AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 2003
Registration Statement No. 333-104054
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LASALLE HOTEL PROPERTIES
(Exact name of each registrant as specified in its charter)
Maryland 36-4219376
(State or other jurisdiction of
incorporation or organization) (I.R.S. employer identification number)
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)
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Copy to:
Michael F. Taylor, Esq.
Sidley Austin 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 Post-Effective Amendment becomes
effective.
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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. |_|
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PROSPECTUS
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$300,000,000
LASALLE HOTEL PROPERTIES
Common Shares of Beneficial Interest, Common Share Warrants,
Preferred Shares of Beneficial Interest, depositary shares representing
Preferred Share and Preferred Share Warrants
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We may offer from time to time up to $300,000,000 of our common
shares of beneficial interest, $.01 par value per share, preferred shares of
beneficial interest, $.01 per value per share, depositary shares representing
interests in our preferred shares, and warrants to purchase common shares or
preferred shares. Our common shares are listed on the New York Stock Exchange
under the symbol "LHO."
We may offer the securities at prices and on terms to be set forth in
one or more supplements to this prospectus. The securities may be offered
directly, through agents on our behalf or through underwriters or dealers.
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 U.S. federal income tax purposes.
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.
The date of this prospectus is June __, 2003
TABLE OF CONTENTS
Prospectus
WHERE YOU CAN FIND ADDITIONAL INFORMATION..................................ii
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING INFORMATION..............iii
LASALLE HOTEL PROPERTIES....................................................1
STRATEGIES AND OBJECTIVES...................................................1
USE OF PROCEEDS.............................................................3
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS (UNAUDITED)................................................4
DESCRIPTION OF COMMON SHARES................................................4
DESCRIPTION OF PREFERRED SHARES.............................................6
DESCRIPTION OF DEPOSITARY SHARES..........................................14
RESTRICTIONS ON OWNERSHIP OF CAPITAL SHARES................................18
DESCRIPTION OF WARRANTS....................................................20
FEDERAL INCOME TAX CONSIDERATIONS..........................................21
PLAN OF DISTRIBUTION.......................................................34
LEGAL MATTERS..............................................................35
EXPERTS....................................................................35
(i)
In this prospectus, the terms "we," "us" and "our," refer to LaSalle
Hotel Properties, LaSalle Hotel Operating Partnership, L.P. (the "Operating
Partnership") and their subsidiaries, except as the context otherwise
requires.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports and other information
with the Securities and Exchange Commission. You may read and copy any
document we file at the public reference facilities of the SEC located at 450
Fifth Street, N.W., Washington, D.C. 20549. You may also obtain information on
the operation of the SEC's public reference facilities by calling the SEC at
1-800-SEC-0330. You can also obtain copies of this material from commercial
retrieval services and electronically at the SEC's Internet web site at
http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3
(Registration No. 333-104054). This prospectus, which constitutes part of the
registration statement, does not contain all of the information set forth in
the registration statement. Certain parts of the registration statement are
omitted from the prospectus in accordance with the rules and regulations of
the SEC. The SEC permits us to "incorporate by reference" information we file
with them into this document, which means that we can disclose important
information to you by referring you to those documents filed with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file (or that is deemed to have been
filed) with the SEC after the date of this prospectus will automatically
update and supersede this information. This prospectus incorporates by
reference the documents set forth below that we previously filed with the SEC.
These documents contain important information about our operations.
The following documents that we previously filed with the SEC
pursuant to the Exchange Act are incorporated by reference in this prospectus:
SEC Filings (File No. 1-14045) Period
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Annual Report on Form 10-K Year ended December 31, 2002
Quarterly Report on Form 10-Q Quarter ended March 31, 2003
Registration Statement on Form 8-A Filed April 21, 1998
We also incorporate by reference any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until we sell all
of the notes being registered or until this offering is otherwise terminated.
If you request a copy of any or all of the documents incorporated by
reference, then we will send to you the copies you requested at no charge.
However, we will not send exhibits to the documents unless exhibits are
specifically incorporated by reference in those documents. You should direct
requests for copies to the Vice President of Finance, LaSalle Hotel Properties,
4800 Montgomery Lane, Suite M25, Bethesda, Maryland 20814, (301) 941-1516. You
may access our website at http://www.lasallehotels.com.
(ii)
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING INFORMATION
Certain information both included and incorporated by reference in
this prospectus may contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act, and as
such may involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of our company
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Forward-looking
statements, which are based on certain assumptions and describe our future
plans, strategies and expectations are generally identifiable by use of the
words "may," "will," "should," "expect," "anticipate," "estimate," "believe,"
"intend" or "project" or the negative thereof or other variations thereon or
comparable terminology. Factors which could have a material adverse effect on
the operations and future prospects of our company are described below under
"Risk Factors." These risks and uncertainties should be considered in
evaluating any forward-looking statements contained or incorporated by
reference herein. Our actual results may differ significantly from the results
discussed in the forward-looking statements.
(iii)
LASALLE HOTEL PROPERTIES
LaSalle Hotel Properties buys, owns and leases upscale and luxury
full-service hotels located in convention, resort and major urban business
markets. Beginning with our first year of operations ended December 31, 1998,
we have elected to be taxed as a real estate investment trust, commonly
referred to as a "REIT," under the Internal Revenue Code of 1986, as amended,
which we refer to as the "Code." We intend to operate in such a manner so that
we may continue to qualify for taxation as a REIT.
We are a self-managed and self-administered REIT, and as of December
31, 2002, we owned interests in 17 hotels with approximately 5,800
rooms/suites located in eleven states and the District of Columbia. We own
100% equity interests in 15 of our hotels, a 95.1% interest in a partnership
which owns one hotel and a 9.9% equity interest in a joint venture that owns
one hotel. All of our hotels are leased under participating leases which
provide for rental payments equal to the greater of base rent or participating
rent which is based on fixed percentages of gross hotel revenue. These leases
are designed to allow us to achieve substantial participation in revenue
growth at our hotels. All of our hotels are managed by independent hotel
operators. Four of our hotels are leased to unaffiliated lessees (affiliates
of whom also manage these hotels) and 12 of our hotels are leased to our
taxable REIT subsidiary, LaSalle Hotel Lessee, Inc. ("LHL"), or one of its
wholly owned subsidiaries. The hotel which is owned by the joint venture that
owns the Chicago Marriott Downtown is leased to Chicago 540 Lessee, Inc. in
which we also have a 9.9% equity interest. Lease revenue from LHL and its
wholly owned subsidiaries is eliminated in consolidation.
Substantially all of our assets are held by, and all of its
operations are conducted through LaSalle Hotel Operating Partnership, L.P. We
are the sole general partner of the operating partnership with an approximate
97.7% ownership at December 31, 2002. At December 31, 2002, continuing
investors held, in the aggregate, 424,686 limited partnership units or a 2.4%
limited partnership interest in the operating partnership. The outstanding
units are redeemable at the option of the holder for a like number of our
common shares, or, at our option, for the cash equivalent.
STRATEGIES AND OBJECTIVES
Our primary objectives are to provide a stable stream of income to
our shareholders through increases in distributable cash flow and 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 enhance the return from and the value of our hotels and any additional
hotels we may acquire or develop; and
o invest in or acquire additional hotels on favorable terms.
We seek to achieve revenue growth principally through:
o renovations and/or expansions at selected hotels;
o acquisitions of full-service hotels located in convention, resort and
major urban business markets in the U.S. and abroad, especially
upscale and luxury full-service hotels in such markets where we
perceive strong demand growth or significant barriers to entry; and
o selective development of hotel properties, particularly upscale and
luxury full-service hotels in high demand markets where development
economics are favorable.
We intend to acquire additional hotels in targeted markets,
consistent with the growth strategies outlined above and which may:
o possess unique competitive advantages in the form of location,
physical facilities or other attributes;
o be available at significant discounts to replacement cost, including
when such discounts result from reduced competition for hotels with
long-term management and/or franchise agreements;
o benefit from brand or franchise conversion, new management,
renovations or redevelopment or other active and aggressive asset
management strategies; or
o have expansion opportunities.
We seek to grow through strategic relationships with premier,
internationally recognized hotel operating companies including: Starwood
Hotels & Resorts Worldwide, Inc., Marriott International, Inc., Radisson
Hotels International, Inc., Interstate Hotels Corporation, Crestline Hotels &
Resorts, Inc., Outrigger Lodging Services, Noble House Hotels & Resorts, Hyatt
Hotels Corporation, and Kimpton Hotel & Restaurant Group, LLC. We believe that
having multiple independent hotel operators creates a network that will
generate significant acquisition opportunities.
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.
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USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement,
the net proceeds to us, from the sale of the securities offered by the
applicable prospectus supplement will be used for the repayment of existing
indebtedness, the acquisition or development of additional hotel properties as
suitable opportunities arise and the renovation, expansion and improvement of
our existing hotels, in each case, as described in detail in the prospectus
supplement depending on the circumstances at the time of the related offering,
and for other general corporate purposes.
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RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS (UNAUDITED)
The following table sets forth the consolidated ratios of earnings to
combined fixed changes and preferred stock dividends for the period shown.
Quarter Ended
March 31, Year Ended December 31,
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2003 2002 2001 2000 1999 1998
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Ratio of Earnings to --(A) 0.8x(A) 1.3x(B) 1.8x(B) 2.1x(B) 2.7x(C)
Combined Fixed Charges and
Preferred Stock Dividends
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(A) The shortfalls of earnings to combined fixed charges and preferred stock
dividends for the quarter ended March 31, 2003 and the year ended
December 31, 2002 were $6,407 and $4,866, respectively. However, the
Company's operations generated sufficient cash flow to cover its fixed
charges after adding back depreciation and other noncash items to earnings.
