Strategic Hotels & Resorts Reports Second Quarter 2007 Financial Results

CHICAGO, Aug. 1 /PRNewswire-FirstCall/ -- Strategic Hotels & Resorts today reported results for the second quarter ended June 30, 2007.

Second Quarter Financial Highlights & Events -- Comparable funds from operations (FFO) was $0.53 per diluted share, an increase of 26 percent over $0.42 in the prior year. Residential activity contributed a total of $3.8 million to FFO or $0.05 per diluted share. -- Quarterly Comparable EBITDA was $79.0 million, an increase of 61 percent over $48.9 million in the prior year. Residential activity contributed a total of $6.4 million to EBITDA. -- North American same store total revenue per available room (Total RevPAR) increased 8.7 percent and revenue per available room (RevPAR) increased 8.2 percent. Growth was driven by an 8.1 percent increase in the average daily rate (ADR). -- Total North American Total RevPAR increased 6.6 percent and RevPAR increased 6.4 percent. Growth was driven by a 6.8 percent increase in ADR. -- Total North American gross operating profit margins expanded 150 basis points. North American same store EBITDA margins contracted 40 basis points. -- Total European Total RevPAR increased 15.4 percent and RevPAR increased 14.7 percent, driven by a 17.6 percent increase in ADR. -- The company closed on an offering of $180 million of 3.50 percent exchangeable senior notes due 2012. Net proceeds from the sale of the notes were approximately $175.9 million, after deducting the initial purchasers' discounts and commissions and offering expenses. In connection with the offering, the company used approximately $9.9 million of net proceeds to enter into a capped call transaction to increase the effective exchange premium of the notes from 20 percent to 40 percent, and separately repurchased approximately $25 million of common stock. -- The company entered into a joint venture agreement with the real estate investment company of the Government of Singapore Investment Corporation Pte Ltd. (GIC RE). Under the agreement, GIC RE's affiliate will acquire a 49 percent interest in the company's InterContinental Chicago and Hyatt Regency La Jolla hotels. Additionally, the joint venture will enter into a long-term asset management and other services agreements with Strategic Hotels & Resorts. The transaction, with a gross aggregate value of $450 million, is expected to close during the third quarter. -- The company amended its $415 million revolving credit facility increasing the capacity to $500 million. Subsequent Events -- On August 1, the company reached an agreement with its insurers to settle its claim on the Hyatt Regency New Orleans, damaged by Hurricane Katrina on August 29, 2005, for $143 million, net of deductible. The financial impact to the company is subject to final determination of outstanding issues including: payments to Hyatt as the property's manager; potential tax liabilities; potential impairment of the property value; accounting treatment of continuing expenses at the property; and the related impact of the defeasance of the property's mortgage financing. -- The company closed on the acquisition of the Hotel Le Parc in Paris on July 31, a 116-room, unbranded hotel for "66.5 million ($91.0 million) from Accor SA. Concurrently, the company entered into a management agreement with Marriott International to operate the hotel under the Renaissance brand.

Laurence Geller, chief executive officer, commented, "Our results through the first half of 2007 are reflective of the continued successful execution of our capital and asset management programs. Total customer spending, which includes food and beverage and other non-room related purchases, increased substantially at all of our properties. Favorable forward meetings schedules in regions such as Chicago, San Francisco, Miami, Mexico City and Europe, are indicative of the continued positive trends in all our properties. We anticipate we will receive settlement on the insurance related to the Hyatt Regency New Orleans and will complete our joint venture with GIC RE during the third quarter. In addition, the third quarter purchase of the Paris property represents a furthering of our European presence. These accomplishments are indicative of the execution of strategies developed to enhance our ability to achieve the long-term results demanded by our management team and expected by our shareholders."

Operating Results

The company reported net income available to common shareholders of $11.9 million, or $0.16 per diluted share for the second quarter of 2007, compared to net income of $11.7 million, or $ 0.18 per diluted share, for the second quarter of 2006.

For the six-month period ending June 30, 2007, the company reported net income available to common shareholders of $2.3 million, or $0.03 per diluted share, compared with net income available to common shareholders of $10.3 million, or $0.17 per diluted share, in the prior period.

Adjusted EBITDA for the second quarter of 2007 was $77.1 million, compared to $47.8 million for the second quarter of 2006. Excluding loss on early extinguishment of debt of $0.2 million, loss on sale of assets of $0.2 million, loss on foreign exchange of $1.9 million and a benefit related to the previous termination of the management agreement at the Marriott Rancho Las Palmas of $0.5 million, Comparable EBITDA was $79.0 million for the quarter. This compares with Comparable EBITDA of $48.9 million for the second quarter of 2006 which excludes the loss on foreign exchange of $0.6 million, a benefit related to the termination of the management agreement at the Marriott Rancho Las Palmas of $0.7 million and planning costs related to the New Orleans Jazz District of $1.1 million.

For the six-month period ending June 30, 2007, Adjusted EBITDA was $127.7 million compared to $74.8 million in the prior year period. Excluding loss on early extinguishment of debt of $4.5 million, loss on foreign exchange of $3.3 million, planning costs related to the New Orleans Jazz District of $0.2 million, loss on sale of assets of $0.2 million and a benefit related to the previous termination of the management agreement at the Marriott Rancho Las Palmas of $0.4 million, Comparable EBITDA was $135.5 million for the six- month period. This compares with Comparable EBITDA of $86.3 million for the prior period which excludes loss on foreign exchange of $0.3 million, planning costs related to the New Orleans Jazz District of $1.5 million and costs related to the termination of the management agreement at the Marriott Rancho Las Palmas of $9.7 million.

FFO in the second quarter of 2007 was $38.8 million, or $0.51 per diluted share, compared to $27.8 million, or $0.41 per diluted share in the second quarter of 2006. Excluding loss on early extinguishment of debt of $0.2 million, loss on foreign exchange of $1.3 million and a benefit related to the previous termination of the management agreement at the Marriott Rancho Las Palmas of $0.3 million, Comparable FFO for the second quarter of 2007 was $39.9 million, or $0.53 per diluted share. This compares with $28.7 million, or $0.42 per diluted share, for the second quarter of 2006 which excludes loss on foreign exchange of $0.6 million, planning costs related to the New Orleans Jazz District net of tax benefits of $0.7 million and a benefit related to the termination of the management agreement at the Marriott Rancho Las Palmas of $0.4 million.

