UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 24, 1998
LASALLE HOTEL PROPERTIES
(Exact name of registrant as specified in its charter)
Maryland 1-14045 36-4219376
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation or
organization)
1401 Eye Street, NW, Suite 900, Washington, D.C. 20005
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 202/222-2600
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
This Form 8-K is being filed to report financial information regarding the
acquisition of the Harborside Hyatt Conference Center & Hotel in Boston,
Massachusetts which was reported in the Form 8-K filed July 9, 1998, which
this form amends.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 24, 1998, LaSalle Hotel Properties (the "Company") acquired
an interest in the Harborside Hyatt Conference Center & Hotel in Boston
(the "Property") through an indirect subsidiary, LHO Harborside Hotel,
L.L.C. (the "Purchaser"). The Purchaser is a limited liability company
organized under the laws of the state of Delaware, of which LaSalle Hotel
Operating Partnership, L.P. (the "Operating Partnership") is the sole
member.
The Property was acquired from Bird Island Limited Partnership for an
aggregate purchase price of $73.5 million (the "Purchase Price"), including
obligations under $40 million of existing tax exempt industrial revenue
bonds subject to which the property was acquired, pursuant to a Purchase
and Sale Agreement. The tax exempt industrial revenue bonds have an
interest rate of 10 percent, mature in 2026 and may be prepaid as early as
2001. The Property is subject to a long term ground lease from Massport,
Logan International Airport's owner and operating authority. As part of the
purchase, the Purchaser acquired, for no additional consideration, an
existing approximately $1.5 million capital expenditure reserve that can be
used for future capital needs as required and a $4 million deposit securing
quarterly bond payments held by State Street Bank, as trustee.
Hyatt Hotels Corporation will continue to operate the Property as the
Harborside Hyatt Conference Center & Hotel under an existing management
agreement. In order to accommodate the management agreement, the hotel
will be leased, under a participating lease, by LaSalle Hotel Lessee, Inc.,
the common stock of which is owned by the Company (9%), LPI Charities
(45.5%) and a wholly owned subsidiary of LaSalle Partners Incorporated
(45.5%).
On April 30, 1998, the Board of Trustees of the Company, including
all of the Independent Trustees (i.e., the Trustees of the Company who are
neither officers of the Company nor affiliated with the Company),
authorized the Company to purchase an interest in the Property.
The Property, a full-service luxury conference center and airport
hotel, opened in 1993. Located adjacent to Boston's Logan International
Airport along the waterfront, the Property features 19,000 square feet of
meeting space, the Harborside Grill restaurant, the Midships Lounge, a
tented pavilion, an indoor swimming pool, a health club, and dramatic views
of Boston from guest rooms and public spaces. The Property is directly
across the harbor from Boston's central business district and next to the
Ted Williams tunnel, providing convenient access to downtown Boston, the
World Trade Center, the future convention center, and the Massport Water
Shuttle, a ferry service to Rowe's Wharf.
The cash portion of the Purchase Price was funded with proceeds from
a borrowing under the Operating Partnership's $200 million senior unsecured
revolving credit facility from Societe Generale, Southwest Agency, The Bank
of Montreal, Chicago Branch, and the other banks party thereto.
The Company based its determination of the Purchase Price on the
expected cash flow, physical condition, location, competitive advantages
and potential for improved revenues. The Company did not obtain an
independent appraisal of the Property. The Property was operated prior to
the acquisition as an airport hotel and conference center, and the Company
expects to continue to operate it as an airport hotel and conference
center.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) and (b) Financial Statements of Property Acquired and Pro Forma
Financial Information
The financial statements, listed in the table of contents thereto, of
Harborside Hyatt Conference Center & Hotel, Accounts Maintained by Hyatt
Corporation, are included herein. The pro forma financial information
required by Item 7(b) has been filed in conjunction with the Company's
quarterly report on Form 10-Q for the quarterly period ended June 30, 1998,
and therefore, is not provided in this Form 8-K/A.
