LaSalle Hotel Properties (LHO) recently announced the acquisition of Park Central Hotel in New York for $396.2 million. The transaction was funded through a combination of cash, money borrowed from its senior unsecured credit facility, and the issuance of 296,300 operating partnership units worth $27 each.
The property was previously held by Highgate Holdings, which will continue to manage the Park Central Hotel. The hotel currently comprises more than 20,000 rooms and benefits from an excellent location with a number of tourist attractions.
LaSalle Hotel expects to renovate the guest rooms, guest bathrooms, corridors and lobby at a cost of $30 million to $35 million. With LaSalle’s ownership, the hotel is poised to achieve its full potential and all renovations are expected to be completed by late 2012.
The strategic move on the company’s part is expected to provide long-term earnings growth to its shareholders through opportunistic investments in premium-quality properties.
LaSalle Hotel reported FFO (funds from operations) of $41.9 million or 49 cents per share in the third quarter of 2011 compared with $8.5 million or 12 cents per share in the year-earlier quarter. Funds 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 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.
STARWOOD HOTELS (HOT): Free Stock Analysis Report
LASALLE HTL PRP (LHO): Free Stock Analysis Report
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