INVESTOR PRESENTATION OCTOBER 2017
HIGHLIGHTS Diversified high-quality portfolio within urban and resort markets Multi operator approach with 22 different brands and operators, yielding best practices and acquisition opportunities Active asset management contributes to excellent margins All but three management contracts are terminable at will Low leverage company focused on maintaining a conservative balance sheet Founded in 1998 and led today by a dedicated executive team with an average tenure of 16.7 years INVESTOR PRESENTATION 2
BEST-IN-CLASS RETURN ON INVESTED CAPITAL 12.0% Higher average returns than its peers over the last 18 years 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LHO Peer Avg Source: Company Reports Return on Invested Capital = ROIC, AFFO/(Debt + Equity) Note: Peers include HST, AHT, BEE, SHO, DRH, FCH, and PEB. Income taxes added back to AFFO. INVESTOR PRESENTATION 3
CONSISTENTLY HIGH EBITDA MARGINS 35.0% 35.3% 30.0% 25.0% 29.1% 27.5% 24.4% 24.5% 30.5% 29.3% 27.8% 26.7% 26.2% 32.1% 31.6% 28.9% 27.4% 27.2% 24.0% 32.2% 30.7% 28.4% 28.3% 26.6% 25.5% 33.2% 31.7% 30.2% 31.9% 29.5% 26.8% 33.5% 32.4% 30.8% 33.1% 31.0% 27.0% 33.9% 32.9% 30.5% 31.8% 27.8% 20.0% 21.9% 21.3% 22.3% 15.0% 10.0% 2010 2011 2012 2013 2014 2015 2016 Source: Company Reports. 2015 data for LHO includes Park Central New York/Westhouse union disruption impact. LaSalle Ashford Sunstone Pebblebrook DiamondRock Host INVESTOR PRESENTATION 4
PORTFOLIO EBITDA DIVERSIFIED ACROSS 11 URBAN & SELECT RESORT MARKETS SEATTLE 1 Other, 4% PORTLAND SAN FRANCISCO SANTA CRUZ LOS ANGELES SAN DIEGO CHICAGO PHILADELPHIA NYC DC BOSTON Chicago, 7% NYC, 9% Los Angeles, 9% Key West, 7% San Diego, 15% Boston, 19% San Francisco, 15% Washington, DC, 15% KEY WEST % of Property EBITDA Trailing Twelve Months 2 Boston 1,483 Rooms Hyatt Regency Boston Harbor Liberty Hotel Onyx Hotel Westin Copley Place New York 1,257 Rooms Gild Hall Park Central New York The Roger WestHouse Target Urban Markets Washington, D.C. 1,743 Rooms Hotel George Hotel Madera Hotel Palomar Hotel Rouge Liaison Capitol Hill Mason & Rook Hotel Sofitel Washington, D.C. The Donovan Topaz Hotel Chicago 1,106 Rooms Hotel Chicago Westin Michigan Avenue Los Angeles 804 Rooms Chamberlain Hotel Grafton on Sunset Hotel Amarano Le Montrose Suite Hotel Le Parc Suite Hotel Viceroy Santa Monica San Diego 1,461 Rooms Hilton San Diego Gaslamp Quarter Hilton San Diego Resort Hotel Solamar L Auberge Del Mar San Diego Paradise Point Resort & Spa San Francisco 1,645 Rooms Harbor Court Hotel Hotel Vitale Park Central San Francisco Serrano Hotel The Marker San Francisco Villa Florence Additional Urban Markets Philadelphia 288 Rooms Embassy Suites Center City Portland 150 Rooms Heathman Hotel Resort Markets Key West 358 Rooms Southernmost Beach Resort The Marker Resort Santa Cruz 156 Rooms Chaminade Resort & Spa 1. LHO does not own any hotels in Seattle, although it remains a target market. 2. All data as of 9/30/17. Pro forma to exclude Hurricane Irma impact in Q3 2017 at Key West hotels. Other includes Portland, OR, Santa Cruz, CA, and Philadelphia, PA. INVESTOR PRESENTATION 5
INDEPENDENT HOTELS PROVIDES OPERATIONAL FLEXIBILITY Independent 65% Westin 13% Hilton 6% Luxury Collection 5% Hyatt 3% Autograph 3% Sofitel 3% Embassy Suites 2% 0% 50% 100% % of Portfolio EBITDA Trailing Twelve Months 1 While most of our hotels are independent, LHO is comfortable with both brand and independent strategies 1. All data as of 9/30/17. Pro forma to exclude Hurricane Irma impact in Q3 2017 at Key West hotels. INVESTOR PRESENTATION 6
