LaSalle Hotel Properties Reports Fourth Quarter and Full Year 2010 Results

LaSalle Hotel Properties (NYSE: LHO) today announced results for the fourth quarter and year ended December 31, 2010. The Company’s results include the following:

“2010 was a very successful year for our Company”

Fourth Quarter Highlights

• RevPAR: Room revenue per available room (“RevPAR”) increased 3.2 percent to $132.24, as a result of a 2.1 percent increase in average daily rate (“ADR”) to $185.15 and a 1.1 percent increase in occupancy to 71.4 percent.
• Hotel EBITDA margin: The Company’s hotel EBITDA margin was 29.0 percent, which was an improvement of 55 basis points compared to the same comparable prior year period.
• Adjusted EBITDA: The Company’s adjusted EBITDA was $43.1 million.
• Adjusted FFO: The Company generated adjusted FFO of $26.7 million, or $0.37 per diluted share.
• Acquisitions: The Company acquired the Hotel Roger Williams in New York City on October 6, 2010 for $90.0 million and the Chamberlain West Hollywood on December 6, 2010 for $38.5 million.
• Dispositions: The joint venture, in which the Company had a 95 percent controlling interest, sold the joint venture’s portion of the building located at 330 N. Wabash Avenue in downtown Chicago, IL on December 29, 2010 for $58.8 million.

Full Year 2010 Highlights

• RevPAR: RevPAR increased 2.5 percent to $137.41, as a result of a 1.2 percent increase in ADR to $183.16 and a 1.2 percent increase in occupancy to 75.0 percent.
• Hotel EBITDA margin: The Company’s hotel EBITDA margin was 29.1 percent.
• Adjusted EBITDA: The Company’s adjusted EBITDA was $165.0 million.
• Adjusted FFO: The Company generated adjusted FFO of $98.1 million, or $1.41 per diluted share.
• Acquisitions: The Company acquired six hotels during 2010 for a total investment of $516.0 million, including the following:
  • The Sofitel Washington, DC Lafayette Square for $95.0 million on March 1;
  • The Hotel Monaco San Francisco for $68.5 million on September 1;
  • The Westin Philadelphia for $145.0 million on September 1;
  • The Embassy Suites Philadelphia – Center City for $79.0 million on September 1;
  • Hotel Roger Williams in New York City for $90.0 million on October 6; and
  • The Chamberlain West Hollywood for $38.5 million on December 6.
• Dispositions: The Company disposed of two hotels and one development property during 2010 for gross proceeds of $128.8 million, including the following:
  • Seaview Resort for $20.0 million on September 1;
  • Westin City Center Dallas for $50.0 million on September 30; and
  • The joint venture, in which the Company had a 95 percent controlling interest, sold the joint venture’s portion of the building located at 330 N. Wabash Avenue in downtown Chicago, IL for $58.8 million on December 29.
• Capital Markets: The Company sold common shares, raising $184.1 million, including the following:
  • Underwritten public offering in March, 2010 which resulted in net proceeds of $109.2 million; and
  • Sale of common shares through its at-the-market (“ATM”) offering program, which resulted in net proceeds of $74.9 million.

  Additionally, the Company retired $12.8 million of outstanding mortgage principal balance on the LeMontrose Suite Hotel.

• Capital Investments: The Company invested $33.4 million of capital in its hotels, including the commencement of guestroom renovations at the Westin Copley Place hotel, Hotel Rouge and Topaz Hotel.
• Dividends: On September 14, 2010, the Company announced that it increased its quarterly dividend from $0.01 to $0.11 per common share of beneficial interest.

“2010 was a very successful year for our Company,” said Michael Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “The industry and our portfolio began to recover, our Company continued to deliver extraordinary hotel EBITDA margins and we substantially improved our portfolio by acquiring hotels that are consistent with our strategy and that we believe will create long term shareholder value and by exiting non-core markets and lower-performing assets. In addition, we were able to meaningfully increase the dividend in the third quarter of 2010.

