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LaSalle CEO, newly bullish, cites strong spring results

LaSalle Hotel Properties executives struck an optimistic tone in a first-quarter earnings conference call, after the company raised its guidance for the full year 2018 for revenue per available room and funds from operations.

The hotel real estate investment trust's results from the quarter "meaningfully exceeded" management's expectations, and that strength appears to be continuing in the second quarter, President and CEO Mike Barnello said. Barnello cited high consumer confidence, the new tax law and strength in the company's corporate and international bookings as factors in the positive results, along with "the best quarter [the] New York market has had in five years," according to a transcript.

LaSalle executives said in February that the company would likely cut its dividend, and made the cut official in March, the same day Pebblebrook Hotel Trust disclosed that it had made an unsolicited offer to buy LaSalle. LaSalle said at the time that Pebblebrook was seeking to take advantage of a temporary dip in its share price following the dividend comments.

On the latest call, Barnello said LaSalle will carefully review Pebblebrook's revised acquisition offer, and he added: "We understand that we could do a better job ensuring that other stakeholders see the value that we see" in the LaSalle portfolio. He declined to answer analysts' questions on the matter.

Several analysts noted that Barnello, who has made dire assessments of the state of the hotel industry on past earnings calls, sounded more positive. In the days after Pebblebrook's offer became public, multiple market participants cited communications from LaSalle management in general, and Barnello's bearish public comments in particular, as factors holding back the company's share price.

"I like the new, more enthusiastic Mike," Wells Fargo analyst Jeff Donnelly said, before asking whether there were specific factors behind the executive's recent optimism. Barnello cited a variety of positive developments including especially strong results in March and April.

Near the end of the call, BTIG analyst James Sullivan noted that the company had released its earnings results at 7 a.m. followed by an 8 a.m. conference call, in a deviation from past practices in which analysts and shareholders had more time to assess the results before calls began.

"Are you going to go back to your past practice, or is this a new practice, one that we should expect you to be following?" Sullivan said.

"I think this is a very unusual quarter, Jim," Barnello said. "I don't know that I would read anything into what we're doing this quarter."