Strategic Hotels & Resorts Reports Fourth Quarter And Full Year 2013 Results

 Strategic Hotels & Resorts Reports Fourth Quarter And Full Year 2013 Results

Full Year 2013 RevPAR increased 8.8 percent in the Company's Total North
American Portfolio and EBITDA margins expanded by 290 basis points

Initiates Full Year 2014 RevPAR growth guidance in the range of 5.0 percent to
7.0 percent

PR Newswire

CHICAGO, Feb. 25, 2014

CHICAGO, Feb. 25, 2014 /PRNewswire/ -- Strategic Hotels & Resorts, Inc. (NYSE:
BEE) today reported results for the fourth quarter and full year ended
December 31, 2013.

($ in millions, except per share and operating        Fourth Quarter
metrics)
Earnings Metrics                                      2013    2012    % Change
Net income (loss) attributable to common shareholders $3.2    $(36.4) N/A
Net income (loss) per diluted share                   $0.02   $(0.18) N/A
Comparable funds from operations (Comparable FFO)     $28.7   $12.2   134.9%
^(a)
Comparable FFO per diluted share ^(a)                 $0.14   $0.06   133.3%
Comparable EBITDA ^(a)                                $58.3   $44.7   30.6%
Total North American Portfolio Operating Metrics ^(b)
Average Daily Rate (ADR)                              $293.19 $276.26 6.1%
Occupancy                                             71.3%   69.1%   2.2 pts
Revenue per Available Room (RevPAR)                   $209.17 $190.82 9.6%
Total RevPAR                                          $419.59 $365.15 14.9%
EBITDA Margins                                        25.9%   21.3%   460 bps
North American Same Store Operating Metrics ^(c)
ADR                                                   $292.75 $275.64 6.2%
Occupancy                                             73.7%   71.3%   2.4 pts
RevPAR                                                $215.75 $196.66 9.7%
Total RevPAR                                          $415.35 $359.73 15.5%
EBITDA Margins                                        26.7%   21.5%   520 bps

Note: Fourth quarter and full year results include payments pursuant to the JW
Marriott Essex House NOI guarantee of $1.4 million and $12.8 million in 2012
and 2013, respectively.



($ in millions, except per share and operating        Full Year
metrics)
Earnings Metrics                                      2013    2012    % Change
Net loss attributable to common shareholders          $(13.2) $(79.5) N/A
Net loss per diluted share                            $(0.06) $(0.40) N/A
Comparable FFO ^(a)                                   $89.5   $53.7   66.6%
Comparable FFO per diluted share ^(a)                 $0.43   $0.26   65.4%
Comparable EBITDA ^(a)                                $213.2  $175.4  21.5%
Total North American Portfolio Operating Metrics ^(b)
ADR                                                   $289.90 $273.30 6.1%
Occupancy                                             74.2%   72.3%   1.9 pts
RevPAR                                                $214.98 $197.59 8.8%
Total RevPAR                                          $401.56 $365.43 9.9%
EBITDA Margins                                        24.4%   21.5%   290 bps
North American Same Store Operating Metrics ^(c)
ADR                                                   $270.07 $254.06 6.3%
Occupancy                                             75.0%   73.2%   1.8 pts
RevPAR                                                $202.58 $186.05 8.9%
Total RevPAR                                          $373.90 $344.77 8.4%
EBITDA Margins                                        23.4%   22.0%   140 bps

      Fourth quarter and full year results include payments pursuant to the JW
Note: Marriott Essex House NOI guarantee of $1.4 million and $12.8 million in
      2012 and 2013, respectively.
      Please refer to tables provided later in this press release for a
      reconciliation of net (loss)/income to Comparable FFO, Comparable FFO
(a)   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.
      Operating statistics reflect results from the Company's Total North
(b)   American portfolio (see portfolio definitions later in this press
      release).
      Operating statistics reflect results from the Company's North American
(c)   same store portfolio (see portfolio definitions later in this press
      release).



"We achieved outstanding operating and financial results across the board in
2013, leading the industry in RevPAR growth and margin expansion," said
Raymond L. "Rip" Gellein, Jr., Chairman and Chief Executive Officer of
Strategic Hotels & Resorts, Inc. "We have very positive expectations for
2014, based on our group outlook, continued strength from the transient
traveler, and our ability to continue expanding margins across the portfolio.
We also look forward to continuing to deleverage the Company's balance sheet
and reviewing growth opportunities that meet our strategic and financial
thresholds. The luxury sector is well positioned for continued strength given
the dearth of competitive new supply in virtually all of our major markets,"
summarized Gellein. 

