Starwood Calls Westin Michigan Ave. Rival's Claims Misleading

In its response to Kalmia Investors' filing with the Security and Exchange Commission on Feb. 13, Starwood stated it "believes that Kalmia's statements are a transparent attempt to disrupt Starwood's own tender offer for the partnership units at a price of $735 per unit." Starwood's tender offer is $10 higher than an offer tendered by Kalmia Investors in January. Starwood's tender offer expires on Friday, Feb. 20.On Feb. 13, Kalmia Investors submitted a 14-D filing with the SEC and also sent a letter to limited partners of Westin Hotels Limited Partnership, the owner of the Westin Michigan Avenue, requesting those who have tendered their units to Starwood to withdraw them.

In its letter Kalmia Investors, which owns 18.5% of the ownership units of the Westin Michigan Avenue, repeated an earlier charge that the general partner of the Westin Hotels LP has a conflict of interest with Starwood and that the general partner is breaching its fiduciary duty to unitholders. Kalmia, in its letter, called for the removal of the general partner. It also stated that a new independent general partner should be instructed to auction the Westin Michigan Hotel and "conduct an orderly liquidation of the partnership."

Starwood responded to the conflict of interest charge by stating, "Starwood and the partnership have taken a number of steps to minimize or eliminate any conflict of interest between Starwood and the partnership's general partner in connection with Starwod's tender offer and consent solicitation and competing transactions."

The company further stated, "Although the general partner is a wholly owned subsidiary of Starwood, Starwood believes that the actions of the general partner in connection with the tender offer by Starwood, Kalmia and other parties demonstrate the independence of the general partner in connection with these matters."

Starwood also countered a claim in Kalmia's 14-D filing that an auction of the Westin Michigan Avenue and a liquidation of the partnership would result in a higher value for unitholders than Starwood's $735 per unit tender offer. Starwood noted that in a recent SEC filing the Westin Hotels LP stated the fact that the partnership is essentially up for sale is well known in the real estate community.

"Sophisticated investors know they can submit a bid for either the units or the Westin Michigan Avenue hotel itself, yet no offer superior to Starwood's offer has been made," Starwood officials added.

As of Feb. 6, a total of approximately 27,582 units have been tendered, representing approximately 20.3% of the total 135,600 outstanding units of the Westin Hotels LP.