LaSalle Hotel Properties Management Discusses Q1 2014 Results - Earnings Call Transcript

Apr.24.14 | About: LaSalle Hotel (LHO)

LaSalle Hotel Properties (NYSE:LHO)

Q1 2014 Earnings Call

April 24, 2014 9:30 am ET

Executives

Kenneth G. Fuller - Treasurer

Michael D. Barnello - Chief Executive Officer, President and Trustee

Bruce A. Riggins - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Secretary

Analysts

Kevin Varin

Michael Bilerman - Citigroup Inc, Research Division

Andrew G. Didora - BofA Merrill Lynch, Research Division

Anto Savarirajan - Goldman Sachs Group Inc., Research Division

Ryan Meliker - MLV & Co LLC, Research Division

Chris J. Woronka - Deutsche Bank AG, Research Division

David Loeb - Robert W. Baird & Co. Incorporated, Research Division

Nikhil Bhalla - FBR Capital Markets & Co., Research Division

Wes Golladay - RBC Capital Markets, LLC, Research Division

William A. Crow - Raymond James & Associates, Inc., Research Division

Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division

Lukas Hartwich - Green Street Advisors, Inc., Research Division

Operator

Good day, and welcome to the LaSalle Hotel Properties First Quarter 2014 Earnings Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Ken Fuller, Treasurer of LaSalle Hotel Properties. Please go ahead.

Kenneth G. Fuller

Thank you, Lauren. Good morning, everyone, and welcome to the First Quarter 2014 Earnings Call and Webcast for LaSalle Hotel Properties. I'm here today with Mike Barnello, our President and Chief Executive Officer; and Bruce Riggins, our Chief Financial Officer. Mike will provide an overview of the industry, discuss our first quarter results and activities and talk about our outlook for the second quarter 2014. Bruce will provide additional details on our first quarter performance and our balance sheet, then we'll open the call for Q&A.

But before we start, please take note of the following: Any statements that we make today about future results and performance or plans and objectives are forward-looking statements. Actual results may differ as a result of factors, risks and uncertainties, over which the company may have no control. Factors that may cause actual results to differ materially are discussed in the company's 10-K for 2013, quarterly reports and its other reports filed with the SEC. The company disclaims any obligation or undertaking to update or revise any forward-looking statements. Our SEC reports, as well as our press releases, are available at our website, www.lasallehotels.com. Our most recent 8-K and yesterday's press release include reconciliations of non-GAAP measures to the most comparable GAAP measures.

And with that, I'll turn the call over to Mike Barnello. Mike?

Michael D. Barnello

Thanks, Ken, and welcome, everyone, to our first quarter call. I'll start with a brief industry overview. During the first quarter, the U.S. lodging industry experienced demand growth of 3.8% against only 0.9% supply increase. The demand growth was the strongest we have seen in the past 8 quarters, which provided evidence that our industry remains in recovery. As a result, first quarter industry occupancy grew 2.9%. Industry ADR continued its encouraging trend with 3.8% growth during the quarter. RevPAR improved to strong 6.8%. Overall, the industry performed well in line with our expectations.

Now I'll turn to our portfolio results. Our portfolio RevPAR grew 4% in the first quarter, with ADR growth of 6.2% and occupancy decline of 2%. A couple of our markets were impacted by some anomalies.

Presidential inauguration in 2013 created a tough comparison for Washington, D.C. in the first quarter of 2014, and the market also suffered several snowstorms throughout the quarter. Additionally, we had 3 hotels under renovation during the quarter, including Hotel George, Donovan House and the Hilton Old Town Alexandria. These renovations are now complete. Excluding Washington, D.C., our first quarter portfolio RevPAR increased 7.7%. New York benefited during the first quarter of 2013 from post Hurricane Sandy-related business, which created tough comparisons in 2014. Despite an extraordinary amount of inclement weather throughout the quarter, our portfolio delivered RevPAR in excess of the midpoint of our range. While business mix standpoint is expected, transient rooms led the charge during the first quarter, with an increase of 0.4% and ADR growth of 7%. Our group rooms declined 8% and were significantly impacted by a reduction in group rooms at Park Central where we had FEMA business in 2013. Our group average rating improved 3%. Our group transient mix is 29% group and 71% transient during the first quarter.

Our portfolio hotel EBITDA margin was 22.7%, which was a 125 basis point decline compared to the prior year. Our margins were negatively impacted by the ramp-up of occupancy at Park Central and WestHouse, as well as a significant year-over-year increase in our property tax and energy costs. Excluding Park Central and WestHouse, our margins were essentially flat, and our expenses increased only 2.5%. First quarter property taxes increased $1.9 million or 15.9%. Energy costs increased due to weather impact and the expirations of some favorable rates we locked into a few years ago. These costs were anticipated in both our quarterly and annual outlook. When looking at our portfolio excluding Park Central and WestHouse before tax and energy costs, our expenses grew only 1.3% and our hotel EBITDA margin improved 71 basis points.

Overall, our portfolio delivered solid EBITDA, leading to strong corporate adjusted EBITDA growth of 13% to $44.9 million. Our adjusted FFO per share grew 18.5% to $0.32.

Turning to capital, we invested $16.4 million of capital during the quarter, including the completion of renovations at Onyx Hotel in Boston, Hilton Alexandria Old Town, as well as Hotel George and Donovan House in Washington, D.C.

On April 2, we acquired the Hotel Vitale, a 200-room hotel located on the Embarcadero in San Francisco. The hotel is in excellent physical condition and benefits from breathtaking views. From a demand perspective, Hotel Vitale is at the heart of the Financial District and proximate to world-class retail and entertainment attractions, including Steuart Street’s restaurant row, Moscone Center, AT&T Park and Union Square.

San Francisco's room demand is at peak levels and supply growth is expected to be limited through the next several years. Over the past few years, we've been able to increase our presence in San Francisco, and this marks our 6th acquisition in the market since 2010. This acquisition takes our San Francisco EBITDA exposure up to 10%. Over the same period, our Washington, D.C. EBITDA exposure had been reduced from 22% to 14%.

On a strong basis, Hotel Vitale generated EBITDA margins of 22%, well below our portfolio average despite a 2013 average rate was approximately 70% higher than our portfolio. [indiscernible] practices, and we expect to improve the asset's cash flow potential.

We now just read the board implemented the 34% increase in our second quarter dividend to a run rate of $1.50 per share. This increase reflects the strong growth our portfolio has delivered throughout the cycle, other recovery and our expectation there remains growth in the cycle.

