Negative Report Issued on Starwood's Tender Offer

MacKenzie Patterson Fuller Inc., a limited partner that owns approximately 2.5% of the outstanding units of Westin Hotels Limited Partnership, sent a letter to fellow limited partners notifying them that a negative report had been issued on Starwood's tender offer of $625 per unit. In fact, the report was commissioned by the general partner of Westin Hotels Limited Partnership, which is an affiliate of Starwood. The report, issued by Houlihan Lokey Howard & Zukin Financial Advisors on Nov. 18, stated, "the consideration to be received in connection with the (tender offer transaction) is not fair to a limited partner of WHLP, from a financial point of view," according to MacKenzie Patterson Fuller's letter to limited partners filed with the Security and Exchange Commission.

Marjorie Brown, managing director and national head of the Fairness Opinion Practice for Houlihan Lokey Howard & Zukin Financial Advisors, confirmed that it issued a report to its client, which is the general partner of Westin Hotels Limited Partnership. Starwood affiliates are the general partner and manager of the Westin Michigan Ave. hotel. She also stated that the report characterized the Starwood tender offer as "not fair."

Glenn Fuller, senior vice president of MacKenzie Patterson Fuller, which is based in Moraga, Calif., said his firm decided to put out a press release and send out a letter on the report's findings in order to ensure that all limited partners of Westin Hotels Limited Partnership were made aware of the consultant's opinion. He added that another reason his firm has also come out against the Starwood tender offer is due to recently released information showing an improving hotel market.

In its November 24 letter to fellow limited partners, MacKenzie Patterson Fuller stated, "In its long history of doing business in the partnership world, MPFI has rarely seen a general partner (or its affiliate) attempt to 'roll up' a partnership in a deal that its own experts deem unfair."

Starwood officials could not be reached for comment by deadline concerning the negative report on its tender offer. Starwood announced on Nov. 4 that it was increasing its tender offer for all of the outstanding units of Westin Hotels Limited Partnership from $600 per unit to $625 per unit. As of November 4, there were 135,600 outstanding units in Westin Hotels Limited Partnership, making the deal worth as much as $84.75 million if all units were tendered.

Starwood's tender offer has not come without its detractors, including a class action lawsuit filed on November 20 in the U.S. District Court for the Southern District in New York. The complaint filed by Wolf Haldenstein Adler Freeman & Herz, LP charged Starwood with violations of federal securities laws and breaches of fiduciary and contractual duties in connection with the tender offer for Westin Hotels Limited Partnership.