LaSalle Hotel Properties Reports First Quarter Results

LaSalle Hotel Properties (NYSE: LHO) today reported a net loss to common shareholders of $18.9 million, or ($0.46) per diluted share for the quarter ended March 31, 2009, compared to a net loss of $14.8 million, or ($0.37) per diluted share for the first quarter of 2008.

For the quarter ended March 31, 2009, the Company generated funds from operations ("FFO”) of $8.6 million versus $9.8 million for the first quarter of 2008. On a per diluted share basis, FFO for the quarter was $0.21, compared to $0.24 for the same period of 2008.

The Company’s earnings before interest, taxes, depreciation and amortization ("EBITDA”) for the first quarter of 2009 was $21.3 million as compared to $24.5 million for the first quarter of 2008.

Room revenue per available room ("RevPAR”) in the first quarter of 2009 was $104.01, which was a decrease of 11.8 percent compared to the same period of 2008. Average daily rate ("ADR”) declined 5.5 percent from the first quarter of 2008 to $172.15, while occupancy fell 6.7 percent to 60.4 percent.

"Our significant investment in Washington, DC coupled with the continued ramp up of a number of recently redeveloped and repositioned hotels enabled us to significantly outperform the industry on a RevPAR basis,” said Jon Bortz, Chairman and Chief Executive Officer of LaSalle Hotel Properties. "Despite an extremely difficult operating environment, the initiatives we and our operators have put in place to mitigate EBITDA margin erosion proved to be extremely effective and should result in enhanced operational efficiencies in the future. Though we expect the operating environment to continue to be difficult, we are seeing some initial signs of stabilization in recent demand trends.”

The Company’s hotels generated $23.6 million of EBITDA for the quarter ended March 31, 2009 compared with $28.2 million for the same period of 2008. Hotel revenues declined 9.1 percent while hotel expenses were reduced by 7.2 percent. As a result, hotel EBITDA margins were limited to a decline of only 169 basis points. Before the impact of property taxes, margins declined just 107 basis points.

As of March 31, 2009, the Company had total outstanding debt of $966.1 million including the Company’s senior unsecured credit facility balance of $273.8 million. Total debt to trailing 12 month Corporate EBITDA (as defined by our senior unsecured credit facility) equaled 4.8 times as of March 31, 2009. For the quarter, the Company’s weighted average interest rate was 4.1 percent. As of March 31, 2009, based on the Company’s covenants under its senior unsecured credit facility, the Company’s EBITDA to interest coverage ratio was 4.2 times and its fixed charge coverage ratio was 2.2 times. At the end of the quarter, the Company had $14.1 million of cash and cash equivalents on its balance sheet and an aggregate of $196.5 million available on its senior unsecured credit facility and the line of credit of LaSalle Hotel Lessee, Inc., the Company’s wholly owned taxable REIT subsidiary.

First Quarter Highlights

On January 1, 2009, Le Montrose Suite Hotel transitioned to a new lease with LaSalle Hotel Lessee, Inc. As a result, all of the Company’s 31 hotels are now leased to LaSalle Hotel Lessee, Inc.

On February 1, 2009, each of the 2,348,888 7.25% Series C Preferred Units was redeemed and the Company issued 2,348,888 7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest. As a result of the redemption of all of the partnership units previously issued in consideration for the purchase of the Westin Copley in 2005, the contingent obligation of the Company to reimburse the seller of the hotel up to $20.0 million of taxes related to unrealized taxable gains created at the time of the Company’s acquisition of the hotel, as described in the Tax Reporting and Protection Agreement entered into by the Company, has become null and void.

On February 2, 2009, the Company retired, without penalty, $38.4 million of outstanding mortgage principal balances on the Westin City Center Dallas and Sheraton Bloomington Hotel Minneapolis South with funds drawn from the senior unsecured credit facility.

On February 4, 2009, the Company announced a quarterly dividend of $0.01 per common share for the first quarter of 2009. The first quarter dividend was paid on April 15, 2009 to common shareholders of record on March 31, 2009.

Subsequent Events

On April 16, 2009, SCG Hotel DLP, L.P. exchanged the above described 2,348,888 7.25% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest for 2,348,888 7.25% Series G Cumulative Redeemable Preferred Shares of Beneficial Interest in a private transaction with the Company.

Earnings Call

The Company will conduct its quarterly conference call on Thursday, April 23, 2009 at 11:30 AM EDT. To participate in the conference call, please dial (877) 795-3649. Additionally, a live webcast of the Earnings Call will be available through the Company’s website. To access, log on to http://www.lasallehotels.com. A replay of the conference call will be archived and available online through the Investor Relations section of http://www.lasallehotels.com.

LaSalle Hotel Properties is a leading multi-operator real estate investment trust owning 31 upscale full-service hotels, totaling approximately 8,500 guest rooms in 14 markets in 11 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 companies, including Westin Hotels and Resorts, Sheraton Hotels & Resorts Worldwide, Inc., Hilton Hotels Corporation, Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels Corporation, Benchmark Hospitality, White Lodging Services Corporation, Gemstone Hotels & Resorts, LLC, Thompson Hotels, Sandcastle Resorts & Hotels, Davidson Hotel Company, Denihan Hospitality Group and the Kimpton Hotel & Restaurant Group, LLC.

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. Forward-looking statements in this press release include, among others, statements about the Company’s initiatives resulting in continued operating efficiencies in the future and stabilization of demand trends. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, (i) the Company’s dependence on third-party managers of its hotels, including its inability to implement strategic business decisions directly, (ii) risks associated with the hotel industry, including competition, increases in wages, energy costs and other operating costs, actual or threatened terrorist attacks, downturns in general and local economic conditions and cancellation of or delays in the completion of anticipated demand generators, (iii) the availability and terms of financing and capital and the general volatility of securities markets, (iv) risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act and similar laws, (v) interest rate increases, (vi) the possible failure of the Company to qualify as a REIT and the risk of changes in laws affecting REITs, (vii) the possibility of uninsured losses, (viii) risks associated with redevelopment and repositioning projects, including delays and cost overruns, and (ix) the risk factors discussed in the Company’s Annual Report on Form 10-K as updated in its Quarterly Reports. Accordingly, there is no assurance that the Company's expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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