"The government of Singapore pays us asset management fees andincentive fees based on the performance of the hotels," says JamesMead, EVP and CFO for Strategic Hotels & Resorts. "StrategicHotels will also receive fees from "capital events such as the saleof the hotel or refinancing," he says.

Strategic Hotels has had joint ventures before with Singaporebefore it became a public company and for hotels in Europe, Meadsays. The InterContinental Chicago and the Hyatt Regency La Jollahad "always been identified to us as potential opportunity jointventure candidates," he says. The hotels are in "great markets" andare not part of capital investment operational and marketingrepositioning programs," he says. The two hotels are valued at $450million, Mead says. Earnings before interest, taxes, depreciationand amortization are expected to be $34.5 million for the twohotels in 2007.

Strategic Hotels & Resorts acquired an 85% interest in theIntercontinental Chicago in 2005, and has since increased ownershipto 100%, and has owned the Hyatt Regency La Jolla "since the late1990's," Mead says. The 419-room Hyatt Regency La Jolla, at 3777 LaJolla Village Dr. in San Diego, has more than 34,000 sf of functionspace and the Café Japengo and the Sporting Club and Spa.