BETHESDA, Md.–LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended September 30, 2016. The Company’s results include the following:
Third Quarter Year-to-Date 2016 2015 % Var. 2016 2015 % Var. ($'s in millions except per share/unit data) Net income attributable to common shareholders $ 152.1 $ 44.4 242.6 % $ 213.3 $ 99.9 113.5 % Net income attributable to common shareholders per diluted share $ 1.34 $ 0.39 243.6 % $ 1.88 $ 0.88 113.6 % RevPAR(1) $ 224.98 $ 215.77 4.3 % $ 207.72 $ 202.79 2.4 % Hotel EBITDA Margin(1) 36.8 % 36.5 % 34.5 % 34.1 % Hotel EBITDA Margin Growth(1) 29 bps 35 bps Total Revenue $ 326.9 $ 329.7 -0.8 % $ 938.1 $ 921.9 1.8 % EBITDA(1) $ 219.1 $ 106.5 105.7 % $ 409.6 $ 285.3 43.6 % Adjusted EBITDA(1) $ 115.3 $ 114.6 0.6 % $ 310.8 $ 297.0 4.6 % FFO(1) $ 95.7 $ 90.7 5.5 % $ 253.4 $ 235.0 7.8 % Adjusted FFO(1) $ 96.4 $ 98.8 -2.4 % $ 259.1 $ 246.7 5.0 % FFO per diluted share/unit(1) $ 0.84 $ 0.80 5.0 % $ 2.24 $ 2.07 8.2 % Adjusted FFO per diluted share/unit(1) $ 0.85 $ 0.87 -2.3 % $ 2.29 $ 2.18 5.0 % (1) See tables later in this press release, which list adjustments that reconcile net income attributable to common shareholders to earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, funds from operations attributable to common shareholders and unitholders (“FFO”), FFO per share/unit, adjusted FFO, adjusted FFO per share/unit and pro forma 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. Room revenue per available room ("RevPAR") is presented on a pro forma basis to reflect hotels in the Company's current portfolio. See "Statistical Data for the Hotels – Pro Forma" later in this press release.
“Our portfolio performed well in a slow growth operating environment, with softening demand and increasing hotel supply. We benefited from the recovery of business at Park Central Hotel New York and WestHouse Hotel New York, and we are proud that our teams continue to operate with best-in-class efficiency across the portfolio, as evidenced by expense growth being limited to less than one percent year-to-date, excluding Park Central Hotel New York and WestHouse Hotel New York,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties.
“Following the disposition of two non-core assets during the third quarter, the Company now has an even stronger balance sheet, with a low debt-to-EBITDA ratio, an excellent quality portfolio primarily in core locations, and a well-covered dividend providing a high yield,” added Mr. Barnello.
Park Central Hotel New York and WestHouse Hotel New York Recovery
Excluding Park Central Hotel New York and WestHouse Hotel New York from the third quarter 2016 and the comparable period in 2015, the Company’s third quarter RevPAR grew by 1.5 percent and its hotel EBITDA margin decreased by 50 basis points to 37.6 percent. During the third quarter, the Company regained $5.6 million of the $7.2 million of lost EBITDA from the comparable prior year period.
Third Quarter Results
- Net Income: The Company’s net income attributable to common shareholders increased 242.6 percent to $152.1 million, due in part to a $104.8 million gain relating to the sale of the Indianapolis Marriott Downtown.
- RevPAR: The Company’s RevPAR increased 4.3 percent to $224.98, primarily driven by a 3.9 percent growth in occupancy to 89.5 percent. Average daily rate (“ADR”) rose by 0.4 percent to $251.26.
- Hotel EBITDA Margin: The Company’s hotel EBITDA margin expanded by 29 basis points from the comparable prior year period to 36.8 percent.
- Adjusted EBITDA: The Company’s adjusted EBITDA was $115.3 million, an increase of $0.7 million over the third quarter of 2015.
- Adjusted FFO: The Company generated adjusted FFO of $96.4 million, or $0.85 per diluted share/unit, compared to $98.8 million, or $0.87 per diluted share/unit, for the comparable prior year period, a per share/unit decrease of 2.3 percent. The Company’s income taxes increased by $3.6 million, or $0.03 per diluted share/unit, from the comparable prior year period.
Year-to-Date Results
- Net Income: The Company grew net income attributable to common shareholders by 113.5 percent to $213.3 million.
- RevPAR: RevPAR increased 2.4 percent to $207.72, primarily driven by a 2.4 percent growth in occupancy to 85.0 percent. ADR was just above the prior year at $244.36.
- Hotel EBITDA Margin: The Company’s hotel EBITDA margin expanded by 35 basis points from the comparable prior year period to 34.5 percent.
- Adjusted EBITDA: The Company’s adjusted EBITDA was $310.8 million, an increase of 4.6 percent over the first nine months of 2015.
- Adjusted FFO: The Company generated adjusted FFO of $259.1 million, or $2.29 per diluted share/unit, compared to $246.7 million, or $2.18 per diluted share/unit, for the comparable prior year period, a per share/unit increase of 5.0 percent.
Asset Sales
In July, the Company completed two non-core asset sales for $245.0 million. Proceeds from both transactions were used to reduce borrowings on the Company’s senior unsecured credit facility and for general corporate purposes.
- On July 8, 2016, the Company sold its junior mezzanine loan (the “Mezzanine Loan”) secured by equity interests in two hotels: Shutters on the Beach and Casa Del Mar, in Santa Monica, California. The Mezzanine Loan sold for $80.0 million, which was the principal amount.
- On July 14, 2016, the Company sold the Indianapolis Marriott Downtown for $165.0 million, generating a 13.7 percent unleveraged IRR. The Company acquired the hotel in February 2004 for $106.0 million.
Capital Investments
During the quarter, the Company invested $17.5 million of capital in its hotels, which was primarily maintenance expenditures. A portion of the capital investment during the quarter was for deposits on upcoming room renovations at L’Auberge Del Mar and Embassy Suites Philadelphia Center City.
Balance Sheet
As of September 30, 2016, the Company had total outstanding debt of $1.1 billion. Total net debt to trailing 12 month Corporate EBITDA (as defined in the financial covenant section of the Company’s senior unsecured credit facility) was 2.8 times, as of September 30, 2016 and its fixed charge coverage ratio was 5.8 times. For the third quarter, the Company’s weighted average interest rate was 2.6 percent, compared to 3.0 percent during the same prior year period. As of September 30, 2016, the Company had $135.0 million of cash and cash equivalents on its balance sheet and capacity of $772.5 million available on its credit facilities.
The Company did not acquire any common shares during the third quarter of 2016 or to date during the fourth quarter of 2016. The Company has $69.8 million of capacity remaining in its share repurchase program.
To view full financial release and corresponding tables please click the PDF icon or visit: http://phx.corporate-ir.net/phoenix.zhtml?c=63030&p=irol-news1&nyo=0