(c) Exhibits
A list of exhibits is set forth in the Exhibit Index which
immediately precedes the exhibits and which is incorporated by reference
herein.
<PAGE>
HARBORSIDE HYATT CONFERENCE CENTER & HOTEL
ACCOUNTS MAINTAINED BY HYATT CORPORATION
Table of Contents
Independent Auditors' Report. . . . . . . . . . . . . . . . 5
Statements of Assets and Liabilities. . . . . . . . . . . . 6
Statement of Operations . . . . . . . . . . . . . . . . . . 7
Statement of Cash Flows . . . . . . . . . . . . . . . . . . 8
Notes to Financial Statements . . . . . . . . . . . . . . . 9-11
<PAGE>
Report of Independent Accountants
To the Partners of
Bird Island Limited Partnership:
We have audited the statements of assets and liabilities of the accounts
maintained by Hyatt Corporation for Harborside Hyatt Conference Center &
Hotel (a hotel owned by Bird Island Ltd. Partnership) as of December 31,
1997 and the related statements of revenues and expenses and cash flows as
represented by such accounts for the year then ended. These financial
statements are the responsibility of the Hotel's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying financial statements were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission and for inclusion on Form 8-K of LaSalle Hotel Properties. The
presentation is not intended to be a complete presentation of the financial
position, results of operations and cash flows of Bird Island Limited
Partnership.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the assets and liabilities of the accounts
maintained by Hyatt Corporation for Harborside Hyatt Conference Center &
Hotel as of December 31, 1997 and its revenues and expenses and its cash
flows as represented by such accounts for the year ended December 31, 1997,
in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
September 4, 1998
<PAGE>
HARBORSIDE HYATT CONFERENCE CENTER & HOTEL
ACCOUNTS MAINTAINED BY HYATT CORPORATION
Statements of Assets and Liabilities
June 24, 1998 (Unaudited) and December 31, 1997
ASSETS
1998
(Unaudited) 1997
----------- -----------
Current assets:
Cash. . . . . . . . . . . . . . . . . $ 739,914 492,709
Accounts receivable, less allowance
for doubtful accounts of $28,002
in 1998 $32,140 in 1997 . . . . . . 2,240,108 1,719,558
Inventories . . . . . . . . . . . . . 27,333 22,040
Other current assets. . . . . . . . . 63,588 95,498
Due from fund for replacement
of furniture, fixtures and
equipment . . . . . . . . . . . . . -- --
----------- -----------
Total assets (all current). . $ 3,070,943 2,329,805
=========== ===========
LIABILITIES AND CONTROL
Current liabilities:
Accounts payable. . . . . . . . . . . $ 127,346 336,149
Accrued expenses. . . . . . . . . . . 762,322 597,289
Advance deposits. . . . . . . . . . . 112,719 107,694
Accrued taxes . . . . . . . . . . . . 173,914 24,116
Due to fund for replacement of
furniture, fixtures and equipment . 68,714 16,453
Due to Hyatt Corporation. . . . . . . 156,071 475,816
----------- -----------
Total liabilities
(all current) . . . . . . . 1,401,086 1,557,517
----------- -----------
Control . . . . . . . . . . . . . . . . 1,669,857 772,288
----------- -----------
Total liabilities
and control . . . . . . . . $ 3,070,943 2,329,805
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
HARBORSIDE HYATT CONFERENCE CENTER & HOTEL
ACCOUNTS MAINTAINED BY HYATT CORPORATION
Statements of Operations
For the period January 1, 1998 through June 24, 1998 (Unaudited) and
For the Year Ended December 31, 1997
For the period
January 1, 1998
through
June 24, 1998
(Unaudited) 1997
--------------- -----------
Revenues:
Rooms . . . . . . . . . . . . . . . . $ 6,465,591 13,340,373
Food and beverage . . . . . . . . . . 3,323,911 6,035,328
Telephone . . . . . . . . . . . . . . 276,090 620,314
Other . . . . . . . . . . . . . . . . 250,088 505,140
