As filed with the Securities and Exchange Commission on December 8, 2000
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LASALLE HOTEL PROPERTIES
(Exact name of each registrant as specified in its charter)
Maryland 36-4219376
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
------------------------
4800 Montgomery Lane, Suite M25
Bethesda, Maryland 20814
(301) 941-1500
(Address, including zip code, and telephone number, including area code,
of each registrant's principal executive office)
------------------------
Jon E. Bortz
President and Chief Executive Officer
LaSalle Hotel Properties
4800 Montgomery Lane, Suite M25
Bethesda, Maryland 20814
(301) 941-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copy to:
Michael F. Taylor, Esq.
Brown & Wood LLP
555 California Street
San Francisco, California 94104
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Approximate date of commencement of proposed sale to public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.|_|
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or interest reinvestment plans, please check the
following box.|X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.|X|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================== =================== ======================== ======================= =====================
<S> <C> <C> <C> <C>
Amount to be Proposed Maximum Proposed Maximum
Title of Class of Registered Aggregate Price per Aggregate Offering Amount of
Securities to be Registered Share(1) Price (1) Registration Fee(2)
-------------------------------------- ------------------- ------------------------ ----------------------- ---------------------
Common Shares of Beneficial
Interest, $.01 par value per
share(2) ............................ 300,000 $14.75 $4,425,000 $1,169
====================================== =================== ======================== ======================= =====================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Pursuant to Rule 457(c) of the rules and regulations under the Securities
Act of 1933, as amended, the registration fee is calculated based on the
average of the high and low sale prices of LaSalle Hotel Properties
common stock on the New York Stock Exchange for December 6, 2000
------------------------
The Registrant hereby amends this registration statement on the date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on the date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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The information contained in this prospectus is not complete and may be
changed. A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration state
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION,
PRELIMINARY PROSPECTUS DATED DECEMBER 8, 2000
PROSPECTUS
300,000 Shares
LASALLE HOTEL PROPERTIES
Common Shares of Beneficial Interest
--------------
This prospectus relates to 300,000 common shares of beneficial interest,
which may be offered from time to time by the selling shareholder named in
this prospectus. The registration of the common shares does not necessarily
mean that any of the shares will be offered or sold by the selling
shareholder. The selling shareholder will receive all the net proceeds from
the sale of the common shares and will pay all underwriting discounts and
selling commissions, if any, applicable to any such sale. We will receive no
proceeds from any sales of the shares, but will incur expenses in connection
with the offering. See "Selling Shareholder" and "Plan of Distribution."
Our common stock is listed on the New York Stock Exchange under the
Symbol "LHO."
The selling shareholder from time to time may offer and sell the shares
held by them directly or through agents or broker-dealers on terms to be
determined at the time of sale. To the extent required, the names of any agent
or broker-dealer and applicable commissions or discounts and any other
required information with respect to any particular offer will be set forth in
the section of this prospectus entitled "Plan of Distribution" or in an
accompanying prospectus supplement. The selling shareholder reserves the sole
right to accept or reject, in whole or in part, any proposed purchase of the
shares to be made directly or through agents.
The terms of the securities may include limitations on ownership and
restrictions on transfer thereof as may be appropriate to preserve our status
as a real estate investment trust for United States federal income tax
purposes.
See "Risk Factors" beginning on page 4 of this prospectus for a
description of risks that should be considered by purchasers of our common
shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
December __, 2000
TABLE OF CONTENTS
Page
INFORMATION ABOUT LASALLE HOTEL PROPERTIES..................................2
RISK FACTORS................................................................4
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE............................10
NO PROCEEDS TO LASALLE HOTEL PROPERTIES....................................10
SELLING SHAREHOLDER........................................................10
DESCRIPTION OF COMMON SHARES...............................................11
RESTRICTIONS ON OWNERSHIP OF CAPITAL SHARES................................12
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS.................................14
PLAN OF DISTRIBUTION.......................................................19
LEGAL MATTERS..............................................................21
EXPERTS....................................................................21
WHERE YOU CAN FIND MORE INFORMATION........................................21
INFORMATION ABOUT LASALLE HOTEL PROPERTIES
We were organized on January 15, 1998 and commenced operations upon the
completion of our initial public offering on April 29, 1998. We are a real
estate investment trust ("REIT") that buys, owns and leases upscale and luxury
full service hotels located in convention, resort and major urban business
markets. We were formed to own hotels and to continue and expand the hotel
investment activities of Jones Lang LaSalle Incorporated ("Jones Lang
LaSalle") and its predecessors. Currently, we have no employees and our
investment advisor, LaSalle Hotel Advisors, Inc., a wholly owned subsidiary of
Jones Lang LaSalle, conducts our day to day operations. January 1, 2001, we
will become self-managed and the advisor will no longer conduct our day-to-day
activities. The entire management team currently employed by the LaSalle Hotel
Advisors, Inc. will become our employees.
As of November 30, 2000, we owned interests in 13 hotels with
approximately 5,300 guest rooms located in 11 states. We own 100% equity
interests in 11 hotels, a 95.1% equity interest in a partnership which owns
one hotel and a 9.9% equity interest in a joint venture arrangement with an
institutional investor which also owns one hotel. Our hotels target both
business and leisure travelers, including groups and those attending meetings
and conventions, who prefer a full range of high quality facilities, services
and amenities. All of our hotels are managed by independent hotel operators.
Our primary objectives are to:
o maximize current returns to shareholders through increases in
distributable cash flow; and
o to increase long-term total returns to shareholders through
appreciation in the value of our common shares.
To achieve these objectives, we seek to:
o invest in or acquire additional hotels on favorable terms; and
o enhance the return from, and the value of, our hotels and any
additional hotels that we may acquire or develop.
We will seek to achieve revenue growth principally through:
o acquisitions of full service hotels located in convention, resort
and major urban business markets in the United States and abroad,
especially upscale and luxury full service hotels in markets where
the Advisor perceives strong demand growth or significant barriers
to entry;
o renovations and/or expansions at certain of our hotels; and
o selective development of hotels, particularly upscale and luxury
full service hotels in high demand markets where development
economics are favorable.
We focus on hotels located in convention, resort and major urban business
markets. Within these markets we primarily focus on upscale and luxury full
service hotels. Full service hotels generally provide a significant array of
guest services and offer a full range of meeting and conference facilities and
banquet space. Facilities also typically include restaurants and lounge areas,
gift shops and recreational facilities, including swimming pools. As a result,
full service hotels often generate significant revenue from sources other than
guest room revenue.
We own all our assets and conduct substantially all our business through
LaSalle Hotel Operating Partnership, L.P., a Delaware limited partnership (the
"Operating Partnership") of which we are the sole general partner with an
approximate 91.5% ownership interest at September 30, 2000.
To enable us to satisfy certain requirements for qualification as a REIT,
neither we nor the Operating Partnership can operate any of the hotels in
which we invest. Accordingly, we lease our hotels to third parties. Four of
our hotels are leased to LaSalle Hotel Lessee, Inc., an entity in which we own
a 9.0% interest, and in which Jones Lang LaSalle and LPI Charities, a
charitable corporation organized under the laws of the state of Illinois, each
own a 45.5% interest. Eight of our remaining hotels are leased to unaffiliated
lessees (affiliates of whom also operate these hotels), and one hotel is
leased to a lessee in which we have a 9.9% equity interest. Hotels have been
leased to LaSalle Hotel Lessee, Inc. when the operators have declined on
account of internal policy reasons to serve as lessee.
As a result of the REIT Modernization Act of 1999, we will be able to
lease the four hotels currently leased to LaSalle Hotel Lessee, Inc. to a
wholly owned taxable subsidiary beginning January 1, 2001. The Operating
Partnership has an agreement with the shareholders of LaSalle Hotel Lessee,
Inc. to acquire LaSalle Hotel Lessee, Inc. for $500,000, effective January 1,
2001. Once acquired, LaSalle Hotel Lessee, Inc. will be a 100% owned
subsidiary of the Operating Partnership as provided for under the taxable-REIT
subsidiary provisions which take effect on January 1, 2001.
All of our hotels are leased under participating leases which provide for
rent equal to the greater of a base rent or participating rent, which is based
on fixed percentages of gross hotel revenues. These leases are designed to
allow us to achieve substantial participation in revenue growth at our hotels.
We intend to operate as a REIT as defined in the Internal Revenue Code of
1986, as amended (the "Code").
Our executive offices are located at 4800 Montgomery Lane, Suite M25,
Bethesda, Maryland 20814 and our telephone number at that location is (301)
941-1500.
RISK FACTORS
An investment in our common shares offered by this prospectus and related
prospectus supplement involves various risks.
o Our Ability to Make Distributions on Our Common Shares Depends Upon
the Ability of Lessees to Make Rent Payments Under Our Leases
Dependence Upon Lessees. Our income is dependent upon rental payments
from the lessees of our hotels which in turn depends upon the ability of the
lessees to generate sufficient revenues from our hotels in excess of operating
expenses. Any failure or delay by the lessees in making rent payments would
adversely affect our ability to make distributions to our shareholders. Such
failure or delay by the lessees may be caused by reductions in revenue from
the hotels or in the net operating income of the lessees or otherwise. In
addition, all of the lessees have limited assets. Although failure on the part
of a lessee to materially comply with the terms of a lease (including failure
to pay rent when due) would give us the right to terminate such lease,
repossess the applicable property and enforce the payment obligations under
the lease, we would then be required to find another lessee to lease such
property. There can be no assurance that we would be able to enforce the
payment obligations of the defaulting lessee, find another lessee or, if
another lessee were found, that we would be able to enter into a new lease on
favorable terms.
o Our Return on Our Hotels Depends Upon the Ability of the Lessees and
the Operators to Operate and Manage the Hotels
Dependence upon Operators. To maintain our status as a REIT, we are
unable to operate any of our hotels. As a result, we are unable to directly
implement strategic business decisions with respect to the operation and
marketing of our hotels, such as decisions with respect to the setting of room
rates, repositioning of a hotel, change of franchise and brand affiliation,
food and beverage prices and certain similar matters. Although we consult with
the lessees and operators with respect to strategic business plans through the
Advisor, the lessees and operators are under no obligation to implement any of
our recommendations with respect to such matters.
o Our Performance and the Value of Our Common Shares are Subject to
Risks Associated With the Hotel Industry
Competition for Guests, Increases in Operating Costs, Dependence on
Travel and Economic Conditions Could Affect Our Cash Flow. Our hotels will be
subject to all operating risks common to the hotel industry. These risks
include:
o competition for guests from other hotels;
o increases in operating costs due to inflation and other factors, which
may not be offset in the future by increases in room rates;
o dependence on business and leisure travelers, which demand may fluctuate
and be seasonal;
o increases in energy costs, airline fares and other expenses related to
travel, which may deter travelling; and
o adverse effects of general and local economic conditions.
