Strategic Hotels & Resorts Reports Fourth Quarter And Full Year 2012 Results

 Strategic Hotels & Resorts Reports Fourth Quarter And Full Year 2012 Results

Exceptional operating performance continued throughout 2012; Comparable FFO
increased 47.8 percent and Comparable EBITDA increased 13.3 percent from year
prior

PR Newswire

CHICAGO, Feb. 27, 2013

CHICAGO, Feb. 27, 2013 /PRNewswire/ --Strategic Hotels & Resorts, Inc. (NYSE:
BEE) today reported results for the fourth quarter and full year ended
December 31, 2012.

($ in millions, except per share and operating Fourth Quarter
metrics)
Earnings Metrics                               2012    2011    % Change
Net loss attributable to common shareholders   $(36.4) $(15.9)  N/A
Net loss per diluted share                     $(0.18) $(0.09)  N/A
Comparable funds from operations (Comparable   $12.2   $20.1   (39.2)%
FFO) ^(a)
Comparable FFO per diluted share ^(a)          $0.06   $0.11   (45.5)%
Comparable EBITDA ^(a)                         $44.7   $39.9   11.9%
Total United States Portfolio Operating
Metrics ^(b)
Average Daily Rate (ADR)                       $251.17 $243.88 3.0%
Occupancy                                      68.7%   67.5%    1.2 pts
Revenue per Available Room (RevPAR)            $172.62 $164.53 4.9%
Total RevPAR                                   $344.60 $334.72 3.0%
EBITDA Margins                                 20.6%   19.7%    90 bps
North American Same Store Operating Metrics
^(c)
ADR                                            $256.01 $248.74 2.9%
Occupancy                                      70.4%   68.9%    1.5 pts
RevPAR                                         $180.22 $171.30 5.2%
Total RevPAR                                   $344.45 $333.81 3.2%
EBITDA Margins                                 21.2%   20.1%    110 bps

($ in millions, except per share and operating  Full Year
metrics)
Earnings Metrics                                2012    2011    % Change
Net loss attributable to common shareholders    $(79.5) $(23.7)  N/A
Net loss per diluted share                      $(0.40) $(0.13) N/A
Comparable FFO ^(a)                             $53.7   $36.4   47.8%
Comparable FFO per diluted share ^(a)           $0.26   $0.20   30.0%
Comparable EBITDA ^(a)                          $175.4  $154.8  13.3%
Total United States Portfolio Operating Metrics
^(b)
ADR                                             $258.21 $246.22 4.9%
Occupancy                                       72.4%   71.0%    1.4 pts
RevPAR                                          $186.98 $174.74 7.0%
Total RevPAR                                    $355.90 $336.43 5.8%
EBITDA Margins                                  22.7%   21.5%    120 bps
North American Same Store Operating Metrics
^(c)
ADR                                             $246.42 $236.24 4.3%
Occupancy                                       73.5%   71.8%    1.7 pts
RevPAR                                          $181.18 $169.54 6.9%
Total RevPAR                                    $331.68 $314.26 5.5%
EBITDA Margins                                  22.4%   21.1%    130 bps

(a) Please refer to tables provided later in this press release for a
reconciliation of net (loss)/income to Comparable FFO, Comparable FFO per
share and Comparable EBITDA. Comparable FFO, Comparable FFO per share and
Comparable EBITDA are non-GAAP measures and are further explained with the
reconciliation tables.

(b) Operating statistics reflect results from the Company's Total United
States portfolio (see portfolio definitions later in this press release).

(c) Operating statistics reflect results from the Company's North American
same store portfolio (see portfolio definitions later in this press release).

"I am very pleased by our strong performance in 2012. We continued to deliver
on our stated strategy, driving steady gains in ADR, occupancy, and RevPAR,
which led to outstanding FFO and EBITDA growth in 2012," said Raymond L. "Rip"
Gellein, Jr., Chairman and Chief Executive Officer of Strategic Hotels &
Resorts, Inc. "One of the year's highlights was the opportunistic and
favorable acquisition of the Essex House Hotel, which brought us back to the
New York market and gave us greater reach on the east coast. As we look
forward to 2013, we remain focused on our strategic imperatives: maximizing
RevPAR, non-rooms revenue and profit margins at our hotels; continuing to
prudently manage our capital and delever our balance sheet; and selectively
pursuing strategic opportunities to refine our admired portfolio and drive
meaningful value for our shareholders."

Fourth Quarter Highlights

  oNet loss attributable to common shareholders was $36.4 million, or $0.18
    per diluted share, in the fourth quarter of 2012, compared with a net loss
    attributable to common shareholders of $15.9 million, or $0.09 per diluted
    share, in the fourth quarter of 2011. Fourth quarter results include
    $18.8 million of impairment losses and other related charges, a $7.8
    million charge related to the termination of the management agreement at
    the Hotel del Coronado and a $2.5 million severance charge. These charges
    have been excluded from Comparable EBITDA, FFO and FFO per share.
  oComparable FFO was $0.06 per diluted share in the fourth quarter of 2012
    compared with $0.11 per diluted share in the prior year period. Fourth
    quarter 2011 Comparable FFO includes a $10.7 million one-time gain related
    to the successful preferred equity tender offer completed on December 19,
    2011. Excluding this gain, Comparable FFO would have been $0.05 per
    diluted share in the fourth quarter of 2011. 
  oComparable EBITDA was $44.7  million in the fourth quarter of 2012
    compared with $39.9 million in the prior year period, an 11.9 percent
    increase. 
  oTotal United States RevPAR increased 4.9 percent in the fourth quarter of
    2012, driven by a  3.0 percent increase in ADR and a 1.2 percentage point
    increase in occupancy, compared to the fourth quarter of 2011. Total
    RevPAR increased 3.0 percent with non-rooms revenue increasing by 1.1
    percent between periods.
  oADR growth in the Total United States portfolio was driven by a 3.9
    percent increase in transient ADR compared to the fourth quarter of 2011
    and a 0.8 percent increase in group ADR.
  oRevPAR increased 5.3 percent in the fourth quarter of 2012 in the
    Company's Total United States resort portfolio and 4.6 percent in the
    Company's Total United States urban portfolio, compared to the fourth
    quarter of 2011.
  oNorth American same store RevPAR increased 5.2 percent in the fourth
    quarter of 2012, driven by a  2.9 percent increase in ADR and a 1.5
    percentage point increase in occupancy, compared to the fourth quarter of
    2011. Total RevPAR increased 3.2 percent with non-rooms revenue
    increasing by 1.1 percent between periods.
  oEuropean RevPAR increased 1.8 percent (a 1.9 percent increase in constant
    dollars) in the fourth quarter of 2012, driven by a 2.7 percent increase
    in ADR (a 2.7 percent increase in constant dollars) offsetting a 0.7
    percentage point decline in occupancy. European Total RevPAR decreased 3.1
    percent in the fourth quarter of 2012 over the prior year period (2.9
    percent in constant dollars). 
  oTotal United States EBITDA margins expanded 90 basis points in the fourth
    quarter of 2012 compared to the fourth quarter of 2011. North American
    same store EBITDA margins expanded 110 basis points between periods.

