Strategic Hotels & Resorts Not to Proceed With Purchase of Hotel Development Space in Chicago (United States)
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Strategic Hotels & Resorts Not to Proceed With Purchase of Hotel Development Space in Chicago (United States)
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Category: North America & West Indies / Carribean islands - United States -
This is a press release selected by our editorial committee and published online for free on 2008-10-06
Strategic Hotels & Resorts, Inc. (NYSE: BEE), announced today the Company will not proceed with its previously announced contracted purchase of hotel development space at the Aqua Building, which is currently under construction and adjacent to the company's Fairmont Chicago Hotel.
Laurence Geller, President & Chief Executive Officer, commented, "Despite the opportunities this property presents, the financial markets and economic operating environment have changed significantly since we first entered into the agreement to purchase the space in 2006. We remain committed to our thoughtful and disciplined business approach which, given the higher cost of capital, escalating total project costs and our dedication to maintaining sufficient liquidity for all market conditions, makes it imprudent for the Company to proceed at this time."
In conjunction with the decision not to proceed with the purchase, the Company estimates it will take a one time charge of approximately $36 million in its third quarter 2008 financial results, which includes the loss of $28 million deposited in the form of a letter of credit to secure the contract and approximately $8 million in planning and development costs. As a result of this decision, capital expenditure needs will be reduced by approximately $100 million, enhancing the Company's liquidity and capital position.
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