LaSalle Hotel Properties Reports Second Quarter Results
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LaSalle Hotel Properties Reports Second Quarter Results
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Category: Worldwide - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2010-07-22
Second Quarter RevPAR Increases 7.4 Percent
LaSalle Hotel Properties (NYSE: LHO) today reported net income to common shareholders of $8.0 million, or $0.11 per diluted share for the quarter ended June 30, 2010, compared to net income of $8.2 million, or $0.16 per diluted share for the second quarter of 2009.
For the quarter ended June 30, 2010, the Company generated funds from operations (“FFO”) of $35.9 million versus $35.6 million for the second quarter of 2009. On a per diluted share basis, FFO for the second quarter was $0.52, compared to $0.70 for the same period of 2009.
Net income and FFO for the prior year included $5.7 million of after-tax income related to the recognition of prior termination cure payments from the previous manager of the Company’s Seaview Resort and a $1.0 million fee for exchanging Series C Cumulative Redeemable Preferred Shares of Beneficial Interest for Series G Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Preferred Share Exchange”).
The Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the second quarter of 2010 were $55.5 million as compared to $59.5 million for the second quarter of 2009. Prior year EBITDA included $9.5 million of pre-tax income related to the recognition of prior termination cure payments and the $1.0 million fee related to the Preferred Share Exchange.
Room revenue per available room (“RevPAR”) in the second quarter of 2010 was $146.60, which was an increase of 7.4 percent compared to the same period of 2009. Average daily rate (“ADR”) increased 2.1 percent from the second quarter of 2009 to $185.44, while occupancy increased 5.2 percent to 79.1 percent.
“We are encouraged by the second quarter results for both the industry and the Company,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “The combination of continued strong demand and the recent improvement in average rate give us confidence that we are in the beginning phase of what we expect to be a strong and long recovery.”
The Company’s hotels generated $58.5 million of EBITDA for the quarter ended June 30, 2010 compared with $53.6 million for the same period of 2009. Hotel revenues increased 7.4 percent while hotel expenses grew 6.6 percent. As a result, the hotel EBITDA margin for the quarter ended June 30, 2010 was 32.5 percent, which is an increase of 53 basis points compared to the same period last year.
As of June 30, 2010, the Company had total outstanding debt of $624.6 million and the Company had no outstanding balance on its senior unsecured credit facility and the credit facility of the Company’s taxable REIT subsidiary. Total debt to trailing 12 month Corporate EBITDA (as defined by our senior unsecured credit facility) equaled 3.9 times as of June 30, 2010. For the quarter, the Company’s weighted average interest rate was 5.3 percent. As of June 30, 2010, based on the Company’s covenants under its senior unsecured credit facility, the Company’s EBITDA to interest coverage ratio was 4.4 times and its fixed charge coverage ratio was 2.1 times. At the end of the quarter, the Company had $42.6 million of cash and cash equivalents on its balance sheet and an aggregate of $472.9 million available on its credit facilities.
For the six months ended June 30, 2010, the Company reported a net loss to common shareholders of $17.8 million compared to a net loss of $10.7 million for the same period of 2009. For the six months ended June 30, 2010, FFO was $37.4 million, or $0.56 per diluted share compared to $44.2 million, or $0.96 per diluted share for the same period of 2009. Net income and FFO for the six months ended June 30, 2010 were reduced by $1.5 million for transaction costs related to the acquisition of the Sofitel Washington, DC Lafayette Square. Prior year net income and FFO included $5.7 million of after-tax income related to the recognition of prior termination cure payments and the $1.0 million fee related to the Preferred Share Exchange.
EBITDA for the six months ended June 30, 2010 decreased to $70.3 million from $80.8 million for the six months ended June 30, 2009. EBITDA for the six months ended June 30, 2010 was reduced by $1.5 million for transaction costs related to the acquisition of the Sofitel Washington, DC Lafayette Square. Prior year EBITDA included $9.5 million of pre-tax income related to the recognition of prior termination cure payments and the $1.0 million fee related to the Preferred Share Exchange. RevPAR was $121.60 for the six months ended June 30, 2010, which represented no change from the same prior year period. ADR declined 3.4 percent from the six months ended June 30, 2009 to $172.28, while occupancy increased 3.5 percent to 70.6 percent during the same period.
For the six months ended June 30, 2010, the Company’s hotels generated $77.7 million of EBITDA compared with $79.7 million for the same period last year. During the six months ended June 30, 2010, hotel revenues increased 0.4 percent, while hotel expenses increased by 1.5 percent. As a result, the hotel EBITDA margin across the Company’s portfolio was 26.1 percent and was limited to a decline of 78 basis points compared to the same period last year.
Second Quarter Highlights
On April 21, 2010, the Company entered into separate Equity Distribution Agreements (the "Agreements") with each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Raymond James & Associates, Inc. and Wells Fargo Securities, LLC (collectively, the "Managers"). Under the terms of the Agreements, the Company may issue and sell from time to time through or to the Managers, as sales agents and/or principals, the Company's common shares of beneficial interest having an aggregate offering price of up to $150.0 million. The Company has not issued any shares under the program.
On June 15, 2010, the Company announced a quarterly dividend of $0.01 per common share for the second quarter of 2010. The second quarter dividend was paid on July 15, 2010 to common shareholders of record on June 30, 2010.
2010 Outlook
Based on the current economic environment and assuming that recent signs of economic recovery continue, the Company’s revised 2010 outlook is as follows:
Net Loss ($30.0) million - ($20.0) million;
FFO $80.0 million - $90.0 million; and
EBITDA $150.0 million - $160.0 million.
This 2010 outlook is based on the following major assumptions:
Portfolio RevPAR increase of 1.0 percent to 4.0 percent compared to 2009;
Portfolio hotel EBITDA margins between 26.4 percent and 27.9 percent (decline of 100 basis points to increase of 50 basis points);
Corporate general and administrative expenses of $16.0 million to $16.5 million;
Transaction costs of $1.5 million related to the acquisition of the Sofitel Washington, DC Lafayette Square;
Total capital investments of $26.0 million to $30.0 million;
Interest expense of $35.0 million to $35.5 million;
Non-cash income tax expense of $7.0 million to $8.0 million; and
Weighted average fully diluted shares of 68.4 million.
Earnings Call
The Company will conduct its quarterly conference call on Thursday, July 22, 2010 at 9:00 AM EDT. To participate in the conference call, please dial (800) 419-9895. 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.
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