For the six-month period ending June 30, 2007, FFO was $55.3 million, or $0.72 per diluted share, compared to $41.5 million, or $0.66 per diluted share, in the prior period. Excluding planning costs and the related tax benefits attributable to the Hyatt Regency New Orleans Jazz District of $0.2 million, loss on foreign exchange of $2.6 million, loss on early extinguishment of debt of $4.5 million and a benefit related to the termination of the management agreement at the Marriott Rancho Las Palmas of $0.2 million, Comparable FFO was $62.4 million, or $0.82 per diluted share, for the six-month period. This compares with Comparable FFO of $48.7 million, or $0.77 per diluted share, for the prior period which excludes planning costs and the related tax benefits of $1.0 million attributable to the Hyatt Regency New Orleans Jazz District, loss on foreign exchange of $0.3 million and a loss related to the termination of the management agreement at the Marriott Rancho Las Palmas of $5.9 million.

North American same store Total RevPAR increased 8.7 percent during the second quarter of 2007 over the prior period in 2006, driven by 9.8 percent growth in non-room revenues and 8.2 percent growth in RevPAR. Same store ADR grew 8.1 percent. For the six-month period ending June 30, 2007, Total RevPAR increased 8.9 percent and RevPAR increased 8.8 percent over the prior period.

Total North American Total RevPAR increased 6.6 percent during the second quarter of 2007 over the prior period in 2006, driven by 7.4 percent growth in non-room revenues and 6.4 percent growth in RevPAR. Total North American ADR grew 6.8 percent. For the six-month period ending June 30, 2007, Total RevPAR increased 6.7 percent and RevPAR increased 7.0 percent over the prior period.

Total European Total RevPAR for the second quarter of 2007 increased 15.4 percent over the first quarter of 2006, due to 16.9 percent growth in non-room revenues and 14.7 percent growth in RevPAR. RevPAR growth was driven by a 17.6 percent increase in ADR. For the six-month period ending June 30, 2007, Total RevPAR increased 17.8 percent and RevPAR increased 17.9 percent over the prior period.

Total North American gross operating profit margins expanded 150 basis points in the second quarter of 2007 compared to the prior period in 2006. North American same store EBITDA margins contracted 40 basis points in the second quarter of 2007 compared to the prior period in 2006. EBITDA margin contraction was principally driven by one-time contracted management agreement base fee increases and year-over-year increases in insurance and real estate tax expenses.

"Same store" hotel comparisons for the second quarter 2007 are derived from the company's North American portfolio at June 30, 2007, consisting of properties held for five or more quarters, in which operations are included in the consolidated results of the company, and that have not sustained substantial property damage or business interruption or undergone large-scale capital projects during the reporting periods being compared. As a result, same store comparisons contain 11 properties and exclude the unconsolidated Hotel del Coronado; the Hyatt Regency New Orleans, which was taken out of service on August 29, 2005 due to damage resulting from Hurricane Katrina; the Westin St. Francis, acquired on June 1, 2006; the Ritz-Carlton Laguna Niguel, acquired on July 7, 2006; and the Fairmont Scottsdale Princess, acquired on September 1, 2006.

"Same store" hotel comparisons for the six-month period-over-period are derived from the company's North American portfolio at June 30, 2007 consisting of properties held for six or more quarters, in which operations are included in the consolidated results of the company, and that have not sustained substantial property damage or business interruption or undergone large-scale capital projects during the reporting periods being compared. As a result, same store comparisons contain 10 properties and exclude the Four Seasons Washington, D.C. (acquired on March 1, 2006), the Hotel del Coronado, the Hyatt Regency New Orleans, the Westin St. Francis, the Ritz-Carlton Laguna Niguel, and the Fairmont Scottsdale Princess.

Total North American hotel comparisons are derived from the company's hotel portfolio at June 30, 2007, consisting of properties in which operations are included in the consolidated results of the company, and that have not sustained substantial property damage or business interruption or undergone large-scale capital projects during the reporting periods being compared. As a result, total North American portfolio comparisons contain 14 properties and exclude the Hotel del Coronado and the Hyatt Regency New Orleans. Period- over-period comparisons for the total North American portfolio are calculated using full period results which may include prior ownership periods.

Total European hotel comparisons are derived from the company's European owned and leased hotel properties at June 30, 2007 consisting of the Marriott London Grosvenor Square, the Paris Marriott Champs-Elysees, the Marriott Hamburg, and the InterContinental Prague.

Residential Activity

The joint venture that owns the Beach Village development at the Hotel del Coronado, of which the company owns a 45% interest, closed sales on 11 of the 36 total hotel condominium units generating $46.7 million of venture proceeds during the quarter ended June 30, 2007. The sales, which were at an average price of approximately $2,300 per square foot, contributed $6.6 million of EBITDA and $4.1 million of FFO to the company's second quarter results.

Acquisition Activity

The company closed on the acquisition of the Hotel Le Parc, a 116-room historic hotel for euro 66.5 million ($91.0 million) from Accor SA. The hotel is located in a growing market - the heart of Paris, Europe's largest hotel market - in the 16th Arrondissement proximate to the Tracedero, and within walking distance of the Arc de Triomphe and the Eiffel Tower.

In connection with the acquisition, the company will reposition the hotel under the Renaissance brand and entered into a management agreement with Marriott International. Marriott will provide operating support through a performance guarantee. The company anticipates launching a multi-year capital program to reposition this historically under-managed and underperforming asset. Initial capital improvements will reduce short-term contributions to operating results and the company forecasts a period of ramp-up after the change of brands.

Management believes there are significant value-enhancement master plan opportunities at the hotel in addition to the brand change. These would include a complete room renovation, reconfiguration of the existing internal courtyard into flexible outdoor space, a food and beverage outlet enhancement and the implementation of the company's proprietary operating systems.

