x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 36-4219376 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
3 Bethesda Metro Center, Suite 1200 Bethesda, Maryland | 20814 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Class | Outstanding at July 17, 2013 | ||
Common Shares of Beneficial Interest ($0.01 par value) | 96,256,468 | ||
7 ¼% Series G Cumulative Redeemable Preferred Shares ($0.01 par value) | 2,348,888 | ||
7 ½% Series H Cumulative Redeemable Preferred Shares ($0.01 par value) | 2,750,000 | ||
6 3/8% Series I Cumulative Redeemable Preferred Shares ($0.01 par value) | 4,400,000 |
PART I. | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
PART I. | Financial Information |
Item 1. | Financial Statements |
June 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
Assets: | |||||||
Investment in hotel properties, net (Note 3) | $ | 3,037,923 | $ | 3,053,044 | |||
Note receivable (net of unamortized discount of $2,302 and $3,510, respectively) | 69,698 | 68,490 | |||||
Property under development | 26,101 | 16,890 | |||||
Cash and cash equivalents | 15,113 | 35,090 | |||||
Restricted cash reserves (Note 5) | 15,766 | 17,414 | |||||
Hotel receivables (net of allowance for doubtful accounts of $530 and $345, respectively) | 41,698 | 28,485 | |||||
Deferred financing costs, net | 7,099 | 8,235 | |||||
Deferred tax assets (Note 9) | 1,973 | 1,286 | |||||
Prepaid expenses and other assets | 49,872 | 27,636 | |||||
Total assets | $ | 3,265,243 | $ | 3,256,570 | |||
Liabilities: | |||||||
Borrowings under credit facilities (Note 4) | $ | 180,000 | $ | 153,000 | |||
Term loans (Note 4) | 477,500 | 477,500 | |||||
Bonds payable (Note 4) | 42,500 | 42,500 | |||||
Mortgage loans (including unamortized premium of $82 and $118, respectively) (Note 4) | 516,782 | 579,220 | |||||
Accounts payable and accrued expenses | 106,248 | 101,365 | |||||
Advance deposits | 23,660 | 16,422 | |||||
Accrued interest | 3,849 | 4,319 | |||||
Distributions payable | 23,417 | 23,314 | |||||
Total liabilities | 1,373,956 | 1,397,640 | |||||
Commitments and contingencies (Note 5) | |||||||
Equity: | |||||||
Shareholders’ Equity: | |||||||
Preferred shares of beneficial interest, $0.01 par value (liquidation preference of $237,472 and $227,472, respectively), 40,000,000 shares authorized; 9,498,888 and 9,098,888 shares issued and outstanding, respectively (Note 6) | 95 | 91 | |||||
Common shares of beneficial interest, $0.01 par value, 200,000,000 shares authorized; 96,258,828 shares issued and 96,256,468 shares outstanding, and 95,480,358 shares issued and 95,445,444 shares outstanding, respectively (Note 6) | 962 | 955 | |||||
Treasury shares, at cost (Note 6) | (65 | ) | (886 | ) | |||
Additional paid-in capital, net of offering costs of $74,118 and $71,640, respectively | 2,148,243 | 2,118,705 | |||||
Accumulated other comprehensive income (loss) (Note 4) | 4,826 | (7,735 | ) | ||||
Distributions in excess of retained earnings | (268,636 | ) | (258,004 | ) | |||
Total shareholders’ equity | 1,885,425 | 1,853,126 | |||||
Noncontrolling Interests: | |||||||
Noncontrolling interests in consolidated entities | 18 | 18 | |||||
Noncontrolling interests of common units in Operating Partnership (Note 6) | 5,844 | 5,786 | |||||
Total noncontrolling interests | 5,862 | 5,804 | |||||
Total equity | 1,891,287 | 1,858,930 | |||||
Total liabilities and equity | $ | 3,265,243 | $ | 3,256,570 |
For the three months ended | For the six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues: | |||||||||||||||
Hotel operating revenues: | |||||||||||||||
Room | $ | 179,089 | $ | 167,186 | $ | 306,077 | $ | 281,878 | |||||||
Food and beverage | 65,529 | 58,787 | 115,375 | 103,402 | |||||||||||
Other operating department | 16,328 | 14,839 | 29,712 | 26,695 | |||||||||||
Total hotel operating revenues | 260,946 | 240,812 | 451,164 | 411,975 | |||||||||||
Other income | 2,614 | 1,283 | 4,100 | 2,439 | |||||||||||
Total revenues | 263,560 | 242,095 | 455,264 | 414,414 | |||||||||||
Expenses: | |||||||||||||||
Hotel operating expenses: | |||||||||||||||
Room | 42,294 | 38,688 | 79,878 | 72,541 | |||||||||||
Food and beverage | 42,681 | 39,475 | 79,985 | 73,737 | |||||||||||
Other direct | 5,998 | 5,558 | 11,020 | 10,184 | |||||||||||
Other indirect (Note 8) | 59,189 | 55,152 | 112,924 | 103,193 | |||||||||||
Total hotel operating expenses | 150,162 | 138,873 | 283,807 | 259,655 | |||||||||||
Depreciation and amortization | 33,427 | 31,279 | 66,548 | 61,431 | |||||||||||
Real estate taxes, personal property taxes and insurance | 12,780 | 10,865 | 25,134 | 21,676 | |||||||||||
Ground rent (Note 5) | 2,791 | 2,210 | 5,286 | 3,986 | |||||||||||
General and administrative | 5,564 | 4,849 | 10,711 | 9,463 | |||||||||||
Acquisition transaction costs (Note 3) | 0 | 307 | 0 | 3,901 | |||||||||||
Other expenses | 1,528 | 918 | 2,169 | 1,469 | |||||||||||
Total operating expenses | 206,252 | 189,301 | 393,655 | 361,581 | |||||||||||
Operating income | 57,308 | 52,794 | 61,609 | 52,833 | |||||||||||
Interest income | 2,395 | 16 | 4,764 | 26 | |||||||||||
Interest expense | (13,763 | ) | (12,503 | ) | (27,780 | ) | (24,281 | ) | |||||||
Income before income tax (expense) benefit | 45,940 | 40,307 | 38,593 | 28,578 | |||||||||||
Income tax (expense) benefit (Note 9) | (4,934 | ) | (4,969 | ) | 83 | (1,977 | ) | ||||||||
Net income | 41,006 | 35,338 | 38,676 | 26,601 | |||||||||||
Net income attributable to noncontrolling interests: | |||||||||||||||
Noncontrolling interests in consolidated entities | (8 | ) | 0 | (8 | ) | 0 | |||||||||
Noncontrolling interests of common units in Operating Partnership (Note 6) | (135 | ) | (130 | ) | (135 | ) | (108 | ) | |||||||
Net income attributable to noncontrolling interests | (143 | ) | (130 | ) | (143 | ) | (108 | ) | |||||||
Net income attributable to the Company | 40,863 | 35,208 | 38,533 | 26,493 | |||||||||||
Distributions to preferred shareholders | (4,107 | ) | (5,999 | ) | (9,172 | ) | (13,401 | ) | |||||||
Issuance costs of redeemed preferred shares (Note 6) | (1,566 | ) | (4,417 | ) | (1,566 | ) | (4,417 | ) | |||||||
Net income attributable to common shareholders | $ | 35,190 | $ | 24,792 | $ | 27,795 | $ | 8,675 |
For the three months ended | For the six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Earnings per Common Share - Basic: | |||||||||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares | $ | 0.37 | $ | 0.29 | $ | 0.29 | $ | 0.10 | |||||||
Earnings per Common Share - Diluted: | |||||||||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares | $ | 0.37 | $ | 0.29 | $ | 0.29 | $ | 0.10 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 95,465,464 | 85,451,978 | 95,316,742 | 84,975,917 | |||||||||||
Diluted | 95,630,066 | 85,617,851 | 95,473,859 | 85,137,833 | |||||||||||
Comprehensive Income: | |||||||||||||||
Net income | $ | 41,006 | $ | 35,338 | $ | 38,676 | $ | 26,601 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Unrealized gain (loss) on interest rate derivative instruments (Note 4) | 11,081 | (4,695 | ) | 12,600 | (4,695 | ) | |||||||||
Comprehensive income | 52,087 | 30,643 | 51,276 | 21,906 | |||||||||||
Comprehensive income attributable to noncontrolling interests: | |||||||||||||||
Noncontrolling interests in consolidated entities | (8 | ) | 0 | (8 | ) | 0 | |||||||||
Noncontrolling interests of common units in Operating Partnership (Note 6) | (169 | ) | (114 | ) | (174 | ) | (92 | ) | |||||||
Comprehensive income attributable to noncontrolling interests | (177 | ) | (114 | ) | (182 | ) | (92 | ) | |||||||
Comprehensive income attributable to the Company | $ | 51,910 | $ | 30,529 | $ | 51,094 | $ | 21,814 |
Preferred Shares of Beneficial Interest | Common Shares of Beneficial Interest | Treasury Shares | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Distributions in Excess of Retained Earnings | Total Shareholders' Equity | Noncontrolling Interests in Consolidated Entities | Noncontrolling Interests of Common Units in Operating Partnership | Total Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||
Balance, December 31, 2011 | $ | 158 | $ | 851 | $ | (24,543 | ) | $ | 2,029,145 | $ | 0 | $ | (239,998 | ) | $ | 1,765,613 | $ | 17 | $ | 5,613 | $ | 5,630 | $ | 1,771,243 | |||||||||||||||||||
Issuance of shares, net of offering costs | 0 | 12 | 22,847 | 41,412 | 0 | 0 | 64,271 | 0 | 0 | 0 | 64,271 | ||||||||||||||||||||||||||||||||
Redemption of preferred shares | (67 | ) | 0 | 0 | (162,266 | ) | 0 | (4,417 | ) | (166,750 | ) | 0 | 0 | 0 | (166,750 | ) | |||||||||||||||||||||||||||
Repurchase of common shares into treasury | 0 | 0 | (738 | ) | 0 | 0 | 0 | (738 | ) | 0 | 0 | 0 | (738 | ) | |||||||||||||||||||||||||||||
Options exercised | 0 | 0 | 0 | 74 | 0 | 0 | 74 | 0 | 0 | 0 | 74 | ||||||||||||||||||||||||||||||||
Adjustments to issuance of units | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (746 | ) | (746 | ) | (746 | ) | |||||||||||||||||||||||||||||
Deferred compensation, net | 0 | 0 | 2,434 | (39 | ) | 0 | 0 | 2,395 | 0 | 0 | 0 | 2,395 | |||||||||||||||||||||||||||||||
Adjustments to noncontrolling interests | 0 | 0 | 0 | (778 | ) | 0 | 0 | (778 | ) | 0 | 778 | 778 | 0 | ||||||||||||||||||||||||||||||
Distributions on issued long-term performance-based share awards | 0 | 0 | 0 | 0 | 0 | (56 | ) | (56 | ) | 0 | 0 | 0 | (56 | ) | |||||||||||||||||||||||||||||
Distributions on common shares/units ($0.31 per share/unit) | 0 | 0 | 0 | 0 | 0 | (26,710 | ) | (26,710 | ) | 0 | (92 | ) | (92 | ) | (26,802 | ) | |||||||||||||||||||||||||||
Distributions on preferred shares | 0 | 0 | 0 | 0 | 0 | (13,401 | ) | (13,401 | ) | (8 | ) | 0 | (8 | ) | (13,409 | ) | |||||||||||||||||||||||||||
Net income | 0 | 0 | 0 | 0 | 0 | 26,493 | 26,493 | 0 | 108 | 108 | 26,601 | ||||||||||||||||||||||||||||||||
Other comprehensive loss: | |||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on interest rate derivative instruments | 0 | 0 | 0 | 0 | (4,679 | ) | 0 | (4,679 | ) | 0 | (16 | ) | (16 | ) | (4,695 | ) | |||||||||||||||||||||||||||
Balance, June 30, 2012 | $ | 91 | $ | 863 | $ | 0 | $ | 1,907,548 | $ | (4,679 | ) | $ | (258,089 | ) | $ | 1,645,734 | $ | 9 | $ | 5,645 | $ | 5,654 | $ | 1,651,388 | |||||||||||||||||||
Balance, December 31, 2012 | $ | 91 | $ | 955 | $ | (886 | ) | $ | 2,118,705 | $ | (7,735 | ) | $ | (258,004 | ) | $ | 1,853,126 | $ | 18 | $ | 5,786 | $ | 5,804 | $ | 1,858,930 | ||||||||||||||||||
Issuance of shares, net of offering costs | 44 | 7 | 262 | 125,862 | 0 | 0 | 126,175 | 0 | 0 | 0 | 126,175 | ||||||||||||||||||||||||||||||||
Redemption of preferred shares | (40 | ) | 0 | 0 | (98,394 | ) | 0 | (1,566 | ) | (100,000 | ) | 0 | 0 | 0 | (100,000 | ) | |||||||||||||||||||||||||||
Repurchase of common shares into treasury | 0 | 0 | (2 | ) | 0 | 0 | 0 | (2 | ) | 0 | 0 | 0 | (2 | ) | |||||||||||||||||||||||||||||
Deferred compensation, net | 0 | 0 | 561 | 2,073 | 0 | 0 | 2,634 | 0 | 0 | 0 | 2,634 | ||||||||||||||||||||||||||||||||
Adjustments to noncontrolling interests | 0 | 0 | 0 | (3 | ) | 0 | 0 | (3 | ) | 0 | 3 | 3 | 0 | ||||||||||||||||||||||||||||||
Distributions on issued long-term performance-based share awards | 0 | 0 | 0 | 0 | 0 | (20 | ) | (20 | ) | 0 | 0 | 0 | (20 | ) | |||||||||||||||||||||||||||||
Distributions on common shares/units ($0.40 per share/unit) | 0 | 0 | 0 | 0 | 0 | (38,407 | ) | (38,407 | ) | 0 | (119 | ) | (119 | ) | (38,526 | ) | |||||||||||||||||||||||||||
Distributions on preferred shares | 0 | 0 | 0 | 0 | 0 | (9,172 | ) | (9,172 | ) | (8 | ) | 0 | (8 | ) | (9,180 | ) | |||||||||||||||||||||||||||
Net income | 0 | 0 | 0 | 0 | 0 | 38,533 | 38,533 | 8 | 135 | 143 | 38,676 | ||||||||||||||||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on interest rate derivative instruments | 0 | 0 | 0 | 0 | 12,561 | 0 | 12,561 | 0 | 39 | 39 | 12,600 | ||||||||||||||||||||||||||||||||
Balance, June 30, 2013 | $ | 95 | $ | 962 | $ | (65 | ) | $ | 2,148,243 | $ | 4,826 | $ | (268,636 | ) | $ | 1,885,425 | $ | 18 | $ | 5,844 | $ | 5,862 | $ | 1,891,287 |
