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 Strategic Hotel Capital, Inc. Acquiring The 261 room Ritz-Carlton Half Moon Bay for $124.4 Million


CHICAGO, July 26, 2004 - Strategic Hotel Capital, Inc. (NYSE: SLH) today announced that it has signed an agreement to acquire The Ritz-Carlton Half Moon Bay, a luxury destination resort overlooking the Pacific Ocean south of San Francisco, California, from a client advised by Morgan Stanley Real Estate.  The resort features 261 guestrooms -- the majority of which have ocean or coastal views -- a 16,000 square foot spa and 17,000 square feet of indoor meeting space with additional outdoor meeting areas.  Other highlighted features include: Navio, a fine dining restaurant; The Conservatory, offering light fare and beverages; two fitness centers; an indoor pool; six lighted tennis courts and access to two adjacent 18-hole championship golf courses.

This is the first resort to have been built on the Northern California coast in over a decade, having taken over 20 years to bring to completion.  The hotel opened in 2001, with the first full year of operations in 2002.  The resort was developed by The Athens Group, a leading developer of luxury resort properties.

The purchase price of $124.4 million is expected to be funded by the combination of a mortgage loan, the company's line of credit and cash.  The resort's Earnings Before Interest Expense, Taxes, Depreciation and Amortization (EBITDA) is forecasted to be approximately $8.1 million in 2004 and $10.4 million in 2005.  The purchase is subject to customary closing conditions and is expected to close in the third quarter.

Key features of this acquisition include the following:

  • This hotel opened immediately prior to September 11, 2001, in the midst of the Bay Area's technology-industry recession, and should be a beneficiary of the overall recoveries in both the national and Bay Area economies.
  • The purchase price is attractive relative to estimated replacement cost in a market with substantial barriers to entry.
Commenting on the acquisition, Laurence Geller, president and chief executive officer of Strategic Hotel Capital, Inc., said, "We are pleased to announce this acquisition following our recent public offering.  The Ritz-Carlton Half Moon Bay quintessentially fits our growth strategy.  This is a genuinely unique, high-end hotel with significant growth prospects located in a market with high barriers to entry.  In addition, the property possesses those characteristics which will allow us to make full use of our value-added asset management skills: complexity; sophisticated and demanding customers; varied demand generators, and is still in the growth stage of its life cycle." Geller also added, "Our ability to underwrite this acquisition, and to manage this investment going forward, is enhanced by the knowledge gained from our successful ownership and asset management of California beachfront resorts and Bay Area hotels."  On a final note, Geller concluded, "We look forward to once again expanding our relationship with the Ritz-Carlton Hotel Company and its parent company, Marriott International, and working together to make an excellent asset even better."

Arne Sorenson, executive vice president and chief financial officer of Marriott International, said,  "We are delighted that Strategic Hotel Capital, Inc. will be adding a world class Ritz-Carlton property to its portfolio.  We look forward to continuing to grow our relationship with Strategic Hotel Capital."

About the Company

Strategic Hotel Capital, Inc. is an industry-leading owner and asset manager of high-end hotels and resorts. We own a quality portfolio of upper upscale and luxury hotels and resorts in desirable North American and European locations. Our portfolio is currently made up of 14 properties totaling 5,931 rooms. Our properties are geographically diverse and include large convention hotels, business hotels and resorts, which are managed by internationally known hotel management companies.

Hyatt Regency New Orleans 
Hyatt Regency Phoenix 
Hilton Burbank Airport 
Marriott Rancho Las Palmas 
Hyatt Regency La Jolla 
Marriott Chicago Schaumburg 
Marriott Lincolnshire 
InterContinental Praha
Loews Santa Monica Beach
Marriott Hamburg
Four Seasons Hotel Mexico City
Marriott Paris Champs Elysees
Four Seasons Resort Punta Mita
Embassy Suites Lake Buena Vista

This press release contains forward-looking statements about Strategic Hotel Capital, Inc. 

Strategic Hotel Capital, Inc.
Web Site:
Also See: Paul Ratchford Named General Manager of The Ritz-Carlton, Half Moon Bay / June 2003
Laurence Geller's Provocative Outlook on the Hotel Industry - Strategic Hotel Capital CEO's Speech at New York University's Eighth Annual Stephen W. Brener Distinguished Lecturer Series / December 2001

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