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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lasalle Hotel Properties (delisted) | NYSE:LHO | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 32.06 | 0 | 01:00:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Maryland
|
|
36-4219376
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
|
|
|
7550 Wisconsin Avenue, 10
th
Floor
Bethesda, Maryland
|
|
20814
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
¨
|
|
|
|
|
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
¨
|
Class
|
|
Outstanding at July 20, 2016
|
|
Common Shares of Beneficial Interest ($0.01 par value)
|
|
113,063,912
|
|
7.5% Series H Cumulative Redeemable Preferred Shares ($0.01 par value)
|
|
2,750,000
|
|
6.375% Series I Cumulative Redeemable Preferred Shares ($0.01 par value)
|
|
4,400,000
|
|
6.3% Series J Cumulative Redeemable Preferred Shares ($0.01 par value)
|
|
6,000,000
|
|
PART I.
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
|
|
PART II.
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
PART I.
|
Financial Information
|
Item 1.
|
Financial Statements
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
|
(unaudited)
|
|
|
||||
Assets:
|
|
|
|
||||
Investment in hotel properties, net (Note 3)
|
$
|
3,756,420
|
|
|
$
|
3,817,676
|
|
Note receivable (Note 3)
|
0
|
|
|
80,000
|
|
||
Note receivable held for sale (Note 13)
|
80,000
|
|
|
0
|
|
||
Property under development
|
10,896
|
|
|
54,066
|
|
||
Assets held for sale (Note 13)
|
65,852
|
|
|
0
|
|
||
Cash and cash equivalents
|
43,053
|
|
|
5,700
|
|
||
Restricted cash reserves (Note 5)
|
23,283
|
|
|
26,443
|
|
||
Hotel receivables (net of allowance for doubtful accounts of $348 and $355, respectively)
|
49,312
|
|
|
39,038
|
|
||
Debt issuance costs for borrowings under credit facilities, net
|
2,511
|
|
|
3,347
|
|
||
Deferred tax assets
|
2,245
|
|
|
3,566
|
|
||
Prepaid expenses and other assets
|
43,934
|
|
|
39,510
|
|
||
Total assets
|
$
|
4,077,506
|
|
|
$
|
4,069,346
|
|
Liabilities:
|
|
|
|
||||
Borrowings under credit facilities (Note 4)
|
$
|
190,000
|
|
|
$
|
21,000
|
|
Term loans, net of unamortized debt issuance costs (Note 4)
|
852,480
|
|
|
852,203
|
|
||
Bonds payable, net of unamortized debt issuance costs (Note 4)
|
42,402
|
|
|
42,316
|
|
||
Mortgage loans, net of unamortized debt issuance costs (Note 4)
|
223,024
|
|
|
508,804
|
|
||
Accounts payable and accrued expenses
|
202,153
|
|
|
181,854
|
|
||
Liabilities of assets held for sale (Note 13)
|
5,119
|
|
|
0
|
|
||
Advance deposits
|
36,809
|
|
|
28,471
|
|
||
Accrued interest
|
2,165
|
|
|
3,276
|
|
||
Distributions payable
|
55,299
|
|
|
53,939
|
|
||
Total liabilities
|
1,609,451
|
|
|
1,691,863
|
|
||
Commitments and contingencies (Note 5)
|
|
|
|
||||
Equity:
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Preferred shares of beneficial interest, $0.01 par value (liquidation preference of $328,750 and $178,750, respectively), 40,000,000 shares authorized; 13,150,000 and 7,150,000 shares issued and outstanding, respectively (Note 6)
|
132
|
|
|
72
|
|
||
Common shares of beneficial interest, $0.01 par value, 200,000,000 shares authorized; 113,115,442 shares issued and 113,063,912 shares outstanding, and 113,115,442 shares issued and 112,959,547 shares outstanding, respectively (Note 6)
|
1,131
|
|
|
1,131
|
|
||
Treasury shares, at cost (Note 6)
|
(1,309
|
)
|
|
(4,798
|
)
|
||
Additional paid-in capital, net of offering costs of $85,218 and $80,205, respectively
|
2,828,589
|
|
|
2,684,010
|
|
||
Accumulated other comprehensive loss (Note 4)
|
(16,789
|
)
|
|
(97
|
)
|
||
Distributions in excess of retained earnings
|
(346,858
|
)
|
|
(306,051
|
)
|
||
Total shareholders’ equity
|
2,464,896
|
|
|
2,374,267
|
|
||
Noncontrolling Interests:
|
|
|
|
||||
Noncontrolling interests in consolidated entities
|
17
|
|
|
18
|
|
||
Noncontrolling interests of common units in Operating Partnership (Note 6)
|
3,142
|
|
|
3,198
|
|
||
Total noncontrolling interests
|
3,159
|
|
|
3,216
|
|
||
Total equity
|
2,468,055
|
|
|
2,377,483
|
|
||
Total liabilities and equity
|
$
|
4,077,506
|
|
|
$
|
4,069,346
|
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Hotel operating revenues:
|
|
|
|
|
|
|
|
||||||||
Room
|
$
|
245,286
|
|
|
$
|
242,447
|
|
|
$
|
426,706
|
|
|
$
|
413,038
|
|
Food and beverage
|
79,025
|
|
|
75,480
|
|
|
135,372
|
|
|
136,395
|
|
||||
Other operating department
|
24,457
|
|
|
21,560
|
|
|
45,100
|
|
|
39,577
|
|
||||
Total hotel operating revenues
|
348,768
|
|
|
339,487
|
|
|
607,178
|
|
|
589,010
|
|
||||
Other income
|
2,319
|
|
|
1,899
|
|
|
4,013
|
|
|
3,179
|
|
||||
Total revenues
|
351,087
|
|
|
341,386
|
|
|
611,191
|
|
|
592,189
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Hotel operating expenses:
|
|
|
|
|
|
|
|
||||||||
Room
|
58,963
|
|
|
55,998
|
|
|
111,254
|
|
|
104,719
|
|
||||
Food and beverage
|
49,994
|
|
|
49,069
|
|
|
92,902
|
|
|
94,187
|
|
||||
Other direct
|
4,973
|
|
|
4,927
|
|
|
8,656
|
|
|
8,847
|
|
||||
Other indirect (Note 8)
|
80,283
|
|
|
78,877
|
|
|
152,198
|
|
|
148,879
|
|
||||
Total hotel operating expenses
|
194,213
|
|
|
188,871
|
|
|
365,010
|
|
|
356,632
|
|
||||
Depreciation and amortization
|
48,841
|
|
|
45,916
|
|
|
96,469
|
|
|
88,794
|
|
||||
Real estate taxes, personal property taxes and insurance
|
16,919
|
|
|
16,352
|
|
|
33,110
|
|
|
32,286
|
|
||||
Ground rent (Note 5)
|
4,108
|
|
|
4,011
|
|
|
7,921
|
|
|
7,673
|
|
||||
General and administrative
|
7,643
|
|
|
6,501
|
|
|
13,473
|
|
|
12,768
|
|
||||
Acquisition transaction costs (Note 3)
|
0
|
|
|
(3
|
)
|
|
0
|
|
|
444
|
|
||||
Other expenses
|
2,327
|
|
|
1,259
|
|
|
4,505
|
|
|
3,604
|
|
||||
Total operating expenses
|
274,051
|
|
|
262,907
|
|
|
520,488
|
|
|
502,201
|
|
||||
Operating income
|
77,036
|
|
|
78,479
|
|
|
90,703
|
|
|
89,988
|
|
||||
Interest income
|
1,676
|
|
|
1
|
|
|
3,330
|
|
|
7
|
|
||||
Interest expense
|
(11,482
|
)
|
|
(13,895
|
)
|
|
(23,349
|
)
|
|
(27,540
|
)
|
||||
Income before income tax expense
|
67,230
|
|
|
64,585
|
|
|
70,684
|
|
|
62,455
|
|
||||
Income tax expense (Note 9)
|
(7,610
|
)
|
|
(5,574
|
)
|
|
(1,990
|
)
|
|
(706
|
)
|
||||
Net income
|
59,620
|
|
|
59,011
|
|
|
68,694
|
|
|
61,749
|
|
||||
Net income attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
||||||||
Noncontrolling interests in consolidated entities
|
(8
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Noncontrolling interests of common units in Operating Partnership (Note 6)
|
(81
|
)
|
|
(139
|
)
|
|
(96
|
)
|
|
(154
|
)
|
||||
Net income attributable to noncontrolling interests
|
(89
|
)
|
|
(147
|
)
|
|
(104
|
)
|
|
(162
|
)
|
||||
Net income attributable to the Company
|
59,531
|
|
|
58,864
|
|
|
68,590
|
|
|
61,587
|
|
||||
Distributions to preferred shareholders
|
(4,355
|
)
|
|
(3,042
|
)
|
|
(7,397
|
)
|
|
(6,084
|
)
|
||||
Net income attributable to common shareholders
|
$
|
55,176
|
|
|
$
|
55,822
|
|
|
$
|
61,193
|
|
|
$
|
55,503
|
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Earnings per Common Share - Basic (Note 11):