On a macro level, the 4 economic indicators that we track continue to provide generally encouraging data. The latest consumer confidence figure was the highest we've seen in 6 years. As of the end of March, unemployment remained at 6.7%, just a hair higher than its lowest level since 2008. Corporate profits reported thus far has been moderate to strong in the first quarter after achieving record levels in 2013, and employments have also been solid.

Turning to our outlook for the second quarter, we expect this economic environment to continue to be positive, with steady demand and limited supply allowing solid RevPAR gains. We expect second quarter RevPAR to increase 7% to 9.5%. We expect our margin change in the second quarter to range from approximately flat to an increase of 50 basis points compared to the same period last year. Margins will be negatively impacted by the ramp-up of Park Central, WestHouse, as well as higher property taxes and energy costs. Our outlook for the second quarter adjusted EBITDA is $103 million to $109 million, with adjusted FFO per share of $0.77 to $0.81.

As for the full year, while looking at our first quarter booking activity, we're encouraged with the trends we've seen. Our entire portfolio's total revenue on the books for the balance of the year is up approximately 6% compared to being up 3% at the time of our February call. Transient revenue book is 8% higher than last year, and group is up 4%.

In terms of our full year outlook, we've updated to include the acquisition of Hotel Vitale. The outlook is otherwise unchanged from the range we gave out in February. For 2014, we anticipate RevPAR growth of 5% to 8.5%. We anticipate our margins to be flat to 100 basis points improvement over 2013. EBITDA margins in 2014 are impacted by the expected recovery of occupancy at Park Central and WestHouse. Our outlook for adjusted EBITDA, including Hotel Vitale, has increased to a range of $327 million to $348 million. And the FFO per share is $2.33 to $2.54.

Now Bruce will provide some details about our first quarter performance and an update on our balance sheet. Bruce?

Bruce A. Riggins

Thanks, Mike. And good morning, everyone. As mentioned, our first quarter RevPAR increase is 4%. RevPAR at our resorts, led by Southernmost in Key West was strong with RevPAR growth of 12.9%. This growth was comprised of a 12.7% increase in ADR and occupancy improvement of 0.1%.

RevPAR for our urban portfolio increased 2.5%, with ADR up 4.3%, offset by occupancy decrease of 1.7%. RevPAR at our convention hotels increased 1.7% due to ADR, which increased 6.4%, partially offset by an occupancy decline of 4.4%.

Los Angeles was our strongest market during the first quarter as RevPAR grew 12% due to an 8.5% improvement in occupancy and a 3.3% increase in ADR. San Francisco was also very strong in the quarter, with the RevPAR increase of 11.4%, comprised of a 17% ADR improvement, partially offset by a 4.8% decrease in occupancy. Seattle had RevPAR growth of 10.9% this quarter, as ADR grew 5.9% and occupancy rose 4.7%. Boston had a strong quarter with RevPAR growth of 10%, primarily driven by ADR increasing 7.2% and occupancy growth of 2.6%. San Diego RevPAR rose 9.1%, due entirely to an ADR increase of 9.3%, slightly offset by an occupancy decrease of 0.2%. New York saw an increase in RevPAR of 7.1%, with an ADR increase of 3.8% and a 3.1% increase in occupancy. Excluding Park Central, RevPAR at our New York hotels increased 0.5%, with a 6.9% increase in occupancy, offset by a 6% decline in average rate. Our portfolio outperformed the Manhattan market, where RevPAR declined 2.1%. Philadelphia RevPAR rose 4.4%, with ADR growth of 4.1% and a slight occupancy increase of 0.3%. As expected, I mentioned earlier, Washington, D.C. had a difficult quarter with RevPAR decline of 10.1%, comprised of a 7.6% decrease in occupancy and a 2.7% decrease in ADR. The DC market was negatively impacted by the inauguration comparison, as well as inclement weather.

Chicago was our weakest market overall due to a weak citywide calendar and the impact of the severe winter weather. And Central Park declined 15.4%, with occupancy decreasing 14.3%, while ADR was down 1.2%.

During the quarter, our best performing properties were Hotel Monaco and Villa Florence in San Francisco; Southernmost in Key West; Chamberlain, Le Montrose and Amarano in Los Angeles; L'Auberge Del Mar, built in San Diego resorts; and Hyatt in Boston Harbor.

Our corporate adjusted EBITDA increased $5.1 million or 12.8% compared to last year. Our adjusted FFO per share was $0.32 compared to $0.27 last year, an 18.5% increase. At March 31, we had total debt outstanding of $1.2 billion at an average interest rate for the quarter of 3.7%. As of quarter end, total debt to trailing 12-month corporate EBITDA as defined in our senior unsecured credit facility was 3.9x, which translates to an interest rate on our credit facility of LIBOR plus 170 basis points. We did not sell any stock under the ATM program in the first quarter or to date in the second quarter. As of the end of the first quarter, we had $576 million of capacity on our credit facility. Next week, we will retire the debt on Hotel Deca, our early 2014 maturity. And at that time, 41 of our 46 hotels will be unencumbered. We continue to have substantial liquidity with which to execute our business plan.

And with that, I'd like to turn it back over to Mike to close out our prepared remarks.

Michael D. Barnello

Thanks, Bruce. To sum it up, our performance during the first quarter was as expected. We're expecting a solid second quarter and a full year 2014 as well. We remain very encouraged by the performance of the industry and its [indiscernible] picture. And we continue to believe we're in a positive course in the cycle. We're excited about our acquisition of Hotel Vitale and the announcement of a 34% increase in our dividend.

That concludes our prepared remarks. Bruce and I would now be happy to answer any questions you may have. Lauren?

Question-and-Answer Session

Operator

[Operator Instructions] We'll take our first question from Michael Bilerman with Citi.

Kevin Varin

This is Kevin Varin with Michael. How are your markets trending in the Northeast as we start to emerge from the winter months, which, as you mentioned in your opening remarks, were impacted by inclement weather? Are there any markets or specific hotel with that underlying expectation?

Michael D. Barnello

No, not really. I mean, the weather impacted us slight in the Northeast and the Midwest. But if you recall, both from our Investor Day, early February, and our announcement later on in February, the markets that we thought would be the strongest were the West Coast, Boston and Key West. That materialized as expected in the first quarter, and we think that's going to really continue throughout the rest of the year. So we don't really see any changes right now -- today in the markets that we think are going to run the way we thought earlier in the year.

