LaSalle Hotel Properties Reports Second Quarter Results

FFO per Share Increases 12.6 Percent
BETHESDA, Md.--(Business Wire)--
LaSalle Hotel Properties (NYSE:LHO) today reported net income to
common shareholders of $20.5 million, or $0.51 per diluted share for
the second quarter ended June 30, 2008, compared to net income of
$19.4 million, or $0.48 per diluted share for the same prior year
period.

For the second quarter ended June 30, 2008, the Company generated
funds from operations ("FFO") of $47.4 million versus $42.3 million
for the same period of 2007, an increase of 12.1 percent. On a per
diluted share basis, FFO for the second quarter 2008 rose to $1.18
from $1.05 a year ago, an increase of 12.6 percent. The Company's
earnings before interest, taxes, depreciation and amortization
("EBITDA") for the second quarter increased 8.4 percent to $70.5
million from $65.0 million for the same period of 2007.

Room revenue per available room ("RevPAR") increased 5.3 percent
for the second quarter to $174.38 versus the previous year. Average
daily rate ("ADR") increased 2.6 percent to $214.38 compared to the
second quarter of 2007, while occupancy increased 2.6 percent to 81.3
percent. The Company's RevPAR outperformance compared to the overall
lodging industry was primarily attributable to the performance of
hotels that benefited from the Company's numerous recently completed
redevelopments, repositionings and renovation projects.

The Company's hotels generated $73.1 million of EBITDA ("Hotel
EBITDA") in the second quarter compared with $68.0 million last year.
Hotel EBITDA margins across the Company's portfolio increased 69 basis
points from the prior year period. The increase in portfolio-wide
hotel EBITDA margins was primarily attributable to a 5.5 percent
increase in portfolio-wide hotel revenues while limiting expense
increases to 4.3 percent from the prior year.

"The solid performance of our recently renovated and repositioned
hotels drove favorable results for the Company and significant
outperformance as compared to the industry in the quarter," said Jon
Bortz, Chairman and Chief Executive Officer of LaSalle Hotel
Properties. "With our major renovations and repositionings materially
complete and now ramping up, we anticipate that our portfolio will
fare better than the industry on a RevPAR basis for the remainder of
2008, as it did in the second quarter. We also continue to
aggressively asset manage our properties, working closely with our
managers to operate more efficiently during this difficult economic
environment."

As of the end of the second quarter 2008, the Company had total
outstanding debt of $965.5 million. The Company's $450.0 million
credit facility had an outstanding balance of $169.0 million as of
June 30, 2008. Trailing 12 month Corporate EBITDA (as defined in the
Company's senior unsecured credit facility) to interest coverage ratio
was 4.3 times. Including the impact of adding back $0.7 million of
capitalized interest to interest expense, the weighted average
interest rate of the Company's debt was 5.1 percent in the quarter. As
of June 30, 2008, total debt to trailing 12 month Corporate EBITDA
equaled 4.5 times.

"We have no debt maturities for the remainder of 2008, significant
capacity available on our $450.0 million credit facility and 18 of our
31 hotels are unencumbered by debt," stated Hans Weger, the Company's
Chief Financial Officer. "We continue to be committed to maintaining a
strong balance sheet during these uncertain times."

For the six months ended June 30, 2008, net income to common
shareholders decreased to $5.7 million from $35.0 million for the
prior year period. Net income for the six months ended June 30, 2007
included a $30.3 million gain on sale of the LaGuardia Marriott and
the negative impact from the $3.9 million non-cash write-off of the
initial issuance costs of the Series A Preferred Shares due to their
redemption in March 2007. For the six months ended June 30, 2008, FFO
increased to $57.2 million, or $1.43 per diluted share, from $49.9
million, or $1.24 per diluted share for the prior year period. FFO for
2007 included the negative impact from the $3.9 million related to the
issuance costs of the Series A Preferred Shares. EBITDA for the six
months ended June 30, 2008 decreased to $95.0 million from $123.8
million for the prior year period. EBITDA for 2007 included the $30.3
million gain on sale of the LaGuardia Marriott.