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
$
|
0.49
|
|
|
$
|
0.49
|
|
|
$
|
0.54
|
|
|
$
|
0.49
|
|
Earnings per Common Share - Diluted (Note 11):
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
$
|
0.49
|
|
|
$
|
0.49
|
|
|
$
|
0.54
|
|
|
$
|
0.49
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
112,784,976
|
|
|
112,728,085
|
|
|
112,766,734
|
|
|
112,688,122
|
|
||||
Diluted
|
113,113,253
|
|
|
113,141,908
|
|
|
113,119,556
|
|
|
113,094,640
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive Income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
59,620
|
|
|
$
|
59,011
|
|
|
$
|
68,694
|
|
|
$
|
61,749
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain on interest rate derivative instruments (Note 4)
|
(5,971
|
)
|
|
26
|
|
|
(20,223
|
)
|
|
(4,372
|
)
|
||||
Reclassification adjustment for amounts recognized in net income (Note 4)
|
1,730
|
|
|
1,069
|
|
|
3,510
|
|
|
2,139
|
|
||||
|
55,379
|
|
|
60,106
|
|
|
51,981
|
|
|
59,516
|
|
||||
Comprehensive income attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
||||||||
Noncontrolling interests in consolidated entities
|
(8
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Noncontrolling interests of common units in Operating Partnership (Note 6)
|
(76
|
)
|
|
(144
|
)
|
|
(75
|
)
|
|
(150
|
)
|
||||
Comprehensive income attributable to noncontrolling interests
|
(84
|
)
|
|
(152
|
)
|
|
(83
|
)
|
|
(158
|
)
|
||||
Comprehensive income attributable to the Company
|
$
|
55,295
|
|
|
$
|
59,954
|
|
|
$
|
51,898
|
|
|
$
|
59,358
|
|
|
Preferred
Shares of Beneficial Interest |
|
Common
Shares of Beneficial Interest |
|
Treasury
Shares |
|
Additional
Paid-In Capital |
|
Accumulated Other Comprehensive Income (Loss)
|
|
Distributions
in Excess of Retained Earnings |
|
Total
Shareholders’ Equity |
|
Noncontrolling
Interests in Consolidated Entities |
|
Noncontrolling Interests of Common Units in Operating Partnership
|
|
Total Noncontrolling Interests
|
|
Total Equity
|
||||||||||||||||||||||
Balance, December 31, 2014
|
$
|
72
|
|
|
$
|
1,127
|
|
|
$
|
(138
|
)
|
|
$
|
2,673,888
|
|
|
$
|
748
|
|
|
$
|
(233,988
|
)
|
|
$
|
2,441,709
|
|
|
$
|
17
|
|
|
$
|
6,660
|
|
|
$
|
6,677
|
|
|
$
|
2,448,386
|
|
Issuance of shares, net of offering costs
|
0
|
|
|
2
|
|
|
0
|
|
|
669
|
|
|
0
|
|
|
0
|
|
|
671
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
671
|
|
|||||||||||
Repurchase of common shares into treasury
|
0
|
|
|
0
|
|
|
(1,727
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,727
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,727
|
)
|
|||||||||||
Unit conversion
|
0
|
|
|
2
|
|
|
0
|
|
|
3,398
|
|
|
0
|
|
|
0
|
|
|
3,400
|
|
|
0
|
|
|
(3,400
|
)
|
|
(3,400
|
)
|
|
0
|
|
|||||||||||
Deferred compensation, net
|
0
|
|
|
0
|
|
|
1,809
|
|
|
1,927
|
|
|
0
|
|
|
0
|
|
|
3,736
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3,736
|
|
|||||||||||
Adjustments to noncontrolling interests
|
0
|
|
|
0
|
|
|
0
|
|
|
14
|
|
|
0
|
|
|
0
|
|
|
14
|
|
|
0
|
|
|
(14
|
)
|
|
(14
|
)
|
|
0
|
|
|||||||||||
Distributions on earned shares from share awards with market conditions
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(334
|
)
|
|
(334
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(334
|
)
|
|||||||||||
Distributions on common shares/units ($0.83 per share/unit)
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(93,364
|
)
|
|
(93,364
|
)
|
|
0
|
|
|
(176
|
)
|
|
(176
|
)
|
|
(93,540
|
)
|
|||||||||||
Distributions on preferred shares
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(6,084
|
)
|
|
(6,084
|
)
|
|
(8
|
)
|
|
0
|
|
|
(8
|
)
|
|
(6,092
|
)
|
|||||||||||
Net income
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
61,587
|
|
|
61,587
|
|
|
8
|
|
|
154
|
|
|
162
|
|
|
61,749
|
|
|||||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Unrealized loss on interest rate derivative instruments
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(4,364
|
)
|
|
0
|
|
|
(4,364
|
)
|
|
0
|
|
|
(8
|
)
|
|
(8
|
)
|
|
(4,372
|
)
|
|||||||||||
Reclassification adjustment for amounts recognized in net income
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,135
|
|
|
0
|
|
|
2,135
|
|
|
0
|
|
|
4
|
|
|
4
|
|
|
2,139
|
|
|||||||||||
Balance, June 30, 2015
|
$
|
72
|
|
|
$
|
1,131
|
|
|
$
|
(56
|
)
|
|
$
|
2,679,896
|
|
|
$
|
(1,481
|
)
|
|
$
|
(272,183
|
)
|
|
$
|
2,407,379
|
|
|
$
|
17
|
|
|
$
|
3,220
|
|
|
$
|
3,237
|
|
|
$
|
2,410,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance, December 31, 2015
|
$
|
72
|
|
|
$
|
1,131
|
|
|
$
|
(4,798
|
)
|
|
$
|
2,684,010
|
|
|
$
|
(97
|
)
|
|
$
|
(306,051
|
)
|
|
$
|
2,374,267
|
|
|
$
|
18
|
|
|
$
|
3,198
|
|
|
$
|
3,216
|
|
|
$
|
2,377,483
|
|
Issuance of shares, net of offering costs
|
60
|
|
|
0
|
|
|
2,105
|
|
|
143,302
|
|
|
0
|
|
|
0
|
|
|
145,467
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
145,467
|
|
|||||||||||
Repurchase of common shares into treasury
|
0
|
|
|
0
|
|
|
(1,597
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,597
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1,597
|
)
|
|||||||||||
Deferred compensation, net
|
0
|
|
|
0
|
|
|
2,981
|
|
|
1,277
|
|
|
0
|
|
|
0
|
|
|
4,258
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
4,258
|
|
|||||||||||
Distributions on earned shares from share awards with market conditions
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(151
|
)
|
|
(151
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(151
|
)
|
|||||||||||
Distributions on common shares/units ($0.90 per share/unit)
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(101,849
|
)
|
|
(101,849
|
)
|
|
0
|
|
|
(131
|
)
|
|
(131
|
)
|
|
(101,980
|
)
|
|||||||||||
Distributions on preferred shares
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(7,397
|
)
|
|
(7,397
|
)
|
|
(9
|
)
|
|
0
|
|
|
(9
|
)
|
|
(7,406
|
)
|
|||||||||||
Net income
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
68,590
|
|
|
68,590
|
|
|
8
|
|
|
96
|
|
|
104
|
|
|
68,694
|
|
|||||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Unrealized loss on interest rate derivative instruments
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(20,197
|
)
|
|
0
|
|
|
(20,197
|
)
|
|
0
|
|
|
(26
|
)
|
|
(26
|
)
|
|
(20,223
|
)
|
|||||||||||
Reclassification adjustment for amounts recognized in net income
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3,505
|
|
|
0
|
|
|
3,505
|
|
|
0
|
|
|
5
|
|
|
5
|
|
|
3,510
|
|
|||||||||||
Balance, June 30, 2016
|
$
|
132
|
|
|
$
|
1,131
|
|
|
$
|
(1,309
|
)
|
|
$
|
2,828,589
|
|
|
$
|
(16,789
|
)
|
|
$
|
(346,858
|
)
|
|
$
|
2,464,896
|
|
|
$
|
17
|
|
|
$
|
3,142
|
|
|
$
|
3,159
|
|
|
$
|
2,468,055
|
|
|
For the six months ended
|
||||||
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
68,694
|
|
|
$
|
61,749
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
96,469
|
|
|
88,794
|
|
||
Amortization of debt issuance costs
|
1,713
|
|
|
1,096
|
|
||
Amortization of deferred compensation
|
4,258
|
|
|
3,736
|
|
||
Deferred income tax expense
|
1,321
|
|
|
0
|
|
||
Allowance for doubtful accounts
