Starwood 2006 Annual Report Download - page 43

We had the following commercial commitments outstanding as of December 31, 2006 (in millions):
Total
Less Than
1 Year 1-3 Years 3-5 Years
After
5 Years
Amount of Commitment Expiration Per Period
Standby letters of credit .......................... $148 $148 $— $— $—
Hotel loan guarantees
(1)
.......................... 51 10 41 — —
Total commercial commitments .................... $199 $158 $41 $— $—
(1) Excludes fair value of guarantees which are reflected in our consolidated balance sheet.
In December 2006, we completed a transaction to, among other things, purchase real assets from Club Regina
Resorts (“CRR”) in Mexico. These assets included land and fixed assets adjacent to The Westin Resort & Spa in
Los Cabos, Mexico and terminated CRR’s rights to solicit guests at three Westin properties in Mexico. In addition to
the purchase of these assets, the transaction included the settlement of all pending and threatened legal claims
between the parties and the exchange of a new issue of CRR notes with a lower principal amount for the principal
amount of existing CRR notes that had been previously fully reserved. Total consideration of approximately
$41 million was paid by us for these items.
In May 2006, we partnered with Chef Jean-Georges Vongerichten and a private equity firm to create a joint
venture that will develop, own, operate, manage and license world-class restaurant concepts created by
Jean-Georges Vongerichten, including operating the existing Spice Market restaurant located in New York City.
The concepts owned by the venture will be available for Starwood’s upper-upscale and luxury hotel brands
including W, Westin, Le Méridien and St. Regis. Additionally, the venture may own and operate freestanding
restaurants outside of Starwood’s hotels. We invested approximately $22 million in this venture.
In January 2004, we acquired a 95% interest in Bliss World LLC which at that time operated three stand alone
spas (two in New York, New York and one in London, England) and a beauty products business with distribution
through its own internet site and catalogue as well as through third party retail stores. The purchase price for the
acquired interest was approximately $25 million, and was funded from available cash. In 2005, we acquired the
remaining 5% interest for approximately $1 million.
We intend to finance the acquisition of additional hotel properties (including equity investments), hotel
renovations, VOI and residential construction, capital improvements, technology spend and other core and ancillary
business acquisitions and investments and provide for general corporate purposes (including dividend payments)
through our credit facilities described below, through the net proceeds from dispositions, through the assumption of
debt, through the issuance of additional equity or debt securities and from cash generated from operations.
We periodically review our business to identify properties or other assets that we believe either are non-core
(including hotels where the return on invested capital is not adequate), no longer complement our business, are in
markets which may not benefit us as much as other markets during an economic recovery or could be sold at
significant premiums. We are focused on enhancing real estate returns and monetizing investments. In the second
quarter of 2006, in connection with the Host Transaction, we completed the sale of 33 hotels and the stock of certain
controlled subsidiaries to Host for consideration valued at $4.1 billion which consisted of approximately $2.8 billion
in the form of Host common stock and cash paid directly to our shareholders and $1.3 billion of consideration paid
to Starwood, including $1.2 billion in cash, $77 million in debt assumption and $61 million in Host common stock.
During the year ended December 31, 2006, we sold ten additional owned hotels and interests in nine unconsolidated
joint ventures for gross proceeds of approximately $588 million in cash. There can be no assurance, however, that
we will be able to complete future dispositions on commercially reasonable terms or at all.
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