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LaSalle Hotel Properties (LHO) CEO Michael Barnello on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 22, 2016 10:00 AM ET

Executives

Max Leinweber – Director of Finance

Michael Barnello – President, Chief Executive Officer, Trustee

Bruce Riggins – Chief Financial Officer, Executive Vice President, Secretary

Analysts

Jeff Donnelly – Wells Fargo Securities

Patrick Scholes – SunTrust Robinson Humphrey, Inc.

Smedes Rose – Citigroup Global Markets, Inc.

David Loeb – Robert W. Baird & Co., Inc.

Shaun Kelley – Bank of America Merrill Lynch

Lukas Hartwich – Green Street Advisors

Wes Golladay – RBC Capital Markets

Thomas Allen – Morgan Stanley & Co.

Steven Kent – Goldman Sachs & Co.

Chris Woronka – Deutsche Bank Securities, Inc.

Anthony Powell – Barclays Capital, Inc.

Kris Trafton – Credit Suisse

Bill Crow – Raymond James & Associates, Inc.

Ryan Meliker – Canaccord Genuity, Inc.

Operator

Please standby, we're about to begin. Good day and welcome to the LHO First Quarter 2016 Earnings Call. At this time, I'd like to turn the conference over to Max Leinweber, Director of Finance. Please go ahead, sir.

Max Leinweber

Thank you, Taylor. Good morning, everyone, and welcome to the first quarter 2016 earnings call and webcast for LaSalle Hotel Properties. I'm here today with Mike Barnello, our President and CEO; and Bruce Riggins, our CFO. Mike will provide an overview of the industry and discuss our first quarter results and activities. Bruce will provide details on our portfolio performance and then update on our balance sheet. And then, we will open the call for Q&A.

Before we start, please take note of the following. Any statements that we make today about future results and performance or plans and objectives are forward-looking statements. Actual results may differ as a result of factors, risks and uncertainties over which the company may have no control. Factors that may cause actual results to differ materially are discussed in the company's 10-K, quarterly reports and its other reports filed with the SEC. The company disclaims any obligation or undertaking to update or revise any forward-looking statements. Our SEC reports as well as our press releases are available at our website, lasallehotels.com. Our most recent 8-K and yesterday's press release include reconciliations of non-GAAP measures with the most comparable GAAP measures.

With that, I'll turn the call over to Mike Barnello. Mike?

Michael Barnello

Thanks, Max, and thanks, everyone, for joining our first quarter call. I'll start out this morning by highlighting our outstanding EBITDA and margins, which again reached a record level for our company in the first quarter. We pride ourselves in our ability to consistently deliver strong bottom line performance during all phases of the lodging cycle.

As such, we are pleased with our 14% adjusted EBITDA increase and 23% adjusted AFFO per share growth in the first quarter. Our impressive AFFO per share growth reflects the benefit of our opportunistic capital markets activities during the last year and the strength of our portfolio.

Our historically best-in-class hotel EBITDA margin rose to 26.5% and expanded by 47 basis points due to our efforts to control expenses, which were flat, despite rising occupancy, wages, and benefits.

Turning to capital, we invested $36 million in our portfolio during the quarter, which included completing renovations at the Chaminade Resort in Santa Cruz, Gild Hall in New York, Hotel Solamar in San Diego, Hotel Amarano in Burbank, The Liberty Hotel in Boston, Lansdowne Resort in Virginia, Hotel Palomar DC, the Mason & Rook Hotel in DC, and the second phase of the guestrooms at Westin Michigan Avenue in Chicago. The Mason & Rook was the most significant of these renovations, and we've dramatically upgraded the product compared to the former Hotel Helix.