Marco Ferrari, Starwood's director of external communication forEurope, Africa, Middle East, says the three hotel properties are:the 196-room Westin Excelsior and the 191-room Hotel Des Bains,both in Venice Lido and the 31-room Hotel Villa Cipriani in Asolo.Also part of the deal is some unspecified additional office, retailand storage space. The buyer, EST Capital, is an independent assetmanagement company that specializes in the establishment andmanagement of closed-ended property funds that are reserved toinstitutional and qualified private investors.

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Ferrari says that Starwood is in discussions with EST Capitalregarding whether it will continue to manage the properties oncethey are traded. Starwood expects the sale to close in the fourthquarter of this year. The hotelier currently operates 30 hotels inItaly. Starwood owns 10 of those hotel assets, including the threefacilities now under contract with EST Capital.

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Harry Curtis, managing director in the gaming and lodging sectorin the Equity Research Group at JP Morgan, says he expects Starwoodto use the proceeds for share repurchases. "The company is stilleager to sell real estate at high multiples and buy back its lowermultiple stock," Curtis notes. "We estimate HOT [Starwood] istrading at 9.1x 2008E EV/Ebitda and 8.1x 2009E EV/Ebitda, which isat least several turns lower than where its properties will likelysell, in our view."

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He adds, "we believe the company's ultimate strategy is tomaintain a trophy asset in key gateway cities, i.e., the St. Regisin New York City. Real estate is 40% of Ebitda now, but shoulddecrease to 20% to 35% after asset sales." Curtis notes that hewould not be surprised if Starwood undertakes additional assetsales in the next 12 months in light of what he terms are wellfunded global capital sources that might look to invest in some ofStarwood's assets. According to Curtis, Starwood has on the marketfor sale the 665-room Sheraton Manhattan and the 219-room WestinTurnberry in Ayreshire, Scotland.

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John Jordan

John Jordan is a veteran journalist with 36 years of print and digital media experience.