These factors could adversely affect the ability of the lessees to
generate revenues and to make rent payments to us and therefore our ability to
make distributions to our shareholders.
Seasonality. Our hotels' operations have historically been seasonal. Six
of our hotels maintain higher occupancy rates during the second and third
quarters and three of our hotels experience their highest occupancies in the
first quarter. One of our hotels generates a large portion of its revenue from
golf related business and, as a result, revenues fluctuate according to the
season and the weather. These seasonality patterns cause fluctuations in the
revenue we receive under our leases.
Unexpected Operating Costs Could Adversely Affect Our Cash Flow. Hotels
require ongoing renovations and other capital improvements, including periodic
replacement or refurbishment of furniture, fixtures and equipment ("FF&E").
Under the terms of our leases, we are obligated to pay the cost of certain
capital expenditures at our hotels and to pay for periodic replacement or
refurbishment of FF&E. If capital expenditures exceed our expectations, there
can be no assurance that sufficient sources of financing will be available to
fund such expenditures. The additional cost of such expenditures could have an
adverse effect on cash available for distribution. In addition, we may acquire
hotels in the future that require significant renovation. Renovation of hotels
involves certain risks, including the possibility of environmental problems,
construction cost overruns and delays, uncertainties as to market demand or
deterioration in market demand after commencement of renovation and the
emergence of unanticipated competition from other hotels.
Conditions of Franchise Agreements and Brand Licensing Agreements Could
Adversely Affect Us. Some of our hotels are subject to franchise agreements
and some are subject to brand licensing agreements. In addition, hotels in
which we invest subsequently may be operated pursuant to franchise and brand
agreements. The continuation of such franchise or brand agreements is subject
to specified operating standards and other terms and conditions. Licensors
typically inspect licensed properties periodically to confirm adherence to
operating standards. Action or inaction on our part or by any of the lessees
or the operators could result in a breach of such standards or other terms and
conditions of the franchise or brand licenses and could result in the loss or
cancellation of a franchise or brand license. It is possible that a licensor
could condition the continuation of a franchise or brand license on the
completion of capital improvements which our board of trustees determines are
too expensive or otherwise unwarranted in light of general economic conditions
or the operating results or prospects of the affected hotel. In that event,
our board of trustees may elect to allow the franchise or brand license to
lapse. In any case, if a license is terminated, LaSalle Hotel Properties and
the lessee may seek to obtain a suitable replacement license or to operate the
hotel independent of a franchise or brand license. The loss of a franchise or
brand license could have a material adverse effect upon the operations or the
underlying value of the hotel covered by the license because of the loss of
associated name recognition, marketing support and centralized reservation
systems provided by the licensor, or due to any penalties payable upon early
termination of a license.
o Covenants Under Our Credit Facility and Absence of Limitations on
Indebtedness Could Adversely Affect Our Financial Condition
Currently we have a policy of incurring debt only if upon such incurrence
our total funded indebtedness would not exceed 50% of "Aggregate Asset Value."
For purposes of this policy, Aggregate Asset Value is defined as the sum of
(a) earnings before interest, taxes, depreciation and amortization for the
preceding four quarters (reduced by the applicable FF&E reserves for the
relevant period) of hotels that we owned for more than four quarters times 10,
and (b) the investment amount (which shall include the purchase price,
including assumed indebtedness, and all acquisition costs) for all hotels
owned for less than four quarters and 95% of all capital expenditures with
respect to such hotels. As of September 30, 2000, this ratio was 43.9%
Requirements of Our Credit Facility could adversely affect our financial
condition and our ability to make distributions. We have obtained a senior
unsecured credit facility from Societe Generale, Southwest Agency, Bank of
Montreal, Deutsche Banc Alex. Brown, and certain other banks named therein,
which provides for a maximum borrowing amount of up to $200 million, which
matures on December 31, 2003. At September 30, 2000 approximately $110 million
was outstanding under our credit facility. Borrowings under our credit
facility bear interest at floating rates equal to LIBOR plus an applicable
margin or an "Adjusted Base Rate" plus an applicable margin, at our election.
For the nine months ended September 30, 2000 the weighted average interest
rate was approximately 8.0% for LIBOR borrowings. We did not have any
Adjusted Base Rate borrowings outstanding at September 30, 2000.
Our ability to borrow under the credit facility is subject to financial
covenants, such as covenants relating to limitations on unsecured and secured
borrowings, minimum interest and fixed charge coverage ratios and a minimum
equity value. We rely on borrowings under the credit facility to finance
acquisitions, capital improvements, working capital and general corporate
purposes and, if we are unable to borrow under the credit facility, it could
adversely affect our financial condition. The credit facility also contains a
financial covenant limiting the amount of distributions that we may make to
holders of our common shares during any fiscal quarter.
Our organizational documents do not contain any limitation on the amount
of indebtedness we may incur. Accordingly, our board of trustees could alter
or eliminate this policy and would do so, for example, if it were necessary in
order for us to continue to qualify as a REIT. If this policy were changed, we
could become more highly leveraged, resulting in higher interest payments that
could adversely affect the ability to pay distributions to our shareholders
and could increase the risk of default on the Operating Partnership's existing
indebtedness.
o Our Performance and Value are Subject to Real Estate Industry
Conditions
Because Real Estate Investments are Illiquid, We May Not Be Able to Sell
Properties When Appropriate. Real estate investments generally cannot be sold
quickly. We may not be able to vary our portfolio promptly in response to
economic or other conditions. In addition, provisions of the Code limit a
REIT's ability to sell properties in some situations when it may be
economically advantageous to do so, thereby adversely affecting returns to our
shareholders.
Liability for Environmental Matters Could Adversely Affect Our Financial
Condition. Federal, state and local laws and regulations relating to the
protection of the environment may require a current or previous owner or
operator of real estate to investigate and clean up hazardous or toxic
substances or petroleum product releases at a property. An owner of real
estate is liable for the costs of removal or remediation of certain hazardous
or toxic substances on or in the property. These laws often impose such
liability without regard to whether the owner knew of, or caused, the presence
of the contaminants. Clean-up costs and the owner's liability generally are
not limited under the enactments and could exceed the value of the property
and/or the aggregate assets of the owner. The presence of or the failure to
properly remediate the substances may adversely affect the owner's ability to
sell or rent the property or to borrow using the property as collateral.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances may also be liable for the clean-up costs of the substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by the person. Even if more than one person was responsible for the
contamination, each person covered by the environmental laws may be held
responsible for the clean-up costs incurred. In addition, third parties may
sue the owner or operator of a site for damages and costs resulting from
environmental contamination emanating from that site.
Environmental laws also govern the presence, maintenance and removal of
asbestos-containing materials ("ACMs"). These laws impose liability for
release of ACMs into the air and third parties may seek recovery from owners
or operators of real properties for personal injury associated with ACMs. In
connection with the ownership (direct or indirect), operation, management and
development of real properties, we may be considered an owner or operator of
properties containing ACMs. Having arranged for the disposal or treatment of
contaminants we may be potentially liable for removal, remediation and other
costs, including governmental fines and injuries to persons and property.
Certain Leases and Rights of First Refusal may Constrain Us from Acting
in the Best Interests of Shareholders. The LeMeridien New Orleans hotel and
the San Diego Paradise Point Resort are each subject to ground leases with a
third party lessor. Any proposed sale of the LeMeridien New Orleans hotel or
the San Diego Paradise Point Resort by the Operating Partnership or any
proposed assignment of the Operating Partnership's leasehold interest in
either of the ground leases will require the consent of the third party
lessor. As a result, LaSalle Hotel Properties and the Operating Partnership
may not be able to sell, assign, transfer or convey the Operating
Partnership's interest in the LeMeridien New Orleans hotel or the San Diego
Paradise Point Resort without the consent of such third party lessor, even if
such transactions may be in the best interests of our shareholders. The
LeMeridien New Orleans is also subject to an air space lease with the City of
New Orleans with respect to the balconies located at the hotel. As a result,
LaSalle Hotel Properties and the Operating Partnership may not be able to
sell, assign, transfer or convey the Operating Partnership's interest in the
LeMeridien New Orleans hotel without the consent of the City of New Orleans.
LeMeridien Dallas is subject to a right of first refusal in favor of the owner
of the balance of the condominium units. In addition, we will be subject to
certain rights of first refusal with respect to the following hotels: Radisson
Hotel South and Plaza Tower, Marriott Seaview Resort and LaGuardia Airport
Marriott.