For the six months ended | |||||||
June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 38,676 | $ | 26,601 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 66,548 | 61,431 | |||||
Amortization of deferred financing costs, mortgage premium and note receivable discount | (104 | ) | 791 | ||||
Deferred compensation | 2,634 | 2,395 | |||||
Deferred income tax (benefit) expense | (687 | ) | 1,503 | ||||
Allowance for doubtful accounts | 185 | 136 | |||||
Other | 449 | 0 | |||||
Changes in assets and liabilities: | |||||||
Restricted cash reserves | 765 | (846 | ) | ||||
Hotel receivables | (13,398 | ) | (12,932 | ) | |||
Prepaid expenses and other assets | (14,739 | ) | (3,208 | ) | |||
Accounts payable and accrued expenses | 8,903 | 10,881 | |||||
Advance deposits | 7,238 | 6,348 | |||||
Accrued interest | (470 | ) | (279 | ) | |||
Net cash provided by operating activities | 96,000 | 92,821 | |||||
Cash flows from investing activities: | |||||||
Improvements and additions to properties | (56,781 | ) | (36,103 | ) | |||
Acquisition of properties | (3,000 | ) | (142,944 | ) | |||
Purchase of office furniture and equipment | (32 | ) | (59 | ) | |||
Restricted cash reserves | 883 | 570 | |||||
Property insurance proceeds | 161 | 0 | |||||
Net cash used in investing activities | (58,769 | ) | (178,536 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under credit facilities | 172,882 | 275,480 | |||||
Repayments under credit facilities | (145,882 | ) | (160,071 | ) | |||
Borrowings on term loans | 0 | 177,500 | |||||
Repayments of mortgage loans | (62,402 | ) | (62,063 | ) | |||
Payment of deferred financing costs | (4 | ) | (1,987 | ) | |||
Purchase of treasury shares | (2 | ) | (738 | ) | |||
Proceeds from exercise of stock options | 0 | 74 | |||||
Proceeds from issuance of preferred shares | 110,000 | 0 | |||||
Payment of preferred offering costs | (3,648 | ) | 0 | ||||
Proceeds from issuance of common shares | 19,943 | 64,702 | |||||
Payment of common offering costs | (521 | ) | (888 | ) | |||
Distributions on issued long-term performance-based share awards | (20 | ) | (56 | ) | |||
Redemption of preferred shares | (100,000 | ) | (166,750 | ) | |||
Distributions on preferred shares | (9,239 | ) | (16,645 | ) | |||
Distributions on common shares/units | (38,315 | ) | (18,702 | ) | |||
Net cash (used in) provided by financing activities | (57,208 | ) | 89,856 | ||||
Net change in cash and cash equivalents | (19,977 | ) | 4,141 | ||||
Cash and cash equivalents, beginning of period | 35,090 | 20,225 | |||||
Cash and cash equivalents, end of period | $ | 15,113 | $ | 24,366 |
1. | Organization |
2. | Summary of Significant Accounting Policies |
3. | Investment in Hotel Properties |
June 30, 2013 | December 31, 2012 | ||||||
Land | $ | 480,705 | $ | 480,705 | |||
Buildings and improvements | 2,944,566 | 2,932,532 | |||||
Furniture, fixtures and equipment | 511,197 | 472,052 | |||||
Investment in hotel properties, gross | 3,936,468 | 3,885,289 | |||||
Accumulated depreciation | (898,545 | ) | (832,245 | ) | |||
Investment in hotel properties, net | $ | 3,037,923 | $ | 3,053,044 |
Property | Acquisition Date | |
Hotel Palomar, Washington, DC | March 8, 2012 | |
L'Auberge Del Mar | December 6, 2012 | |
The Liberty Hotel | December 28, 2012 |
For the three months ended | For the six months ended | ||||||
June 30, 2012 | June 30, 2012 | ||||||
(unaudited) | (unaudited) | ||||||
Total revenues | $ | 258,510 | $ | 447,265 | |||
Net income | $ | 37,158 | $ | 28,016 | |||
Net income attributable to common shareholders | $ | 26,612 | $ | 10,090 | |||
Earnings per common share - basic | $ | 0.28 | $ | 0.10 | |||
Earnings per common share - diluted | $ | 0.28 | $ | 0.10 | |||
Weighted average number of common shares outstanding: | |||||||
Basic | 95,043,286 | 95,040,678 | |||||
Diluted | 95,209,159 | 95,202,595 |
4. | Long-Term Debt |
Balance Outstanding as of | ||||||||||||
Debt | Interest Rate | Maturity Date | June 30, 2013 | December 31, 2012 | ||||||||
Credit facilities | ||||||||||||
Senior unsecured credit facility | Floating (a) | January 2016 (a) | $ | 180,000 | $ | 153,000 | ||||||
LHL unsecured credit facility | Floating (b) | January 2016 (b) | 0 | 0 | ||||||||
Total borrowings under credit facilities | 180,000 | 153,000 | ||||||||||
Term loans | ||||||||||||
First Term Loan | Floating (c) | May 2019 | 177,500 | 177,500 | ||||||||
Second Term Loan | Floating (c) | August 2017 | 300,000 | 300,000 | ||||||||
Total term loans | 477,500 | 477,500 | ||||||||||
Massport Bonds | ||||||||||||
Hyatt Boston Harbor (taxable) | Floating (d) | March 2018 | 5,400 | 5,400 | ||||||||
Hyatt Boston Harbor (tax exempt) | Floating (d) | March 2018 | 37,100 | 37,100 | ||||||||
Total bonds payable | 42,500 | 42,500 | ||||||||||
Mortgage loans | ||||||||||||
Hotel Solamar | 5.49% | December 2013 (e) | 0 | 60,134 | ||||||||
Hotel Deca | 6.28% | August 2014 (f) | 8,961 | 9,111 | ||||||||
Westin Copley Place | 5.28% | September 2015 | 210,000 | 210,000 | ||||||||
Westin Michigan Avenue | 5.75% | April 2016 | 136,246 | 137,172 | ||||||||
Indianapolis Marriott Downtown | 5.99% | July 2016 | 99,510 | 100,142 | ||||||||
Hotel Roger Williams | 6.31% | August 2016 | 61,983 | 62,543 | ||||||||
Mortgage loans at stated value | 516,700 | 579,102 | ||||||||||
Unamortized loan premium (g) | 82 | 118 | ||||||||||
Total mortgage loans | 516,782 | 579,220 | ||||||||||
Total debt | $ | 1,216,782 | $ | 1,252,220 |
(a) | Borrowings bear interest at floating rates equal to, at the Company’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate plus an applicable margin. As of June 30, 2013, the rate, including the applicable margin, for the Company’s outstanding LIBOR borrowings of $180,000 was 1.95%. As of December 31, 2012, the rate, including the applicable margin, for the Company's outstanding LIBOR borrowing of $153,000 was 2.22%. The Company has the option, pursuant to certain terms and conditions, to extend the maturity date to January 2017. |
(b) | Borrowings bear interest at floating rates equal to, at LHL’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate plus an applicable margin. There were no borrowings outstanding at June 30, 2013 or December 31, 2012. LHL has the option, subject to certain terms and conditions, to extend the maturity date to January 2017. |
(c) | Term loans bear interest at floating rates equal to LIBOR plus an applicable margin. The Company entered into separate interest rate swap agreements for the full seven-year term of the First Term Loan (as defined below) and the full five-year term, including a one-year extension subject to certain conditions, of the Second Term Loan (as defined below), resulting in fixed all-in interest rates at June 30, 2013 of 3.62% and 2.43%, respectively, and at December 31, 2012 of 3.87% and 2.68%, respectively, at the Company's current leverage ratio (as defined in the swap agreements). |
(d) | The Massport Bonds are secured by letters of credit issued by the Royal Bank of Scotland that expire in February 2014, pursuant to an amendment to the agreement governing the letters of credit. The Royal Bank of Scotland letters of credit also have three one-year extension options and are secured by the Hyatt Boston Harbor (formerly the Harborside Hyatt Conference Center & Hotel). The bonds bear interest based on weekly floating rates. The interest rates as of June 30, 2013 were 0.70% and 0.10% for the $5,400 and $37,100 bonds, respectively. The interest rates as of December 31, 2012 were 0.65% and 0.17% for the $5,400 and $37,100 bonds, respectively. The Company also incurs an annual letter of credit fee of a variable rate based on an applicable margin as defined in the Company's senior unsecured credit agreement. |
(e) | The Company repaid the mortgage loan on June 3, 2013 through borrowings on its senior unsecured credit facility. |
(f) | The Company intends to repay the mortgage loan through borrowings on its credit facilities upon maturity. |
(g) | Mortgage debt includes an unamortized loan premium on the mortgage loan on Hotel Deca of $82 as of June 30, 2013 and $118 as of December 31, 2012. |
For the three months ended | For the six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest Expense: | |||||||||||||||
Interest incurred | $ | 13,444 | $ | 12,104 | $ | 27,071 | $ | 23,685 | |||||||
Amortization of deferred financing costs | 576 | 432 | 1,140 | 828 | |||||||||||
Capitalized interest | (257 | ) | (33 | ) | (431 | ) | (232 | ) | |||||||
Interest expense | $ | 13,763 | $ | 12,503 | $ | 27,780 | $ | 24,281 | |||||||
Weighted Average Interest Rates for Variable Rate Debt: | |||||||||||||||
Senior unsecured credit facility | 2.1 | % | 2.1 | % | 2.1 | % | 2.1 | % | |||||||
LHL unsecured credit facility | 2.1 | % | 2.0 | % | 2.1 | % | 2.0 | % | |||||||
Massport Bonds | 0.3 | % | 0.3 | % | 0.2 | % | 0.3 | % |
Amount of Gain (Loss) Recognized in OCI on Derivative Instruments | Location of Loss Reclassified from AOCI into Income | Amount of Loss Reclassified from AOCI into Income | |||||||||||||||||
(Effective Portion) | (Effective Portion) | (Effective Portion) | |||||||||||||||||
For the three months ended | For the three months ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Derivatives in cash flow hedging relationships: | |||||||||||||||||||
Interest rate swaps | $ | 11,081 | $ | (4,695 | ) | Interest expense | $ | 1,049 | $ | 302 |
Amount of Gain (Loss) Recognized in OCI on Derivative Instruments | Location of Loss Reclassified from AOCI into Income | Amount of Loss Reclassified from AOCI into Income | |||||||||||||||||
(Effective Portion) | (Effective Portion) | (Effective Portion) | |||||||||||||||||
For the six months ended | For the six months ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Derivatives in cash flow hedging relationships: | |||||||||||||||||||
Interest rate swaps | $ | 12,600 | $ | (4,695 | ) | Interest expense | $ | 2,081 | $ | 302 |
5. | Commitments and Contingencies |
2013 | $ | 3,525 | |
2014 | 7,060 | ||
2015 | 7,087 | ||
2016 | 7,140 | ||
2017 | 7,153 | ||
Thereafter | 362,977 | ||
$ | 394,942 |
6. | Equity |
Dividend per Share/Unit | For the Quarter Ended | Record Date | Payable Date | |||||
$ | 0.20 | December 31, 2012 | December 31, 2012 | January 15, 2013 | ||||
$ | 0.20 | March 31, 2013 | March 28, 2013 | April 15, 2013 |
Security Type | Number of Shares | ||
7 ¼% Series G Preferred Shares | 2,348,888 | ||
7 ½% Series H Preferred Shares | 2,750,000 | ||
6 3/8% Series I Preferred Shares | 4,400,000 |
Dividend per | For the | |||||||||
Security Type | Share (1) | Quarter Ended | Record Date | Payable Date | ||||||
7 ¼% Series G | $ | 0.45 | December 31, 2012 | January 1, 2013 | January 15, 2013 | |||||
7 ½% Series H | $ | 0.47 | December 31, 2012 | January 1, 2013 | January 15, 2013 | |||||
7 ¼% Series G (redemption) | $ | 0.48 | March 31, 2013 | March 28, 2013 | April 5, 2013 | |||||
7 ¼% Series G | $ | 0.45 | March 31, 2013 | March 28, 2013 | April 15, 2013 | |||||
7 ½% Series H | $ | 0.47 | March 31, 2013 | March 28, 2013 | April 15, 2013 | |||||
6 3/8% Series I | $ | 0.18 | March 31, 2013 | March 28, 2013 | April 15, 2013 |
(1) | Amounts are rounded to the nearest whole cent for presentation purposes. |
For the six months ended | |||||||
June 30, | |||||||
2013 | 2012 | ||||||
Net income attributable to common shareholders | $ | 27,795 | $ | 8,675 | |||
Decrease in additional paid-in capital from adjustments to noncontrolling interests of common units in Operating Partnership | (3 | ) | (778 | ) | |||
Change from net income attributable to common shareholders and adjustments to noncontrolling interests | $ | 27,792 | $ | 7,897 |
7. | Equity Incentive Plan |
Number of Shares | Weighted - Average Grant Date Fair Value | |||||
Nonvested at January 1, 2013 | 252,772 | $ | 29.72 | |||
Granted | 81,400 | 27.20 | ||||
Vested | (165 | ) | 27.18 | |||
Forfeited | (2,360 | ) | 27.34 | |||
Nonvested at June 30, 2013 (1) | 331,647 | $ | 29.12 |
