BETHESDA, Md.--(BUSINESS WIRE)--LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended March 31, 2018. The Company’s results are summarized below.

Michael D. Barnello, President and Chief Executive Officer of LaSalle said, “First quarter results were meaningfully stronger than we expected and we are seeing the markets continue to build on this momentum so far in the second quarter. During the first quarter, corporate and international demand rebounded in our portfolio, and our early indication for the second quarter is that these positive trends should continue. Additionally, despite rising supply, the Manhattan market experienced its highest RevPAR growth of any quarter dating back to 2013, which is very promising. These data points are notably more positive than we expected just two months ago. We are encouraged by the market strength we are seeing and have raised our full year outlook; we believe the LaSalle portfolio is well positioned to capitalize on these drivers.”

Mr. Barnello added, “Furthermore, during the first quarter, we continued to make significant progress on our strategic and financial objectives and are confident in the unique value of our assets and position in the market. We delivered strong operational execution with flat RevPAR at our unaffected properties, demonstrated disciplined expense management and completed the majority of our renovations that began at the end of 2017. Importantly, we maintained our focus on prudent capital allocation and repurchased shares under the share repurchase program, creating additional value for our shareholders.”

First Quarter 2018 Results

• Net Loss: The Company’s net loss attributable to common shareholders was $11 million, which changed by $87 million from the same period in 2017, primarily due to $74 million of gains from three asset sales last year.
• RevPAR: The Company’s first quarter 2018 RevPAR decreased 7.6% to $165, driven by a 4.0% reduction in average daily rate to $221 and an occupancy decline of 3.7% to 74.9%. Excluding the Company’s hotels located in Washington, DC and Key West and hotels under renovation, RevPAR was approximately flat to last year.

• Hotel EBITDAre Margin: The Company’s hotel EBITDAre margin was 23.7%, which declined by 370 basis points from the first quarter 2017. The Company’s hotel expenses declined by 1% during the quarter.
• Adjusted EBITDAre: The Company’s adjusted EBITDAre was $48 million, a decrease of $14 million from the first quarter 2017.
• Adjusted FFO: The Company generated adjusted FFO of $37 million, or $0.33 per diluted share/unit, compared to $51 million, or $0.45 per diluted share/unit, for the first quarter 2017.

Capital Investments: The Company invested $39 million of capital in its hotels in the first quarter. The majority of this investment was for renovations, which are now mostly complete at Westin Copley Place in Boston, Paradise Point Resort and Spa in San Diego, Chamberlain and Le Montrose Suite Hotel in West Hollywood, Hotel Spero (formerly Serrano Hotel) and Harbor Court Hotel in San Francisco, and The Heathman Hotel in Portland.

The Company anticipates investing approximately $175 million of capital in its hotels in 2018, as previously disclosed.

Balance Sheet and Capital Markets Activities

• Balance Sheet Summary as of March 31, 2018: 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, adjusted for all cash and cash equivalents on its balance sheet) was 2.6 times. The Company’s fixed charge coverage ratio was 5.3 times, and its weighted average interest rate for the first quarter was 3.2%. The Company had capacity of $773 million available on its credit facilities, in addition to $229 million of cash and cash equivalents on its balance sheet.
• Hyatt Regency Boston Harbor Bond Repayment: On March 1, 2018, the Company repaid the $42.5 million of outstanding bonds on the Hyatt Regency Boston Harbor with cash on hand.
• Share Repurchase: Between February 26, 2018 and March 5, 2018, the Company repurchased 2,982,800 common shares of the Company at a cost of $74.5 million and a weighted average price of $24.96 per share under the Company’s previously announced share repurchase program, which equates to an 8.1% capitalization rate on 2017 NOI. The Company has approximately $500 million of capacity remaining in its share repurchase authorization. The Company has not repurchased any common shares under the program since March 5, 2018.

Key West Impact Update: In the first quarter, the Company recorded $1.3 million of business interruption proceeds related to losses in 2017 following Hurricane Irma. The Company will continue to process business interruption claims for both of the Key West properties.

Full Year 2018 Outlook

The Company is updating its full year outlook for 2018 to account for outperformance during the first quarter and second quarter outlook only. The Company has not made any changes to its outlook in the second half of 2018 at this time. The outlook is based on the current economic environment and assumes no acquisitions, dispositions, or capital markets activity.

Mr. Barnello concluded, “With the bulk of the renovations behind us, coupled with the strong rebound in corporate and international travel, we are more confident than ever that LaSalle is poised to deliver compelling shareholder returns, and we are pleased to raise our full year outlook as a result. As always, we remain focused on enhancing value for shareholders and open-minded to all viable opportunities to achieve our objectives with our irreplaceable portfolio of outstanding hotel assets, solid balance sheet and strong cash flow.”

The only anomaly affecting the Company’s second quarter outlook is the continued integration-related disruption at all nine of its Kimpton-managed hotels and both of its Marriott-managed Westin hotels. Excluding these 11 hotels, the implied RevPAR outlook range for the second quarter is 2.0% to 3.5%.

If any of the foregoing estimates and assumptions prove to be inaccurate, actual results for the second quarter and full year 2018 may vary, and could vary significantly, from the amounts shown above. Achievement of the anticipated results is subject to the risks discussed in the Company’s filings with the Securities and Exchange Commission.

Dividend

On March 15, 2018, the Company declared a first quarter 2018 dividend of $0.45 per common share.

On March 28, 2018, the Company announced its dividend policy for the remaining quarters of 2018. Pursuant to the dividend policy, the Company expects to pay a quarterly dividend of $0.225 per common share for each of the quarters ending June 30, 2018, September 30, 2018 and December 31, 2018.

To the extent that the regular quarterly dividends for 2018 do not satisfy the annual distribution requirements under the REIT provisions of the Internal Revenue Code, the Company expects to satisfy the annual distribution requirements by paying a special dividend in January 2019.

The adoption of a dividend policy does not commit the Company to declare future dividends at the expected levels, or at all. The timing, form and amount of any future dividends will be in the discretion of the Company’s Board of Trustees and will depend upon the Company’s cash flow, financial condition and capital expenditure requirements, the annual REIT distribution requirements and other factors that the Board deems relevant.

About LaSalle Hotel Properties

LaSalle Hotel Properties is a leading multi-operator real estate investment trust. The Company owns 41 properties, which are upscale, full-service hotels, totaling 10,452 guest rooms in 11 markets in seven 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 Access Hotels & Resorts, Accor, Benchmark Hospitality, Davidson Hotel Company, Evolution Hospitality, HEI Hotels & Resorts, Highgate Hotels, Hilton, Hyatt Hotels Corporation, IHG, JRK Hotel Group, Inc., Marriott International, Noble House Hotels & Resorts, Outrigger Lodging Services, Provenance Hotels, Two Roads Hospitality, and Viceroy Hotel Group.