Full Year Highlights

  oNet loss attributable to common shareholders was $79.5 million, or $0.40
    per diluted share, in 2012 compared with a net loss attributable to common
    shareholders of $23.7 million, or $0.13 per diluted share, in the prior
    year. Full year 2012 results include $18.8 million of impairment losses
    and other related charges, a $7.8 million charge related to the
    termination of the management agreement at the Hotel del Coronado, and a
    $2.5 million severance charge. Full year 2011 results included a $29.2
    million charge related to the loss on early termination of derivative
    financial instruments and a $1.2 million charge related to the loss on
    early extinguishment of debt. These charges have been excluded from
    Comparable EBITDA, FFO and FFO per share.
  oComparable FFO was $0.26 per diluted share compared with $0.20 per diluted
    share in the prior year period. Full year 2011 Comparable FFO includes a
    $10.7 million one-time gain related to a successful preferred equity
    tender offer completed on December 19, 2011. Excluding this gain,
    Comparable FFO would have been $0.14 per diluted share.
  oComparable EBITDA was $175.4  million compared with $154.8 million in the
    prior year period, a 13.3 percent increase.
  oTotal United States RevPAR increased 7.0 percent, driven by a 4.9 percent
    increase in ADR and a  1.4 percentage point increase in occupancy,
    compared to the full year 2011. Total RevPAR increased 5.8 percent with
    non-rooms revenue increasing by 4.7 percent between years.
  oADR growth in the Total United States portfolio was driven by a 5.0
    percent increase in transient ADR compared to the full year 2011 and a 4.0
    percent increase in group ADR.
  oRevPAR increased 7.0 percent in the Company's Total United States resort
    and urban portfolios, compared to the full year 2011.
  oNorth American same store RevPAR increased 6.9 percent, driven by a 4.3
    percent increase in ADR and a  1.7 percentage point increase in occupancy,
    compared to the full year 2011. Total RevPAR increased 5.5 percent with
    non-rooms revenue increasing by 4.3 percent between years.
  oEuropean RevPAR increased 1.1 percent (5.0 percent in constant dollars),
    driven by a 1.1 percentage point increase in occupancy offsetting a 0.1
    percent decrease in ADR (3.7 percent increase in constant dollars) between
    years. European Total RevPAR decreased 1.2 percent in between years (2.4
    percent increase in constant dollars).
  oTotal United States and EBITDA margins expanded 120 basis points compared
    to the full year 2011. North American same store EBITDA margins expanded
    130 basis points between periods. 

Preferred Dividends

On November 29, 2012, the Company's Board of Directors declared a quarterly
dividend of $0.53125 per share of 8.5 percent Series A Cumulative Redeemable
Preferred Stock paid on December 31, 2012 to shareholders of record as of
December 14, 2012, a quarterly dividend of $0.51563 per share of 8.25 percent
Series B Cumulative Redeemable Preferred Stock payable on December 31, 2012 to
shareholders of record as of December 14, 2012 and a quarterly dividend of
$0.51563 per share of 8.25 percent Series C Cumulative Redeemable Preferred
Stock payable on December 31, 2012 to shareholders of record as of December
14, 2012.

2012 Transaction Activity

  oOn November 1, 2012, the Company closed a $90.0 million non-recourse
    mortgage agreement with MetLife secured by the Hyatt Regency La Jolla
    hotel. Under the terms of the loan agreement, the $97.5 million mortgage
    previously encumbering the property was replaced with a $72.0 million
    A-Note and an $18.0 million B-Note that will each mature December 1,
    2017. The floating rate A-Note bears interest at LIBOR plus 400 basis
    points, subject to a 50 basis point LIBOR floor, and the B-Note bears
    interest at a fixed rate of 10.0 percent.
  oOn September 14, 2012, the Company closed on the acquisition of the JW
    Marriott Essex House Hotel in New York City for a gross purchase price of
    approximately $362.3 million and established a joint venture arrangement
    with affiliates of KSL Capital Partners, LLC to fund the equity portion of
    the acquisition. The Company owns 51.0 percent of the joint venture and
    serves as managing member and asset manager. 
  oOn June 29, 2012, the Company paid previously accrued and unpaid dividends
    on the Series A, B and C Preferred Stock through June 30, 2012 to
    shareholders of record as of June 15, 2012. In total, 14 quarters of
    preferred dividends were paid equating to $7.4375 per share of Series A
    Preferred Stock and $7.21882 per share of Series B and Series C Preferred
    Stock.
  oOn April 23, 2012, the Company closed on the sale of 18.4 million shares
    of common stock at a public offering price of $6.50 per share, including
    2.4 million shares of common stock issued pursuant to the exercise in full
    of the underwriters' over-allotment option. The Company received
    approximately $114.1 million from the offering after deducting
    underwriting discounts, commissions and transaction expenses related to
    the offering. The Company utilized the net proceeds from the offering to
    reduce borrowings under its secured bank credit facility, fund the payment
    of accrued and unpaid preferred dividends, and fund capital expenditures
    and working capital. 

Impairment Losses and Other Charges

Fourth quarter and full year 2012 results include impairment losses and other
charges totaling $18.8 million, including a $14.6 million impairment of a
Mexican land development site and $4.2 million of other charges related to the
elimination of certain capital projects and entitlement pursuit activities.
These one-time charges have been excluded from Comparable EBITDA, FFO and FFO
per share metrics.