|
(5
|
)
|
|
71
|
|
||
Other
|
245
|
|
|
100
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Restricted cash reserves
|
3,027
|
|
|
2,265
|
|
||
Hotel receivables
|
(14,150
|
)
|
|
(27,962
|
)
|
||
Prepaid expenses and other assets
|
(10,013
|
)
|
|
2,176
|
|
||
Accounts payable and accrued expenses
|
16,685
|
|
|
20,324
|
|
||
Advance deposits
|
8,440
|
|
|
12,864
|
|
||
Accrued interest
|
(1,111
|
)
|
|
(1,077
|
)
|
||
Net cash provided by operating activities
|
175,573
|
|
|
164,136
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions to properties
|
(44,841
|
)
|
|
(55,357
|
)
|
||
Improvements to properties
|
(12,791
|
)
|
|
(5,299
|
)
|
||
Acquisition of properties
|
0
|
|
|
(439,157
|
)
|
||
Deposit on acquisition
|
0
|
|
|
25,000
|
|
||
Purchase of office furniture and equipment
|
(10
|
)
|
|
(124
|
)
|
||
Restricted cash reserves
|
133
|
|
|
(2,577
|
)
|
||
Property insurance proceeds
|
1,083
|
|
|
470
|
|
||
Net cash used in investing activities
|
(56,426
|
)
|
|
(477,044
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under credit facilities
|
431,472
|
|
|
653,545
|
|
||
Repayments under credit facilities
|
(262,472
|
)
|
|
(122,545
|
)
|
||
Repayments of mortgage loans
|
(286,294
|
)
|
|
(212,386
|
)
|
||
Payment of debt issuance costs
|
0
|
|
|
(13
|
)
|
||
Purchase of treasury shares
|
(1,597
|
)
|
|
(1,727
|
)
|
||
Proceeds from issuance of preferred shares
|
150,000
|
|
|
0
|
|
||
Payment of preferred offering costs
|
(4,740
|
)
|
|
0
|
|
||
Payment of common offering costs
|
(79
|
)
|
|
(192
|
)
|
||
Distributions on earned shares from share awards with market conditions
|
(151
|
)
|
|
(334
|
)
|
||
Distributions on preferred shares
|
(6,093
|
)
|
|
(6,092
|
)
|
||
Distributions on common shares/units
|
(101,840
|
)
|
|
(84,893
|
)
|
||
Net cash (used in) provided by financing activities
|
(81,794
|
)
|
|
225,363
|
|
||
Net change in cash and cash equivalents
|
37,353
|
|
|
(87,545
|
)
|
||
Cash and cash equivalents, beginning of period
|
5,700
|
|
|
114,131
|
|
||
Cash and cash equivalents, end of period
|
$
|
43,053
|
|
|
$
|
26,586
|
|
1.
|
Organization
|
2.
|
Summary of Significant Accounting Policies
|
3.
|
Investment in Hotel Properties
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Land
|
$
|
731,928
|
|
|
$
|
731,796
|
|
Buildings and improvements
|
3,542,749
|
|
|
3,613,724
|
|
||
Furniture, fixtures and equipment
|
753,651
|
|
|
701,742
|
|
||
Investment in hotel properties, gross
|
5,028,328
|
|
|
5,047,262
|
|
||
Accumulated depreciation
|
(1,271,908
|
)
|
|
(1,229,586
|
)
|
||
Investment in hotel properties, net
|
$
|
3,756,420
|
|
|
$
|
3,817,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
Transaction Costs |
||||||||
Hotel Name
|
|
Acquisition Date
|
|
Number of
Rooms |
|
Location
|
|
Purchase
Price |
|
Manager
|
|
For the three months ended June 30, 2015
|
|
For the six months ended June 30, 2015
|
||||||
Park Central San Francisco
|
|
January 23, 2015
|
|
681
|
|
San Francisco, CA
|
|
$
|
350,000
|
|
|
Highgate Hotels
|
|
$
|
0
|
|
|
$
|
230
|
|
The Marker Waterfront Resort
|
|
March 16, 2015
|
|
96
|
|
Key West, FL
|
|
96,250
|
|
|
Highgate Hotels
|
|
(3
|
)
|
|
214
|
|
|||
Total
|
|
|
|
|
|
|
|
$
|
446,250
|
|
|
|
|
$
|
(3
|
)
|
|
$
|
444
|
|
4.
|
Long-Term Debt
|
|
|
|
|
|
|
Balance Outstanding as of
|
||||||
Debt
|
|
Interest
Rate |
|
Maturity
Date |
|
June 30,
2016 |
|
December 31,
2015 |
||||
Credit facilities
|
|
|
|
|
|
|
|
|
||||
Senior unsecured credit facility
|
|
Floating
(a)
|
|
January 2018
(a)
|
|
$
|
190,000
|
|
|
$
|
21,000
|
|
LHL unsecured credit facility
|
|
Floating
(b)
|
|
January 2018
(b)
|
|
0
|
|
|
0
|
|
||
Total borrowings under credit facilities
|
|
|
|
|
|
190,000
|
|
|
21,000
|
|
||
Term loans
|
|
|
|
|
|
|
|
|
||||
Second Term Loan
|
|
Floating/Fixed
(c)
|
|
January 2019
|
|
300,000
|
|
|
300,000
|
|
||
Third Term Loan
|
|
Floating/Fixed
(c)
|
|
January 2021
|
|
555,000
|
|
|
555,000
|
|
||
Debt issuance costs, net
|
|
|
|
|
|
(2,520
|
)
|
|
(2,797
|
)
|
||
Total term loans, net of unamortized debt issuance costs
|
|
|
|
852,480
|
|
|
852,203
|
|
||||
Massport Bonds
|
|
|
|
|
|
|
|
|
||||
Hyatt Regency Boston Harbor (taxable)
|
|
Floating
(d)
|
|
March 2018
|
|
5,400
|
|
|
5,400
|
|
||
Hyatt Regency Boston Harbor (tax exempt)
|
|
Floating
(d)
|
|
March 2018
|
|
37,100
|
|
|
37,100
|
|
||
Debt issuance costs, net
|
|
|
|
|
|
(98
|
)
|
|
(184
|
)
|
||
Total bonds payable, net of unamortized debt issuance costs
|
|
|
|
42,402
|
|
|
42,316
|
|
||||
Mortgage loans
|
|
|
|
|
|
|
|
|
||||
Westin Michigan Avenue
|
|
5.75%
|
|
-
(e)
|
|
0
|
|
|
131,262
|
|
||
Indianapolis Marriott Downtown
|
|
5.99%
|
|
-
(e)
|
|
0
|
|
|
96,097
|
|
||
The Roger
|
|
6.31%
|
|
-
(f)
|
|
0
|
|
|
58,935
|
|
||
Westin Copley Place
|
|
Floating
(g)
|
|
August 2018
|
|
225,000
|
|
|
225,000
|
|
||
Debt issuance costs, net
|
|
|
|
|
|
(1,976
|
)
|
|
(2,490
|
)
|
||
Total mortgage loans, net of unamortized debt issuance costs
|
|
|
|
223,024
|
|
|
508,804
|
|
||||
Total debt
|
|
|
|
|
|
$
|
1,307,906
|
|
|
$
|
1,424,323
|
|
(a)
|
Borrowings bear interest at floating rates equal to, at the Company’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate (as defined in the credit agreement) plus an applicable margin. As of
June 30, 2016
, the rate, including the applicable margin, for the Company’s outstanding LIBOR borrowing of
$190,000
was
2.17%
. As of
December 31, 2015
, the rate, including the applicable margin, for the Company’s outstanding LIBOR borrowing of
$21,000
was
2.13%
. The Company has the option, pursuant to certain terms and conditions, to extend the maturity date for
two
six
-month extensions.
|
(b)
|
Borrowings bear interest at floating rates equal to, at LHL’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate (as defined in the credit agreement) plus an applicable margin. There were
no
borrowings outstanding at
June 30, 2016
and
December 31, 2015
. LHL has the option, pursuant to certain terms and conditions, to extend the maturity date for
two
six
-month extensions.
|
(c)
|
Term loans bear interest at floating rates equal to LIBOR plus an applicable margin. The Company entered into separate interest rate swap agreements for the full
seven
-year term of the First Term Loan (as defined below) and a
five
-year term ending in August 2017 for the Second Term Loan (as defined below), resulting in fixed all-in interest rates. On November 5, 2015, the Company repaid the First Term Loan and entered into the Third Term Loan (as defined below). The Company entered into separate interest rate swap agreements with an aggregate notional amount of
$377,500
for the full term of the Third Term Loan. The interest rate swaps for the First Term Loan continue to be in place and were redesignated as hedging instruments through May 2019 for the Third Term Loan. At
June 30, 2016
and
December 31, 2015
, the fixed all-in interest rates for the Second Term Loan and Third Term Loan were
2.38%
and
2.95%
, respectively, at the Company’s current leverage ratio (as defined in the swap agreements).