(1) | Amount excludes 34,318 long-term performance-based shares which were earned but nonvested due to a service condition as of June 30, 2013. |
• | Factors associated with the underlying performance of the Company’s share price and shareholder returns over the term of the performance awards including total share return volatility and risk-free interest. |
• | Factors associated with the relative performance of the Company’s share price and shareholder returns when compared to those companies which compose the index including beta as a means to breakdown total volatility into market-related and company specific volatilities. |
• | The valuation has been performed in a risk-neutral framework. |
• | Return on invested capital is a performance condition award measurement. The estimated value was calculated based on the initial face value at the date of grant. The valuation will be adjusted on a periodic basis as the estimated number of awards expected to vest is revised. |
Volatility | Interest Rates | Dividend Yield | Stock Beta | Fair Value of Components of Award | Weighting of Total Awards | ||||||||||||
January 30, 2013 Awards (performance period starting January 1, 2013) | |||||||||||||||||
Target amounts | 38.70 | % | 0.42 | % | N/A | N/A | $ | 29.38 | 33.40 | % | |||||||
Return on invested capital | N/A | N/A | N/A | N/A | $ | 27.20 | 33.30 | % | |||||||||
Peer companies | 38.70 | % | 0.42 | % | N/A | 0.864 | $ | 30.51 | 33.30 | % | |||||||
January 30, 2013 Awards (performance period starting July 1, 2013) | |||||||||||||||||
Target amounts | 38.70 | % | 0.42 | % | N/A | N/A | $ | 27.70 | 33.40 | % | |||||||
Return on invested capital | N/A | N/A | N/A | N/A | $ | 27.20 | 33.30 | % | |||||||||
Peer companies | 38.70 | % | 0.42 | % | N/A | 0.864 | $ | 31.34 | 33.30 | % |
Number of Shares | Weighted- Average Grant Date Fair Value | |||||
Nonvested at January 1, 2013 | 208,986 | $ | 34.61 | |||
Granted (2) | 40,280 | 29.03 | ||||
Vested | 0 | 0.00 | ||||
Forfeited | 0 | 0.00 | ||||
Nonvested at June 30, 2013 (1) (2) | 249,266 | $ | 33.71 |
(1) | Amount excludes 50,000 shares that have been committed for future performance share grants. Fair value will be estimated at the beginning of the performance measurement period on July 1, 2014. |
(2) | Amount excludes 40,279 shares awarded on January 30, 2013 for which fair value has been estimated, but amortization into expense has not yet commenced. Amortization of fair value into expense will commence at the beginning of the requisite service period on July 1, 2013. |
8. | LHL |
For the three months ended | For the six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
General and administrative | $ | 18,594 | $ | 17,294 | $ | 36,321 | $ | 32,771 | |||||||
Sales and marketing | 13,992 | 13,119 | 27,393 | 25,140 | |||||||||||
Repairs and maintenance | 8,043 | 7,823 | 16,217 | 15,410 | |||||||||||
Utilities and insurance | 6,582 | 6,350 | 13,561 | 12,664 | |||||||||||
Management and incentive fees | 9,500 | 8,457 | 14,908 | 13,104 | |||||||||||
Franchise fees | 2,148 | 1,772 | 3,839 | 3,340 | |||||||||||
Other expenses | 330 | 337 | 685 | 764 | |||||||||||
Total other indirect expenses | $ | 59,189 | $ | 55,152 | $ | 112,924 | $ | 103,193 |
1. | Hyatt Boston Harbor (formerly Harborside Hyatt Conference Center & Hotel) | 21. | Westin Michigan Avenue | |||
2. | Hotel Viking | 22. | Hotel Sax Chicago | |||
3. | Topaz Hotel | 23. | Alexis Hotel | |||
4. | Hotel Rouge | 24. | Hotel Solamar | |||
5. | Hotel Madera | 25. | Gild Hall | |||
6. | Hotel Helix | 26. | Hotel Amarano Burbank | |||
7. | The Liaison Capitol Hill | 27. | San Diego Paradise Point Resort and Spa | |||
8. | Lansdowne Resort | 28. | Le Montrose Suite Hotel | |||
9. | Hotel George | 29. | Sofitel Washington, DC Lafayette Square | |||
10. | Indianapolis Marriott Downtown | 30. | Hotel Monaco San Francisco | |||
11. | Hilton Alexandria Old Town | 31. | Westin Philadelphia | |||
12. | Chaminade Resort and Conference Center | 32. | Embassy Suites Philadelphia - Center City | |||
13. | Hilton San Diego Gaslamp Quarter | 33. | Hotel Roger Williams | |||
14. | The Grafton on Sunset | 34. | Chamberlain West Hollywood | |||
15. | Onyx Hotel | 35. | Viceroy Santa Monica | |||
16. | Westin Copley Place | 36. | Villa Florence | |||
17. | Hotel Deca | 37. | Park Central Hotel | |||
18. | The Hilton San Diego Resort and Spa | 38. | Hotel Palomar, Washington, DC | |||
19. | Donovan House | 39. | L'Auberge Del Mar | |||
20. | Le Parc Suite Hotel | 40. | The Liberty Hotel |
9. | Income Taxes |
For the three months ended | For the six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
LHL’s income tax expense (benefit) | $ | 4,615 | $ | 5,434 | $ | (645 | ) | $ | 2,267 | ||||||
Operating Partnership's income tax expense (benefit) | 319 | (465 | ) | 562 | (290 | ) | |||||||||
Total income tax expense (benefit) | $ | 4,934 | $ | 4,969 | $ | (83 | ) | $ | 1,977 |
10. | Fair Value Measurements |
Fair Value Measurements at | ||||||||||
June 30, 2013 | December 31, 2012 | |||||||||
Using Significant Other Observable | ||||||||||
Inputs (Level 2) | ||||||||||
Description | Consolidated Balance Sheet Location | |||||||||
Derivative interest rate instruments | Prepaid expenses and other assets | $ | 4,841 | $ | 0 | |||||
Derivative interest rate instruments | Accounts payable and accrued expenses | $ | 0 | $ | 7,759 |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Note receivable | $ | 69,698 | $ | 69,698 | $ | 68,490 | $ | 68,490 | |||||||
Borrowings under credit facilities | $ | 180,000 | $ | 179,535 | $ | 153,000 | $ | 153,719 | |||||||
Term loans | $ | 477,500 | $ | 470,438 | $ | 477,500 | $ | 475,752 | |||||||
Bonds payable | $ | 42,500 | $ | 42,500 | $ | 42,500 | $ | 42,500 | |||||||
Mortgage loans | $ | 516,782 | $ | 536,513 | $ | 579,220 | $ | 607,109 |
11. | Earnings Per Common Share |
For the three months ended | For the six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Numerator: | |||||||||||||||
Net income attributable to common shareholders | $ | 35,190 | $ | 24,792 | $ | 27,795 | $ | 8,675 | |||||||
Dividends paid on unvested restricted shares | (73 | ) | (87 | ) | (147 | ) | (135 | ) | |||||||
Undistributed earnings attributable to unvested restricted shares | (61 | ) | (38 | ) | 0 | 0 | |||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares | $ | 35,056 | $ | 24,667 | $ | 27,648 | $ | 8,540 | |||||||
Denominator: | |||||||||||||||
Weighted average number of common shares - basic | 95,465,464 | 85,451,978 | 95,316,742 | 84,975,917 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Stock options and compensation-related shares | 164,602 | 165,873 | 157,117 | 161,916 | |||||||||||
Weighted average number of common shares - diluted | 95,630,066 | 85,617,851 | 95,473,859 | 85,137,833 | |||||||||||
Earnings per Common Share - Basic: | |||||||||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares | $ | 0.37 | $ | 0.29 | $ | 0.29 | $ | 0.10 | |||||||
Earnings per Common Share - Diluted: | |||||||||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares | $ | 0.37 | $ | 0.29 | $ | 0.29 | $ | 0.10 |
12. | Supplemental Information to Statements of Cash Flows |
For the six months ended | |||||||
June 30, | |||||||
2013 | 2012 | ||||||
Interest paid, net of capitalized interest | $ | 27,110 | $ | 23,732 | |||
Interest capitalized | 431 | 232 | |||||
Income taxes paid, net | 1,317 | 1,189 | |||||
Increase in distributions payable on common shares | 162 | 8,066 | |||||
Decrease in distributions payable on preferred shares | (59 | ) | (3,236 | ) | |||
Write-off of fully amortized deferred financing costs | 203 | 162 | |||||
Increase (decrease) in accrued capital expenditures | 4,090 | (1,007 | ) | ||||
Grant of restricted shares and awards to employees and executives, net | 3,749 | 4,744 | |||||
Issuance of common shares for Board of Trustees compensation | 277 | 494 | |||||
In conjunction with the acquisition of properties, the Company assumed | |||||||
assets and liabilities as follows: | |||||||
Investment in properties (after credits at closing) | $ | 0 | $ | (143,721 | ) | ||
Deposits on potential acquisitions | (3,000 | ) | 0 | ||||
Other assets | 0 | (565 | ) | ||||
Liabilities | 0 | 1,342 | |||||
Acquisition of properties | $ | (3,000 | ) | $ | (142,944 | ) |
13. | Subsequent Events |
Dividend per | For the Quarter | Record | Payable | |||||||
Security Type | Share/Unit (1) | Ended | Date | Date | ||||||
Common Shares/Units | $ | 0.20 | June 30, 2013 | June 28, 2013 | July 15, 2013 | |||||
7 ¼% Series G Preferred Shares | $ | 0.45 | June 30, 2013 | July 1, 2013 | July 15, 2013 | |||||
7 ½% Series H Preferred Shares | $ | 0.47 | June 30, 2013 | July 1, 2013 | July 15, 2013 | |||||
6 3/8% Series I Preferred Shares | $ | 0.40 | June 30, 2013 | July 1, 2013 | July 15, 2013 |
(1) | Amounts are rounded to the nearest whole cent for presentation purposes. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | risks associated with the hotel industry, including competition, increases in wages, energy costs and other operating costs, potential unionization, actual or threatened terrorist attacks, any type of flu or disease-related pandemic and downturns in general and local economic conditions; |
• | the availability and terms of financing and capital and the general volatility of securities markets; |
• | the Company's dependence on third-party managers of its hotels, including its inability to implement strategic business decisions directly; |
• | risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act of 1990, as amended, and similar laws; |
• | interest rate increases; |
• | the possible failure of the Company to maintain its qualification as a real estate investment trust (“REIT”) and the risk of changes in laws affecting REITs; |
• | the possibility of uninsured losses; |
• | risks associated with redevelopment and repositioning projects, including delays and cost overruns; and |
• | the risk factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, as updated elsewhere in this report. |
• | additional borrowings to purchase the Fourth Quarter 2012 Acquisition Properties; |
• | additional borrowings to redeem the 7 ½% Series D Cumulative Redeemable Preferred Shares (the "Series D Preferred Shares") and the 8% Series E Cumulative Redeemable Preferred Shares (the "Series E Preferred Shares") in May 2012; |
• | additional borrowings to acquire a performing mezzanine loan in July 2012; |
• | additional borrowings to redeem 4,000,000 of the 6,348,888 7¼% Series G Cumulative Redeemable Preferred Shares (the "Series G Preferred Shares") in April 2013; and |
• | additional borrowing to finance other capital improvements during 2012 and 2013. |
• | the March 2013 issuance of the 6 3/8% Series I Cumulative Redeemable Preferred Shares (the "Series I Preferred Shares"); |
• | the issuance of common shares under the Company's equity distribution agreements during 2012 and 2013; |
• | the December 2012 common share offering; and |
• | positive operating results from the hotel properties. |
• | additional borrowings to purchase the 2012 Acquisition Properties; |
• | additional borrowings to redeem the Series D Preferred Shares and the Series E Preferred Shares in May 2012; |
• | additional borrowings to acquire a performing mezzanine loan in July 2012; |
• | additional borrowings to redeem 4,000,000 of the 6,348,888 Series G Preferred Shares in April 2013; and |
• | additional borrowing to finance other capital improvements during 2012 and 2013. |
• | the March 2013 issuance of the Series I Preferred Shares; |
• | the issuance of common shares under the Company's equity distribution agreements during 2012 and 2013; |
• | the December 2012 common share offering; and |
• | positive operating results from the hotel properties. |
For the three months ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income attributable to common shareholders | $ | 35,190 | $ | 24,792 | $ | 27,795 | $ | 8,675 | ||||||||
Depreciation | 33,322 | 31,135 | 66,333 | 61,147 | ||||||||||||