Kevin Varin

Okay. And then just one last question. Can you just talk about how Park Central is tracking so far in 2014 versus your underwriting to give us a sense if they are ahead or below expectation?

Michael D. Barnello

Sure. We're very pleased with what's going on with Park Central and WestHouse. Both are continuing to ramp up. We didn't do a quarterly underwriting, but clearly, for the year, we do. And we are on track. We feel good about people's reactions -- guests' reactions to both properties. And you can see that in TripAdvisor. What we've said all through last year and then a couple of times this year is that Park Central and WestHouse ramp-up is going to be tied closely to the strength in New York City. So the stronger New York City is, the quicker we'll ramp up. As you know, New York City was actually down the first quarter in RevPAR. That didn't help things. But we're still on track. So obviously, we're hoping for a strength in New York for the rest of this year, as well as the next couple of years. That will help PC ramp up quicker, as well as WestHouse. So right now, we're feeling good about where we are.

Michael Bilerman - Citigroup Inc, Research Division

And then Mike, this is Michael Bilerman. Just one quick question on the dividend increase and the magnitude of it, and you talked about it being a sizable increase, which it was. I guess, how did you balance lifting that dividend to a higher sort of yield versus maintaining that free cash flow for investment purposes and lessening the need for a potential equity raise to fund those investments down the road as you sort of moved up your payout ratio?

Michael D. Barnello

Michael, it's a great question. And a lot goes into the ultimate decision to increase the dividend. First and foremost, remember, we're an income company, and you're not much an income company if you're not thriving that much in income. So the dividend is near and dear to us. We think it's a great bond with the shareholders and it's important to them, it's important to us. And so we've always said we wanted to grow the dividend responsibly and try to attract earnings growth over time. It doesn't work exactly that way because, obviously, when dividends get reduced during the bad times, the earnings ramp up, and then we have more lumpier growth in the dividends. So where we are now is we're getting to a point where looking over the dividend, what we pay out currently. We look at things like a percentage of CAD, the percentage of FFO. We clearly look at the taxable income that we were required to pay out, but we're not just beholden to that. We're not just -- we never said we're going to pat the minimum amount of cash and leave it at that. We're trying to balance what we think we can pay out to the shareholders and balance what you referenced. What's a good return for the shareholders versus retaining that capital, potentially reinvesting it without the frictional cost of going back and getting it from the shareholders. And we balanced that. First of all, the amount that we're paying, even though we can't give you the exact amount what it's going to be for the end of the year because -- A, we don't know it, and B, a lot of things are going to change what you know in the year. It's not going to be a substantial "overpayment" what the requirement is, Michael. So we look at the frictional costs that are associated with any "overpayment" of the dividend based on requirements. We think that, that's more than offset by shareholder appreciation in terms of potential stock increases. And that any frictional cost can be made up by potentially raising less shares if the stock price is higher. But that's a theoretical argument because when you raise the shares, you don't know what they would have been at had you not raised the dividend or had raised the dividend less. And we think that directionally, that makes sense. So those are things that balance. And obviously, our perspective is that we continue to look at what we can increase the dividend over time and hopefully is that we're in a position to grow the earnings. And as the earnings grow, we can grow the dividend next year and the year after. But that's at the plan, not a promise based on where we are in the cycle. Did that help?

Michael Bilerman - Citigroup Inc, Research Division

Yes.

Operator

And we'll take our next question from Andrew Didora with Bank of America.

Andrew G. Didora - BofA Merrill Lynch, Research Division

I just wanted to touch upon New York in a little bit more in detail. Obviously, one of the softness in the market in 1Q, it can certainly be well explained. Can you maybe give us a sense on what you've been seeing in New York of late? Have you seen any sort of a nice bounce back posted as the weather improves? And then I guess, any particular trends you've been seeing over the last few weeks and kind of expectation -- your expectations for the market in 2Q as we get into a little bit more of a -- the seasonally busier periods in the market? I guess, thinking of New York relative to your overall portfolio growth in 2Q would be helpful.

Michael D. Barnello

Sure. So what's interesting about New York, and we showed these charts during our investor presentation, is that supply growth has been pounding New York last couple of years, and demand growth in the last 5 years had been substantially higher. And what we're faced with in 2014 is that we know supply growth is going to be strong or high in New York, not just this year, but for the next couple of years. And the question is, how is demand going to react to that increased supply? Are we going to be able to offset it like it has in the past? Or will it be somewhat diluted? And what you saw in the first quarter is a little bit of a combination. So you -- we saw that New York City had increased the [indiscernible] in Manhattan, Times Square, Lower Manhattan, anywhere from the supply increases to the 5% to 8% levels in the first quarter. Demand did improve in a 3% to 4% level depending on what segment you're looking at. And that left the RevPAR decline 1% to 2% -- to 3% in Times Square. So you have that effect. When you think about what's happening in the remainder of the year, what we look at is couple of things. I mean, the next 3 quarter -- or in this quarter, the next 2 quarters are the strongest in Manhattan. The first quarter in Manhattan, as well as the rest of Northeast is a weaker quarter. It didn't get helped by the comparisons to the strong first quarter New York had relative to FEMA business. We benefited ourselves at Park Central from FEMA business, a little bit in the hotels, but primarily Park Central. And that business went away. So you had that going away, an increased supply, you had horrendous weather. And all that combined to produce a fairly down quarter for New York City. We know FEMA is not going to happen again because there's no tough comparison on that side. And we're hoping for, I guess, normal weather for the next 3 quarters. So that should moderate. The supply is real, so that's going to have to be something that we have to be content with, but demand is typically the strongest during these next 3 quarters. So we feel like we'll be able to -- New York will be able to offset that supply somewhat. But our perspective on New York has not changed since the beginning of the year. We still think that New York will be one of our tougher markets, primarily because of the supply. That's the biggest issue that impacted them, and that issue isn't changing. So when you asked about the last couple of weeks, I mean, I'm hesitant to make any type of conclusion over what happens in the early part of April, especially there's is holiday shift. But we're optimistic that the rest of April and through December, we'll see better strength in New York unlike what happened in Q1.

Andrew G. Didora - BofA Merrill Lynch, Research Division

That's great. And then my second questions here, just -- I know you guys bought the Hotel Vitale in the quarter, but we have seen some of your peers, their transaction activity kind of wane in the past couple of quarters, and even you guys haven't been as aggressive, I guess, as you have -- as you were earlier in the cycle. Just what do you think is driving this? Is it pricing? Is it just getting too high? Or are there lack of hotels on the market? Any color on this would be helpful.

