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WHITE PLAINS, NY-The deadline for an unsolicited tender offer of $550 per unit for nearly 60 percent of the outstanding limited partnership units of the Westin Hotels Limited Partnership, the owner of the Westin Michigan Avenue hotel, expired at 5 p.m. on Aug. 29. Meanwhile, Starwood Hotels & Resorts Worldwide Inc. is following through on its promised tender offer for 100 percent of the outstanding units at $600 per unit.

At deadline, the battle for control of the 751-room hotel in Downtown Chicago was still in the balance. Starwood announced on Aug. 28 that it had filed a preliminary proxy statement with the SEC relating to its tender offer to unit holders of Westin Hotels LP. The offer was made to for all outstanding units (135,600) in a deal valued at $81,360,000 if all units were tendered. Also pending at press time was an unsolicited tender offer from Kalmia Investors LLC of Delaware to purchase 59% of the outstanding units (79,917). Kalmia, which made the offer to Westin Hotels LP on July 24, currently owns 8.1% of the outstanding limited partnership units. That deal would be worth $43,954,350 if all 79,917 units were tendered.

Starwood officials stated that its tender offer, which was first announced on Aug. 20, is conditioned on Westin Hotels LP recognizing the transfer of units to Starwood, agreeing to allow Starwood as a substitute limited partner and the tender of at least a majority of the outstanding units.

On Aug. 28, in connection with the dueling tender offers, Westin Hotels LP announced that the Westin Michigan Avenue’s total operating revenue for this year was nearly $4.1 million as of July 31, as compared to $3.5 million at the same time last year. The hotel’s occupancy so far in 2003 has been 88.8%, compared to 79.7% in 2002. The revenue per available room is also higher this year, $130.20 per room as compared to $111.37 a year ago.

In addition to the 751 guest rooms, the Westin Michigan Avenue, located at 909 North Michigan Ave. in Downtown Chicago, also features 23 suites and 35,000 sf of meeting space.

The board of directors of Westin Realty Corp., the general partner of Westin Hotels LP, while not making any official recommendation and taking a “neutral stance” on the offer by Kalmia Investors, did state on Aug. 20 that if the unsolicited tender offer is successful, “Kalmia will have the ability to determine if and when the partnership is refinanced or The Westin Michigan Avenue in Chicago, Illinois, WHLP’s primary asset since 2001, is sold, remove the General Partner, amend the partnership agreement and/or dissolve WHLP.”

The directors further stated that if Kalmia’s offer is tendered, limited partners would not have much influence on material decisions and “will experience a reduced liquidity of their investment… .”

In its response to the Kalmia offer, Westin officials stated that the general partner has been reviewing opportunities to sell or refinance the Westin Michigan Avenue since 2001.

They further stated that the general partner has commenced the process of refinancing its debt, however the directors stated they were not optimistic that it would secure a lender under terms it included in a May 2003 proxy statement to the SEC.

“The general partner believes that the hotel real estate market is currently at a relative low point in the cycle and expects that the market will improve over the next few years, although the timing and extent of any such recovery is uncertain,” Westin Realty officials stated.

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