Amortization of deferred lease costs | 86 | 88 | 174 | 174 | ||||||||||||
Noncontrolling interests: | ||||||||||||||||
Noncontrolling interests in consolidated entities | 8 | 0 | 8 | 0 | ||||||||||||
Noncontrolling interests of common units in Operating Partnership | 135 | 130 | 135 | 108 | ||||||||||||
FFO | $ | 68,741 | $ | 56,145 | $ | 94,445 | $ | 70,104 | ||||||||
Weighted Average number of common shares and units outstanding: | ||||||||||||||||
Basic | 95,761,764 | 85,748,278 | 95,613,042 | 85,272,217 | ||||||||||||
Diluted | 95,926,366 | 85,914,151 | 95,770,159 | 85,434,133 |
For the three months ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income attributable to common shareholders | $ | 35,190 | $ | 24,792 | $ | 27,795 | $ | 8,675 | ||||||||
Interest expense | 13,763 | 12,503 | 27,780 | 24,281 | ||||||||||||
Income tax expense (benefit) | 4,934 | 4,969 | (83 | ) | 1,977 | |||||||||||
Depreciation and amortization | 33,427 | 31,279 | 66,548 | 61,431 | ||||||||||||
Noncontrolling interests: | ||||||||||||||||
Noncontrolling interests in consolidated entities | 8 | 0 | 8 | 0 | ||||||||||||
Noncontrolling interests of common units in Operating Partnership | 135 | 130 | 135 | 108 | ||||||||||||
Distributions to preferred shareholders | 4,107 | 5,999 | 9,172 | 13,401 | ||||||||||||
EBITDA | $ | 91,564 | $ | 79,672 | $ | 131,355 | $ | 109,873 |
Balance Outstanding as of | ||||||||||||
Debt | Interest Rate | Maturity Date | June 30, 2013 | December 31, 2012 | ||||||||
Credit facilities | ||||||||||||
Senior unsecured credit facility | Floating (a) | January 2016 (a) | $ | 180,000 | $ | 153,000 | ||||||
LHL unsecured credit facility | Floating (b) | January 2016 (b) | 0 | 0 | ||||||||
Total borrowings under credit facilities | 180,000 | 153,000 | ||||||||||
Term loans | ||||||||||||
First Term Loan | Floating (c) | May 2019 | 177,500 | 177,500 | ||||||||
Second Term Loan | Floating (c) | August 2017 | 300,000 | 300,000 | ||||||||
Total term loans | 477,500 | 477,500 | ||||||||||
Massport Bonds | ||||||||||||
Hyatt Boston Harbor (taxable) | Floating (d) | March 2018 | 5,400 | 5,400 | ||||||||
Hyatt Boston Harbor (tax exempt) | Floating (d) | March 2018 | 37,100 | 37,100 | ||||||||
Total bonds payable | 42,500 | 42,500 | ||||||||||
Mortgage loans | ||||||||||||
Hotel Solamar | 5.49% | December 2013 (e) | 0 | 60,134 | ||||||||
Hotel Deca | 6.28% | August 2014 (f) | 8,961 | 9,111 | ||||||||
Westin Copley Place | 5.28% | September 2015 | 210,000 | 210,000 | ||||||||
Westin Michigan Avenue | 5.75% | April 2016 | 136,246 | 137,172 | ||||||||
Indianapolis Marriott Downtown | 5.99% | July 2016 | 99,510 | 100,142 | ||||||||
Hotel Roger Williams | 6.31% | August 2016 | 61,983 | 62,543 | ||||||||
Mortgage loans at stated value | 516,700 | 579,102 | ||||||||||
Unamortized loan premium (g) | 82 | 118 | ||||||||||
Total mortgage loans | 516,782 | 579,220 | ||||||||||
Total debt | $ | 1,216,782 | $ | 1,252,220 |
(a) | Borrowings bear interest at floating rates equal to, at the Company’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate plus an applicable margin. As of June 30, 2013, the rate, including the applicable margin, for the Company’s outstanding LIBOR borrowings of $180,000 was 1.95%. As of December 31, 2012, the rate, including the applicable margin, for the Company's outstanding LIBOR borrowing of $153,000 was 2.22%. The Company has the option, pursuant to certain terms and conditions, to extend the maturity date to January 2017. |
(b) | Borrowings bear interest at floating rates equal to, at LHL’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate plus an applicable margin. There were no borrowings outstanding at June 30, 2013 or December 31, 2012. LHL has the option, subject to certain terms and conditions, to extend the maturity date to January 2017. |
(c) | Term loans bear interest at floating rates equal to LIBOR plus an applicable margin. The Company entered into separate interest rate swap agreements for the full seven-year term of the First Term Loan (as defined below) and the full five-year term, including a one-year extension subject to certain conditions, of the Second Term Loan (as defined below), resulting in fixed all-in interest rates at June 30, 2013 of 3.62% and 2.43%, respectively, and at December 31, 2012 of 3.87% and 2.68%, respectively, at the Company's current leverage ratio (as defined in the swap agreements). |
(d) | The Massport Bonds are secured by letters of credit issued by the Royal Bank of Scotland that expire in February 2014, pursuant to an amendment to the agreement governing the letters of credit. The Royal Bank of Scotland letters of credit also have three one-year extension options and are secured by the Hyatt Boston Harbor (formerly the Harborside Hyatt Conference Center & Hotel). The bonds bear interest based on weekly floating rates. The interest rates as of June 30, 2013 were 0.70% and 0.10% for the $5,400 and $37,100 bonds, respectively. The interest rates as of December 31, 2012 were 0.65% and 0.17% for the $5,400 and $37,100 bonds, respectively. The Company also incurs an annual letter of credit fee of a variable rate based on an applicable margin as defined in the Company's senior unsecured credit agreement. |
(e) | The Company repaid the mortgage loan on June 3, 2013 through borrowings on its senior unsecured credit facility. |
(f) | The Company intends to repay the mortgage loan through borrowings on its credit facilities upon maturity. |
(g) | Mortgage debt includes an unamortized loan premium on the mortgage loan on Hotel Deca of $82 as of June 30, 2013 and $118 as of December 31, 2012. |
For the three months ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Interest Expense: | ||||||||||||||||
Interest incurred | $ | 13,444 | $ | 12,104 | $ | 27,071 | $ | 23,685 | ||||||||
Amortization of deferred financing costs | 576 | 432 | 1,140 | 828 | ||||||||||||
Capitalized interest | (257 | ) | (33 | ) | (431 | ) | (232 | ) | ||||||||
Interest expense | $ | 13,763 | $ | 12,503 | $ | 27,780 | $ | 24,281 | ||||||||
Weighted Average Interest Rates for Variable Rate Debt: | ||||||||||||||||
Senior unsecured credit facility | 2.1 | % | 2.1 | % | 2.1 | % | 2.1 | % | ||||||||
LHL unsecured credit facility | 2.1 | % | 2.0 | % | 2.1 | % | 2.0 | % | ||||||||
Massport Bonds | 0.3 | % | 0.3 | % | 0.2 | % | 0.3 | % |
Amount of Gain (Loss) Recognized in OCI on Derivative Instruments | Location of Loss Reclassified from AOCI into Income | Amount of Loss Reclassified from AOCI into Income | |||||||||||||||||
(Effective Portion) | (Effective Portion) | (Effective Portion) | |||||||||||||||||
For the three months ended | For the three months ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Derivatives in cash flow hedging relationships: | |||||||||||||||||||
Interest rate swaps | $ | 11,081 | $ | (4,695 | ) | Interest expense | $ | 1,049 | $ | 302 |
Amount of Gain (Loss) Recognized in OCI on Derivative Instruments | Location of Loss Reclassified from AOCI into Income | Amount of Loss Reclassified from AOCI into Income | |||||||||||||||||
(Effective Portion) | (Effective Portion) | (Effective Portion) | |||||||||||||||||
For the six months ended | For the six months ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Derivatives in cash flow hedging relationships: | |||||||||||||||||||
Interest rate swaps | $ | 12,600 | $ | (4,695 | ) | Interest expense | $ | 2,081 | $ | 302 |
Fair Value Measurements at | ||||||||||
June 30, 2013 | December 31, 2012 | |||||||||
Using Significant Other Observable | ||||||||||
Inputs (Level 2) | ||||||||||
Description | Consolidated Balance Sheet Location | |||||||||
Derivative interest rate instruments | Prepaid expenses and other assets | $ | 4,841 | $ | 0 | |||||
Derivative interest rate instruments | Accounts payable and accrued expenses | $ | 0 | $ | 7,759 |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Note receivable | $ | 69,698 | $ | 69,698 | $ | 68,490 | $ | 68,490 | |||||||
Borrowings under credit facilities | $ | 180,000 | $ | 179,535 | $ | 153,000 | $ | 153,719 | |||||||
Term loans | $ | 477,500 | $ | 470,438 | $ | 477,500 | $ | 475,752 | |||||||
Bonds payable | $ | 42,500 | $ | 42,500 | $ | 42,500 | $ | 42,500 | |||||||
Mortgage loans | $ | 516,782 | $ | 536,513 | $ | 579,220 | $ | 607,109 |
Total Amounts Committed | Amount of Commitment Expiration Per Period | |||||||||||||||||||
Obligations and Commitments | Less than 1 year | 1 to 3 years | 4 to 5 years | Over 5 years | ||||||||||||||||
Mortgage loans (1) | $ | 595,211 | $ | 34,329 | $ | 406,158 | $ | 154,724 | $ | 0 | ||||||||||
Borrowings under credit facilities (2) | 189,194 | 3,559 | 185,635 | 0 | 0 | |||||||||||||||
Rents (3) | 394,942 | 7,054 | 14,187 | 14,306 | 359,395 | |||||||||||||||
Massport Bonds (1) | 42,875 | 75 | 150 | 42,650 | 0 | |||||||||||||||
Term loans (4) | 546,027 | 13,906 | 27,850 | 321,073 | 183,198 | |||||||||||||||
Purchase commitments (5) | ||||||||||||||||||||
Purchase orders and letters of commitment | 46,026 | 46,026 | 0 | 0 | 0 | |||||||||||||||
Total obligations and commitments | $ | 1,814,275 | $ | 104,949 | $ | 633,980 | $ | 532,753 | $ | 542,593 |
(1) | Amounts include principal and interest. |
(2) | Amounts include principal and interest. Interest expense is calculated based on the variable rate as of June 30, 2013. It is assumed that the outstanding debt as of June 30, 2013 will be repaid upon maturity with interest-only payments until then. |
(3) | Amounts calculated based on the annual minimum future lease payments that extend through the term of the lease. Rents may be subject to adjustments based on future interest rates and hotel performance. |
(4) | Amounts include principal and interest. The term loans bear interest at floating rates equal to LIBOR plus applicable margins. The Company entered into separate interest rate swap agreements for the full seven-year term of the First Term Loan and the full five-year term, including a one-year extension subject to certain conditions, of the Second Term Loan, resulting in fixed all-in interest rates of 3.62% and 2.43%, respectively, at the Company's current leverage ratio (as defined in the swap agreements). It is assumed that the outstanding debt as of June 30, 2013 will be repaid upon maturity with fixed interest-only payments until then. |
(5) | As of June 30, 2013, purchase orders and letters of commitment totaling approximately $46.0 million had been issued for renovations at the properties. The Company has committed to these projects and anticipates making similar arrangements in the future with the existing properties or any future properties that it may acquire. |
For the three months ended | For the six months ended | |||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||
2013 | 2012 | Variance | 2013 | 2012 | Variance | |||||||||||||||||
Occupancy | 83.5 | % | 83.9 | % | -0.4 | % | 77.5 | % | 77.9 | % | -0.5 | % | ||||||||||
ADR | $ | 221.88 | $ | 219.00 | 1.3 | % | $ | 205.49 | $ | 200.65 | 2.4 | % | ||||||||||
RevPAR | $ | 185.35 | $ | 183.69 | 0.9 | % | $ | 159.26 | $ | 156.36 | 1.9 | % |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Description of Exhibit | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 | |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002 | |
101 | The following financial statements from LaSalle Hotel Properties’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed on July 17, 2013, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements |
LASALLE HOTEL PROPERTIES | ||||
Date: | July 17, 2013 | BY: | /s/ BRUCE A. RIGGINS | |
Bruce A. Riggins | ||||
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit Number | Description of Exhibit | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 | |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002 | |
101 | The following financial statements from LaSalle Hotel Properties’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed on July 17, 2013, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements |
1. | I have reviewed this quarterly report on Form 10-Q of LaSalle Hotel Properties; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MICHAEL D. BARNELLO |
Michael D. Barnello |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of LaSalle Hotel Properties; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ BRUCE A. RIGGINS |
Bruce A. Riggins |
Executive Vice President and Chief Financial Officer |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LHO. |
/s/ MICHAEL D. BARNELLO |
Michael D. Barnello |
President and Chief Executive Officer |
/s/ BRUCE A. RIGGINS |
Bruce A. Riggins |
Executive Vice President and Chief Financial Officer |
Fair Value Measurements
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements In evaluating fair value, GAAP outlines a valuation framework and creates a fair value hierarchy that distinguishes between market assumptions based on market data (observable inputs) and a reporting entity’s own assumptions about market data (unobservable inputs). The hierarchy ranks the quality and reliability of inputs used to determine fair value, which are then classified and disclosed in one of the three categories. The three levels are as follows: Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Level 2—Observable inputs, other than quoted prices included in level 1, such as interest rates, yield curves, quoted prices in active markets for similar assets and liabilities, and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3—Unobservable inputs that are supported by limited market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques when observable inputs are not available. The Company estimates the fair value of its financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and subjectivity are involved in developing these estimates and, accordingly, such estimates are not necessarily indicative of amounts that would be realized upon disposition. Recurring Measurements For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of their fair value is as follows:
The fair value of each derivative instrument is based on a discounted cash flow analysis of the expected cash flows under each arrangement. This analysis reflects the contractual terms of the derivative instrument, including the period to maturity, and utilizes observable market-based inputs, including interest rate curves and implied volatilities, which is classified within level 2 of the fair value hierarchy. The Company also incorporates credit value adjustments to appropriately reflect each parties' nonperformance risk in the fair value measurement, which utilizes level 3 inputs such as estimates of current credit spreads. However, the Company has assessed that the credit valuation adjustments are not significant to the overall valuation of the derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified within level 2 of the fair value hierarchy. Financial Instruments Not Measured at Fair Value The following table represents the fair value, derived using level 2 inputs, of financial instruments presented at carrying value in the Company's consolidated financial statements as of June 30, 2013 and December 31, 2012:
The Company estimates the fair value of its borrowings under credit facilities, term loans, bonds payable and mortgage loans using a weighted average effective interest rate of 2.9% as of June 30, 2013 and December 31, 2012. The assumptions reflect the terms currently available on similar borrowings to borrowers with credit profiles similar to the Company's. The Company estimates that the fair value of its note receivable approximates its carrying value due to the relatively short period until maturity. At June 30, 2013 and December 31, 2012, the carrying amounts of certain of the Company's financial instruments, including cash and cash equivalents, restricted cash, accounts receivable and accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments and the recent acquisition of these items. |
Equity (Noncontrolling Interest Of Common Units In Operating Partnership) (Narrative) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
Jun. 30, 2013
|
---|---|
Stockholders' Equity Note [Abstract] | |
Common units of limited partnership | 296,300 |
Partnership interest held by limited partners | 0.30% |
Common units of operating partnership interest for cash or common shares | $ 7,319 |
Closing common share price, per share | $ 24.70 |
Summary Of Significant Accounting Policies
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | Summary of Significant Accounting Policies The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. As such, certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC. These unaudited consolidated financial statements, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the consolidated balance sheets, consolidated statements of operations and comprehensive income (loss), consolidated statements of equity and consolidated statements of cash flows for the periods presented. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 due to seasonal and other factors. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Basis of Presentation The consolidated financial statements include the accounts of the Company, the Operating Partnership, LHL and their subsidiaries in which they have a controlling interest, including joint ventures. All significant intercompany balances and transactions have been eliminated. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Substantially all of the Company’s revenues and expenses are generated by the operations of the individual hotels. The Company records revenues and expenses that are estimated by the hotel operators to produce quarterly financial statements because the management contracts do not require the hotel operators to submit actual results within a time frame that permits the Company to use actual results when preparing its Quarterly Reports on Form 10-Q for filing by the deadline prescribed by the SEC. Generally, the Company records actual revenue and expense amounts for the first two months of each quarter and revenue and expense estimates for the last month of each quarter. Each quarter, the Company reviews the estimated revenue and expense amounts provided by the hotel operators for reasonableness based upon historical results for prior periods and internal Company forecasts. The Company records any differences between recorded estimated amounts and actual amounts in the following quarter; historically, these differences have not been material. The Company believes the quarterly revenues and expenses, recorded on the Company’s consolidated statements of operations and comprehensive income (loss) based on an aggregate estimate, are fairly stated. Share-Based Compensation From time to time, the Company awards nonvested shares under the 2009 Equity Incentive Plan (“2009 Plan”), which has approximately six years remaining, as compensation to officers, employees and non-employee trustees (see Note 7). The shares issued to officers and employees vest over three to nine years. The Company generally recognizes compensation expense for nonvested shares on a straight-line basis over the vesting period based upon the fair market value of the shares on the date of issuance, adjusted for forfeitures. Noncontrolling Interests The Company's financial statements include entities in which the Company has a controlling financial interest. Noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from the Company's equity. On the consolidated statements of operations and comprehensive income (loss), revenues, expenses and net income or loss from less-than-wholly-owned subsidiaries are reported at the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. Income or loss is allocated to noncontrolling interests based on their weighted average ownership percentage for the applicable period. Consolidated statements of equity include beginning balances, activity for the period and ending balances for shareholders’ equity, noncontrolling interests and total equity. However, the Company’s securities that are redeemable for cash or other assets at the option of the holder, not solely within the control of the issuer, must be classified outside of permanent equity. The Company makes this determination based on terms in applicable agreements, specifically in relation to redemption provisions. Additionally, with respect to noncontrolling interests for which the Company has a choice to settle the contract by delivery of its own shares, the Company evaluates whether the Company controls the actions or events necessary to issue the maximum number of shares that could be required to be delivered under share settlement of the contract. As of June 30, 2013, the consolidated results of the Company include the following ownership interests held by owners other than the Company: (i) the common units in the Operating Partnership held by third parties, (ii) the outside preferred ownership interests in a subsidiary and (iii) the outside ownership interest in a joint venture. Notes Receivable Notes receivable are carried at cost, net of any premiums or discounts which are recognized as an adjustment of yield over the remaining life of the note using the effective interest method. Interest income is recorded on the accrual basis consistent with the terms of the notes receivable. A note is deemed to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest contractually due. Interest previously accrued but not collected becomes part of the Company's recorded investment in the note receivable for purposes of assessing impairment. The Company applies interest payments received on non-accrual notes receivable first to accrued interest and then as interest income. Notes receivable return to accrual status when contractually current and the collection of future payments is reasonably assured. |
Commitments And Contingencies (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Future Minimum Rent Payments | Future minimum rent payments (without reflecting future applicable Consumer Price Index increases) are as follows:
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Subsequent Events (Narrative) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
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|
Subsequent Event [Line Items] | |||
Preferred stock, shares outstanding | 9,498,888 | 9,098,888 | |
Redemption value | $ 100,000 | $ 166,750 | |
Accrued distributions | $ 23,417 | $ 23,314 | |
7 1/4% Series G Preferred Shares [Member]
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Subsequent Event [Line Items] | |||
Preferred stock, shares outstanding | 2,348,888 | ||
Redeemable preferred stock redemption price per share | $ 25.00 |
Equity Incentive Plan (Service Condition Nonvested Share Awards) (Narrative) (Details) (Service Condition Nonvested Share Awards [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
|
Jun. 30, 2013
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Jun. 30, 2012
|
Dec. 31, 2012
|
|
Equity Incentive Plan [Line Items] | |||||
Unrecognized compensation costs | $ 6,583 | $ 6,583 | $ 5,919 | ||
Weighted-average recognized period (in years) | 2 years 4 months 24 days | 2 years 8 months 12 days | |||
Total fair value of vested shares | 0 | 0 | 4 | 1,635 | |
Compensation costs | $ 710 | $ 703 | $ 1,420 | $ 1,392 | |
Minimum [Member]
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Equity Incentive Plan [Line Items] | |||||
Vest period (in years) | 3 years | ||||
Maximum [Member]
|
|||||
Equity Incentive Plan [Line Items] | |||||
Vest period (in years) | 9 years |
Earnings Per Common Share