RevPAR increased 2.6 percent for the six months ended June 30,
2008 to $146.42 versus the prior year period. The growth in RevPAR was
almost entirely due to ADR growth of 2.3 percent to $200.58. Occupancy
rose 0.3 percent to a healthy 73.0 percent for the six months ended
June 30, 2008.

For the six months ended June 30, 2008, the Company's hotels
generated $101.0 million of Hotel EBITDA compared with $99.6 million
for the same period last year. Hotel EBITDA margins across the
Company's portfolio decreased 29 basis points from the prior year
period. The decrease in portfolio-wide hotel EBITDA margins was
primarily attributable to increases in wages and benefits, sales and
marketing expenses and a 14.9 percent increase in property taxes over
the first half of 2007.

Second Quarter Highlights

On April 15, 2008, the Company announced its monthly dividend of
$0.17 per share of its common shares of beneficial interest for each
of the three months of April, May and June 2008. The April dividend
was paid on May 15, 2008 to common shareholders of record on April 30,
2008; the May dividend was paid on June 13, 2008 to common
shareholders of record on May 30, 2008; and the June dividend was paid
on July 15, 2008 to common shareholders of record on June 30, 2008.

On April 17, 2008, the Company and LaSalle Investment Management
announced a joint venture to seek domestic hotel investments in high
barrier-to-entry urban and resort markets in the U.S. The two
companies plan to invest up to an aggregate of $250 million of equity
in the joint venture. This would result in investments of up to $700
million when combined with targeted leverage. LaSalle Hotel Properties
will own 15 percent of the joint venture and have the opportunity to
earn a greater percentage of sale proceeds based upon achieving
specific return thresholds on total joint venture equity investments.
The Company will also receive additional income for providing
acquisition, asset management, project redevelopment oversight and
certain financing services.

On June 2, 2008, the Board of Trustees of LaSalle Hotel Properties
adopted a succession plan with respect to its Chairman, Chief
Executive Officer and President Jon E. Bortz and its Chief Operating
Officer Michael D. Barnello. Pursuant to the succession plan, Mr.
Bortz will retire as Chief Executive Officer as of July 1, 2010, and
Mr. Barnello, who has been Chief Operating Officer since the Company's
inception, will assume the role and duties of Chief Executive Officer
at that time. The succession plan includes Mr. Bortz continuing in his
role as Chairman of the Board after his retirement. Effective June 2,
2008, Mr. Barnello was named President of LaSalle Hotel Properties.

Subsequent Events

On July 15, 2008, the Company announced it was increasing its
monthly dividend to $0.175 per common share for each of the three
months of July, August and September 2008. The July dividend will be
paid on August 15, 2008 to common shareholders of record on July 31,
2008; the August dividend will be paid on September 15, 2008 to common
shareholders of record on August 29, 2008; and the September dividend
will be paid on October 15, 2008 to common shareholders of record on
September 30, 2008.

"This represents the sixth consecutive year the Company has
increased its common share dividend," stated Mr. Weger, "demonstrating
the Company's commitment to consistent income growth for its
shareholders."

On July 21, 2008, in connection with the Company's previously
announced succession plan, the Board of Trustees increased the number
of trustees constituting the full Board of Trustees to eight, and
appointed Michael D. Barnello, our President and Chief Operating
Officer, as a trustee effective immediately (initially to the class of
trustees whose terms expire in 2009) to serve until his successor is
duly elected and qualified. In addition, Julio Morales was named Chief
Accounting Officer effective immediately. Mr. Morales, 47, has been
with the Company since June 2000 and has acted as Controller of the
Company since that time. Mr. Morales will continue to have
responsibility for the day-to-day accounting functions of the Company
and will continue to report to Hans S. Weger, the Company's Executive
Vice President and Chief Financial Officer.

