Exhibit (e)(1)
(XXXXXXXX XXXXX XXXXXX & XXXXX LOGO)
October 15, 2003
Westin Hotels Limited Partnership
Westin Chicago Limited Partnership
Westin Realty Corp.
000 Xxxxx Xxxxxxxx Xxxxxx Corporation
Ladies and Gentlemen:
We understand that Kalmia Investors, LLC ("Kalmia"), Merced Partners
Limited Partnership ("Merced"), Smithtown Bay, LLC ("Smithtown"), Global Capital
Management, Inc. ("GCM"), Xxxx X. Xxxxxxxxxxx and Xxxxxxx X. Xxxx (collectively
the "Purchaser") have offered to purchase up to 73,250 units of limited
partnership interest ("Units") of Westin Hotels Limited Partnership ("WHLP").
The cash purchase price is equal to $550.00 per Unit without interest reduced by
any cash distributions made or declared on or after October 1, 2003 (to the
extent the Purchaser does not receive such distributions with respect to any
Units accepted for payment) (the "Offer Price"). The $50.00 transfer fee charged
by WHLP for each transfer will be the responsibility of the Purchaser. Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc. ("Xxxxxxxx Xxxxx") has not
considered the transfer fee, or any other costs that unitholders may incur, in
its analysis of the Offer Price. It is also our understanding that an
acquisition by the Purchaser of 73,250 units would result in an approximate
ownership percentage of 66.8% and, accordingly, if fully subscribed, the
Purchaser would hold sufficient interest to control certain material decisions
to be made by the limited partners of WHLP per the terms of the Amended and
Restated Agreement of Limited Partnership of WHLP, as of December 31, 1986 (the
"Partnership Agreement"). For purposes of this Opinion (defined herein), we have
assumed the Transaction (defined herein) to be fully subscribed.
We also understand that WHLP owns the Westin Michigan Avenue, Chicago in
Chicago, Illinois ("Westin Michigan Avenue") through Westin Chicago Limited
Partnership (the "Hotel Partnership"), a subsidiary limited partnership. It is
also understood that, prior to certain liquidating distributions to the limited
partners, the Hotel Partnership is obligated to repay its existing debt
obligations as well as any accrued and deferred incentive management fees to 000
Xxxxx Xxxxxxxx Xxxxxx Corporation ("909 Corp.").
The Purchaser's offer to purchase up to 73,250 Units of WHLP at the Offer
Price and all related transactions disclosed to Xxxxxxxx Xxxxx are collectively
referred to herein as the "Transaction."
Xxxxxxxx Xxxxx has been retained by and reports to WHLP and the Hotel
Partnership (collectively the "Partnerships"). Westin Realty Corp. ("WRC")
and 909 Corp. (collectively, the "General Partners") are the respective
general partners for WHLP and the Hotel Partnership. Both WRC and 909 Corp.
are wholly-owned, through affiliates, by Starwood Hotels & Resorts Worldwide,
Inc.
In connection with the proposed Transaction, the Partnerships and the
General Partners have requested that Xxxxxxxx Xxxxx render an opinion (the
"Opinion") as to the matters set forth herein.
LOS ANGELES o 1930 Century Park West o Los Angeles, California 90067
o tel.000.000.0000 o fax.000.000.0000
NEW YORK CHICAGO SAN FRANCISCO WASHINGTON, D.C. MINNEAPOLIS DALLAS
ATLANTA LONDON
Investment advisory services through Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial
Advisors.
Westin Hotels Limited Partnership
Westin Chicago Limited Partnership
Westin Realty Corp.
000 Xxxxx Xxxxxxxx Xxxxxx Corporation
October 15, 2003 -2-
The Opinion does not address: (i) the Purchaser's underlying business
decision to effect the Transaction; (ii) the Partnerships' and/or the General
Partners' underlying business decision to endorse, reject, or remain neutral
with respect to the Transaction; (iii) whether any of WHLP's limited partners
should participate in (or reject) the Transaction by tendering into the offer,
(iv) the tax or legal consequences of the Transaction, including but not limited
to tax or legal consequences to the limited partners, the General Partners or
the Partnerships; (v) the fairness, advisability or desirability of alternatives
to the Transaction; (vi) the fair market value of the Westin Michigan Avenue; or
(vii) the fairness of any aspect of the Transaction not expressly addressed in
this Opinion, including the fairness of the Transaction as a whole. Furthermore,
at your request, we have not negotiated the Transaction or advised you with
respect to alternatives to it. We have not been requested to, and did not,
solicit third party indications of interest in acquiring all or any part of the
Westin Michigan Avenue or WHLP, make any recommendations as to the form or
amount of consideration to be received by the Partnerships, the limited
partners, the General Partners or any other person in connection with the
Transaction.
