RevPAR, ADR Down For LaSalle But Bortz Sees Improvement

BETHESDA, MD— Despite recent declines in RevPAR and ADR, Jon Bortz, chairman/CEO of LaSalle Hotel Properties, sees better results on the horizon. LaSalle Hotel Properties reported comparable funds from operations (FFO) of $5.7 million for the first quarter 2002 versus $8.3 million for the same period of 2001. On a per diluted share/unit basis, comparable FFO for the first quarter 2002 was 29 cents versus 44 cents a year ago. Comparable FFO is defined as funds from operations before one-time items, including the purchase of LaSalle Hotel Lessee (“LHL”), the transition expenses associated with becoming a self-managed Real Estate Investment Trust (REIT) and costs associated with terminating third-party tenant leases. For the quarter ended March 31, 2002 versus the same period in 2001, RevPAR decreased 14.8% to $81.54. ADR of $139.08 was down 4.3% over the prior year period, while average occupancy declined 10.9% to 58.6%. “We are pleased with the consistent improvements in hotel demand experienced throughout the companys urban, resort and convention properties during the quarter,” Bortz said. “The RevPAR decline of 14.8% for the portfolio was slightly better than our expectations of a 15% to 18% drop,” he continued. “It was largely attributable to our drive-to resorts, located in San Diego, Key West, Atlantic City and Newport, Rhode Island. These hotels achieved positive RevPAR growth in the quarter. Combined with better operating margins, this allowed us to achieve a higher than anticipated comparable FFO.” “We expect continuing improvement in hotel demand from all market segments during the remainder of 2002, mirroring the steady improvement in the travel and leisure industry and expectations for a gradual recovery in the economy,” Bortz said. “While our resorts have benefited from the relative strength of the leisure segment, we have seen a recovery in both group and commercial transient travelers, albeit at a slower pace of improvement. We anticipate that these segments will take another 12 to 18 months to reach full recovery.” For the first quarter 2002, the company had a net loss of $3.1 million, or (17 cents) per diluted share/unit, compared to a net loss of $2.3 million, or (13 cents) per diluted share/unit for the prior year period. For the first quarter 2002, the companys comparable EBITDA declined 21.1% from 2001 to $9.7 million. The company closed and began the repositioning of the remaining two hotels in the D.C. Boutique Collection in April. The renovations at the Hotel Madera (formerly the Clarion Hampshire House) and The Helix Hotel (formerly the Howard Johnson) are expected to be completed during the fourth quarter of 2002. It is anticipated that the company will spend approximately $17.5 million to complete the D.C. Boutique Collection, bringing total redevelopment costs for the four hotels to approximately $31.0 million. “We continue to be excited by the tremendous response in the market to our recently repositioned and re-opened Topaz Hotel and Hotel Rouge,” Bortz said. Business at these hotels “continues to ramp up significantly,” he added. “With the completion of the remaining two properties in the fourth quarter, our four upscale boutique properties are well-positioned to take advantage of the improving economy and the opening of the new Washington Convention Center in March 2003,” Bortz said.