|
(d)
|
The Massport Bonds are secured by letters of credit issued by U.S. Bank National Association that expire in September 2016. The letters of credit have
two
one
-year extension options and are secured by the Hyatt Regency Boston Harbor. The letters of credit cannot be extended beyond the Massport Bonds’ maturity date. The bonds bear interest based on weekly floating rates. The interest rates as of
June 30, 2016
were
0.44%
and
0.43%
for the
$5,400
and
$37,100
bonds, respectively. The interest
|
(e)
|
The Company repaid the mortgage loans on January 4, 2016 through borrowings on its senior unsecured credit facility.
|
(f)
|
The Company repaid the mortgage loan on February 11, 2016 through borrowings on its senior unsecured credit facility.
|
(g)
|
The mortgage loan matures on August 14, 2018 with
three
options to extend the maturity date to January 5, 2021, pursuant to certain terms and conditions. The interest-only mortgage loan bears interest at a variable rate ranging from LIBOR plus
1.75%
to LIBOR plus
2.00%
, depending on Westin Copley Place’s net cash flow (as defined in the loan agreement). The interest rate as of
June 30, 2016
was LIBOR plus
1.75%
, which equaled
2.20%
. The interest rate as of
December 31, 2015
was LIBOR plus
1.75%
, which equaled
2.09%
. The mortgage loan allows for prepayments without penalty after
one year
, subject to certain terms and conditions.
|
2016
|
$
|
0
|
|
2017
|
0
|
|
|
2018
|
457,500
|
|
|
2019
|
300,000
|
|
|
2020
|
0
|
|
|
Thereafter
|
555,000
|
|
|
Total debt
|
$
|
1,312,500
|
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest Expense:
|
|
|
|
|
|
|
|
||||||||
Interest incurred
|
$
|
10,685
|
|
|
$
|
13,422
|
|
|
$
|
21,869
|
|
|
$
|
26,744
|
|
Amortization of debt issuance costs
|
835
|
|
|
549
|
|
|
1,713
|
|
|
1,096
|
|
||||
Capitalized interest
|
(38
|
)
|
|
(76
|
)
|
|
(233
|
)
|
|
(300
|
)
|
||||
Interest expense
|
$
|
11,482
|
|
|
$
|
13,895
|
|
|
$
|
23,349
|
|
|
$
|
27,540
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Interest Rates for Unswapped Variable Rate Debt:
|
|
|
|
|
|
|
|||||||||
Senior unsecured credit facility
|
2.15
|
%
|
|
1.89
|
%
|
|
2.14
|
%
|
|
1.88
|
%
|
||||
LHL unsecured credit facility
|
2.14
|
%
|
|
1.88
|
%
|
|
2.13
|
%
|
|
1.88
|
%
|
||||
Massport Bonds
|
0.41
|
%
|
|
0.09
|
%
|
|
0.26
|
%
|
|
0.07
|
%
|
||||
Mortgage loan (Westin Copley Place)
|
2.19
|
%
|
|
N/A
|
|
|
2.18
|
%
|
|
N/A
|
|
|
|
Amount of (Loss) Gain Recognized in OCI on Derivative Instruments
|
|
Location of Loss Reclassified from AOCL into Net Income
|
|
Amount of Loss Reclassified from AOCL into Net Income
|
|||||||||||||
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|||||||||||||
|
|
For the three months ended
|
|
|
|
|
For the three months ended
|
||||||||||||
|
|
June 30,
|
|
|
|
|
June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
|
|
|
2016
|
|
2015
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest rate swaps
|
|
$
|
(5,971
|
)
|
|
$
|
26
|
|
|
Interest expense
|
|
$
|
1,730
|
|
|
$
|
1,069
|
|
|
|
Amount of Loss Recognized in OCI on Derivative Instruments
|
|
Location of Loss Reclassified from AOCL into Net Income
|
|
Amount of Loss Reclassified from AOCL into Net Income
|
|||||||||||||
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|||||||||||||
|
|
For the six months ended
|
|
|
|
|
For the six months ended
|
||||||||||||
|
|
June 30,
|
|
|
|
|
June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
|
|
|
2016
|
|
2015
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest rate swaps
|
|
$
|
(20,223
|
)
|
|
$
|
(4,372
|
)
|
|
Interest expense
|
|
$
|
3,510
|
|
|
$
|
2,139
|
|
5.
|
Commitments and Contingencies
|
Lease Properties
|
|
Lease Type
|
|
Lease Expiration Date
|
Southernmost Beach Resort Key West (Restaurant facility)
|
|
Ground lease
|
|
April 2019
(1)
|
Hyatt Regency Boston Harbor
|
|
Ground lease
|
|
March 2026
(2)
|
The Hilton San Diego Resort and Spa
|
|
Ground lease
|
|
December 2045
|
San Diego Paradise Point Resort and Spa
|
|
Ground lease
|
|
May 2050
|
Hotel Vitale
|
|
Ground lease
|
|
March 2056
(3)
|
Viceroy Santa Monica
|
|
Ground lease
|
|
September 2065
|
Westin Copley Place
(4)
|
|
Air rights lease
|
|
December 2077
|
The Liberty Hotel
|
|
Ground lease
|
|
May 2080
|
Indianapolis Marriott Downtown
(5)
|
|
Ground lease
|
|
June 2099
(5)
|
Hotel Solamar
|
|
Ground lease
|
|
December 2102
|
Lease Properties
|
|
Estimated Present Value of Remaining Rent Payments
(1)
|
|
Lease Expiration Date
|
||
The Roger
|
|
$
|
4,892
|
|
|
December 2044
|
Harbor Court Hotel
|
|
$
|
18,424
|
|
|
April 2048
|
Hotel Triton
(2)
|
|
$
|
25,625
|
|
|
December 2049
|
2016
|
$
|
6,424
|
|
2017
|
13,052
|
|
|
2018
|
13,195
|
|
|
2019
|
13,172
|
|
|
2020
|
13,559
|
|
|
Thereafter
|
600,780
|
|
|
|
$
|
660,182
|
|
6.
|
Equity
|
Dividend per
Share/Unit (1) |
|
For the Quarter Ended
|
|
Record Date
|
|
Payable Date
|
||
$
|
0.45
|
|
|
December 31, 2015
|
|
December 31, 2015
|
|
January 15, 2016
|
$
|
0.45
|
|
|
March 31, 2016
|
|
March 31, 2016
|
|
April 15, 2016
|
Security Type
|
|
Number of
Shares |
|
7.5% Series H Preferred Shares
|
|
2,750,000
|
|
6.375% Series I Preferred Shares
|
|
4,400,000
|
|
6.3% Series J Preferred Shares
|
|
6,000,000
|
|
Security Type
|
|
Dividend per Share
(1)
|
|
For the Quarter Ended
|
|
Record Date
|
|
Payable Date
|
||
7.5% Series H
|
|
$
|
0.47
|
|
|
December 31, 2015
|
|
January 1, 2016
|
|
January 15, 2016
|
6.375% Series I
|
|
$
|
0.40
|
|
|
December 31, 2015
|
|
January 1, 2016
|
|
January 15, 2016
|
7.5% Series H
|
|
$
|
0.47
|
|
|
March 31, 2016
|
|
April 1, 2016
|
|
April 15, 2016
|
6.375% Series I
|
|
$
|
0.40
|
|
|
March 31, 2016
|
|
April 1, 2016
|
|
April 15, 2016
|
|
For the six months ended
|
||
|
June 30,
|
||
|
2015
|
||
Net income attributable to common shareholders
|
$
|
55,503
|
|
Increase in additional paid-in capital from adjustments to noncontrolling interests of common units in Operating Partnership
|
14
|
|
|
Change from net income attributable to common shareholders and adjustments to noncontrolling interests
|
$
|
55,517
|
|
7.
|
Equity Incentive Plan
|
|
Number of
Shares |
|
Weighted -
Average Grant Date Fair Value |
|||
Nonvested at January 1, 2016
|
228,835
|
|
|
$
|
33.29
|
|
Granted
|
109,313
|
|
|
25.01
|
|
|
Vested
(2)
|
(90,191
|
)
|
|
31.70
|
|
|
Forfeited
|
(12,281
|
)
|
|
27.49
|
|
|
Nonvested at June 30, 2016
(1)
|
235,676
|
|
|
$
|
30.81
|
|
(1)
|
Amount excludes
29,376
share awards with market conditions which were earned but nonvested due to a service condition as of
June 30, 2016
.
|
(2)
|
Amount includes accelerated vesting of the former Chief Financial Officer’s shares.
|
•
|
Factors associated with the underlying performance of the Company’s share price and shareholder returns over the term of the awards including total share return volatility and risk-free interest.