2013 Guidance

For the full year 2013, the Company anticipates that Comparable EBITDA will be
in the range of $195.0 million to $210.0 million and Comparable FFO in the
range of $0.33 and $0.40 per fully diluted share.

The Company's 2013 guidance includes the following assumptions:

  oSame Store North American RevPAR growth in the range of 5.0 percent to 7.0
    percent and Total RevPAR growth of 4.0 percent to 6.0 percent,
    respectively. Same Store operating metrics include North American hotels
    which are included in the Company's consolidated financial results but
    exclude the JW Marriott Essex House Hotel, which was acquired in 2012;
  oSame Store North American EBITDA margin expansion between 75 basis points
    and 125 basis points;
  oCorporate G&A expenses in the range of $21.0 million to $23.0 million;
  oConsolidated interest expense in the range of $95 million to $100 million,
    including approximately $10 million of non-cash interest expense;
  oPreferred dividend expense of $24.2 million;
  oCapital expenditures totaling approximately $65 million to $70 million,
    including spending of $35 million from property-level furniture, fixtures
    and equipment (FF&E) reserves and an additional $30 million to $35 million
    of owner-funded spending; and
  oNo additional planned acquisition, disposition or capital raising
    activity.

Portfolio Definitions

Total United States portfolio hotel comparisons for the fourth quarter and
full year 2012 are derived from the Company's hotel portfolio at December 31,
2012, consisting of all 14 properties located in the United States, including
unconsolidated joint ventures.

North American same store hotel comparisons for the fourth quarter and full
year 2012 are derived from the Company's hotel portfolio at December 31, 2012,
consisting of properties located in North America and held for five or more
quarters, in which operations are included in the consolidated results of the
Company. As a result, same store comparisons contain 13 properties for the
fourth quarter, including the Four Seasons Punta Mita Resort and excluding the
JW Marriott Essex House Hotel, which was acquired on September 14, 2012, and
the unconsolidated Hotel del Coronado and Fairmont Scottsdale Princess hotels.
Same store comparisons contain contain 11 properties for the full year, also
excluding the Four Seasons Jackson Hole and Four Seasons Silicon Valley
hotels, which were acquired on March 11, 2011.

European hotel comparisons for the fourth quarter and full year 2012 are
derived from the Company's European owned and leased hotel properties at
December 31, 2012, consisting of the Marriott London Grosvenor Square and the
Marriott Hamburg hotels.

Earnings Call

The Company will conduct its fourth quarter and full-year 2012 conference call
for investors and other interested parties on Thursday, February 28, 2013 at
10:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to
the call by telephone at 800.573.4752 (toll international: 617.224.4324) with
passcode 71539203. To participate on the web cast, log on to
http://edge.media-server.com/m/p/fzhfd434/lan/en 15 minutes before the call to
download the necessary software. For those unable to listen to the call live,
a taped rebroadcast will be available beginning at 12:00 p.m. ET on February
28, 2013, through 11:59 p.m. ET on March 7, 2013. To access the replay,
888.286.8010 (toll international: 617.801.6888) and request replay pin number
25278256. A replay of the call will also be available on the Internet at
http://www.strategichotels.com or http://www.earnings.com for 30 days after
the call.

The Company also produces supplemental financial data that includes detailed
information regarding its operating results.This supplemental data is
considered an integral part of this earnings release.These materials are
available on the Strategic Hotels & Resorts' website at
www.strategichotels.com within the fourth quarter information section.

About the Company

Strategic Hotels & Resorts, Inc. is a real estate investment trust (REIT)
which owns and provides value-enhancing asset management of high-end hotels
and resorts in the United States, Mexico and Europe. The Company currently has
ownership interests in 18 properties with an aggregate of 8,271 rooms and
851,600 square feet of meeting space. For a list of current properties and for
further information, please visit the Company's website at
http://www.strategichotels.com.

This press release contains forward-looking statements about Strategic Hotels
& Resorts, Inc. (the "Company"). Except for historical information, the
matters discussed in this press release are forward-looking statements subject
to certain risks and uncertainties. These forward-looking statements include
statements regarding the Company's future financial results, stabilization in
the lodging space, positive trends in the lodging industry and the Company's
continued focus on improving profitability. Actual results could differ
materially from the Company's projections. Factors that may contribute to
these differences include, but are not limited to the following: the effects
of the recent global economic recession upon business and leisure travel and
the hotel markets in which the Company invests; the Company's liquidity and
refinancing demands; the Company's ability to obtain or refinance maturing
debt; the Company's ability to maintain compliance with covenants contained in
the Company's debt facilities; stagnation or further deterioration in economic
and market conditions, particularly impacting business and leisure travel
spending in the markets where the Company's hotels operate and in which the
Company invests, including luxury and upper upscale product; general
volatility of the capital markets and the market price of the Company's shares
of common stock; availability of capital; the Company's ability to dispose of
properties in a manner consistent with the Company's investment strategy and
liquidity needs; hostilities and security concerns, including future terrorist
attacks, or the apprehension of hostilities, in each case that affect travel
within or to the United States, Mexico, Germany, England or other countries
where the Company invests; difficulties in identifying properties to acquire
and completing acquisitions; the Company's failure to maintain effective
internal control over financial reporting and disclosure controls and
procedures; risks related to natural disasters; increases in interest rates
and operating costs, including insurance premiums and real property taxes;
contagious disease outbreaks,such as the H1N1 virus outbreak; delays and
cost-overruns in construction and development; marketing challenges associated
with entering new lines of business or pursuing new business strategies; the
Company's failure to maintain its status as a REIT; changes in the competitive
environment in the Company's industry and the markets where the Company
invests; changes in real estate and zoning laws or regulations; legislative or
regulatory changes, including changes to laws governing the taxation of REITS;
changes in generally accepted accounting principles, policies and guidelines;
and litigation, judgments or settlements.

Additional risks are discussed in the Company's filings with the Securities
and Exchange Commission, including those appearing under the heading "Item 1A.
Risk Factors" in the Company's most recent Form 10-K and subsequent Form
10-Qs. Although the Company believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it can give no
assurance that its expectations will be attained. The forward-looking
statements are made as of the date of this press release, and the Company
undertakes no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise,
except as required by law.