The Costs of Compliance with the Americans with Disabilities Act Could
Adversely Affect Our Cash Flow. Under the Americans with Disabilities Act of
1990 (the "ADA"), all public accommodations are required to meet certain
Federal requirements related to access and use by disabled persons. A
determination that we are not in compliance with the ADA could result in
imposition of fines or an award of damages to private litigants. If we were
required to make modifications to comply with the ADA, our ability to make
expected distributions to our shareholders could be adversely affected.
o Failure to qualify as a REIT would be costly
If we failed to qualify as a REIT in any taxable year, we would be
subject to federal income tax (including any applicable alternative minimum
tax) on our taxable income at regular corporate rates. Moreover, unless
entitled to relief under certain statutory provisions, we also would be
disqualified from treatment as a REIT for the four taxable years following the
year during which qualification was lost. This treatment would significantly
reduce net earnings available to service indebtedness, make investments or pay
distributions to shareholders because of the additional tax liability to us
for the years involved. Also, we would not then be required to pay
distributions to our shareholders.
o The Ability of Our Shareholders to Effect a Change in Control is
Limited
Potential Anti-Takeover Effect of Certain Provisions of Maryland Law and
Our Declaration of Trust and Bylaws. Provisions of Maryland law and of our
declaration of trust and bylaws may have the effect of discouraging a third
party from making an acquisition proposal and could delay, defer or prevent a
transaction or a change in control under circumstances that could give our
shareholders the opportunity to realize a premium over the then prevailing
market price of our common shares. Such provisions include the following:
Share Ownership Limit in Our Declaration of Trust Could Inhibit Changes
in Control. In order for us to maintain our qualification as a REIT under the
Code, not more than 50% in value of our outstanding shares may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code
to include certain entities) at any time during the last half of our taxable
year. Furthermore, if any person were to own actually or constructively more
than 10% in value of our shares, and, at the same time, to own actually or
constructively 10% or more of the shares of a corporate lessee, or a 10% or
greater interest in the assets or profits of a noncorporate lessee, then the
lessee could become a related party tenant, which could result in loss of our
REIT status. For the purpose of preserving our REIT qualification, among other
reasons, our declaration of trust prohibits direct or indirect ownership
(taking into account applicable ownership provisions of the Code) of more than
9.8% of any class of our outstanding shares by any person. Generally, the
shares owned by affiliated owners will be aggregated for purposes of this
limitation on ownership. Our board of trustees could waive these restrictions
if evidence satisfactory to it and our tax counsel were presented that the
changes in ownership would not then or in the future jeopardize our status as
a REIT and the board of trustees decides such action would be in our best
interests. Shares acquired or transferred in breach of the limitation will be
automatically transferred to a trust for the exclusive benefit of one or more
charitable organizations and the purchaser-transferee shall not be entitled to
vote or to receive dividends or other distributions. In addition, shares
acquired or transferred in breach of the limitation may be purchased from such
trust by us for the lesser of the price paid and the average closing price for
the ten trading days immediately preceding redemption. A transfer of shares to
a person who, as a result of the transfer, violates the ownership limitation
will be void.
This limitation on ownership could have the effect of delaying, deferring
or preventing a transaction or a change in control in which holders of some,
or a majority, of the shares might receive a premium for their shares over the
then prevailing market price or which such holders might believe to be
otherwise in their best interests.
Potential Effects of Staggered Board Could Inhibit Changes in Control.
Our board of trustees is divided into three classes of trustees. The terms of
the first, second and third classes will expire in 2002, 2003 and 2001,
respectively. Trustees of each class will be chosen for three year terms upon
the expiration of the current class term. A trustee may be removed, with or
without cause, by the affirmative vote of 75% of the votes entitled to be cast
for the election of trustees, which super-majority vote may have the effect of
delaying, deferring or preventing a change of control. The staggered terms of
trustees may reduce the possibility of a tender offer or an attempt to change
control even though a tender offer or change in control might be in the best
interests of the shareholders.
Issuances of Preferred Shares Could Inhibit Changes in Control. Our
declaration of trust authorizes our board of trustees to issue up to 20
million preferred shares, to reclassify unissued shares, and to establish the
preferences, conversion and other rights, voting powers, restrictions,
limitations and restrictions on ownership, limitations as to dividends or
other distributions, qualifications, and terms and conditions of redemption
for each such class or series of any preferred shares issued. As of June 30,
2000, we had no preferred shares outstanding.
Certain Provisions of Maryland Law Could Inhibit Changes in Control. The
Maryland General Corporation Law establishes special requirements for
"business combinations" between a Maryland corporation, including a Maryland
REIT such as us, and "interested shareholders" unless exemptions are
applicable. An interested shareholder is any person who beneficially owns ten
percent or more of the voting power of our then-outstanding voting stock.
Maryland law prohibits, for a period of five years, a merger or other similar
transactions between us and an interested shareholder, unless the board of
trustees approved the transaction prior to the party becoming an interested
shareholder. The five-year period runs from the most recent date on which the
interested shareholder became an interested shareholder. The law also requires
a supermajority shareholder vote for such transactions after the end of the
five-year period. This means that the transaction must be approved by at
least:
o 80% of the votes entitled to be cast by holders of outstanding voting
shares; and
o 66% of the votes entitled to be cast by holders of outstanding voting
shares other than shares held by the interested shareholder with whom the
business combination is to be effected.
The business combination statute could have the effect of discouraging
offers to acquire us and of increasing the difficulty of consummating any such
offers, even if our acquisition would be in our shareholders' best interests.
Maryland Control Share Acquisition Statute. Maryland law provides that
"control shares" of a Maryland corporation acquired in a "control share
acquisition" have no voting rights except to the extent approved by a
shareholder vote. Two-thirds of the shares eligible to vote must vote in favor
of granting the "control shares" voting rights. "Control shares" are shares of
stock that, taken together with all other shares of stock the acquiror
previously acquired, would entitle the acquiror to exercise at least 20% of
the voting power in electing directors. Control shares do not include shares
of stock the acquiring person is entitled to vote as a result of having
previously obtained shareholder approval. A "control share acquisition" means
the acquisition of control shares, subject to certain exceptions.
If a person who has made (or proposes to make) a control share
acquisition satisfies certain conditions (including agreeing to pay expenses),
he may compel the board of trustees to call a special meeting of shareholders
to be held within 50 days to consider the voting rights of the shares. If such
a person makes no request for a meeting, we have the option to present the
question at any shareholders' meeting.
If voting rights are not approved at a meeting of shareholders then we
may redeem any or all of the control shares (except those for which voting
rights have previously been approved) for fair value. We will determine the
fair value of the shares, without regard to voting rights, as of the date of
either:
o the last control share acquisition or
o any meeting where shareholders considered and did not approve voting
rights of the control shares.
If voting rights for control shares are approved at a shareholders'
meeting and the acquiror becomes entitled to vote a majority of the shares of
stock entitled to vote, all other shareholders may exercise appraisal rights.
This means that you would be able to redeem your stock back to us for fair
value. Under Maryland law, the fair value may not be less than the highest
price per share paid in the control share acquisition. Furthermore, certain
limitations otherwise applicable to the exercise of dissenters' rights would
not apply in the context of a control share acquisition.
The control share acquisition statute would not apply to shares acquired
in a merger, consolidation or share exchange if we were a party to the
transaction.
The control share acquisition statute could have the effect of
discouraging offers to acquire us and of increasing the difficulty of
consummating any such offers, even if our acquisition would be in our
shareholders' best interests.
Approval of Unitholders Required for Certain Business Combinations. The
Operating Partnership's partnership agreement provides that we may not
generally engage in any merger, consolidation or other combination with or
into another person or sale of all or substantially all of our assets, or any
reclassification, or any recapitalization or change of outstanding common
shares, unless the holders of units will receive, or have the opportunity to
receive, the same consideration per unit as holders of common shares receive
per common share in the transaction. If holders of units will not be treated
in such manner in connection with a proposed Business Combination, we may not
engage in such transaction unless unitholders holding more than 50% of the
units vote to approve the transaction. In addition, as provided in the
partnership agreement, we will not consummate a transaction with respect to
which we conducted a vote of the shareholders unless the matter would have
been approved had holders of units been able to vote together with the
shareholders on the transaction. As a result of these provisions of the
partnership agreement, a third party may be inhibited from making an
acquisition proposal that it would otherwise make, or we, despite having the
requisite authority under our declaration of trust, may not be authorized to
engage in a proposed transaction.
o Property Ownership Through Partnerships and Joint Ventures Could Limit
Our Control of those Investments
Partnership or joint venture investments may involve risks not otherwise
present for investments made solely by us, including the possibility that our
partners or co-venturer might become bankrupt, that our partners or
co-venturer might at any time have different interests or goals than we do,
and that our partners or co-venturer may take action contrary to our
instructions, requests, policies or objectives, including our policy with
respect to maintaining our qualification as a REIT. Other risks of joint
venture investments include impasse on decisions, such as a sale, because
neither our partner or co-venturer nor us would have full control over the
partnership or joint venture. There is no limitation under our organizational
documents as to the amount of funds that may be invested in partnerships or
joint ventures.
o Tax Consequences Upon a Sale or Refinancing of Properties May Result
in Conflicts of Interest for LaSalle Hotel Properties and Jones Lang LaSalle
Holders of units of limited partnership of the Operating Partnership or
co-owners of properties not owned entirely by us may suffer different and more
adverse tax consequences than we will upon the sale or refinancing of our
properties. We may have different objectives from these co-owners and holders
of limited partnership units regarding the appropriate pricing and timing of
any sale or refinancing of these properties. While we as the sole general
partner of the Operating Partnership, have the exclusive authority as to
whether and on what terms to sell or refinance each property owned solely by
the Operating Partnership, our trustees and officers who have interests in
limited partnership units may seek to influence us not to sell or refinance
the properties, even though such a sale might otherwise be financially
advantageous to us, or may seek to influence us to refinance a property with a
higher level of debt.
Policies with respect to conflicts of interest may not be successful. We
have adopted policies designed to eliminate or minimize conflicts of interest.