In general, the shortfalls were due to the travel industry being negatively
impacted by several factors including the war in Iraq, several raised
terror alerts, an overall weak economy, and the impact of SARS on
international travel. Additionally, for the quarter ended March 31, 2003,
the shortfall increased due to the seasonality of the Company's hotels.
The Company's hotels maintain higher occupancy rates during the second and
third quarters.
(B) We did not have any preferred capital outstanding prior to March 2002.
(C) We were organized on January 15, 1998 and commenced operations on April
29, 1998.
The ratio of earnings to combined fixed charges and preferred
dividends were computed by dividing earnings by the aggregate of fixed charges
and preferred dividends. For this purpose, earnings consist of income from
continuing operations before minority interest, fixed charges (excluding
interest capitalized), gain or loss from the sale of property, extraordinary
items and preferred dividends. Fixed charges consist of interest expense
(including interest costs capitalized) and preferred dividends.
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 shall 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
Amended and Restated Bylaws ("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 liability,
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 $.01 per share. In addition,
units of limited partnership interest in
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the Operating Partnership may be redeemed for cash or, at our option, common
shares on a one-for-one basis. On March 27, 2003, there were 18,713,581 common
shares outstanding.
All of the common shares offered hereby have been duly authorized and
will be 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 the provisions of our Declaration of Trust regarding
restrictions on transfer of shares of beneficial interest, 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 securities
of LaSalle Hotel Properties. 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 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
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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 of LaSalle Hotel
Properties or the 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 the IPO approved, a provision in our Declaration of
Trust restricting the ownership or acquisition of common shares. See
"Restrictions on Ownership of Capital Shares."
Transfer Agent and Registrar
The transfer agent and registrar for our common shares is LaSalle
Bank, N.A.
DESCRIPTION OF PREFERRED SHARES
General
Our Declaration of Trust provides that we may issue up to 20 million
preferred shares, $.01 par value per share. On March 27, 2003, 3,991,900
shares of our 10 1/4% Series A Cumulative Redeemable Preferred Shares
(Liquidation Preference $25 Per Share) were issued and outstanding.
The statements made hereunder relating to the preferred shares are
summaries of the anticipated material terms thereof and do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, the applicable provisions of our Declaration of Trust and Bylaws and any
applicable articles supplementary to our Declaration of Trust designating
terms of a series of preferred shares.
The issuance of preferred shares could adversely affect the voting
power, dividend rights and other rights of holders of common shares. Although
our Board of Trustees has no intention at the present time, it could establish
a series of preferred shares that could, depending on the terms of the series,
delay, defer or prevent a transaction or a change in control of LaSalle Hotel
Properties that might involve a premium price for the common shares or
otherwise be in the best interest of the holders thereof. Management believes
that the availability of preferred shares will provide us with increased
flexibility in structuring possible future financing and acquisitions and in
meeting other needs that might arise.
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Terms
Subject to the limitations prescribed by our Declaration of Trust,
our Board of Trustees is authorized to fix the number of shares constituting
each series of preferred shares and the designations and powers, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including the provisions
as may be desired concerning voting, redemption, distributions, dissolution or
the distribution of assets, conversion or exchange, and other subjects or
matters as may be fixed by resolution of our Board of Trustees. The preferred
shares will, when issued, be fully paid and nonassessable and will have no
preemptive rights.
A prospectus supplement relating to the series of preferred shares
offered will contain specific terms, including:
o The title and stated value of the preferred shares;
o The number of preferred shares, the liquidation preference per
preferred share and the offering price of the preferred shares;
o The distribution rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to the preferred
shares;
o The date from which distributions on the preferred shares shall
accumulate, if applicable;
o The procedures for any auction and remarketing, if any, for the
preferred shares;
o The provision for a sinking fund, if any, for the preferred shares;
o The provisions for redemption, if applicable, of the preferred shares;
o Any listing of the preferred shares on any securities exchange;
o The terms and conditions, if applicable, upon which the preferred
shares may or will be convertible into our common shares, including
the conversion price or manner of calculation thereof;
o The relative ranking and preferences of the preferred shares as to
distribution rights and rights upon our liquidation, dissolution or
winding up of our affairs;
o Any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve our status as
a REIT;
o A discussion of material federal income tax considerations applicable
to the preferred shares; and
o Any other specific terms, preferences, rights, limitations or
restrictions of the preferred shares.
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Rank
Unless otherwise specified in the applicable prospectus supplement,
the preferred shares will, with respect to distribution rights and rights upon
our liquidation, dissolution or winding up, rank:
(1) senior to our common shares and to all classes or series of
equity securities issued by us the terms of which provide that
the equity securities shall rank junior to the preferred
shares;
(2) on a parity with all classes or series of equity securities
issued by us, other than those referred to in clauses (1) and
(3); and
(3) junior to all classes or series of equity securities issued by
us which the terms of the preferred shares provide will rank
senior to it. The term "equity securities" does not include
convertible debt securities.
Distributions
Unless otherwise specified in the applicable prospectus supplement,
the preferred shares will have the rights with respect to payment of
distributions set forth below.
Holders of the preferred shares of each series will be entitled to
receive, when, as and if authorized by our Board of Trustees, out of assets
legally available for payment, cash distributions in the amounts and on the
dates as will be set forth in, or pursuant to, the applicable prospectus
supplement. Each distribution shall be payable to holders of record as they
appear on our share transfer books on the record dates as shall be fixed by
our Board of Trustees.
Distribution on any series of preferred shares may be cumulative or
non-cumulative, as provided in the applicable prospectus supplement.
Distribution, if cumulative, will be cumulative from and after the date set
forth in the applicable prospectus supplement. If our Board of Trustees fails
to authorize a distribution payable on a distribution payment date on any
series of preferred shares for which distribution are non-cumulative, then the
holders of the series of preferred shares will have no right to receive a
distribution in respect of the related distribution period and we will have no
obligation to pay the distribution accrued for the period, whether or not
distributions on the series of preferred shares are declared payable on any
future distribution payment date.
If preferred shares of any series are outstanding, no full
distributions will be authorized or paid or set apart for payment on any of
our capital shares of any other series ranking, as to distributions, on a
parity with or junior to the preferred shares of the series for any period
unless:
o if the series of preferred shares has a cumulative distribution, full
cumulative distributions have been or contemporaneously are
authorized and paid or declared and a sum sufficient for the payment
thereof set apart for the payment for all past distribution periods
and the then current distribution period; or
o if the series of preferred shares do not have a cumulative
distribution, full distributions for the then current distribution
period have been or contemporaneously are authorized
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and paid or authorized and a sum sufficient for the payment thereof
set apart for the payment on the preferred shares of the series.
When distributions are not paid in full (or a sum sufficient for the
full payment is not so set apart) on preferred shares of any series and the
shares of any other series of preferred shares ranking on a parity as to
distributions with the preferred shares of the series, all distributions
authorized upon preferred shares of the series and any other series of
preferred shares ranking on a parity as to distributions with the preferred
shares shall be authorized pro rata so that the amount of distributions
authorized per preferred share of the series and the other series of preferred
shares shall in all cases bear to each other the same ratio that accrued
distributions per share on the preferred shares of the series and the other
series of preferred shares (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if the
preferred shares do not have a cumulative distribution) bear to each other. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any distribution payment or payments on preferred shares of the series which
may be in arrears.
Except as provided in the immediately preceding paragraph, unless (1)
if the series of preferred shares has a cumulative distribution, full
cumulative distributions on the preferred shares of the series have been or
contemporaneously are authorized and paid or authorized and a sum sufficient
for the payment thereof set apart for payment for all past distribution
periods and the then current distribution period, and (2) if the series of
preferred shares does not have a cumulative distribution, full distributions
on the preferred shares of the series have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for payment for the then current distribution period, no
distributions (other than in common shares or other capital shares ranking
junior to the preferred shares of the series as to distributions and upon
liquidation) shall be declared or paid or set aside for payment or other
distribution shall be authorized or made upon the common shares, or any other
of the capital shares of LaSalle Hotel Properties ranking junior to or on a
parity with the preferred shares of the series as to distributions or upon
liquidation, nor shall any shares of common shares, or any other capital
shares of LaSalle Hotel Properties ranking junior to or on a parity with the
preferred shares of the series as to distributions or upon liquidation, be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any
shares) by LaSalle Hotel Properties except:
(1) by conversion into or exchange for other capital shares of
LaSalle Hotel Properties ranking junior to the preferred shares of the series
as to distributions and upon liquidation;
(2) by redemption, purchase or acquisition of equity securities under
incentive, benefit or share purchase plans of LaSalle Hotel Properties for
officers, Trustees or employees or others performing or providing similar
services; or
(3) by other redemption, purchase or acquisition of such capital
shares for the purpose of preserving our status as a REIT.
9
Redemption
If so provided in the applicable prospectus supplement, the preferred
shares will be subject to mandatory redemption or redemption at our option, as
a whole or in part, in each case upon the terms, at the times and at the
redemption prices set forth in the prospectus supplement.
The prospectus supplement relating to a series of preferred shares
that is subject to mandatory redemption will specify the number of preferred
shares that we will redeem in each year commencing after a date to be
specified, at a redemption price per share to be specified, together with an
amount equal to all accumulated and unpaid distributions thereon (which shall
not, if the preferred shares do not have a cumulative distribution, include
any accumulation in respect of unpaid distributions for prior distribution
periods) to the date of redemption. The redemption price may be payable in
cash or other property, as specified in the applicable prospectus supplement.
If the redemption price for preferred shares of any series is payable only
from the net proceeds of the issuance of our capital shares, the terms of the
preferred shares may provide that, if no capital shares shall have been issued
or to the extent the net proceeds from any issuance are insufficient to pay in
full the aggregate redemption price then due, the preferred shares shall
automatically and mandatorily be converted into the applicable capital shares
of LaSalle Hotel Properties pursuant to conversion provisions specified in the
applicable prospectus supplement.