Chief executive officer, Laurence Geller, commented, "To have acquired this unique asset with tremendous upside in one of Europe's best hotel markets with its extraordinarily high barriers to entry, exemplifies a target opportunity for our company and allows us to utilize all of our panoply of skill sets to extract the maximum value. Paris has experienced double digit RevPAR growth and is still at its recovery stage in the cycle. We believe a well-executed master plan, in addition to the Renaissance brand and Marriott system, will position this hotel as a leader in its market for many years to come."

Quarterly Distribution

The Board of Directors previously declared on May 31, 2007 a quarterly dividend of $0.24 per share of common stock, payable to shareholders of record as of the close of business Tuesday, June 26, 2007. The dividend was paid on July 10, 2007. Additionally, for shareholders of record as of June 15, 2007, the Board declared a quarterly dividend of $0.53125 per share of 8.50 percent Series A Cumulative Redeemable Preferred Stock, $0.51563 per share of 8.25 percent Series B Cumulative Redeemable Preferred Stock, and $0.51563 per share of 8.25 percent Series C Cumulative Redeemable Preferred Stock. The preferred stock dividends were paid on June 29, 2007.

2007 Outlook

Management is raising the low end of the range for full year 2007 guidance and adjusting for completed and anticipated residential sales and the estimated impact of the Hyatt Regency New Orleans insurance settlement and continuing expenses that were previously excluded from guidance.

For the full year 2007, the company anticipates that Comparable EBITDA will be in the range of $270.6 million to $275.6 million, Comparable FFO will be in the range of $123.1 million to $128.1 million, and Comparable FFO per diluted share in the range of $1.61 to $1.67. Guidance includes the contribution of $13.1 million in Comparable EBITDA, $7.6 million in Comparable FFO or $0.10 per diluted share from residential sales. Guidance additionally includes a reduction in Comparable EBITDA of $4.7 million and Comparable FFO of $0.06 per diluted share as a result of continued operating and refinancing costs related to the Hyatt Regency New Orleans. The table below provides a reconciliation of Comparable EBITDA and Comparable FFO per diluted share to previous guidance figures.

Full-Year 2007 Guidance Comparable EBITDA Comparable FFO Year Ending December 31 (in millions) per Share Previous Guidance $260.7 to $267.2 $1.55 to $1.63 Residential Contribution 13.1 0.10 Hyatt New Orleans Adjustment (4.7) (0.06) Adjustment to Low End 1.5 0.02 Revised Guidance $270.6 to $275.6 $1.61 to $1.67

The company's third quarter and full-year guidance includes the following assumptions:

-- Unchanged guidance for North American same store and total North American Total RevPAR and RevPAR growth: - The company expects 2007 North American same store Total RevPAR growth to be in the range of 6.5 percent to 7.5 percent, and RevPAR growth to be in the range of 7.5 percent to 8.5 percent. - The company expects 2007 total North American Total RevPAR growth to be in the range of 6.5 percent to 7.5 percent, and RevPAR growth to be in the range of 8.0 percent to 9.0 percent. The total North American portfolio includes all consolidated North American properties as of January 1, 2007. -- Residential sales contributing $13.1 million in Comparable EBITDA and $7.6 million of Comparable FFO, or approximately $0.10 per diluted share, for the full year. Residential sales contributed $6.4 million in Comparable EBITDA and $3.8 million in Comparable FFO, or $0.05 per diluted share in the first half of 2007. -- $143 million settlement of the insurance claim at the Hyatt Regency New Orleans out of which the company would receive $75 million, net of previously disbursed insurance payments, and estimated payments to Hyatt as manager of the hotel. The company has not made a final determination for the use of proceeds, payments to third parties, and ultimate plans for the property. As a result, this estimate is preliminary and subject to change. Upon settlement, the company will begin recognizing property-level operating expenses that were formerly offset through the recording of an insurance receivable. As a consequence of repaying the debt related to the hotel, and estimating operating costs for the remainder of 2007, guidance includes a reduction in Comparable EBITDA and Comparable FFO of approximately $4.7 million or $0.06 per share during the second half of 2007. -- Closing of the joint venture sale to GIC RE in August 2007. -- Defeasance of the approximately $200 million fixed rate CMBS loan currently encumbering the Hyatt Regency in New Orleans, La Jolla and Phoenix. The loan is expected to be defeased in August 2007 at a cost of approximately $8.0 million. -- Closing of the Le Parc acquisition on July 31, 2007. No acquisitions are assumed during the remainder of 2007.

The following tables reconcile projected 2007 net income to projected Comparable FFO and Comparable EBITDA (in millions, except per share data):

Low Range High Range Net Income $6.0 $11.0 Depreciation and Amortization 100.3 100.3 Realized Portion of Deferred Gain on Sale Leasebacks (4.6) (4.6) Deferred Tax on Realized Portion of Deferred Gain 1.4 1.4 Minority Interests 0.6 0.6 Adjustments from Consolidated Affiliates (3.0) (3.0) Adjustments from Unconsolidated Affiliates 6.7 6.7 Loss on Early Extinguishment of Debt 12.5 12.5 Other Adjustments 3.2 3.2 Comparable FFO $123.1 $128.1 Comparable FFO per Diluted Share $1.61 $1.67 Low Range High Range Net Income $6.0 $11.0 Depreciation and Amortization 100.3 100.3 Interest Expense 88.2 88.2 Income Taxes 13.0 13.0 Minority Interests 0.6 0.6 Adjustments from Consolidated Affiliates (7.1) (7.1) Adjustments from Unconsolidated Affiliates 28.6 28.6 Preferred Shareholder Dividends 29.8 29.8 Loss on Early Extinguishment of Debt 12.5 12.5 Realized Portion of Deferred Gain on Sale Leasebacks (4.6) (4.6) Other Adjustments 3.3 3.3 Comparable EBITDA $270.6 $275.6 Third Quarter 2007 Guidance

For the third quarter of 2007, the company anticipates that Comparable EBITDA will be in the range of $65.1 million to $67.6 million, Comparable FFO will be in the range of $27.1 million to $29.6 million, and Comparable FFO per diluted share in the range of $0.36 to $0.39. Guidance includes the contribution of $4.0 million in Comparable EBITDA, $2.3 million in Comparable FFO or $0.03 per share from residential sales. Guidance additionally includes a reduction in Comparable EBITDA and Comparable FFO of $1.6 million or $0.02 per diluted share as a result of continued operating and refinancing costs related to the Hyatt Regency New Orleans.

