UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission file number 1-14045
LASALLE HOTEL PROPERTIES
(Exact name of registrant as specified in its charter)
| Maryland |
36-4219376 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
| 4800 Montgomery Lane, Suite M25, Bethesda, MD |
20814 | |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code (301)941-1500
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act rule 12b-2). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common and preferred shares as of the latest practicable date.
| Class |
Outstanding at April 18, 2003 | |
| Common Shares of Beneficial Interest |
18,713,581 | |
| ($0.01 par value) |
||
| 10¼% Series A Cumulative Redeemable Preferred Shares |
3,991,900 | |
| ($0.01 par value) |
. |
| Page | ||||
| PART I |
Financial Information |
|||
| Item 1. |
3 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 | ||
| Item 3. |
29 | |||
| Item 4. |
30 | |||
| PART II |
Other Information |
|||
| Item 1. |
30 | |||
| Item 2. |
30 | |||
| Item 3. |
30 | |||
| Item 4. |
30 | |||
| Item 5. |
30 | |||
| Item 6. |
30 | |||
| 32 | ||||
| 33 |
2
PART I. Financial Information
LASALLE HOTEL PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (Unaudited) |
||||||||
| Assets: |
||||||||
| Investment in hotel properties, net (Note 2) |
$ |
496,895 |
|
$ |
495,488 |
| ||
| Investment in joint venture (Note 2) |
|
3,995 |
|
|
4,580 |
| ||
| Cash and cash equivalents |
|
10,741 |
|
|
6,521 |
| ||
| Restricted cash reserves (Note 5) |
|
11,876 |
|
|
18,737 |
| ||
| Rent receivable |
|
2,077 |
|
|
2,251 |
| ||
| Notes receivable |
|
1,802 |
|
|
1,802 |
| ||
| Hotel receivables (net of allowance for doubtful accounts of $188 and $197, respectively) |
|
6,447 |
|
|
5,886 |
| ||
| Deferred financing costs, net |
|
2,385 |
|
|
2,721 |
| ||
| Deferred tax asset |
|
6,993 |
|
|
4,215 |
| ||
| Prepaid expenses and other assets |
|
7,051 |
|
|
7,223 |
| ||
| Assets held for sale, net (Note 3) |
|
58,574 |
|
|
56,311 |
| ||
| Total assets |
$ |
608,836 |
|
$ |
605,735 |
| ||
| Liabilities and Shareholders’ Equity: |
||||||||
| Borrowings under credit facilities (Note 4) |
$ |
113,490 |
|
$ |
99,390 |
| ||
| Bonds payable (Note 4) |
|
42,500 |
|
|
42,500 |
| ||
| Mortgage loans (Note 4) |
|
69,903 |
|
|
70,175 |
| ||
| Accounts payable and accrued expenses (Note 5) |
|
17,143 |
|
|
16,312 |
| ||
| Advance deposits |
|
2,136 |
|
|
1,555 |
| ||
| Accrued interest |
|
649 |
|
|
650 |
| ||
| Distributions payable |
|
3,897 |
|
|
6,575 |
| ||
| Liabilities of assets held for sale (Note 3) |
|
48,718 |
|
|
48,199 |
| ||
| Total liabilities |
|
298,436 |
|
|
285,356 |
| ||
| Minority interest in LaSalle Hotel Operating Partnership, L.P. (Note 6) |
|
5,088 |
|
|
5,262 |
| ||
| Minority interest in other partnerships |
|
10 |
|
|
10 |
| ||
| Commitments and contingencies (Note 5) |
|
— |
|
|
— |
| ||
| Shareholders’ Equity: |
||||||||
| Preferred shares, $.01 par value, 20,000,000 shares authorized, 3,991,900 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively (Note 6) |
|
40 |
|
|
40 |
| ||
| Common shares of beneficial interest, $.01 par value, 100,000,000 shares authorized, 18,713,581 and 18,708,829 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively (Note 6) |