|
•
|
Factors associated with the relative performance of the Company’s share price and shareholder returns when compared to those companies which compose the index including beta as a means to breakdown total volatility into market-related and company specific volatilities.
|
•
|
The valuation has been performed in a risk-neutral framework.
|
•
|
Return on invested capital is a performance condition award measurement. The estimated value was calculated based on the initial face value at the date of grant. The valuation will be adjusted on a periodic basis as the estimated number of awards expected to vest is revised.
|
|
Volatility
|
|
Interest
Rates |
|
Dividend
Yield |
|
Stock
Beta |
|
Fair Value of
Components of Award |
|
Weighting
of Total Awards |
||||||
April 25, 2016 Awards (performance period starting January 1, 2016)
|
|
|
|
|
|||||||||||||
Target amounts
|
26.40
|
%
|
|
1.01
|
%
|
|
N/A
|
|
N/A
|
|
|
$
|
18.61
|
|
|
33.40
|
%
|
Return on invested capital
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
|
$
|
23.75
|
|
|
33.30
|
%
|
Peer companies
|
26.40
|
%
|
|
1.01
|
%
|
|
N/A
|
|
1.024
|
|
|
$
|
23.63
|
|
|
33.30
|
%
|
April 25, 2016 Awards (performance period starting July 1, 2016)
|
|
|
|
|
|||||||||||||
Target amounts
|
26.40
|
%
|
|
1.01
|
%
|
|
N/A
|
|
N/A
|
|
|
$
|
20.47
|
|
|
33.40
|
%
|
Return on invested capital
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
|
$
|
23.75
|
|
|
33.30
|
%
|
Peer companies
|
26.40
|
%
|
|
1.01
|
%
|
|
N/A
|
|
1.024
|
|
|
$
|
26.10
|
|
|
33.30
|
%
|
March 18, 2016 Awards (performance period starting January 1, 2016)
|
|
|
|
|
|
|
|||||||||||
Target amounts
|
26.40
|
%
|
|
1.00
|
%
|
|
N/A
|
|
N/A
|
|
|
$
|
22.23
|
|
|
33.40
|
%
|
Return on invested capital
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
|
$
|
25.14
|
|
|
33.30
|
%
|
Peer companies
|
26.40
|
%
|
|
1.00
|
%
|
|
N/A
|
|
1.023
|
|
|
$
|
25.18
|
|
|
33.30
|
%
|
March 18, 2016 Awards (performance period starting July 1, 2016)
|
|
|
|
|
|
|
|||||||||||
Target amounts
|
26.40
|
%
|
|
1.00
|
%
|
|
N/A
|
|
N/A
|
|
|
$
|
21.65
|
|
|
33.40
|
%
|
Return on invested capital
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
|
$
|
25.14
|
|
|
33.30
|
%
|
Peer companies
|
26.40
|
%
|
|
1.00
|
%
|
|
N/A
|
|
1.023
|
|
|
$
|
27.81
|
|
|
33.30
|
%
|
|
Number of
Shares
|
|
Weighted-
Average Grant
Date Fair Value
|
|||
Nonvested at January 1, 2016
|
348,587
|
|
|
$
|
33.98
|
|
Granted
(1)(2)
|
110,665
|
|
|
28.55
|
|
|
Vested
(2)
|
(112,639
|
)
|
|
37.94
|
|
|
Forfeited
(2)
|
(38,313
|
)
|
|
39.18
|
|
|
Nonvested at June 30, 2016
|
308,300
|
|
|
$
|
28.45
|
|
(1)
|
Amount includes
48,588
shares awarded on March 18, 2016 and
6,316
shares awarded on April 25, 2016 for which fair value has been finalized, but amortization into expense has not yet commenced. Amortization of fair value into expense will commence at the beginning of the performance measurement period on July 1, 2016.
|
(2)
|
Amounts include
27,570
shares vested,
858
shares earned in excess of target amount, and
34,959
shares forfeited, respectively, upon termination of the former Chief Financial Officer.
|
8.
|
LHL
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
General and administrative
|
$
|
27,041
|
|
|
$
|
25,822
|
|
|
$
|
51,642
|
|
|
$
|
49,729
|
|
Sales and marketing
|
19,908
|
|
|
19,894
|
|
|
38,489
|
|
|
37,845
|
|
||||
Repairs and maintenance
|
9,911
|
|
|
9,863
|
|
|
19,747
|
|
|
19,474
|
|
||||
Management and incentive fees
|
10,926
|
|
|
11,727
|
|
|
18,557
|
|
|
19,055
|
|
||||
Utilities and insurance
|
8,296
|
|
|
8,289
|
|
|
16,529
|
|
|
17,106
|
|
||||
Franchise fees
|
3,245
|
|
|
2,503
|
|
|
5,522
|
|
|
4,331
|
|
||||
Other expenses
|
956
|
|
|
779
|
|
|
1,712
|
|
|
1,339
|
|
||||
Total other indirect expenses
|
$
|
80,283
|
|
|
$
|
78,877
|
|
|
$
|
152,198
|
|
|
$
|
148,879
|
|
|
|
Hotel Properties
|
|
Location
|
1.
|
|
Hotel Amarano Burbank
|
|
Burbank, CA
|
2.
|
|
L’Auberge Del Mar
|
|
Del Mar, CA
|
3.
|
|
Hilton San Diego Gaslamp Quarter
|
|
San Diego, CA
|
4.
|
|
Hotel Solamar
|
|
San Diego, CA
|
5.
|
|
San Diego Paradise Point Resort and Spa
|
|
San Diego, CA
|
6.
|
|
The Hilton San Diego Resort and Spa
|
|
San Diego, CA
|
7.
|
|
Harbor Court Hotel
|
|
San Francisco, CA
|
8.
|
|
Hotel Triton
|
|
San Francisco, CA
|
9.
|
|
Hotel Vitale
|
|
San Francisco, CA
|
10.
|
|
Park Central San Francisco
|
|
San Francisco, CA
|
11.
|
|
Serrano Hotel
|
|
San Francisco, CA
|
12.
|
|
The Marker San Francisco
|
|
San Francisco, CA
|
13.
|
|
Villa Florence
|
|
San Francisco, CA
|
14.
|
|
Chaminade Resort and Conference Center
|
|
Santa Cruz, CA
|
15.
|
|
Viceroy Santa Monica
|
|
Santa Monica, CA
|
16.
|
|
Chamberlain West Hollywood
|
|
West Hollywood, CA
|
17.
|
|
Le Montrose Suite Hotel
|
|
West Hollywood, CA
|
18.
|
|
Le Parc Suite Hotel
|
|
West Hollywood, CA
|
19.
|
|
The Grafton on Sunset
|
|
West Hollywood, CA
|
20.
|
|
Hotel George
|
|
Washington, D.C.
|
21.
|
|
Hotel Madera
|
|
Washington, D.C.
|
22.
|
|
Hotel Palomar, Washington, DC
|
|
Washington, D.C.
|
23.
|
|
Hotel Rouge
|
|
Washington, D.C.
|
24.
|
|
Mason & Rook Hotel
|
|
Washington, D.C.
|
25.
|
|
Sofitel Washington, DC Lafayette Square
|
|
Washington, D.C.
|
26.
|
|
The Donovan
|
|
Washington, D.C.
|
27.
|
|
The Liaison Capitol Hill
|
|
Washington, D.C.
|
28.
|
|
Topaz Hotel
|
|
Washington, D.C.
|
29.
|
|
Southernmost Beach Resort Key West
|
|
Key West, FL
|
30.
|
|
The Marker Waterfront Resort
|
|
Key West, FL
|
31.
|
|
Hotel Chicago
|
|
Chicago, IL
|
32.
|
|
Westin Michigan Avenue
|
|
Chicago, IL
|
33.
|
|
Indianapolis Marriott Downtown
(1)
|
|
Indianapolis, IN
|
34.
|
|
Hyatt Regency Boston Harbor
|
|
Boston, MA
|
35.
|
|
Onyx Hotel
|
|
Boston, MA
|
36.
|
|
The Liberty Hotel
|
|
Boston, MA
|
37.
|
|
Westin Copley Place
|
|
Boston, MA
|
38.
|
|
Gild Hall
|
|
New York, NY
|
39.
|
|
The Roger
|
|
New York, NY
|
40.
|
|
Park Central Hotel New York (shared lease with WestHouse Hotel New York)
|
|
New York, NY
|
41.
|
|
WestHouse Hotel New York
|
|
New York, NY
|
42.
|
|
The Heathman Hotel
|
|
Portland, OR
|
43.
|
|
Embassy Suites Philadelphia - Center City
|
|
Philadelphia, PA
|
44.
|
|
Westin Philadelphia
|
|
Philadelphia, PA
|
45.
|
|
Lansdowne Resort
|
|
Lansdowne,VA
|
46.