2008 Outlook

Due to worsening economic and lodging fundamentals, the Company is
reducing its industry and Company outlook. Assuming no major
geopolitical events that might negatively impact the economy or the
travel business, our revised outlook for 2008 is as follows:

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*T
Current Previous Change
--------------- --------------- -----------------
Industry RevPAR
Growth (2.0%) - 0.0% 0.0% - 3.0% (2.0%) - (3.0%)
Company RevPAR
Growth 0.0% - 2.0% 2.0% - 5.0% (2.0%) - (3.0%)
Net Income/Diluted
Share $0.40 - $0.54 $0.64 - $0.89 ($0.24) - ($0.35)
FFO/Diluted Share $3.02 - $3.16 $3.16 - $3.41 ($0.14) - ($0.25)
EBITDA (millions) $199.8 - $205.4 $205.9 - $217.1 ($6.1) - ($11.7)
*T

The 2008 full year outlook is based on the following major
assumptions:

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Current Previous Change
------------------ --------------- ------------------
Portfolio Hotel
EBITDA Margins (100bps) - (50bps) (50bps) - 50bps (50bps) - (100bps)
Corporate
General &
Administrative
Expense
(millions) $17.4 - $17.7 $15.6 - $15.9 $1.8 - $1.8
Non-Cash Income
Tax Expense
(millions) $0.5 - $1.6 $0.5 - $1.6 $0.0 - $0.0
Weighted Average
Outstanding
Debt (millions) $965.0 - $975.0 $900.0 - $910.0 $65.0 - $65.0
Interest Expense
(millions) $48.7 - $49.0 $49.3 - $49.6 ($0.6) - ($0.6)
Weighted Average
Fully Diluted
Shares & Units
(millions) 40.1 40.3 (0.2)
*T

The outlook for the second half of 2008 is as follows:

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3rd Quarter
---------------------------------------------
Current Previous Change
------------- ------------- -----------------
RevPAR Growth (1.5%) - 1.5% Not Provided N/A
FFO/Diluted Share $0.97 - $1.05 $1.13 - $1.20 ($0.16) - ($0.15)
EBITDA (millions) $59.6 - $63.2 $67.2 - $70.4 ($7.6) - ($7.2)
*T

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4th Quarter
---------------------------------------------
Current Previous Change
------------- ------------- -----------------
RevPAR Growth (2.0%) - 2.0% Not Provided N/A
FFO/Diluted Share $0.62 - $0.68 $0.67 - $0.73 ($0.05) - ($0.05)
EBITDA (millions) $45.2 - $47.2 $46.0 - $49.0 ($0.8) - ($1.8)
*T

LaSalle Hotel Properties is a leading multi-operator real estate
investment trust owning 31 upscale and luxury full-service hotels,
totaling approximately 8,500 guest rooms in 14 markets in 11 states
and the District of Columbia. The Company focuses on owning,
redeveloping and repositioning upscale and luxury full-service hotels
located in urban, resort and convention markets. LaSalle Hotel
Properties seeks to grow through strategic relationships with premier
lodging companies, including Westin Hotels and Resorts, Sheraton
Hotels & Resorts Worldwide, Inc., Hilton Hotels Corporation, Outrigger
Lodging Services, Noble House Hotels & Resorts, Hyatt Hotels
Corporation, Benchmark Hospitality, White Lodging Services
Corporation, Gemstone Hotels & Resorts, LLC, Thompson Hotels,
Sandcastle Resorts & Hotels, Davidson Hotel Company, Denihan
Hospitality Group and the Kimpton Hotel & Restaurant Group, LLC.

