and InterContinental Miami for Aggregate
Value of $303.5 million
|CHICAGO, Feb. 28, 2005 - Strategic Hotel Capital, Inc. (NYSE:
SLH) today announced it has signed an agreement to acquire an 85% controlling
interest in the InterContinental hotels in Chicago and Miami with a combined
room count of 1,448 and an agreed upon aggregate value of $303.5 million,
or a price of $210,000 per room. The acquisition, which is expected
to close in April, remains subject to customary closing conditions.
Each hotel will be held in a partnership in which Strategic Hotel Capital will own a controlling 85% interest with InterContinental Hotels ("IHG") holding the remaining 15%. Through its partnership agreements with IHG, Strategic Hotel Capital will be entitled to receive a non-cumulative preferred return of 8% on its total investment of $263.5 million, less Strategic's 85% share of the partnership's debt service obligations. The investment of $263.5 million includes the company's proportionate share of the cost of the properties, closing costs, and initial capital expenditures.
After SLH receives its preferred return, IHG is entitled to receive a non-cumulative preferred return of 8% on its investment. Thereafter SLH and IHG will share proportionate to their respective ownership interests in the partnership returns. Strategic Hotel Capital's investment is expected to be financed through a combination of debt and equity financing as market conditions permit. The company anticipates that the acquisition will be accretive to earnings beginning with the second quarter of 2005, and forecasts a combined 12-month property EBITDA of $25 million to $27 million. The expected 9-month 2005 property EBITDA is forecasted to be in the range of $19 million to $21 million.
Laurence Geller, CEO of Strategic Hotel Capital, commented, "These acquisitions are well-aligned with our core investment strategy, and we are very enthusiastic about the quality of assets and their potential opportunities. Both properties provide our asset management team with avenues to add substantial value to well-located urban hotels in growing markets with multiple demand generators. We are also fortunate to be able to strengthen a key strategic relationship with InterContinental Hotels, which also manages our InterContinental Hotel Praha - Prague, Czech Republic."
About the Company
Strategic Hotel Capital, Inc.
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