DIVERSIFIED AND UNAFFILIATED OPERATORS PROVIDE COMPETITIVE ADVANTAGE Best practices extracted and shared among all operators Access to acquisition opportunities Hyatt, 3% Noble House, 3% Accor, 3% Davidson, 3% Access, 2% Viceroy, 2% Benchmark, 1% Provenance, 1% Highgate, 19% JRK, 4% OLS, 8% Two Roads, 14% HEI, 10% Marriott, 13% Kimpton, 14% % of Property EBITDA Trailing Twelve Months 1 1. All data as of 9/30/17. Pro forma to exclude Hurricane Irma impact in Q3 2017 at Key West hotels. INVESTOR PRESENTATION 7
MANAGEMENT AGREEMENT STRUCTURED TO DRIVE PERFORMANCE Terminable management agreements Alignment of operators with owner Ability to make changes when necessary Higher value upon sale (more potential buyers) Incentive to perform fosters higher EBITDA margin Longer Term (3 hotels) 16% 2 Terminable-at-Will (38 hotels) 84% % of Property EBITDA Trailing Twelve Months 1 1. All data as of 9/30/17. Pro forma to exclude Hurricane Irma impact in Q3 2017 at Key West hotels. 2. Hotels with longer term management agreements are the Westin Copley Place, Westin Michigan Avenue, and Sofitel Washington, DC. INVESTOR PRESENTATION 8
EXTERNAL INVESTMENT STRATEGY Urban and resort markets Top urban tracts within institutional-quality major markets, having superior long-term performance Multiple sustainable demand drivers Research driven INVESTOR PRESENTATION 9
CBD FOCUS RESULTS IN HIGHER RATE AND REVPAR LHO s hotels are located within the urban tracts of major US markets, which feature stronger performance than the MSA Average Rate Comparison RevPAR Comparison $350 LHO Portfolio Average: $247 STR Urban Average: $177 STR U.S. Average: $124 $300 LHO Portfolio Average: $208 STR Urban Average: $130 STR U.S. Average: $81 $300 $250 $250 $200 $200 $150 STR U.S. Average $100 $150 $100 STR U.S. Average $50 $50 $0 DC Boston San Diego Chicago LA NYC Seattle San Fran $- DC Boston San Diego Chicago LA NYC Seattle San Fran MSA Urban Tract MSA Urban Tract LHO Source: Smith Travel Research Notes: LA Urban Tract reflects Hollywood/Beverly Hills/City of Santa Monica. Data reflects trailing twelve months ended December 31, 2016. LHO Portfolio Average pro forma to reflect the current portfolio. INVESTOR PRESENTATION 10
ASSET MANAGEMENT TACTICS LEAD TO EXCELLENT EBITDA MARGIN Focus on establishing strong, productive relationships with operators Multi-operator approach with 22 different brands and operators, yielding best practices Significant senior level involvement; average of 7 properties per asset manager Consistent capital expenditure at the property level Asset management tactics have led to excellent hotel EBITDA margin and ROIC INVESTOR PRESENTATION 11
HISTORY OF PROGRAMMATIC CAPITAL INVESTMENT, RENOVATION & REFURBISHMENT $160 $140 $16 $14 $13.4 $120 $12 $11.0 $100 $80 $60 $40 $20 $0 $38 $90 $24 $63 $14 $16 $38 $15 $17 $11 $91 $64 $102 $49 $90 $26 $42 $28 $38 $40 $53 $50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $10 $8 $6 $4 $2 $0 $9.2 $8.0 $8.2 $7.8 $6.7 $7.1 $5.5 $3.4 $3.6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Maintenance Capital Renovation/Repositioning Capital Investments Per Room 1 1. Capital investment per room excludes the following major renovations: Donovan, Hotel Chicago, and HSDR in 2007 2008, Park Central New York in 2013 2014, and Mason & Rook in 2015 2016. Notes: 2017 at midpoint of guidance. Annual capital investment dollars in millions. Capital investments per room dollars in thousands. INVESTOR PRESENTATION 12