This press release, together with other statements and information
publicly disseminated by the Company, contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. The Company intends such forward-looking statements
to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act
of 1995 and includes this statement for purposes of complying with
these safe harbor provisions. Forward-looking statements, which are
based on certain assumptions and describe the Company's future plans,
strategies and expectations, are generally identifiable by use of the
words "believe," "expect," "intend," "anticipate," "estimate,"
"project" or similar expressions. Forward-looking statements in this
press release include, among others, statements about the economy,
industry fundamentals, the Company's CEO succession plan, the effects
of the Company's renovation and repositioning strategy, performance
improvements, general and administrative expenses, interest expense,
tax expense, shares and units, EBITDA, FFO, and Net Income. You should
not rely on forward-looking statements since they involve known and
unknown risks, uncertainties and other factors that are, in some
cases, beyond the Company's control and which could materially affect
actual results, performances or achievements. Factors that may cause
actual results to differ materially from current expectations include,
but are not limited to, (i) the Company's dependence on third-party
managers of its hotels, including its inability to implement strategic
business decisions directly, (ii) risks associated with the hotel
industry, including competition, increases in wages, energy costs and
other operating costs, actual or threatened terrorist attacks,
downturns in general and local economic conditions and cancellation of
or delays in the completion of anticipated demand generators, (iii)
the availability and terms of financing and capital and the general
volatility of securities markets, (iv) risks associated with the real
estate industry, including environmental contamination and costs of
complying with the Americans with Disabilities Act and similar laws,
(v) interest rate increases, (vi) the possible failure of the Company
to qualify as a REIT and the risk of changes in laws affecting REITs,
(vii) the possibility of uninsured losses, (viii) risks associated
with redevelopment and repositioning projects, including delays and
cost overruns, and (ix) the risk factors discussed in the Company's
Annual Report on Form 10-K as updated in its Quarterly Reports.
Accordingly, there is no assurance that the Company's expectations
will be realized. Except as otherwise required by the federal
securities laws, the Company disclaims any obligation or undertaking
to publicly release any updates or revisions to any forward-looking
statement contained herein (or elsewhere) to reflect any change in the
Company's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.

For additional information or to receive press releases via
e-mail, please visit our website at www.lasallehotels.com

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LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)

For the three months For the six months
ended ended
June 30, June 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues:
Hotel operating
revenues:
Room revenue $ 127,203 $ 114,944 $ 207,701 $ 195,659
Food and beverage
revenue 52,222 48,372 84,762 83,526
Other operating
department revenue 14,318 13,017 23,889 22,355
---------- ---------- ---------- ----------
Total hotel
operating revenues 193,743 176,333 316,352 301,540
Participating lease
revenue 5,057 7,143 10,564 12,660
Other income 2,496 1,240 4,040 2,438
---------- ---------- ---------- ----------
Total revenues 201,296 184,716 330,956 316,638
---------- ---------- ---------- ----------
Expenses:
Hotel operating
expenses:
Room 27,361 24,054 48,848 44,895
Food and beverage 33,530 31,050 58,216 57,199
Other direct 6,640 6,316 11,328 11,143
Other indirect 46,575 44,336 86,086 82,797
---------- ---------- ---------- ----------
Total hotel
operating expenses 114,106 105,756 204,478 196,034
Depreciation and
amortization 26,819 22,945 51,560 45,085
Real estate taxes,
personal property taxes
and insurance 9,865 8,299 18,666 16,445
Ground rent 1,997 1,728 3,545 3,169
General and
administrative 4,170 3,488 7,828 7,398
Other expenses 682 658 1,504 1,233
---------- ---------- ---------- ----------
Total operating
expenses 157,639 142,874 287,581 269,364
---------- ---------- ---------- ----------
Operating income 43,657 41,842 43,375 47,274
Interest income 26 199 109 1,023
Interest expense (12,362) (11,868) (23,831) (23,311)
---------- ---------- ---------- ----------
Income before income tax
benefit, minority
interest and discontinued
operations 31,321 30,173 19,653 24,986
Income tax (expense)
benefit (3,738) (3,632) 117 (251)
Minority interest in loss
of consolidated entities 4 - 5 -
Minority interest of
common units in Operating
Partnership (72) (69) (53) (143)
Minority interest of
preferred units in
Operating Partnership (1,346) (1,531) (2,759) (3,057)
Equity in earnings of
joint venture - 27 - 27
---------- ---------- ---------- ----------
Income from continuing
operations 26,169 24,968 16,963 21,562
---------- ---------- ---------- ----------

Discontinued operations:
Income from operations
of property disposed
of, including gain on
sale - 16 - 30,341
Minority interest, net
of tax - - - (1)
Income tax benefit - - - 73
---------- ---------- ---------- ----------
Net income from
discontinued operations - 16 - 30,413
---------- ---------- ---------- ----------

