BETHESDA, Md.--(BUSINESS WIRE)--LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended June 30, 2016.

 “During the second quarter, our team and operators continued to execute at record levels, delivering hotel EBITDA growth and a best-in-class 38.6 percent hotel EBITDA margin,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “Concurrently, we have been able to further strengthen the Company through a preferred equity raise and by completing two non-core asset dispositions.”

“The preferred equity offering boasts the lowest-ever coupon for a lodging REIT. The sale of Indianapolis Marriott Downtown capped off an excellent long-term investment for us. We owned the hotel for 12 years and it generated a 13.7 percent unleveraged IRR. We also sold our non-core junior mezzanine loan on Shutters on the Beach and Casa Del Mar at par. Each of these transactions has reduced our debt, and as a result our debt-to-EBITDA ratio, further bolstering our already solid balance sheet,” added Mr. Barnello.

Second Quarter Results

• Net Income: The Company’s net income attributable to common shareholders was $55.2 million.
• RevPAR: Room revenue per available room (“RevPAR”) increased 1.7 percent to $223.13, primarily driven by a 2.0 percent growth in occupancy to 88.7 percent. Average daily rate (“ADR”) was just below the prior year at $251.58.
• Hotel EBITDA Margin: The Company’s hotel EBITDA margin expanded by 31 basis points from the comparable prior year period to 38.6 percent.
• Adjusted EBITDA: The Company’s adjusted EBITDA was $130.5 million, an increase of 4.2 percent over the second quarter of 2015.
• Adjusted FFO: The Company generated adjusted FFO of $107.0 million, or $0.95 per diluted share/unit, compared to $102.6 million, or $0.91 per diluted share/unit, for the comparable prior year period, a per share/unit increase of 4.4 percent.

Year-to-Date Results

• Net Income: The Company grew net income attributable to common shareholders by 10.3 percent to $61.2 million.
• RevPAR: RevPAR increased 1.8 percent to $195.56, primarily driven by a 2.0 percent growth in occupancy to 82.3 percent. ADR was just below the prior year at $237.62.
• Hotel EBITDA Margin: The Company’s hotel EBITDA margin expanded by 45 basis points from the comparable prior year period to 33.4 percent.
• Adjusted EBITDA: The Company’s adjusted EBITDA was $195.5 million, an increase of 7.2 percent over the first half of 2015.
• Adjusted FFO: The Company generated adjusted FFO of $162.7 million, or $1.44 per diluted share/unit, compared to $147.9 million, or $1.31 per diluted share/unit, for the comparable prior year period, a per share/unit increase of 9.9 percent.

Subsequent Events: Asset Sales

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. The Company originally provided the Mezzanine Loan on July 20, 2015.

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. For RevPAR, hotel EBITDA, and hotel EBITDA margin detail for this hotel for the trailing four quarters, please refer to the supporting table at the end of this release.

Proceeds from both transactions were used to reduce borrowings on the Company’s senior unsecured credit facility and for general corporate purposes.

Capital Markets Activities

During the quarter, the Company issued 6,000,000 6.3 percent Series J Cumulative Redeemable Preferred Shares for gross proceeds of $150.0 million. The 6.3 percent coupon is the lowest-ever for a lodging REIT.

Capital Investments

During the quarter, the Company invested $21.2 million of capital in its hotels. As a result of fewer planned renovations at the end of 2016 and the sale of Indianapolis Marriott Downtown, the Company is lowering its 2016 anticipated capital expenditures to a range of $110.0 million to $130.0 million. Previously, the Company anticipated investing between $130.0 million and $170.0 million of capital in its hotels during 2016.

Balance Sheet

As of June 30, 2016, the Company had total outstanding debt of $1.3 billion, including $190.0 million outstanding on its senior unsecured credit facility. 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 3.2 times as of June 30, 2016 and its fixed charge coverage ratio was 5.6 times. For the second quarter, the Company’s weighted average interest rate was 2.5 percent, compared to 3.3 percent during the same prior year period. As of June 30, 2016, the Company had $43.1 million of cash and cash equivalents on its balance sheet and capacity of $582.4 million available on its credit facilities.

Pro forma for the sale of Indianapolis Marriott Downtown and the Mezzanine Loan, the Company’s total net debt to trailing 12 month Corporate EBITDA is 2.9 times, with $98.1 million of cash and cash equivalents on its balance sheet and capacity of $772.4 million available on its credit facilities.

The Company did not acquire any common shares during the second quarter of 2016 or to date during the third quarter of 2016. The Company has $69.8 million of capacity remaining in its share repurchase program.

Dividend

On June 15, 2016, the Company declared a second quarter 2016 dividend of $0.45 per common share of beneficial interest. The dividend represents an annual run rate of $1.80 per share and a 7.0 percent yield based on the closing share price on July 19, 2016.

Appointment of Kenneth G. Fuller as Chief Financial Officer

On April 25, 2016, Kenneth G. Fuller was appointed as the Company’s Executive Vice President, Chief Financial Officer, Secretary, and Treasurer. Mr. Fuller returned to the Company after founding Vine Investment Partners (“Vine”) – a real estate company focused on acquiring and developing multi-family residential properties and hotels. Prior to founding Vine, Mr. Fuller served the Company in various positions dating back to 2000, including most recently as Treasurer from 2011 to 2015.

About LaSalle Hotel Properties

LaSalle Hotel Properties is a leading multi-operator real estate investment trust. The Company owns 46 properties, which are upscale, full-service hotels, totaling approximately 11,450 guest rooms in 13 markets in nine 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 groups, including Hilton Hotels Corporation, Marriott International, Starwood Hotels & Resorts Worldwide, Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels Corporation, Benchmark Hospitality, Commune Hotels and Resorts, Destination Hotels, Davidson Hotel Company, Kimpton Hotel & Restaurant Group, LLC, Accor, HEI Hotels & Resorts, JRK Hotel Group, Inc., Viceroy Hotel Group, Highgate Hotels and Access Hotels & Resorts.