We continued to opportunistically raise capital in 2010 with net proceeds of $109.2 million through our common equity offering in March and $74.9 million through our ATM program. To date in 2011, we have raised net proceeds of $66.4 million through our Series H preferred offering and $72.3 million through our ATM program.”

Balance Sheet

As of December 31, 2010, the Company had total outstanding debt of $808.6 million, including $120.2 million outstanding on its credit facilities. Total debt to trailing 12 month Corporate EBITDA (as defined in the Company’s senior unsecured credit facility) was 4.4 times as of December 31, 2010. For the year, the Company’s weighted average interest rate was 4.9 percent. As of December 31, 2010, based on the Company’s covenants under its senior unsecured credit facility, the Company’s EBITDA to interest coverage ratio was 4.7 times and its fixed charge coverage ratio was 2.3 times. At the end of 2010, the Company had $32.3 million of cash and cash equivalents on its balance sheet and an aggregate of $347.7 million available on its credit facilities.

Subsequent Events

On January 5, 2011, the Company announced that Mr. Bruce A. Riggins has been appointed Executive Vice President and Chief Financial Officer effective January 24, 2011. Mr. Riggins was previously Chief Financial Officer of Interstate Hotels & Resorts.

On January 12, 2011, the Company sold the Sheraton Bloomington Hotel for $20.0 million. The Company recorded an impairment loss related to the sale of $3.2 million in the fourth quarter of 2010.

On January 19, 2011, the Company priced an underwritten public offering of 7.5% Series H Cumulative Redeemable Preferred Shares at $25.00 per share, for net proceeds of approximately $66.4 million, including the exercise of the underwriters’ overallotment option.

On February 11, 2011, the Company announced the redemption of its 8.375% Series B Cumulative Redeemable Preferred Shares. The redemption price is $25.00 per share, plus accrued and unpaid dividends through the redemption date of March 14, 2011.

During January and February, 2011, the Company sold 2,619,811 common shares through its at-the-market offering program resulting in net proceeds of approximately $72.3 million. In addition, the Company’s Board of Trustees has authorized an additional ATM program in the amount of $250.0 million, to the extent conditions warrant raising the additional proceeds; however, the Company has not yet entered into any new equity distribution agreements.

2011 Outlook

Based on the current economic environment and assuming that recent signs of economic recovery continue to improve, and assuming 2011 RevPAR growth of 6.0% to 8.0% compared to 2010, the Company’s 2011 outlook is as follows:

• Adjusted EBITDA of $192.0 to $202.0 million;
• Adjusted FFO of $116.4 to $124.4 million;
• Adjusted FFO per diluted share of $1.55 to $1.66;
• Portfolio hotel EBITDA margins between 30.0% and 31.0%, an increase of approximately 100 to 200 basis points;
• Corporate general and administrative expenses of $16.0 million to $17.0 million;
• Total capital investments of $65.0 million to $70.0 million;
• Non-cash income tax expense of $5.5 million to $7.5 million;
• No acquisitions; and
• $0.6 million of costs associated with the departure of the previous CFO and $0.7 million of recognized issuance costs associated with the redemption of the Series B Cumulative Redeemable Preferred Shares. These items are excluded from adjusted EBITDA and adjusted FFO.

2011 First Quarter Outlook

Based on the portfolio’s performance the first two months of the quarter, the Company expects RevPAR to increase 5.0% to 7.0%, resulting in adjusted FFO of $7.2 million to $8.8 million, adjusted FFO per share of $0.10 per share to $0.12 per share and adjusted EBITDA of $22.0 million to $24.0 million for the first quarter. Both adjusted FFO and adjusted EBITDA for the quarter exclude the impact of approximately $0.6 million of costs associated with the departure of the previous CFO and $0.7 million of recognized issuance costs associated with the redemption of the Series B Cumulative Redeemable Preferred Shares.

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