These policies include the approval of all transactions in which our trustees
or officers have a conflicting interest by a majority of the trustees who are
neither officers nor affiliated with us. These policies do not prohibit sales
of assets to or from affiliates, but would require the sales to be approved by
our independent trustees. However, there is no assurance that these policies
will be successful and, if they are not successful, decisions could be made
that might fail to reflect fully the interests of all of our shareholders.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document (and the documents that are incorporated by reference)
contain forward-looking statements that are subject to risks and
uncertainties. You are cautioned not to place undue reliance on such
statements which only speak as of the date hereof. Forward-looking statements
include information concerning possible or assumed future results of our
operations, including any forecasts, projections and plans and objectives for
future operations. You can identify forward looking statements by the use of
forward looking expressions like "may," "will," "should," "expect,"
"anticipate," "estimate," or "continue" or any negative or other variations on
such expressions. Many factors could affect our actual financial results, and
could cause actual results to differ materially from those in the
forward-looking statements.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks and uncertainties, the
forward-looking events and circumstances discussed in this prospectus might
not occur.
NO PROCEEDS TO LASALLE HOTEL PROPERTIES
We will not receive any of the proceeds from sales of shares by the
selling shareholder. We will pay all costs and expenses incurred in connection
with the registration under the Securities Act of 1933 of this offering. The
selling shareholder will pay any brokerage fees and commissions, fees and
disbursements of their legal counsel and share transfer and other taxes
attributable to the sale of the shares.
SELLING SHAREHOLDER
The common shares were originally issued by us in offerings exempt from
the registration requirements of the Securities Act of 1933. The shareholders
in those offerings or their pledgees, donees, transferees or other successors
in interest who we collectively refer to in this prospectus as selling
shareholder, may from time to time offer and sell any and all of the common
shares offered under this prospectus. The following table sets forth
information as of September 30, 2000 with respect to common shares covered by
this prospectus. Because the selling shareholder may offer all, some or none
of the common shares that are covered by this prospectus, no estimate can be
made of the number of common shares that will be offered under this prospectus
or the number of common shares that will be owned by any of the selling
shareholder upon completion of the offering to which this prospectus relates.
Number of Shares Covered by this
Name of Selling Shareholder Prospectus
--------------------------- --------------------------------
LaSalle Hotel Co-Investment, Inc.................. 300,000
-------
Total.......................................... 300,000
=======
DESCRIPTION OF COMMON SHARES
General
Under Maryland law, a shareholder is not personally liable for our
obligations solely as a result of being a shareholder. Our declaration of
trust provides that no shareholder will be liable for any debt or obligation
of ours by reason of being a shareholder nor shall any shareholder be subject
to any personal liability in tort, contract or otherwise to any person in
connection with our property or affairs by reason of being a shareholder. Our
bylaws further provide that we shall indemnify each present or former
shareholder against any claim or liability to which the shareholder may become
subject by reason of being or having been a shareholder and that we shall
reimburse each shareholder for all reasonable expenses incurred by him or her
in connection with any such claim or liability. However, with respect to tort
claims, contractual claims where shareholder liability is not so negated,
claims for taxes and certain statutory liabilities, the shareholders may, in
some jurisdictions, be personally liable to the extent that such claims are
not satisfied by us. Inasmuch as we carry public liability insurance which we
consider adequate, any risk of personal liability to shareholders is limited
to situations in which our assets plus our insurance coverage would be
insufficient to satisfy the claims against us and our shareholders.
Our declaration of trust provides that we may issue 100 million common
shares of beneficial interest, par value $0.01 per share. In addition, units
of limited partnership interest in the Operating Partnership may be redeemed
for cash or, at our option, common shares on a one-for-one basis. On June 30,
2000, there were 16,908,995 of the Company's common shares outstanding and
1,575,901 units of limited partnership in the Operating Partnership
outstanding.
All of the common shares offered by this prospectus have been duly
authorized, and are fully paid and nonassessable. Subject to the preferential
rights of any other shares of beneficial interest and to the provisions of our
declaration of trust regarding restrictions on transfers of shares of
beneficial interest, holders of common shares are entitled to receive
distributions if, as and when authorized and declared by our board of trustees
out of assets legally available therefor and to share ratably in our assets
legally available for distribution to our shareholders in the event of our
liquidation, dissolution or winding up after payment of, or adequate provision
for, all our known debts and liabilities.
Subject to restrictions on transfer of shares of beneficial interest
contained in our declaration of trust, each outstanding common share entitles
the holder to one vote on all matters submitted to a vote of shareholders,
including the election of trustees, and, except as provided with respect to
any other class or series of shares of beneficial interest, the holders of
common shares will possess the exclusive voting power. There is no cumulative
voting in the election of trustees, which means that the holders of a majority
of the outstanding common shares can elect all of the trustees then standing
for election and the holders of the remaining shares of beneficial interest,
if any, will not be able to elect any trustees.
Holders of common shares have no preferences, conversion, sinking fund,
redemption rights or preemptive rights to subscribe for any of our securities.
Subject to the exchange provisions of our declaration of trust regarding
restrictions on transfer, common shares have equal distribution, liquidation
and other rights.
Certain Provisions of the Declaration of Trust
Pursuant to Maryland law, a Maryland real estate investment trust
generally cannot dissolve, amend its declaration of trust or merge, unless
approved by the affirmative vote of shareholders holding at least two-thirds
of the shares entitled to vote on the matter unless a lesser percentage (but
not less than a majority of all of the votes entitled to be cast on the
matter) is set forth in the trust's declaration of trust. Our declaration of
trust provides that the board of trustees, with the approval of a majority of
the votes entitled to be cast at a meeting of shareholders, may amend our
declaration of trust from time to time to increase or decrease the aggregate
number of shares or the number of shares of any class that we have the
authority to issue. Our declaration of trust also provides that a merger
transaction or termination of the trust must be approved, at a meeting of the
shareholders called for that purpose, by the affirmative vote of not less than
sixty-six and two-thirds percent (66 2/3%) of all the votes entitled to be
cast on the matter. Under Maryland law, a declaration of trust may permit the
trustees by a two-thirds vote to amend the declaration of trust from time to
time to qualify as a REIT under the Code or Maryland law without the
affirmative vote of the shareholders. Our declaration of trust permits such
action by our board of trustees.
Our board of trustees is divided into three classes of trustees, serving
staggered three year terms. At each annual meeting of shareholders, the class
of trustees to be elected at the meeting will be elected for a three-year term
and the trustees in the other two classes will continue in office. We believe
that classified trustees will help to assure the continuity and stability of
our board of trustees and our business strategies and policies as determined
by our board of trustees. The use of a staggered board may delay or defer a
change in control or removal of incumbent management.
Restrictions on Ownership
In order to qualify as a REIT under the Code, not more than 50% in value
of our outstanding shares may be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities) during
the last half of a taxable year and our shares must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months
(or during a proportionate part of a shorter taxable year). To satisfy the
above ownership requirements and certain other requirements for qualification
as a REIT, our board of trustees has adopted, and our shareholders prior to
our IPO approved, a provision in our declaration of trust restricting the
ownership or acquisition of common shares.
Transfer Agent and Registrar
The transfer agent and registrar for our common shares is Computershare
Investor Services, LLC.
RESTRICTIONS ON OWNERSHIP OF CAPITAL SHARES
Restrictions on Ownership and Transfer
For us to qualify as a REIT under the Code, no more than 50% in value of
our outstanding shares of beneficial interest may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code to
include certain entities) during the last half of a taxable year (other than
the first year for which an election to be treated as a REIT has been made).
In addition, if we, or an owner of 10% or more in value of our shares,
actually or constructively owns 10% or more of a tenant of ours (or a tenant
of any partnership in which we are a partner), the rent we receive (either
directly or through any such partnership) from such tenant will not be
qualifying income for purposes of the REIT gross income tests of the Code. A
REIT's shares also must be beneficially owned by 100 or more persons during at
least 335 days of a taxable year of twelve months or during a proportionate
part of a shorter taxable year (other than the first year for which an
election to be treated as a REIT has been made).
Because our board of trustees believes it is desirable for us to qualify
as a REIT, our declaration of trust, subject to certain exceptions, provides
that no holder may own, or be deemed to own by virtue of the attribution
provisions of the Code, more of our common shares than permitted by the
limitation on ownership. The ownership attribution rules under the Code are
complex and may cause shares owned actually or constructively by a group of
related individuals and/or entities to be owned constructively by one
individual or entity. As a result, the acquisition of less than 9.8% of the
shares (or the acquisition of an interest in an entity that owns, actually or
constructively, shares) by an individual or entity, could, nevertheless cause
that individual or entity, or another individual or entity, to own
constructively in excess of 9.8% of the outstanding shares and thus subject
such shares to the limitation on ownership. The board of trustees may grant an
exemption from the limitation on ownership with respect to one or more persons
who would not be treated as "individuals" for purposes of the Code if such
person submits to the board information satisfactory to the board, in its
reasonable discretion, demonstrating that (i) such person is not an individual
for purposes of the Code, (ii) such ownership will not cause a person who is
an individual to be treated as owning shares in excess of the limitation on
ownership, applying the applicable constructive ownership rules, and (iii)
such ownership will not otherwise jeopardize our status as a REIT. As a
condition of such waiver, the board may, in its reasonable discretion, require
undertakings or representations from the applicant to ensure that the
conditions referred to above are satisfied and will continue to be satisfied
as long as such person owns shares in excess of the limitation on ownership.
The board of trustees may grant an exemption for individuals or entities to
acquire any series or class of preferred shares in excess of the limitation on
ownership, provided that certain conditions are met and any representations
and undertakings that may be required by the board are made. In either
circumstance, prior to granting any exemption, the board must receive a ruling
from the Internal Revenue Service or advice of counsel, in either case in form
and substance satisfactory to the board of trustees, as it may deem necessary
or advisable in order to determine or ensure our status as a REIT.
Our declaration of trust further prohibits any person from actually or
constructively owning shares of beneficial interest that would result in our
being "closely held" under Section 856(h) of the Code or otherwise cause us to
fail to qualify as a REIT. It also prohibits any person from transferring
shares of beneficial interest of ours if such transfer would result in shares
of beneficial interest being owned by fewer than 100 persons.
Any person who acquires or attempts or intends to acquire actual or
constructive ownership of shares of beneficial interest of ours that will or
may violate any of the foregoing restrictions on transferability and ownership
is required to give us notice immediately and to provide us with such other
information as we may request in order to determine the effect of such
transfer on our status as a REIT.
