Hotel Portfolio Transaction

Blackstone To Buy Strategic Hotels & Resorts for $6 Billion

Strategic Hotels Strategic Hotels & Resorts, Inc. (NYSE: BEE) today announced that it has entered into a definitive agreement with affiliates of Blackstone Real Estate Partners VIII L.P., under which Blackstone will acquire all outstanding shares of common stock of Strategic Hotels & Resorts, Inc., for $14.25 per share in cash, and all of the outstanding membership units of the Company's subsidiary, Strategic Hotels Funding L.L.C., not held by the Company, for $14.25 per unit in cash.  Including outstanding debt of the Company, the total transaction value is approximately $6 billion. 

"Our board and management team have consistently stated that we would consider any opportunity that maximizes stockholder value," said Raymond L. "Rip" Gellein, Chairman and Chief Executive Officer of Strategic Hotels & Resorts, Inc. "We believe this transaction capitalizes on our unique portfolio, strong asset management platform and continued operating outperformance over the past several years.  The board thoroughly considered various alternatives over the course of the past few years, and this all cash offer from Blackstone creates significant stockholder value with a high degree of execution certainty," concluded Gellein.

Tyler Henritze, co-head of US acquisitions for Blackstone Real Estate, added, "We are excited about the opportunity to acquire one of the highest quality luxury hotel portfolios in the U.S.  As long term investors in the lodging industry, we remain confident in the fundamentals of the sector despite recent market volatility."

The offer price represents a premium of approximately 13% over the unaffected intra-day trading price on July 23, 2015, at which point a media article was issued reporting a potential transaction for the Company.  On August 17, 2015, the Company confirmed that its Board of Directors had retained J.P. Morgan and was exploring possible strategic alternatives for the Company, including the potential sale of the Company.

Completion of the transaction is expected to occur by the first quarter of 2016, and is contingent upon customary closing conditions, including the approval of Strategic Hotel's stockholders, who will vote on the transaction at a special meeting on a date to be announced.  Furthermore, the transaction is not subject to a financing contingency.  The Board of Directors of Strategic Hotels has unanimously approved the merger agreement.

J.P. Morgan is acting as financial advisor to Strategic Hotels & Resorts, Inc.  J.P. Morgan and Duff & Phelps provided fairness opinions to the Strategic Hotels Board of Directors in connection with the transaction.  Sidley Austin LLP is acting as legal advisor to Strategic Hotels. Simpson Thacher & Bartlett LLP is acting as legal advisor to Blackstone.

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 the United States. The Company currently has ownership interests in 17 properties with an aggregate of 7,921 rooms and 847,000 square feet of multi-purpose meeting and banqueting space. 

Blackstone is a global leader in real estate investing. Blackstone's real estate business was founded in 1991 and has $92 billion in investor capital under management.  Blackstone's real estate portfolio includes hotel, office, retail, industrial and residential properties in the US, Europe, Asia and Latin America.  Major investments include Hilton Worldwide, Invitation Homes (single family homes), Logicor (pan-European logistics), SCP (Chinese shopping malls), and prime office buildings in the world's major cities.  Blackstone real estate also operates one of the leading real estate finance platforms, including management of the publicly traded Blackstone Mortgage Trust (NYSE: BXMT).



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