BETHESDA, Md.--(BUSINESS WIRE)--LaSalle Hotel Properties (NYSE: LHO) today announced results for the quarter ended June 30, 2018. The Company’s results are summarized below.

Michael D. Barnello, President and Chief Executive Officer of LaSalle said, “Our second quarter results exceeded our expectations, as the industry and our portfolio benefitted from strong lodging demand. LaSalle took an important step this quarter to maximize shareholder value by entering into a definitive agreement to be acquired by Blackstone in an all-cash transaction. The transaction followed a thorough review of strategic alternatives and we believe it represents a compelling opportunity for LaSalle’s shareholders, delivering a significant premium with immediate and certain cash value.”

Second Quarter 2018 Results

• Net Income: The Company’s net income attributable to common shareholders was $32 million, which decreased by $24 million from the same period in 2017. The second quarter 2017 benefited from $11 million of gains from the sale of two assets last year.
• RevPAR: The Company’s second quarter 2018 RevPAR grew 1.7% to $231, driven by a 1.1% increase in average daily rate (“ADR”) to $261 and an occupancy growth of 0.6% to 88.6%. Excluding the Company’s hotels managed by Kimpton and Marriott, RevPAR increased 3.7% versus last year. For reference, Kimpton has been working on systems integration with the IHG platform throughout 2018, and Marriott has been doing the same with Starwood’s former systems.
• Hotel EBITDAre Margin: The Company’s hotel EBITDAre margin was 37.4%.
• Adjusted EBITDAre: The Company’s adjusted EBITDAre was $108 million, which declined $2 million year-over-year. In the second quarter 2017, the Company earned $4 million of adjusted EBITDAre from assets sold in 2017.
• Adjusted FFO: The Company generated adjusted FFO of $88 million, or $0.80 per diluted share/unit, compared to $92 million, or $0.81 per diluted share/unit, for the second quarter 2017.

Year-to-Date 2018 Results

• Net Income: The Company’s net income attributable to common shareholders was $20 million, which decreased by $111 million from the same period in 2017. During the first half of 2017, the Company sold five assets for a combined gain of $86 million, which distorts this comparison year-over-year.
• RevPAR: The Company’s first half 2018 RevPAR decreased 2.4% to $198, driven by a 1.0% reduction in ADR to $242 and an occupancy decline of 1.4% to 81.8%. Excluding the Company’s hotels managed by Kimpton and Marriott, RevPAR was flat to last year.
• Hotel EBITDAre Margin: The Company’s hotel EBITDAre margin was 31.6%.
• Adjusted EBITDAre: The Company’s adjusted EBITDAre was $155 million, a decrease of $17 million from the first half of 2017. In the first half of 2017, the Company earned $7 million of adjusted EBITDAre from assets sold in 2017, negatively impacting the year-over-year comparison.
• Adjusted FFO: The Company generated adjusted FFO of $126 million, or $1.12 per diluted share/unit, compared to $143 million, or $1.26 per diluted share/unit, for the first half of 2017.

Capital Investments: The Company invested $42 million of capital in its hotels in the second quarter. Since March, the Company has completed guestroom renovations at San Diego Paradise Point Resort & Spa, Hotel Spero, Harbor Court Hotel, The Heathman Hotel, Chamberlain West Hollywood, Montrose West Hollywood, and Westin Copley Place. The Company also completed lobby or restaurant renovations at Hotel Spero, Harbor Court Hotel, The Heathman Hotel, Chamberlain West Hollywood, Montrose West Hollywood, and Sofitel Washington, DC Lafayette Square. Additionally, the Company renovated its meeting space at Hotel Chicago and Hyatt Regency Boston Harbor.

Balance Sheet and Capital Markets Activities

• Balance Sheet Summary as of June 30, 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 5.2 times, and its weighted average interest rate for the second quarter was 3.3%. The Company had capacity of $773 million available on its credit facilities, in addition to $221 million of cash and cash equivalents on its balance sheet.
• Share Repurchase Program: The Company has not repurchased any common shares under its share repurchase program since March 5, 2018.

Key West Impact Update: In the second quarter’s adjusted EBITDAre, the Company recorded $1.3 million of business interruption proceeds related to losses in 2017 and 2018 following Hurricane Irma. Year-to-date through the second quarter, the Company collected $2.6 million of business interruption proceeds relating to Hurricane Irma. The Company will continue to process business interruption claims for both of the Key West properties.

Dividend: On June 15, 2018, the Company declared a second quarter 2018 dividend of $0.225 per common share.

Blackstone Transaction: As previously announced on May 21, 2018, LaSalle entered into a definitive agreement with affiliates of Blackstone Real Estate Partners VIII (“Blackstone”), under which Blackstone would acquire all outstanding common shares of LaSalle for $33.50 per share in an all-cash transaction valued at $4.8 billion (the “Blackstone Merger Agreement”). The transaction was unanimously approved by LaSalle’s Board of Trustees after careful consideration of multiple proposals received. The Company remains committed to completing the transaction with Blackstone, which is subject to customary closing conditions, including the approval of LaSalle’s shareholders. The LaSalle Board recommends that shareholders vote “FOR” the proposal to approve the merger and other transactions contemplated by the Blackstone Merger Agreement in advance of the special meeting of shareholders, which will be held on September 6, 2018. The transaction is expected to close within a week of the special meeting and is not contingent on receipt of financing.

2018 Outlook and Earnings Call: Given the pending transaction with Blackstone, the Company is not updating its outlook for the balance of 2018. The Company will not host an investor conference call this quarter.

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.