If any purported transfer of our shares of beneficial interest or any
other event would otherwise result in any person violating the limitation on
ownership or the other restrictions in our declaration of the trust, then any
such purported transfer will be void with respect to the purported transferee
as to that number of shares that exceeds the limitation on ownership and the
transferee will acquire no right or interest (or, in the case of any event
other than a purported transfer, the person or entity holding record title to
any such shares in excess of the limitation on ownership will cease to own any
right or interest in shares exceeding the ownership limitation). Any shares in
excess of the limit will be transferred automatically, by operation of law, to
a trust, the beneficiary of which will be a qualified charitable organization
selected by us. Such automatic transfer shall be deemed to be effective as of
the close of business on the business day prior to the date of such violating
transfer. Within 20 days of receiving notice from us of the transfer of shares
to the trust, the trustee of the trust will be required to sell any shares in
excess of the limitation on ownership to a person or entity who could own such
shares without violating this limit, and distribute to the owner an amount
equal to the lesser of the price paid by the owner for the shares or the sales
proceeds received by the trust for the shares. In the case of any shares
resulting from any event other than a transfer, or from a transfer for no
consideration (such as a gift), the trustee will be required to sell the
shares in excess of the ownership limit to a qualified person or entity and
distribute to the owner an amount equal to the lesser of the fair market value
of the shares or the sales proceeds received by the trust for the shares. In
either case, any proceeds in excess of the amount distributable to the owner,
will be distributed to the beneficiary of the trust.
Prior to a sale of any shares in excess of the ownership limit by the
trust, the trustee will be entitled to receive, in trust for the beneficiary,
all dividends and other distributions paid by us with respect to those shares,
and also will be entitled to exercise all voting rights with respect to those
shares. Subject to Maryland law, effective as of the date that such shares
have been transferred to the trust, the trustee shall have the authority to
rescind as void any vote cast by a transferee prior to the discovery by us
that such shares have been transferred to the trust, and to recast such vote
in accordance with the desires of the trustee acting for the benefit of the
beneficiary. Any dividend or other distribution paid to the transferee or
owner will be required to be repaid to the trustee upon demand for
distribution to the beneficiary.
In addition, shares of beneficial interest held in the trust shall be
deemed to have been offered for sale to us, or our designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the trust (or, in the case of a devise or gift,
the market value at the time of such devise or gift) and (ii) the market value
of such shares on the date we, or our designee, accepts such offer. We shall
have the right to accept such offer for a period of 90 days after the transfer
of shares to the trust. Upon such a sale to us, the interest of the
beneficiary of the trust in the shares sold will terminate and the trustee
shall distribute the net proceeds of the sale to the prior owner.
The foregoing restrictions on transferability and ownership will not
apply if the board of trustees determines that it is no longer in our best
interests to attempt to qualify, or to continue to qualify, as a REIT.
All certificates representing shares of beneficial interest shall bear a
legend referring to the restrictions described above.
Each shareholder will, upon demand, be required to disclose to us in
writing such information with respect to the direct, indirect and constructive
ownership of shares of beneficial interest as the board of trustees deems
reasonably necessary to comply with the provisions of the Code applicable to a
REIT, to comply with the requirements of any taxing authority or governmental
agency or to determine any such compliance.
These ownership limitations could have the effect of delaying, deferring
or preventing a takeover or other transaction in which holders of some, or a
majority, of common shares might receive a premium for their common shares
over the then prevailing market price or which such holders might believe to
be otherwise in their best interest.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
Based on various assumptions and factual representations made by us
regarding our operations, in the opinion of Brown & Wood LLP, our counsel,
commencing with our taxable year ended December 31, 1998, we have been
organized in conformity with the requirements for qualification as a REIT
under the Code, and our method of operating has enabled, and will enable us to
meet the requirements for qualification and taxation as a REIT. Our
qualification as a REIT depends upon our ability to meet the various
requirements imposed under the Code through actual operations. Brown & Wood
LLP will not review our operations, and no assurance can be given that actual
operations will meet these requirements. The opinion of Brown & Wood LLP is
not binding on the IRS or any court. The opinion of Brown & Wood LLP is based
upon existing law, IRS regulations and currently published administrative
positions of the IRS and judicial decisions, all of which are subject to
change either prospectively or retroactively.
Taxation Of LaSalle Hotel Properties
General. We elected to be taxed as a REIT under Sections 856 through 860
of the Code commencing with our taxable year ended December 31, 1998. In any
year in which we qualify for taxation as a REIT, we generally will not be
subject to federal corporate income taxes on net income that we distribute
currently to shareholders. However, we will be subject to federal income tax
in the following circumstances.
First, we will be taxed at regular corporate rates on any undistributed
REIT taxable income, including undistributed net capital gains. Second, under
certain circumstances, we may be subject to the "alternative minimum tax" on
any items of tax preference. Third, if we have (i) net income from the sale or
other disposition of certain "foreclosure property" that is held primarily for
sale to customers in the ordinary course of business or (ii) other
nonqualifying income from foreclosure property, we will be subject to tax at
the highest corporate rate on such income. Fourth, if we have net income from
prohibited transactions (which are, in general, certain sales or other
dispositions of property (other than foreclosure property) held primarily for
sale to customers in the ordinary course of business), such income will be
subject to a 100% tax. Fifth, if we should fail to satisfy the 75% gross
income test or the 95% gross income test (discussed below), and nonetheless
should maintain our qualification as a REIT because certain other requirements
have been met, we will be subject to a 100% tax on the net income attributable
to the greater of either the amount by which we fail the 75% gross income test
or the amount by which we fail the 95% gross income test. Sixth, if we should
fail to distribute during each calendar year at least the sum of (i) 85% of
our REIT ordinary income for such year, (ii) 95% of our REIT capital gain net
income for such year, and (iii) any undistributed taxable income from prior
periods, we would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. Seventh, if we acquire or
have acquired any asset from a C corporation (i.e., a corporation generally
subject to full corporate-level tax) in a transaction in which the basis of
the asset in our hands is determined by reference to the basis of the asset
(or any other asset) in the hands of the C corporation and we recognize gain
on the disposition of such asset during the 10 year period beginning on the
date on which we acquired the asset, then to the extent of such asset's
"Built-In Gain" (i.e., the excess of (a) the fair market value of such asset
at the time of acquisition over (b) the adjusted basis in such asset,
determined as of the time of such acquisition), such gain will be subject to
tax at the highest regular corporate rate applicable. This result with respect
to the recognition of Built-In Gain assumes that LaSalle Hotel Properties will
make an election pursuant to Treasury Regulations with respect to any such
acquisition.
Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) that is managed by one or more trustees or directors,
(2) the beneficial ownership of which is evidenced by transferable shares of
stock, or by transferable certificates of beneficial interest, (3) that would
be taxable as a domestic corporation, but for Sections 856 through 859 of the
Code, (4) that is neither a financial institution nor an insurance company
subject to certain provisions of the Code, (5) the beneficial ownership of
which is held by 100 or more persons, (6) that during the last half of each
taxable year not more than 50% in value of the outstanding stock of which is
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities), and (7) that meets certain other tests,
described below, regarding the nature of its income and assets. The Code
provides that conditions (1) through (4), inclusive, must be met during the
entire taxable year and that condition (5) must be met during at least 335
days of a taxable year of 12 months, or during a proportionate part of a
taxable year of less than 12 months.
Income Tests. To maintain qualification as a REIT, we must satisfy
certain gross income requirements, which are applied on an annual basis.
First, at least 75% of its gross income (excluding gross income from
prohibited transactions) for each taxable year must be derived directly or
indirectly from investments relating to real property or mortgages on real
property (including "rents from real property" and, in certain circumstances,
interest) or from certain types of temporary investments. Second, at least 95%
of its gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived from the same items which qualify under the
75% income test, and from dividends, interest and gain from the sale or
disposition of stock or securities, or from any combination of the foregoing.
The rents received pursuant to the Participating Leases qualify as "rents
from real property" in satisfying the gross income requirements for a REIT.
Moreover, we do not anticipate receiving rents that could cause us to fail to
meet the 75% and 95% gross income tests.
If we were to fail to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, we may nevertheless qualify as a REIT for such
year if we are entitled to relief under certain provisions of the Code. We do
not know whether in all circumstances we would be entitled to the benefit of
these relief provisions. Even if these relief provisions were to apply,
however, a 100% tax would be imposed with respect to the "excess net income"
attributable to the failure to satisfy the 75% and 95% gross income tests.
Asset Tests. At the close of each quarter of our taxable year, we must
satisfy the following three tests relating to the nature of our assets: (1) at
least 75% of the value of our total assets must be represented by "real estate
assets," cash, cash items and government securities; (2) not more than 25% of
our total assets may be represented by securities other than those in the 75%
asset class; and (3) of the investments included in the 25% asset class, the
value of any one issuer's securities (other than an interest in a partnership,
shares of a "qualified REIT subsidiary" or another REIT) owned by LaSalle
Hotel Properties may not exceed 5% of the value of our total assets, and we
may not own more than 10% of any one issuer's outstanding voting securities
(other than an interest in a partnership, shares of a "qualified REIT
subsidiary" or another REIT). For taxable years beginning after December 31,
2000, the above-described asset tests will change in two ways. First, a REIT
will be allowed to hold 100% of the stock in a subsidiary that could earn
income that would not be qualifying income if earned directly by the parent
REIT. Both the subsidiary and the REIT must jointly elect to treat the
subsidiary as a "taxable REIT Subsidiary" A Taxable REIT Subsidiary would pay
tax at the regular corporate rates on any income that it would earn. Moreover,
the Code contains rules to ensure that contractual arrangements between a
Taxable REIT Subsidiary and the parent REIT are at arm's-length. We intend to
acquire 100% ownership of LaSalle Hotel Lessee, Inc. as of January 1, 2001 and
we propose to jointly elect with LaSalle Hotel Lessee, Inc. that LaSalle Hotel
Lessee, Inc. be treated as a Taxable REIT Subsidiary. The second change to the
asset tests will prohibit a REIT from owning securities representing 10% of
the value of any one issuer, other than a partnership, a qualified REIT
subsidiary, another REIT, or a Taxable REIT Subsidiary.