Michael D. Barnello

I think the biggest issue is the hotels on the market. If we can only buy what someone is going to sell, either they're selling it through broker market or in a couple of cases, we were able to do off-market deals. That's just been not as prevalent for us, but we have done a couple. There's not just as many deals that fit the criteria in the markets that we like. We've never been a company that's going to buy just to buy. We don't have a mandate that the board gave us over the years that -- buy x number of hotels or x dollars worth of hotels. And none of us internally, including our Chief Investment Officer can pay $0.01 for just the pure act of doing a deal. So we're not going to force it. We're going to continue to stick to our meeting and make sure that we find investments for best for the shareholder, both short and long term, and we're just not seeing as much out there. So that's been pretty true for nearly the whole 4 years, though. I mean, clearly, we are more active early on in the cycle. And you look back at our acquisition dollar investments from -- in '10, '11, '12, '13, kind of wane where we did -- where we've done a little less in terms of the dollar volume each year, with about $300 million last year. But we've done $130 million in the first quarter, so it's too early to tell whether that will be the last deal we do or whether we'll surpass $300 million. So we're patient, but it would be false to tell you there's tons of deals out there and we're anxious to dive into them. But we're also optimistic that there's enough deals out there that we'll be interested in and hopefully, we'll get a few more. But basically, it's just supply.

Operator

Our next question comes from the Steven Kent with Goldman Sachs.

Anto Savarirajan - Goldman Sachs Group Inc., Research Division

This is Anto Savarirajan for Steve Kent. You mentioned the headwinds from property taxes, energy costs and the impact from Park Central and WestHouse. Can you talk about the other puts and takes in your flat to 100 basis point margin expansion expectations for the year?

Michael D. Barnello

Well, we could, however, it's like most of that is under control. We have done a really good job with our asset management team and with the operations teams at all the properties maintaining expenses. And we're incredibly proud of that effort. And the things that we're talking about that were anomalies in the first quarter and in some respects will continue the rest of the year are things that are harder for us to control. It's harder for us to control property taxes. We always have 25-or-so tax years -- that doesn't mean properties, but tax years under appeal. That's still the case today. It's hard to say when we'll get the answer on that or if -- when we do get an answer on that, what the response will be. It could be no, no decrease. It could be substantial results, depends on which property we're at. It's the hardest -- that's part of the hardest line item for us to guesstimate. Over a long period of time, we're pretty accurate. But any short period of time, it's tougher to underwrite because, obviously, each jurisdiction changes what they do on the taxes, both in terms of how they evaluate our properties and what they do with [indiscernible]. So the taxes were not a surprise. They're significant that we underwrote those, and we were appealing where we think it makes sense. Energy has to do with the way we had staggered the contracts. And once the contracts that we were able to get phenomenal deals on over the years have basically just run their course. No different than buying -- getting cheap debt at some point if the market changes. And as that debt expires, you have to sign up for what may be viewed as more expensive debt. With the rest of our portfolio, our rest of portfolio expenses, we feel very good about where we're tracking. We don't see anything that's out of the ordinary. And when we think about our expenses, 6% of that is the people, and we feel very good about where we are from an employee satisfaction, retention and cost-cutting perspective.

Anto Savarirajan - Goldman Sachs Group Inc., Research Division

The change in guidance indicates $7 million to $8 million in adjusted EBITDA for the Hotel Vitale for 9 months. How should we think about an annual run rate and more importantly, what kind of contribution do we expect for 2015?

Michael D. Barnello

Well, we don't give anything out of the property basis for a forward year. We've always given out historicals when we buy a property. This was no different. So the time we bought this hotel, it was showing 12 was we announced a 4.6% cap rate on NOI on trailing. When we look at this $7 million to $8 million, you're correct, on EBITDA for 9 months. It's not so simple just to annualize that. The first quarter in San Francisco is not as strong as the rest of the quarters. It's -- and that's not terribly off relative to how LaSalle's portfolio works. If you think about our EBITDA for the first quarter, it's generally in the 10% to 14% of our annual EBITDA. So you can't quite prorate it, but you can get a decent sense of what it's going to be for the year. We think that the forward years -- again, we haven't given out individual hotel guidance. But what I would point you towards is on the [indiscernible] that we gave out during the investor presentation that showed where we've moved the needle from and to, and some of the recent acquisitions that we bought had, had lower cap rates. And we're certainly going to dig into the Vitale to get that hotel to run more efficiently. And as we mentioned in our prepared remarks, Vitale is a fantastic hotel. And it has, unfortunately, one of the lowest margins in our portfolio. And it has a rate that's almost -- as of last year, full year for '13, was 70% higher than our portfolio. So those 2 things don't sync up. And it's our job to right-size that. And if you look at the investor presentation, I think you can see that our asset management team has done a pretty good job doing that, and we expect to be able to do that with the Vitale.

Anto Savarirajan - Goldman Sachs Group Inc., Research Division

One last question, if I may. Chicago was a tough market for the quarter. But can you talk about the trends at the Hotel Chicago, the [indiscernible] Hotel Sax over the past 2 months since you made the change?

Michael D. Barnello

Sure. What we can say is that Chicago was the toughest quarter for us. The transition to the Hotel Sax -- or from Hotel Sax to Hotel Chicago at the same time it came on our graph was obviously anticipated. We knew the recent transition bumps and that materialized. We weren't helped by the weather. I mean, it's not a great story in Chicago either. But they are continuing to grow their ramp. Now bear in mind, in February 5, they took over. So we're now in the 3-month mark. HEI has done a great job for us running the other properties that they run for us, and we're confident that they will be able to turn this around. We're not there yet on the ramp, but it's obviously too soon to tell. We think about where Chicago is shaking out. Chicago had a tougher citywide quarter in the first quarter. Citywide events were down from 7 to 5. The room night count was down substantially on top of citywide. I think Q2 they're down a little bit, Q3 they're down a little bit. This is, again, citywide again. And the fourth quarter is up substantially. When you look at the whole year for Chicago, citywide looks approximately pretty flat. But the layout quarter-to-quarter is not as smooth as we would have liked to dictate. So when we think about where we are, we feel better about Q2, Q3 and Q4 than the first quarter because those are the months where Chicago has the best demand, the highest occupancies and presumably, will do the highest RevPARs. But the citywides aren't touched off in Q2 and Q3 and, again, will help us in Q4.

Operator

Our next question is from Ryan Meliker with MLV & Co.