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | Earnings Per Common Share The limited partners' outstanding common units in the Operating Partnership (which may be converted to common shares of beneficial interest) have been excluded from the diluted earnings per share calculation as there would be no effect on the amounts since the limited partners' share of income or loss would also be added back to net income or loss. Any anti-dilutive shares have been excluded from the diluted earnings per share calculation. Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Accordingly, distributed and undistributed earnings attributable to unvested restricted shares (participating securities) have been excluded, as applicable, from net income or loss attributable to common shareholders used in the basic and diluted earnings per share calculations. Net income or loss figures are presented net of noncontrolling interests in the earnings per share calculations. The computation of basic and diluted earnings per common share is as follows:
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Equity (Common Dividends Paid) (Details) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Mar. 31, 2013
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Stockholders' Equity Note [Abstract] | ||||
Dividend per Share/Unit | $ 0.20 | $ 0.20 | $ 0.40 | $ 0.31 |
For the Quarter Ended | Mar. 31, 2013 | Dec. 31, 2012 | ||
Record Date | Mar. 28, 2013 | Dec. 31, 2012 | ||
Payable Date | Apr. 15, 2013 | Jan. 15, 2013 |
Long-Term Debt (Components Of Long-Term Debt) (Details) (USD $)
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6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
Senior Unsecured Credit Facility [Member]
|
Dec. 31, 2012
Senior Unsecured Credit Facility [Member]
|
Jun. 30, 2013
LHL Unsecured Credit Facility [Member]
|
Dec. 31, 2012
LHL Unsecured Credit Facility [Member]
|
Jun. 30, 2013
Harborside Hyatt Conference Center & Hotel (Taxable) [Member]
|
Dec. 31, 2012
Harborside Hyatt Conference Center & Hotel (Taxable) [Member]
|
Jun. 30, 2013
Harborside Hyatt Conference Center & Hotel (Tax Exempt) [Member]
|
Dec. 31, 2012
Harborside Hyatt Conference Center & Hotel (Tax Exempt) [Member]
|
Jun. 30, 2013
Hotel Deca [Member]
|
Dec. 31, 2012
Hotel Deca [Member]
|
Jun. 30, 2013
Letters Of Credit [Member]
extensions
|
May 16, 2012
First Term Loan [Member]
Term Loan [Member]
|
Jun. 30, 2013
First Term Loan [Member]
Term Loan [Member]
|
Dec. 31, 2012
First Term Loan [Member]
Term Loan [Member]
|
Aug. 02, 2012
Second Term Loan [Member]
Term Loan [Member]
|
Jun. 30, 2013
Second Term Loan [Member]
Term Loan [Member]
|
Dec. 31, 2012
Second Term Loan [Member]
Term Loan [Member]
|
Jun. 03, 2013
Mortgages [Member]
Hotel Solamar [Member]
|
Jun. 30, 2013
Mortgages [Member]
Hotel Solamar [Member]
|
Dec. 31, 2012
Mortgages [Member]
Hotel Solamar [Member]
|
Jun. 30, 2013
Mortgages [Member]
Hotel Deca [Member]
|
Dec. 31, 2012
Mortgages [Member]
Hotel Deca [Member]
|
Jun. 30, 2013
Mortgages [Member]
Westin Copley Place [Member]
|
Dec. 31, 2012
Mortgages [Member]
Westin Copley Place [Member]
|
Jun. 30, 2013
Mortgages [Member]
Westin Michigan Avenue [Member]
|
Dec. 31, 2012
Mortgages [Member]
Westin Michigan Avenue [Member]
|
Jun. 30, 2013
Mortgages [Member]
Indianapolis Marriott Downtown [Member]
|
Dec. 31, 2012
Mortgages [Member]
Indianapolis Marriott Downtown [Member]
|
Jun. 30, 2013
Mortgages [Member]
Hotel Roger Williams [Member]
|
Dec. 31, 2012
Mortgages [Member]
Hotel Roger Williams [Member]
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Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit facilities | $ 180,000,000 | $ 153,000,000 | $ 180,000,000 | $ 153,000,000 | $ 0 | $ 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term loans | 477,500,000 | 477,500,000 | 177,500,000 | 177,500,000 | 177,500,000 | 300,000,000 | 300,000,000 | 300,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Massport Bonds | 42,500,000 | 42,500,000 | 5,400,000 | 5,400,000 | 37,100,000 | 37,100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Repayment date of debt instrument | Jun. 03, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loans at stated value | 516,700,000 | 579,102,000 | 59,789,000 | 0 | 60,134,000 | 8,961,000 | 9,111,000 | 210,000,000 | 210,000,000 | 136,246,000 | 137,172,000 | 99,510,000 | 100,142,000 | 61,983,000 | 62,543,000 | |||||||||||||||||||||||||||||||||||||||||
Unamortized loan premium | 82,000 | [1] | 118,000 | [1] | 82,000 | 118,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total mortgage loans | 516,782,000 | 579,220,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt | $ 1,216,782,000 | $ 1,252,220,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit facility interest rate | Floating | [2] | Floating | [3] | Floating | [4] | Floating | [4] | ||||||||||||||||||||||||||||||||||||||||||||||||
Credit facility maturity date | Jan. 30, 2016 | [2] | Jan. 30, 2016 | [3] | Feb. 01, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 3.62% | 3.87% | 2.43% | 2.68% | 5.49% | 6.28% | 5.28% | 5.75% | 5.99% | 6.31% | ||||||||||||||||||||||||||||||||||||||||||||||
Massport bond interest rate | Floating | [5] | Floating | [5] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt maturity date | Mar. 01, 2018 | Mar. 01, 2018 | May 16, 2019 | May 16, 2019 | Aug. 02, 2017 | Aug. 02, 2017 | Dec. 01, 2013 | [6] | Aug. 01, 2014 | [7] | Sep. 01, 2015 | Apr. 01, 2016 | Jul. 01, 2016 | Aug. 01, 2016 | ||||||||||||||||||||||||||||||||||||||||||
Interest rate on variable rate debt | 1.95% | 2.22% | 0.70% | 0.65% | 0.10% | 0.17% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Credit facility potential maturity date under option to extend | January 2017 | January 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan, Duration | 7 years | 5 years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan extension option period | 1 year | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of extension options | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Extension option period | 1 year | 1 year | 1 year | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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LHL (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Real Estate Investment Trust, Operating Support [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Other Indirect Hotel Operating Expenses | Other indirect hotel operating expenses consist of the following expenses incurred by the hotels:
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Schedule of Hotels Owned | As of June 30, 2013, LHL leased all 40 hotels owned by the Company as follows:
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Equity Incentive Plan (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Employee Stock Ownership Plan (ESOP), Shares in ESOP [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of The Company's Service Condition Nonvested Shares | A summary of the Company’s service condition nonvested shares as of June 30, 2013 is as follows:
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Assumptions Of Performance Measures For Valuation | The assumptions used were as follows for each performance measure:
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Summary Of The Company's Long-Term Performance-Based Share Awards | A summary of the Company’s long-term performance-based share awards as of June 30, 2013 is as follows:
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Commitments And Contingencies (Reserve Funds And Restricted Cash Reserves) (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
Minimum [Member]
|
Jun. 30, 2013
Maximum [Member]
|
Jun. 30, 2013
Capital Expenditure [Member]
|
Jun. 30, 2013
Operating Expenses And Debt Payments [Member]
|
Jun. 30, 2013
Refund Future Liabilities [Member]
|
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Commitments And Contingencies [Line Items] | |||||||
Percentage of reserve funds provided by the company | 4.00% | 5.00% | |||||
Restricted cash reserves | $ 15,766 | $ 17,414 | $ 9,912 | $ 4,378 | $ 1,476 |
Investment in Properties (Narrative) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
Jun. 30, 2012
Hotel Palomar Washington Dc [Member]
|
Jun. 30, 2012
Hotel Palomar Washington Dc [Member]
|
Mar. 31, 2012
Park Central Hotel [Member]
|
Jun. 30, 2012
Mezzanine Loan [Member]
|
Jun. 30, 2012
Mezzanine Loan [Member]
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Aug. 08, 2012
2011 Agreement [Member]
|
May 30, 2012
2011 Agreement [Member]
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Feb. 14, 2012
2011 Agreement [Member]
|
Dec. 19, 2012
Underwritten Public Offering [Member]
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Investment In Hotel Properties [Line Items] | ||||||||||||||
Land | $ 480,705 | $ 480,705 | $ 480,705 | |||||||||||
Buildings and improvements | 2,944,566 | 2,944,566 | 2,932,532 | |||||||||||
Furniture, fixtures and equipment | 511,197 | 511,197 | 472,052 | |||||||||||
Investment in hotel properties, gross | 3,936,468 | 3,936,468 | 3,885,289 | |||||||||||
Accumulated depreciation | (898,545) | (898,545) | (832,245) | |||||||||||
Depreciation | 33,322 | 31,135 | 66,333 | 61,147 | ||||||||||
Acquisition transaction costs | 0 | 307 | 0 | 3,901 | 0 | 3,594 | 207 | 207 | ||||||
Decrease in purchase price allocation | 746 | |||||||||||||
Common shares of beneficial interest issued | 96,258,828 | 96,258,828 | 95,480,358 | 3,100 | 641,069 | 1,714,939 | 9,200,000 | |||||||
Investment in hotel properties, net | $ 3,037,923 | $ 3,037,923 | $ 3,053,044 |
Long-Term Debt (Credit Facilities Narrative) (Details) (USD $)
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6 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2013
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Senior Unsecured Credit Facility [Member]
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Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity under unsecured credit facility | $ 750,000,000 | |||||
Credit facility maturity date | Jan. 30, 2016 | [1] | ||||
Extension option period | 1 year | |||||
Additional commitments | 1,000,000,000 | |||||
LHL Unsecured Credit Facility [Member]
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Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity under unsecured credit facility | $ 25,000,000 | |||||
Credit facility maturity date | Jan. 30, 2016 | [2] | ||||
Extension option period | 1 year | |||||
Minimum [Member] | Senior Unsecured Credit Facility [Member]
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Debt Instrument [Line Items] | ||||||
Variable unused commitment fee | 0.30% | |||||
Minimum [Member] | LHL Unsecured Credit Facility [Member]
|
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Debt Instrument [Line Items] | ||||||
Variable unused commitment fee | 0.30% | |||||
Maximum [Member] | Senior Unsecured Credit Facility [Member]
|
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Debt Instrument [Line Items] | ||||||
Variable unused commitment fee | 0.40% | |||||
Maximum [Member] | LHL Unsecured Credit Facility [Member]
|
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Debt Instrument [Line Items] | ||||||
Variable unused commitment fee | 0.40% | |||||
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Equity (Treasury Shares) (Narrative) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
0 Months Ended | 6 Months Ended |
---|---|---|
Aug. 29, 2011
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Jun. 30, 2013
|
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Equity [Line Items] | ||
Common shares surrendered and forfeited by executives and employees | 2,414 | |
Stock repurchase program, authorized | $ 100,000 | |
Stock repurchase program, remaining authorized | $ 75,498 | |
Issuance of shares of beneficial interest from treasury | 10,332 | |
Common shares held in treasury | 2,360 | |
Restricted Stock [Member]
|
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Equity [Line Items] | ||
Issuance of shares of beneficial interest from treasury | 24,636 |
Supplemental Information To Statements Of Cash Flows (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information To Statements Of Cash Flows |
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Fair Value Measurements Fair Value Measurements - Schedule of Fair Value and Carrying Value of Financial Instruments (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Weighted average effective interest rate | 2.90% | 2.90% |