Notwithstanding the foregoing, unless (1) if the series of preferred
shares has a cumulative distribution, full cumulative distributions on all
shares of any series of preferred shares shall have been or contemporaneously
are authorized and paid or authorized and a sum sufficient for the payment
thereof set apart for payment for all past distribution periods and the then
current distribution period, and (2) if the series of preferred shares does
not have a cumulative distribution, full distributions on the preferred shares
of any series have been or contemporaneously are authorized and paid or
authorized and a sum sufficient for the payment thereof set apart for payment
for the then current distribution period, no shares of any series of preferred
shares shall be redeemed unless all outstanding preferred shares of the series
is simultaneously redeemed; provided, however, that the foregoing shall not
prevent the purchase or acquisition of preferred shares of the series to
preserve our status as a REIT or pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding preferred shares of the
series. In addition, unless (1) if the series of preferred shares has a
cumulative distribution, full cumulative distributions on all outstanding
shares of any series of preferred shares have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for payment for all past distribution periods and the then current
distribution period, and (2) if the series of preferred shares do not have a
cumulative distribution, full distributions on the preferred shares of any
series have been or contemporaneously are authorized and paid or authorized
and a sum sufficient for the payment thereof set apart for payment for the
then current distribution period, we shall not purchase or otherwise acquire,
directly or indirectly for any consideration, nor shall any monies be paid to
or be made available for a sinking fund for the redemption of, any preferred
shares of the series (except by conversion into or exchange for our capital
shares ranking junior to the preferred shares of the series as to
distributions and upon liquidation; provided, however, that the foregoing
shall not prevent the purchase or acquisition of preferred shares of the
series to
10
preserve our status as a REIT or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding preferred shares of
the series.)
If fewer than all of the outstanding preferred shares of any series
are to be redeemed, the number of shares to be redeemed will be determined by
us and the shares may be redeemed pro rata from the holders of record of the
shares in proportion to the number of the shares held or for which redemption
is requested by the holder (with adjustments to avoid redemption of fractional
shares) or by lot or in any other reasonable manner.
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of record of preferred
shares of any series to be redeemed at the address shown on the share transfer
books. Each notice shall state:
o the redemption date;
o the number of shares and series of the preferred shares to be redeemed;
o the redemption price;
o the place or places where certificates for the preferred shares are to
be surrendered for payment of the redemption price;
o that distribution on the shares to be redeemed will cease to
accumulate on the redemption date; and
o the date upon which the holder's conversion rights, if any, as to the
shares shall terminate.
If fewer than all the preferred shares of any series are to be
redeemed, the notice mailed to each holder thereof shall also specify the
number of preferred shares to be redeemed from each holder. If notice of
redemption of any preferred shares has been given and if the funds necessary
for redemption have been set aside by LaSalle Hotel Properties in trust for
the benefit of the holders of any preferred shares so called for redemption,
then from and after the redemption date distribution will cease to accumulate
on the preferred shares, and all rights of the holders of the preferred shares
will terminate, except the right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding
up of our affairs (referred to herein as a "liquidation"), before any
distribution or payment shall be made to the holders of our common shares or
any other class or series of our capital shares ranking junior to the
preferred shares of the series in the distribution of assets upon any
liquidation, dissolution or winding up of LaSalle Hotel Properties, the
holders of the preferred shares shall be entitled to receive out of our assets
legally available for distribution to shareholders (after payment or provision
for payment of all debts and other liabilities of LaSalle Hotel Properties)
liquidating distributions in the amount of the liquidation preference per
share (set forth in the applicable prospectus supplement), plus an amount
equal to all distributions accumulated and unpaid
11
thereon (which shall not include any accumulation in respect of unpaid
distribution for prior distribution periods if the preferred shares do not
have a cumulative distribution). After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of preferred
shares will have no rights or claim to any remaining assets. In the event
that, upon any voluntary or involuntary liquidation, dissolution or winding
up, our available assets are insufficient to pay the amount of the liquidating
distributions on all outstanding preferred shares of the series and the
corresponding amounts payable on all shares of other classes or series of our
capital shares ranking on a parity with the preferred shares in the
distribution of assets, then the holders of the preferred shares and all other
classes or series of capital shares shall share ratably in any distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled.
The consolidation or merger of LaSalle Hotel Properties with or into
any other entity, or the merger of another entity with or into LaSalle Hotel
Properties, or a statutory share exchange by LaSalle Hotel Properties, or the
sale, lease, transfer or conveyance of all or substantially all of the
property or business of LaSalle Hotel Properties, shall not be deemed to
constitute a liquidation, dissolution or winding up of LaSalle Hotel
Properties.
Voting Rights
Holders of the preferred shares will not have any voting rights,
except as set forth below or as otherwise from time to time required by law or
as indicated in the applicable prospectus supplement.
Whenever distributions on any series of preferred shares shall be in
arrears for six or more consecutive quarterly periods, the holders of the
preferred shares (voting as a single class with all other series of preferred
shares upon which like voting rights have been conferred and are exercisable)
will be entitled to vote for the election of two additional trustees of
LaSalle Hotel Properties at a special meeting called by the holders of record
of at least ten percent (10%) of any series of parity preferred shares so in
arrears (unless the request is received less than 90 days before the date
fixed for the next annual or special meeting of shareholders), or, if the
request for a special meeting is received less than 90 days before the date
fixed for the next annual or special meeting of shareholders, at the next
annual meeting of shareholders, and at each subsequent annual meeting until
(i) if the series of preferred shares has a cumulative distribution, all
distributions accumulated on the preferred shares for the past distribution
periods and the then current distribution period shall have been fully paid or
authorized and a sum sufficient for the payment thereof set aside for payment
in full or (ii) if the series of preferred shares does not have a cumulative
distribution, four quarterly distributions shall have been fully paid or
authorized and a sum sufficient for the payment thereof set aside for payment.
In these cases, the entire Board of Trustees of LaSalle Hotel Properties will
be increased by two trustees.
Unless provided otherwise for any series of preferred shares, so long
as any preferred shares remain outstanding, we will not, without the
affirmative vote or consent of the holders of at least two-thirds of the
preferred shares of the series outstanding at the time, given in person or by
proxy, either in writing or at a meeting (the series voting separately as a
class):
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(1) authorize or create, or increase the authorized or issued amount
of, any class or series of capital shares ranking senior to the preferred
shares with respect to payment of distributions or the distribution of assets
upon voluntary or involuntary liquidation, dissolution or winding up of
LaSalle Hotel Properties, or reclassify any authorized capital shares of
LaSalle Hotel Properties into preferred shares, or create, authorize or issue
any obligation or security convertible into or evidencing the right to
purchase any shares; or
(2) amend, alter or repeal the provisions of our Declaration of Trust
or the Articles Supplementary for the series of preferred shares, whether by
merger, consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of the
series of preferred shares or the holders thereof; provided, however, with
respect to the occurrence of any of the Events set forth in (2) above, so long
as the series of preferred shares remains outstanding with the terms thereof
materially unchanged, taking into account that upon the occurrence of an
Event, LaSalle Hotel Properties may not be the surviving entity and such
surviving entity may thereafter be the issuer of the preferred shares, the
occurrence of any Event shall not be deemed to materially and adversely affect
the rights, preferences, privileges or voting powers of holders of the series
of preferred shares; and provided, further, that (x) any increase in the
amount of the authorized preferred shares or the creation or issuance of any
other class or series of equity securities, or (y) any increase in the amount
of authorized shares of the series of preferred shares or any other class or
series of equity securities, in each case ranking on a parity with or junior
to the preferred shares of the series with respect to payment of distributions
or the distribution of assets upon voluntary or involuntary liquidation,
dissolution or winding up of LaSalle Hotel Properties, shall not be deemed to
materially and adversely affect the rights, preferences, privileges or voting
powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which the vote or consent would otherwise be
required shall be effected, all outstanding shares of the series of preferred
shares shall have been converted, redeemed or called for redemption upon
proper notice and sufficient funds shall have been deposited in trust to
effect the redemption.
Conversion Rights
The terms and conditions, if any, upon which any series of preferred
shares are convertible into common shares will be set forth in the applicable
prospectus supplement. The terms will include the number of common shares into
which the preferred shares are convertible, the conversion price (or manner of
calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the holders of the preferred shares, the
events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of the preferred shares.
Shareholder Liability
As discussed above under "Description of Common Shares-- General,"
under Maryland law, a shareholder, including holders of preferred shares, is
not personally liable for our obligations solely as a result of his status
as a shareholder. Our Declaration of Trust provides that no shareholder shall
be liable for any debt or obligation of ours by reason of being a
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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 liability, 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.
Restrictions on Ownership
As discussed below under "Restrictions on Ownership of Capital
Shares," in order for us to qualify as a REIT under the Code, not more than
50% in value of our outstanding capital 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. Therefore, the
Articles Supplementary for each series of preferred shares may contain
provisions restricting the ownership and transfer of the preferred shares. The
applicable prospectus supplement will specify any additional ownership
limitation relating to a series of preferred shares.
Registrar and Transfer Agent
Unless otherwise specified in the applicable prospectus supplement,
the registrar and transfer agent for the preferred shares will be LaSalle
Bank, N.A.
DESCRIPTION OF DEPOSITARY SHARES
General
We may issue receipts for depositary shares, each of which will
represent a fractional interest or a share of a particular series of a class
of preferred shares, as specified in the applicable prospectus supplement.
