LaSalle Hotel Properties (LHO) recently announced the acquisition of Hotel Palomar in Washington D.C. for $143.8 million in an off-market deal. The company funded the acquisition through a combination of borrowings under an unsecured credit agreement and proceeds generated from a recent share offering that raised $46.6 million.
Hotel Palomar comprises 335 guest rooms and is located close to the Dupont Circle in Washington. The hotel is ideally located in close proximity to a number of foreign embassies as well as Washington universities. The acquisition is also expected to strengthen LaSalle’s position in the Washington area.
La Salle reported fourth 2011 adjusted funds from operations (FFO) of $30.3 million or 36 cents per share compared with $26.7 million or 37 cents in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and other non-cash expenses to net income.
Following the acquisition, LaSalle expects adjusted funds from operations to range from $2.00 to $2.12 per share in 2012, up from the company’s prior expectation for $1.92 to $2.05 per share .
LaSalle Hotel, a real estate investment trust (REIT), engages in the purchase, ownership, redevelopment, and leasing of primarily upscale and luxury full-service hotels in convention, resort, and urban business markets in the United States. LaSalle Hotel currently owns 37 hotels with 9,800 rooms in 13 different markets.
LaSalle Hotel 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 World (HOT) also holds a Zacks #3 Rank.
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