Fair Value, Inputs, Level 2 [Member] | Carrying Value [Member]
|
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Note receivable | $ 69,698 | $ 68,490 |
Borrowings under credit facilities | 180,000 | 153,000 |
Term loans | 477,500 | 477,500 |
Bonds payable | 42,500 | 42,500 |
Mortgage loans | 516,782 | 579,220 |
Fair Value, Inputs, Level 2 [Member] | Estimated Fair Value [Member]
|
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Note receivable | 69,698 | 68,490 |
Borrowings under credit facilities | 179,535 | 153,719 |
Term loans | 470,438 | 475,752 |
Bonds payable | 42,500 | 42,500 |
Mortgage loans | $ 536,513 | $ 607,109 |
Fair Value Measurements Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative Asset, Fair Value, Gross Asset | $ 4,841 | $ 0 |
Accounts Payable and Accrued Expenses [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
|
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivatives included in accounts payable and accrued expenses | $ 0 | $ 7,759 |
Long-Term Debt Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance (Details) (Cash Flow Hedging [Member], Interest Rate Swap [Member], Designated as Hedging Instrument [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion) | $ 11,081 | $ (4,695) | $ 12,600 | $ (4,695) |
Interest Expense [Member]
|
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Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Loss Reclassified from AOCI (Effective Portion) | $ 1,049 | $ 302 | $ 2,081 | $ 302 |
Equity (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Dividends Paid | The Company paid the following dividends on common shares/units during the six months ended June 30, 2013:
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Preferred Shares Outstanding | The following Preferred Shares were outstanding as of June 30, 2013:
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Schedule of Preferred Dividends Paid | The Company paid the following dividends on preferred shares during the six months ended June 30, 2013:
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Schedule Of Effects Of Changes In The Company's Ownership Interest In The Operating Partnership On The Company's Equity | The following schedule presents the effects of changes in the Company's ownership interest in the Operating Partnership on the Company's equity:
|
Consolidated Statements Of Equity (Parenthetical) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Mar. 31, 2013
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Statement of Stockholders' Equity [Abstract] | ||||
Distributions on common shares (per share) | $ 0.20 | $ 0.20 | $ 0.40 | $ 0.31 |
Investment in Hotel Properties
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment In Hotel Properties | Investment in Hotel Properties Investment in hotel properties as of June 30, 2013 and December 31, 2012 consists of the following:
Depreciation expense was $33,322 and $66,333 for the three and six months ended June 30, 2013, respectively, and $31,135 and $61,147 for the three and six months ended June 30, 2012, respectively. In connection with the acquisition of Hotel Palomar, Washington, DC on March 8, 2012, the Company incurred acquisition transaction costs of zero and $3,594 that were expensed as incurred during the three and six months ended June 30, 2012, respectively, which expenses are included in the accompanying consolidated statements of operations and comprehensive income. During the first quarter of 2012, the Company finalized its determination of fair value of the real estate assets acquired of Park Central Hotel, upon receiving certain valuation-related information. The final determination resulted in a decrease of $746 to investment in hotel properties and noncontrolling interests of common units in Operating Partnership. In connection with the acquisition of Viceroy Santa Monica on March 16, 2011, the Company incurred acquisition transaction costs of $100 during the three and six months ended June 30, 2012 related to the finalization of acquisition accounting, which expenses are included in the accompanying consolidated statements of operations and comprehensive income. In connection with the acquisition of the mezzanine loan secured by pledges of ownership interests of the entities that own the underlying hotel properties, Shutters on the Beach and Casa Del Mar, in Santa Monica, CA, on July 13, 2012, the Company incurred acquisition transaction costs of $207 during the three and six months ended June 30, 2012, which expenses are included in the accompanying consolidated statements of operations and comprehensive income. Condensed Pro Forma Financial Information The results of operations of acquired properties are included in the consolidated statements of operations and comprehensive income beginning on their respective acquisition dates. The following unaudited condensed pro forma financial information is presented as if the following 2012 acquisitions had been consummated prior to January 1, 2011, the beginning of the reporting period prior to acquisition. In addition, for purposes of the unaudited condensed pro forma financial information only, the February 1, 2012 through February 14, 2012 issuance of 1,714,939 common shares of beneficial interest, the May 18, 2012 through May 30, 2012 issuance of 641,069 common shares of beneficial interest, the August 8, 2012 issuance of 3,100 common shares of beneficial interest and the December 19, 2012 issuance of 9,200,000 shares of beneficial interest are presented as if the issuances had occurred as of January 1, 2011. No adjustments have been made to the unaudited condensed pro forma financial information presented below for the 2012 preferred share redemptions or the 2013 preferred share issuance and redemption, since those transactions have no relation to the 2012 acquisitions. The unaudited condensed pro forma financial information is for comparative purposes only and not necessarily indicative of what actual results of operations of the Company would have been had the 2012 acquisitions been consummated prior to January 1, 2011, nor does it purport to represent the results of operations for future periods. The unaudited condensed pro forma financial information has not been adjusted for property sales. Adjustments have been made to the unaudited pro forma financial information for the following acquisitions:
The unaudited condensed pro forma financial information for the three and six months ended June 30, 2012 is as follows:
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Long-Term Debt
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Long-term Debt, Other Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Debt Summary Debt as of June 30, 2013 and December 31, 2012 consisted of the following:
A summary of the Company’s interest expense and weighted average interest rates for variable rate debt for the three and six months ended June 30, 2013 and 2012 is as follows:
Credit Facilities The Company has a $750,000 senior unsecured credit facility with a syndicate of banks. The credit facility matures on January 30, 2016, subject to a one-year extension that the Company may exercise at its option, pursuant to certain terms and conditions, including payment of an extension fee. The credit facility includes an accordion feature which, subject to certain conditions, entitles the Company to request additional lender commitments, allowing for total commitments up to $1,000,000. Borrowings under the credit facility bear interest at floating rates equal to, at the Company’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate plus an applicable margin. Additionally, the Company is required to pay a variable unused commitment fee of 0.30% or 0.40% of the unused portion of the credit facility, depending on the average daily unused portion of the credit facility. LHL has a $25,000 unsecured revolving credit facility to be used for working capital and general lessee corporate purposes. The LHL credit facility matures on January 30, 2016, subject to a one-year extension that LHL may exercise at its option, pursuant to certain terms and conditions, including payment of an extension fee. Borrowings under the LHL credit facility bear interest at floating rates equal to, at LHL’s option, either (i) LIBOR plus an applicable margin, or (ii) an Adjusted Base Rate plus an applicable margin. Additionally, LHL is required to pay a variable unused commitment fee of 0.30% or 0.40% of the unused portion of the credit facility, depending on the average daily unused portion of the LHL credit facility. The Company's senior unsecured credit facility and LHL's unsecured credit facility contain certain financial covenants relating to net worth requirements, debt ratios and fixed charge coverage and other limitations that restrict the Company's ability to make distributions or other payments to its shareholders upon events of default. Term Loans On May 16, 2012, the Company entered into a $177,500 unsecured loan with a seven-year term maturing on May 16, 2019 (the “First Term Loan”). The First Term Loan bears interest at a variable rate, but was hedged to a fixed interest rate based on the Company's current leverage ratio (as defined in the swap agreements), which interest rate was 3.62% at June 30, 2013, for the full seven-year term (see “Derivative and Hedging Activities” below). On August 2, 2012, the Company entered into a $300,000 unsecured loan with a five-year term maturing on August 2, 2017, including a one-year extension subject to certain conditions (the "Second Term Loan"). The Second Term Loan bears interest at a variable rate, but was hedged to a fixed interest rate based on the Company's current leverage ratio (as defined in the swap agreements), which interest rate was 2.43% at June 30, 2013, for the full five-year term (see "Derivative and Hedging Activities below"). The Company's term loans contain certain financial covenants relating to net worth requirements, debt ratios and fixed charge coverage and other limitations that restrict the Company's ability to make distributions or other payments to its shareholders upon events of default. Derivative and Hedging Activities The Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Unrealized gains and losses on the effective portion of hedging instruments are reported in other comprehensive income (loss) ("OCI"). Ineffective portions of changes in the fair value of a cash flow hedge are recognized as interest expense. Amounts reported in accumulated other comprehensive income (loss) ("AOCI") related to currently outstanding derivatives are recognized as an adjustment to income (loss) as interest payments are made on the Company's variable rate debt. Effective May 16, 2012, the Company entered into three interest rate swap agreements with an aggregate notional amount of $177,500 for the First Term Loan's full seven-year term, resulting in a fixed all-in interest rate based on the Company's current leverage ratio (as defined in the swap agreements), which interest rate was 3.62% at June 30, 2013. Effective August 2, 2012, the Company entered into five interest rate swap agreements with an aggregate notional amount of $300,000 for the Second Term Loan's full five-year term, including a one-year extension subject to certain conditions, resulting in a fixed all-in interest rate based on the Company's current leverage ratio (as defined in the swap agreements), which interest rate was 2.43% at June 30, 2013. The Company has designated its pay-fixed, receive-floating interest rate swap derivatives as cash flow hedges. The following tables present the effect of derivative instruments on the Company's consolidated statements of operations and comprehensive income, including the location and amount of unrealized gain (loss) on outstanding derivative instruments in cash flow hedging relationships, for the three and six months ended June 30, 2013 and 2012:
During the three and six months ended June 30, 2013 and 2012, the Company did not have any hedge ineffectiveness or amounts that were excluded from the assessment of hedge effectiveness recorded in earnings. As of June 30, 2013, there was $4,841 in cumulative unrealized gain, of which $4,826 was included in AOCI and $15 was attributable to noncontrolling interests. As of December 31, 2012, there was $7,759 in cumulative unrealized loss, of which $7,735 was included in AOCI and $24 was attributable to noncontrolling interests. The Company expects that approximately $4,223 will be reclassified from AOCI and noncontrolling interests and recognized as a reduction to income in the next 12 months, calculated as estimated interest expense using the interest rates on the derivative instruments as of June 30, 2013. Mortgage Loans The Company’s mortgage loans are secured by the respective properties. The mortgages are non-recourse to the Company except for fraud or misapplication of funds. On June 3, 2013, the Company repaid without fee or penalty the Hotel Solamar mortgage loan in the amount of $59,789 plus accrued interest through borrowings on its senior unsecured credit facility. The loan was due to mature in December 2013. The mortgage loans contain debt service coverage ratio tests related to the mortgaged properties. If the debt service coverage ratio for a specific property fails to exceed a threshold level specified in the mortgage, cash flows from that hotel may automatically be directed to the lender to (i) satisfy required payments, (ii) fund certain reserves required by the mortgage and (iii) fund additional cash reserves for future required payments, including final payment. Cash flows may be directed to the lender ("cash trap") until such time as the property again complies with the specified debt service coverage ratio or the mortgage is paid off. Financial Covenants Failure to comply with our financial covenants contained in our credit facilities, term loans and non-recourse secured mortgages could result from, among other things, changes in our results of operations, the incurrence of additional debt or changes in general economic conditions. If the Company violates the financial covenants contained in any of its credit facilities or term loans described above, the Company may attempt to negotiate waivers of the violations or amend the terms of the applicable credit facilities or term loans with the lenders thereunder; however, the Company can make no assurance that it would be successful in any such negotiations or that, if successful in obtaining waivers or amendments, such amendments or waivers would be on terms attractive to the Company. If a default under the credit facilities or term loans were to occur, the Company would possibly have to refinance the debt through additional debt financing, private or public offerings of debt securities, or additional equity financings. If the Company is unable to refinance its debt on acceptable terms, including at maturity of the credit facilities and term loans, it may be forced to dispose of hotel properties on disadvantageous terms, potentially resulting in losses that reduce cash flow from operating activities. If, at the time of any refinancing, prevailing interest rates or other factors result in higher interest rates upon refinancing, increases in interest expense would lower the Company’s cash flow, and, consequently, cash available for distribution to its shareholders. A cash trap associated with a mortgage loan may limit the overall liquidity for the Company as cash from the hotel securing such mortgage would not be available for the Company to use. If the Company is unable to meet mortgage payment obligations, including the payment obligation upon maturity of the mortgage borrowing, the mortgage securing the specific property could be foreclosed upon by, or the property could be otherwise transferred to, the mortgagee with a consequent loss of income and asset value to the Company. As of June 30, 2013, the Company is in compliance with all debt covenants, current on all loan payments and not otherwise in default under the credit facilities, term loans, bonds payable or mortgage loans. One of the mortgaged properties is currently subject to a cash trap as a result of the impact of a recent renovation on hotel operations. This cash trap does not have a material impact on the cash flow or the operations of the property or the Company. |
Organization
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6 Months Ended |
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Jun. 30, 2013
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Organization [Abstract] | |
Organization | Organization LaSalle Hotel Properties (the “Company”), a Maryland real estate investment trust organized on January 15, 1998, primarily buys, owns, redevelops and leases upscale and luxury full-service hotels located in convention, resort and major urban business markets. The Company is a self-administered and self-managed real estate investment trust ("REIT") as defined in the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, the Company is generally not subject to federal corporate income tax on that portion of its net income that is currently distributed to its shareholders. The income of LaSalle Hotel Lessee, Inc. (together with its wholly owned subsidiaries, “LHL”), the Company’s wholly owned taxable REIT subsidiary ("TRS"), is subject to taxation at normal corporate rates. As of June 30, 2013, the Company owned interests in 40 hotels with over 10,600 guest rooms located in nine states and the District of Columbia. Each hotel is leased to LHL (see Note 8) under a participating lease that provides for rental payments equal to the greater of (i) a base rent or (ii) a participating rent based on hotel revenues. The LHL leases expire between December 2013 and December 2015. Lease revenue from LHL is eliminated in consolidation. A third-party non-affiliated hotel operator manages each hotel pursuant to a hotel management agreement. Substantially all of the Company’s assets are held directly or indirectly by, and all of its operations are conducted through, LaSalle Hotel Operating Partnership, LP (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership. The Company owned, through a combination of direct and indirect interests, 99.7% of the common units of the Operating Partnership at June 30, 2013. The remaining 0.3% is held by limited partners who held 296,300 common units of the Operating Partnership at June 30, 2013. See Note 6 for additional disclosures on common operating partnership units. |
Long-Term Debt Long-term Debt (Term Loans Narrative) (Details) (USD $)
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0 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 6 Months Ended | |||||||||
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Jun. 30, 2013
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Dec. 31, 2012
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May 16, 2012
Term Loan [Member]
First Term Loan [Member]
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Jun. 30, 2013
Term Loan [Member]
First Term Loan [Member]
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Dec. 31, 2012
Term Loan [Member]
First Term Loan [Member]
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Aug. 02, 2012
Term Loan [Member]
Second Term Loan [Member]
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Jun. 30, 2013
Term Loan [Member]
Second Term Loan [Member]
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Dec. 31, 2012
Term Loan [Member]
Second Term Loan [Member]
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Jun. 30, 2013
Hotel Solamar [Member]
Mortgages [Member]
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Jun. 03, 2013
Hotel Solamar [Member]
Mortgages [Member]
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Dec. 31, 2012
Hotel Solamar [Member]
Mortgages [Member]
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Debt Instrument [Line Items] | ||||||||||||||
Mortgage loans at stated value | $ 516,700,000 | $ 579,102,000 | $ 0 | $ 59,789,000 | $ 60,134,000 | |||||||||
Unsecured Debt | $ 477,500,000 | $ 477,500,000 | $ 177,500,000 | $ 177,500,000 | $ 177,500,000 | $ 300,000,000 | $ 300,000,000 | $ 300,000,000 | ||||||
Term loan, Duration | 7 years | 5 years | ||||||||||||
Debt maturity date | May 16, 2019 | May 16, 2019 | Aug. 02, 2017 | Aug. 02, 2017 | Dec. 01, 2013 | [1] | ||||||||
Term loan extension option period | 1 year | |||||||||||||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 3.62% | 3.87% | 2.43% | 2.68% | 5.49% | |||||||||
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Income Taxes (Tables)
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Jun. 30, 2013
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Income Tax Expense (Benefit) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Income Tax Expense | Income tax expense (benefit) was comprised of the following for the three and six months ended June 30, 2013 and 2012:
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Subsequent Events (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Subsequent Events [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Of Common And Preferred Share Dividends | The Company paid the following common and preferred dividends subsequent to June 30, 2013:
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Investment in Properties (Schedule of Condensed Pro Forma Financial Information) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
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Jun. 30, 2012
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Jun. 30, 2013
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Dec. 31, 2012
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Aug. 08, 2012
2011 Agreement [Member]
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May 30, 2012
2011 Agreement [Member]
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Feb. 14, 2012
2011 Agreement [Member]
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Dec. 19, 2012
Underwritten Public Offering [Member]
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Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||||||
Common shares of beneficial interest issued | 96,258,828 | 95,480,358 | 3,100 | 641,069 | 1,714,939 | 9,200,000 | ||
Total revenues | $ 258,510 | $ 447,265 | ||||||
Net income | 37,158 | 28,016 | ||||||
Net income attributable to common shareholders | $ 26,612 | $ 10,090 | ||||||
Earnings per common share - basic (in dollars per share) | $ 0.28 | $ 0.10 | ||||||
Earnings per common share - diluted (in dollars per share) | $ 0.28 | $ 0.10 | ||||||
Weighted average number of common shares outstanding, Basic (in shares) | 95,043,286 | 95,040,678 | ||||||
Weighted average number of common shares outstanding, Diluted (in shares) | 95,209,159 | 95,202,595 |
Equity Incentive Plan (Equity Incentive) (Narrative) (Details) (Equity Incentive Plan 2009 [Member])
|
6 Months Ended |
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Jun. 30, 2013
|
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Equity Incentive Plan [Line Items] | |
Maximum common shares of beneficial interest to be issued | 1,800,000 |
Common shares of beneficial interest to be issued per individual limit | 500,000 |
Exercise price of share options as a percentage of fair market value, minimum | 100.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 0 |
Common shares available for grant | 1,068,681 |
Minimum [Member]
|
|
Equity Incentive Plan [Line Items] | |
Vesting period (in years) | 3 years |
Minimum [Member] | Restricted Stock [Member]
|
|
Equity Incentive Plan [Line Items] | |
Vesting period (in years) | 3 years |
Maximum [Member]
|
|
Equity Incentive Plan [Line Items] | |
Vesting period (in years) | 9 years |
Maximum [Member] | Restricted Stock [Member]
|
|
Equity Incentive Plan [Line Items] | |
Vesting period (in years) | 5 years |