Strategic Hotel Capital, Inc.
today announced it has signed an agreement to acquire an 85% controlling
interest in the InterContinental hotels in Chicago and Miami with a
combined room count of 1,448 and an agreed upon aggregate value of $303.5
million, or a price of $210,000 per room. The acquisition, which is
expected to close in April, remains subject to customary closing
conditions. The completely renovated 807-room InterContinental Chicago, located in the
heart of the Magnificent Mile shopping district, is an historic luxury
property in the third most populated metropolitan area in the nation. The
hotel consists of two towers, the 42-story historic tower and the 26-story
main tower, and features 42,000 square feet of function space, including
six historic ballrooms and 30 state-of-the-art meeting rooms.

The 641-room InterContinental Miami rises 34 stories above Biscayne Bay in
the Central Business District of Miami. The luxury property is located on
3.6 acres of the Miami Centre, a prominent office and hotel complex in the
core of Miami’s downtown, and features 65,000 square feet of meeting
space, a state-of-the-art fitness center and other high-end amenities,
including three restaurants.

Each hotel will be held in a partnership in which Strategic Hotel Capital
will own a controlling 85% interest with InterContinental Hotels (“IHG”)
holding the remaining 15%. Through its partnership agreements with IHG,
Strategic Hotel Capital will be entitled to receive a non-cumulative
preferred return of 8% on its total investment of $263.5 million, less
Strategic’s 85% share of the partnership’s debt service obligations. The
investment of $263.5 million includes the company’s proportionate share of
the cost of the properties, closing costs, and initial capital
expenditures. After SLH receives its preferred return, IHG is entitled to
receive a non-cumulative preferred return of 8% on its investment.
Thereafter SLH and IHG will share proportionate to their respective
ownership interests in the partnership returns. Strategic Hotel Capital’s
investment is expected to be financed through a combination of debt and
equity financing as market conditions permit. The company anticipates that
the acquisition will be accretive to earnings beginning with the second
quarter of 2005, and forecasts a combined 12-month property EBITDA of $25
million to $27 million. The expected 9-month 2005 property EBITDA is
forecasted to be in the range of $19 million to $21 million.

Laurence Geller, CEO of Strategic Hotel Capital, commented, “These
acquisitions are well-aligned with our core investment strategy, and we
are very enthusiastic about the quality of assets and their potential
opportunities. Both properties provide our asset management team with
avenues to add substantial value to well-located urban hotels in growing
markets with multiple demand generators. We are also fortunate to be able
to strengthen a key strategic relationship with InterContinental Hotels,
which also manages our InterContinental Hotel Praha - Prague, Czech
Republic.”
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