Fourth Quarter Highlights

  oTotal consolidated revenues were $242.4 million in the fourth quarter of
    2013, a 13.9 percent increase over the prior year period.
  oTotal North American portfolio RevPAR increased 9.6 percent in the fourth
    quarter of 2013, driven by a 6.1 percent increase in ADR and a 2.2
    percentage point increase in occupancy compared to the fourth quarter of
    2012. Total RevPAR increased 14.9 percent between periods. Excluding
    payments received pursuant to the JW Marriott Essex House NOI guarantee,
    Total RevPAR increased 10.6 percent in the fourth quarter of 2013 as
    compared to the fourth quarter of 2012.
  oComparable FFO was $0.14 per diluted share in the fourth quarter of 2013
    compared with $0.06 per diluted share in the prior year period, a 133.3
    percent increase over the prior year period. 
  oComparable EBITDA was $58.3  million in the fourth quarter of 2013
    compared with $44.7 million in the prior year period, a 30.6 percent
    increase. 
  oNet income attributable to common shareholders was $3.2 million, or $0.02
    per diluted share, in the fourth quarter of 2013, compared with a net loss
    attributable to common shareholders of $36.4 million, or $0.18 per diluted
    share, in the fourth quarter of 2012. Fourth quarter 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. These charges
    have been excluded from Comparable EBITDA, FFO and FFO per share.
  oTransient occupied room nights in the Total North American portfolio
    increased 5.0 percent, offsetting a 1.2 percent decline in group occupied
    rooms in the fourth quarter of 2013 compared to the fourth quarter of
    2012. Transient ADR increased 4.7 percent compared to the fourth quarter
    of 2012 and group ADR increased 6.2 percent compared to the fourth quarter
    of 2012. Transient revenues increased 9.9 percent compared to the fourth
    quarter of 2012 and group revenues increased 4.9 percent, compared to the
    fourth quarter of 2012.
  oTotal United States RevPAR increased 9.7 percent in the fourth quarter of
    2013, driven by a  6.4 percent increase in ADR and a 2.2 percentage point
    increase in occupancy, compared to the fourth quarter of 2012. Total
    RevPAR increased 15.1 percent between periods. Excluding payments
    received pursuant to the JW Marriott Essex House NOI guarantee, Total
    RevPAR increased 10.6 percent in the fourth quarter of 2013 as compared to
    the fourth quarter of 2012.
  oNorth American same store RevPAR increased 9.7 percent in the fourth
    quarter of 2013, driven by a  6.2 percent increase in ADR and a 2.4
    percentage point increase in occupancy, compared to the fourth quarter of
    2012. Total RevPAR increased 15.5 percent between periods. Excluding
    payments received pursuant to the JW Marriott Essex House NOI guarantee,
    Total RevPAR increased 10.1 percent in the fourth quarter of 2013 as
    compared to the fourth quarter of 2012.
  oEuropean RevPAR increased 4.4 percent (a 2.2 percent increase in constant
    dollars) in the fourth quarter of 2013, driven by a 1.1 percent increase
    in ADR (a 1.1 percent decline in constant dollars) and a 2.7 percentage
    point increase in occupancy. European Total RevPAR increased 5.8 percent
    in the fourth quarter of 2013 over the prior year period (a 3.8 percent
    increase in constant dollars). 
  oTotal North American portfolio EBITDA margins expanded 460 basis points in
    the fourth quarter of 2013 compared to the fourth quarter of 2012. North
    American same store EBITDA margins expanded 520 basis points between
    periods. Excluding payments received pursuant to the JW Marriott Essex
    House NOI guarantee, EBITDA margins expanded 180 basis points and 160
    basis points in the Total North American and North American same store
    portfolios, respectively, between periods.

Full Year Highlights

  oTotal consolidated revenues were $900.0 million in 2013, a 16.1 percent
    increase over the prior year period.
  oTotal North American RevPAR increased 8.8 percent in 2013, driven by a 6.1
    percent increase in ADR and a 1.9 percentage point increase in occupancy,
    compared to the full year 2012. Total RevPAR increased 9.9 percent
    between periods. Excluding payments received pursuant to the JW Marriott
    Essex House NOI guarantee, Total RevPAR increased 8.8 percent in 2013
    compared to 2012.
  oComparable FFO was $0.43 per diluted share in 2013 compared with $0.26 per
    diluted share in the prior year, a 65.4 percent increase. 
  oComparable EBITDA was $213.2  million in 2013 compared with $175.4 million
    in the prior year, a 21.5 percent increase.
  oNet loss attributable to common shareholders was $13.2 million, or $0.06
    per diluted share, in 2013 compared with a net loss attributable to common
    shareholders of $79.5 million, or $0.40 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. These charges have been excluded from
    Comparable EBITDA, FFO and FFO per share.
  oTransient occupied room nights in the Total North American portfolio
    increased 3.1 percent and group occupied room nights increased 1.6 percent
    in 2013 compared to 2012. Transient ADR increased 6.1 percent in 2013 and
    group ADR increased 4.8 percent compared to 2012. Transient revenues
    increased 9.4 percent in 2013 and group revenues increased 6.5 percent,
    compared to 2012.
  oTotal United States RevPAR increased 8.6 percent in 2013, driven by a 5.9
    percent increase in ADR and a  1.8 percentage point increase in occupancy,
    compared to the full year 2012. Total RevPAR increased 9.7 percent
    between periods. Excluding payments received pursuant to the JW Marriott
    Essex House NOI guarantee, Total RevPAR increased 8.6 percent in 2013
    compared to 2012.
  oNorth American same store RevPAR increased 8.9 percent, driven by a 6.3
    percent increase in ADR and a  1.8 percentage point increase in occupancy,
    compared to the full year 2012. Total RevPAR increased 8.4 percent
    between periods.
  oEuropean RevPAR decreased 1.7 percent (2.1 percent in constant dollars) in
    2013, driven by a 2.4 percentage decrease in ADR (2.8 percent in constant
    dollars) offsetting a 0.6 percentage point increase in occupancy between
    years. European Total RevPAR decreased 1.2 percent in between years (1.6
    percent in constant dollars).
  oTotal North American portfolio EBITDA margins expanded 290 basis points in
    2013 compared to the full year 2012. Excluding payments received pursuant
    to the JW Marriott Essex House NOI guarantee, EBITDA margins expanded 210
    basis points compared to the full year 2012. North American same store
    EBITDA margins expanded 140 basis points between periods.