Ryan Meliker - MLV & Co LLC, Research Division

Just a couple of quick questions, guys. First of all, just kind of talk a little bit more about the Vitale. You guys gave some good color at the Investor Day about how you're going to grow margins and the thought process behind the fact that this is a hotel that operated at low margin level. I think it was 23% on a trailing 12-month basis. Can you just give us any expectation in terms of a time horizon and when you think you'll be able to get this property to what you would call your expectations on underwriting or portfolio level margins? And how much of that is expected in the first 12 months or so? Just to give us a better understanding in terms of how aggressive or reasonable that $7.5 million in the midpoint of your guidance is for the remainder of the year.

Michael D. Barnello

Well, my answer is 2 pieces to that, Ryan. First, we're very comfortable with the $7 million, $8 million EBITDA. We wouldn't have put that out if we thought that, that was not a good place to be guiding you guys toward. So we're very comfortable with that. Our underwriting is not going to help you because how we underwrite ramp, we don't disclose that here. But what I can tell you is that we don't give out individual stats on a property. We don't give out projections on a property. I think the best thing to do is really look at the things that we put in place that we've showed you guys at the Investor Day. You can see -- I can't make the same promises that, that's going to happen exactly as it's happened before. But I think we gave out 14 case studies, and you could see the ramp, how quickly things have turned around there. It doesn't happen exactly the same way in every property. Some depends on what we have to change in each property. You can't just go ahead and take over on April 4, and April 5, everything is right-sized. So it doesn't happen that quickly. And some things are easier than others. Some things with different requirements take a little time. Staying out with contracts takes little time, et cetera. So -- but when we think about -- from our perspective, we think of the -- a lot of the medium improvement and then, when we think in years 2 and 3, absolutely. But you can really see that in the presentation that we gave out, how dramatic we've made changes. Even in some [indiscernible], I guess, I turn it to low barriers, which had a fairly low margin. In the first year, they went from roughly at 6% shelling 12% cash on cash to basically 9%. Now I'm not going to tell you that's exactly what is going to happen at Vitale, but give you some idea of the type of changes that we're expecting to do over the next couple of years.

Ryan Meliker - MLV & Co LLC, Research Division

And then just more color on the dividend increase. Can you give us any indication as to why the board went to the specific $0.375 per quarter? Seems like if I assume a reasonable, say, 5% FF&E reserve for maintenance CapEx on your FFO to get to a more run rate cash available for redistribution, that's only about 73% or so, 70% to 75%, I guess, across your guidance. Of your 2014 AFFO, where is the board comfortable? Why was that the number selected? And do you ever see the board be willing to go back to something -- going back to closer to a 90% to 100% level of that CAD?

Michael D. Barnello

Well, we've never paid out 90% to 100%. I mean, we looked out. Historically, we have been in -- on the sum of the years we pay dividends, we'll take out the years that we had to cut because the cycle was going through some bad times. We pay generally in the 50% to high 60% range. So we never paid out 90%. I don't -- I don't want to speak for the board. I don't see us really getting to that level of 90% to 100% just because we are trying to balance safety, security and what all -- other things we can do with the cash in terms of helping the portfolio grow. I'm not going to say we'll never do it, I'm just telling you that I don't know that we would be aiming to that. Where we are now and how they picked the number was we look at a lot of scenarios when we model. And obviously, we look at what we expect the hotels to deliver this year, we look at the taxable income, we look at our outlook for this year and for the next couple of years, we do some directions on run rates. We look at scenarios that would have -- as you might imagine, we'll look at $1.30, $1.40, $1.50, $1.60, $1.70. Not only what it does to our percentage of CAD and percentage of AFFO, what does it will do to our debt-to-EBITDA, what does it do to the rest of Bruce's covenants, et cetera. And that's how we came up with it. At the end of the day, we are trying to grow it because it's important for a dividend-paying company to have a decent dividend. So that's the goal. We're trying to balance return with safety. And -- so we've done it at $1.48, $1.52. Of course, really not much of a change. But we felt good about the $1.50 for this year. And obviously, we hope that we, for the part of the cycle, will continue to grow and also we'll continue that dividend. That depends on how we perform. So it doesn't give you an exact answer on the $1.50 versus $1.51, but that's what we're thinking.

Operator

Our next question is from Chris Woronka with Deutsche Bank.

Chris J. Woronka - Deutsche Bank AG, Research Division

I thought I heard you say earlier that the -- in New York this quarter, you were up on occupancy and down on rate. Maybe I misheard that, but that wouldn't make a lot of intuitive sense based on everything we know about both the market and you guys. Is that right?

Michael D. Barnello

Well, remember, that -- you probably heard 2 things, Chris, okay? What Bruce said was that New York had a 7.1% increase overall RevPAR, okay, which was ADR increase of 3.8% and an occupancy increase of 3.1%. That includes Park Central. We also gave out data

data excluding Park Central for comparison purposes. Excluding Park Central, we -- our New York hotels were up 0.5%. So that's where you heard the declines. So we had a 6% decline in rate and a 7% increase in occupancy.

Chris J. Woronka - Deutsche Bank AG, Research Division

Okay. And that was still -- but you had the FEMA business or is that not in the hotels that are...

Michael D. Barnello

FEMA was 99%, I mean, I'll give the exact -- but in the 90% range was all Park Central.

Chris J. Woronka - Deutsche Bank AG, Research Division

Okay.

Michael D. Barnello

We had a little bit at the other hotels, but it's -- it wasn't enough that you -- we would have mentioned it if it wasn't Park Central.

Chris J. Woronka - Deutsche Bank AG, Research Division

Okay, got you. And then just one more follow-up on the Vitale. I mean, should we assume that what you guys are trying to do there is primarily labor related? Or is it something else? I mean, you guys, obviously, identified why the margins are where they are in light of the RevPAR. Is it as simple as labor? Or are there other things that you're looking at?

Michael D. Barnello

It's really everything. We go to a property. We have to look at every single line item. So top to bottom, it's food costs, it's amenity costs, it's cost of supplies, it's bidding out contracts, it's engineering contracts. It's really everything, Chris. I mean, I'd love to tell you it was one line item. We could just go wave a wand and be done with it, but it's really every single thing. Rarely are these hotels run in a such a way that you can change one line item and get from 23% margins to 30%-plus. So the good news is our guys have a best practice for really every department, and they'll put that in place. But it's not one item.

