Starwood 2008 Annual Report Download - page 155

Note 19. Leases and Rentals
The Company leases certain equipment for the hotels’ operations under various lease agreements. The leases
extend for varying periods through 2014 and generally are for a fixed amount each month. In addition, several of the
Company’s hotels are subject to leases of land or building facilities from third parties, which extend for varying
periods through 2089 and generally contain fixed and variable components, including a 25-year building lease of
the Westin Dublin hotel in Dublin, Ireland (18 years remaining under the lease) with fixed annual payments of
$3 million and a building lease of the W Times Square hotel in New York City which has a term of 25 years (18 years
remaining under the lease) with fixed annual lease payments of $16 million. The variable components of leases of
land or building facilities are based on the operating profit or revenues of the related hotels.
In June 2004, the Company entered into an agreement to lease the W Barcelona hotel in Spain, which is in the
process of being constructed with an anticipated opening date of December 2009. The term of this lease is 15 years
with annual fixed rent payments which range from approximately 7 million Euros to 9 million Euros. In conjunction
with entering into this lease, the Company made a 9 million Euro guarantee to the lessor that it will not terminate the
lease prior to the lease commencement date. At the lease commencement date, the Company must provide a letter of
credit to the lessor for 9 million Euros as security for the first three years of rent. This letter of credit would
supersede the Company’s guarantee once the hotel opens.
In June 2008, the Company entered into an agreement to lease the W London Leicester Square Hotel for
40 years, commencing once the hotel reopens following a major renovation. The commencement of the lease term is
contingent upon the completion of the renovation which is under way and is expected to be completed in January
2011. The minimum future rent payments due upon completion of the hotel is £3.5 million in year one, £4.5 million
in year two, and £5.5 million in year three. After the third year the rent changes based on the United Kingdom RRI
Index. Due to the uncertain opening date, the payments are not included in the table below.
The Company’s minimum future rents at December 31, 2008 payable under non-cancelable operating leases
with third parties are as follows (in millions):
2009 .................................................................. $ 90
2010 .................................................................. $100
2011 .................................................................. $100
2012 .................................................................. $ 85
2013 .................................................................. $ 85
Thereafter............................................................... $698
Rent expense under non-cancelable operating leases consisted of the following (in millions):
2008 2007 2006
Year Ended December 31,
Minimum rent ............................................. $93 $86 $76
Contingent rent ............................................ 10 10 11
Sublease rent .............................................. (6) (6) (4)
$97 $90 $83
Note 20. Stockholders’ Equity
Share Repurchases. In April 2007, the Board of Directors authorized an additional $1 billion in Share
repurchases under the Company’s existing Corporation Share repurchase authorization (the “Share Repurchase
Authorization”). In November 2007, the Board of Directors of the Company further authorized the repurchase of up
to an additional $1 billion of Corporation Shares under the Share Repurchase Authorization. During the year ended
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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)