Preferred Dividends

On November 27, 2013, 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, 2013 to shareholders of record as of the
close of business on December 16, 2013, a quarterly dividend of $0.51563 per
share of 8.25 percent Series B Cumulative Redeemable Preferred Stock paid on
December 31, 2013 to shareholders of record as of the close of business on
December 16, 2013 and a quarterly dividend of $0.51563 per share of 8.25
percent Series C Cumulative Redeemable Preferred Stock paid on December 31,
2013 to shareholders of record as of the close of business on December 16,
2013.

2013 Transaction Activity

  oOn December 12, 2013, the Company announced the signing of an agreement
    with Cascade Investment, L.L.C. to sell the Four Seasons Punta Mita Resort
    and adjacent La Solana land parcel for gross consideration of $200
    million, subject to certain working capital adjustments. The transaction
    is expected to close in the first quarter of 2014.
  oOn October 16, 2013, the Company sold the Lakeshore Athletic Club property
    adjacent to the Fairmont Chicago hotel for $10.5 million to the owner of
    Lakeshore Sport & Fitness.
  oOn September 9, 2013, the Company closed on amendments to the
    cross-collateralized mortgage agreements secured by the Westin St. Francis
    and Fairmont Chicago hotels, which eliminated future principal
    amortization payments totaling $37.2 million in scheduled payments from
    the signing the amendment through the remaining term of the two
    agreements.
  oOn March 12, 2013, the Company, along with certain affiliates of
    Blackstone Real Estate Partners VI L.P., its joint-venture partner, closed
    on a $475 million loan secured by the Hotel del Coronado, bearing interest
    at LIBOR plus 365 basis points and has an initial two-year term with
    three, one-year extension options.

2014 Guidance

For the full year 2014, the Company is providing the following guidance ranges
for its Total United States and United States same-store portfolios.
Comparable EBITDA and Comparable FFO per share ranges assume the pending sale
of the Four Seasons Punta Mita Resort and adjacent La Solana land parcel
closes in the first quarter and proceeds are used to reduce the outstanding
balance on the Company's revolving credit facility, partially redeem preferred
equity, and other general corporate purposes.



Operating Metrics                 

RevPAR                            5.0% - 7.0%

Total RevPAR                      4.5% - 6.5%

EBITDA Margin expansion           120 – 200 basis points
Corporate Metrics
Comparable EBITDA                 $220M - $240M

Comparable FFO per diluted share  $0.53 - $0.63



Full year 2014 RevPAR and Total RevPAR growth guidance ranges have been
reduced by 100 basis points and the EBITDA margin expansion guidance range has
been reduced by 20 basis points as the result of anticipated displacement
related to renovation activity.

The Company is additionally providing the following guidance for 2014:

  oCorporate general and administrative expenses in the range of $22.0
    million to $24.0 million, excluding costs associated with the Orange
    Capital activist campaign;
  oConsolidated interest expense in the range of $85 million to $90 million,
    including approximately $8 million of non-cash interest expense;
  oPreferred dividend expense of $17.6 million, which assumes the redemption
    of the Series A Preferred Equity at the end of the first quarter,
    contingent on the closing of the sale of the Four Seasons Punta Mita
    Resort;
  oCapital expenditures totaling approximately $75 million to $80 million,
    including spending of $40 million from property-level furniture, fixtures
    and equipment (FF&E) reserves and an additional $35 million to $40 million
    of owner-funded spending; and
  oNo effect from any additional acquisition, disposition or capital raising
    activity that may occur during the year.

Portfolio Definitions

Total United States portfolio hotel comparisons for the fourth quarter and
full year 2013 are derived from the Company's hotel portfolio at December 31,
2013, consisting of all 15 properties located in the United States, including
unconsolidated joint ventures.

