Strategic Hotels & Resorts Completes Recapitalization of the Hotel Del Coronado

  • Strategic Hotels & Resorts
  • 02.07.11
Strategic Hotels & Resorts, Inc. (NYSE: BEE) announced that it has closed a definitive agreement to recapitalize the joint venture that owns the Hotel del Coronado.

Under the terms of the transaction, a new joint venture has been established between Strategic Hotels & Resorts, Blackstone Real Estate Advisors (Blackstone) and KSL Resorts to invest cash in the asset and to convert a portion of the existing debt into equity.  The recapitalization transaction values the hotel at approximately $590 million.  As part of the recapitalization, Deutsche Bank originated $425 million in debt financing. 

Blackstone will become the general partner of the new joint venture with a 60 percent ownership interest.  Strategic Hotels, which will continue as asset manager of the hotel, and KSL Resorts, the hotel operator, are limited partners with approximately 34.3 percent and 5.7 percent ownership stakes, respectively. 

Laurence Geller, chief executive officer of Strategic Hotels said, "We are very pleased by this outcome, as it provides the opportunity for us to achieve attractive returns on our new investment, significantly reduces the hotel's indebtedness and maintains our ownership in this iconic asset.  The Hotel del Coronado is an integral part of our portfolio and we welcome Blackstone into the partnership.  Given the attractive growth characteristics of both the hotel and the San Diego market, we expect to further enhance the hotel's operations and overall value as it returns to, and potentially surpasses, previous peak performance."



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