The following tables reconcile projected 2013 net loss attributable to common
shareholders to projected Comparable EBITDA, Comparable FFO and Comparable FFO
per diluted share ($ in millions, except per share data):

                                                     Low Range  High Range
Net Loss Attributable to Common Shareholders         $(55.7)    $(40.7)
Depreciation and Amortization                        119.4      119.4
Interest Expense                                     97.4       97.4
Income Taxes                                         1.4        1.4
Non-controlling Interests                            (0.1)      (0.1)
Adjustments from Consolidated Affiliates             (16.0)     (16.0)
Adjustments from Unconsolidated Affiliates           24.6       24.6
Preferred Shareholder Dividends                      24.2       24.2
Realized Portion of Deferred Gain on Sale Leasebacks (0.2)      (0.2)
Comparable EBITDA                                    $195.0     $210.0



                                                     Low Range  High Range
Net Loss Attributable to Common Shareholders         $(55.7)    $(40.7)
Depreciation and Amortization                        118.5      118.5
Realized Portion of Deferred Gain on Sale Leasebacks (0.2)      (0.2)
Non-controlling Interests                            (0.1)      (0.0)
Adjustments from Consolidated Affiliates             (8.4)      (8.4)
Adjustments from Unconsolidated Affiliates           14.9       14.9
Comparable FFO                                       $69.0      $84.1
Comparable FFO per Diluted Share                     $0.33      $0.40



Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Statements of Operations
(in thousands, except per share data)
                                                      Years Ended
                     Three Months Ended December 31,
                                                      December 31,
                     2012             2011            2012         2011
Revenues:
Rooms                $  123,051       $  99,985       $ 446,760    $ 410,315
Food and beverage    76,164           71,207          273,857      267,194
Other hotel          23,584           21,047          82,922       80,907
operating revenue
Lease revenue        1,273            1,675           4,778        5,422
Total revenues       224,072          193,914         808,317      763,838
Operating Costs and
Expenses:
Rooms                34,268           28,359          124,896      114,087
Food and beverage    56,508           50,018          199,573      192,028
Other departmental   58,424           51,808          211,981      207,664
expenses
Management fees      6,972            6,516           24,984       24,719
Other hotel          16,482           14,311          56,842       53,808
expenses
Lease expense        1,155            1,163           4,580        4,865
Depreciation and     27,048           25,840          103,464      112,062
amortization
Impairment losses    18,843           —               18,843       —
and other charges
Corporate expenses   8,225            15,650          31,857       39,856
Total operating      227,925          193,665         777,020      749,089
costs and expenses
Operating (loss)     (3,853)          249             31,297       14,749
income
Interest expense     (16,862)         (19,299)        (75,489)     (86,447)
Interest income      95               49              217          173
Loss on early
extinguishment of    —                —               —            (1,237)
debt
Loss on early
termination of
derivative           —                —               —            (29,242)
financial
instruments
Equity in losses of
unconsolidated       (11,431)         (2,949)         (13,485)     (9,215)
affiliates
Foreign currency
exchange gain        94               (79)            (1,075)      (2)
(loss)
Other income, net    455              1,051           1,820        5,767
Loss before income
taxes and            (31,502)         (20,978)        (56,715)     (105,454)
discontinued
operations
Income tax expense   (796)            (691)           (1,011)      (970)
Loss from
continuing           (32,298)         (21,669)        (57,726)     (106,424)
operations
Income (loss) from
discontinued         —                357             (535)        101,572
operations, net of
tax
Net loss             (32,298)         (21,312)        (58,261)     (4,852)
Net loss
attributable to the
noncontrolling       58               99              184          29
interests in SHR's
operating
partnership
Net loss (income)
attributable to the
noncontrolling       1,880            614             2,771        (383)
interests in
consolidated
affiliates
Net loss             (30,360)         (20,599)        (55,306)     (5,206)
attributable to SHR
Preferred
shareholder          (6,041)          4,682           (24,166)     (18,482)
dividends
Net loss
attributable to SHR  $  (36,401)      $  (15,917)     $ (79,472)   $ (23,688)
common shareholders
Basic Loss Per
Share:
Loss from
continuing
operations           $  (0.18)        $  (0.09)       $ (0.40)     $ (0.70)
attributable to SHR
common shareholders
Income (loss) from
discontinued
operations           —                —               —            0.57
attributable to SHR
common shareholders
Net loss
attributable to SHR  $  (0.18)        $  (0.09)       $ (0.40)     $ (0.13)
common shareholders
Weighted average
common shares        206,836          186,151         201,109      176,576
outstanding
Diluted Loss Per
Share:
Loss from
continuing
operations           $  (0.18)        $  (0.09)       $ (0.40)     $ (0.70)
attributable to SHR
common shareholders
Income (loss) from
discontinued
operations           —                —               —            0.57
attributable to SHR
common shareholders
Net loss
attributable to SHR  $  (0.18)        $  (0.09)       $ (0.40)     $ (0.13)
common shareholders
Weighted average
common shares        206,836          186,151         201,109      176,576
outstanding





Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Balance Sheets
(in thousands, except share data)
                                                    December 31,
                                                    2012          2011
Assets
Investment in hotel properties, net                 $ 1,970,560   $ 1,692,431
Goodwill                                            40,359        40,359
Intangible assets, net of accumulated amortization  30,631        30,635
of $10,812 and $8,915
Investment in unconsolidated affiliates             112,488       126,034
Cash and cash equivalents                           80,074        72,013
Restricted cash and cash equivalents                58,579        39,498
Accounts receivable, net of allowance for doubtful  45,620        43,597
accounts of $1,602 and $1,698
Deferred financing costs, net of accumulated        11,695        10,845
amortization of $7,049 and $3,488
Deferred tax assets                                 2,203         2,230
Prepaid expenses and other assets                   54,208        29,047
Total assets                                        $ 2,406,417   $ 2,086,689
Liabilities, Noncontrolling Interests and Equity
Liabilities:
Mortgages and other debt payable                    $ 1,176,297   $ 1,000,385
Bank credit facility                                146,000       50,000
Accounts payable and accrued expenses               228,397       249,179
Distributions payable                               —             72,499
Deferred tax liabilities                            47,275        47,623
Total liabilities                                   1,597,969     1,419,686
Noncontrolling interests in SHR's operating         5,463         4,583
partnership
Commitments and contingencies
Equity:
SHR's shareholders' equity:
8.50% Series A Cumulative Redeemable Preferred
Stock ($0.01 par value per share; 4,148,141 shares
issued and outstanding; liquidation preference      99,995        99,995
$25.00 per share plus accrued distributions and
$103,704 and $130,148 in the aggregate)
8.25% Series B Cumulative Redeemable Preferred
Stock ($0.01 par value per share; 3,615,375 shares
issued and outstanding; liquidation preference      87,064        87,064
$25.00 per share plus accrued distributions and
$90,384 and $112,775 in the aggregate)
8.25% Series C Cumulative Redeemable Preferred
Stock ($0.01 par value per share; 3,827,727 shares
issued and outstanding; liquidation preference      92,489        92,489
$25.00 per share plus accrued distributions and
$95,693 and $119,377 in the aggregate)
Common shares ($0.01 par value per share;
350,000,000 and 250,000,000 common shares           2,043         1,856
authorized; 204,308,710 and 185,627,199 common
shares issued and outstanding)
Additional paid-in capital                          1,730,535     1,634,067
Accumulated deficit                                 (1,245,927)   (1,190,621)
Accumulated other comprehensive loss                (58,871)      (70,652)
Total SHR's shareholders' equity                    707,328       654,198
Noncontrolling interests in consolidated            95,657        8,222
affiliates
Total equity                                        802,985       662,420
Total liabilities, noncontrolling interests and     $ 2,406,417   $ 2,086,689
equity





Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Financial Highlights
Supplemental Financial Data
(in thousands, except per share information)
                                                 December31, 2012
                                                 ProRataShare  Consolidated
Capitalization
Common shares outstanding                        204,309         204,309
Operating partnership units outstanding          853             853
Restricted stock units outstanding               1,610           1,610
Value Creation Plan units outstanding under the  1,301           1,301
deferral program
Combined shares and units outstanding            208,073         208,073
Common stock price at end of period              $  6.40         $ 6.40
Common equity capitalization                     $  1,331,667    $ 1,331,667
Preferred equity capitalization (at $25.00 face  289,102         289,102
value)
Consolidated debt                                1,322,297       1,322,297
Pro rata share of unconsolidated debt            221,200         —
Pro rata share of consolidated debt              (135,160)       —
Cash and cash equivalents                        (80,074)        (80,074)
Total enterprise value                           $  2,949,032    $ 2,862,992
Net Debt / Total Enterprise Value                45.0         %  43.4        %
Preferred Equity / Total Enterprise Value        9.8          %  10.1        %
Common Equity / Total Enterprise Value           45.2         %  46.5        %



Strategic Hotels& Resorts, Inc. and Subsidiaries (SHR)

Discontinued Operations

The results of operations of hotels sold are classified as discontinued
operations and segregated in the consolidated statements of operations for all
periods presented. The following hotel was sold during 2011 (in thousands):

Hotel                                         DateSold     NetSalesProceeds
Paris Marriott Champs Elysees (Paris          April6,2011 $    60,003
Marriott)

The following is a summary of income (loss) from discontinued operations for
the three months and years ended December31, 2012 and 2011 (in thousands):

                         Three Months Ended December  Years Ended December 31,
                         31,
                         2012           2011          2012          2011
Hotel operating          $    —         $   —         $  —          $ 9,743
revenues
Operating costs and      —              —             —             9,456
expenses
Operating income         —              —             —             287
Foreign currency         —              —             (535)         51
exchange (loss) gain
Other income, net        —              —             —             326
Income tax expense       —              —             —             (379)
Gain on sale             —              357           —             101,287
Income (loss) from       $    —         $   357       $  (535)      $ 101,572
discontinued operations



Strategic Hotels& Resorts, Inc. and Subsidiaries (SHR)

Investments in Unconsolidated Affiliates
(in thousands)

On February4, 2011, we completed a recapitalization of the unconsolidated
affiliate that owns the Hotel del Coronado. Pursuant to the terms of the
recapitalization, our ownership interest in the Hotel del Coronado decreased
from 45% to 34.3%. On December 17, 2012, we acquired an additional interest in
the entity increasing our ownership to 36.4%. On June9, 2011, we completed a
recapitalization of the Fairmont Scottsdale Princess hotel. As part of the
recapitalization, our ownership interest in the Fairmont Scottsdale Princess
hotel decreased from 100% to 50%. We account for these investments using the
equity method of accounting.

                Three Months Ended December 31,      Three Months Ended December 31,
                2012                                 2011
                Hotel del   Fairmont                 Hotel del   Fairmont
                            Scottsdale  Total                    Scottsdale  Total
                Coronado                             Coronado
                            Princess                             Princess
Total revenues  $ 29,888    $  20,546   $ 50,434     $ 30,324    $  18,322   $ 48,646
(100%)
Property        $ 7,201     $  3,034    $ 10,235     $ 7,697     $  2,052    $ 9,749
EBITDA (100%)
Equity in losses of
unconsolidated affiliates
(SHR ownership)
Property        $ 2,491     $  1,517    $ 4,008      $ 2,640     $  1,026    $ 3,666
EBITDA
Depreciation
and             (1,797)     (1,823)     (3,620)      (1,674)     (1,765)     (3,439)
amortization
Interest        (2,549)     (189)       (2,738)      (2,515)     (204)       (2,719)
expense
Other           (7,869)     (111)       (7,980)      (22)        (17)        (39)
expenses, net
Income taxes    90          —           90           (49)        —           (49)
Equity in
losses of       $ (9,634)   $  (606)    $ (10,240)   $ (1,620)   $  (960)    $ (2,580)
unconsolidated
affiliates
EBITDA
Contribution:
Equity in
losses of       $ (9,634)   $  (606)    $ (10,240)   $ (1,620)   $  (960)    $ (2,580)
unconsolidated
affiliates
Depreciation
and             1,797       1,823       3,620        1,674       1,765       3,439
amortization
Termination     7,820       —           7,820        —           —           —
fee
Interest        2,549       189         2,738        2,515       204         2,719
expense
Income taxes    (90)        —           (90)         49          —           49
EBITDA          $ 2,442     $  1,406    $ 3,848      $ 2,618     $  1,009    $ 3,627
Contribution
FFO
Contribution:
Equity in
losses of       $ (9,634)   $  (606)    $ (10,240)   $ (1,620)   $  (960)    $ (2,580)
unconsolidated
affiliates
Depreciation
and             1,797       1,823       3,620        1,674       1,765       3,439
amortization
Termination     7,820       —           7,820        —           —           —
fee
FFO             $ (17)      $  1,217    $ 1,200      $ 54        $  805      $ 859
Contribution