Annual Distribution Requirements. In order to qualify as a REIT, we are
required to distribute dividends (other than capital gain dividends) to our
shareholders in an amount at least equal to (1) the sum of (a) 95% of our
"REIT taxable income" (computed without regard to the dividends paid deduction
and net capital gain) and (b) 95% of the net income (after tax), if any, from
foreclosure property, minus (2) the sum of certain items of noncash income. In
addition, if LaSalle Hotel Properties disposes of any assets with a "Built-In
Gain" (as discussed above), we will be required, to distribute at least 95% of
the Built-In Gain (after tax), if any, recognized on the disposition of such
asset. For taxable years beginning after December 31, 2000, the
above-described 95% distribution requirements will be lowered to 90%.
To the extent that we do not distribute all of our net capital gain or
distribute at least 95% (90% for years beginning after December 31, 2000), but
less than 100%, of our "REIT taxable income," as adjusted, we will be subject
to tax thereon at regular ordinary and capital gain corporate tax rates. In
addition, if we should fail to distribute during each calendar year at least
the sum of (1) 85% of our REIT ordinary income for such year, (2) 95% of our
REIT capital gain income for such year, and (3) any undistributed taxable
income from prior periods, we would be subject to a 4% excise tax on the
excess of such required distribution over the sum of amounts we actually
distributed during the calendar year and the amount, if any, on which we paid
income tax for such year.
We may elect to require the shareholders to include undistributed net
capital gains in their income by designating, in a written notice to
shareholders, those amounts as undistributed capital gains in respect of its
shareholders' shares. If we make such an election, the shareholders will (1)
include in their income as capital gains their proportionate share of such
undistributed capital gains and (2) be deemed to have paid their proportionate
share of the tax we paid on such undistributed capital gains and thereby
receive a credit or refund for such amount. In addition, a shareholder will
increase the basis in their shares by the difference between the amount of
capital gain included in their income and the amount of the tax that we are
deemed to have paid on the shareholder's behalf. Our earnings and profits will
be adjusted appropriately.
Under certain circumstances, we may be able to rectify a failure to meet
the distribution requirement for a year by paying "deficiency dividends" to
shareholders in a later year, which may be included in our deduction for
dividends paid for the earlier year. Thus, we may be able to avoid being taxed
on amounts distributed as deficiency dividends; however, we will be required
to pay interest based upon the amount of any deduction taken for deficiency
dividends.
Failure to Qualify. If we fail to qualify for taxation as a REIT in any
taxable year, we will be subject to tax (including any applicable alternative
minimum tax) on our taxable income at regular corporate rates. Distributions
to shareholders in a year in which we fail to qualify as a REIT will not be
deductible and will not be required to be made. In addition, if we fail to
qualify as a REIT, all distributions to shareholders will be taxable as
ordinary income, to the extent of current and accumulated earnings and
profits, and, subject to certain limitations of the Code, corporate
distributees may be eligible for the dividends received deduction. Unless
entitled to relief under specific statutory provisions, we will also be
disqualified from taxation as a REIT for the four taxable years following the
year during which qualification was lost. It is not possible to state whether
in all circumstances we would be entitled to such statutory relief.
Taxation Of Shareholders
Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the securities offered hereby and with
respect to the tax consequences arising under federal law and the laws of any
state, municipality or other taxing jurisdiction, including tax consequences
resulting from the investor's own tax characteristics. In particular, foreign
investors should consult their own tax advisors concerning the tax
consequences of an investment in the securities offered hereby, including the
possibility of United States income tax withholding on our distributions.
Taxation of Taxable Domestic Shareholders. As long as we qualify as a
REIT, distributions made to taxable domestic shareholders out of current or
accumulated earnings and profits (and not designated as capital gain
dividends) will be taken into account as ordinary income. Corporate
shareholders will not be eligible for the dividends received deduction as to
such amounts. Distributions in excess of current and accumulated earnings and
profits will not be taxable to a shareholder to the extent that they do not
exceed the adjusted basis of the shares, but rather will reduce the adjusted
basis of such shares. To the extent that such distributions exceed the
adjusted basis of the shares, they will be included in income as long-term
capital gain (or short-term capital gain if the shares have been held for one
year or less), assuming the shares are a capital asset in the hands of the
shareholder. Distributions that we designate as capital gain dividends will be
taxed as long-term capital gains (to the extent they do not exceed our actual
net capital gain for the taxable year) without regard to the period for which
the shareholder has held the shares. Long-term capital gains are separated
into tax rate groups - a 20% group, a 25% group, and a 28% group. In addition
to designating distributions as capital gains, we will also designate the tax
rate groups into which such gains are allocable.
In general, a domestic shareholder will realize capital gain or loss on
the disposition of the shares equal to the difference between (i) the amount
of cash and the fair market value of any property received on such disposition
and (ii) the shareholder's adjusted basis in the shares. Such gain or loss
generally will constitute long-term capital gain or loss if the shareholder
has held such shares for more than one year. Subject to certain exceptions,
for individuals, trusts and estates the maximum rate of tax on the net capital
gain from a disposition of the shares is 20%. The maximum rate has been
reduced to 18% for capital assets acquired after December 21, 2000 and held
for more than five years.
Loss upon a sale or exchange of the shares by a shareholder who has held
such shares for six months or less (after applying certain holding period
rules) will be treated as a long-term capital loss to the extent of
distributions required to be treated by such shareholder as long-term capital
gain.
Backup Withholding. We will report to domestic shareholders and the IRS
the amount of dividends paid during each calendar year, and the amount of tax
withheld, if any, with respect thereto. Under the backup withholding rules, a
shareholder may be subject to backup withholding at the rate of 31% with
respect to dividends paid unless such holder (a) is a corporation or comes
within certain other exempt categories and, when required, demonstrates this
fact, or (b) provides a taxpayer identification number and certifies as to no
loss of exemption from backup withholding. Amounts withheld as backup
withholding will be creditable against the shareholder's income tax liability.
In addition, we may be required to withhold a portion of capital gain
distributions made to any shareholders who fail to certify their non-foreign
status. See "--Taxation of Non-U.S. Shareholders" below.
Taxation of Tax-Exempt Shareholders. Distributions to a shareholder that
is a tax-exempt entity should not constitute "unrelated business taxable
income" ("UBTI"), provided that the tax-exempt entity has not financed the
acquisition of its shares with "acquisition indebtedness" within the meaning
of the Code and the shares are not otherwise used in an unrelated trade or
business of the tax-exempt entity. However, distributions by a REIT to a
tax-exempt employee's pension trust that owns more than 10 percent of the REIT
will be treated as UBTI in an amount equal to the percentage of gross income
of the REIT that is derived from an "unrelated trade or business" (determined
as if the REIT were a pension trust) divided by the gross income of the REIT
for the year in which the dividends are paid. This rule only applies, however,
if (i) the percentage of gross income of the REIT that is derived from an
unrelated trade or business for the year in which the dividends are paid is at
least five percent, (ii) the REIT qualifies as a REIT only because the pension
trust is not treated as a single individual for purposes of the "five-or-fewer
rule", and (iii) (A) one pension trust owns more than 25 percent of the value
of the REIT or, (B) a group of pension trusts individually holding more than
10 percent of the value of the REIT collectively own more than 50 percent of
the value of the REIT.
Taxation of Non-U.S. Shareholders. A non-U.S. shareholder is a
shareholder who is not a "U.S. Person" and who does not hold shares in
connection with the conduct of trade or business within the United States. A
U.S. Person is defined as a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any State (other than a partnership that is not
treated as a U.S. Person under any applicable Treasury regulations), or an
estate whose income is subject to United States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. Persons have the authority to control all substantial decisions of
the trust. Notwithstanding the preceding sentence, to the extent provided in
Treasury regulations, certain trusts in existence on August 20, 1996, and
treated as U.S. Persons prior to such date, that elect to continue to be
treated as U.S. Persons, also will be U.S. Persons. Non-U.S. shareholders
should consult with their own tax advisors to determine the impact of U.S.
Federal, state and local income tax laws with regard to an investment in
shares, including any reporting requirements.
Distributions that are not attributable to gain from sales or exchanges
of U.S. real property interests and not designated as capital gain dividends
will be treated as dividends of ordinary income to the extent that they are
made out of current or accumulated earnings and profits. Such distributions,
ordinarily, will be subject to a withholding tax equal to 30% of the gross
amount of the distribution unless an applicable tax treaty reduces that tax.
Distributions in excess of current and accumulated earnings and profits will
not be taxable to a non-U.S. shareholder to the extent they do not exceed the
adjusted basis of the shares, but rather will reduce the adjusted basis of
such shares. To the extent that such distributions exceed the adjusted basis
of a non-U.S. shareholder's shares, it will give rise to tax liability if the
non-U.S. shareholder would otherwise be subject to tax on any gain from the
sale or disposition of his shares as described below (in which case they also
may be subject to a 30% branch profits tax if the shareholder is a foreign
corporation). If it cannot be determined at the time a distribution is made
whether or not such distribution will be in excess of current or accumulated
earnings and profits, the entire distribution will be subject to withholding
at the rate applicable to dividends. However, the non-U.S. shareholder may
seek a refund of such amounts from the IRS if it is subsequently determined
that such distribution was, in fact, in excess of current or accumulated
earnings and profits.
For any year in which we qualify as a REIT, distributions that are
attributable to gain from sales or exchanges of U.S. real property interests
will be taxed to a non-U.S. shareholder under the provisions of the Foreign
Investment in Real Property Tax Act of 1980 ("FIRPTA") at the normal capital
gain rates applicable to U.S. shareholders (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals). Also, distributions subject to FIRPTA may be subject to a
30% branch profits tax in the hands of a corporate non-U.S. shareholder not
entitled to treaty relief or exemption. We are required by applicable Treasury
Regulations to withhold 35% of any distribution that we have, or could have
designated as a capital gain dividend. The amount withheld is creditable
against the non-U.S. shareholder's FIRPTA tax liability.