North American same store hotel comparisons for the fourth quarter and full
year 2013 are derived from the Company's hotel portfolio at December 31, 2013,
consisting of properties located in North America and held for five or more
quarters in the case of fourth quarter results and eight or more quarters for
full year results, in which operations are included in the consolidated
results of the Company. As a result, same store comparisons contain 14
properties for the fourth quarter, including the Four Seasons Punta Mita
Resort, but excluding the unconsolidated Hotel del Coronado and Fairmont
Scottsdale Princess hotels. Same store comparisons for the full year contain
13 properties, also excluding the JW Marriott Essex House Hotel, which was
acquired on September 14, 2012.

European hotel comparisons for the fourth quarter and full year 2013 are
derived from the Company's European owned and leased hotel properties at
December 31, 2013, consisting of the Marriott London Grosvenor Square and the
Marriott Hamburg hotels.

Earnings Call

The Company will conduct its fourth quarter and full-year 2013 conference call
for investors and other interested parties on Wednesday, February 26, 2014 at
10:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to
the call by dialing 877.415.3177 (toll international: 857.244.7320) with
passcode 66838542. To participate on the webcast, log on to
http://edge.media-server.com/m/p/vpa3u2wm/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 2:00 p.m. ET on February
26, 2014 through 11:59 p.m. ET on March 5, 2014. To access the replay, dial
888.286.8010 (toll international: 617.801.6888) with passcode 62181703. A
replay of the call will also be available on the Internet at
http://www.strategichotels.com or
http://www.reuters.com/finance/markets/earnings 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.

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: failure to
complete or close on transactions or the failure of closing conditions to be
satisfied, including the closing of the disposition of the Four Seasons Punta
Mita Resort; a change in the proposed use of proceeds from the disposition of
the Four Seasons Punta Mita Resort; 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, refinance or extend maturing debt; the Company's
ability to maintain compliance with covenants contained in its 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 its 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 2014 net income 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 Income Attributable to Common Shareholders       $52.9      $72.9
Depreciation and Amortization                        112.8      112.8
Interest Expense                                     86.0       86.0
Income Taxes                                         2.3        2.3
Non-controlling Interests                            0.4        0.4
Adjustments from Consolidated Affiliates             (15.5)     (15.5)
Adjustments from Unconsolidated Affiliates           23.5       23.5
Preferred Shareholder Dividends                      17.6       17.6
Realized Portion of Deferred Gain on Sale Leasebacks (0.2)      (0.2)
Gain on Sale of Assets                               (59.8)     (59.8)
Comparable EBITDA                                    $220.0     $240.0



                                                     Low Range  High Range
Net Income Attributable to Common Shareholders       $52.9      $72.9
Depreciation and Amortization                        112.0      112.0
Realized Portion of Deferred Gain on Sale Leasebacks (0.2)      (0.2)
Gain on Sale of Assets                               (59.8)     (59.8)
Non-controlling Interests                            0.3        0.3
Adjustments from Consolidated Affiliates             (8.0)      (8.0)
Adjustments from Unconsolidated Affiliates           14.9       14.9
Comparable FFO                                       112.1      132.1
Comparable FFO per Diluted Share                     $0.53      $0.63





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

Consolidated Statements of Operations

(in thousands, except per share data)


                             Three Months Ended       Years Ended
                             December 31,             December 31,
                             2013        2012         2013         2012
Revenues:
Rooms                        $ 126,917   $ 117,255    $ 506,348    $ 429,689
Food and beverage            81,426      73,483       294,969      264,893
Other hotel operating        32,709      20,799       93,535       75,857
revenue
Lease revenue                1,385       1,273        5,161        4,778
Total revenues               242,437     212,810      900,013      775,217
Operating Costs and
Expenses:
Rooms                        36,160      33,288       144,464      121,794
Food and beverage            59,504      54,794       225,213      193,431
Other departmental expenses  56,226      55,189       220,523      200,219
Management fees              7,829       6,227        27,126       23,085
Other hotel expenses         15,239      15,221       60,618       53,117
Lease expense                1,234       1,155        4,818        4,580
Depreciation and             24,507      26,055       101,943      99,458
amortization
Impairment losses and other  —           18,406       728          18,406
charges
Corporate expenses           7,161       8,150        25,807       31,578
Total operating costs and    207,860     218,485      811,240      745,668
expenses
Operating income (loss)      34,577      (5,675)      88,773       29,549
Interest expense             (20,405)    (16,862)     (84,276)     (75,489)
Interest income              14          95           59           213
Equity in (losses) earnings
of unconsolidated            (265)       (11,431)     2,987        (13,485)
affiliates
Foreign currency exchange    8           15           44           (1,258)
gain (loss)
Other (expenses) income,     (359)       455          (314)        1,820
net
Income (loss) before income
taxes and discontinued       13,570      (33,403)     7,273        (58,650)
operations
Income tax expense           (153)       (257)        (557)        (800)
Income (loss) from           13,417      (33,660)     6,716        (59,450)
continuing operations
Income from discontinued     2,248       1,362        3,171        1,189
operations, net of tax
Net Income (Loss)            15,665      (32,298)     9,887        (58,261)
Net (income) loss
attributable to the          (60)        58           (38)         184
noncontrolling interests in
SHR's operating partnership
Net (income) loss
attributable to the          (6,341)     1,880        1,126        2,771
noncontrolling interests in
consolidated affiliates
Net Income (Loss)            9,264       (30,360)     10,975       (55,306)
Attributable to SHR
Preferred shareholder        (6,041)     (6,041)      (24,166)     (24,166)
dividends
Net Income (Loss)
Attributable to SHR Common   $ 3,223     $ (36,401)   $ (13,191)   $ (79,472)
Shareholders
Basic Income (Loss) Per
Share:
Income (loss) from
continuing operations        $ 0.01      $ (0.18)     $ (0.08)     $ (0.40)
attributable to SHR common
shareholders
Income from discontinued
operations attributable to   0.01        —            0.02         —
SHR common shareholders
Net income (loss)
attributable to SHR common   $ 0.02      $ (0.18)     $ (0.06)     $ (0.40)
shareholders
Weighted average common      206,814     206,836      206,334      201,109
shares outstanding
Diluted Income (Loss) Per
Share:
Income (loss) from
continuing operations        $ 0.01      $ (0.18)     $ (0.08)     $ (0.40)
attributable to SHR common
shareholders
Income from discontinued
operations attributable to   0.01        —            0.02         —
SHR common shareholders
Net income (loss)
attributable to SHR common   $ 0.02      $ (0.18)     $ (0.06)     $ (0.40)
shareholders
Weighted average common      208,986     206,836      206,334      201,109
shares outstanding