The company expects third quarter 2007 North American same store Total RevPAR growth to be in the range of 7.5 percent to 8.5 percent, and third quarter 2007 RevPAR growth to be in the range of 8.5 percent to 9.5 percent.

The company expects third quarter 2007 total North American Total RevPAR growth to be in the range of 7.0 percent to 8.0 percent, and third quarter 2007 RevPAR growth to be in the range of 8.0 percent to 9.0 percent.

The following tables reconcile projected third quarter 2007 net income to projected Comparable FFO and Comparable EBITDA (in millions, except per share data):

Low Range High Range Net Loss ($5.4) (3.0) Depreciation and Amortization 24.2 24.2 Realized Portion of Deferred Gain on Sale Leasebacks (1.1) (1.1) Deferred Tax on Realized Portion of Deferred Gain 0.4 0.4 Minority Interests 0.1 0.2 Adjustments from Consolidated Affiliates (0.6) (0.6) Adjustments from Unconsolidated Affiliates 1.5 1.5 Loss on Early Extinguishment of Debt 8.0 8.0 Comparable FFO $27.1 $29.6 Comparable FFO per Diluted Share $0.36 $0.39 Low Range High Range Net Loss ($5.4) ($3.0) Depreciation and Amortization 24.2 24.2 Interest Expense 22.9 22.9 Income Taxes 2.6 2.6 Minority Interests 0.1 0.2 Adjustments from Consolidated Affiliates (1.6) (1.6) Adjustments from Unconsolidated Affiliates 7.9 7.9 Preferred Shareholder Dividends 7.5 7.5 Loss on Early Extinguishment of Debt 8.0 8.0 Realized Portion of Deferred Gain on Sale Leasebacks (1.1) (1.1) Comparable EBITDA $65.1 $67.6 Earnings Call

The company will conduct its second quarter 2007 conference call for investors and other interested parties on Thursday, August 2 at 12:00 p.m. Eastern Time (ET). Interested individuals are invited to listen to the call by telephone at [phone] (toll international: [phone]). To participate on the web cast, log on to http://www.strategichotels.com/ or http://www.earnings.com/ 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 3:00 p.m. ET on August 2, 2007, through 12:00 midnight ET on August 9, 2007. To access the replay, dial [phone] (toll international: [phone]) and request replay pin number 3414135. 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 produces supplemental financial data that includes detailed information regarding the 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 http://www.strategichotels.com/ within the investor relations 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 North America, Mexico and Europe. The company currently has ownership interests in 20 properties with an aggregate of 10,048 rooms. 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 (the "Company"). Except for historical information, the matters discussed in this press release are forward-looking statements subject to certain risks and uncertainties. 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: availability of capital; ability to obtain or refinance debt; rising interest rates; rising insurance premiums; cash available for capital expenditures; competition; demand for hotel rooms in our current and proposed market areas; economic conditions generally and in the real estate market specifically; delays in construction and development; demand for hotel condominiums; marketing challenges associated with entering new lines of business; risks related to natural disasters; the pace and extent of the recovery of the New Orleans economy and tourism industry; the successful collection and ultimate application of insurance proceeds agreed to with the Company's insurers for the New Orleans property claim; the extent to which an impairment is recorded with respect to the New Orleans property; the ongoing restoration and rehabilitation of the New Orleans property and the accounting treatment of ongoing expenses incurred at the property; the effect of threats of terrorism and increased security precautions on travel patterns and hotel bookings; the outbreak of hostilities and international political instability; legislative or regulatory changes, including changes to laws governing the taxation of REITs; and changes in generally accepted accounting principles, policies and guidelines applicable to REITs.

