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CHICAGO-While embarking on an overhaul of the retail space at the Hotel Intercontinental here, Strategic Hotel Capital may sell its Marriott Schaumburg later this year. President and chief executive officer Laurence S. Geller says the hotel and resort REIT will test the market for the 398-room hotel at 50 N. Martingale Rd. in the second half of 2005 along with a 333-key Embassy Suites in Lake Buena Vista, FL.

The Schaumburg property posted a 54.1% increase in earnings in the first quarter before interest, taxes, debt and amortization compared to the same period last year, even though total revenue increased just 0.4% to $3.3 million. Average occupancy during the quarter was 58.2%, less than a percentage point better than 2004, with total revenue per available room of $97.50.

The most recent property tax assessment for the Marriott Schaumburg puts its value as high as $50 million. Strategic Hotel Capital’s other suburban holding is the Marriott Lincolnshire resort, where first-quarter occupancy dropped 14.4 points to 57.1%, while total RevPAR fell 10% to $227.13. Property EBIDTA in Lincolnshire was $795,000, $140,000 more than the Marriott Schaumburg. However, the two suburban properties had the lowest EBIDTA numbers in the REIT’s except for a Ritz-Carlton in Half Moon Bay, CA.

Meanwhile, Strategic Hotel Capital has hired US Equities Realty to design the redevelopment of one of its most recent acquisitions, the Hotel Intercontinental at 535 N. Michigan Ave. “Our intent is to move the bulk of the lower revenue-producing retail activities to other locations within the hotel and replace them with more profitable revenue-generating retail,” Geller says, adding the retail space could generate $200 per sf in sales.

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