Janney Montgomery Scott Reiterates a 'Buy' on LaSalle Hotel Properties (LHO); Fair Value Estimates Raised

June 30, 2009 9:26 AM EDT

Janney Montgomery Scott reiterates a 'Buy' rating on LaSalle Hotel Properties (NYSE: LHO). Fair value estimate raised to $20.

Janney analyst says, "Shares of LaSalle are off 17.5% since the REIT's June 10th stock offering,which netted the REIT $141M. During the same time frame, the RMZ is off only 5.7%. While we acknowledge the short-term dilutive nature of LaSalle's June 10th offering, we believe investors should focus on the longer-term benefits it affords the REIT within the increasingly distressed hotel marketplace. LaSalle already boasted a pristine balance sheet with de minimus debt maturity risk; this recent offering therefore was executed to bolster their cash coffers, positioning LaSalle to be an agile, opportunistic buyer of premium hotel assets. Our revised FFO/sh estimates are based on modest but accretive acquisitions beginning in 2010 and, importantly, are not predicated on a robust economic recovery. Even with our modest expectations, which LaSalle could outperform handily, we expect LHO to grow FFO/sh 29.3% in 2011. Given that hotel REITs tend to trade two years (or more) ahead of fundamentals, we are increasing our 12-month fair value to $20 from $12.50. Our revised fair value for LHO assumes the REIT should trade at 10.0x our 2011E and 12.2x our 2011 corporate-level EBITDA estimate."

To see more analyst ratings on LHO Click Here.

LaSalle Hotel Properties is a self-managed and self-administered real estate investment trust (REIT). As of December 31, 2008, the Company owned interests in 31 hotels with approximately 8,500 rooms/suites located in 11 states and the District of Columbia.

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