Preferred shares of each series of each class represented by depositary shares
will be deposited under a separate Agreement among LaSalle Hotel Properties,
the named depositary and the holders from time to time of the depositary
receipts. Subject to the terms of the agreement, each owner of a depositary
receipt will be entitled, in proportion to the fractional interest of a share
of the particular series of a class of preferred shares represented by the
depositary shares evidenced by the depositary receipt, to all the rights and
preferences of the preferred shares represented by the depositary shares,
including distribution, voting, conversion, redemption and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the applicable agreement. Immediately following the issuance and
delivery of the preferred shares by us to the depositary, we will cause the
depositary to issue, on our behalf, the depositary receipts. Copies of the
applicable form of agreement and depositary receipt may be obtained from us
upon request.
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Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred shares to the record
holders of the depositary receipts evidencing the related depositary shares in
proportion to the number of the depositary receipts owned by the holder,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the depositary.
In the event of a distribution other than in cash, the depositary
will distribute property received by it to the record holders of depositary
receipts entitled thereto, subject to certain obligations of holders to file
proofs, certificates and other information and to pay certain charges and
expenses to the depositary, unless the depositary determines that it is not
feasible to make the distribution, in which case the depositary may, with our
approval, sell the property and distribute the net proceeds from the sale to
holders.
Withdrawal of Shares
Upon surrender of the depositary receipts at the corporate trust
office of the depositary (unless the related depositary shares have previously
been called for redemption), the holders thereof will be entitled to delivery
at the office, to or upon the holder's order, of the number of whole or
fractional preferred shares and any money or other property represented by the
depositary shares evidenced by the depositary receipts. Holders of depositary
receipts will be entitled to receive whole or fractional shares of the related
preferred shares on the basis of the proportion of preferred shares
represented by each depositary share as specified in the applicable prospectus
supplement, but holders of the preferred shares will not thereafter be
entitled to receive depositary shares therefor. If the depositary receipts
delivered by the holder evidence a number of depositary shares in excess of
the number of depositary shares representing the number of preferred shares to
be withdrawn, the depositary will deliver to the holder at the same time a new
depositary receipt evidencing the excess number of depositary shares.
Redemption of Depositary Shares
Whenever we redeem preferred shares held by the depositary, the
depositary will redeem as of the same redemption date the number of depositary
shares representing the preferred shares so redeemed, provided we shall have
paid in full to the depositary the redemption price of the preferred shares to
be redeemed plus an amount equal to any accrued and unpaid distributions
thereon to the date fixed for redemption. The redemption price per depositary
share will be equal to the redemption price and any other amounts per share
payable with respect to the preferred shares. If less than all the depositary
shares are to be redeemed, the depositary shares to be redeemed will be
selected by the depositary by lot.
After the date fixed for redemption, the depositary shares so called
for redemption will no longer be deemed to be outstanding and all rights of
the holders of the depositary receipts evidencing the depositary shares so
called for redemption will cease, except the right to receive any moneys
payable upon redemption and any money or other property to which the holders
of the depositary receipts were entitled upon redemption upon surrender
thereof to the depositary.
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Voting of the Underlying Preferred Shares
Upon receipt of notice of any meeting at which the holders of the
preferred shares are entitled to vote, the depositary will mail the
information contained in the notice of meeting to the record holders of the
depositary receipts evidencing the depositary shares which represent the
preferred shares. Each record holder of depositary receipts evidencing
depositary shares on the record date (which will be the same date as the
record date for the preferred shares) will be entitled to instruct the
depositary as to the exercise of the voting rights pertaining to the amount of
preferred shares represented by the holder's depositary shares. The depositary
will vote the amount of preferred shares represented by the depositary shares
in accordance with the instructions, and we will agree to take all reasonable
action which may be deemed necessary by the depositary in order to enable the
depositary to do so. The depositary will abstain from voting the amount of
preferred shares represented by the depositary shares to the extent it does
not receive specific instructions from the holders of depositary receipts
evidencing the depositary shares.
Liquidation Preference
In the event of our liquidation, dissolution or winding up, whether
voluntary or involuntary, each holder of a depositary receipt will be entitled
to the fraction of the liquidation preference accorded each preferred share
represented by the depositary share evidenced by the depositary receipt, as
set forth in the applicable prospectus supplement.
Conversion of Preferred Shares
The depositary shares, as such, are not convertible into common
shares or any other securities or property of ours. Nevertheless, if so
specified in the applicable prospectus supplement relating to an offering of
depositary shares, the depositary receipts may be surrendered by holders
thereof to the depositary with written instructions to the depositary to
instruct us to cause conversion of the preferred shares represented by the
depositary shares evidenced by depositary receipts into whole common shares,
other preferred shares of ours or other capital shares of ours, and we have
agreed that upon receipt of instructions and any amounts payable in respect
thereof, it will cause the conversion thereof utilizing the same procedures as
those provided for delivery of preferred shares to effect the conversion. If
the depositary shares evidenced by a depositary receipt are to be converted in
part only, one or more new depositary receipts will be issued for any
depositary shares not to be converted. No fractional common shares will be
issued upon conversion, and if the conversion will result in a fractional
share being issued, an amount will be paid in cash by us equal to the value of
the fractional interest based upon the closing price of the common shares on
the last business day prior to the conversion.
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares which
represent the preferred shares and any provision of the agreement may at any
time be amended by agreement between us and the depositary. However, any
amendment that materially and adversely alters the rights of the holders of
depositary receipts will not be effective unless the amendment has
16
been approved by the existing holders of at least a majority of the depositary
shares evidenced by the depositary receipts then outstanding.
The agreement may be terminated by us upon not less than 30 days'
prior written notice to the depositary if (1) the termination is to preserve
our status as a REIT or (2) a majority of each class of preferred shares
affected by the termination consents to the termination, whereupon the
depositary shall deliver or make available to each holder of depositary
receipts, upon surrender of the depositary receipts held by the holder, the
number of whole or fractional preferred shares as are represented by the
depositary shares evidenced by depositary receipts. In addition, the agreement
will automatically terminate if (1) all outstanding depositary shares shall
have been redeemed, (2) there shall have been a final distribution in respect
of the related preferred shares in connection with any liquidation,
dissolution or winding up of LaSalle Hotel Properties and the distribution
shall have been distributed to the holders of depositary receipts evidencing
the depositary shares representing the preferred shares or (iii) each related
preferred share shall have been converted into capital share of LaSalle Hotel
Properties not so represented by depositary shares.
Charges of Preferred Shares Depositary
We will pay all transfer and other taxes and governmental charges
arising solely from the existence of the agreement. In addition, we will pay
the fees and expenses of the depositary in connection with the performance of
its duties under the agreement. However, holders of depositary receipts will
pay the fees and expenses of the depositary for any duties requested by the
holders to be performed which are outside of those expressly provided for in
the agreement.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice of
its election to do so, and we may at any time remove the depositary, any
resignation or removal to take effect upon the appointment of a successor
depositary. A successor depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the U.S. and having a combined capital
and surplus of at least $50,000,000.
Miscellaneous
The depositary will forward to holders of depositary receipts any
reports and communications from LaSalle Hotel Properties which are received by
the depositary with respect to the related preferred shares.
Neither LaSalle Hotel Properties nor the depositary will be liable if
the depositary is prevented from or delayed in, by law or any circumstances
beyond its control, performing its obligations under the agreement. The
obligations of LaSalle Hotel Properties and the depositary under the agreement
will be limited to performing specified duties thereunder in good faith and
without negligence, gross negligence or willful misconduct, and LaSalle Hotel
Properties and the depositary will not be obligated to prosecute or defend any
legal proceeding in respect of any depositary receipts, depositary shares or
preferred shares represented thereby unless satisfactory indemnity is
furnished. LaSalle Hotel Properties and the depositary may rely on written
advice
17
of counsel or accountants, or information provided by persons presenting the
preferred shares represented thereby for deposit, holders of depositary
receipts or other persons believed to be competent to give information, and on
documents believed to be genuine and signed by a proper party.
If the depositary shall receive conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and
from LaSalle Hotel Properties, on the other hand, the depositary shall be
entitled to act on claims, requests or instructions received from LaSalle
Hotel Properties.
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) or
during a proportionate part of a shorter taxable year. 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 than the Ownership Limit. 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 Ownership Limit. The
Board of Trustees may grant an exemption from the Ownership Limit 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
Ownership Limit, 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 of Trustees may, in its reasonable
discretion, require undertakings or representations from the applicant to
ensure that the conditions in clauses (i), (ii) and (iii) of the preceding
sentence are satisfied and will continue to be satisfied as long as such
person owns shares in excess of the Ownership Limit. Under certain
18
circumstances, the Board of Trustees may, in its sole and absolute discretion,
grant an exemption for individuals or entities to acquire any series or class
of Preferred Shares in excess of the Ownership Limit, provided that certain
conditions are met and any representations and undertakings that may be
required by the Board of Trustees are made. In either circumstance, prior to
granting any exemption, the Board of Trustees 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 (a) 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 and (b) 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 Ownership Limit
or the other restrictions in our Declaration of the Trust, then any such
purported transfer will be void and of no force or effect with respect to the
purported transferee (the "Prohibited Transferee") as to that number of shares
that exceeds the Ownership Limit (referred to as "Excess Shares") and the
Prohibited Transferee shall 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 Ownership Limit (the "Prohibited
Owner") shall cease to own any right or interest) in such Excess Shares. Any
such Excess Shares described above will be transferred automatically, by
operation of law, to a trust, the beneficiary of which will be a qualified
charitable organization selected by us (the "Beneficiary"). Such automatic
transfer shall be deemed to be effective as of the close of business on the
Business Day (as defined in the Declaration of Trust) 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 (who shall be
designated by us and be unaffiliated with us and any Prohibited Transferee or
Prohibited Owner) will be required to sell such Excess Shares to a person or
entity who could own such shares without violating the Ownership Limit, and
distribute to the Prohibited Transferee an amount equal to the lesser of the
price paid by the Prohibited Transferee for such Excess Shares or the sales
proceeds received by the trust for such excess shares. In the case of any
Excess 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 such Excess Shares to a qualified person or entity and distribute to
the Prohibited Owner an amount equal to the lesser of the fair market value of
such Excess Shares as of the date of such event or the sales proceeds received
by the trust for such Excess Shares. In either case, any proceeds in excess of
the amount distributable to the Prohibited Transferee or Prohibited Owner, as
applicable, will be distributed to the Beneficiary. Prior to a sale of any
such Excess Shares by the trust, the trustee will be entitled to receive, in
trust for the Beneficiary, all dividends and
19
other distributions paid by us with respect to such Excess Shares, and also
will be entitled to exercise all voting rights with respect to such Excess
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 (at
the trustee's sole discretion and subject to applicable law) (i) to rescind as
void any vote cast by a Prohibited Transferee prior to the discovery by us
that such shares have been transferred to the trust and (ii) to recast such
vote in accordance with the desires of the trustee acting for the benefit of
the Beneficiary. However, if we have already taken irreversible corporate
action, then the trustee shall not have the authority to rescind and recast
such vote. Any dividend or other distribution paid to the Prohibited
Transferee or Prohibited Owner (prior to the discovery by us that such shares
had been automatically transferred to a trust as described above) will be
required to be repaid to the trustee upon demand for distribution to the
Beneficiary. If the transfer to the trust as described above is not
automatically effective (for any reason) to prevent violation of the Ownership
Limit, then the Declaration of Trust provides that the transfer of the Excess
Shares will be void.