Net income 26,169 24,984 16,963 51,975
Distributions to preferred
shareholders (5,624) (5,624) (11,248) (13,095)
Issuance costs of redeemed
preferred shares - - - (3,868)
---------- ---------- ---------- ----------
Net income applicable to
common shareholders $ 20,545 $ 19,360 $ 5,715 $ 35,012
========== ========== ========== ==========
*T

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LASALLE HOTEL PROPERTIES
Consolidated Statements of Operations - Continued
(Dollars in thousands, except per share data)
(Unaudited)

For the three months For the six months
ended ended
June 30, June 30,
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Earnings per Common
Share - Basic:
Net income
applicable to
common shareholders
before discontinued
operations and
after dividends on
unvested restricted
shares $ 0.51 $ 0.48 $ 0.14 $ 0.11
Discontinued
operations - - - 0.76
----------- ----------- ----------- -----------
Net income
applicable to
common shareholders
after dividends on
unvested restricted
shares $ 0.51 $ 0.48 $ 0.14 $ 0.87
=========== =========== =========== ===========

Earnings per Common
Share - Diluted:
Net income
applicable to
common shareholders
before discontinued
operations $ 0.51 $ 0.48 $ 0.14 $ 0.11
Discontinued
operations - - - 0.76
----------- ----------- ----------- -----------
Net income
applicable to
common shareholders $ 0.51 $ 0.48 $ 0.14 $ 0.87
=========== =========== =========== ===========

Weighted average
number of common
shares outstanding:
Basic 39,919,144 39,854,720 39,919,144 39,849,367
Diluted 39,978,272 40,133,572 39,994,301 40,132,087
*T

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LASALLE HOTEL PROPERTIES
FFO and EBITDA
(Dollars in thousands, except share data)
(Unaudited)

For the three months ended For the six months ended
June 30, June 30,
--------------------------- -------------------------
2008 2007 2008 2007
------------- ------------- ------------ ------------

Funds From
Operations
(FFO):
Net income
applicable to
common
shareholders $ 20,545 $ 19,360 $ 5,715 $ 35,012
Depreciation 26,595 22,722 51,163 44,738
Amortization of
deferred lease
costs 181 122 304 246
Minority
interest:
Minority
interest in
consolidated
entities (4) - (5) -
Minority
interest of
common units
in Operating
Partnership 72 69 53 143
Minority
interest in
discontinued
operations - - - 1
Less: Net gain
on sale of
property
disposed of - (16) - (30,278)

------------- ------------- ------------ ------------
FFO $ 47,389 $ 42,257 $ 57,230 $ 49,862
============= ============= ============ ============

Weighted average
number of
common shares
and units
outstanding
Basic 40,022,674 39,958,250 40,022,674 39,952,897
Diluted 40,081,802 40,237,102 40,097,831 40,235,617

For the three months ended For the six months ended
June 30, June 30,
--------------------------- -------------------------
2008 2007 2008 2007
------------- ------------- ------------ ------------
Earnings Before
Interest,
Taxes,
Depreciation
and
Amortization
(EBITDA):
Net income
applicable to
common
shareholders $ 20,545 $ 19,360 $ 5,715 $ 35,012
Interest expense 12,362 11,868 23,831 23,311
Income tax
expense
(benefit):
Income tax
expense
(benefit) 3,738 3,632 (117) 251
Income tax
(benefit)
from
discontinued
operations - - - (73)
Depreciation and
amortization 26,819 22,945 51,560 45,136
Minority
interest:
Minority
interest in
consolidated
entities (4) - (5) -
Minority
interest of
common units
in Operating
Partnership 72 69 53 143
Minority
interest of
preferred
units in
Operating
Partnership 1,346 1,531 2,759 3,057
Minority
interest in
discontinued
operations - - - 1
Distributions to
preferred
shareholders 5,624 5,624 11,248 16,963
------------- ------------- ------------ ------------

EBITDA $ 70,502 $ 65,029 $ 95,044 $ 123,801

Corporate
expense 5,340 4,524 10,251 9,389
Interest and
other income (2,522) (1,466) (4,149) (3,488)
Participating
lease
adjustments
(net) 538 400 431 458
Hotel level
adjustments
(net) (779) (476) (554) (135)
Income from
operations of
property
disposed of,
including
gain on sale - (16) - (30,392)

------------- ------------- ------------ ------------
Hotel EBITDA $ 73,079 $ 67,995 $ 101,023 $ 99,633
============= ============= ============ ============
*T

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Notes:
With respect to Hotel EBITDA, the Company believes that excluding the
effect of corporate-level expenses, non-cash items, and the portion
of these items related to unconsolidated entities, provides a more
complete understanding of the operating results over which individual
hotels and operators have direct control. We believe property-level
results provide investors with supplemental information on the
ongoing operational performance of our hotels and effectiveness of
management in running our business on a property-level basis.

