Strategic Hotels & Resorts Doubles Market Cap, Prepares for Debt Maturities

In the period between our last coverage post on June 2nd and today, BEE has doubled from 1.31 to 2.56.

While Bernanke points to a recession end inasmuch as the market is concerned, to many the recession isn't over while unemployment rates remain at record highs. The wealthy count on largely stock/real estate capital gains to fuel their spending. The return of the stock market to pre-correction levels is leading more travelers to discover that they can afford to breathe a sigh of relief at an opulent hotel after a tough last year.

Europeans are finding BEE's 5-star properties more affordable than ever with the Euro hitting a year high against the dollar.

Two Four Seasons hotels in Mexico saw a EBITDA decline of 82% in 2008 due to H1N1.

In the August conference call the CEO Laurence Geller points out that "an undesirable, and frankly, unfair luxury taint [was] caused by the government's comments earlier this year." The progressive US leadership has espoused a corporate direction of limited consumption under the heat of public furor over Wall St bonuses.

There are still a few question mark properties soon reaching their 2011 debt maturities. The Fairmont Chicago has formally been listed with a broker. The Intercontinental Prague may be brokered. The Hotel Del Coronado is purported to have "some great partners with KSL and KKR," opines James Mead, BEE CFO, in the August conference call, but still remains a cash flow concern.

Disclosure: Long BEE

Comments

[raj_c:]

The current administration has no idea how damaging their comments can be to specific industries. Biden even encouraged people not to travel, as if the travel & hotel industry hasn't already suffered enough.

Sep 24 11:08 AM

[Bob Mowry:]

From the annual report "Suspension of Stock Dividends. On November 4, 2008, SHR's board of directors elected to suspend the quarterly dividend to holders of shares of SHR common stock. On February 24, 2009, SHR's board of directors elected to suspend the quarterly dividend to holders of shares of SHR preferred stock. "

STRATEGIC HOTEL PF B (BEE-PB) is looking good at this point. Since March it's gone from 1.55 to 8.50 today. The dividends have historically returned about 2.00 per year for a 8.5% preferred rate before the dividends were haulted. The purchase of 10MM worth of these shares were sold on Sept 17th, rocketing the share price from 5.5 to 8.5 in a matter of days.

Sep 25 10:57 AM

[doubleeagle:]

Bob,

Great to hear your comments! From my perspective on a technical and psychological level, there has been no news on this stocks since it last reported. Once some good news comes out which I believe can come from a sale of a property(Fairmont Chicago), this stock could be looking to make its way back to the 4-6 dollar range. Inflation and weak dollar only making a more enticing investment from this standpoint.

Sep 25 02:38 PM