manhattan and Hotel Monaco San Francisco.
As of December 31, 2012, the Company had total outstanding debt of $1.25 billion, including $153.0 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 4.2 times as of December 31, 2012 and its fixed charge coverage ratio was 3.0 times. For the fourth quarter, the Company's weighted average interest rate was 4.3 percent. As of December 31, 2012, the Company had $52.5 million of cash and cash equivalents on its balance sheet and capacity of $619.7 million available on its credit facilities.
On February 20, 2013, the Company entered into an Equity Distribution Agreement with Raymond James & Associates, Inc. to establish a new at-the-market ("ATM") program totaling $250.0 million. The new ATM program replaces the previous $250.0 million program, of which $146.0 million remained.
The Company is providing its 2013 outlook based on an economic environment that continues to improve and assuming no acquisitions and no capital markets activities. The Company's RevPAR growth and financial expectations for 2013 are as follows:
|($'s in millions except per share/unit data)|
Excluding Park Central Hotel
|Hotel EBITDA Margins||31.4%||32.4%|
|Hotel EBITDA Margin Change||0 bps||100 bps|
Including Park Central Hotel
|Hotel EBITDA Margins||31.5%||32.5%|
|Hotel EBITDA Margin Change||-50 bps||50 bps|
Entire Portfolio (Including Park Central Hotel)
|Adjusted FFO per diluted share/unit||$||2.03||$||2.23|
|Income Tax Expenses||$||4.5||$||5.5|
|Portfolio Excluding Park Central||$||70.0||$||75.0|
|Portfolio Including Park Central||$||130.0||$||145.0|
2013 First Quarter Outlook
Based on the portfolio's performance quarter-to-date, the Company expects first quarter RevPAR, excluding the Park Central Hotel to increase 4.0 percent to 6.0 percent. The Company expects its portfolio, including the Park Central Hotel to generate adjusted EBITDA of $37.0 million to $39.0 million and adjusted FFO per share/unit of $0.24 to $0.26.
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 atwww.lasallehotels.com.
|LASALLE HOTEL PROPERTIES|
|Consolidated Statements of Operations and Comprehensive Income|
(in thousands, except share data)
|For the three months ended||For the year ended|
|December 31,||December 31,|
|Hotel operating revenues:|
|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|
|Hotel operating expenses:|
|Food and beverage||38,406||34,589||149,894||133,838|
|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|
|General and administrative||5,134||4,201||19,769||17,120|
|Acquisition transaction costs||441||1,997||4,498||2,571|
|Total operating expenses||187,227||159,994||738,023||629,483|
|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|
|Income from operations of properties disposed of, including gain on sale||0||388||0||829|
|Income tax benefit (expense)||0||
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