Additional risks are discussed in the Company's current filings with the Securities and Exchange Commission. 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 we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Consolidated Statements of Operations (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Revenues: Rooms $137,765 $83,277 $264,402 $150,195 Food and beverage 88,132 51,196 168,945 91,654 Other hotel operating revenue 27,680 14,163 53,846 25,766 253,577 148,636 487,193 267,615 Lease revenue 5,689 3,968 10,101 7,769 Total revenues 259,266 152,604 497,294 275,384 Operating Costs and Expenses: Rooms 32,558 20,053 64,125 35,992 Food and beverage 58,069 34,980 113,350 63,091 Other departmental expenses 61,073 36,793 121,819 68,708 Management fees 10,611 4,969 19,333 8,591 Other hotel expenses 16,368 9,586 33,091 17,072 Lease expense 3,886 3,395 7,666 6,619 Depreciation and amortization 26,040 14,594 51,589 27,465 Corporate expenses 8,062 6,916 15,179 12,589 Total operating costs and expenses 216,667 131,286 426,152 240,127 Operating income 42,599 21,318 71,142 35,257 Interest expense (20,877) (7,288) (41,874) (14,476) Interest income 873 1,267 1,800 2,421 Loss on early extinguishment of debt (160) - (4,479) - Equity in earnings (losses) of joint ventures 4,556 672 1,673 (947) Foreign currency exchange (loss) gain (2,015) 27 (3,670) (28) Other (expenses) income, net (60) 1,037 (217) 2,706 Income before income taxes, minority interests and discontinued operations 24,916 17,033 24,375 24,933 Income tax expense (5,282) (1,207) (6,574) (2,871) Minority interest in SHR's operating partnership (250) (247) (224) (540) Minority interest in consolidated affiliates (181) (593) (603) (789) Income from continuing operations 19,203 14,986 16,974 20,733 Income (loss) from discontinued operations, net of tax and minority interests 158 2,636 290 (828) Net income 19,361 17,622 17,264 19,905 Preferred shareholder dividends (7,462) (5,914) (14,924) (9,620) Net income available to common shareholders $11,899 $11,708 $2,340 $10,285 Basic Income (Loss) Per Share: Income from continuing operations available to common shareholders per share $0.16 $0.14 $0.03 $0.18 Income (loss) from discontinued operations per share - 0.04 - (0.01) Net income available to common shareholders per share $0.16 $0.18 $0.03 $0.17 Weighted-average common shares outstanding 74,833 66,187 75,341 60,750 Diluted Income (Loss) Per Share: Income from continuing operations available to common shareholders per share $0.16 $0.14 $0.03 $0.18 Income (loss) from discontinued operations per share - 0.04 - (0.01) Net income available to common shareholders per share $0.16 $0.18 $0.03 $0.17 Weighted-average common shares outstanding 75,014 66,387 75,561 60,950 Consolidated Balance Sheets (in thousands, except share data) June 30, December 31, 2007 2006 Assets Property and equipment $2,711,183 $2,644,120 Less accumulated depreciation (318,236) (268,991) Net property and equipment 2,392,947 2,375,129 Goodwill 425,993 421,516 Intangible assets, net of accumulated amortization of $2,237 and $3,166 45,855 45,793 Investment in joint ventures 72,428 71,349 Cash and cash equivalents 114,237 86,462 Restricted cash and cash equivalents 61,078 73,400 Accounts receivable, net of allowance for doubtful accounts of $721 and $809 86,758 70,282 Deferred financing costs, net of accumulated amortization of $2,588 and $2,194 17,243 10,701 Deferred tax assets 40,350 43,555 Other assets 76,136 57,522 Total assets $3,333,025 $3,255,709 Liabilities and Shareholders' Equity Liabilities: Mortgages and other debt payable $1,385,470 $1,442,865 Exchangeable senior notes, net of discount 179,145 - Bank credit facility 117,000 115,000 Accounts payable and accrued expenses 189,961 186,293 Distributions payable 18,371 18,175 Deferred tax liabilities 23,482 24,390 Deferred gain on sale of hotels 107,753 107,474 Insurance proceeds received in excess of insurance recoveries receivable 34,305 20,794 Total liabilities 2,055,487 1,914,991 Minority interests in SHR's operating partnership 11,909 12,463 Minority interests in consolidated affiliates 4,161 10,965 Shareholders' equity: 8.5% Series A Cumulative Redeemable Preferred Stock ($0.01 par value; 4,000,000 shares issued and outstanding; liquidation preference $25.00 per share) 97,553 97,553 8.25% Series B Cumulative Redeemable Preferred Stock ($0.01 par value; 4,600,000 shares issued and outstanding; liquidation preference $25.00 per share) 110,775 110,775 8.25% Series C Cumulative Redeemable Preferred Stock ($0.01 par value; 5,750,000 shares issued and outstanding; liquidation preference $25.00 per share) 138,940 138,940 Common shares ($0.01 par value; 150,000,000 common shares authorized; 74,351,799 and 75,406,727 common shares issued and outstanding, respectively) 742 753 Additional paid-in capital 1,198,084 1,224,400 Accumulated deficit (305,413) (265,435) Accumulated other comprehensive income 20,787 10,304 Total shareholders' equity 1,261,468 1,317,290 Total liabilities and shareholders' equity $3,333,025 $3,255,709 Discontinued Operations The results of operations of hotels sold or held for sale have been classified as discontinued operations and segregated in the consolidated statements of operations for all periods presented. On July 14, 2006, we sold the Marriott Rancho Las Palmas for $54.8 million. On September 7, 2006, we sold the Hilton Burbank Airport and Convention Center for $123.3 million. The following is a summary of income (loss) from discontinued operations for the three and six months ended June 30, 2007 and 2006 (in thousands): Three Months Six Months Ended Ended June 30, June 30, 2007 2006 2007 2006 Hotel operating revenues $- $16,668 $- $34,910 Operating costs and expenses (158) 12,264 (286) 35,812 Depreciation and amortization - 893 - 2,535 Total operating costs and expenses (158) 13,157 (286) 38,347 Operating income (loss) 158 3,511 286 (3,437) Interest expense - (638) - (1,300) Interest income - 42 4 100 Other expenses, net - - - (1) Income tax (expense) benefit - (200) - 3,700 Loss on sale - (35) - (22) Minority interest (expense) benefit - (44) - 132 Income (loss) from discontinued operations $158 $2,636 $290 $(828) Investment in the Hotel del Coronado (in thousands) On January 9, 2006 we purchased a 45% interest in the joint venture that owns the Hotel del Coronado. We account for this investment using the equity method of accounting. Our equity in losses of the joint venture amounted to $1.5 million and $36,000 for the three months ended June 30, 2007 and 2006, respectively, and $4.2 million and $1.5 million for the six months ended June 30, 2007 and for the period from