                Year Ended December 31, 2012          Year Ended December 31, 2011
                             Fairmont                             Fairmont
                Hotel del                             Hotel del
                             Scottsdale  Total                    Scottsdale  Total
                Coronado                              Coronado
                             Princess                             Princess
Total revenues  $ 140,220    $ 77,281    $ 217,501    $ 136,727   $ 30,711    $ 167,438
(100%)
Property        $ 40,722     $ 12,777    $ 53,499     $ 42,445    $ (1,144)   $ 41,301
EBITDA (100%)
Equity in losses of
unconsolidated affiliates
(SHR ownership)
Property        $ 13,989     $ 6,389     $ 20,378     $ 14,662    $ (572)     $ 14,090
EBITDA
Depreciation
and             (6,895)      (7,145)     (14,040)     (6,637)     (4,022)     (10,659)
amortization
Interest        (10,093)     (778)       (10,871)     (9,897)     (452)       (10,349)
expense
Other           (7,931)      (155)       (8,086)      (1,569)     (657)       (2,226)
expenses, net
Income taxes    383          —           383          505         —           505
Equity in
losses of       $ (10,547)   $ (1,689)   $ (12,236)   $ (2,936)   $ (5,703)   $ (8,639)
unconsolidated
affiliates
EBITDA
Contribution
Equity in
losses of       $ (10,547)   $ (1,689)   $ (12,236)   $ (2,936)   $ (5,703)   $ (8,639)
unconsolidated
affiliates
Depreciation
and             6,895        7,145       14,040       6,637       4,022       10,659
amortization
Termination     7,820        —           7,820        —           —           —
fee
Interest        10,093       778         10,871       9,897       452         10,349
expense
Income taxes    (383)        —           (383)        (505)       —           (505)
EBITDA          $ 13,878     $ 6,234     $ 20,112     $ 13,093    $ (1,229)   $ 11,864
Contribution
FFO
Contribution
Equity in
losses of       $ (10,547)   $ (1,689)   $ (12,236)   $ (2,936)   $ (5,703)   $ (8,639)
unconsolidated
affiliates
Depreciation
and             6,895        7,145       14,040       6,637       4,022       10,659
amortization
Termination     7,820        —           7,820        —           —           —
fee
FFO             $ 4,168      $ 5,456     $ 9,624      $ 3,701     $ (1,681)   $ 2,020
Contribution





Investments in Unconsolidated Affiliates (Continued)
(in thousands)
                                  Spreadover
Debt         InterestRate                           LoanAmount  Maturity(a)
                                  LIBOR
Hotel del
Coronado
CMBS
Mortgage     5.80     %     (b)  480bp       (b)  $  425,000   March2016
and
Mezzanine
Cash and
cash                                                 (7,929)
equivalents
Net Debt                                             $  417,071
Fairmont
Scottsdale
Princess
CMBS         0.57     %           36 bp              $  133,000   April 2015
Mortgage
Cash and
cash                                                 (4,626)
equivalents
Net Debt                                             $  128,374

(a) Includes extension options.

(b) Subject to a 1% LIBOR floor.



                 Effective
Caps                            LIBORCapRate  NotionalAmount  Maturity
                 Date
Hotel del
Coronado
CMBS Mortgage
and Mezzanine    February2011  2.00     %      $   425,000      February2013
Loan Caps
CMBS Mortgage
and Mezzanine    February 2013  2.50     %      $   425,000      March 2013
Loan Caps
Fairmont
Scottsdale
Princess
CMBS Mortgage    June 2011      4.00     %      $   133,000      December2013
Loan Cap





Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Leasehold Information
(in thousands)
                         Three Months Ended December  Years Ended December 31,
                         31,
                         2012            2011         2012          2011
Paris Marriott (a):
Property EBITDA          $   —           $  —         $  —          $ 3,455
Revenue (b)              $   —           $  —         $  —          $ 3,455
Lease expense            —               —            —             (3,274)
Less: Deferred gain on   —               —            —             (1,214)
sale-leaseback
Adjusted lease expense   —               —            —             (4,488)
EBITDA contribution      $   —           $  —         $  —          $ (1,033)
from leasehold
Marriott Hamburg:
Property EBITDA          $   1,472       $  1,568     $  5,876      $ 6,603
Revenue (b)              $   1,273       $  1,675     $  4,778      $ 5,422
Lease expense            (1,155)         (1,163)      (4,580)       (4,865)
Less: Deferred gain on   (50)            (66)         (200)         (217)
sale-leaseback
Adjusted lease expense   (1,205)         (1,229)      (4,780)       (5,082)
EBITDA contribution      $   68          $  446       $  (2)        $ 340
from leasehold
Total Leaseholds:
Property EBITDA          $   1,472       $  1,568     $  5,876      $ 10,058
Revenue (b)              $   1,273       $  1,675     $  4,778      $ 8,877
Lease expense            (1,155)         (1,163)      (4,580)       (8,139)
Less: Deferred gain on   (50)            (66)         (200)         (1,431)
sale-leasebacks
Adjusted lease expense   (1,205)         (1,229)      (4,780)       (9,570)
EBITDA contribution      $   68          $  446       $  (2)        $ (693)
from leaseholds



                       December 31,
Security Deposit (c):  2012      2011
Marriott Hamburg       $ 2,507   $ 2,462

(a) On April6, 2011, we sold our leasehold interest in the Paris Marriott
hotel. The results of operations for the Paris Marriott hotel have been
classified as discontinued operations for all periods presented.

(b) For the year ended December31, 2011, Revenue for the Paris Marriott hotel
represents Property EBITDA. For the three months and years ended December31,
2012 and 2011, Revenue for the Marriott Hamburg hotel represents lease
revenue.

(c) The security deposit is recorded in prepaid expenses and other assets on
the consolidated balance sheets.

Strategic Hotels& Resorts, Inc. and Subsidiaries (SHR)

Non-GAAP Financial Measures

We present five non-GAAP financial measures that we believe are useful to
management and investors as key measures of our operating performance: Funds
from Operations (FFO); FFO—Fully Diluted; Comparable FFO; Earnings Before
Interest Expense, Taxes, Depreciation and Amortization (EBITDA); and
Comparable EBITDA.