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
- held discussions with the General Partnerships' senior management to
discuss the Transaction, the operations, financial condition, future
prospects and performance of the Westin Michigan Avenue and WHLP;
- reviewed WHLP's financial statements as filed on Form 10-K for the two
fiscal years ended December 31, 2002 and December 31, 2001, respectively;
- reviewed WHLP's financial statements as filed on Form 10-Q for the
quarterly period ended June 30, 2003;
- reviewed company-prepared consolidating financial statements for WHLP and
the Westin Michigan Avenue for the fiscal years ended, December 31, 1999
through 2002;
- reviewed company-prepared financial statements for the Westin Michigan
Avenue for the fiscal years ended December 31, 1998 through 2002;
- reviewed company-prepared financial statements for the Westin Michigan
Avenue for the eight-month period ended August 31, 2002 and
company-prepared preliminary financial statements for the Westin Michigan
Avenue for the corresponding eight-month period ending August 31, 2003,
which WHLP's management has identified as being the most current financial
statements available;
- reviewed a press release containing certain preliminary WHLP financial
information for the three month and nine month periods ended September 30,
2003;
- reviewed a draft Refinancing Analysis prepared by JLL, dated July 24,
2003;
- reviewed copies of the following agreements:
- the Amended and Restated Agreement of Limited Partnership of WHLP,
as of December 31, 1986;
Westin Hotels Limited Partnership
Westin Chicago Limited Partnership
Westin Realty Corp.
000 Xxxxx Xxxxxxxx Xxxxxx Corporation
October 15, 2003 -3-
- the Amended and Restated Agreement of Limited Partnership of the
Hotel Partnership, as of December 31, 1986;
- the Chicago FF&E Escrow Agreement, as of June 2, 1994;
- the Amended and Restated Management Agreement among Westin Hotel
Company and 909 Corp., the Hotel Partnership, and WHLP, as of August
21, 1986;
- the First Amendment to Amended and Restated Management Agreement of
the Hotel Partnership, as of June 2, 1994;
- the Second Amendment to Amended and Restated Management Agreement,
as of September 1, 1999;
- the Third Amendment to Amended and Restated Management Agreement, as
of February 27, 2002;
- the Mortgage and Security Agreement between 909 Corp. and Teacher
Retirement System of Texas, dated August 21, 1986;
- the First Amendment to Mortgage and Security Agreement, dated June
2, 1994;
- the Promissory Note by and between 909 Corp. and Teacher Retirement
System of Texas, dated August 21, 1986;
- the First Amendment to Promissory Note, as of June 2, 1994;
- the Loan Agreement by and between WHLP and the General Partner, as
of June 2, 1994;
- the Assignment and Assumption of Agreements by and between Westin
Hotel Company and 909 Corp., as of December 31, 1997; and
- the Restructuring Agreement by and among Teacher Retirement System
of Texas, Westin Hotel Company, the General Partner, St. Xxxxxxx
Hotel Corporation, The Westin St. Xxxxxxx Limited Partnership, 909
Corp., the Hotel Partnership and WHLP, as of June 2, 1994.
- reviewed the Tender Offer Statement filed on Schedule TO as of July 7,
2003 by Windy City Investments, LLC, Madison Windy City Investments, LLC,
Madison Investment Partners 20, LLC, Madison Capital Group, LLC, The
Harmony Group II, LLC and Xxxxx X. Xxxxxx;
- reviewed the Tender Offer Statement filed on Schedule TO as of July 24,
2003 by Kalmia Investors, LLC;
- reviewed the Amendment No. 1 to the Tender Offer Statement filed on
Schedule TO as of July 30, 2003 by Kalmia Investors, LLC;
- reviewed the Amendment No. 2 to the Tender Offer Statement filed on
Schedule TO as of August 5, 2003 by Kalmia Investors, LLC;
- reviewed the Amendment No. 3 to the Tender Offer Statement filed on
Schedule TO as of August 18, 2003 by Kalmia Investors, LLC;
- reviewed the Amendment No. 4 to the Tender Offer Statement filed on
Schedule TO as of
Westin Hotels Limited Partnership
Westin Chicago Limited Partnership
Westin Realty Corp.
