NANTUCKET, Massachusetts—Starwood Hotels & Resorts Worldwide provided updates for its transactions outlook and debt structure last week.
During the Jefferies 2011 Global Consumer Conference, which was webcast, Starwood’s VP of investor relations Jason Koval said the company is focused on paying down debt. Starwood’s debt peaked at US$4 billion in April 2009, but today, gross debt stands at US$2.9 billion, Koval said.
Starwood has US$700 million of excess cash on the balance sheet. The company intends to pay down looming debt maturities in 2012 and 2013, he said.
“We are very focused on deleveraging,” Koval said.
Transactions
On the transactions front, Koval said the company is transitioning to an asset-light model. The company sold the W Chicago – City Center to real-estate investment trust Chesapeake Lodging Trust for US$128.8 million earlier this month. And Starwood in April sold the 450-room Westin Gaslamp Quarter in San Diego for US$110 million to another REIT, Pebblebrook Hotel Trust.
Both properties were marketed last year, but Starwood pulled them because pricing for the assets was too low. The properties were put back on the market this year with “similar, if not higher pricing expectations,” Koval said.
Starwood could be a seller yet again in the market. “We’re always continuing to monitor the markets,” he said. “There are certain assets being marketed today, and if the pricing makes sense, you will see us do more transactions.”
But that doesn’t mean acquisitions are out of the picture for Starwood.
“If there’s another Le Méridien available, we would like to take advantage of a brand like that,” he said in reference to the portfolio of 122 hotels (comprising 34,000 rooms) that Starwood acquired in 2005.
REITs, and their ability to buy without taking on significant leverage, are ruling the market, Koval said.
“The pool of capital is still relatively limited as compared to when the sovereign wealth money and private equity money was in the space,” Koval said.