New Credit Facility for LaSalle Hotel - Analyst Blog
LaSalle Hotel Properties ( LHO ) recently announced that it has entered into a new senior unsecured credit facility worth $750.0 million.The new facility replaces the company's existing $450.0 million facility expected to mature in April, 2012.The new facility matures on January 30, 2017 and also comes with an option of extending the total commitment up to $1.0 billion.
This apart, LaSalle also intends to complete the acquisition of Park Central Hotel by January 10, 2012. The company expects to fund this transaction with cash, borrowings from its new $750.0 million credit facility and issuance of about $8.0 million of operating partnership units valued at $27.00 per share.
As of September 30, 2011, the company had total outstanding debt of $687.2 million and cash and cash equivalents of $217.4 million.
LaSalle reported adjusted FFO (fund from operations) of $42.4 million or 50 cents per share in the third quarter of 2011 compared with $32.6 million or 46 cents per share in the year-earlier quarter. Fund from operations, 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.
LaSalle owns 36 upscale full-service hotels, totaling over 8,900 guest rooms in 13 markets across 9 states in the U.S. and the District of Columbia. Apart from improving the size and quality of its portfolio through strategic acquisitions of high-quality hotels, the company plans to continue selling non-core properties that do not fit with its long-term strategy.
LaSalle boasts a geographically diversified portfolio with high barriers to entry and a strong demand for high-quality facilities. The company focuses on owning, redeveloping and repositioning upscale full-service hotels in urban, resort and convention markets.
La Salle currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Starwood Hotels & Resorts Worldwide Inc ( HOT ) also holds a Zacks #3 Rank.