LaSalle Reports 3rd Qtr Net Income to Common Shareholders, Reduces Dividend

$12.5 million, a 38% Drop from the $20.2 million Reported in 3rd Qtr 2007

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. October 26, 2008

BETHESDA, MD, October 23, 2008. LaSalle Hotel Properties (NYSE:LHO) today reported net income to common shareholders of $12.5 million, or $0.30 per diluted share for the quarter ended September 30, 2008, compared to net income of $20.2 million, or $0.50 per diluted share for the prior year period. Net income for the quarter ended September 30, 2008 includes a $4.3 million expense related to the final settlement and dismissal of all Meridien litigation.

For the quarter ended September 30, 2008, the Company generated funds from operations ("FFO") of $39.9 million versus $43.7 million for the same period of 2007. On a per diluted share basis, FFO for the third quarter was $0.99 versus $1.09 for the same period last year. FFO for the quarter ended September 30, 2008 was reduced by the $4.3 million settlement expense related to the Meridien litigation. Excluding the settlement expense, FFO for the third quarter 2008 would have been $44.2 million or $1.09 per diluted share.

The Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") for the third quarter declined to $60.0 million from $65.5 million during the prior year period. EBITDA for the quarter ended September 30, 2008 was reduced by the $4.3 million settlement expense related to the Meridien litigation. Excluding the settlement expense, EBITDA for the third quarter 2008 would have been $64.3 million.

Room revenue per available room ("RevPAR") for the quarter ended September 30, 2008 versus the same period in 2007 decreased 0.1 percent to $166.76. RevPAR for the quarter consisted of a 0.8 percent increase in occupancy offset by a 1.0 percent decline in Average Daily Rate ("ADR") from the prior year period.

The Company's hotels generated $66.9 million of EBITDA for the third quarter compared with $66.0 million for the same period last year. Hotel revenues increased 1.6 percent in the quarter versus the prior year's third quarter while hotel expenses rose 1.7 percent in the quarter versus the prior year.

"Despite weakening trends, our operators were successful in generating positive revenue growth while limiting expense growth to a minor increase," said Jon Bortz, Chairman and Chief Executive Officer of LaSalle Hotel Properties. "Given the challenging economic environment, we remain active with our operators in our joint efforts to aggressively lower expenses as business levels weaken. Our properties are in excellent physical condition, our balance sheet and liquidity are strong and are both being enhanced by the actions we have announced today."

As of the end of the third quarter 2008, the Company had total outstanding debt of $1,008.1 million. The Company's $450.0 million credit facility had an outstanding balance of $221.5 million as of September 30, 2008. Total debt to trailing 12 month Corporate EBITDA (as defined by our senior unsecured credit facility) equaled 4.5 times as of September 30, 2008.

For the nine months ended September 30, 2008, net income to common shareholders decreased to $18.2 million from $55.3 million for the prior year period. Net income for the prior year period includes the $30.4 million gain on sale of the LaGuardia Marriott. For the first nine months of 2008, FFO rose to $97.1 million from $93.6 million in the prior year period or $2.41 per diluted share from $2.33 per diluted share. EBITDA year to date through the end of September declined to $155.0 million from $189.3 million for the prior year period. EBITDA for the prior year period includes the $30.4 million gain on sale of the LaGuardia Marriott. Net income, FFO and EBITDA for the nine months ended September 30, 2008 include the negative impact from the $4.3 million expense related to the settlement of all Meridien litigation.

RevPAR increased 1.6 percent for the nine months ended September 30, 2008 to $153.26 versus the prior year period. The increase in RevPAR was due to ADR growth of 1.1 percent to $201.95 and an increase in occupancy of 0.5 percent to 75.9 percent for the nine months ended September 30, 2008.

For the nine months ended September 30, 2008, the Company's hotels generated $168.0 million of hotel EBITDA compared with $165.7 million for the same period last year. Hotel revenue growth was 2.1 percent for the nine months ended September 30, 2008 versus the same period last year while hotel expenses grew 2.4 percent versus the same prior year period.

Third Quarter Highlights

On September 11, 2008, the Company entered into a settlement agreement that ended its six year litigation with Meridien. The Company recorded a one-time expense of $4.3 million in the current year's third quarter for the settlement and dismissal of both the New Orleans and Dallas cases, representing all of the litigation with Meridien.

Subsequent Events

On October 1, 2008, the Company extinguished $58.6 million of secured debt related to San Diego Paradise Point Resort with cash and additional borrowings from the Company's line of credit. This reduced the Company's total outstanding debt to approximately $961.0 million.

On October 3, 2008, the Company exercised its option to extend for one year the $20.0 million loan secured by Gild Hall. The Company has no maturities remaining in 2008 and only $68.5 million of non-extendable maturities in 2009. Should the debt markets remain unfavorable, the Company can utilize capacity on its line of credit to repay the 2009 non-extendable maturities.

Fourth Quarter Dividends

The Company announced its monthly dividend of $0.085 per common share of beneficial interest for each of the months of October, November and December 2008. The October dividend will be paid on November 14, 2008 to common shareholders of record on November 3, 2008; the November dividend will be paid on December 15, 2008 to common shareholders of record on November 28, 2008; and the December dividend will be paid on January 15, 2009 to common shareholders of record on December 31, 2008. This monthly dividend results in an annualized rate of $1.02 per common share which is a reduction from the prior declared dividend's annualized rate of $2.10 per common share. The $1.02 per common share annualized rate represents a 9.1 percent yield based on today's closing share price.

"The Board of Trustees took this action to reduce the dividend based on the recommendation of management, the current challenging economic environment and the view that the U.S. economy, as well as the lodging industry, will likely continue to face declining economic trends through 2009," said Hans Weger, Chief Financial Officer. "This reduction will further strengthen the balance sheet, provide over $100 million of additional liquidity over the next 26 months and position the Company to take advantage of future investment opportunities."

Given sluggish operating fundamentals since the fourth quarter of 2007, combined with the current rapidly deteriorating economic environment and the expectation that the lodging industry will face a challenging operating environment through at least 2009, the Company has also taken the following additional steps to further strengthen its balance sheet and liquidity:

---| Limit capital investments at the hotels in 2009 to those related to life safety, emergency capital maintenance and a few minor projects that are currently underway;

---| Modified the fast-track schedule for the IBM Building conversion in Chicago to a normal development schedule with major construction commencing in 2010 and the super-luxury hotel opening in 2011; and

---| Continue to work aggressively with our operators to improve efficiencies, reduce costs and enhance revenues at our properties.

2008 Outlook

The outlook for the full year 2008 is as follows:

Net Income: $11.7 million - $13.7 million ($0.29 - $0.34 per diluted share);

FFO: $117.4 million - $119.4 million ($2.91 - $2.96 per diluted share); and

EBITDA: $195.5 million - $197.5 million.

Excluding the $4.3 million settlement expense related to Meridien, the Company's outlook for 2008 is as follows:

Net Income: $16.0 million - $18.0 million ($0.40 - $0.45 per diluted share);

FFO: $121.7 million - $123.7 million ($3.02 - $3.07 per diluted share); and

EBITDA: $199.8 million - $201.8 million.