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

Consolidated Balance Sheets

(in thousands, except share data)


                                                    December 31,
                                                    2013          2012
Assets
Investment in hotel properties, net                 $ 1,795,338   $ 1,970,560
Goodwill                                            38,128        40,359
Intangible assets, net of accumulated amortization  29,502        30,631
of $12,213 and $10,812
Assets held for sale                                135,901       —
Investment in unconsolidated affiliates             104,973       112,488
Cash and cash equivalents                           73,655        80,074
Restricted cash and cash equivalents                75,916        58,579
Accounts receivable, net of allowance for doubtful  39,660        45,620
accounts of $1,745 and $1,602
Deferred financing costs, net of accumulated        8,478         11,695
amortization of $12,354 and $7,049
Deferred tax assets                                 —             2,203
Prepaid expenses and other assets                   35,600        54,208
Total assets                                        $ 2,337,151   $ 2,406,417
Liabilities, Noncontrolling Interests and Equity
Liabilities:
Mortgages and other debt payable                    $ 1,163,696   $ 1,176,297
Bank credit facility                                110,000       146,000
Liabilities of assets held for sale                 17,027        —
Accounts payable and accrued expenses               189,889       228,397
Deferred tax liabilities                            46,137        47,275
Total liabilities                                   1,526,749     1,597,969
Commitments and contingencies
Noncontrolling interests in SHR's operating         7,534         5,463
partnership
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 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 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 in the aggregate)
Common stock ($0.01 par value per share;
350,000,000 shares of common stock authorized;      2,056         2,043
205,582,838 and 204,308,710 shares of common stock
issued and outstanding)
Additional paid-in capital                          1,705,306     1,730,535
Accumulated deficit                                 (1,234,952)   (1,245,927)
Accumulated other comprehensive loss                (41,445)      (58,871)
Total SHR's shareholders' equity                    710,513       707,328
Noncontrolling interests in consolidated            92,355        95,657
affiliates
Total equity                                        802,868       802,985
Total liabilities, noncontrolling interests and     $ 2,337,151   $ 2,406,417
equity





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

Financial Highlights

Supplemental Financial Data

(in thousands, except per share information)


                                                 December31, 2013
                                                 ProRataShare  Consolidated
Capitalization
Shares of common stock outstanding               205,583         205,583
Operating partnership units outstanding          797             797
Restricted stock units outstanding               1,699           1,699
Combined shares and units outstanding            208,079         208,079
Common stock price at end of period              $  9.45         $ 9.45
Common equity capitalization                     $  1,966,347    $ 1,966,347
Preferred equity capitalization (at $25.00 face  289,102         289,102
value)
Consolidated debt                                1,273,696       1,273,696
Pro rata share of unconsolidated debt            231,400         —
Pro rata share of consolidated debt              (132,794)       —
Cash and cash equivalents                        (73,655)        (73,655)
Total enterprise value                           $  3,554,096    $ 3,455,490
Net Debt / Total Enterprise Value                36.6         %  34.7        %
Preferred Equity / Total Enterprise Value        8.1          %  8.4         %
Common Equity / Total Enterprise Value           55.3         %  56.9        %







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

Discontinued Operations


The results of operations of hotels sold or held for sale are classified as
discontinued operations and segregated in the consolidated statements of
operations for all periods presented. On December 12, 2013, we entered into an
agreement to sell the Four Seasons Punta Mita Resort and the adjacent La
Solana land parcel for $200,000,000.