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 Excess Shares to the Trust. Upon such a sale to us, the interest of the
Beneficiary in the shares sold shall terminate and the trustee shall
distribute the net proceeds of the sale to the Prohibited 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.
DESCRIPTION OF WARRANTS
We may issue Warrants for the purchase of common shares or preferred
shares. Warrants may be issued independently or together with any securities
and may be attached to or separate from the securities. Each series of
warrants will be issued under a separate warrant agreement to
20
be entered into between LaSalle Hotel Properties and a warrant agent specified
therein. The agent for the warrants will act solely for LaSalle Hotel
Properties in connection with the warrants of the series and will not assume
any obligation or relationship of agency or trust for or with any holders or
beneficial owners of warrants.
The applicable prospectus supplement will describe the following
terms, where applicable, of the warrants in respect of which this prospectus
is being delivered:
o the title of the warrants;
o the aggregate number of the warrants;
o the price or prices at which the warrants will be issued;
o the currencies in which the price or prices of the warrants may be
payable;
o the designation, amount and terms of the Securities purchasable upon
exercise of the warrants;
o the designation and terms of the other Securities, if any, with which
the warrants are issued and the number of the warrants issued with
each security;
o if applicable, the date on and after which the warrants and the
Securities purchasable upon exercise of the warrants will be
separately transferable;
o the price or prices at which and currency or currencies in which the
Securities purchasable upon exercise of the warrants may be purchased;
o the date on which the right to exercise the warrants shall commence
and the date on which the right shall expire;
o the minimum or maximum amount of the warrants which may be exercised
at any one time;
o information with respect to book-entry procedures, if any;
o a discussion of material federal income tax considerations; and
o any other material terms of the warrants, including terms, procedures
and limitations relating to the exchange and exercise of the
warrants.
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain material United States
federal income tax consequences of the purchase, ownership and disposition of
our shares by individuals who hold the Shares as capital assets (within the
meaning of section 1221 of the Code). It does not purport to address the
federal income tax consequences applicable to all categories of holders, some
of which (such as insurance companies, regulated investment companies or
dealers in securities)
21
may be subject to special rules. Except as discussed under the caption
"Taxation of Foreign Shareholders," this summary does not address persons who
are not U.S. Shareholders (as defined herein).
This summary is based on current provisions of the Code, the Treasury
regulations promulgated thereunder and judicial or ruling authorities. All
these authorities are subject to change, and any change may be effective
retroactively. No attempt is made to present a detailed explanation of the tax
treatment of LaSalle Hotel Properties or our Shareholders, and the discussion
here is not intended as a substitute for careful tax planning. WE RECOMMEND
THAT OUR INVESTORS CONSULT THEIR OWN TAX ADVISERS REGARDING ANY FEDERAL,
STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF INVESTING IN SHARES IN LIGHT OF
THEIR INDIVIDUAL CIRCUMSTANCES.
As used herein, a holder of our shares is a "U.S Shareholder" if the
holder is (i) a citizen or resident of the United States who is a natural
person, (ii) a corporation or a partnership (including an entity treated as a
corporation or partnership for federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia (unless, in the case of a partnership, Treasury
regulations are adopted that provide otherwise), (iii) an estate the income of
which is subject to federal income taxation regardless of its source or (iv) 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 "United
States persons" (within the meaning of the Code and attending Treasury
regulations) have authority to control all substantial decisions of the trust.
In addition, to the extent provided in Treasury regulations, certain trusts in
existence on August 20, 1996 that are treated as United States persons on
August 19, 1996 and elect to continue to be treated as United States persons,
are also considered U.S. Shareholders. A holder of our shares is a "Non-U.S.
Shareholder" if the holder is a nonresident alien or a foreign corporation,
partnership, trust or estate.
General
We have elected to be taxed as a REIT under sections 856 through 860
of the Code effective for our taxable year ending December 31, 1998, and we
believe that we have been organized and operated in the manner necessary to
qualify as a REIT commencing with that taxable year. We have been structured
to qualify as a REIT and we intend to continue to qualify as a REIT, but no
assurance can be given that we will operate in the manner necessary to remain
qualified as a REIT.
In the opinion of Sidley Austin Brown & Wood LLP, commencing with our
taxable year ending December 31, 1998, we have been organized in conformity
with the requirements for qualification and taxation as a REIT under the Code
and our proposed method of operation will enable us to continue to meet the
requirements for qualification and taxation as a REIT. This opinion is based
on various assumptions relating to our organization and operation and upon
representations made by us concerning certain factual matters, including
matters related to our organization and expected manner of operation.
Moreover, qualification and taxation as a REIT will depend on our ability to
meet on a continuing basis, through actual annual operating results, (i)
dividend distribution levels, (ii) diversity of beneficial ownership, and
(iii) various other qualification tests (discussed below) imposed by the Code.
Sidley Austin Brown & Wood LLP
22
will not review compliance with these tests on a continuing basis and no
assurance can be given that we will satisfy such tests on a continuing basis.
See the discussion under the caption "Failure to Qualify," below.
The following is a general summary of the material Code provisions
that govern the federal income tax treatment of a REIT and its shareholders.
These provisions of the Code are technical and complex.
In general, if we qualify as a REIT, we will not be subject to
federal corporate income taxes on the net income that we distribute currently
to our shareholders. This treatment substantially eliminates the "double
taxation" (taxation at both the corporation and shareholder levels) that
generally results from investment in a corporation. We will, however, still be
subject to federal income and excise tax in certain circumstances, including
the following:
o we will be taxed at regular corporate rates on any
undistributed "REIT taxable income," including undistributed
net capital gains;
o we may be subject to the "alternative minimum tax" on our items
of tax preference;
o if we have (i) net income from the sale or other disposition of
foreclosure property that we hold primarily for sale to
customers in the ordinary course of business or (ii) other
non-qualifying income from foreclosure property, then we will
be subject to tax on that income at the highest corporate rate.
In general, "foreclosure property" is any property we acquire
by foreclosure (or otherwise) on default of a lease of such
property or a loan secured by such property;
o if we have net income from prohibited transactions, then that
income will be subject to a 100% tax. In general, "prohibited
transactions" are sales or other dispositions of property
(other than foreclosure property) that we hold primarily for
sale to customers in the ordinary course of business;
o if we fail to satisfy either the 75% gross income test or the
95% gross income test (discussed below), but preserve our
qualification as a REIT by satisfying certain other
requirements, then we will be subject to a 100% tax on (i) the
greater of (a) the amount by which we fail the 75% gross income
test or (b) the amount by which 90% of our gross income exceeds
the amount of gross income we derive from sources that count
towards satisfying the 95% gross income test, (ii) multiplied
by a fraction intended to reflect our profitability;
o if we fail to distribute for each calendar year at least the
sum of (i) 85% of our REIT ordinary income, (ii) 95% of our
REIT capital gain net income, and (iii) any undistributed
taxable income from prior years, then we will be subject to a
4% excise tax on the excess of the required distributions over
the actual distributions;
o if we acquire any asset from a C corporation (that is, a
corporation generally subject to the full corporate level tax)
in a transaction in which the basis of the
23
asset in our hands is determined by reference to the basis of
the asset (or any other property) in the hands of the C
corporation, and if we recognize gain on the disposition of
such asset during the ten-year period (the "Recognition
Period") beginning on the date we acquire the asset, then the
asset's "built-in" gain (the excess of the asset's fair market
value at the time we acquired it over the asset's adjusted
basis at that time) will be subject to tax at the highest
regular corporate rate (the "Built-In Gain Rule"); and
o if it is determined that amounts of certain income and expense
were not allocated between us and a taxable REIT subsidiary (as
defined herein) on the basis of arm's length dealing, or to the
extent we charge a taxable REIT subsidiary interest in excess
of a commercially reasonable rate, then we will be subject to a
tax equal to 100% of those amounts.
Requirements for Qualification. The Code defines a REIT as a
corporation, trust, or association:
o that is managed by one or more trustees or directors;
o the beneficial ownership of which is evidenced by transferable
shares or by transferable certificates of beneficial interest;
o that would be taxable as a domestic corporation, but for
Section 856 through 859 of the Code;
o that is neither a financial institution nor an insurance
company subject to certain provisions of the Code;
o the beneficial ownership of which is held by 100 or more
persons;
o no 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) during the
last half of each taxable year; and
o that meets certain other tests, described below, regarding the
composition of its income and assets.
