BETHESDA, Md.–LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended March 31, 2017. The Company’s results include the following:
First Quarter 2017 2016 % Var. ($'s in millions except per share/unit data) Net income attributable to common shareholders(1) $ 76.1 $ 6.0 1,168.3% Net income attributable to common shareholders per diluted share(1) $ 0.67 $ 0.05 1,240.0% RevPAR(2) $ 177.56 $ 175.03 1.4% Hotel EBITDA Margin(2) 27.5% 27.0% Hotel EBITDA Margin Growth(2)
50 bps
Total Revenues $ 254.4 $ 260.1 -2.2% EBITDA(1,2) $ 135.6 $ 62.9 115.6% Adjusted EBITDA(2) $ 61.8 $ 65.0 -4.9% Note: Adjusted EBITDA in the first quarter of 2016 includes $6.1 million for assets that the Company sold in July 2016 and January 2017. FFO(2) $ 49.0 $ 53.6 -8.6% Adjusted FFO(2) $ 51.3 $ 55.6 -7.7% FFO per diluted share/unit(2) $ 0.43 $ 0.47 -8.5% Adjusted FFO per diluted share/unit(2) $ 0.45 $ 0.49 -8.2%
(1) 2017 net income and EBITDA (as defined below) include $74.4 million of gains from the sales of the Hotel Deca, Lansdowne Resort, and Alexis Hotel.
(2) 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.
“We are proud that our teams continue to operate with excellent efficiency across the portfolio, as evidenced by a decline in hotel operating expenses during the first quarter,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties.
“We have been opportunistic in selling four hotels this year, and we are pleased to use part of these proceeds to redeem our Series H Preferred Shares,” added Mr. Barnello.
First Quarter Results
- Net Income: The Company’s net income attributable to common shareholders was $76.1 million, which increased 1,168.3% from the first quarter of 2016, due in part to $74.4 million in combined gains relating to the sales of Hotel Deca, Lansdowne Resort, and Alexis Hotel.
- RevPAR: The Company’s RevPAR increased 1.4% to $177.56, driven by 1.2% growth in average daily rate to $228.39 and a 0.2% gain in occupancy to 77.7%.
- Hotel EBITDA Margin: The Company’s hotel EBITDA margin expanded by 50 basis points from the comparable prior year period to 27.5%. The Company’s hotel expenses declined by 1.1% from the first quarter of 2016.
- Adjusted EBITDA: The Company’s adjusted EBITDA was $61.8 million, a decrease of $3.2 million from the first quarter of 2016. First quarter 2016 adjusted EBITDA included $6.1 million from three assets the Company sold in July 2016 and January 2017: Indianapolis Marriott Downtown, the mezzanine loan on Shutters on the Beach and Casa Del Mar, and Hotel Deca.
- Adjusted FFO: The Company generated adjusted FFO of $51.3 million, or $0.45 per diluted share/unit, compared to $55.6 million, or $0.49 per diluted share/unit, for the comparable prior year period.
Disposition and Investment Activity
- Asset Sales: Year-to-date, the Company completed four asset sales for $273.9 million, at an average 6.5% trailing net operating income (“NOI”) capitalization rate. The Company will use proceeds from the asset sales to redeem the $68.8 million outstanding of 7.5% Series H Cumulative Redeemable Preferred Shares (the “Series H Preferred Shares”) and for general corporate purposes.
- In January 2017, the Company sold Hotel Deca in Seattle, Washington for $55.0 million, which reflected a 6.7% trailing NOI capitalization rate. The Company acquired the hotel in December 2005 for $26.4 million.
- In March 2017, the Company sold Lansdowne Resort in Lansdowne, Virginia for $133.0 million, which reflected a 6.8% trailing NOI capitalization rate. The Company acquired the hotel in June 2003 for $115.8 million.
- Also in March 2017, the Company sold Alexis Hotel in Seattle, Washington for $71.6 million, which reflected a 5.6% trailing NOI capitalization rate. The Company acquired the hotel in June 2006 for $38.0 million.
- In April 2017, the Company sold its leasehold interest in Hotel Triton in San Francisco, California for $14.25 million, which reflected a 7.8% trailing NOI capitalization rate. The Company acquired the hotel in August 2013 for $10.9 million.
- Capital Investments: During the quarter, the Company invested $12.6 million of capital in its hotels. The Company completed room renovations at L’Auberge Del Mar and Embassy Suites Philadelphia – Center City. As a result of the asset sales, the Company is lowering its 2017 anticipated capital expenditures to a range of $130.0 million to $150.0 million. Previously, the Company anticipated investing between $130.0 million and $170.0 million of capital in its hotels during 2017.
Balance Sheet and Capital Markets Activities
- Balance Sheet Summary as of March 31, 2017: The Company had total outstanding debt of $1.1 billion, and 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 2.9 times, which only reflects $26.3 million of the full $361.4 million of cash and cash equivalents on its balance sheet. The Company’s fixed charge coverage ratio was 5.9 times, and its weighted average interest rate for the first quarter was 2.7%. The Company had capacity of $772.5 million available on its credit facilities.
- Credit Facility Refinancing: On January 10, 2017, the Company refinanced $1.05 billion of debt, reducing the interest cost on its $750.0 million revolver and $300.0 million five-year term loan and extending their maturities to January 2022 (including the exercise of extension options pursuant to certain conditions).
- Share Repurchase Authorization: In February 2017, the Company’s Board of Trustees authorized an expanded share repurchase program to acquire up to an additional $500.0 million of the Company’s common shares. Including the previous authorization, the Company now has $569.8 million of capacity remaining in its share repurchase program. The Board of Trustees authorized the expanded program to increase the Company’s flexibility to execute opportunistic repurchases when it believes share buybacks are an accretive use of funds that will enhance shareholder value. The program does not obligate the Company to acquire any specific number of shares and, as a result, there is no guarantee as to the number of shares that will be repurchased (if any) or the timing of such repurchases. The Company did not acquire any common shares during the first quarter of 2017 or to date during the second quarter of 2017.
Dividend
On March 15, 2017, the Company declared a first quarter 2017 dividend of $0.45 per common share of beneficial interest. The dividend represents an annual run rate of $1.80 per share and a 6.2% yield based on the closing share price on April 18, 2017.
Subsequent Event – Series H Preferred Shares Redemption Announcement
On April 3, 2017, the Company provided notice to the holders of its 7.5% Series H Preferred Shares of the redemption of all 2,750,000 of its issued and outstanding Series H Preferred Shares. The cash redemption price for the Series H Preferred Shares is $25.00 per share, plus accrued and unpaid dividends through the redemption date. The redemption date will be May 4, 2017. After the redemption date, dividends on the Series H Preferred Shares will cease to accrue.
To view full financial release and corresponding tables please click the PDF icon or visit: http://lasallehotelproperties.gcs-web.com/static-files/ce9101bd-6489-4c3c-b64c-628cd32c9126