----------- -----------
Total revenues. . . . . . . . 10,316,435 20,501,155
----------- -----------
Operating expenses:
Rooms . . . . . . . . . . . . . . . . 1,284,328 2,241,392
Food and beverage . . . . . . . . . . 2,446,400 4,161,686
Telephone . . . . . . . . . . . . . . 137,719 284,840
Other . . . . . . . . . . . . . . . . 18,806 44,888
Administrative and general. . . . . . 542,422 1,094,393
Marketing . . . . . . . . . . . . . . 576,115 1,843,595
Energy costs. . . . . . . . . . . . . 291,661 703,590
Property operations and maintenance . 355,411 801,151
Management fee. . . . . . . . . . . . 544,761 1,118,107
Ground rent (note D). . . . . . . . . 389,663 659,114
Other . . . . . . . . . . . . . . . . 143,764 463,490
----------- -----------
Total operating expenses. . . 6,730,416 13,416,246
----------- -----------
Income from operations. . . . $ 3,585,425 7,084,909
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
HARBORSIDE HYATT CONFERENCE CENTER & HOTEL
ACCOUNTS MAINTAINED BY HYATT CORPORATION
Statement of Cash Flows
Year Ended December 31, 1997
Cash flows from operating activities:
Income from operations. . . . . . . . . . . . . . . . $ 6,469,872
Adjustments to reconcile income from operations
to net cash provided by operating activities:
Increase (decrease) in cash attributable
to changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . (788,908)
Inventories . . . . . . . . . . . . . . . . . . . (5,139)
Other current assets. . . . . . . . . . . . . . . 3,031
Accounts payable. . . . . . . . . . . . . . . . . (88,300)
Accrued expenses. . . . . . . . . . . . . . . . . 65,347
Advanced deposits . . . . . . . . . . . . . . . . (34,157)
Accrued taxes . . . . . . . . . . . . . . . . . . (54,241)
Due from (to) the fund for replacement
of furniture, fixtures and equipment,
net . . . . . . . . . . . . . . . . . . . . . . 51,440
Due to Hyatt Corporation. . . . . . . . . . . . . 230,273
-----------
Net cash provided by operating
activities. . . . . . . . . . . . . . . . . 5,849,218
Cash flows from financing activities:
Cash distributions to owner . . . . . . . . . . . . . (6,375,000)
-----------
Net (decrease) increase in cash . . . . . . . . . . . . (525,782)
Cash, beginning of year . . . . . . . . . . . . . . . . 1,018,491
-----------
Cash, end of year . . . . . . . . . . . . . . . . . . . $ 492,709
===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
HARBORSIDE HYATT CONFERENCE CENTER & HOTEL
ACCOUNTS MAINTAINED BY HYATT CORPORATION
Notes to Financial Statements
Year Ended December 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Financial Statements
The accompanying financial statements have been prepared pursuant to
the provisions of a Management Agreement between Hyatt Corporation
("Hyatt") and the Bird Island Ltd. Partnership (the "Owner") of the
Harborside Hyatt Conference Center & Hotel (the "Hotel"). Accordingly, the
statements of assets and liabilities do not include all of the assets and
liabilities of the Owner, but only those assets and liabilities carried on
the books and records of the Hotel which are maintained by employees of
Hyatt. Assets and liabilities not reflected herein may include, but are
not limited to, property, building, furniture and equipment and mortgages
payable. The statements of revenues and expenses do not include charges
for depreciation or interest expense in connection with the assets and
liabilities, any expenses paid directly by the Owner, or any provision for
income taxes, since such taxes, if any, are the liabilities of the partners
of the Owner. However, the statements of revenues and expenses do include
current charges for ground rent and the provision for replacement of and
additions to furniture, fixtures and equipment calculated in accordance
with the Management Agreement.