The first four requirements must be satisfied during the entire
taxable year, and the fifth must be satisfied 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). The fifth and sixth requirements did not apply until
after the first taxable year for which we elected to be taxed as a REIT. In
addition, we will be treated as satisfying the sixth condition for any taxable
year for which we comply with the regulatory requirements to request
information from our shareholders regarding their actual ownership of our
shares and we do to know, or exercising reasonable due diligence would not
have known, that we failed to satisfy such condition.
24
We intend to comply with Treasury regulations requiring us to
ascertain the actual ownership of our outstanding shares. Failure to do so
will subject us to a fine. In addition, certain restrictions on the transfer
of our shares, imposed by our Declaration of Trust, are meant to help us
continue to satisfy the fifth and sixth requirements for qualification
described above.
Finally, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. Our taxable year is the calendar year.
Income Tests. To remain qualified as a REIT we must satisfy two gross
income tests in each taxable year. First, at least 75% of our gross income
(excluding gross income from "prohibited transactions") must come from real
estate sources such as rents from real property (as defined below) and
interest on obligations secured by real property, and from certain temporary
investments. Second, at least 95% of our gross income (excluding gross income
from "prohibited transactions") must come from investments, such as rents from
real property and interest on obligations secured by real property, and from
dividends, interest and gain from the sale or disposition of stock or
securities (or from any combination of the foregoing).
Subject to certain restrictions, rents received by a REIT (which
include charges for services customarily furnished or rendered in connection
with real property and rent attributable to personal property leased in
connection with real property) will generally qualify as "rents from real
property." The restrictions imposed include the following:
o the amount of rent must not be based, in whole or in part, on
the income or profits of any person (with an exception for
rents based on fixed percentages of the occupant's receipts or
sales);
o except for certain qualified lodging facilities leased to a
taxable REIT subsidiary (described below), the REIT (or a
direct or indirect owner of 10% or more of the REIT) may not
own (directly or constructively) 10% or more of the tenant (a
"Related Party Tenant");
o the amount of rent attributable to personal property leased in
connection with a lease of real property may not exceed 15% of
the total rent received under the lease; and
o the REIT generally may not operate or manage the property or
furnish or render services to the tenants except through (i) a
taxable REIT subsidiary (described below) or (2) an
"independent contractor" that satisfies certain stock ownership
restrictions, that is adequately compensated and from whom we
derive no income. (We are not required to use a taxable REIT
subsidiary or independent contractor, however, to the extent
that any service we provide is "usually or customarily
rendered" in connection with the rental of space for occupancy
only or is not considered "rendered to the tenants.")
If, for any taxable year, we fail to satisfy the 75% gross income
test, the 95% gross income test, or both, we may nevertheless preserve our
REIT status if we satisfy certain relief provisions under the Code. In
general, relief will be available if (i) our failure to meet one or
25
both of the gross income tests is due to reasonable cause rather than willful
neglect, (ii) we attached a schedule of the sources of our income to our
federal corporate income tax return and (iii) any incorrect information on the
schedule was not due to fraud with intent to evade tax. It is, however,
impossible to state whether in all circumstances we would be entitled to the
benefit of the relief provisions. As discussed above under the caption
"General," even if we qualified for relief, a tax would be imposed with
respect to the amount by which we fail the 75% gross income test or 95% gross
income test.
Asset Tests. To maintain our qualification as a REIT we must also
satisfy, at the close of each quarter of each taxable year, the following
tests relating to the nature of our assets.
o at least 75% of the value of our total assets must be
represented by real estate assets, including (a) interests in
real property and interests in obligations secured by real
property ("mortgages"), (b) our proportionate share (determined
in accordance with our capital interest) of real estate assets
held by any partnership in which we are a partner, (c) stock or
debt instruments held for not more than one year purchased with
the proceeds of a stock offering or long-term (that is, at
least five-years) public debt offering, and (d) cash, cash
items and Government securities.
o no more than 20% of the value of our total assets may be
securities of one or more taxable REIT subsidiaries (described
below); and
o except for (a) securities in the 75% asset class, (b)
securities in a taxable REIT subsidiary or qualified REIT
subsidiary (defined below), and (c) certain partnership
interests and debt obligations, --
o the value of any one issuer's securities we own may not
exceed 5% of the value of our total assets;
o we may not own more than 10% of any one issuer's
outstanding voting securities; and
o we may not own more than 10% of the total value of any one
issuer's outstanding securities.
We may hold one or more assets (or provide services to tenants)
through one or more taxable REIT subsidiaries. To treat a subsidiary as a
taxable REIT subsidiary, we and the subsidiary must make a joint election by
filing a Form 8875 with the IRS. We and LHL made a joint election to treat LHL
as our taxable REIT subsidiary effective January 1, 2001. A taxable REIT
subsidiary will pay tax at the corporate rates on its earnings, but such
earnings may include types of income that might jeopardize our REIT status if
we earned it directly. We may hold up to 100% of the stock in a taxable REIT
subsidiary. To prevent the shifting of income and expenses between us and a
taxable REIT subsidiary, the Code imposes on us a tax equal to 100% of certain
items of income and expense that are not allocated between us and the taxable
REIT subsidiary at arm's length. The 100% tax is also imposed to the extent we
charge a taxable REIT subsidiary interest in excess of a commercially
reasonable rate. In the case of a qualified lodging
26
facility (such as a hotel) leased by a REIT (directly or indirectly) to a
taxable REIT subsidiary, the lease payments will not qualify as REIT-qualified
rental income unless the property is operated on behalf of the taxable REIT
subsidiary by an independent contractor. Moreover, at the time it enters into
the operating agreement, the independent contractor must be actively engaged
in the trade or business of operating qualified lodging facilities for persons
not related to the REIT or the taxable REIT subsidiary. We believe the current
operating agreements with LHL meet these requirements.
We may also hold one or more of our assets through one or more
corporate subsidiaries that satisfy the requirements to be treated as
"qualified REIT subsidiaries." A qualified REIT subsidiary is disregarded for
federal income tax purposes, which means, among other things, that for
purposes of applying the gross income and assets tests, all assets,
liabilities and items of income, deduction and credit of the subsidiary will
be treated as ours. A subsidiary is a qualified REIT subsidiary if we own all
the stock of the subsidiary. We may also hold one or more of our assets
through other entities that may be disregarded for federal income tax
purposes, such as one or more limited liability companies (LLCs) in which we
are the only member.
Finally, as described above, we may hold one or more of our assets
through one or more partnerships. For purposes of applying the REIT asset and
gross income qualifications tests, and in other instances, Treasury
regulations will treat us as owning a proportionate share of a partnership's
gross income and assets based on our percentage ownership of that
partnership's capital. For this reason, if we own any percentage of the
capital interests in a partnership that we do not control, we may be unable to
avoid sharing in that partnership's non-REIT-qualifying assets and income.
If we satisfy the asset tests at the close of any quarter, we will
not lose our REIT status if we fail to satisfy the asset tests at the end of a
later quarter solely because of changes in asset values. If our failure to
satisfy the asset tests results, either in whole or in part, from an
acquisition of securities or other property during a quarter, the failure can
be cured by disposing of sufficient non-qualifying assets within 30 days after
the close of that quarter. We intend to maintain adequate records of the value
of our assets to ensure compliance with the asset tests and to take such other
action within 30 days after the close of any quarter as may be required to
cure any noncompliance. In some instances, however, we may be compelled to
dispose of assets that we would prefer to retain.
Annual Distribution Requirements. To qualify as a REIT we must also
distribute to our shareholders dividends (other than capital gain dividends)
in an amount at least equal to (i) the sum of (A) 90% of our "REIT taxable
income" (computed without regard to the dividends paid deduction and our "net
capital gain") and (B) 90% of the after-tax net income (if any) from
foreclosure property, minus (ii) the sum of certain items of non-cash income
(including, among other things, cancellation of indebtedness income and
original issue discount income). In general, the distributions can be paid
during the taxable year to which they relate. We may also satisfy the
distribution requirements with respect to a particular year provided we (1)
declare a sufficient dividend before timely filing our tax return for that
year and (2) pay the dividend within the 12-month period following the close
of the year, and on or before the date of the first regular dividend payment
after such declaration.
27
To the extent we fail to distribute our net capital gain, and to the
extent we distribute at least 90%, but less than 100%, of our "REIT taxable
income" (as adjusted) we will be subject to tax at the regular corporate
capital gains rates (with respect to the undistributed net capital gain) and
at the regular corporate ordinary income tax rates (with respect to the
undistributed REIT taxable income). Furthermore, if we fail to distribute
during each calendar year at least the sum of (i) 85% of the REIT ordinary
income for such year, (ii) 95% of our REIT capital gain income for such year
and (iii) any undistributed taxable income from prior periods, we will be
subject to a 4% excise tax on the excess of such amounts over the amounts
actually distributed. In addition, if we dispose of any asset subject to the
Built-In Gain Rule during the Recognition Period, we will be required to
distribute at least 95% of the built-in gain (after tax), if any, recognized
on the disposition. For this purpose, dividends declared in October, November
or December of any calendar year and payable to shareholders of record on a
specified date in such month, are treated as paid by us and as received by our
shareholders on the last day of the calendar year, provided we actually pay
the dividends no later than in January of the following calendar year.
We intend to make timely distributions sufficient to meet the annual
distribution requirements. In this regard, because we may claim depreciation
and other non-cash charges in computing our REIT taxable income, we expect our
cash flow to exceed our REIT taxable income. It is possible, however, that
from time-to-time, we may not have sufficient cash or other liquid assets to
meet the 90% distribution requirement. The shortfall may, for example, be due
to differences between the time we actually receive income or pay an expense,
and the time we must include the income or may deduct the expense for purposes
of calculating our REIT taxable income. As a further example, the shortfall
may be due to an excess of non-deductible cash outlays such as principal
payments on debt and the acquisition of investments, over non-cash deductions
such as depreciation. In such events, we may arrange for short-term or
long-term borrowings so that we can pay the required dividends and meet the
90% distribution requirement.