EBITDA represents net income (or loss) attributable to SHR common shareholders
excluding: (i)interest expense, (ii)income taxes, including deferred income
tax benefits and expenses applicable to our foreign subsidiaries and income
taxes applicable to sale of assets; (iii)depreciation and amortization; and
(iv)preferred stock dividends. EBITDA also excludes interest expense, income
taxes and depreciation and amortization of our unconsolidated affiliates.
EBITDA is presented on a full participation basis, which means we have assumed
conversion of all redeemable noncontrolling interests of our operating
partnership into our common stock. We believe this treatment of noncontrolling
interests provides useful information for management and our investors and
appropriately considers our current capital structure. We also present
Comparable EBITDA, which eliminates the effect of realizing deferred gains on
our sale leasebacks, as well as the effect of gains or losses on sales of
assets, early extinguishment of debt, impairment losses, foreign currency
exchange gains or losses and certain other charges that are highly variable
from year to year. We believe EBITDA and Comparable EBITDA are useful to
management and investors in evaluating our operating performance because they
provide management and investors with an indication of our ability to incur
and service debt, to satisfy general operating expenses, to make capital
expenditures and to fund other cash needs or reinvest cash into our business.
We also believe they help management and investors meaningfully evaluate and
compare the results of our operations from period to period by removing the
impact of our asset base (primarily depreciation and amortization) from our
operating results. Our management also uses EBITDA and Comparable EBITDA as
measures in determining the value of acquisitions and dispositions.

We compute FFO in accordance with standards established by the National
Association of Real Estate Investment Trusts, or NAREIT, with the exception of
impairment of depreciable real estate. NAREIT adopted a definition of FFO in
order to promote an industry-wide standard measure of REIT operating
performance. NAREIT defines FFO as net income (or loss) (computed in
accordance with GAAP) excluding losses or gains from sales of depreciable
property, impairment of depreciable real estate, real estate-related
depreciation and amortization, and our portion of these items related to
unconsolidated affiliates. We also present FFO—Fully Diluted, which is FFO
plus income or loss on income attributable to redeemable noncontrolling
interests in our operating partnership. We also present Comparable FFO, which
is FFO—Fully Diluted excluding the impact of any gains or losses on early
extinguishment of debt, impairment losses, foreign currency exchange gains or
losses and certain other charges that are highly variable from year to year.
We believe that the presentation of FFO, FFO—Fully Diluted and Comparable FFO
provides useful information to management and investors regarding our results
of operations because they are measures of our ability to fund capital
expenditures and expand our business. In addition, FFO is widely used in the
real estate industry to measure operating performance without regard to items
such as depreciation and amortization. We also present Comparable FFO per
diluted share as a non-GAAP measure of our performance. We calculate
Comparable FFO per diluted share for a given operating period as our
Comparable FFO (as defined above) divided by the weighted average of fully
diluted shares outstanding, excluding shares related to the JW Marriott Essex
House Hotel put option. Dilutive securities may include shares granted under
share-based compensation plans and operating partnership units. No effect is
shown for securities that are anti-dilutive.

We caution investors that amounts presented in accordance with our definitions
of FFO, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA may
not be comparable to similar measures disclosed by other companies, since not
all companies calculate these non-GAAP measures in the same manner. FFO,
FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA should not be
considered as an alternative measure of our net income (or loss) or operating
performance. FFO, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable
EBITDA may include funds that may not be available for our discretionary use
due to functional requirements to conserve funds for capital expenditures and
property acquisitions and other commitments and uncertainties. Although we
believe that FFO, FFO—Fully Diluted, Comparable FFO, EBITDA, and Comparable
EBITDA can enhance your understanding of our financial condition and results
of operations, these non-GAAP financial measures, when viewed individually,
are not necessarily a better indicator of any trend as compared to comparable
GAAP measures such as net income (or loss) attributable to SHR common
shareholders. In addition, you should be aware that adverse economic and
market conditions might negatively impact our cash flow. We have provided a
quantitative reconciliation of FFO, FFO—Fully Diluted, Comparable FFO, EBITDA,
and Comparable EBITDA to the most directly comparable GAAP financial
performance measure, which is net income (or loss) attributable to SHR common
shareholders.



Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Reconciliation of Net Loss Attributable to SHR Common Shareholders to EBITDA
and Comparable EBITDA
(in thousands)
                             Three Months Ended        Years Ended December 31,
                             December 31,
                             2012         2011         2012         2011
Net loss attributable to     $ (36,401)   $ (15,917)   $ (79,472)   $ (23,688)
SHR common shareholders
Depreciation and             27,048       25,840       103,464      112,062
amortization
Interest expense             16,862       19,299       75,489       86,447
Income taxes—continuing      796          691          1,011        970
operations
Income taxes—discontinued    —            —            —            379
operations
Noncontrolling interests     (58)         (99)         (184)        (29)
Adjustments from             (4,217)      (1,302)      (8,599)      (6,733)
consolidated affiliates
Adjustments from             6,956        6,928        27,562       23,221
unconsolidated affiliates
Preferred shareholder        6,041        (4,682)      24,166       18,482
dividends
EBITDA                       17,027       30,758       143,437      211,111
Realized portion of
deferred gain on             (50)         (66)         (200)        (217)
sale-leaseback—continuing
operations
Realized portion of
deferred gain on             —            —            —            (1,214)
sale-leaseback—discontinued
operations
Gain on sale of
assets—continuing            —            —            —            (2,640)
operations
Gain on sale of
assets—discontinued          —            (357)        —            (101,287)
operations
Impairment losses and other  18,843       —            18,843       —
charges
Loss on early                —            —            —            1,237
extinguishment of debt
Loss on early termination
of derivative financial      —            —            —            29,242
instruments
Foreign currency exchange
(gain) loss—continuing       (94)         79           1,075        2
operations (a)
Foreign currency exchange
loss (gain)—discontinued     —            —            535          (51)
operations (a)
Adjustment for Value         (1,352)      9,529        1,407        18,607
Creation Plan
Severance charges            2,485        —            2,485        —
Management agreement         7,820        —            7,820        —
termination fee (b)
Comparable EBITDA            $ 44,679     $ 39,943     $ 175,402    $ 154,790



(a) Foreign currency exchange gains or losses applicable to third-party and
inter-company debt and certain balance sheet items held by foreign
subsidiaries.