|
|
Alexis Hotel
|
|
Seattle, WA
|
47.
|
|
Hotel Deca
|
|
Seattle, WA
|
9.
|
Income Taxes
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
LHL’s income tax expense
|
$
|
7,246
|
|
|
$
|
5,311
|
|
|
$
|
1,373
|
|
|
$
|
232
|
|
Operating Partnership’s income tax expense
|
364
|
|
|
263
|
|
|
617
|
|
|
474
|
|
||||
Total income tax expense
|
$
|
7,610
|
|
|
$
|
5,574
|
|
|
$
|
1,990
|
|
|
$
|
706
|
|
10.
|
Fair Value Measurements
|
|
|
|
|
Fair Value Measurements at
|
||||||
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
|
|
|
|
Using Significant Other Observable
|
||||||
|
|
|
|
Inputs (Level 2)
|
||||||
Description
|
|
Consolidated Balance Sheet Location
|
|
|
|
|
||||
Derivative interest rate instruments
|
|
Prepaid expenses and other assets
|
|
$
|
0
|
|
|
$
|
1,605
|
|
Derivative interest rate instruments
|
|
Accounts payable and accrued expenses
|
|
$
|
16,810
|
|
|
$
|
1,702
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
Note receivable
|
$
|
80,000
|
|
|
$
|
80,000
|
|
|
$
|
80,000
|
|
|
$
|
80,000
|
|
Borrowings under credit facilities
|
$
|
190,000
|
|
|
$
|
190,735
|
|
|
$
|
21,000
|
|
|
$
|
21,061
|
|
Term loans
|
$
|
855,000
|
|
|
$
|
857,539
|
|
|
$
|
855,000
|
|
|
$
|
856,038
|
|
Bonds payable
|
$
|
42,500
|
|
|
$
|
42,500
|
|
|
$
|
42,500
|
|
|
$
|
42,500
|
|
Mortgage loans
|
$
|
225,000
|
|
|
$
|
225,255
|
|
|
$
|
511,294
|
|
|
$
|
511,786
|
|
11.
|
Earnings Per Common Share
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
55,176
|
|
|
$
|
55,822
|
|
|
$
|
61,193
|
|
|
$
|
55,503
|
|
Dividends paid on unvested restricted shares
|
(119
|
)
|
|
(141
|
)
|
|
(252
|
)
|
|
(260
|
)
|
||||
Undistributed earnings attributable to unvested restricted shares
|
(10
|
)
|
|
(14
|
)
|
|
0
|
|
|
0
|
|
||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
$
|
55,047
|
|
|
$
|
55,667
|
|
|
$
|
60,941
|
|
|
$
|
55,243
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares - basic
|
112,784,976
|
|
|
112,728,085
|
|
|
112,766,734
|
|
|
112,688,122
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Compensation-related shares
|
328,277
|
|
|
413,823
|
|
|
352,822
|
|
|
406,518
|
|
||||
Weighted average number of common shares - diluted
|
113,113,253
|
|
|
113,141,908
|
|
|
113,119,556
|
|
|
113,094,640
|
|
||||
Earnings per Common Share - Basic:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
$
|
0.49
|
|
|
$
|
0.49
|
|
|
$
|
0.54
|
|
|
$
|
0.49
|
|
Earnings per Common Share - Diluted:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
$
|
0.49
|
|
|
$
|
0.49
|
|
|
$
|
0.54
|
|
|
$
|
0.49
|
|
12.
|
Supplemental Information to Statements of Cash Flows
|
|
For the six months ended
|
||||||
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Interest paid, net of capitalized interest
|
$
|
22,747
|
|
|
$
|
27,521
|
|
Interest capitalized
|
233
|
|
|
300
|
|
||
Income taxes paid, net
|
839
|
|
|
517
|
|
||
Increase in distributions payable on common shares
|
47
|
|
|
8,547
|
|
||
Increase in distributions payable on preferred shares
|
1,313
|
|
|
0
|
|
||
Redemption of common units for common shares
|
0
|
|
|
3,400
|
|
||
Write-off of fully amortized debt issuance costs
|
563
|
|
|
131
|
|
||
Decrease in accrued capital expenditures
|
(5,682
|
)
|
|
(3,089
|
)
|
||
Grant of nonvested shares and awards to employees and executives, net
|
4,347
|
|
|
5,188
|
|
||
Issuance of common shares for Board of Trustees compensation
|
480
|
|
|
691
|
|
||
In conjunction with the acquisition of properties, the Company assumed the following assets and liabilities:
|
|
|
|
||||
Investment in properties (after credits at closing)
|
$
|
0
|
|
|
$
|
(445,734
|
)
|
Other assets
|
0
|
|
|
(1,897
|
)
|
||
Liabilities
|
0
|
|
|
8,474
|
|
||
Acquisition of properties
|
$
|
0
|
|
|
$
|
(439,157
|
)
|
13.
|
Subsequent Events
|
Security Type
|
|
Dividend per Share/Unit
(1)
|
|
For the Quarter Ended
|
|
Record Date
|
|
Payable Date
|
||
Common Shares/Units
|
|
$
|
0.45
|
|
|
June 30, 2016
|
|
June 30, 2016
|
|
July 15, 2016
|
7.5% Series H Preferred Shares
|
|
$
|
0.47
|
|
|
June 30, 2016
|
|
July 1, 2016
|
|
July 15, 2016
|
6.375% Series I Preferred Shares
|
|
$
|
0.40
|
|
|
June 30, 2016
|
|
July 1, 2016
|
|
July 15, 2016
|
6.3% Series J Preferred Shares
(2)
|
|
$
|
0.22
|
|
|
June 30, 2016
|
|
July 1, 2016
|
|
July 15, 2016
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
risks associated with the hotel industry, including competition for guests and meetings from other hotels and alternative lodging companies, increases in wages, energy costs and other operating costs, potential unionization or union disruption, actual or threatened terrorist attacks, any type of flu or disease-related pandemic and downturns in general and local economic conditions;
|
•
|
the availability and terms of financing and capital and the general volatility of securities markets;
|
•
|
the Company’s dependence on third-party managers of its hotels, including its inability to implement strategic business decisions directly;
|
•
|
risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act of 1990, as amended, and similar laws;
|
•
|
interest rate increases;
|
•
|
the possible failure of the Company to maintain its qualification as a real estate investment trust (“REIT”) as defined in the Internal Revenue Code of 1986, as amended (the “Code”) and the risk of changes in laws affecting REITs;
|
•
|
the possibility of uninsured losses;
|
•
|
risks associated with redevelopment and repositioning projects, including delays and cost overruns;
|
•
|
the risk of a material failure, inadequacy, interruption or security failure of the Company’s or the hotel managers’ information technology networks and systems; and
|
•
|
the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2015
, as updated elsewhere in this report.
|
•
|
$3.1 million increase from Westin Copley Place;
|
•
|
$2.6 million increase from Indianapolis Marriott Downtown;
|
•
|
$1.1 million increase from Hotel Palomar, Washington, DC;
|
•
|
$0.8 million increase from Southernmost Beach Resort Key West;
|
•
|
$0.7 million increase from Lansdowne Resort;
|
•
|
$0.7 million increase from Westin Michigan Avenue;
|
•
|
$0.7 million increase from The Grafton on Sunset; and
|
•
|
$0.7 million increase from Hotel Amarano Burbank.
|
•
|
$2.1 million increase from Westin Copley Place;
|
•
|
$0.9 million increase from Park Central Hotel New York and WestHouse Hotel New York;
|
•
|
$0.8 million increase from Indianapolis Marriott Downtown;
|
•
|
$0.8 million increase from San Diego Paradise Point Resort and Spa;
|
•
|
$0.6 million increase from The Liberty Hotel; and
|
•
|
$0.5 million increase from Westin Michigan Avenue.
|
•
|
additional borrowings to purchase the Mezzanine Loan; and
|
•
|
additional borrowings to finance other capital improvements during 2015 and 2016.
|
•
|
the issuance of the 6.3% Series J Cumulative Redeemable Preferred Shares (the “Series J Preferred Shares”) in May 2016; and
|
•
|
positive operating results from the hotel properties.
|
•
|
$3.6 million increase from Indianapolis Marriott Downtown;
|
•
|
$1.9 million increase from The Grafton on Sunset;
|
•
|
$1.8 million increase from Park Central Hotel New York and WestHouse Hotel New York; and
|
•
|
$1.7 million increase from Westin Philadelphia.
|
•
|
$2.2 million increase from Park Central Hotel New York and WestHouse Hotel New York; and
|
•
|
$1.4 million increase from Indianapolis Marriott Downtown.
|
•
|
additional borrowings to purchase the 2015 Acquisition Properties and the Mezzanine Loan; and
|
•
|
additional borrowings to finance other capital improvements during 2015 and 2016.