Under certain circumstances, if we fail to meet the distribution
requirement for a taxable year, we may correct the situation by paying
"deficiency dividends" to our shareholders in a later year. By paying the
deficiency dividend we may increase our dividends paid deduction for the
earlier year, thereby reducing our REIT taxable income for the earlier year.
However, if we pay a deficiency dividend, we will have to pay to the IRS
interest based upon the amount of any deduction taken for such dividend.
Failure to Qualify. If we fail to qualify for taxation as REIT in any
taxable year and certain relief provisions do not apply, we will be subject to
tax (including any applicable alternative minimum tax) on our taxable income
at regular corporate rates. Unless we are entitled to relief under specific
statutory provisions, we also will be disqualified from taxation as a REIT for
the four taxable years following the year during which our qualification was
lost. It is not possible to state whether in all circumstances we would be
entitled to such statutory relief.
For any year in which we fail to qualify as a REIT, we will not be
required to make distributions to our shareholders. Any distributions we do
make will not be deductible by us, and will generally be taxable to our
shareholders as ordinary income to the extent of our current and accumulated
earnings and profits. Subject to certain limitations in the Code, corporate
28
shareholders receiving such distributions may be eligible to claim the
dividends received deduction.
Taxation of Shareholders
Taxation of U.S. Shareholders. As long as we qualify as a REIT,
distributions that are made to our taxable U.S. Shareholders out of current or
accumulated earnings and profits (and that are not designated as capital gain
dividends) will be taken into account by them as ordinary income and will be
ineligible for the dividends received deduction. Distributions that are
designated 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 our
shares. (Any loss upon a sale or exchange of shares held for six months or
less (determined by applying certain holding period rules), however, will be
treated as a long-term capital loss to the extent the shareholder received
from us distributions that were required to be treated as long-term capital
gains.)
We may elect to not distribute any net long-term capital gain and pay
the tax thereon. In that case, a U.S. Shareholder will (i) include in its
income, as long-term capital gain, its proportionate share of the
undistributed gain, and (ii) claim, as a refundable tax credit, its
proportionate share of the taxes paid. In addition, a shareholder will be
entitled to increase the basis in our shares by an amount equal to the
difference between its share of the undistributed long term capital gains and
its share of the taxes paid.
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 shareholder's shares, but rather will reduce
the adjusted basis of the shareholder's shares. To the extent these
distributions exceed the shareholder's adjusted basis in its shares, the
distributions 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.
Earnings and profits are allocated to distributions with respect to
preferred stock before they are allocated to distributions with respect to
common stock. Therefore, depending on our earnings and profits, distributions
with respect to our preferred shares (as compared to distributions with
respect to our common shares) are more likely to be treated as dividends than
as a return of capital or a distribution in excess of basis.
Shareholders may not claim on their individual income tax returns our
net operating losses or capital losses. In addition, distributions with
respect to, and gain from the disposition of, our shares will be treated as
"portfolio income" and, therefore, shareholders will be unable to claim
passive losses against such income.
A redemption of our shares will be treated as a distribution and
hence taxable as a dividend to the extent of our current or accumulated
earnings and profits, unless the redemption is treated as a distribution in
part or full payment in exchange for the redeemed shares under section 302(b)
of the Code. Under that statute, a redemption will generally be treated as a
distribution in part or full payment in exchange for the redeemed shares if
the distribution:
29
o is "substantially disproportionate" with respect to your
ownership in us,
o results in a "complete termination" of your common and
preferred share interests in us, or
o is "not essentially equivalent to a dividend" with respect to
you.
In determining whether any of these tests have been met, a
shareholder must generally take into account our common and preferred shares
considered to be owned by the shareholder by reason of constructive ownership
rules as well as our common and preferred shares actually owned by the
shareholder.
Backup Withholding. We will report to our U.S. Shareholders and the
IRS the amount of dividends paid during each calendar year and the amount of
tax withheld, if any, with respect thereto. A shareholder may be subject to
backup withholding with respect to dividends paid unless the holder (i) is a
corporation or comes within certain other exempt categories and, if required,
demonstrates this fact, or (ii) provides a taxpayer identification number and
certifies as to no loss of exemption, and otherwise complies with the
applicable requirements of the backup withholdings rules. An individual U.S.
Shareholder may satisfy the requirements by providing us with an appropriately
prepared IRS Form W-9. Individual U.S. Shareholders who do not provide us with
their correct taxpayer identification numbers may be subject to penalties
imposed by the IRS. Any amount paid as backup withholding will be creditable
against the shareholder's income tax liability.
Tax-Exempt Shareholders. The IRS has ruled that amounts distributed
as dividends by a qualified REIT generally do not constitute unrelated
business taxable income ("UBTI") if received by a tax-exempt entity. Based on
that ruling, the dividend income from our shares will not be UBTI to a
tax-exempt shareholder, provided that the tax-exempt shareholder has not held
its shares as "debt financed property" within the meaning of the Code and such
shares are not otherwise used in a trade or business. Similarly, income from
selling our shares will not constitute UBTI unless the tax-exempt seller has
held its shares as "debt financed property" or has used the shares in a trade
or business.
Notwithstanding the above paragraph, if we are a pension-held REIT,
then any qualified pension trust that holds more than 10% of our stock will
have to treat dividends as UBTI in the same proportion that our gross income
would be UBTI. A qualified pension trust is any trust described in section
401(a) of the Code that is exempt from tax under section 501(a). In general,
we will be treated as a pension held REIT if both (a) we are predominantly
owned by qualified pension trusts (that is, at least one qualified pension
trust holds more than 25% of our shares, or one or more qualified pension
trusts, each of which owns more than 10% of our shares, hold in the aggregate
more than 50% of our shares) and (b) we would not be a REIT if we had to treat
our stock held in a qualified pension trust as owned by the qualified pension
trust (instead of treating such stock as owned by the qualified pension
trust's multiple beneficiaries). As a result of certain limitations on
transfer and ownership of shares contained in the Declaration of Trust, we do
not expect to be classified as a "pension held REIT."
30
In addition, if a tax-exempt shareholder is described in section
512(a)(3) of the Code, then distributions received from us may also constitute
UBTI. A shareholder is described in section 512(a)(3) the shareholder
qualifies for exemption under sections 501(c)(7), (9), (17) or (20).
Taxation of Foreign Shareholders
The rules governing U.S. federal income taxation of Non-U.S.
Shareholders are complex and no attempt will be made herein to provide more
than a limited summary of those rules. WE RECOMMEND THAT NON-U.S. SHAREHOLDERS
CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE THE IMPACT OF U.S. FEDERAL,
STATE, LOCAL OR FOREIGN INCOME TAX LAWS WITH REGARD TO AN INVESTMENT IN
SHARES, INCLUDING ANY REPORTING REQUIREMENTS.
Ordinary Dividends. Distributions, other than distributions that are
treated as attributable to gain from sales or exchanges by us of U.S. real
property interests (discussed below) and other than distributions designated
by us as capital gain dividends, will be treated as ordinary income to the
extent that they are made out of our current or accumulated earnings and
profits. Such distributions to Non-U.S. Shareholders will ordinarily be
subject to a withholding tax equal to 30% of the gross amount of the
distribution, unless an applicable tax treaty reduces that tax rate. If income
from the investment in the shares is treated as effectively connected with the
shareholder's conduct of a U.S. trade or business, the Non-U.S. Shareholder
generally will be subject to tax at graduated rates in the same manner as U.S.
shareholders are taxed with respect to such dividends (and may also be subject
to the 30% branch profits tax if the shareholder is a foreign corporation).
We expect to withhold U.S. income tax at the rate of 30% on the gross
amount of any dividends (other than dividends treated as attributable to gain
from sales or exchanges of U.S. real property interests and capital gain
dividends) paid to a Non-U.S. Shareholder, unless we receive the requisite
proof that (i) a lower treaty rate applies or (ii) the income is "effectively
connected income." A Non-U.S. Shareholder claiming the benefit of a tax treaty
may need to satisfy certification and other requirements, such as providing an
IRS Form W-8BEN. A Non-U.S. Shareholder who wishes to claim distributions are
effectively connected with a United States trade or business, may need to
satisfy certification and other requirements, such as providing IRS Form
W-8ECI. Other requirements, such as providing an IRS Form W-8IMY, may apply to
Non-U.S. Shareholders that hold their shares through a financial intermediary
or foreign partnership.
Return of Capital. Distributions in excess of our current and
accumulated earnings and profits, which are not treated as attributable to the
gain from disposition by us of a U.S. real property interest, will not be
taxable to a Non-U.S. Shareholder to the extent that they do not exceed the
adjusted basis of the Non-U.S. Shareholder's 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, they will give
rise to tax liability if the Non-U.S. Shareholder otherwise would be subject
to tax on any gain from the sale or disposition of its shares, as described
below. If it cannot be determined at the time a distribution is made whether
the distribution will exceed our current and accumulated earnings and profits,
then the distribution
31
will be subject to withholding at the rate applicable to dividends. The
Non-U.S. Shareholder, however, may seek a refund of these amounts from the IRS
if it is subsequently determined that the distribution did, in fact, exceed
our current and accumulated earnings and profits.
Capital Gain Dividends. For any year in which we qualify as a REIT,
distributions that are attributable to gain from sales or exchanges by us 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, as
amended ("FIRPTA"). Under FIRPTA, these distributions are taxed to a Non-U. S.
Shareholder as if the gains were effectively connected with a U. S. business.