These financial statements have been prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission Regulation S-X and for inclusion in the Form 8-K of LaSalle
Hotel Properties. The presentation is not intended to be a complete
presentation of the financial position, revenues and expenses and cash
flows of the Harborside Hyatt Conference Center & Hotel.
INVENTORIES
Inventories, consisting primarily of food and beverage, are stated at
the lower of cost or market. Cost is determined generally by the first-in,
first-out method.
2. MANAGEMENT FEE:
The Management fee is computed in accordance with the terms of the
Management Agreement dated March 15, 1990, as amended, between Hyatt and
the Owner. The Management Agreement expires on June 27, 2021, with two
ten-year renewal periods. The management fee consists of a basic fee of
3.25% of gross receipts, as defined, through December 31, 1996, 3.5% for
1997 through 1998, 3.75% for 1999, and 4% thereafter; and, an incentive fee
in an amount, if any, equal to 15% of available cash flow, as defined, in
excess of $4,200,000.
<PAGE>
HARBORSIDE HYATT CONFERENCE CENTER & HOTEL
ACCOUNTS MAINTAINED BY HYATT CORPORATION
Notes to Financial Statements, Continued
Year Ended December 31, 1997
2. MANAGEMENT FEE, continued:
For the year ended December 31, 1997, the management fees pursuant to
the terms of the Management Agreement are computed as follows:
1997
-----------
Basic management fee:
Gross receipts, per statements
of revenues and expenses. . . . . . . . . . . $20,501,157
x 3.5%
-----------
$ 717,541
===========
Incentive management fee:
Available cash flow,
as defined. . . . . . . . . . . . . . . . . . $ 6,870,437
Target amount . . . . . . . . . . . . . . . . . (4,200,000)
-----------
Available cash flow in
excess of target amount . . . . . . . . . . . . 2,670,437
x 15.0%
-----------
400,566
-----------
Management fee:
Basic . . . . . . . . . . . . . . . . . . . . . 717,541
Incentive . . . . . . . . . . . . . . . . . . . 400,566
-----------
$ 1,118,107
===========
4. CONTROL:
Activity in the owner's account for the year ended December 31, 1997
is as follows:
1997
-----------
Balance, beginning of year. . . . . . . . . . . . $ 677,416
Income from operations. . . . . . . . . . . . . . 6,469,872
Distributions to Owner. . . . . . . . . . . . . . (6,375,000)
-----------
Balance, end of year. . . . . . . . . . . . . . . $ 772,288
===========
<PAGE>
HARBORSIDE HYATT CONFERENCE CENTER & HOTEL
ACCOUNTS MAINTAINED BY HYATT CORPORATION
Notes to Financial Statements, Continued
Year Ended December 31, 1997
5. GROUND LEASE:
The Owner is obligated under an operating lease for the rental of
land on which the Hotel is situated. The term of the ground lease is for
an initial period expiring in 2021, with renewal options, subject to
certain conditions, which may extend the term to not later than 2077. The
ground lease provides for rental payments consisting of base rent, as
defined, of $347,760 per year. In addition, the lease provides for
contingent rent based upon 1% of gross revenues, as defined, and additional
contingent rent of 5% of the excess of current year over base year gross
revenues until December 31, 2005 (base year revenues were established in
1996 at $18,374,307). The additional contingent rent, as defined,
increases to 6.25% in 2006 through 2020, and 7% for the year ended 2021.
Ground rent expense for 1997 is as follows:
1997
-----------
Base rent . . . . . . . . . . . . . . . . . . . . $ 347,760
Contingent rent . . . . . . . . . . . . . . . . . 205,012
Additional contingent rent. . . . . . . . . . . . 106,342
-----------
$ 659,114
===========
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
LASALLE HOTEL PROPERTIES
Date: September 8, 1998 By: /S/ JON E. BORTZ
Jon E. Bortz
President and
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
Exhibit 2.1* Purchase and Sale Agreement, dated as of June 16,
1998, by and between Bird Island Limited Partnership and LaSalle Hotel
Operating Partnership, L.P.
* Previously filed.