RECENT AND UPCOMING RENOVATIONS Current and Upcoming Renovations Start Date Paradise Point Resort & Spa Guestrooms Ongoing Chamberlain Guestrooms October 2017 Le Montrose Guestrooms October 2017 Serrano Hotel Guestrooms, Corridors, Lobby October 2017 Westin Copley Place Guestrooms, Corridors November 2017 Harbor Court Guestrooms, Corridors, Lobby November 2017 Heathman Guestrooms, Corridors November 2017 Recent Renovations Completed L Auberge Del Mar Guestrooms, Corridors, Meeting Space February 2017 Embassy Suites Center City Guestrooms, Corridors, Lobby February 2017 Chaminade Guestrooms April 2016 Mason & Rook Guestrooms, Public Space, Exterior April 2016 Gild Hall Guestrooms, Corridors, Add 4 Keys April 2016 Westin Michigan Avenue Guestrooms Phase II March 2016 Liberty Guestrooms March 2016 Hotel Palomar DC Guestrooms March 2016 Solamar Guestrooms, Lobby February 2016 Amarano Guestrooms January 2016 INVESTOR PRESENTATION 13
RECENT AND CURRENT RENOVATIONS Paradise Point Resort & Spa L Auberge Del Mar Westin Copley Place Embassy Suites Center City INVESTOR PRESENTATION 14
MASON & ROOK CASE STUDY Formerly the Hotel Helix, Mason and Rook underwent a $24MM, $135K/key, renovation of all guestrooms, public spaces, and meeting spaces The upper-upscale room product, modern restaurant concept, and new rooftop pool and lounge capitalize on the hotel s location in Washington, D.C. s vibrant 14 th Street Corridor, which has experienced exponential growth and high-end development over the last few years Compared performance prior to renovation, the Mason and Rook has grown RevPAR 35% and EBITDA by 88% INVESTOR PRESENTATION 15
MASON & ROOK PERFORMANCE 2014 Q3 2017 TTM Growth Occupancy 85% 83% -2% ADR $166 $231 39% RevPAR $141 $191 35% EBITDA $3.2 MM $6.0 MM 88% EBITDA Margin 30.6% 36.4% 580 bps The hotel was closed for renovation between Q4 2015 - Q1 2016. TTM Q3 2017 Cap Rate Hypothetical Per Valuation Room 6.5% $82 MM $459K 6.0% $88 MM $497K 5.5% $96 MM $542K INVESTOR PRESENTATION 16
SELECT ACQUISITIONS ENHANCE PERFORMANCE & GROW TARGET MARKET SHARE Acquisition 2016 Purchase Number Price Per NOI NOI Acquisition Market Price of Rooms Room Date Acquired Cap Rate Yield 1 The Marker Waterfront Resort Key West, FL $96 MM 96 $1.0 M March 2015 N/A 5.5% Park Central San Francisco San Francisco, CA $350 MM 681 $514 K January 2015 5.2% 5.8% Heathman Hotel Portland, OR $64 MM 150 $429 K December 2014 4.0% 6.2% Hotel Vitale San Francisco, CA $130 MM 200 $650 K April 2014 4.5% 6.8% Southernmost Key West, FL $185 MM 260 $710 K August 2013 6.5% 10.5% Serrano Hotel San Francisco, CA $72 MM 236 $303 K August 2013 5.2% 8.0% Hotel Triton/Harbor Court San Francisco, CA $48 MM 271 $176 K August 2013 8.5% 18.2% The Liberty Hotel Boston, MA $170 MM 298 $570 K December 2012 6.8% 9.8% L'Auberge Del Mar 2 Del Mar, CA $77 MM 120 $640 K December 2012 6.0% 10.5% Hotel Palomar Washington DC Washington, DC $144 MM 335 $429 K March 2012 6.6% 6.7% Park Central New York, NY $396 MM 934 $424 K December 2011 6.0% 5.2% Villa Florence San Francisco, CA $67 MM 182 $369 K October 2011 6.3% 12.6% Viceroy Santa Monica Santa Monica, CA $80 MM 162 $494 K March 2011 4.0% 8.4% Chamberlain West Hollywood West Hollywood, CA $39 MM 113 $341 K December 2010 2.6% 12.3% The Roger New York, NY $94 MM 193 $486 K October 2010 6.4% 5.0% Marker San Francisco San Francisco, CA $69 MM 201 $341 K September 2010 3.6% 7.6% Westin Philadelphia Philadelphia, PA $145 MM 294 $493 K September 2010 5.7% 7.4% Embassy Suites Center City 2 Philadelphia, PA $79 MM 288 $274 K September 2010 6.0% 9.3% Sofitel Washington DC Washington, DC $95 MM 237 $401 K March 2010 6.0% 9.2% Total $2,398 MM 5,251 $457 K Average: 5.6% 8.7% Mezzanine Loan On Shutters on the Beach/Casa Del Mar Mezzanine Loan On Shutters on the Beach/Casa Del Mar Santa Monica, CA $80 MM 198/129 $1.2 M 3 July 2015 6.7% Santa Monica, CA $67 MM 198/129 $1.2 M 3 July 2012 6.1% 1. Average Total Portfolio Recent NOI yield after an average holding period of 4.6 years. 2. Recent NOI through TTM Q3 2016 due to renovation in Q4 2016. 3. Shutters on the Beach and Casa Del Mar Price Per Room and NOI Cap Rate are based on last dollar in. INVESTOR PRESENTATION 17