Chris J. Woronka - Deutsche Bank AG, Research Division

Okay, fair enough. And then just on DC Are you guys seeing any -- obviously, your exposure has gone down there for a couple of different reasons. But are you -- longer term, are you willing to buy more in the market? And are you seeing anyone -- I'm not really talking about the stress, but are you seeing maybe expectations there change a little bit relative to the rest of the country or not really?

Michael D. Barnello

Nothing changes with expectations. And certainly, it hasn't changed relative to where we were in the first part of the year. If you think back, I think perception weighs heavier on DC in the past than reality, and we've tried to spend some time with investors talking through that. And I think living in Ohio out in the past is just if you look at, say, '09 to '13, we highlighted in our Investor Day, and we have a page on this, is that the MSA was flat during that period on a CAGR basis for RevPAR. And that's what you will look at, is during the recovery, the MSA was flat. The CBD, the downtown area, was up 2.4% during that period of time. In our hotels, our portfolio was up 4.8%. So double the CBD during that 5-year period. So we're not suggesting that, that 5-year period was -- would outpace some other markets we're in, but we don't feel bad about that growth. And so when we look out to the next couple of years, do we recognize that we have a rough patch in terms of supply? The answer is yes. And we -- the Marriott Marquis opening up pretty soon is not a shocker for us. That's been anticipated for quite a while. Are we happy about it? No, we're not happy about it. But we'll kind of -- we'll play through it. But we do believe in the medium and long term of DC. So, I mean, the demand is still at high levels. I would say it went down a little bit in the first quarter because of the things I mentioned earlier, weather, some city-wides and the inauguration. But we still believe it's a great place to be medium to long. We haven't changed our viewpoint on where it shakes out relative to the rest of our markets, either. We've said New York and DC will be our below-average markets for the year, and that's still the same expectation now here we are in April. When we look at -- are we hearing any signs of distress for anybody else? No, we're not. You're not seeing [indiscernible] transact here, which I think is actually a pretty good testament to the people who own here, is that people aren't fleeing the city. They think that long term, it's a good place to be. You're just -- you're not seeing transactions here. But I think some people are pretty comfortable with where DC shakes out long term. So again, we know that, that's a concern for a lot of people, and we try to explain as best we can. But we still feel good about DC down the road.

Chris J. Woronka - Deutsche Bank AG, Research Division

Okay, that's great. And just one more on the dividend. Should we -- I'm assuming we shouldn't read anything into in that in terms of you maybe expect to make an asset sale and, therefore, you would have taxable gain and that you're trying to maybe encapsulate that into the -- into your annual dividend. Is that -- should we not kind of go down that path?

Michael D. Barnello

I would hate for you to read anything -- into anything with the dividend other than the fact that we increased it to provide a better path for the shareholders. So that's all I would read into it.

Operator

Our next question is from David Loeb with Robert W. Baird.

David Loeb - Robert W. Baird & Co. Incorporated, Research Division

A follow-up actually to Andrew's question, and Chris kind of alluded to it as well. Can you just talk generally about dispositions? I know you don't want to talk about individual transactions, but what are your thoughts about dispositions over the next several quarters?

Michael D. Barnello

What -- we look at our hotels all the time. We do a hold versus sell analysis to evaluate what hotels we should keep, which we should sell. As you guys have known, pretty much 90% of our EBITDA comes from our core markets. So we don't have a lot of non-core assets. Nonetheless, when we ask ourselves, would it be time to sell, from time to time, we have, most notably in 2010 when we sold 4 of our assets. Other than that, I really can't comment on that anything we potentially would sell. We don't really comment on deals, buying or selling, until we've announced something. So other than telling you that it's something we look at, I really can't give any more color than that.

Operator

Our next question is from Nikhil Bhalla with FBR.

Nikhil Bhalla - FBR Capital Markets & Co., Research Division

Just a quick question in terms of the impact of weather in 1Q. Is there any way to quantify that? I'm sorry if you mentioned this. I just joined the call a few minutes late.

Michael D. Barnello

Just joined the call? No problem. We didn't get into the -- quantifying the weather. We talked about it. It affected DC, Chicago and New York the most, a little bit in Boston. We don't have a great data on that unlike other major storms like when we had Sandy. We had -- so we'll need to track. I know we had specific dates, and we could see that potentially, we had tons of cancellations around those periods. So here, it was a little different for -- in this quarter because we had the bad weather and we didn't necessarily see as many cancellations, although we did see some, but we saw less business that lasts as long as they would from -- during the citywide or any kind of event since they were supposed to be on for 4 days. They might have had 3. Or we thought it was going to be 4, they only stayed 3. And we didn't see the pickup. So a good example would be cherry blossoms and the weather wasn't ideal. And so we didn't necessarily see cancellations, but we didn't see the pickup. So it's always hard to say what was the impact. The impact would have been a hypothetical impact from what was budgeted. And so we don't have great data what's happened with a bunch of hotels for a bunch of times. We also had airline cancellations. So we don't have -- I can't quantify and tell you it's 1%, 2% other than it was a nagging, well, pressure on all those cities. And even the Boston had a little bit of it. The Boston just played stronger because of some other things they had going on in terms of overall demand and their citywide story. But the other 3 markets got hit. Again, it's hard to say pretty hard, but, I mean, there definitely was impact.

Nikhil Bhalla - FBR Capital Markets & Co., Research Division

Got it. That's fair enough. And just on the group pace, group revenue pace. Did you say it's up 4%? As I recall, it was up 2% as of your last call. Is there a little bit of an acceleration there? If you don't mind just giving us some color on that.

Michael D. Barnello

So during the February call, our group RevPAR, so group revenue was up about 2%. And right now, as we enter the year, it's above 4%. So it's a bit double. When you look at the total RevPAR, including the transient, in fact what we're giving are about 3%, that's up about 6%. So you're accurate on both of those. And just bear in mind, our group pace, we always give it out. But we're less than 30% group. And of that group, really 5 hotels is about half of the group portfolio.

Operator

Our next question is from Wes Golladay with RBC Capital Markets.

Wes Golladay - RBC Capital Markets, LLC, Research Division

On the past calls, you mentioned you would start to hold back pace in certain markets. How has does the strategy worked? And are you're looking to be more aggressive in certain markets? And when you put that in context versus the revenue gain, up 6%, on the books for the balance of the year, I mean, how has does that -- how are your West Coast markets doing compared to this?