January 9, 2006 to June 30, 2006, respectively. Period Six from Months January 9, Three Months Ended to Ended June June June 30, 30, 30, 2007 2006 2007 2006 Total revenues (100%) $34,076 $33,909 $64,574 $61,106 Property EBITDA (100%) $12,230 $13,610 $22,102 $23,027 Equity in loss of joint venture (SHR 45% ownership) Property EBITDA (45%) $5,504 $6,125 $9,946 $10,362 Depreciation and amortization (1,492) (1,157) (3,453) (2,455) Loss on sale of assets (243) - (243) - Interest expense (5,363) (4,934) (10,396) (9,233) Other (expense) income, net (28) 80 (78) - Income taxes 125 (150) 30 (150) Equity in loss of joint venture $(1,497) $(36) $(4,194) $(1,476) EBITDA Contribution from investment in Hotel del Coronado Equity in loss of joint venture $(1,497) $(36) $(4,194) $(1,476) Depreciation and amortization 1,492 1,157 3,453 2,455 Interest expense 5,363 4,934 10,396 9,233 Income taxes (125) 150 (30) 150 EBITDA Contribution for investment in Hotel del Coronado $5,233 $6,205 $9,625 $10,362 FFO Contribution from investment in Hotel del Coronado Equity in loss of joint venture $(1,497) $(36) $(4,194) $(1,476) Depreciation and amortization 1,492 1,157 3,453 2,455 FFO Contribution for investment in Hotel del Coronado $(5) $1,121 $(741) $979 Debt Interest Spread over Loan Maturity Rate LIBOR Amount Date CMBS Mortgage and Mezzanine 7.40% 208 bp $610,000 January 2008 (a) Revolving Credit Facility 7.82% 250 bp 17,523 January 2008 (a) Construction Loan 7.82% 250 bp - February 2008 (b) $627,523 (a) The joint venture has an option to extend the maturity date to January 2011. (b) The joint venture has an option to extend the maturity date to February 2009. Notional Cap LIBOR Cap Rate Amount Maturity CMBS Mortgage and Mezzanine 5.0% to January January Loan Cap 2008 $630,000 2009 5.5% January 2008 to maturity Summary of Residential Activity (in thousands) On January 9, 2006 we purchased a 45% interest in a joint venture that owns the North Beach Venture development adjacent to the Hotel del Coronado. We account for this investment using the equity method of accounting. Our equity in earnings of the joint venture amounted to $6.3 million and $41,000 for the three months ended June 30, 2007 and 2006, respectively, and $6.2 million and $41,000 for the six months ended June 30, 2007 and for the period from January 9, 2006 to June 30, 2006, respectively. We own a 31% interest in a joint venture that is developing the Four Seasons Residence Club Punta Mita (RCPM) adjacent to the Four Seasons Punta Mita Resort. We account for this investment using the equity method of accounting. Our equity in (losses) earnings of the joint venture amounted to $(0.2) million and $0.4 million for the three months ended June 30, 2007 and 2006, respectively, and $(0.4) million and $0.3 million for the six months ended June 30, 2007 and 2006, respectively. Period Six from Months January 9, Three Months Ended to Ended June June June 30, 30, 30, North Beach Venture 2007 2006 2007 2006 Hotel condominium sales (100%) $46,672 $- $46,672 $- Hotel condominium cost of sales (100%) $(31,963) $- $(31,963) $- SHR's 45% share Hotel condominium sales $21,002 $- $21,002 $- Hotel condominium cost of sales (14,383) - (14,383) - Other income (expense), net 1 41 (35) 41 Income taxes (2,557) - (2,557) - SHR's share of net income $4,063 $41 $4,027 $41 Net income $4,063 $41 $4,027 $41 Income taxes 2,557 - 2,557 - EBITDA Contribution for investment in North Beach Venture $6,620 $41 $6,584 $41 FFO Contribution for investment in North Beach Venture $4,063 $41 $4,027 $41 Three Months Ended Six Months Ended June 30, June 30, Residence Club Punta Mita (RCPM) 2007 2006 2007 2006 SHR's 31% share Sales $135 $2,294 $874 $2,294 EBITDA Contribution for investment in RCPM $(224) $110 $(381) $152 FFO Contribution for investment in RCPM $(231) $150 $(379) $110 SHR's share of total residential activity: Sales $21,137 $2,294 $21,876 $2,294 EBITDA $6,396 $151 $6,203 $193 FFO $3,832 $191 $3,648 $151 Non-GAAP Financial Measures In addition to REIT hotel income, six other non-GAAP financial measures are presented for the Company 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); Adjusted EBITDA; and Comparable EBITDA. A reconciliation of these measures to net income available to common shareholders, the most directly comparable GAAP measure, is set forth in the following tables. We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which 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 plus real estate-related depreciation and amortization, and after adjustments for our portion of these items related to unconsolidated partnerships and joint ventures. We also present FFO - Fully Diluted, which is FFO plus minority interest expense on convertible minority interests. 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 other non-recurring charges. 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. Comparable FFO per diluted share, in accordance with NAREIT, is adjsuted for the effects of dilutive securities. Dilutive securities may include shares granted under share- based compensation plans, operating partnership units and exchangeable debt securities. No effect is shown for securities that are anti- dilutive. EBITDA represents net income available to common shareholders excluding: (i) interest expense, (ii) income tax expense, including deferred income tax benefits and expenses applicable to our foreign subsidiaries and income taxes applicable to sale of assets; and (iii) depreciation and amortization. EBITDA also excludes interest expense, income tax expense and depreciation and amortization of our equity method investments. EBITDA is presented on a full participation basis, which means we have assumed conversion of all convertible minority interests of our operating partnership into our common stock and includes preferred dividends. We believe this treatment of minority interest provides more useful information for management and our investors and appropriately considers our current capital structure. We also present Adjusted EBITDA, which eliminates the effect of realizing deferred gains on our sale leasebacks. We also present Comparable EBITDA, which eliminates the effect of gains or losses on sales of assets, early extinguishment of debt, impairment losses, foreign currency exchange gains or losses and other non-recurring charges. We believe EBITDA, Adjusted 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, Adjusted EBITDA and Comparable EBITDA as measures in determining the value of acquisitions and dispositions. We caution investors that amounts presented in accordance with our definitions of FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted 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, Adjusted EBITDA and Comparable EBITDA should not be considered as an alternative measure of our net income or operating performance. FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted 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, Adjusted 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 available to common shareholders. In addition, you should be aware that adverse economic and market conditions might negatively impact our cash flow. Below, we have provided a quantitative reconciliation of FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA to the most directly comparable GAAP financial performance measure, which is net (loss) income available to common shareholders, and provide an explanatory description by footnote of the items excluded from FFO, FFO - Fully Diluted, EBITDA and Adjusted EBITDA. Reconciliation of Net Income Available to Common Shareholders to EBITDA, Adjusted EBITDA and Comparable EBITDA (in thousands) Three Months Ended Six Months Ended June 30 , June 30, 2007 2006 2007 2006 Net income available to common shareholders $11,899 $11,708 $2,340 $10,285 Depreciation and amortization - continuing operations 26,040 14,594 51,589 27,465 Depreciation and amortization - discontinued operations - 893 - 2,535 Interest expense - continuing operations 20,877 7,288 41,874 14,476 Interest expense - discontinued operations - 638 - 1,300 Income taxes - continuing operations 5,282 1,207 6,574 2,871 Income taxes - discontinued operations - 200 - (3,700) Minority interests 250 291 224 408 Adjustments from consolidated affiliates (632) (1,089) (1,660) (2,170) Adjustments from unconsolidated affiliates 7,096 7,306 14,175 13,864 Preferred shareholder dividends 7,462 5,914 14,924 9,620 EBITDA (a) 78,274 48,950 130,040 76,954 Realized portion of deferred gain on sale leasebacks (1,184) (1,105) (2,321) (2,157) Adjusted EBITDA (a) 77,090 47,845 127,719 74,797 Gain on sale of assets - continuing operations - (18) - (48) Loss on sale of assets - discontinued operations - 35 - 22 Loss on sale of assets - unconsolidated affiliates 243 - 243 - Foreign currency exchange loss 1,926 602 3,265 337 Termination costs - discontinued operations (469) (689) (400) 9,695 Planning costs - New Orleans Jazz District - 1,114 227 1,521 Loss on early extinguishment of debt - continuing operations 160 - 4,479 - Comparable EBITDA $78,950 $48,889 $135,533 $86,324 (a) EBITDA and Adjusted EBITDA have not been adjusted for the following amounts included in net income available to common shareholders because these (losses) gains and other transactions have either occurred during the prior two years or are reasonably likely to occur within two years (in thousands): - Gain on sale of assets from continuing operations amounted to $18 for the three months ended June 30, 2006 and $48 for the six months ended June 30, 2006. - Loss on sale of assets from discontinued operations amounted to $35 for the three months ended June 30, 2006 and $22 for the six months ended June 30, 2006. - Loss on sale of assets from unconsolidated affiliates amounted to $243 for the three and six months ended June 30, 2007. - Foreign currency exchange losses applicable to third-party and inter- company debt and certain balance sheet items held by foreign subsidiaries amounted to $1,926 and $602 for the three months ended June 30, 2007 and 2006, respectively, and $3,265 and $337 for the six months ended June 30, 2007 and 2006, respectively. - Termination costs included in discontinued operations related to the termination of the management agreement at the Marriott Rancho Las Palmas property amounted to $469 and $689 for the three months ended June 30, 2007 and 2006, respectively, and $400 and $(9,695) for the six months ended June 30, 2007 and 2006, respectively. - Planning costs related to the New Orleans Jazz District surrounding the Hyatt Regency New Orleans hotel amounted to $1,114 for the three months ended June 30, 2006, and $227 and $1,521 for the six months ended June 30, 2007 and 2006, respectively. - Loss on early extinguishment of debt from continuing operations amounted to $160 and $4,479 for the three and six months ended June 30, 2007, respectively. Reconciliation of Net Income Available to Common Shareholders to Funds From Operations (FFO), FFO - Fully Diluted and Comparable FFO (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Net income available to common shareholders $11,899 $11,708 $2,340 $10,285 Depreciation and amortization - continuing operations 26,040 14,594 51,589 27,465 Depreciation and amortization - discontinued operations - 893 - 2,535 Gain on sale of assets - continuing operations - (18) - (48) Loss on sale of assets - discontinued operations - 35 - 22 Realized portion of deferred gain on sale leasebacks (1,184) (1,105) (2,321) (2,157) Deferred tax expense on realized portion of deferred gain on sale leasebacks 354 330 699 646 Minority interests adjustments (354) (282) (703) (1,077) Adjustments from consolidated affiliates (326) (554) (878) (1,136) Adjustments from unconsolidated affiliates 1,736 1,636 3,696 3,466 FFO (b) 38,165 27,237 54,422 40,001 Convertible minority interests 604 573 927 1,485 FFO - Fully Diluted (b) 38,769 27,810 55,349 41,486 Termination costs, net of tax - discontinued operations (286) (425) (244) 5,914 Planning costs, net of tax - New Orleans Jazz District - 733 166 1,009 Foreign currency exchange loss, net of tax 1,301 602 2,640 337 Loss on early extinguishment of debt - continuing operations 160 - 4,479 - Comparable FFO $39,944 $28,720 $62,390 $48,746 Comparable FFO per diluted share $0.53 $0.42 $0.82 $0.77 Weighted-average diluted shares (a) 75,990 67,709 76,537 62,999 (a) In the second quarter of 2007, we began using the guidance prescribed by NAREIT for calculating weighted-average diluted shares. These changes had no impact on the Comparable FFO per share amounts reported in prior periods. (b) FFO and FFO - Fully Diluted have not been adjusted for the following amounts included in net income available to common shareholders because these (losses) gains and other transactions have either occurred during the prior two years or are reasonably likely to occur within two years (in thousands): - Termination costs, net of tax, included in discontinued operations related to the termination of the management agreement at the Marriott Rancho Las Palmas property amounted to $286 and $425 for the three months ended June 30, 2007 and 2006, respectively, and $244 and $(5,914) for the six months ended June 30, 2007 and 2006, respectively. - Planning costs, net of tax, related to the