CHICAGO? In just three days, Strategic Hotel Capital decided to acquire the bulk of a major shareholders stock, inked a joint-venture agreement for expansion in Europe, and swiftly bought its first property as part of that deal. That?s at a pace SHC?s CEO Laurence Geller doesn?t see abating anytime soon. ?We?ve done $800 million in business so far this year. We?re just going to keep on going,? he said. Helping to push the envelope is SHC?s plan to buy the stock of one of its major shareholders, Security Capital Group(SCG). SHC had invested $400 million ($375 million direct, $25 million Preferred Growth) into the global hotel investment company, which is a privately held C-corporation. ?Unfortunately,? said Geller, ?they went public with their holding company and their stock took it on the chin.? SCG then regrouped and retrenched, he said, and this past May reported it would sell its interest in SHC. Geller said SCG negotiated its own stock buyout, which represented a 23.6% ownership in SHC at the half-year mark. He expected the sale to close in third-quarter; SHC will pay $328 million for the shares, with the proceeds going to pay down debt and repurchase common stock. The $25 million Preferred Growth remains separate and in place, said Geller, who viewed SCG?s decision with a certain degree of dismay. ?I?m sad. We started this thing together, and it?s been a grand adventure. But they?ve clearly had their challenges and have made the long-term decisions best for them.? SHC?s other major investment partners, Goldman Sach?s Whitehall Funds and Prudential Insurance Co. of America, remain on board. Geller said part of SHC?s own long-term strategy is to acquire 30% of its luxury and upscale hotel holdings outside the United States, where it currently has the bulk of its portfolio representing such brands as Hyatt, Marriott, Westin and Ritz-Carlton. It also owns two properties in Europe (Paris and London) and the Four Seasons, Mexico City in Mexico. Toward that end, SHC has formed a joint venture with GIC Real Estate Pte. Ltd. (GIC RE), the real estate investment arm of the government of Singapore Investment Corp. Pte. Ltd., which manages the foreign reserves of Singapore, and is another SHC shareholder.Within a day of announcing the agreement, Geller said the pact yielded SHC its 30th property?a 365-room Inter-Continental in Prague?which went on the auction block as part of the holdings of a public company. Geller did not disclose the purchase price, but noted SHC had been ?flirting with Inter-Continental? for 18 months. The CEO said expanding his $2.5 billion company?s relationship with GIC RE brings additional capital to the table; Government of Singapore Investment Corp. Pte. Ltd. reportedly has funds in excess of $70 billion, which it invests in real estate, foreign exchange and other ventures. ?We plan to do about 10 acquisitions initially with GIC RE,? said Geller, ?and go into improving markets, notably northern and western Europe. We think it?s affording more and more opportunities now.? SHC will be responsible for asset management and pick operators as the properties are acquired. As for even greater expansion, perhaps in Mexico, Geller was mum. ?We?re a very quiet company because we?re privately held, but we have tremendous strength in the balance sheet and we have a great portfolio and we don?t see being a public corporation anytime soon. So we?re just going to keep on going.?
