CHICAGO, Ill., February 25, 2003 � Strategic Hotel Capital (SHC), a private hotel investment company, today announced that it had completed a $1.17 billion financing provided by Deutsche Bank.  It is believed to be the largest, loan ever made to a privately held hotel company.  The financing was executed through a $910 million commercial mortgage-backed securities offering (CMBS), and a $260 million mezzanine loan.  A substantial majority of the CMBS offering was rated by Moody�s Investor Service, Standard & Poors and Fitch Ratings.

�Even in this difficult operating environment, we saw the opportunity to unlock some of the value of our U.S. assets and to improve our financial flexibility,� said Laurence S. Geller, chief executive officer of SHC.  �This financing represents yet another benchmark SHC has set in the hotel industry and is a testament to the strength of our business philosophy, the professionalism of our management team and the quality and value of our assets.  The fact that the financing was rated by all three of the major agencies was particularly gratifying.  We believe this pioneering effort in terms of size and complexity of transaction reflects the long-term confidence of institutional investors in our company, our management team and in our luxury hotel assets.  The execution of this financing by Deutsche Bank was excellent.�

�While we have remained active seekers of hotel assets in the past year, the gap between the expectations of buyers and sellers has remained too wide.  However, the gap is beginning to narrow, which should facilitate our search for attractively priced luxury properties with upside potential that can benefit from our style of aggressive asset management. Concurrently, with this new financing, we have the flexibility to sell any non-strategic assets that we believe have achieved their optimum potential under SHC�s investment strategy.  Our goal is to continually trade up thereby improving the overall quality of the portfolio.�

The financing is secured by fifteen of the company�s twenty-seven hotels.  All of the properties are located in the United States.  According to Jon Vaccaro, Deutsche Bank�s Global Head of Real Estate Debt, �We were very pleased to extend a $1.17 billion commitment to Strategic, given our dominant position in the hospitality sector and the obvious synergies with our own focus on highly-structured financings for the most sophisticated owners of the best real estate.  Strategic represents a unique and compelling combination of world class real estate, proven management and a well-defined long-term business plan.� 

The financing, which carries a two-year term with three, one-year extensions, consists of four tranches:

• an investment-grade CMBS, placed with various domestic and European life companies, banks, pension funds and money managers;
• two subordinate mortgage loans, placed with US life companies; and 
• a mezzanine loan, placed with a Deutsche Bank affiliate and a major overseas institutional investor 

�Our strategy of acquiring attractive assets at competitive prices and improving their value through strategic investment and aggressive asset management has proven to be highly successful for our investors,� Geller said.  �Although the U.S. operating environment outlook remains sluggish for the balance of 2003, we expect our hotels to continue to outperform their competitive set.�

Geller noted the company continually evaluates growth and capital raising strategies and �this, the third of SHC�s securitised financings, is in line with our objectives, demonstrates yet again the capital market�s confidence in our company and increases our flexibility to pursue our growth objectives.�

Headquartered in Chicago, Ill., Strategic Hotel Capital currently owns twenty-three luxury and upscale hotels and resorts in the U.S., North America and Europe.  The company acquires and aggressively asset manages larger hotels, properties with 200-plus rooms, in markets with unique, hard-to-duplicate locations with high barriers to additional competition.  Among the company�s flagship properties are the Essex House, a Westin Hotel, New York City; the Hotel Inter-Continental Praha, Prague, Czech Republic; the Marriott Champs Elysees in Paris and the Four Seasons Mexico City and Four Seasons Punta Mita Resort.