Michael D. Barnello

Sure. When you look at the pace, I guess I wouldn't give you out the West Coast pace particularly. But bear in mind that the West Coast is going to be way more transient for us than the East Coast. And the only real group house we have out West is Paradise Point and one of the big ones. I mean, the other big ones for us, Wes, are Chicago, Michigan Avenue in the Midwest. And then we have Copley, Westin Copley, Lansdowne in the East and also Indianapolis Midwest. So not much in the West. When you think about our strategy on Boston, I think it's played out pretty well and Boston had a great quarter. They were up really strong, and we expect Boston to have a really fantastic year, really pretty much every quarter. So I think that's played out pretty well. You mentioned Key West. We can't give a stat on an individual property. But Key West had a great quarter. We did mention them as one of the best performers in our portfolio. Quite frankly, we expect that to be one of the better performers at every quarter at the reservation. So we feel good about the group strategy that we've put in place there. And again, it's not as much of an issue in the West Coast. What I would say is more mission [ph] in the West Coast in making sure we're pricing the transient further out at the right prices. What we don't want to do is take too much low-rated business further out in the transient side because, obviously, that stifles our ability to grow the rate as we head closer to the actual dates of travel.

Wes Golladay - RBC Capital Markets, LLC, Research Division

Have you noticed any change in the overseas traveler in New York with the pound being stronger and some of the emerging market currencies weakening?

Michael D. Barnello

The first quarter actually did pretty well overall international, Wes. We did about 8% of our business was international. That's a touch up from what we would normally be. But it is a quarter, so I don't want to bake any kind of a trend line out of it. And no, these -- the metrics are still the same. So Canada and Mexico, still the biggest, followed by London, Germany, France, Australia. Although Australia happens to be predominantly West Coast. But I don't have a good breakdown handy and tell you what the New York breakdown would be. But otherwise, that's all I can -- it's been pretty much on track.

Wes Golladay - RBC Capital Markets, LLC, Research Division

Okay. And then on the expense side, the energy and utilities were up 10%. I'm sure some of those was weather related. Should this start to normalize as we look at the future quarters?

Michael D. Barnello

The weather should. Now there was 2 parts to energy. The weather was -- it's hard to predict what -- clearly what the fourth quarter is going to look like. But let's hope that the next 3 quarters are what we'll call normal. The part that we'll see increases of that they are in will be some of the great contracts that our guys will sign. So we stagger our electricity, our gas purchases 2, 3, 5, whatever the period our estimators can lock into, and a lot of the guys just did a fantastic job locking into some super low rates. We've had the benefit of that in the last couple of years and which you guys have seen. And we're still paying what we think is a great market rate. But if they roll off and we're in a higher energy cycle, we're going to pay a little more for energy. So the question -- your question is half yes and half no. The weather, I -- we hope it's normal, but we don't know. And the -- some of the contracts on energy, what we had touch on.

Operator

Our next question is from Bill Crow with Raymond James & Associates.

William A. Crow - Raymond James & Associates, Inc., Research Division

Mike, 2 questions. So first, how much of the pressure on real estate taxes is coming from your increased presence in California?

Michael D. Barnello

Hold on. It's -- we have some coming there. We have -- let's see. We're up about $1.9 million, Bill. A big kickup was Key West. We had a little bit at Serrano because if you'll recall, Harbor Court and Triton did not have a kickup. Because the leases were less than 35 years, we do not have a change in property taxes. The Serrano had a kickup. Southernmost had one. Park Central, you had a little bit of an increase because it's a part of that -- of capitalized taxes last year. Boston Copley was up a little bit. Those were the big ones. Those together make up a little more than half of the increase. The rest of it, even though it was a lot, was anticipated. We do get the bills throughout the year. Many times, it's for the next year. So we had a good idea of the accruals. So usually, we don't get hit in the middle of a quarter with a big increase for that particular quarter. But sometimes, we do.

William A. Crow - Raymond James & Associates, Inc., Research Division

Okay. And then as you think about long-term planning, and I think if you believe historically, there's been a relationship between margin growth and RevPAR growth, especially as we switch into a rate-driven RevPAR growth. Do you see a scenario next year, for example, where that relationship normalizes? Or are we at risk that ObamaCare or ongoing property tax increases or what have you will again kind of shift that relationship between top line growth and margin growth?

Michael D. Barnello

Well, it's always tricky. It' not always normalized. That's because we learned so many lessons over the last 5, 6 years when we're going through different parts of the cycle of what the new normal should look like. And I think necessity has made us fairly creative on our fixed versus variable cost. That said, addressing some for your particulars, let's look at those things. I mean, people talk about ObamaCare. Ken didn't know what that was going to translate to. Because of all those zigs and zags of ObamaCare, we were forced to have our hotels all be ObamaCare ready at the beginning of the year. So we are, even though there was a reprieve given to businesses and they don't really have to be ready until next year. We felt like with our 20 different brands and operators, they're all compliant. And the increase there has been in the -- just under 10% range when you think about the health care. Now that may sound like a lot, Bill. But quite frankly, that's been a similar increase we've had for the last 5 or 6 years in health care. It's been of the most -- I guess, the highest growing line items in our P&L. So on one hand, we can't say we're happy about that. On the other hand, it hasn't been much different for a while. So that part doesn't surprise us. Actually, we feel very good about what our operators were able to do with that after hearing some of the concerns people had over the last couple of years of how much it was going to increase our cost. So we're pretty pleased with that. And real estate taxes, that's a harder one for us to underwrite in any particular year because, as you know, many of the cities don't necessarily give us a 5-year tax bill. They do something on a triannual or random basis where they increase taxes and those rates, and we do our best to try to keep up. California is a touch easier because of the way they have their proposition so that we pay based on the purchase price and then we grow at 1% to 2% range a year. That's a little easier. When you think about expenses longer term outside of that, what we have said historically is that it roughly takes 3% of RevPAR really rate to cover 3% of expense growth. And I think that's generally pretty true. If you look what we've been able to do for the last 4 or 5 years, our expense run rate has been significantly below 3%. And what we highlight during the call was that our expense growth was really about 1.3% on a run rate basis when you take out the Park Central ramp, energy and taxes. So I'm not trying to make excuse for those. I'm just trying to highlight that it's not a portfolio-systemic problem. It's a couple of line items that we have accounted for and are underwriting, we accounted for in our outlook. When you look at the rest of the portfolio further out, in Q2 a lot of folks might say, well, you have a pretty big, robust RevPAR story for Q2 as margins wouldn't be as strong as a LaSalle margin might look like. But bear in mind, that's the biggest ramp-up of Park Central that you're going to have. Of all the comparisons to '13, it was the toughest quarter. It was Q2 last year, a lot of occupancy. And so a lot of occupancy in the New York market is expensive. So you have -- a lot of the expenses kick in, in Park Central. And as a result, the margin growth is not as strong. The taxes will continue to be, I think, rough [indiscernible] is that level for the rest of the year because, that's what I'm talking about, on a yearly basis, not on a quarterly basis. And we felt the second half of the year will be actually be much more favorable to us because we expect to have a higher non-PC RevPAR contribution for the second half of the year. And because of that, the non-PC expense growth will be much lower. And so we expect margins to be stronger in the second half of the year. Again, all that was something that we had anticipated when we gave out the 0- to 100-basis-point margin. And about -- further, I guess when you think about your question, the quicker the Park Central and WestHouse get ramped up, the quicker we get to a "stabilized level" of revenue and expense run rate.