Gain recognized by a non-U.S. shareholder upon a sale of shares generally
will not be taxed under FIRPTA if we are a "domestically controlled REIT,"
defined generally as a REIT in which at all times during a specified testing
period less than 50% in value of the stock was held directly or indirectly by
foreign persons. We do not qualify as a "domestically controlled REIT," a
non-U.S. shareholder's sale of securities generally still will not be subject
to U.S. tax under FIRPTA as a sale of a U.S. real property interest, provided
that, (i) the securities are "regularly traded" (as defined by the applicable
Treasury regulations) on an established securities market, and (ii) the
selling non-U.S. shareholder held 5% or less of our outstanding securities at
all times during a specified testing period. We believe the shares would be
considered to be "regularly traded" for this purpose, and we have no actual
knowledge of any non-U.S. shareholder that holds in excess of 5% of our stock.
If the gain on the sale of the shares were to be subject to tax under
FIRPTA, the non-U.S. shareholder would be subject to the same treatment as
U.S. shareholders with respect to such gain (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals), and the purchaser of the shares would be required to
withhold and remit to the IRS 10% of the purchase price.
Backup Withholding Tax and Information Reporting. Backup withholding tax
(which generally is a withholding tax imposed at the rate of 31% on certain
payments to persons that fail to furnish certain information under the United
States information reporting requirements) and information reporting will
generally not apply to distributions paid to non-U.S. Shareholders outside the
United States that are treated as (i) dividends subject to the 30% (or lower
treaty rate) withholding tax discussed above, (ii) capital gains dividends or
(iii) distributions attributable to gain from our sale or exchange of U.S.
real property interests.
As a general matter, backup withholding and information reporting will
not apply to a payment of the proceeds of a sale of shares by or through a
foreign office of a foreign broker. Information reporting (but not backup
withholding) will apply, however, to a payment of the proceeds of a sale of
shares by a foreign office of a broker that (a) is a U.S. Person, (b) derives
50% or more of its gross income for certain periods from the conduct of a
trade or business in the United States or (c) is a "controlled foreign
corporation" (generally, a foreign corporation controlled by United States
shareholders) for United States tax purposes, unless the broker has
documentary evidence in its records that the holder is a non-U.S. shareholder
and certain other conditions are met, or the shareholder otherwise establishes
an exemption. Payment to or through a United States office of a broker of the
proceeds of a sale of shares is subject to both backup withholding and
information reporting unless the shareholder certifies under penalty of
perjury that the shareholder is a non-U.S. shareholder, or otherwise
establishes an exemption. A non-U.S. shareholder may obtain a refund of any
amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the IRS.
The United States Treasury has recently finalized regulations regarding
the withholding and information reporting rules. In general, these regulations
do not alter the substantive withholding and information reporting
requirements but unify certification procedures and forms and clarify and
modify reliance standards. These regulations generally will be effective for
payments made after December 31, 2000, subject to certain transition rules. A
non-U.S. shareholder should consult its own advisor regarding the effect of
the new Treasury Regulations.
PLAN OF DISTRIBUTION
The selling shareholder may from time to time, in one or more
transactions, sell all or a portion of the offered shares on the New York
Stock Exchange, in the over-the-counter market, on any other national
securities exchange on which the common shares are listed or traded, in
negotiated transactions, in underwritten transactions, pursuant to Rule 144
under the Securities Act of 1933 or otherwise, at prices then prevailing or
related to the then current market price or at negotiated prices. The offering
price of the offered shares from time to time will be determined by the
selling shareholder and, at the time of the determination, may be higher or
lower than the market price of the common shares on the New York Stock
Exchange. In connection with an underwritten offering, underwriters or agents
may receive compensation in the form of discounts, concessions or commissions
from the selling shareholder or from purchasers of offered shares for whom
they may act as agents, and underwriters may sell offered shares to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents. Under agreements that may be
entered into by us, underwriters, dealers and agents who participate in the
distribution of offered shares may be entitled to indemnification by us
against specific liabilities, including liabilities under the Securities Act
of 1933, or to contribution with respect to payments which such underwriters,
dealers or agents may be required to make in respect thereof. The offered
shares may be sold directly or through broker-dealers acting as principal or
agent, or pursuant to a distribution by one or more underwriters on a firm
commitment or best-efforts basis. The methods by which the offered shares may
be sold include:
o a block trade in which the broker-dealer so engaged will attempt to sell
the offered shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o an exchange distribution in accordance with the rules of the New York
Stock Exchange;
o privately negotiated transactions; and
o underwritten transactions.
The selling shareholder and any underwriters, dealers or agents
participating in the distribution of the offered shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and any
profit on the sale of the offered shares by the selling shareholder and any
commissions received by any such broker-dealers may be deemed to be
underwriting commissions under the Securities Act of 1933.
When the selling shareholder elects to make a particular offer of offered
shares, a prospectus supplement, if required, will be distributed which will
identify any underwriters, dealers or agents and any discounts, commissions
and other terms constituting compensation from such selling shareholder and
any other required information.
In order to comply with state securities laws, if applicable, the offered
shares may be sold only through registered or licensed brokers or dealers. In
addition, in specific states, the offered shares may not be sold unless they
have been registered or qualified for sale in such state or an exemption from
such registration or qualification requirement is available and is complied
with.
We have agreed to pay all costs and expenses incurred in connection with
the registration under the Securities Act of 1933 of the offered shares,
including, without limitation, all registration and filing fees, printing
expenses and fees and disbursements of counsel and accountants for us. The
selling shareholder will pay any brokerage fees and commissions, fees and
disbursements of legal counsel for the selling shareholder and stock transfer
and other taxes attributable to the sale of the offered shares. We also have
agreed to indemnify the selling shareholder and its officers, directors and
trustees and each person who controls, within the meaning of the Securities
Act of 1933, the selling shareholder against specified losses, claims,
damages, liabilities and expenses arising under the securities laws in
connection with this offering. The selling shareholder has agreed to indemnify
us, our officers and trustees and each person who controls, within the meaning
of the Securities Act of 1933, us, against any losses, claims, damages,
liabilities and expenses arising under the securities laws in connection with
this offering with respect to written information furnished to us by the
selling shareholder.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby and certain
legal matters described under "Material Federal Income Tax Considerations"
will be passed upon for us by Brown & Wood LLP, New York, New York.
EXPERTS
The consolidated financial statements and schedule of LaSalle Hotel
Properties as of December 31, 1999 and 1998 and for the year ended December
31, 1999 and for the period from April 29, 1998 (inception) through December
31, 1998 and the financial statements of LaSalle Hotel Lessee, Inc. as of
December 31, 1999 and 1998 and for the year ended December 31, 1999 and for
the period from April 29, 1998 (inception) through December 31, 1998 have been
incorporated by reference herein in reliance upon the reports of KPMG LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements or other information we file at the Securities and
Exchange Commission's public reference rooms located at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661 and 7 World Trade Center, Suite 1300,
New York, NY 10048. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the public reference rooms. Our
Securities and Exchange Commission filings are also available to the public
from commercial document retrieval services and at the web site maintained by
the Securities and Exchange Commission at "http://www.sec.gov."
We have filed a Registration Statement on Form S-3, of which this
prospectus is a part, to register the securities with the Securities and
Exchange Commission. As allowed by Securities and Exchange Commission rules,
this Prospectus does not contain all the information you can find in the
Registration Statement or the exhibits to the Registration Statement.
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this Prospectus, which means that we can disclose
important information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The information
incorporated by reference is deemed to be part of this Prospectus, except for
any information superseded by information in this Prospectus. This Prospectus
incorporates by reference the documents set forth below that we have
previously filed with the Securities and Exchange Commission. These documents
contain important information about us, our business and our finances.
Document Period
-------- ------
Annual Report on Form 10-K
(File No. 1-14045)..................... Year ended December 31, 1999
Quarterly Reports on Form 10-Q
(File No. 1-14045)..................... Quarter ended March 31, 2000
Quarter ended June 30, 2000
Quarter ended September 30, 2000
Dated Filed
----- -----
Current Reports on Form 8-K
(File No. 1-14045)..................... January 24, 2000 January 25, 2000
January 25, 2000 January 25, 2000
April 24, 2000 April 25, 2000
July 31, 2000 August 1, 2000
October 30, 2000 November 1, 2000
November 14, 2000 November 15, 2000
Any documents which we file pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
after the date of this prospectus but before the end of any offering of
securities made under this prospectus will also be considered to be
incorporated by reference.
If you request, either orally or in writing, we will provide you with a
copy of any or all documents which are incorporated by reference. Such
documents will be provided to you free of charge, but will not contain any
exhibits, unless those exhibits are incorporated by reference into the
document. Written requests should be addressed to LaSalle Hotel Properties,
4800 Montgomery Lane, Suite M25, Bethesda, Maryland 20814, Attn: Raymond D.
Martz, Director of Finance. Oral requests should be made to Mr. Martz at (301)
941-1516.
=============================================================================
300,000 SHARES
LASALLE HOTEL PROPERTIES
SHARES OF BENEFICIAL INTEREST
--------------
PROSPECTUS
--------------
December __, 2000
==============================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the estimated expenses in connection with the
issuance and distribution of the Registrant's securities being registered
hereby, other than underwriting discounts and commissions, all of which will
be borne by the Registrant:
Securities and Exchange Commission registration fee..... $ 1,169
Printing and engraving expenses......................... 10,000
Legal fees and expenses................................. 10,000
Accounting fees and expenses............................ 4,500
Blue Sky fees and expenses.............................. 0
Miscellaneous........................................... 3,500
-------------
Total $ 29,169
=============
Item 15. Indemnification of Trustees and Officers.
