LaSalle Hotel Properties (
) is a real estate investment trust that started off in 1998
owning just 10 hotels. Today, it has 45 and is looking for
It specializes in upscale, full-service hotels in urban,
resort and convention markets. LaSalle seeks to lower risk
through geographic diversification, market type diversification
and by working with multiple hotel operators and owning both
branded and independent hotels.
LaSalle buys hotels and in some cases renovates or expands
them. But it doesn't operate them. It contracts with operators,
including well-known brands, like Hyatt and Sheraton.
In the past three years, it's added 17 hotels to its
portfolio, most recently two in San Francisco and one in Key
West, Fla., all completed in August 2013.
LaSalle has been growing its funds from operation, or FFO, the
REIT equivalent of earnings, since late 2010. But it's not a
steady grower over the long run. The hotel business is cyclical,
blown this way and that by economic winds.
That means its FFO and ultimately its dividend are vulnerable
if the economy heads south. FFO dropped sharply in the 2001-03
period and again in 2008-10. Although it's been rising since
then, it hasn't regained its peak earnings of 2007.
The stock got walloped in the financial crisis, losing 92% of
its value. It's come the majority of the way back, but, again,
hasn't reached its peak price.
The quarterly dividend fell to a penny a share at the bottom
in 2009, but is now 28 cents. The $1.12 annual dividend works out
to a 3.5% yield. The three- to five-year dividend growth rate is
a robust 25%, thanks to recovery of the past few years.
FFO for the most recent quarter rose 12% from a year ago. The
stock has been moving generally sideways the past three years and
appears to be forming a flat base.