FBR Capital Upgrades LaSalle Hotel Properties (LHO) to Outperform; Strongest Balance Sheet in Lodging REIT Group

October 23, 2009 10:06 AM EDT

FBR Capital upgrades LaSalle Hotel Properties (NYSE: LHO) to Outperform. Price target increased from $13 to $23.

FBR analyst says, "Following yesterday's slight pullback despite strong results and 10% decline from recent highs, we are upgrading our rating on shares of LHO to Outperform...Despite demand trends continuing to improve, one of the concerns we have had with the lodging REIT group has been with valuations that seem stretched. However, we view LHO's valuation as more reasonable than its peers, especially with its high-quality portfolio, industry-best balance sheet, and hotels that mostly have unencumbered management contracts...Balance sheet strongest of the lodging REIT group...We believe our earnings estimates are achievable. Following 3Q results in which LHO's 3Q09 FFO/share of $0.49 was above consensus of $0.44 and our estimate of $0.41, we are raising our 4Q and 2010 estimates. Our 4Q estimate goes to $0.27 from $0.24, and our 2010 estimate goes to $1.24 from $1.15. Our 2011 estimate is for $1.66."

"We project LHO's 2010 RevPAR will fall 5% (approximately 200 bps lower than peers due to challenging 1Q DC comps) and grow 7% in 2011. We estimate that 4Q company EBITDA margins will decrease by approximately 150 bps, and 2010 will fall by approximately 200 bps."

To see more analyst ratings on LHO Click Here.

LaSalle Hotel Properties, a real estate investment trust (REIT), engages in the purchase, ownership, redevelopment, and leasing of primarily upscale and luxury full-service hotels in convention, resort, and urban business markets in the United States.

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