(b) Our share of the Hotel del Coronado management agreement termination fee
included in both equity in losses of unconsolidated affiliates and net loss
attributable to the noncontrolling interests in consolidated affiliates.



Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Reconciliation of Net Loss Attributable to SHR Common Shareholders to
Funds From Operations (FFO), FFO—Fully Diluted and Comparable FFO
(in thousands, except per share data)
                             Three Months Ended        Years Ended December 31,
                             December 31,
                             2012         2011         2012         2011
Net loss attributable to     $ (36,401)   $ (15,917)   $ (79,472)   $ (23,688)
SHR common shareholders
Depreciation and             27,048       25,840       103,464      112,062
amortization
Corporate depreciation       (190)        (273)        (979)        (1,141)
Gain on sale of
assets—continuing            —            —            —            (2,640)
operations
Gain on sale of
assets—discontinued          —            (357)        —            (101,287)
operations
Realized portion of
deferred gain on             (50)         (66)         (200)        (217)
sale-leaseback—continuing
operations
Realized portion of
deferred gain on             —            —            —            (1,214)
sale-leaseback—discontinued
operations
Deferred tax expense on
realized portion of          —            —            —            379
deferred gain on
sale-leasebacks
Noncontrolling interests     (127)        (135)        (501)        (575)
adjustments
Adjustments from             (1,906)      (664)        (4,091)      (4,486)
consolidated affiliates
Adjustments from             3,923        3,740        15,258       11,763
unconsolidated affiliates
FFO                          (7,703)      12,168       33,479       (11,044)
Redeemable noncontrolling    69           36           317          546
interests
FFO—Fully Diluted            (7,634)      12,204       33,796       (10,498)
Impairment losses and other  18,843       —            18,843       —
charges
Non-cash mark to market of   (7,833)      (1,696)      (12,238)     (2,183)
interest rate swaps
Loss on early                —            —            —            1,237
extinguishment of debt
Loss on early termination
of derivative financial      —            —            —            29,242
instruments
Foreign currency exchange
(gain) loss—continuing       (94)         79           1,075        2
operations (a)
Foreign currency exchange
loss (gain)—discontinued     —            —            535          (51)
operations (a)
Adjustment for Value         (1,352)      9,529        1,407        18,607
Creation Plan
Severance charges            2,485        —            2,485        —
Management agreement         7,820        —            7,820        —
termination fee (b)
Comparable FFO               $ 12,235     $ 20,116     $ 53,723     $ 36,356
Comparable FFO per fully     $ 0.06       $ 0.11       $ 0.26       $ 0.20
diluted share
Weighted average diluted     209,307      188,340      203,605      179,319
shares (c)



(a) Foreign currency exchange gains or losses applicable to third-party and
inter-company debt and certain balance sheet items held by foreign
subsidiaries.

(b) Our share of the Hotel del Coronado management agreement termination fee
included in both equity in losses of unconsolidated affiliates and net loss
attributable to the noncontrolling interests in consolidated affiliates.

(c) Excludes shares related to the JW Marriott Essex House Hotel put option.



Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Debt Summary
(dollars in thousands)
Debt                   InterestRate   Spread(a)  LoanAmount   Maturity (b)
Marriott London        1.62      %     110bp(c)  $ 115,468     October2013
Grosvenor Square (c)
North Beach Venture    5.00      %     Fixed       1,476         January2014
Bank credit facility   3.21      %     300 bp      146,000       June2015
Four Seasons           3.36      %     315 bp      130,000       July2016
Washington, D.C.
Westin St. Francis     6.09      %     Fixed       214,186       June2017
Fairmont Chicago       6.09      %     Fixed       95,167        June2017
JW Marriott Essex      4.75      %     400 bp      190,000       September
House Hotel                                                      2017
Hyatt Regency La       4.50% / 10.00%  400 bp /    90,000        December 2017
Jolla (d)                              Fixed
InterContinental       3.71      %     350 bp      85,000        July2018
Miami
Loews Santa Monica     4.06      %     385 bp      110,000       July2018
Beach Hotel
InterContinental       5.61      %     Fixed       145,000       August2021
Chicago
                                                   $ 1,322,297



(a) Spread over LIBOR (0.21% at December31, 2012). Interest on the JW
Marriott Essex House Hotel loan is subject to a 0.75% LIBOR floor. Interest
on the Hyatt Regency La Jolla loan is subject to a 0.50% LIBOR floor.

(b) Includes extension options.

(c) Principal balance of £71,070,000 at December31, 2012. Spread over
three-month GBP LIBOR (0.52% at December31, 2012).

(d) Interest on $72,000,000 is payable at LIBOR plus 4.00%, subject to a 0.50%
LIBOR floor, and interest on $18,000,000 is payable at a fixed rate of 10.00%.

Domestic and European Interest Rate Swaps

                     FixedPayRate  Notional
Swap Effective Date                              Maturity
                     AgainstLIBOR   Amount
February 2010        4.90     %      $ 100,000   September2014
February 2010        4.96     %      100,000     December2014
December 2010        5.23     %      100,000     December2015
February 2011        5.27     %      100,000     February2016
                     5.09     %      $ 400,000



                     FixedPayRate     Notional
Swap Effective Date                                  Maturity
                     AgainstGBPLIBOR  Amount
October 2007         5.72       %         £ 71,070   October2013



Future scheduled debt principal payments (including extension options) are as
follows:

Years ending December31,                                        Amount
2013                                                             $ 126,334
2014                                                             15,348
2015                                                             162,246
2016                                                             150,661
2017                                                             549,516
Thereafter                                                       318,192
                                                                 $ 1,322,297
Percent of fixed rate debt including U.S. and European swaps     74.8        %
Weighted average interest rate including U.S. and European       6.45        %
swaps (e)
Weighted average maturity of fixed rate debt (debt with          4.21
maturity of greater than one year)

(e) Excludes the amortization of deferred financing costs and the amortization
of the interest rate swap costs.

SOURCE Strategic Hotels & Resorts, Inc.

Website: http://www.strategichotels.com
Contact: Diane Morefield, EVP & Chief Financial Officer, +1-312-658-5740, or
Jonathan Stanner, Vice President, Capital Markets & Treasurer,
+1-312-658-5746, both of Strategic Hotels & Resorts