The following is a summary of income from discontinued operations for the
three months and years ended December 31, 2013 and 2012 (in thousands):


                   Three Months Ended December 31,    Years Ended December 31,
                   2013               2012            2013           2012
Hotel operating    $   12,300         $   11,262      $  37,964      $ 33,100
revenues
Operating costs    9,061              8,010           30,203         26,909
and expenses
Depreciation and   1,052              993             4,075          4,006
amortization
Impairment
losses and other   —                  437             —              437
charges
Total operating
costs and          10,113             9,440           34,278         31,352
expenses
Operating income   2,187              1,822           3,686          1,748
Interest income    —                  —               —              4
Foreign currency
exchange (loss)    (142)              79              (1)            (352)
gain
Other income,      375                —               375            —
net
Income tax         (172)              (539)           (889)          (211)
expense
Income from
discontinued       $   2,248          $   1,362       $  3,171       $ 1,189
operations





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

Investments in Unconsolidated Affiliates
(in thousands)


We have a 36.4% and 50.0% ownership interest in the Hotel del Coronado and the
Fairmont Scottsdale Princess hotel, respectively. We account for these investments
using the equity method of accounting.


                Three Months Ended December 31,   Three Months Ended December 31,
                2013                              2012
                Hotel del  Fairmont               Hotel del   Fairmont
                           Scottsdale  Total                  Scottsdale  Total
                Coronado                          Coronado
                           Princess                           Princess
Total revenues  $ 33,115   $  23,634   $ 56,749   $ 29,888    $  20,546   $ 50,434
(100%)
Property        $ 8,668    $  4,111    $ 12,779   $ 7,201     $  3,034    $ 10,235
EBITDA (100%)
Equity in (losses) earnings of
unconsolidated affiliates (SHR
ownership)
Property        $ 3,153    $  2,056    $ 5,209    $ 2,491     $  1,517    $ 4,008
EBITDA
Depreciation
and             (1,917)    (1,565)     (3,482)    (1,797)     (1,823)     (3,620)
amortization
Interest        (1,941)    (193)       (2,134)    (2,549)     (189)       (2,738)
expense
Other           (14)       (23)        (37)       (7,869)     (111)       (7,980)
expenses, net
Income taxes    85         —           85         90          —           90
Equity in
(losses)
earnings of     $ (634)    $  275      $ (359)    $ (9,634)   $  (606)    $ (10,240)
unconsolidated
affiliates
EBITDA
Contribution:
Equity in
(losses)
earnings of     $ (634)    $  275      $ (359)    $ (9,634)   $  (606)    $ (10,240)
unconsolidated
affiliates
Depreciation
and             1,917      1,565       3,482      1,797       1,823       3,620
amortization
Termination     —          —           —          7,820       —           7,820
fee
Interest        1,941      193         2,134      2,549       189         2,738
expense
Income taxes    (85)       —           (85)       (90)        —           (90)
EBITDA          $ 3,139    $  2,033    $ 5,172    $ 2,442     $  1,406    $ 3,848
Contribution
FFO
Contribution:
Equity in
(losses)
earnings of     $ (634)    $  275      $ (359)    $ (9,634)   $  (606)    $ (10,240)
unconsolidated
affiliates
Depreciation
and             1,917      1,565       3,482      1,797       1,823       3,620
amortization
Termination     —          —           —          7,820       —           7,820
fee
FFO             $ 1,283    $  1,840    $ 3,123    $ (17)      $  1,217    $ 1,200
Contribution



                Year Ended December 31, 2013        Year Ended December 31, 2012
                            Fairmont                             Fairmont
                Hotel del                           Hotel del
                            Scottsdale  Total                    Scottsdale  Total
                Coronado                            Coronado
                            Princess                             Princess
Total revenues  $ 148,482   $  93,133   $ 241,615   $ 140,220    $ 77,281    $ 217,501
(100%)
Property        $ 47,155    $  18,883   $ 66,038    $ 40,722     $ 12,777    $ 53,499
EBITDA (100%)
Equity in earnings (losses) of
unconsolidated affiliates (SHR
ownership)
Property        $ 17,152    $  9,442    $ 26,594    $ 13,989     $ 6,389     $ 20,378
EBITDA
Depreciation
and             (7,564)     (6,570)     (14,134)    (6,895)      (7,145)     (14,040)
amortization
Interest        (8,325)     (778)       (9,103)     (10,093)     (778)       (10,871)
expense
Other           (242)       (58)        (300)       (7,931)      (155)       (8,086)
expenses, net
Income taxes    (191)       —           (191)       383          —           383
Equity in
earnings
(losses) of     $ 830       $  2,036    $ 2,866     $ (10,547)   $ (1,689)   $ (12,236)
unconsolidated
affiliates
EBITDA
Contribution
Equity in
earnings
(losses) of     $ 830       $  2,036    $ 2,866     $ (10,547)   $ (1,689)   $ (12,236)
unconsolidated
affiliates
Depreciation
and             7,564       6,570       14,134      6,895        7,145       14,040
amortization
Termination     —           —           —           7,820        —           7,820
fee
Interest        8,325       778         9,103       10,093       778         10,871
expense
Income taxes    191         —           191         (383)        —           (383)
EBITDA          $ 16,910    $  9,384    $ 26,294    $ 13,878     $ 6,234     $ 20,112
Contribution
FFO
Contribution
Equity in
earnings
(losses) of     $ 830       $  2,036    $ 2,866     $ (10,547)   $ (1,689)   $ (12,236)
unconsolidated
affiliates
Depreciation
and             7,564       6,570       14,134      6,895        7,145       14,040
amortization
Termination     —           —           —           7,820        —           7,820
fee
FFO             $ 8,394     $  8,606    $ 17,000    $ 4,168      $ 5,456     $ 9,624
Contribution



