LaSalle Devotes Capital To Portfolio Renovations

WASHINGTON, D.C.? Like many other lodging REITs, LaSalle Hotel Properties will devote most of its capital and energy this year to renovating its existing properties rather than aggressively acquiring new ones. In 1998, LaSalle?s first year as a publicly-traded entity, the company grew steadily and carefully laid the groundwork for a strategy that will permeate 1999 and 2000. In addition to creating a dividend re-investment plan, LaSalle renovated its Le Meridien hotels in Dallas and New Orleans in order to reposition the properties. LaSalle also created strategic relationships with two new operators, Hyatt Hotels Corp. and Noble House Hotels and Resorts, through the purchase of the San Diego Paradise Point Resort, an upscale resort property and the Hyatt Harborside Hotel and Convention Center in Boston, MA, according to President/CEO John Bortz. Both of these properties will be included in a 1999 renovation initiative that will exceed $23 million and will be geared toward repositioning properties such as the Marriott Seaview in Absecon, NJ as four-star hotels. ?These substantial reinvestment programs play a critical role in maintaining and improving the competitiveness of our company?s hotels, keeping our hotel guests satisfied with their lodging experience and growing our earnings,? said Bortz. ?We are already experiencing benefits at our renovated Le Meridien properties in New Orleans and Dallas,? he added. LaSalle also initiated a three-year, $55 million capital spending program in 1998, $8 million of which was spent last year. Bortz said the company will spend $30 million in 1999 and will use the remaining $17 million in 2000. The majority of the capital will go towards updating and repositioning properties in the REIT?s portfolio. ?About two-thirds of the capital goes toward major renovations and repositionings and the remainder is used for more normal capital maintenance,? Bortz explained. As far as portfolio expansion is concerned, Bortz said that LaSalle is ?taking a very cautious approach to new acquisitions at this point,? and will continue re-investing in its existing portfolio. LaSalle closed out last year on a strong note, reporting an FFO increase of 26%, from $31.4 million to $39.4 million on a combined pro forma/actual basis. The company also fared well with RevPAR, which increased 6.8% to $96.17 for comparable hotels and 5.3% to $93.00 compared to $88.33 for the total portfolio. It expects to post similar numbers this year as well. ?In 1999, assuming the economy continues to grow moderately, we are projecting between three and 5% RevPAR growth for our hotel portfolio,? Bortz said. ?Our properties, along with other upscale and luxury segments of the hotel industry, continue to run at high occupancy rates, which should allow us to continue to increase prices above inflation in 1999.? ?We are cautiously optimistic about this year,? Bortz added. ?The industry continues to be healthy and we hope the capital markets will restrain new supply.? LaSalle Hotel Properties is a multi-tenant, multi-operator REIT which owns 12 upscale and luxury full-service hotels totaling 4,120 rooms throughout nine states. The company is focused on investing in properties located in primary business, urban, resort and convention markets. It also aims to grow through relationships with international hotel operators including Le Meridien Hotels & Resorts, Marriott Int?l, Radisson Hotels Int?l; Hyatt Hotels Corp.; Durbin Cos.; Outrigger Lodging Services and Noble House Hotels & Resorts. The REIT serves as the exclusive vehicle for LaSalle Partners? hotel investment activities in the U.S. LaSalle Partners is a vertically integrated global real estate services firm providing management services, corporate, financial and investment services for public and private institutions and other real estate owners and investors worldwide.