Hotel EBITDA includes the operating data for all properties leased to
LHL and to third parties for the three and six months ended June 30,
2008 and 2007 excluding the Donovan House. Chaminade Resort is
excluded from January (closed for renovations) in the six months
ended June 30, 2008 and 2007.
*T

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LASALLE HOTEL PROPERTIES
Hotel Operational Data
Schedule of Property Level Results
(Dollars in thousands)
(Unaudited)

For the three months ended For the six months ended
June 30, June 30,
-------------------------- ------------------------
2008 2007 2008 2007
------------- ------------ ----------- ------------
Revenues
Room $ 131,363 $ 124,727 $ 219,844 $ 213,214
Food and
beverage 55,190 51,914 91,325 90,780
Other 14,218 13,752 24,189 23,575
------------- ------------ ----------- ------------
Total hotel
revenues 200,771 190,393 335,358 327,569
------------- ------------ ----------- ------------

Expenses
Room 27,527 25,715 50,663 47,861
Food and
beverage 34,887 32,864 61,669 60,940
Other direct 6,725 6,656 11,710 11,748
General and
administrative 14,128 13,377 27,354 25,424
Sales and
marketing 12,865 12,667 24,565 23,675
Management fees 7,458 7,731 11,333 11,964
Property
operations and
maintenance 6,542 6,829 12,890 13,288
Energy and
utilities 5,670 5,755 11,532 12,018
Property taxes 8,511 7,239 16,212 14,108
Other fixed
expenses 3,379 3,565 6,407 6,910
------------- ------------ ----------- ------------
Total hotel
expenses 127,692 122,398 234,335 227,936
------------- ------------ ----------- ------------

Hotel EBITDA $ 73,079 $ 67,995 $ 101,023 $ 99,633
============= ============ =========== ============
*T

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Note:
This schedule includes the operating data for all properties leased to
LHL, and to third parties as of June 30, 2008, excluding the Donovan
House. Chaminade Resort is excluded from January (closed for
renovations).
*T

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LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(Unaudited)

For the three For the six
months ended months ended
June 30, June 30,
--------------- ---------------
2008 2007 2008 2007
------- ------- ------- -------
TOTAL PORTFOLIO
Occupancy 81.3% 79.3% 73.0% 72.8%
Increase/(Decrease) 2.6% 0.3%
ADR $214.38 $208.99 $200.58 $196.07
Increase/(Decrease) 2.6% 2.3%
REVPAR $174.38 $165.63 $146.42 $142.71
Increase/(Decrease) 5.3% 2.6%
*T

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Note:
This schedule includes the operating data for all properties leased to
LHL, and to third parties as of June 30, 2008, excluding the Donovan
House. Chaminade Resort is excluded from January (closed for
renovations).
*T

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LASALLE HOTEL PROPERTIES
Statistical Data for the Hotels
(Unaudited)

Prior Year Operating Data

First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
2007 2007 2007 2007 2007
-------- -------- -------- -------- --------
Occupancy 66.2% 79.3% 80.9% 69.6% 74.0%
ADR $180.35 $208.99 $206.36 $203.84 $200.75
REVPAR $119.42 $165.63 $167.00 $141.83 $148.61
*T

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*T
Note:
This schedule includes historical operating data for the owned hotels
open and operating as of December 31, 2007 (excludes the Donovan
House for the full year and Chaminade Resort for January & December,
as these properties were closed for renovations).
*T

LaSalle Hotel Properties
Hans Weger, Chief Financial Officer, 301-941-1500

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