Investments in Unconsolidated Affiliates (Continued)

(in thousands)


                                      Spreadover
Debt                 InterestRate                   LoanAmount  Maturity(a)
                                      LIBOR
Hotel del Coronado
CMBS Mortgage and    3.82     %       365bp         $  475,000   March2018
Mezzanine
Cash and cash                                        (7,462)
equivalents
Net Debt                                             $  467,538
Fairmont Scottsdale
Princess
CMBS Mortgage        0.53     %       36 bp          $  117,000   April 2015
Cash and cash                                        (6,841)
equivalents
Net Debt                                             $  110,159

(a) Includes extension options.

                    Effective
Caps                               LIBORCapRate  NotionalAmount  Maturity
                    Date
Hotel del Coronado
CMBS Mortgage and
Mezzanine Loan      March 2013     3.00     %      $   475,000      March 2015
Caps
Fairmont
Scottsdale
Princess
CMBS Mortgage Loan  December 2013  4.00     %      $   117,000      April 2015
Cap





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

Leasehold Information

(in thousands)


                         Three Months Ended December  Years Ended December 31,
                         31,
                         2013            2012         2013          2012
Marriott Hamburg:
Property EBITDA          $   1,741       $  1,472     $  6,298      $  5,876
Revenue (a)              $   1,385       $  1,273     $  5,161      $  4,778
Lease expense            (1,234)         (1,155)      (4,818)       (4,580)
Less: Deferred gain on   (53)            (50)         (207)         (200)
sale-leaseback
Adjusted lease expense   (1,287)         (1,205)      (5,025)       (4,780)
EBITDA contribution      $   98          $  68        $  136        $  (2)
from leasehold



                       December 31,
Security Deposit (b):  2013      2012
Marriott Hamburg       $ 2,611   $ 2,507

(a) For the three months and years ended December31, 2013 and 2012, Revenue
    for the Marriott Hamburg hotel represents lease revenue.
(b) 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 Income (Loss) Attributable to SHR Common Shareholders to
EBITDA and Comparable EBITDA

(in thousands)


                              Three Months Ended      Years Ended
                              December 31,            December 31,
                              2013       2012         2013         2012
Net income (loss)
attributable to SHR common    $ 3,223    $ (36,401)   $ (13,191)   $ (79,472)
shareholders
Depreciation and
amortization—continuing       24,507     26,055       101,943      99,458
operations
Depreciation and
amortization—discontinued     1,052      993          4,075        4,006
operations
Interest expense—continuing   20,405     16,862       84,276       75,489
operations
Income taxes—continuing       153        257          557          800
operations
Income taxes—discontinued     172        539          889          211
operations
Noncontrolling interests      60         (58)         38           (184)
Adjustments from              (3,589)    (4,217)      (14,604)     (8,599)
consolidated affiliates
Adjustments from              5,553      6,956        23,489       27,562
unconsolidated affiliates
Preferred shareholder         6,041      6,041        24,166       24,166
dividends
EBITDA                        57,577     17,027       211,638      143,437
Realized portion of deferred  (53)       (50)         (207)        (200)
gain on sale-leaseback
Loss on sale of assets        430        —            1,185        —
Loss on sale of
assets—adjustments from       (85)       —            (455)        —
consolidated affiliates
Impairment losses and other
charges—continuing            —          18,406       728          18,406
operations
Impairment losses and other
charges—discontinued          —          437          —            437
operations
Foreign currency exchange
(gain) loss—continuing        (8)        (15)         (44)         1,258
operations (a)
Foreign currency exchange
loss (gain)—discontinued      142        (79)         1            352
operations (a)
Activist shareholder costs    342        —            342          —
Adjustment for Value          —          (1,352)      —            1,407
Creation Plan
Severance charges             —          2,485        —            2,485
Management agreement          —          7,820        —            7,820
termination fee (b)
Comparable EBITDA             $ 58,345   $ 44,679     $ 213,188    $ 175,402



    Foreign currency exchange gains or losses applicable to third-party and
(a) inter-company debt and certain balance sheet items held by foreign
    subsidiaries.
    Our share of the Hotel del Coronado management agreement termination fee
(b) included in both equity in (losses) earnings of unconsolidated affiliates
    and net (income) loss attributable to the noncontrolling interest in
    consolidated affiliates.





