Starwood Hotels, Lehman Brothers and Starwood Capital Sign Agreements to Make Acquisition Proposals for Le Meridien

GREENWICH, Conn., Starwood Capital Group Global, L.L.C. ("Starwood Capital"), a closely held real estate investment firm based in Greenwich, Connecticut, today announced that its controlled affiliate, in a 50/50 joint venture with an affiliate of Lehman Brothers ("Lehman"), has acquired the owned and leased hotel portfolio of Le Meridien Hotels and Resorts ("Le Meridien"). Within the same transaction, Starwood Hotels & Resorts ("Starwood Hotels") has acquired the Le Meridien brand, management and franchise business from Le Meridien. Starwood Hotels has also entered into management agreements for the owned and leased Le Meridien properties to be acquired by Starwood Capital and Lehman with such hotels continuing to be operated under their current flags. Starwood Capital and Lehman anticipate selling several agreed upon hotels unencumbered by brand affiliation in the near future.

The owned and leased portfolio is made up of 32 luxury, four/five star hotels located primarily across Europe but also in North America, Africa, and South America. With properties in business, leisure, and resort markets, it includes such assets as the Hotel Eden in Rome, Italy, the Le Meridien Dona Filipa and Le Meridien Penina Golf & Resort properties in the Algarve, Portugal, and the 1,025-key Le Meridien Etoile in Paris, France. Overall, the portfolio consists of over 8,000 hotel rooms in 16 countries. Barry Sternlicht, Chairman and CEO of Starwood Capital, said, "This acquisition will allow us to capitalize on an ongoing recovery in the European full-service lodging sector as many of the assets in this portfolio are located in strategic European markets. I also believe this transaction is an excellent strategic fit for Starwood Hotels and that Starwood Hotels' operational expertise could improve the performance of these assets on behalf of the real estate owners. It is rewarding to see this transaction consummated after almost two years of complex negotiations."

Starwood Capital is led by Barry Sternlicht, who for nearly 10 years until May of this year served as Chairman of Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) ("Starwood Hotels") and was CEO of Starwood Hotels until October of 2004. Under Mr. Sternlicht's leadership, Starwood Hotels grew from an $8 million enterprise into a company enjoying a market value in excess of $15 billion today and is the leading international owner/operator of hotels measured by EBITDA in the world, with ownership of brands such as Westin, Sheraton, "W", St. Regis, Luxury Collection and Four Points. Mr. Sternlicht is an innovator in creating brand identity and brand value in the hospitality industry, repositioning Westin behind its "Heavenly" branded suite of product lines, creating both the "W" and St. Regis brands while at HOT and growing these brands within a six-year timeframe to include more than 50 of these properties operating or under development around the world.

The recipient of numerous honors and awards, Mr. Sternlicht was ranked as the "#1 Hotel Company CEO" in the nation by Institutional Investor Magazine in 2005. He also holds an Honorary Doctor of Business Administration in Hospitality Management from Johnson & Wales University and has received the Preston Robert Tisch Distinguished Industry Leadership Award from New York University School for Hospitality, Tourism & Travel Administration, the CEO Diversity Award by Diversity Best Practices/Business Women's Network, the Lifetime Achievement Award from the Association of Travel Marketing Executives, and the Hospitality Heritage Award from the American Hotel and Lodging Association.

Starwood Capital has been a leader in real estate investments since its inception in 1991. Its investors are international and include some of the United States' largest state and corporate pension funds, endowments and high-net worth families from around the world. Currently, Starwood Capital manages a real estate portfolio valued at over $10 billion. In the past fifteen years, Starwood Capital has closed real estate transactions totaling in excess of $30 billion. Starwood Capital has invested in nearly every class of real estate on a global basis, including office, retail, residential, senior housing, golf, hotels, resorts and industrial assets. Starwood Capital and its affiliates have successfully executed an investment strategy that includes building enterprises around core real estate portfolios. In addition to the recapitalization, reorganization and expansion of a troubled real estate investment trust to become what is today Starwood Hotels, Starwood, in partnerships with affiliates of Goldman Sachs & Co., acquired National Golf Properties/American Golf Corporation in 2003, the largest owner/operators of golf courses and related facilities in the U.S. Most recently, Star GT Acquisitions SAS, an affiliate of Starwood Capital, earlier this year closed on the acquisition of a controlling stake in Groupe Taittinger and Societe du Louvre, Europe's second largest hotel network, in a $3.2 billion transaction. Societe du Louvre owns and operates a unique collection of 14 luxury hotels with over 3,000 rooms in France Switzerland and Germany. It is also the second largest budget hotel chain in Europe, comprising 812 budget hotels with more than 51,000 rooms in Europe and the United Kingdom.

Tom Johnson
Starwood Capital Group