for Termination Fees and Related Severance Cost to Terminate Marriott's
Management Contract at the Marriott Rancho Las Palmas
Resort in Rancho Mirage, California
CHICAGO (AP) -- Strategic Hotels & Resorts Inc. on Tuesday said it reached an agreement to terminate a hotel management contract with Marriott Hotel Services Inc., and will pay up to $10.4 million in termination fees and other costs.
Marriott Hotel Services manages the Marriott Rancho Las Palmas Resort, based in Rancho Mirage, Calif. The real estate investment trust said it will end the contract with Marriott by Dec. 29, which will give it more options for the resort, including a potential sale.
Strategic Hotels will pay Marriott Hotel Services an initial $5 million termination fee, and possibly an additional $5 million fee in 2009. The company would be exempt from the additional fee if it agrees to a hotel management contract with Marriott Hotel Services by year-end 2008.
The company also will reimburse Marriott Hotel Services for severance costs at the resort. Strategic Hotels said it expects to record a one-time charge in the first quarter, which was not included in its earlier guidance.
In February, the company said it expected to report funds from operations of 32 cents to 36 cents per share for the quarter. Analysts expect FFO of 35 cents per share, according to a Thomson Financial poll.
Shares of Strategic Hotels rose 35 cents to $22.85 in afternoon trading on the New York Stock Exchange.
About the Company
This press release contains forward-looking statements about Strategic Hotels & Resorts, Inc. (the "Company").
Strategic Hotels & Resorts, Inc.
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