In addition, the hotelier states that it is negotiating definitive agreements with another party to sell another four US hotels. Starwood did not disclose the potential buyer and the proposed sale price. That deal would involve 1,392 rooms in four states and include two Sheraton facilities and two Marriott hotels.

The pending sale of the 14-hotel portfolio is to a group of investors that includes: Olympus Real Estate Partners, Rockwood Capital, Prudential Real Estate Investors and HEI Hospitality.Olympus, Rockwood and HEI entered into a definitive agreement to acquire 13, while New Jersey-based Prudential Real Estate Investors, in a joint venture arrangement with HEI, will acquire the 14th hotel.

The partnership plans to sell four of its 13 hotels that it deems inconsistent with its investment criteria, for an undisclosed amount. Three of the properties are under binding agreements to sell. Smilezzzz Hospitality, an independent hotel management company and wholly-owned subsidiary of HEI Hospitality, will manage the hotels.

The nine hotels that will become part of the partnership portfolio include: Sheraton Buckhead, Atlanta; Sheraton Chicago Northwest, Arlington Heights, IL; Sheraton College Park, Beltsville, MD; Sheraton Danbury, Danbury, CT; Sheraton Ferncroft, Danvers, MA; Sheraton Norfolk, Norfolk, VA; Westin Southfield, Southfield, MI; Westin Stamford, Stamford, CT; and the Hilton Sonoma County, Santa Rose, CA. The property purchased by a joint venture between Prudential Real Estate Investors and HEI Hospitality is Hilton Novi, Novi, MI.The four hotels to be sold to private investment groups include: Sheraton Gainesville, Gainesville, FL; Sheraton, North Charleston, SC; Residence Inn Tyson's Corner, Vienna, VA; and Wayfarer Inn, Bedford, NH.

The deal involves a total of 4,171 rooms in 11 states comprised of eight Sheratons, two Westins, one Marriott, two Hiltons and one independent property. The Starwood branded hotels in the portfolio will remain under their current flags with an additional hotel planned for conversion to a Starwood flag, according to company officials. As part of this transaction, HEI expects to introduce future franchising opportunities for Starwood's brands, Starwood officials note.

The sale is expected to close in the third quarter of this year. Bear, Stearns & Co. Inc. advised Starwood in the transaction.

"While these hotels did not fit Starwood's strategic profile, these high-quality assets meet our criteria of having excellent upside potential for our investors, especially as the economy begins to rebound," says Walter P. Schmidt, executive VP, Rockwood Capital.

David Matheston said both sales deals involve hotel facilities in tertiary markets. When both deals close, Starwood will reach its goal for this year of selling about $1.1 billion in assets. The proceeds of the sales will be used to repay debt and for general corporate purposes, he adds.

Earlier this month, Standard & Poors cut Starwood's debt rating to junk grade. Starwood as of March 31, 2003 had approximately $5.5 billion in debt.