LaSalle Hotel Properties Reports Fourth Quarter and Full Year 2009 Results
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LaSalle Hotel Properties Reports Fourth Quarter and Full Year 2009 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 2010-02-26
LaSalle Hotel Properties (NYSE: LHO) today reported a net loss to common shareholders of $18.8 million, or ($0.34) per diluted share for the year ended December 31, 2009 compared to net income of $10.6 million, or $0.25 per diluted share for the prior year. The net loss for 2009 includes $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 2,348,888 7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest for 2,348,888 7.25% Series G Cumulative Redeemable Preferred Shares of Beneficial Interest (the “Preferred Share Exchange”). Net income for 2008 was reduced by a $4.3 million final settlement expense related to the Meridien litigation.
For the year ended December 31, 2009, the Company generated funds from operations (“FFO”) of $90.8 million versus $117.1 million for the same period of 2008. On a per diluted share basis, FFO for 2009 was $1.66, compared to $2.90 for the prior year. FFO for 2009 included $5.7 million of after-tax income related to the recognition of prior termination cure payments and the $1.0 million fee for the Preferred Share Exchange. FFO for 2008 was reduced by the $4.3 million settlement expense related to the Meridien litigation.
The Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) for 2009 were $160.1 million as compared to $192.0 million for 2008. EBITDA for 2009 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. EBITDA for 2008 was reduced by the $4.3 million settlement expense related to the Meridien litigation.
“2009 was an extremely challenging year, during which our Company and the US lodging industry overall faced the largest RevPAR decline in recorded history,” said Michael Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “Despite the challenges of the 2009 operating environment, our Company delivered best-in-class EBITDA margins as our asset managers and property teams did an outstanding job limiting margin erosion.”
Room revenue per available room (“RevPAR”) in 2009 was $120.80, which was a decrease of 17.0 percent compared to 2008. Average daily rate (“ADR”) declined 13.5 percent versus 2008 to $172.55, while occupancy fell 4.1 percent to 70.0 percent.
The Company’s hotels generated $160.0 million of EBITDA for the year ended December 31, 2009 compared with $209.0 million for the same period of 2008. Hotel revenues declined 15.1 percent while hotel expenses were reduced by 11.5 percent. As a result, the hotel EBITDA margin was 27.4 percent for the year ended December 31, 2009, which is a decline of 297 basis points compared to the same period last year.
3 Bethesda Metro Center, Suite 1200, Bethesda, MD 20814
PH 301.941.1500, FX 301.941.1553
www.lasallehotels.com
News Release
As of December 31, 2009, the Company had total outstanding debt of $643.8 million and the Company had no outstanding balance on its senior unsecured credit facility. Total debt to trailing 12 month Corporate EBITDA (as defined in the Company’s senior unsecured credit facility) equaled 3.9 times as of December 31, 2009. For the year, the Company’s weighted average interest rate was 4.6 percent. As of December 31, 2009, 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 2.2 times. At the end of 2009, the Company had $20.2 million of cash and cash equivalents on its balance sheet and an aggregate of $466.7 million available on its credit facilities.
2009 Highlights
In 2009, the Company retired, without penalty, $89.3 million of outstanding mortgage principal balances secured by the following four hotel properties:
Westin City Center Dallas and Sheraton Bloomington Hotel Minneapolis South - $38.4 million mortgage paid on February 2, 2009;
Hilton Alexandria Old Town - $30.9 million mortgage paid on June 1, 2009; and
Gild Hall - $20.0 million mortgage paid on October 27, 2009.
The Company completed two underwritten public offerings during the second quarter of 2009 and raised net proceeds of $260.4 million. The two offerings served to strengthen the balance sheet and position the Company to acquire assets as they become available.
On September 14, 2009 the Company announced that Michael D. Barnello was named as its Chief Executive Officer. Additionally, Alfred L. Young was appointed Chief Operating Officer of the Company effective November 3, 2009.
Fourth Quarter Results
For the three months ended December 31, 2009, net loss to common shareholders was $11.5 million, or ($0.18) per diluted share compared to net loss of $7.6 million, or ($0.19) for the same period of 2008.