OPPORTUNISTIC ASSET DISPOSITIONS ALLOW FOR STRATEGIC CAPITAL DECISIONS Number Date of Original Date of Hold Sale Cap EBITDA Disposition Market of Rooms Purchase Purchase Price Sale Period 1 Price Rate 2 Multiple 1 IRR 2,3 Westin Philadelphia 4 Philadelphia, PA 294 September 2010 $145 MM June 2017 6.8 Yrs $135 MM 7.8% 11.7x 5.7% Hotel Triton San Francsico, CA 140 August 2013 $11 MM April 2017 3.7 Yrs $14 MM 7.8% 9.8x 17.4% Alexis Hotel Seattle, WA 121 June 2006 $38 MM March 2017 10.8 Yrs $72 MM 5.6% 15.9x 7.8% Lansdowne Resort Leesburg, VA 296 June 2003 $116 MM March 2017 13.8 Yrs $133 MM 6.8% 12.4x 4.0% Hotel Deca Seattle, WA 158 December 2005 $26 MM January 2017 11.1 Yrs $55 MM 6.7% 13.9x 12.3% Indianapolis Marriott Indianapolis, IN 622 February 2004 $106 MM July 2016 12.4 Yrs $165 MM 7.9% 11.3x 13.7% Mezzanine Loan on Shutters on the Beach/Casa Del Mar Santa Monica, CA N/A July 2015 $80 MM July 2016 1.0 Yrs $80 MM N/A N/A 8.1% Hotel Viking Newport, RI 208 June 1999 $27 MM September 2014 15.3 Yrs $77 MM 6.0% 14.7x 10.7% Hilton Old Town Alexandria, VA 246 May 2004 $59 MM June 2014 10.1 Yrs $93 MM 6.0% 14.9x 13.5% Total 9.4 Yrs $824 MM 6.9% 13.1x 9.4% Simple Average 10.4% 1. Total hold period and EBITDA multiple are calculated as a simple average. 2. Total cap rate and 9.4% IRR are calculated as a weighted average based on sales proceeds. 3. IRR calculated as a simple average is 10.4%. 4. The Westin Philadelphia was originally purchased as part of a portfolio transaction including the Embassy Suites Philadelphia for $224MM. INVESTOR PRESENTATION 18
BEST-IN-CLASS BALANCE SHEET AND CONSERVATIVE DEBT STRUCTURE MAXIMIZE FINANCIAL FLEXIBILITY Stagger debt maturities to lower risk Low Absolute Leverage Utilize combination of fixed and floating rate debt Large Unencumbered Asset Base % of Property EBITDA Trailing Twelve Months Forecast 1 Cost of Capital 1 Variable Rate Debt $268 6% 2.87% Fixed Rate Debt $855 19% 3.05% Total Debt $1,123 25% 3.00% 12% 2 Encumbered Hotels Preferred Equity $260 6% 6.33% Common Equity 2 $3,154 70% Total Capitalization $4,537 100% 88% 39 Unencumbered Hotels Net Debt to EBITDA 3 2.0x 1. All data except common equity as of 9/30/17. Numbers may not foot due to differences caused by rounding. 2. Based on market value of 113.5MM shares and units at $27.79 on October 23, 2017. 3. As defined in our senior unsecured credit facility, which does not account for all cash on hand, debt to EBITDA as of 9/30/17 is 3.2x. Including all cash on hand, true net debt to EBITDA as of 9/30/17 is 2.0x. INVESTOR PRESENTATION 19
CONSISTENT LOW LEVERAGE OVER THE PAST DECADE Historical Debt/EBITDA 1 Current Debt/EBITDA 2 4.7x 3.6x 4.0x 3.8x 4.2x 4.7x 3.9x 4.4x 3.7x 4.2x 3.9x 3.5x 3.6x LHO SHO 1 2.0x 2.2x 3.0x 2.5x HST 2.4x DRH 3.0x PEB 3.6x AHT 7.9x 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1. As defined in our senior unsecured credit facility, which does not account for all cash on hand, debt to EBITDA as of 9/30/17 is 3.2x. Including all cash on hand, true net debt to EBITDA as of 9/30/17 is 2.0x. 2. Peer leverage as reported in Q2 2017. Note: 2014 leverage ratio pro forma for Park Central San Francisco acquisition. INVESTOR PRESENTATION 20