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

Reconciliation of Net Income (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,
                              2013       2012         2013         2012
Net income (loss)
attributable to SHR common    $ 3,223    $ (36,401)   $ (13,191)   $ (79,472)
shareholders
Depreciation and
amortization—continuing       24,507     26,055       101,943      99,458
operations
Depreciation and
amortization—discontinued     1,052      993          4,075        4,006
operations
Corporate depreciation        (125)      (190)        (508)        (979)
Loss on sale of assets        430        —            1,185        —
Realized portion of deferred  (53)       (50)         (207)        (200)
gain on sale-leaseback
Noncontrolling interests      (123)      (127)        (400)        (501)
adjustments
Adjustments from              (1,813)    (1,906)      (7,378)      (4,091)
consolidated affiliates
Adjustments from              3,482      3,923        14,135       15,258
unconsolidated affiliates
FFO                           30,580     (7,703)      99,654       33,479
Redeemable noncontrolling     183        69           438          317
interests
FFO—Fully Diluted             30,763     (7,634)      100,092      33,796
Impairment losses and other
charges—continuing            —          18,406       728          18,406
operations
Impairment losses and other
charges—discontinued          —          437          —            437
operations
Non-cash mark to market of    (2,496)    (7,833)      (11,617)     (12,238)
interest rate swaps
Foreign currency exchange
(gain) loss—continuing        (8)        (15)         (44)         1,258
operations (a)
Foreign currency exchange
loss (gain)—discontinued      142        (79)         1            352
operations (a)
Activist shareholder costs    342        —            342          —
Adjustment for Value          —          (1,352)      —            1,407
Creation Plan
Severance charges             —          2,485        —            2,485
Management agreement          —          7,820        —            7,820
termination fee (b)
Comparable FFO                $ 28,743   $ 12,235     $ 89,502     $ 53,723
Comparable FFO per fully      $ 0.14     $ 0.06       $ 0.43       $ 0.26
diluted share
Weighted average diluted      209,800    209,307      209,328      203,605
shares (c)



    Foreign currency exchange gains or losses applicable to third-party and
(a) inter-company debt and certain balance sheet items held by foreign
    subsidiaries.
    Our share of the Hotel del Coronado management agreement termination fee
(b) included in both equity in (losses) earnings of unconsolidated affiliates
    and net (income) 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         4.28       %   375bp(c)  $ 115,958     October2014
Grosvenor Square (c)
North Beach Venture     5.00       %   Fixed       1,469         January2015
Bank credit facility    3.17       %   300 bp      110,000       June2015
Four Seasons            3.32       %   315 bp      130,000       July2016
Washington, D.C.
Westin St. Francis      6.09       %   Fixed       209,588       June2017
Fairmont Chicago        6.09       %   Fixed       93,124        June2017
JW Marriott Essex       4.75       %   400 bp      185,826       September
House Hotel                                                      2017
Hyatt Regency La Jolla  4.50% /    %   400 bp /    89,312        December 2017
(d)                     10.00          Fixed
InterContinental Miami  3.67       %   350 bp      85,000        July2018
Loews Santa Monica      4.02       %   385 bp      109,000       July2018
Beach Hotel
InterContinental        5.61       %   Fixed       144,419       August2021
Chicago
                                                   $ 1,273,696



    Spread over LIBOR (0.17% at December31, 2013). Interest on the JW
(a) 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.
    Principal balance of £70,040,000 at December31, 2013. On August 7, 2013,
    the Company entered into an amendment to the mortgage loan. The amendment
    extended the maturity of the loan to October 2014 and waived the July 2013
(c) and subsequent principal payments through the extended term. Pursuant to
    the amendment, the spread over GBP LIBOR increases in steps during the
    extension period from GBP LIBOR plus 2.10% in August 2013 to GBP LIBOR
    plus 4.25% in April 2014. The spread in the table is the spread over
    three-month GBP LIBOR (0.53% at December31, 2013).
    Interest on $72,000,000 is payable at LIBOR plus 4.00%, subject to a 0.50%
(d) LIBOR floor, and interest on $17,312,000 is payable at a fixed rate of
    10.00%.



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



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

Years ending December31,                                        Amount
2014                                                             $ 120,213
2015                                                             117,498
2016                                                             139,783
2017                                                             577,043
2018                                                             185,015
Thereafter                                                       134,144
                                                                 $ 1,273,696
Percent of fixed rate debt including swaps                       68.0        %
Weighted average interest rate including swaps (e)               6.21        %
Weighted average maturity of fixed rate debt (debt with          3.92
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, Strategic Hotels &
Resorts, (312) 658-5740, or Jonathan Stanner, Vice President, Capital Markets
& Treasurer, Strategic Hotels & Resorts, (312) 658-5746
 
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