For the quarter ended December 31, 2009, FFO was $15.9 million, or $0.25 per diluted share compared to $20.0 million, or $0.49 per diluted share for the same period of 2008. EBITDA for 2009’s fourth quarter was $30.9 million versus $37.0 million in the prior year period.
RevPAR for the quarter ended December 31, 2009 decreased 11.0 percent to $111.46 versus the same prior year period. ADR declined 11.6 percent from the fourth quarter of 2008 to $171.09, while occupancy increased 0.7 percent to 65.1 percent during the same period.
The Company’s hotels generated $34.6 million of EBITDA for the fourth quarter of 2009 compared with $41.1 million for the same period last year. During the three months ended December 31, 2009, hotel revenues declined 11.8 percent, while hotel expenses were reduced by 10.4 percent. As a result, the hotel EBITDA margin was 24.8 percent for the three months ended December 31, 2009 and was limited to a decrease of 118 basis points compared to the same period last year.
Subsequent Events
On January 15, 2010, the Company paid the fourth quarter 2009 dividend of $0.01 per common share of beneficial interest to shareholders of record as of December 31, 2009.
On February 1, 2010, the Company retired without penalty, the $12.8 million outstanding mortgage principal balance on the LeMontrose Suite Hotel. As of February 2, 2010, twenty-four of the Company’s hotels were unencumbered by debt.
On February 2, 2010, the Company and LaSalle Investment Management mutually agreed to dissolve their joint venture agreement. As of the date of dissolution, there were no acquisitions through the joint venture.
Agreement to Acquire Sofitel Lafayette Square, Washington, D.C.
On February 8, 2010, the Company entered into an agreement to acquire the Sofitel Lafayette Square in Washington, D.C. for $95.0 million. The Sofitel is an urban, full-service hotel with 237 guestrooms. The hotel is located in the heart of the business district of downtown Washington, D.C., two blocks from the White House. Closing of the acquisition is subject to the satisfaction of certain conditions and there is no assurance that the acquisition will occur or that it will occur based on the expected terms.
2010 Outlook
Based on the current economic environment and assuming that recent signs of economic recovery continue to improve, the Company’s 2010 outlook is as follows:
Net Loss ($51.0) million - ($36.5) million;
FFO $48.5 million - $62.5 million; and
EBITDA $113.5 million - $128.5 million.
This 2010 outlook is based on the following major assumptions:
Portfolio RevPAR decline of (4.0%) to (6.0%) compared to 2009;
Portfolio hotel EBITDA margins between 22.4% and 24.4% (decline of 300 to 500 basis points);
Corporate general and administrative expenses of $16.0 million to $16.5 million;
Total capital investments of $26.0 million to $30.0 million;
Non-cash income tax expense of $2.0 million to $3.0 million;
Acquisition of the Sofitel Lafayette Square, Washington, D.C.; and
FFO and EBITDA include transaction costs of approximately $2.0 million related to the Sofitel acquisition, which will be recognized as expenses in accordance with GAAP.
Due to the uncertainty of the pace of recovery in the economy and subsequently the lodging sector we are not providing a quarterly breakdown of our outlook. However, based on the portfolio’s performance the first two months of the quarter, we expect RevPAR to decline 11.0 to 13.0 percent resulting in FFO of ($1.0) million to $1.0 million and EBITDA of $11.5 million to $13.5 million for the first quarter. Both FFO and EBITDA for the quarter include the expensing of approximately $2.0 million of transaction costs related to the Sofitel acquisition. Excluding the impact of the inauguration, our outlook for our portfolio RevPAR performance in the first quarter would be a decline of 7.5 to 9.5 percent.
Earnings Call
The Company will conduct its quarterly conference call on Friday, February 26, 2010 at 9:00 AM EST. To participate in the conference call, please dial (888) 378-4398. 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 owning 31 upscale full-service hotels, totaling approximately 8,500 guest rooms in 14 markets in 11 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, Sheraton Hotels & Resorts Worldwide, Inc., Hilton Hotels Corporation, Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels Corporation, Benchmark Hospitality, White Lodging Services Corporation, Thompson Hotels, Sandcastle Resorts & Hotels, Davidson Hotel Company, Denihan Hospitality Group, Dolce Hotels and Resorts and the Kimpton Hotel & Restaurant Group, LLC.
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