New Orleans Jazz District surrounding the Hyatt Regency New Orleans hotel amounted to $733 for the three months ended June 30, 2006, and $166 and $1,009 for the six months ended June 30, 2007 and 2006, respectively. - Foreign currency exchange losses, net of tax, applicable to third- party and inter-company debt and certain balance sheet items held by foreign subsidiaries amounted to $1,301 and $602 for the three months ended June 30, 2007 and 2006, respectively, and $2,640 and $337 for the six months ended June 30, 2007 and 2006, respectively. - Loss on early extinguishment of debt from continuing operations amounted to $160 and $4,479 for the three and six months ended June 30, 2007, respectively. Debt Summary (dollars in thousands) Spread Encumbered Interest over Loan Maturity Debt Hotels Rate LIBOR Amount Date (a) Bank Credit Facility N/A 6.12% 80 bp $117,000 March 2012 CMBS Fixed Rate 3 5.43% Fixed 200,250 July 2011 Fairmont Chicago 1 6.02% 70 bp 123,750 April 2012 Loews Santa Monica 1 5.95% 63 bp 118,250 March 2012 Ritz-Carlton Half Moon Bay 1 5.99% 67 bp 76,500 March 2012 InterContinental Chicago 1 5.63% 31 bp 121,000 October 2011 InterContinental Miami 1 6.05% 73 bp 90,000 October 2011 InterContinental Prague 1 5.37% 125 bp(b) 140,757 March 2012 Westin St. Francis 1 6.02% 70 bp 220,000 August 2011 Marriott London Grosvenor Square 1 7.02% 110 bp(c) 114,963 October 2013 Fairmont Scottsdale 1 5.88% 56 bp 180,000 September 2011 Exchangeable senior notes N/A 3.50% Fixed 179,145 April 2012 $1,681,615 (a) Includes extension options (b) Spread over EURIBOR (c) Spread over GBP LIBOR Fixed Pay Rate Notional Swap Effective Date Against LIBOR Amount Maturity April 2005 4.42% $75,000 April 2010 April 2005 4.59% $75,000 April 2012 June 2005 4.12% $50,000 June 2012 June 2006 5.50% $75,000 June 2013 August 2006 5.34% $100,000 August 2011 August 2006 5.42% $100,000 August 2013 September 2006 5.08% $100,000 February 2011 September 2006 5.10% $100,000 December 2010 September 2006 5.09% $100,000 September 2009 March 2007 4.81% $100,000 December 2009 March 2007 4.84% $100,000 July 2012 4.99% $975,000 At June 30, 2007, future scheduled debt principal payments (including extension options) are as follows: Years ended Amounts December 31, (in thousands) 2007 $1,539 2008 3,209 2009 3,421 2010 7,750 2011 804,026 Thereafter 861,670 Total $1,681,615 Percent of fixed rate debt including swaps 80.5% Weighted average interest rate including swaps 5.46% Portfolio Data Portfolio at June 30, 2007 % of QTD June QTD Number % of 2007 June 2007 of Total Property Property Hotel Location Rooms Rooms EBITDA EBITDA United States: Westin St. Francis San Francisco, CA 1,195 12% 8% $6,752 InterContinental Chicago (a) Chicago, IL 792 8% 11% 8,756 Hyatt Regency Phoenix Phoenix, AZ 696 7% 3% 2,417 Hotel del Coronado (b) Coronado, CA 694 7% 7% 5,504 Fairmont Chicago Chicago, IL 687 7% 7% 5,816 Fairmont Scottsdale Princess Scottsdale, AZ 651 6% 9% 7,527 InterContinental Miami (a) Miami, FL 641 6% 4% 3,309 Hyatt Regency La Jolla La Jolla, CA 419 4% 3% 2,647 Ritz-Carlton Laguna Niguel Dana Point, CA 396 4% 7% 5,875 Marriott Lincolnshire Resort Lincolnshire, IL 389 4% 3% 2,113 Loews Santa Monica Beach Hotel Santa Monica, CA 342 3% 5% 4,256 Ritz-Carlton Half Moon Bay Half Moon Bay, CA 261 3% 4% 2,891 Four Seasons Washington, D.C. Washington, D.C. 211 2% 6% 4,474 Total United States 7,374 73% 77% 62,337 Mexican: Four Seasons Mexico City Mexico City, Mexico 240 2% 2% 1,942 Four Seasons Punta Mita Resort Punta Mita, Mexico 173 2% 7% 5,751 Total Mexican 413 4% 9% 7,693 European: InterContinental Prague Prague, Czech Republic 372 4% 8% 6,083 Marriott Hamburg (c) Hamburg, Germany 277 3% N/A N/A Marriott London Grosvenor Square London, England 236 2% 6% 4,560 Paris Marriott Champs Elysees (c) Paris, France 192 2% N/A N/A Total European 1,077 11% 14% 10,643 Assets Under Redevelopment: Hyatt Regency New Orleans (d) New Orleans, LA 1,184 12% N/A N/A Total Assets Under Redevelopment 1,184 12% 0% N/A 10,048 100% 100% $80,673 (a) On April 1, 2005, we purchased an 85% controlling interest in the joint ventures that own the InterContinental Chicago and Miami hotels. On May 9, 2007, we acquired our joint venture partner's 15% interest in the InterContinental Chicago hotel. We consolidate these hotels for reporting purposes. (b) On January 9, 2006 we purchased a 45% interest in the joint venture that owns the Hotel del Coronado and account for our investment under the equity method of accounting. Our equity in earnings of the hotel joint venture is included in equity in earnings (losses) of joint ventures in our consolidated statements of operations. The percentage of Property EBITDA above has been calculated based on our 45% ownership. (c) We have leasehold interests in these properties and have not included them in the percentage of Property EBITDA calculation. (d) In August 2005, a hurricane caused substantial damage to the Hyatt Regency New Orleans property. The hurricane damage also caused significant interruption to the business and the hotel has ceased significant operations. The property is currently under redevelopment. For purposes of the analysis above, the number of rooms represents fully operational rooms prior to the hurricane. Under Construction and Completed Capital Projects Hotel Project Description Completed Fairmont Chicago Sushi bar Q4 06 Gold lounge Q4 06 Spa In Construction Fairmont Scottsdale Princess Michael Mina restaurant In Construction Gerber bar In Construction Gold room renovation In Construction Four Seasons Mexico City Guest room renovation Q1 06 Four Seasons Punta Mita Oasis room and river pool - addition of 23 rooms Q2 07 Fitness center expansion Q1 07 Coral suite - 5 room addition Q1 07 Retail expansion and BOH upgrades Q4 06 Tamai pool Q4 06 Tamai garden Q4 06 Beachfront restaurant additon Q4 06 Arena suite - 5 room addition Q1 06 Hotel del Coronado Beach Village - addition of 78 rooms Q2 07 Guest room renovation - 311 rooms Q2 07 Restaurant renovation Q2 07 Spa & fitness center / beach club Q1 07 Retail reconfiguration / renovation In Construction Wine room In Construction InterContinental Chicago Starbucks Q3 07 Wine tasting room Q4 06 InterContinental Miami Starbucks Q3 06 Spa In Construction InterContinental Prague Guest room renovation - 27 rooms Q2 07 Loews Santa Monica Restaurant renovation Q4 04 Ritz-Carlton Half Moon Bay Outdoor patios Q3 06 Guestroom fireplaces Q2 06 Ocean terrace Q2 06 Wine tasting room Q3 05 Retail expansion Q3 05 Retaurant expansion Q4 05 Ritz-Carlton Laguna Niguel Suite conversion - addition of 3 rooms Q2 07 Suite renovation Q2 07 Wine tasting room addition Q1 07