In a concerted move to increase its liquidity,
LaSalle Hotel Properties
), a real estate investment trust (REIT), has recently announced
a secondary offering of 8.0 million shares at $23.70 each. The
company will also grant the underwriters an option to purchase an
additional 1.2 million shares to cover any over-allotments.
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Raymond James Financial Inc.
) are acting as joint book-running managers for the equity offer.
LaSalle intends to utilize the proceeds from the offering to fund
its just-concluded acquisition of L'Auberge Del Mar in Del Mar,
California. The remainder of the proceeds would be used to reduce
debt under its unsecured credit facility and for general
Incidentally, LaSalle had acquired the 120-room full service
luxury resort in California for $76.9 million. Set on 4.5 acres
overlooking the picturesque Pacific Ocean, the hotel is
strategically placed in close proximity to several leisure and
business demand drivers of the region. These include the Del Mar
Beach, Torrey Pines Golf Course and the Del Mar Racetrack &
Fairgrounds, besides other upscale shopping and dining hotspots.
In addition, the hotel is also close to the University of
California, San Diego, which is one of the leading research
universities in the U.S.
LaSalle presently expects a RevPAR (revenue per available room)
growth of 4.0% - 4.3% for full year 2012. Adjusted EBITDA is
expected to be in the range of $259.0 million - $261.0 million,
while adjusted FFO (funds from operations) is expected to vary in
the range of $175.3 million and $176.3 million. On a per share
basis, adjusted FFO is pegged at $2.04 - $2.05, while the current
Zacks Consensus Estimate is static at $2.05.
LaSalle owns luxury and upper-upscale hotels in high
barriers-to-entry markets throughout the U.S. The company
specifically focuses on owning, redeveloping and repositioning
upscale full-service hotels in urban, resort and convention
markets. LaSalle currently owns 10,300 guest rooms in 13 markets
in 9 states in the U.S. and the District of Columbia.
We maintain our Neutral rating on the stock, which presently has
a Zacks #3 Rank that translates into a short-term Hold rating.
Note: FFO, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization and
other non-cash expenses to net income.