LaSalle Hotel Properties Reports Second Quarter Results
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LaSalle Hotel Properties Reports Second Quarter Results
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Category: Worldwide
This is a press release selected by our editorial committee and published online for free on 2006-07-20
LaSalle Hotel Properties (NYSE:LHO) today reported net income to common shareholders of $18.4 million, or $0.46 per diluted share for the quarter ended June 30, 2006, compared to net income of $10.3 million, or $0.34 per diluted share for the prior year period.
For the quarter ended June 30, 2006, the Company generated funds from operations ("FFO") of $37.9 million versus $20.8 million for the same period of 2005. On a per diluted share/unit basis, FFO for the second quarter was $0.94 versus $0.68 for the same period last year, a 38 percent increase. The Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") for 2006's second quarter rose to $58.7 million from $32.2 million during the prior year period.
Room revenue per available room ("RevPAR") for the quarter ended June 30, 2006 versus the same period in 2005 increased 10.6 percent to $155.39. Average daily rate ("ADR") rose to $196.09, an 8.5 percent improvement, while occupancy rose 1.9 percent to 79.2 percent from the prior year period. For the six months ended June 30, 2006, RevPAR increased 11.8 percent to $136.96 from the prior year period. ADR increased 8.8 percent to $185.09 and occupancy increased 2.7 percent to 74.0 percent from the prior year period.
The Company's hotels generated $59.4 million of EBITDA for the second quarter compared with $54.2 million for the same period last year. Second quarter portfolio-wide EBITDA margins increased 5 basis points ("bps") from the prior year. For the six months ended June 30, 2006, portfolio-wide EBITDA margins improved 110 bps from the prior year period.
"The Company's overall performance in the second quarter was in-line with our expectations," said Jon Bortz, Chairman and Chief Executive Officer of LaSalle Hotel Properties. "In the quarter, demand remained healthy, RevPAR growth was strong and FFO per diluted share/unit rose 38 percent. While hotel EBITDA margins disappointed us slightly, most of the quarter's margin pressures were anticipated and our hotel EBITDA margin growth outlook for the year remains within our prior range. Though we experienced some minor softness in leisure demand in June, fundamentals for the lodging industry and LaSalle Hotel Properties remain strong."
On April 13, 2006, LaSalle Hotel Properties increased its monthly dividend to $0.14 per common share of beneficial interest for each of the months of April, May and June 2006. This represented a 40 percent increase from the prior monthly dividend of $0.10 per common share.
On June 8, 2006, the Company successfully executed a $101.8 million secured loan with Bank of America, N.A. at a fixed annualized interest rate of 5.99 percent. The term of the loan is 10 years and is collateralized by the 615-room Indianapolis Marriott Downtown. Proceeds from the loan were used to repay the previous $57.0 million mortgage secured by the hotel and reduce the Company's outstanding balance on its credit facility. In conjunction with this refinancing, the Company recognized $1.1 million of income in the second quarter related to the termination of a swap for the $57.0 million mortgage, although a higher interest rate on the new loan will offset most of this income over the prior mortgage's remaining term.
On June 15, 2006, the Company acquired the Alexis Hotel in Seattle, Washington, for $38.0 million. The 109-room Four Diamond, independent full-service hotel is located on First Avenue in the heart of downtown Seattle. The purchase price included 19,000 square feet of retail space currently 100 percent leased to third-party tenants. The historic Alexis Hotel is located in the heart of the central business district of downtown Seattle, in close proximity to leisure and business demand generators. The hotel is managed by the Kimpton Hotel & Restaurant Group, LLC.
As of the end of the second quarter 2006, the Company had total outstanding debt of $730.1 million. The Company's $300.0 million credit facility had no outstanding balance as of June 30, 2006. Interest expense for the quarter was $9.4 million, resulting in a trailing 12 month Corporate EBITDA (as defined in the Company's senior unsecured credit facility) to interest coverage ratio of 4.5 times. As of June 30, 2006, total debt to trailing 12 month Corporate EBITDA equaled 4.1 times, one of the lowest debt to EBITDA ratios in the industry.
For the six months ended June 30, 2006, net income to common shareholders increased to $51.6 million from $7.3 million for the prior year period. EBITDA increased to $121.5 million from $45.7 million for the prior year period. FFO increased to $50.1 million from $29.1 million or $1.27 per diluted share/unit from $0.95 per diluted share/unit for the prior year period, which represents a 34 percent increase. Net income and EBITDA for the six months ended June 30, 2006 include the $38.4 million gain in joint venture equity pick-up related to the sale of the Chicago Marriott. Net income, EBITDA and FFO include the $1.0 million contingent litigation expense for the six months ended June 30, 2005.
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