NO NEAR TERM MATURITIES $900 $800 $700 $600 $500 $555 $400 $300 $200 $100 $225 $300 $0 $ in millions $43 2017 2018 2019 2020 2021 2022 Westin Copley (LIBOR + 1.75%) 5 YR $555MM Term Loan (2.95%) 5 YR $300MM Term Loan (3.23%) Credit Facilities (LIBOR + 1.50%) Hyatt Bonds (Floats Weekly) Notes: Total capacity of Senior Unsecured Credit Facility and LHL Credit Facility is $775.0MM. Numbers may not foot due to differences caused by rounding. INVESTOR PRESENTATION 21
INVESTMENT HIGHLIGHTS Provide best returns while seeking to minimize risk Long track record of outperformance Consistent strategy: Targeted urban, resort & convention markets Aggressive asset management Steady capital investment Low-leverage capital structure Portfolio growth through accretive acquisitions Balance sheet is in excellent condition INVESTOR PRESENTATION 22
This presentation has been prepared for informational purposes only from information supplied by LaSalle Hotel Properties ( LHO or the Company ) and from third-party sources indicated herein. Such third-party information has not been independently verified. The Company makes no representation or warranty, expressed or implied, as to the accuracy or completeness of such information. This presentation also includes certain statements, estimates and projections provided by LHO management with respect to the anticipated future performance of LHO, including forward-looking statements within the meaning of 21E of the Securities Exchange Act of 1934. Such statements, estimates and projections reflect various assumptions by LHO management concerning anticipated results and have been included solely for illustrative purposes. No representations are made as to the accuracy of such statements, estimates or projections, which necessarily involve known and unknown risks, uncertainties and other factors that, in some ways, are beyond management s control. Such factors include the risk factors discussed in the Company s SEC filings. Accordingly, actual results may vary materially from the projected results contained herein and you should not rely on any forward-looking statements made herein or made in connection with this presentation. The Company shall have no obligation or undertaking to update or revise any forward-looking statements to reflect any change in Company expectations or results, or any change in events. This presentation includes disclosure of non-gaap measures, including funds from operations ("FFO") and earnings before interest, taxes, depreciation and amortization ( EBITDA ). The Company considers FFO and EBITDA to be key supplemental measures of the Company s performance, and they should be considered along with, but not as alternatives to, net income as a measure of the Company s operating performance. Neither FFO nor EBITDA represents cash generated from operating activities determined by GAAP and should not be considered as alternatives to net income, cash flow from operations or any other operating performance measure prescribed by GAAP. Neither FFO nor EBITDA is a measure of the Company s liquidity, nor is FFO or EBITDA indicative of funds available to fund the Company s cash needs, including its ability to make cash distributions. Please refer to the Company's filings with the SEC and its earnings releases, which are available at www.lasallehotels.com, for disclosure of the Company's net income, for reconciliations of FFO and EBITDA to net income and for additional detail on the Company's use of non-gaap measures.