LaSalle Reports 2006 Net income

RevPAR Increases 10.1%, Occupancy 73.9%

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. October 14, 2008

BETHESDA, MD, February 22, 2007. LaSalle Hotel Properties (NYSE:LHO) today reported net income to common shareholders of $73.5 million, or $1.85 per diluted share for the year ended December 31, 2006, compared to net income of $20.8 million, or $0.67 per diluted share for the prior year. Net income for 2006 includes the $38.4 million net gain on the sale of the Chicago Marriott Downtown.

For the year ended December 31, 2006, the Company generated funds from operations ("FFO") of $114.2 million versus $70.5 million for 2005, an increase of 62.0 percent. On a per diluted share basis, FFO for 2006 rose to $2.87 versus $2.25 a year ago, an increase of 27.9 percent.

The Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") for the year increased 105.0 percent to $225.2 million from $109.9 million for 2005. EBITDA for 2006 includes the $38.4 million net gain on the sale of the Chicago Marriott Downtown.

Net Income, FFO and EBITDA include a contingent litigation expense of $0.8 million in 2006 and $1.0 million in 2005 associated with the Company's ongoing litigation with Lehman Brothers (formerly the Meridien litigation).

Room revenue per available room ("RevPAR") increased 10.1 percent in 2006 to $140.78 versus the previous year. Average daily rate ("ADR") climbed 9.1 percent to $190.42 from 2005, while occupancy grew 0.9 percent to 73.9 percent.

"2006 was an excellent year for the economy, the lodging industry and for LaSalle Hotel Properties," said Jon Bortz, Chairman and Chief Executive Officer of LaSalle Hotel Properties. "The Company surpassed its previous peak in FFO per diluted share, EBITDA per diluted share and RevPAR. We took advantage of the favorable economic and lodging industry trends, making new acquisitions in our core major urban markets and investing significant capital in our existing and acquisition properties to provide growth in the future. Strong increases in our cash flow coupled with our optimistic view of the fundamentals of the industry, led to our decision to increase our monthly dividend by 40 percent in 2006."

The Company's hotels generated $194.9 million of EBITDA for the year compared with $170.1 million last year. EBITDA margins across the Company's portfolio increased 155 basis points from the prior year. The EBITDA margin expansion was primarily attributable to ADR growth, guestroom and food and beverage cost controls and aggressive asset management efforts to restrain increases in undistributed expenses. Margin growth was partly offset by continued above-inflationary increases in energy costs, property taxes, property and casualty insurance, general liability insurance and operator incentive fees, which grew due to increases in property-level EBITDA.

"Lodging industry fundamentals remained strong in 2006, with supply increasing only 0.6 percent and room demand up 1.1 percent, providing rising occupancies, market compression and an ability to substantially increase rates," said Mr. Bortz. "The Company's favorable performance in 2006 can be attributed to our consistent, focused and disciplined acquisition strategy, aggressive asset management and the benefits we continue to receive from our substantial pipeline of current and recent renovation, repositioning and re-branding projects."

2006 Highlights

The Company acquired seven hotels in 2006 for a total purchase price of $588 million. Our 2006 acquisitions are ideally located in major urban markets, including two in downtown Chicago, two in West Los Angeles (West Hollywood and Burbank), one in downtown Seattle, one in downtown San Diego and one in New York City. At three of the seven properties, we immediately changed the management company. Four of the seven properties are currently under renovation or repositioning and the Holiday Inn Wall Street in lower Manhattan will be renovated and repositioned as a luxury independent hotel by early 2008. Acquiring hotels in great locations in the top performing urban and resort markets in the U.S., with the opportunity to renovate, reposition, and re-brand the hotels, continues to be an important part of our overall strategy.

During 2006, the Company invested $63.2 million of capital throughout our portfolio, including $10.6 million for renovation of the meeting facilities, guestroom carpets and creation of a shared laundry facility at Paradise Point Resort in San Diego. Other major projects included: $6.4 million for the completion of the repositioning of Lansdowne Resort including development of the Shark Bite, a 9 hole executive course scheduled to open in May 2007; $5.2 million for the Chicago House of Blues Hotel renovation, repositioning and infrastructure improvements; $4.9 million for the Hilton San Diego Resort renovation and repositioning; $4.4 million for completion of the first phase of the Chaminade Resort renovation and repositioning in Santa Cruz; and $4.0 million for the guestroom renovation and junior ballroom addition at the Harborside Hyatt in Boston.

During 2006, the Company paid $1.56 in dividends per common share, which represents 52.3 percent ordinary income, 20.7 percent capital gain and 27.0 percent Unrecaptured Section 1250 Gain for tax purposes. In April 2006, the Company increased its monthly dividend distribution by 40 percent to $0.14 from $0.10 per common share.

As of year-end 2006, LaSalle Hotel Properties had total outstanding debt of $809.0 million, with the Company's $300.0 million unsecured credit facility fully available for future use. Interest expense for the year was $40.0 million (excluding amortized financing expenses of $2.6 million). For the year, the Company's weighted average interest rate was a low 5.3 percent. As of December 31, 2006, based on the Company's bank covenants under its senior unsecured credit facility, the Company's EBITDA to interest coverage ratio was 4.4 and debt to EBITDA ratio was 3.8, one of the lowest in the lodging industry. At the end of the year, the Company also had $63.0 million of unrestricted cash and cash equivalents on its balance sheet and $18.4 million of restricted cash.

"We continue to manage our balance sheet with a focus on maintaining low leverage, mixing fixed and variable rate debt and staggering debt maturities," advised Hans Weger, Chief Financial Officer of LaSalle Hotel Properties. "As a result, we believe we have the balance sheet flexibility and capacity to take advantage of future investment opportunities, as they may arise."

Fourth Quarter Results

For the fourth quarter 2006, LaSalle Hotel Properties reported net income applicable to common shareholders of $4.5 million, or $0.11 per diluted share, compared with net income of $2.0 million, or $0.06 per diluted share, for the prior year fourth quarter.

FFO improved 51.9 percent to $26.2 million versus $17.2 million for the fourth quarter 2005. On a per diluted share basis, fourth quarter 2006 FFO was $0.65 versus $0.51 for the prior year's quarter, a 26.8 percent increase. EBITDA increased by 57.0 percent to $45.7 million in the fourth quarter 2006 from $29.1 million in the same quarter of 2005.

RevPAR for the fourth quarter 2006 rose 8.5 percent compared with the prior year's quarter. ADR increased 8.0 percent from 2005 to $192.16 and occupancy grew 0.5 percent to 68.3 percent. Fourth quarter performance was led by the Company's hotels located in major urban markets including Chicago, West Hollywood and San Diego.

During the fourth quarter, the Company's portfolio-wide hotel EBITDA margins increased 282 basis points from the prior year quarter to 28.7 percent. EBITDA margin improvement in the quarter was a result of a $14.18 increase in ADR and a healthy 8.2 percent increase in other revenues, coupled with effective departmental and overhead expense controls and a reduction in energy costs, partly offset by greater than inflationary increases in property taxes, insurance and operator incentive fees.