|
•
|
the issuance of the Series J Preferred Shares in May 2016; and
|
•
|
positive operating results from the hotel properties.
|
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income attributable to common shareholders
|
|
$
|
55,176
|
|
|
$
|
55,822
|
|
|
$
|
61,193
|
|
|
$
|
55,503
|
|
Depreciation
|
|
48,706
|
|
|
45,790
|
|
|
96,200
|
|
|
88,542
|
|
||||
Amortization of deferred lease costs
|
|
82
|
|
|
72
|
|
|
162
|
|
|
147
|
|
||||
Noncontrolling interests:
|
|
|
|
|
|
|
|
|
||||||||
Noncontrolling interests in consolidated entities
|
|
8
|
|
|
8
|
|
|
8
|
|
|
8
|
|
||||
Noncontrolling interests of common units in Operating Partnership
|
|
81
|
|
|
139
|
|
|
96
|
|
|
154
|
|
||||
FFO attributable to common shareholders and unitholders
|
|
$
|
104,053
|
|
|
$
|
101,831
|
|
|
$
|
157,659
|
|
|
$
|
144,354
|
|
Weighted average number of common shares and units outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
112,930,199
|
|
|
112,943,036
|
|
|
112,911,957
|
|
|
112,943,523
|
|
||||
Diluted
|
|
113,258,476
|
|
|
113,356,859
|
|
|
113,264,779
|
|
|
113,350,041
|
|
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income attributable to common shareholders
|
|
$
|
55,176
|
|
|
$
|
55,822
|
|
|
$
|
61,193
|
|
|
$
|
55,503
|
|
Interest expense
|
|
11,482
|
|
|
13,895
|
|
|
23,349
|
|
|
27,540
|
|
||||
Income tax expense
|
|
7,610
|
|
|
5,574
|
|
|
1,990
|
|
|
706
|
|
||||
Depreciation and amortization
|
|
48,841
|
|
|
45,916
|
|
|
96,469
|
|
|
88,794
|
|
||||
Noncontrolling interests:
|
|
|
|
|
|
|
|
|
||||||||
Noncontrolling interests in consolidated entities
|
|
8
|
|
|
8
|
|
|
8
|
|
|
8
|
|
||||
Noncontrolling interests of common units in Operating Partnership
|
|
81
|
|
|
139
|
|
|
96
|
|
|
154
|
|
||||
Distributions to preferred shareholders
|
|
4,355
|
|
|
3,042
|
|
|
7,397
|
|
|
6,084
|
|
||||
EBITDA
|
|
$
|
127,553
|
|
|
$
|
124,396
|
|
|
$
|
190,502
|
|
|
$
|
178,789
|
|
(a)
|
Borrowings bear interest at floating rates equal to, at the Company’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate (as defined in the credit agreement) plus an applicable margin. As of
June 30, 2016
, the rate, including the applicable margin, for the Company’s outstanding LIBOR borrowing of
$190,000
was
2.17%
. As of
December 31, 2015
, the rate, including the applicable margin, for the Company’s outstanding LIBOR borrowing of
$21,000
was
2.13%
. The Company has the option, pursuant to certain terms and conditions, to extend the maturity date for
two
six
-month extensions.
|
(b)
|
Borrowings bear interest at floating rates equal to, at LHL’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate (as defined in the credit agreement) plus an applicable margin. There were
no
borrowings outstanding at
June 30, 2016
and
December 31, 2015
. LHL has the option, pursuant to certain terms and conditions, to extend the maturity date for
two
six
-month extensions.
|
(c)
|
Term loans bear interest at floating rates equal to LIBOR plus an applicable margin. The Company entered into separate interest rate swap agreements for the full
seven
-year term of the First Term Loan (as defined below) and a
five
-year term ending in August 2017 for the Second Term Loan (as defined below), resulting in fixed all-in interest rates. On November 5, 2015, the Company repaid the First Term Loan and entered into the Third Term Loan (as defined below). The Company
|
(d)
|
The Massport Bonds are secured by letters of credit issued by U.S. Bank National Association that expire in September 2016. The letters of credit have
two
one
-year extension options and are secured by the Hyatt Regency Boston Harbor. The letters of credit cannot be extended beyond the Massport Bonds’ maturity date. The bonds bear interest based on weekly floating rates. The interest rates as of
June 30, 2016
were
0.44%
and
0.43%
for the
$5,400
and
$37,100
bonds, respectively. The interest rates as of
December 31, 2015
were
0.39%
and
0.02%
for the
$5,400
and
$37,100
bonds, respectively. The Company incurs an annual letter of credit fee of
1.35%
.
|
(e)
|
The Company repaid the mortgage loans on January 4, 2016 through borrowings on its senior unsecured credit facility.
|
(f)
|
The Company repaid the mortgage loan on February 11, 2016 through borrowings on its senior unsecured credit facility.
|
(g)
|
The mortgage loan matures on August 14, 2018 with
three
options to extend the maturity date to January 5, 2021, pursuant to certain terms and conditions. The interest-only mortgage loan bears interest at a variable rate ranging from LIBOR plus
1.75%
to LIBOR plus
2.00%
, depending on Westin Copley Place’s net cash flow (as defined in the loan agreement). The interest rate as of
June 30, 2016
was LIBOR plus
1.75%
, which equaled
2.20%
. The interest rate as of
December 31, 2015
was LIBOR plus
1.75%
, which equaled
2.09%
. The mortgage loan allows for prepayments without penalty after
one year
, subject to certain terms and conditions.
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest Expense:
|
|
|
|
|
|
|
|
||||||||
Interest incurred
|
$
|
10,685
|
|
|
$
|
13,422
|
|
|
$
|
21,869
|
|
|
$
|
26,744
|
|
Amortization of debt issuance costs
|
835
|
|
|
549
|
|
|
1,713
|
|
|
1,096
|
|
||||
Capitalized interest
|
(38
|
)
|
|
(76
|
)
|
|
(233
|
)
|
|
(300
|
)
|
||||
Interest expense
|
$
|
11,482
|
|
|
$
|
13,895
|
|
|
$
|
23,349
|
|
|
$
|
27,540
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Interest Rates for Unswapped Variable Rate Debt:
|
|
|
|
|
|
|
|||||||||
Senior unsecured credit facility
|
2.15
|
%
|
|
1.89
|
%
|
|
2.14
|
%
|
|
1.88
|
%
|
||||
LHL unsecured credit facility
|
2.14
|
%
|
|
1.88
|
%
|
|
2.13
|
%
|
|
1.88
|
%
|
||||
Massport Bonds
|
0.41
|
%
|
|
0.09
|
%
|
|
0.26
|
%
|
|
0.07
|
%
|
||||
Mortgage loan (Westin Copley Place)
|
2.19
|
%
|
|
N/A
|
|
|
2.18
|
%
|
|
N/A
|
|
|
|
Amount of (Loss) Gain Recognized in OCI on Derivative Instruments
|
|
Location of Loss Reclassified from AOCL into Net Income
|
|
Amount of Loss Reclassified from AOCL into Net Income
|
|||||||||||||
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|||||||||||||
|
|
For the three months ended
|
|
|
|
|
For the three months ended
|
||||||||||||
|
|
June 30,
|
|
|
|
|
June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
|
|
|
2016
|
|
2015
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest rate swaps
|
|
$
|
(5,971
|
)
|
|
$
|
26
|
|
|
Interest expense
|
|
$
|
1,730
|
|
|
$
|
1,069
|
|
|
|
Amount of Loss Recognized in OCI on Derivative Instruments
|
|
Location of Loss Reclassified from AOCL into Net Income
|
|
Amount of Loss Reclassified from AOCL into Net Income
|
|||||||||||||
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|||||||||||||
|
|
For the six months ended
|
|
|
|
|
For the six months ended
|
||||||||||||
|
|
June 30,
|
|
|
|
|
June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
|
|
|
2016
|
|
2015
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest rate swaps
|
|
$
|
(20,223
|
)
|
|
$
|
(4,372
|
)
|
|
Interest expense
|
|
$
|
3,510
|
|
|
$
|
2,139
|
|
|
|
|
|
Fair Value Measurements at
|
||||||
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
|
|
|
|
Using Significant Other Observable
|
||||||
|
|
|
|
Inputs (Level 2)
|
||||||
Description
|
|
Consolidated Balance Sheet Location
|
|
|
|
|
||||
Derivative interest rate instruments
|
|
Prepaid expenses and other assets
|
|
$
|
0
|
|
|
$
|
1,605
|
|
Derivative interest rate instruments
|
|
Accounts payable and accrued expenses
|
|
$
|
16,810
|
|
|
$
|
1,702
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||
Note receivable
|
$
|
80,000
|
|
|
$
|
80,000
|
|
|
$
|
80,000
|
|
|
$
|
80,000
|
|
Borrowings under credit facilities
|
$
|
190,000
|
|
|
$
|
190,735
|
|
|
$
|
21,000
|
|
|
$
|
21,061
|
|
Term loans
|
$
|
855,000
|
|
|
$
|
857,539
|
|
|
$
|
855,000
|
|
|
$
|
856,038
|
|
Bonds payable
|
$
|
42,500
|
|
|
$
|
42,500
|
|
|
$
|
42,500
|
|
|
$
|
42,500
|
|
Mortgage loans
|
$
|
225,000
|
|
|
$
|
225,255
|
|
|
$
|
511,294
|
|
|
$
|
511,786
|
|
|
|
Total
Amounts Committed |
|