William A. Crow - Raymond James & Associates, Inc., Research Division

So I appreciate that. So you think that they ramp up under your plan in time at the end of this year so that you're looking at that 3%, offsetting 3% sort of scenario, for '15? Or is there still going to be some impact?

Michael D. Barnello

Well, what we said about the ramp at Park Central and WestHouse is that we gave out a 3-year projection at the Investor Day and we're still comfortable with where we are for that. And what we said was that the reason for the range is that it's dependent on how New York does. So we're not unaware of the fact there's no supply in New York. At the same time, New York is still one of the best landmarks of the country over the last 5 years, and we've said that it would continue to grow. So the stronger New York does, the quicker our ramp is. The quicker our ramp is, the quicker we get to your stabilized run rate expense story.

Operator

Our next question comes from Jeff Donnelly with Wells Fargo.

Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division

Mike I might have missed this in your opening remarks, but can you talk a little bit about WestHouse, specifically how rates there fared versus your expectations and sort of the gap to Park Central?

Michael D. Barnello

Yes, I wouldn't get into -- too much on the difference between the rate gap to Park Central other than to say that the rates for WestHouse were really where we expect them to be. The -- we purposely appraised WestHouse higher. They're not going to toggle exactly to less the Park Central in any one quarter, Jeff, and maybe more -- most particularly in the first quarter because Park Central is much bigger, so they need a little more flexing than WestHouse would in order to get a steadier occupancy. But we're comfortable with a higher rate and lower occupancy in the first quarter in WestHouse in anticipation that continues to grow. So we recognize the WestHouse ramp will take longer but their occupancy in that of the year will be much lower than Park Central because we want to maintain their rate. As far as how it turned out relative to our expectation, we feel very good about where it's shaken out relative to our expectation. You can see it a little bit for yourself if you look at the TripAdvisor comments. People were very pleased with the product, the service, et cetera. And so again, it's still very early days. I know you guys will ask us every quarter how soon. But we feel very good about the progress, both the overall occupancy as well as the rates between both properties.

Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division

And I'm curious because anecdotally, general managers we speak with in the New York City market seem to have a more confident, I guess, let's say, view for the back half of the year or later in the year than they did at the start. I know you can't speak specifically to these sort of -- a lot of conversations, but do you think some of that confidence is just coming from, I guess, let's say, sort of the seasonality in the business and that Q2 and Q3 always look better than Q1? Maybe it's a weather impact? Or is there something maybe specific about the forward bookings in the New York City market that's maybe kind of giving, I'll call it broadly, general managers in that market some greater confidence than people in our world are expecting?

Michael D. Barnello

Well, it's tough to comment on what they might be thinking. But I would tell you that when you think about New York, I mean, we do track New York citywide. I would tell you it's not as meaningful as other cities because, a, it's just -- it's not as big of an impact; and b, there's way more hotel rooms in New York than any of our other markets. And for what it's worth, though, I mean, the bookings are going to be up in New York for the full year. Maybe there's some color on that, but it's -- they're up big, but their actual room rents are not huge. I don't think that's what you're referring to. I think your guess is more accurate, is that the first quarter is the toughest. The weather, it was unusual. I don't think anybody is banking on unusual weather for the next 3 quarters, and they are the best quarters in New York. I mean, those 2 things are making people feel better about the outlook for New York City. As we do also. We do think that once you're in a tough quarter -- it is the worst quarter anyway, and to get heat on with all of those things doesn't help. So I think by definition, people feel like, well, I've been through that. And so, how is New York going to do? And we feel better about the position that we'll be in the next couple of quarters. I don't know that I'd say anything on the bookings side. At least I can comment on what they might have.

Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division

And just one last question is that we feel like the capital markets for hotels are broad now a little bit. You've seen sort of deeper interest in terms of like the CMBS market financing hotels. Is that shifting maybe who you're competing with? Are you seeing new entrants for transactions that either are making it -- I guess that's easier to sell but also maybe making it a little more challenging for you to buy because the competition on underwriting is shifting?

Michael D. Barnello

I think for the most part, it's a lot of the same players. We did lose to non-REITs over the last 4 years. So I don't want to suggest that if we lose to a non-REIT this year, then that means there's some kind of shift. I mean, I guess, we keep seeing it happen. It happens more often than not they'll have to shift with that. I think there are more players. There is more competition. But I think the biggest thing is there's just not as much on the market. And if we lose a deal or we lose the rest of the deals this year because we don't know the rights of the shareholders, well, then, so be it. But I don't know that I would tell you right now I feel like there's -- between new players that the market has shifted this quarter. You would have thought that would have changed a little bit over the last couple of years, and it hasn't really affected us that much.

Operator

Our final question is from Lukas Hartwich at Green Street Advisors.

Lukas Hartwich - Green Street Advisors, Inc., Research Division

Can you just provide an update on the supply outlook outside of New York and DC?

Michael D. Barnello

Sure. Hold on. It's pretty good outside of this market. But hold on 1 second. Okay. So looking at our markets, we have just about 1% in Boston this year. Chicago has about 3%. We have basically nothing in our markets in L.A. Nothing in Philadelphia, nothing in San Diego. Less than 1% in San Francisco. Basically nothing in Seattle. And then we talked about D.C. and New York, right? So that's pretty clear picture outside of New York and D.C. And Chicago is a little bit.

Operator

And it appears there are no further questions at this time. I'd like to turn the call back to our presenters for any additional or closing remarks.

Michael D. Barnello

Thanks, Lauren, and thanks, everyone, for listening to our first quarter earnings call. We look forward to seeing many of you guys at Marriott in June. Thanks a lot.

Operator

That does conclude today's conference. We thank you for your participation.

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