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Re: Enterprising Investor post# 215

Sunday, 06/16/2013 8:46:31 PM

Sunday, June 16, 2013 8:46:31 PM

Post# of 252
Strategic Hires Eastdil to Put Hotel Company on Block (6/13/13)

By KRIS HUDSON
Luxury hotel owner Strategic Hotels & Resorts Inc. has hired brokerage Eastdil Secured to sell the company, according to a person familiar with the situation.

Strategic, which owns 18 hotels including four Four Seasons, two Ritz-Carltons and the J.W. Marriott Essex House hotel in Manhattan, has faced pressure from shareholder Orange Capital to put itself on the block. Orange Capital, which owns 3.6% of Strategic's shares, has argued that Strategic's stock trades for less than the company or its hotels would fetch on the private market.

The news of Strategic hiring Eastdil was previously reported by Reuters, sending shares in the company higher. Trading of Strategic's shares closed at $8.44 Thursday, up 9.5% in 4 p.m. composite trading on the New York Stock Exchange.

Luxury hotel companies often get lower values on the public markets than private buyers will pay because they cost far more and yield less profit than upscale, midmarket and economy hotels. Strategic, based in Chicago, has debt of $1.4 billion and equity value of roughly $1.7 billion. Among its flagship properties are the Essex House, the Four Seasons Washington, D.C., and the Hotel Del Coronado near San Diego.

Speculation about Strategic possibly going on the block has increased since founder and former chief executive Laurence Geller left the company abruptly last November. However, his successor as CEO, Raymond Gellein Jr., damped that speculation. Mr. Gellein, who also is Strategic's chairman, said in March that the company will gain more value improving its operations as a stand-alone company than as a takeover target.

Write to Kris Hudson at kris.hudson@wsj.com

http://online.wsj.com/article/SB10001424127887324688404578544012881159492.html?mod=WSJ_qtoverview_wsjlatest

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