Amount of Commitment Expiration Per Period
|
||||||||||||||||
Obligations and Commitments
|
|
|
Less than
1 year |
|
1 to 3 years
|
|
4 to 5 years
|
|
Over 5 years
|
|||||||||||
Mortgage loan
|
|
$
|
225,000
|
|
|
$
|
0
|
|
|
$
|
225,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Mortgage loan interest
(1)
|
|
11,055
|
|
|
5,019
|
|
|
6,036
|
|
|
0
|
|
|
0
|
|
|||||
Borrowings under credit facilities
(2)
|
|
190,000
|
|
|
0
|
|
|
190,000
|
|
|
0
|
|
|
0
|
|
|||||
Credit facilities interest
(2)
|
|
6,368
|
|
|
4,180
|
|
|
2,188
|
|
|
0
|
|
|
0
|
|
|||||
Ground rents
(3)
|
|
660,182
|
|
|
12,934
|
|
|
26,350
|
|
|
26,959
|
|
|
593,939
|
|
|||||
Massport Bonds
(2)
|
|
42,500
|
|
|
0
|
|
|
42,500
|
|
|
0
|
|
|
0
|
|
|||||
Massport Bonds interest
(2)
|
|
305
|
|
|
183
|
|
|
122
|
|
|
0
|
|
|
0
|
|
|||||
Term loans
(4)
|
|
855,000
|
|
|
|
|
300,000
|
|
|
555,000
|
|
|
0
|
|
||||||
Term loans interest
(4)
|
|
89,761
|
|
|
23,834
|
|
|
42,633
|
|
|
23,294
|
|
|
0
|
|
|||||
Purchase commitments
(5)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase orders and letters of commitment
|
|
27,316
|
|
|
27,316
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
Total obligations and commitments
|
|
$
|
2,107,487
|
|
|
$
|
73,466
|
|
|
$
|
834,829
|
|
|
$
|
605,253
|
|
|
$
|
593,939
|
|
(1)
|
Interest expense is calculated based on the variable rate as of
June 30, 2016
for Westin Copley Place.
|
(2)
|
Interest expense is calculated based on the variable rate as of
June 30, 2016
. It is assumed that the outstanding debt as of
June 30, 2016
will be repaid upon maturity with interest-only payments until then.
|
(3)
|
Amounts calculated based on the annual minimum future lease payments that extend through the term of the lease. Ground rents may be subject to adjustments based on future interest rates and hotel performance.
|
(4)
|
The term loans bear interest at floating rates equal to LIBOR plus applicable margins. The Company entered into separate interest rate swap agreements for the Second Term Loan, resulting in a fixed all-in interest rate of
2.38%
, at the Company’s current leverage ratio (as defined in the agreements) through August 2, 2017, the interest rate swaps’ maturity date. The Company entered into separate interest rate swap agreements for the Third Term Loan, resulting in a fixed all-in interest rate of
2.95%
at the Company’s current leverage ratio (as defined in the agreements). The $377.5 million portion of the Third Term Loan is fixed through its maturity date of January 29, 2021 and the $177.5 million portion of the Third Term Loan is fixed through May 16, 2019, the interest rate swaps’ maturity date. It is assumed that the outstanding debt as of
June 30, 2016
will be repaid upon maturity with fixed interest-only payments through the swapped periods and interest calculated based on the variable rate as of
June 30, 2016
for the unswapped period of the term loans.
|
(5)
|
As of
June 30, 2016
, purchase orders and letters of commitment totaling approximately
$27.3 million
had been issued for renovations at the properties. The Company has committed to these projects and anticipates making similar arrangements in the future with the existing properties or any future properties that it may acquire.
|
|
|
For the three months ended
|
|
For the six months ended
|
||||||||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
Variance
|
|
2016
|
|
2015
|
|
Variance
|
||||||||||
Occupancy
|
|
88.7
|
%
|
|
87.0
|
%
|
|
2.0
|
%
|
|
82.3
|
%
|
|
80.7
|
%
|
|
2.0
|
%
|
||||
ADR
|
|
$
|
251.58
|
|
|
$
|
252.14
|
|
|
-0.2
|
%
|
|
$
|
237.62
|
|
|
$
|
238.05
|
|
|
-0.2
|
%
|
RevPAR
|
|
$
|
223.13
|
|
|
$
|
219.31
|
|
|
1.7
|
%
|
|
$
|
195.56
|
|
|
$
|
192.11
|
|
|
1.8
|
%
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
(1)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
(2)
|
||||||
April 1, 2016 - April 30, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
May 1, 2016 - May 31, 2016
|
|
14,477
|
|
|
$
|
24.64
|
|
|
—
|
|
|
$
|
—
|
|
June 1, 2016 - June 30, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Total
|
|
14,477
|
|
|
$
|
24.64
|
|
|
—
|
|
|
$
|
69,807,000
|
|
(1)
|
Reflects shares surrendered to the Company for payment of tax withholding obligations in connection with the vesting of restricted shares. The average price paid reflects the average market value of shares withheld for tax purposes.
|
(2)
|
On August 29, 2011, the Company announced its Board of Trustees had authorized the Repurchase Program to acquire up to $100.0 million of the Company’s common shares of beneficial interest. The Company cumulatively repurchased $30.2 million of common shares of beneficial interest pursuant to the Repurchase Program through June 30, 2016. As of June 30, 2016, the Company had availability under the Repurchase Program to acquire up to $69.8 million of common shares of beneficial interest. The authorization did not include specific price targets or an expiration date. The timing, manner, price and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The Repurchase Program may be suspended, modified or terminated at any time for any reason without prior notice. The Repurchase Program does not obligate the Company to acquire any specific number of shares, and all open market repurchases will be made in accordance with applicable rules and regulations setting forth certain restrictions on the method, timing, price and volume of open market share repurchases.
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
|
3.1
|
|
Articles of Amendment and Restatement of Declaration of Trust of LaSalle Hotel Properties (including all articles of amendment and articles supplementary)
|
|
|
|
4.1
|
|
Form of certificate evidencing the 6.3% Series J Cumulative Redeemable Preferred Shares
(1)
|
|
|
|
10.1
|
|
Severance Agreement between Kenneth G. Fuller and LaSalle Hotel Properties effective April 25, 2016
|
|
|
|
10.2
|
|
Eleventh Amendment to the Amended and Restated Agreement of Limited Partnership of LaSalle Hotel Operating Partnership, L.P., dated as of May 25, 2016
(2)
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002
|
|
|
|
101
|
|
The following financial statements from LaSalle Hotel Properties’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed on July 20, 2016, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements
|
|
|
|
(1)
|
Previously filed as an exhibit to the Company’s Registration Statement on Form 8-A filed with the SEC on May 20, 2016 and incorporated herein by reference.
|
(2)
|
Previously filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on May 25, 2016 and incorporated herein by reference.
|
|
|
|
|
LASALLE HOTEL PROPERTIES
|
|
|
|
|
|
Date:
|
July 20, 2016
|
|
BY:
|
/s/ KENNETH G. FULLER
|
|
|
|
|
Kenneth G. Fuller
|
|
|
|
|
Executive Vice President
and Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
|
3.1
|
|
Articles of Amendment and Restatement of Declaration of Trust of LaSalle Hotel Properties (including all articles of amendment and articles supplementary)
|
|
|
|
4.1
|
|
Form of certificate evidencing the 6.3% Series J Cumulative Redeemable Preferred Shares
(1)
|
|
|
|
10.1
|
|
Severance Agreement between Kenneth G. Fuller and LaSalle Hotel Properties effective April 25, 2016
|
|
|
|
10.2
|
|
Eleventh Amendment to the Amended and Restated Agreement of Limited Partnership of LaSalle Hotel Operating Partnership, L.P., dated as of May 25, 2016
(2)
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002
|
|
|
|
101
|
|
The following financial statements from LaSalle Hotel Properties’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed on July 20, 2016, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements
|
|
|
|
(1)
|
Previously filed as an exhibit to the Company’s Registration Statement on Form 8-A filed with the SEC on May 20, 2016 and incorporated herein by reference.
|
(2)
|
Previously filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on May 25, 2016 and incorporated herein by reference.
|
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