The latest on Strategic Hotels - a missed target

Since I know some of you follow locally-based Strategic Hotels & Resorts, here is the latest from Crain's:

Chicago-based Strategic Hotels, a real estate investment trust, said Wednesday that its comparable funds from operations were a loss of $2.5 million, or 3 cents a share, in the second quarter, compared with FFO of $36.4 million, or 48 cents a share, in the second quarter last year.

Analysts on average had estimated a 1-cent loss in FFO, according to Bloomberg L.P.

I'll let people who know more about the company comment. Regular readers know I have a soft spot for any company run by a admirer of Winston Churchill.

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Get your hotels for sale!

Crain's is reporting that Strategic Hotels is putting the Chicago Fairmont up for sale. This is a tough time to be selling hotels, and it is not the only property on the market here right now.

I've never really "gotten" the Fairmont, nor has it ever really stood out in the Chicago crowd in my opinion. And its RevPAR is, well, not so good. The one thing it does have going for it is an assumable loan until April of 2012 at LIBOR plus 70 bps. So the thought is buy now and ride out the recession for two more years, because money for big hotel deals isn't easy to come by today.

People are saying this is yet another sign of trouble at the highly levered SHC and that the company needs cash, and now. I don't know. I do not follow SHC enough to tell you. I only know that I always wish Churchllians well, and since Laurence Geller (who says his company is well-positioned) is also chairman of the Churchill Centre, he gets my best wishes. Maybe today's after-market conference call will shed more light on where the company is going.

P.S. Happy Flunk Day!

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Maybe this is why he was so chipper

Bill Gates is buying a 5.2% chunk of Strategic Hotels, according to Crain's. Maybe that is why Laurence Geller had the views he did about the industry last month. Seriously, in any event, good for both of them. Hopefully this gives Strategic cash to do some good things. I still see this company going nowhere but up, and the Gates investment sure makes me feel better.

Have a great weekend!

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Geller: Hotels will be just fine

As I have said here before, I don't know him personally, but I like Laurence Geller. Yeah, I like his company, but he is also the Chairman of the Churchill Centre, an organization I happen to hold dear because I consider myself a Churchillian. (In fact, this reminds me to renew my lapsed membership. Oops.)

Mr. Geller spoke about the hotel industry at a conference here last month, and he opened with a classic Churchill quote from 1945, when he lost a general election after V/E Day to Clement Attlee and the Labour Party. His wife said,

“Winston, for God’s sake, snap out of it. Look at this as a blessing in disguise.” Churchill’s response: “If so, Clemmie, it’s very effectively disguised.”

(This quote is very apropos for me personally for reasons I will soon discuss in another post.)

Geller's take is also at once Churchillian and Santayanian: history repeats itself. "Manage it, get over it, don’t look backwards, look forwards." I like that. And he's spot on. Room supply growth is modest and once absorbed you won't have much new inventory on line for a little while because of financing considerations. You can take a look at the rest of his reasoning of why things will be all right at NREI.

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