Exclusive: Strategic Hotels hires Eastdil for possible sale - sources

NEW YORK Thu Jun 13, 2013 4:47pm EDT

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NEW YORK (Reuters) - Luxury hotel owner Strategic Hotels and Resorts Inc (BEE.N) has hired investment bank Eastdil Secured to explore a possible sale of the real estate investment trust, two sources familiar with the matter said this week.

The process is in the early stages and materials have not gone out to prospective buyers, one of the sources said, declining to be named because the sale process is private.

Strategic has a market value of about $1.6 billion. Its shares rose 10.6 percent to $8.53 in late trading on the New York Stock Exchange after the news.

Strategic's portfolio of hotels, valued at about $3.5 billion, is made up of luxury hotels such as Marriott International Inc's MAR.N Ritz-Carlton and JW Marriott luxury brands.

Diane Morefield, Strategic Hotels chief financial officer, declined to comment. Eastdil, which is owned by Wells Fargo & Co (WFC.N), did not return calls seeking comment.

The news of the possible sale comes after Strategic's founder and chief executive, Laurence Geller, abruptly left the company in November. His departure led to speculation by Wall Street analysts about a possible sale of the company.

In February, investment firm Orange Capital, a shareholder in the company, called for Strategic to hire a financial adviser and explore all options, including a sale. Orange owns a 3.7 percent stake in Strategic, according to Thomson Reuters data.

Last month, the company's board voted to speed up the expiration of its stockholder rights plan, a poison pill that would have made it more difficult for a suitor to buy the company without the board's approval.

The U.S. hotel sector has been on a slow, but steady comeback since the recession, with revenue per room increasing about 6 percent or more over the past four years, Green Street Advisors analyst Lukas Hartwich said.

"Moods are cautiously optimistic," Hartwich said. "I don't think anyone thinks that we're off to the races here in terms of a meaningful pickup in the way things are going. But I think people are pretty comfortable that we're plodding a similar growth rate we've had over the last couple of years."

Among the 18 hotels and resorts the Chicago-based company owns or has stakes in are the JW Marriott Essex House in Manhattan, and the Four Seasons Resorts in Punta Mita, Mexico and Jackson Hole, Wyoming.

Hartwich said it is the highest quality portfolio among the publicly traded hotel REITs.

"It's focused on luxury hotels where the other publicly traded REITs are focused on your upper upscale, which is your Marriott, your Hilton, which are fine hotels but they're not luxury, they're not the Four Seasons," he said.

(Reporting by Ilaina Jonas; Editing by Leslie Gevirtz)

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