Thus, Non-U.S. Shareholders will be taxed on these distributions at the same
capital gain rates applicable to U.S. Shareholders (subject to any applicable
alternative minimum tax and special alternative minimum tax in the case of
nonresident alien individuals), without regard to whether the distributions
are designated by us as capital gain dividends. Distributions subject to the
FIRPTA provisions may also be subject to a 30% branch profits tax in the hands
of a corporate Non-U.S. Shareholder unless the Shareholder is entitled to
treaty relief or other exemption. Treasury Regulations under FIRPTA require us
to withhold 35% of any distribution that we could designate as a capital gain
dividend.
Sales of Shares. Gain recognized by a Non-U.S. Shareholder upon a
sale or exchange of shares generally will not be taxed under FIRPTA provided
we are a "domestically controlled REIT." In general we will qualify as a
domestically held REIT if at all times during a designated testing period less
than 50% in value of our shares are held (directly or indirectly) by foreign
persons. It is currently anticipated that we will be a "domestically
controlled REIT" and that therefore the sale of shares will not be subject to
taxation under FIRPTA. However, gain not subject to FIRPTA will be taxable to
a Non-U.S. Shareholder if (i) its investment in our shares is "effectively
connected" with its conduct of a U.S. trade or business, or (ii) the Non-U.S.
Shareholder is an alien individual who is present in the United States for 183
days or more during the taxable year. A similar rule will apply to capital
gain dividends not subject to FIRPTA.
Although we anticipate that we will qualify as a domestically
controlled REIT, because our shares will be publicly traded, no assurance can
be given that we will continue to qualify. If we are not a domestically
controlled REIT, then whether or not a Non-U.S. Shareholder's sale of the
shares will be subject to tax under FIRPTA will depend on (i) whether or not
the shares were regularly traded on an established securities market (such as
the New York Stock Exchange) and (ii) the size of the seller's interest in the
shares. If gain on the sale of shares is subject to tax under FIRPTA, then a
Non-U.S. Shareholder is subject to the same treatment as a U.S. Shareholder
with respect to such gain (subject to any applicable alternative minimum tax
and a special alternative minimum tax in the case of nonresident alien
individuals) and the purchaser of such shares may be required to withhold 10%
of the gross purchase price.
Redemptions
Redemptions of the shares will be treated as distributions made with
respect to those shares. Whether such distributions will be treated as
dividends will depend on the rules under section 302 (b) discussed above under
the caption "Taxation of U.S. Shareholders." Whether
32
such distributions will be subject to tax under FIRPTA will depend on whether
such distributions are attributable to gain from sales or exchanges by us of
U.S. real property interests.
Federal Estate Taxes
In general, if an individual who is not a citizen or resident (as
defined in the Code) of the United States owns (or is treated as owning) our
stock at the date of death, such stock will be included in the individual's
estate for United States Federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise.
Proposed Legislation
Under the President's budget proposal for fiscal year 2004, up to
100% of the dividends paid by a taxable corporation could be excluded from a
shareholder's gross income. Subject to certain narrow exceptions, this
exclusion would not apply to REIT dividends such as the dividends payable on
our shares. If the dividend exclusion becomes law, an investment in our shares
could become less attractive than other investments and could impair the value
of our shares.
33
PLAN OF DISTRIBUTION
We may sell the securities to one or more underwriters for public
offering and sale by them or may sell the securities to investors directly or
through agents. Any underwriter or agent involved in the offer and sale of the
securities will be named in the applicable prospectus supplement.
Underwriters may offer and sell the securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. LaSalle Hotel Properties
also may, from time to time, authorize underwriters acting as their agents to
offer and sell the securities upon the terms and conditions as are set forth
in the applicable prospectus supplement. In connection with the sale of
securities, underwriters may be deemed to have received compensation from us
in the form of underwriting discounts or commissions and may also receive
commissions from purchasers of securities for whom they may act as agent.
Underwriters may sell securities to or through dealers, and 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 agent.
Any underwriting compensation paid by us to underwriters or agents in
connection with the offering of securities, and any discounts, concessions for
commissions allowed by underwriters to participating dealers, will be set
forth in the applicable prospectus supplement. Underwriters, dealers and
agents participating in the distribution of the securities may be deemed to be
underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the securities may be deemed to be
underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered
into with us, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
One or more of the following (or their successors) may be involved as
an underwriter or agent in any at-the-market offering of securities.
o A.G. Edwards & Sons, Inc.
o Deutsche Banc Alex. Brown Inc.
o Harris Investor Services, LLC
o Legg Mason Wood Walker, Incorporated
o Raymond James & Associates, Inc.
o UBS Securities LLC
o Wachovia Securities, Inc.
Certain of the underwriters and their affiliates may engage in
transactions with, and perform services for, us in the ordinary course of
business.
34
LEGAL MATTERS
The validity of the issuance of the securities offered hereby and
certain legal matters described under "Federal Income Tax Considerations" will
be passed upon for LaSalle Hotel Properties by Sidley Austin Brown & Wood LLP,
New York, New York.
EXPERTS
The consolidated financial statements and schedule of LaSalle Hotel
Properties as of December 31, 2002 and 2001 and for each of the years in the
three-year period ended December 31, 2002 and the financial statements of
LaSalle Hotel Lessee, Inc. for the years ended December 31, 2000 and 1999, and
for the period from April 29, 1998 (inception) through December 31, 1998, have
been incorporated by reference herein in reliance upon the report of KPMG LLP,
independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
35
=============================================================================
LaSalle Hotel Properties
=============================================================================
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..... $16,164
NYSE Listing Fee........................................ 12,500
Printing and engraving expenses......................... 50,000
Legal fees and expenses................................. 75,000
Accounting fees and expenses............................ 8,000
Blue Sky fees and expenses.............................. 2,000
Miscellaneous........................................... 10,000
--------
Total $173,644
========
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
II-1
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.
Maryland 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 may be permitted to trustees or officers pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
II-2
Item 16. Exhibits.
Exhibit Index
Exhibits Description
-------- -----------
1.1 -- Form of Underwriting Agreement for Common Shares. (3)
1.2 -- Form of Underwriting Agreement for Preferred Shares. (3)
3.1 -- Amended and Restated Bylaws. (3)
4.1 -- Form of Common Share Certificate.(1)
4.3 -- Form of Preferred Share Certificate evidencing 10 1/4% Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest, Liquidation Preference $25.00 Per share, Par
Value $.01 Per Share.. (2)
4.4 -- Form of Warrant Agreement.(4)
4.5 -- Form of Warrant. (4)
5 -- Opinion of Sidley Austin Brown & Wood LLP as to the legality of the Securities. (3)
8 -- Opinion of Sidley Austin Brown & Wood LLP as to tax matters. (3)
12.1 -- Calculation of LaSalle Hotel Properties Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
23.1 -- Consent of Sidley Austin Brown & Wood LLP (included in Exhibits 5 and 8).
23.2 -- Consent of KPMG LLP.
24 -- Power of attorney. (3)
-------------
(1) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 333-45647) and incorporated herein by reference.
(2) Previously filed as an exhibit to Registration Statement on Form 8-A (No.
001-14045) and incorporated herein by reference.
(3) Previously filed as an exhibit to Registration Statement on Form S-3 (No.
333-104054) and incorporated herein by reference.
(4) To be filed by amendment or incorporated by reference in connection with
the offering of Securities.
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;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) 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 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
II-3
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) 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, 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, 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 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 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 and will be
governed by the final adjudication of such issue.
II-4
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, MD, on June 17, 2003.
LASALLE HOTEL PROPERTIES
By: /s/ Hans S. Weger
----------------------------------------
Hans S. Weger
Executive Vice President, Treasurer and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on June 17, 2003.
Signature Title Date
--------- ----- ----
Chairman, President and Chief
/s/ Jon E. Bortz* Executive Officer
----------------------------------
Jon E. Bortz
Trustee
/s/ Darryl Hartley-Leonard*
----------------------------------
Darryl Hartley-Leonard
Trustee
/s/ Kelly L. Kuhn*
----------------------------------
Kelly L. Kuhn
/s/ William S. McCalmont* Trustee
----------------------------------
William S. McCalmont
/s/ Donald S. Perkins* Trustee
----------------------------------
Donald S. Perkins
Trustee
/s/ Stuart L. Scott*
----------------------------------
Stuart L. Scott
/s/ Donald A. Washburn* Trustee
----------------------------------
Donald A. Washburn
* By: Hans S. Weger, as attorney-in-fact
Exhibit Index
Exhibits Description
-------- -----------
1.1 -- Form of Underwriting Agreement for Common Shares. (3)
1.2 -- Form of Underwriting Agreement for Preferred Shares. (3)
3.1 -- Amended and Restated Bylaws. (3)
4.1 -- Form of Common Share Certificate. (1)
4.3 -- Form of Preferred Share Certificate evidencing 10 1/4% Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest, Liquidation Preference $25.00 Per share, Par
Value $.01 Per Share.. (2)
4.4 -- Form of Warrant Agreement. (4)
4.5 -- Form of Warrant. (4)
5 -- Opinion of Sidley Austin Brown & Wood LLP as to the legality of the Securities. (3)
8 -- Opinion of Sidley Austin Brown & Wood LLP as to tax matters. (3)
12.1 -- Calculation of LaSalle Hotel Properties Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
23.1 -- Consent of Sidley Austin Brown & Wood LLP (included in Exhibits 5 and 8).
23.2 -- Consent of KPMG LLP.
24 -- Power of attorney. (3)
------------
(1) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 333-45647) and incorporated herein by reference.
(2) Previously filed as an exhibit to Registration Statement on Form 8-A (No.
001-14045) and incorporated herein by reference.
(3) Previously filed as an exhibit to Registration Statement on Form S-3 (No.
333-104054).
(4) To be filed by amendment or incorporated by reference in connection with
the offering of Securities.