The Company's officers and trustees are and will be indemnified under
Maryland and Delaware law, the declaration of trust and Bylaws of the Company
and the partnership agreement of the Operating Partnership against certain
liabilities. The declaration of trust of the Company requires it to indemnify
its trustees and officers to the fullest extent permitted from time to time
under Maryland law.
The declaration of trust of the Company authorizes it, to the maximum
extent permitted by Maryland law, to obligate itself to indemnify and to pay
or reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any present or former trustee or officer or (b) any
individual who, while a trustee of the Company and at the request of the
Company, serves or has served as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise from and against any claim or
liability to which such person may become subject or which such person may
incur by reason of his or her status as a present or former trustee or officer
of the Company. The Bylaws of the Company obligate it, to the maximum extent
permitted by Maryland law, to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (a) any present or
former trustee or officer who is made party to the proceeding by reason of his
service in that capacity or (b) any individual who, while a trustee or officer
of the Company and at the request of the Company, serves or has served another
real estate investment trust, corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a trustee, director, officer
or partner of such real estate investment trust, corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and who is
made a party to the proceeding by reason of his service in that capacity,
against any claim or liability to which he may become subject by reason of
such status.
The declaration of trust and Bylaws also permit the Company to indemnify
and advance expenses to any person who served as a predecessor of the Company
in any of the capacities described above and to any employee or agent of the
Company or a predecessor of the Company. The Bylaws require the Company to
indemnify a trustee or officer who has been successful, on the merits or
otherwise, in the defense of any proceeding to which he is made a party by
reason of his service in that capacity.
The Maryland REIT Law permits a Maryland real estate investment trust to
indemnify and advance expenses to its trustees, officers, employees and agents
to the same extent as permitted by Maryland Law for directors and officers of
Maryland corporations. Maryland Law permits a corporation to indemnify its
present and former directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by
them in connection with any proceeding to which they may be made a party by
reason of their service in those or other capacities unless it is established
that (a) the act or omission of the director or officer was material to the
matter giving rise to the proceeding and (i) was committed in bad faith or
(ii) was the result of active and deliberate dishonesty, (b) the director or
officer actually received an improper personal benefit in money, property or
services or (c) in the case of any criminal proceeding, the director or
officer had reasonable cause to believe that the act or omission was unlawful.
However, under Maryland Law, a Maryland corporation may not indemnify for an
adverse judgment in a suit by or in the right of the corporation. In
accordance with Maryland Law, the Bylaws of the Company require it, as a
condition to advance expenses, to obtain (a) a written affirmation by the
director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification by the Company as authorized by the
Bylaws and (b) a written statement by or on his behalf to repay the amount
paid or reimbursed by the Company if it shall ultimately be determined that
the standard of conduct was not met.
The Company has entered into indemnification agreements with each of its
trustees and officers. The indemnification agreements require, among other
things, that the Company indemnify its trustees and officers to the fullest
extent permitted by law and advance to its trustees and executive officers all
related expenses, subject to reimbursement if it is subsequently determined
that indemnification is not permitted.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees or officers pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
Item 16. Exhibits.
4.1 -- Articles of Incorporation(1)
4.2 -- By-Laws(1)
4.3 -- Form of Common Share Certificate(1)
5 -- Opinion of Brown & Wood LLP as to the legality of the Securities
8 -- Opinion of Brown & Wood LLP as to tax matters
23.1 -- Consent of Brown & Wood LLP (included in Exhibits 5 and 8)
23.2 -- Consent of KPMG LLP
24 -- Power of attorney (included on signature page of this
registration statement)
---------------
(1) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 333-45647) and incorporated herein by reference.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to the Registration Statement;
(A) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(B) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(C) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or 15(d) of the Exchange Act that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, partners and
controlling persons of a Registrant pursuant to the foregoing provisions, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a Registrant of expenses incurred or
paid by a director, officer, partner or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer, partner or controlling person in connection with the
securities being registered, the applicable Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933 the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) under the Securities Act of 1933 shall be deemed to
be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, LaSalle Hotel
Properties certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Bethesda, Maryland, on December 4, 2000.
LASALLE HOTEL PROPERTIES
By: /S/ HANS S. WEGER
-----------------------------------
Hans S. Weger
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
trustees of LaSalle Hotel Properties hereby severally constitute Jon E. Bortz
and Hans S. Weger, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names
in the capacities indicated below, the Registration Statement filed herewith
and any and all amendments to said Registration Statement, and generally to do
all such things in our names and in our capacities as officers and trustees to
enable LaSalle Hotel Properties to comply with the provisions of the
Securities Act of 1933, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be
signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ STUART L. SCOTT Chairman of the Board of Trustees December 4, 2000
--------------------
Stuart L. Scott
/s/ JON E. BORTZ President, Chief Executive Officer December 4, 2000
----------------- and Trustee
Jon E. Bortz
/s/ DARRYL HARTLEY-LEONARD Trustee December 4, 2000
---------------------------
Darryl Hartley-Leonard
/s/ GEORGE F. LITTLE, II Trustee December 4, 2000
-------------------------
George F. Little, II
/s/ WILLIAM S. MCCALMONT Trustee December 4, 2000
-------------------------
William S. McCalmont
/s/ DONALD S. PERKINS Trustee December 4, 2000
----------------------
Donald S. Perkins
Trustee
-----------------------
Donald A. Washburn
</TABLE>
Exhibit Index
Exhibits Description
-------- -----------
5 -- Opinion of Brown & Wood LLP as to the legality
of the Securities
8 -- Opinion of Brown & Wood LLP as to tax matters
23.1 -- Consent of Brown & Wood LLP (included in Exhibits 5 and 8)
23.2 -- Consent of KPMG LLP
24 -- Power of attorney (included on signature page of
this Registration Statement)
<PAGE>
Exhibit 5
BROWN & WOOD LLP
One World Trade Center
New York, New York 10048-0557
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
December 8, 2000
LaSalle Hotel Properties
4800 Montgomery Lane, Suite M25
Bethesda, MD 20814
Ladies and Gentlemen:
This opinion is furnished in connection with the registration statement
on Form S-3 (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the offering from time to time by LaSalle Hotel Co-Investment, Inc. of up to
300,000 common shares of beneficial interest, $.01 par value per share (the
"Common Shares"), of LaSalle Hotel Properties, a Maryland real estate
investment trust (the "Company").
In connection with rendering this opinion, we have examined the
Declaration of Trust and the Bylaws of the Company, such records of the
proceedings of the Company as we deemed appropriate; the Registration
Statement, and such other certificates, receipts, records and documents as we
considered necessary for the purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Common Shares
are validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE>
Exhibit 8
BROWN & WOOD LLP
1666 K STREET, NW
WASHINGTON, DC 20006-1208
Telephone: (202) 533-1300
Facsimile: (202) 533-1399
December 8, 2000
LaSalle Hotel Properties
4800 Montgomery Lane, Suite M25
Bethesda, Maryland 20814
Ladies and Gentlemen:
You have requested our opinion concerning certain of the federal income
tax matters with respect to LaSalle Hotel Properties, a Maryland real estate
investment trust (the "Trust"), in connection with the registration statement
on Form S-3 (the "Registration Statement") filed by the Trust with the
Securities and Exchange Commission (the "SEC") on December 8, 2000.
This opinion is based, in part, upon various assumptions and factual
representations set forth in the Registration Statement, in registration
statements on Forms S-11 and S-3 previously filed by the Trust with the SEC
and in a letter delivered to us by the Trust today. This opinion is also based
upon the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
Regulations promulgated thereunder and existing administrative and judicial
interpretations thereof, all as they exist at the date of this letter. All of
the foregoing statutes, regulations and interpretations are subject to change,
in some circumstances with retroactive effect. Any changes to the foregoing
authorities might result in modifications of our opinions contained herein.
Based on the foregoing, we are of the opinion that, commencing with the
Trust's taxable year ended December 31, 1998, the Trust has been and will
continue to be organized in conformity with the requirements for qualification
and taxation as a real estate investment trust (a "REIT") under the Code and
its method of operating has enabled the Trust, and its proposed method of
operation going forward will enable the Trust, to meet the requirements for
qualification and taxation as a REIT.
We express no opinion with respect to the transactions described herein
and in the Registration Statement other than those expressly set forth herein.
Furthermore, the Trust's qualification as a REIT will depend on the Trust's
meeting, in its actual operations, the applicable asset composition, source of
income, shareholder diversification, distribution and other requirements of
the Code and Treasury Regulations necessary for a trust to qualify as a REIT.
We will not review these operations and no assurance can be given that the
actual operations of the Trust and its affiliates will meet these requirements
or the representations made to us with respect thereto.
This opinion is furnished to you for your use in connection with the
Registration Statement. We hereby consent to the filing of this opinion as
Exhibit 8 to the Registration Statement and to the use of our name in
connection with the material discussed therein under the caption "Material
Federal Income Tax Considerations."
Very truly yours,
/s/ Brown & Wood LLP
<PAGE>
Exhibit 23.2
The Board of Trustees LaSalle Hotel Properties:
We consent to incorporation by reference in the Registration Statement on Form
S-3 of LaSalle Hotel Properties of our report dated January 21, 2000 relating
to the consolidated balance sheets of LaSalle Hotel Properties as of December
31, 1999 and 1998, and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year ended December 31, 1999 and
for the period from April 29, 1998 (inception) through December 31, 1998 and
the related financial statement schedule and our report dated March 1, 2000
relating to the balance sheets of LaSalle Hotel Lessee, Inc. as of December 31,
1999 and 1998, and the related statements of operations, stockholders' equity
(deficit), and cash flows for the year ended December 31, 1999 and for the
period from April 29, 1998 (inception) through December 31, 1998, which
reports appear in the December 31, 1999 annual report on Form 10-K of LaSalle
Hotel Properties and to the reference to our firm under the heading "Experts"
in the prospectus.
/s/ KPMG LLP
Chicago, Illinois
December 8, 2000