|
187 |
|
|
187 |
| ||
| Additional paid-in capital, including offering costs of $25,364 and $25,329 at March 31, 2003 and December 31, 2002, respectively |
|
374,402 |
|
|
374,383 |
| ||
| Deferred compensation |
|
(1,707 |
) |
|
(1,914 |
) | ||
| Accumulated other comprehensive loss (Note 8) |
|
(838 |
) |
|
(1,050 |
) | ||
| Distributions in excess of retained earnings |
|
(66,782 |
) |
|
(56,539 |
) | ||
| Total shareholders’ equity |
|
305,302 |
|
|
315,107 |
| ||
| Total liabilities and shareholders’ equity |
$ |
608,836 |
|
$ |
605,735 |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
3
LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
| For the three months ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Revenues: |
||||||||
| Hotel operating revenues: |
||||||||
| Room revenue |
$ |
18,754 |
|
$ |
18,037 |
| ||
| Food and beverage revenue |
|
10,122 |
|
|
8,802 |
| ||
| Other operating department revenue |
|
1,948 |
|
|
2,123 |
| ||
| Participating lease revenue |
|
4,960 |
|
|
5,073 |
| ||
| Interest income |
|
69 |
|
|
80 |
| ||
| Other income (Note 5) |
|
402 |
|
|
12 |
| ||
| Total revenues |
|
36,255 |
|
|
34,127 |
| ||
| Expenses: |
||||||||
| Hotel operating expenses: |
||||||||
| Room |
|
5,799 |
|
|
5,135 |
| ||
| Food and beverage |
|
8,187 |
|
|
6,866 |
| ||
| Other direct |
|
1,438 |
|
|
1,528 |
| ||
| Other indirect (Note 9) |
|
10,650 |
|
|
9,524 |
| ||
| Depreciation and other amortization |
|
8,587 |
|
|
7,644 |
| ||
| Real estate taxes, personal property taxes and insurance |
|
2,349 |
|
|
2,276 |
| ||
| Ground rent (Note 5) |
|
772 |
|
|
730 |
| ||
| General and administrative |
|
1,959 |
|
|
1,655 |
| ||
| Interest |
|
2,917 |
|
|
3,665 |
| ||
| Amortization of deferred financing costs |
|
591 |
|
|
549 |
| ||
| Total expenses |
|
43,249 |
|
|
39,572 |
| ||
| Loss before income tax benefit, minority interest, equity in earnings of unconsolidated entities and discontinued operations |
|
(6,994 |
) |
|
(5,445 |
) | ||
| Income tax benefit (Note 10) |
|
2,729 |
|
|
2,080 |
| ||
| Loss before minority interest, equity in earnings of unconsolidated entities and discontinued operations |
|
(4,265 |
) |
|
(3,365 |
) | ||
| Minority interest in LaSalle Hotel Operating Partnership, L.P. |
|
99 |
|
|
97 |
| ||
| Loss before equity in earnings of unconsolidated entities and discontinued operations |
|
(4,166 |
) |
|
(3,268 |
) | ||
| Equity in earnings of unconsolidated entities: |
||||||||
| Equity in loss of joint venture (Note 2) |
|
(207 |
) |
|
(97 |
) | ||
| Total equity in earnings of unconsolidated entities |
|
(207 |
) |
|
(97 |
) | ||
| Loss before discontinued operations |
|
(4,373 |
) |
|
(3,365 |
) | ||
| Discontinued operations (Note 3) |
||||||||
| Income from operations of property held for sale |
|
701 |
|
|
992 |
| ||
| Minority interest |
|
(14 |
) |
|
(23 |
) | ||
| Income tax expense (Note 10) |
|
(69 |
) |
|
— |
| ||
| Net income from discontinued operations |
|
618 |
|
|
969 |
| ||
| Net loss |
|
(3,755 |
) |
|
(2,396 |
) | ||
| Distributions to preferred shareholders |
|
(2,557 |
) |
|
(739 |
) | ||
| Net loss applicable to common shareholders |
$ |
(6,312 |
||||||