000 Xxxxx Xxxxxxxx Xxxxxx Corporation
October 15, 2003 -4-
September 2, 2003 by Kalmia Investors, LLC;
- reviewed the Amendment No. 5 to the Tender Offer Statement filed on
Schedule TO as of September 8, 2003 by Kalmia Investors, LLC;
- reviewed the Tender Offer Statement filed on Schedule TO as of August 20,
2003 by Starwood Hotels & Resorts Worldwide, Inc.;
- reviewed the Tender Offer Statement filed on Schedule TO as of August 25,
2003 by Starwood Hotels & Resorts Worldwide, Inc.;
- reviewed the Tender Offer/Consent Solicitation Statement filed on Schedule
TO as of August 27, 2003 by Starwood Hotels & Resorts Worldwide, Inc.;
- reviewed the Tender Offer Statement filed on Schedule TO as of August 28,
2003 by Starwood Hotels & Resorts Worldwide, Inc.;
- reviewed the Tender Offer Statement filed on Schedule TO as of September
24, 2003 by Starwood Hotels & Resorts Worldwide, Inc.;
- reviewed the Tender Offer/Consent Solicitation Statement filed on Schedule
TO as of September 30, 2003 by Starwood Hotels & Resorts Worldwide, Inc.;
- reviewed the preliminary Proxy Statement filed on Schedule 14A filed with
the Securities and Exchange Commission in May 2003;
- reviewed the Amendment to Schedule 13D filed by Kalmia Investors, LLC as
of October 1, 2003;
- reviewed the Tender Offer Statement filed on Schedule TO as of October 6,
2003 by Kalmia Investors, LLC, Merced Partners Limited Partnership,
Smithtown Bay, LLC, Global Capital Management, Inc., Xxxx X. Xxxxxxxxxxx
and Xxxxxxx X. Xxxx; and
- conducted a review of preliminary, Hotel-level projections, industry
analyst reports and reviews, and other such analyses, studies and
investigations as we deemed appropriate under the circumstance for
rendering the Opinion expressed herein.
We have relied upon and assumed, without independent verification, the
accuracy and completeness of the financial and other information, including the
financial forecasts and projections, provided to us by WHLP and the General
Partners and that such information has been reasonably prepared and reflects the
best currently available estimates of the current and future financial results
and condition of the Westin Michigan Avenue and that there has been no material
change in the assets, financial condition or prospects of the Westin Michigan
Avenue since the date of the most recent financial statements made available to
us. Furthermore, we have relied upon, without independent investigation, the
General Partners' interpretation of each Partnerships' partnership agreement,
particularly the distribution and allocation provisions thereof. We have also
relied upon the assurance of the General Partners that any financial projections
or pro forma statements or adjustments provided to us were reasonably prepared
or adjusted on bases consistent with actual historical experience or reflecting
the best currently available estimates and good faith judgements; that no
material changes have occurred in the information reviewed
Westin Hotels Limited Partnership
Westin Chicago Limited Partnership
Westin Realty Corp.
000 Xxxxx Xxxxxxxx Xxxxxx Corporation
October 15, 2003 -5-
by us between the date the information was provided and the date of this Opinion
or in the assets, financial condition business or prospects of the Westin
Michigan Avenue; and that the General Partners are not aware of any information
or facts regarding the Westin Michigan Avenue and the Partnerships that would
cause the information supplied to us to be incomplete or misleading in any
material respect.
We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Westin Michigan Avenue, the
Partnerships, or the General Partners and do not assume any responsibility with
respect to it. We have not made an independent appraisal of the Westin Michigan
Avenue or any of the properties or assets of the Partnerships, or the General
Partners. Our Opinion is necessarily based on business, economic, market and
other conditions as they exist and can be evaluated by us at the date of this
letter.
Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc. expresses no opinion
as to whether any of WHLP's limited partners should participate in the
Transaction by tendering their Units; notwithstanding, and based upon the
foregoing, and in reliance thereon and subject to the attached "Limited Factors
and Other Assumptions", it is our Opinion that the consideration to be received
in connection with the Transaction is not fair to a limited partner of WHLP,
from a financial point of view.
/s/ XXXXXXXX XXXXX XXXXXX & XXXXX FINANCIAL ADVISORS, INC.
XXXXXXXX XXXXX XXXXXX & XXXXX FINANCIAL ADVISORS, INC.
LIMITING FACTORS AND OTHER ASSUMPTIONS
The professional fee for this engagement is not contingent upon the opinion of
value set forth in the attached written opinion ("Opinion") prepared by Xxxxxxxx
Xxxxx. Xxxxxxxx Xxxxx is under no obligation to update, revise or reaffirm the
Opinion.
The Opinion is based on business, general economic, market and other conditions
that reasonably could be evaluated by Xxxxxxxx Xxxxx as of the date of the
Opinion. Unanticipated and/or subsequent events that could affect the
conclusions set forth in the Opinion include adverse changes in industry
performance or market conditions and changes to the business, financial
condition and results of operations of the Partnerships, the General Partners
and the Westin Michigan Avenue. Unanticipated events and circumstances may occur
and actual results may vary from those assumed. The variations may be material.
The Opinion is intended solely for the information of the person or persons to
whom it is addressed, solely for the purpose stated, and may not be relied upon
by any other person or for any other purpose without Xxxxxxxx Lokey's prior
written consent. The conclusions set forth in the Opinion are based on methods
and techniques that Xxxxxxxx Xxxxx considers appropriate under the
circumstances, and represent the opinion of Xxxxxxxx Xxxxx based upon
information furnished by the Partnerships and the General Partners and its
advisors and other publicly available sources. Xxxxxxxx Xxxxx has relied upon
the Partnerships' and the General Partners' representations that the information
provided by it, or on its behalf, is accurate and complete in all material
requests. While all public information (including industry and statistical
information) was obtained from sources we believe are reliable, Xxxxxxxx Xxxxx
makes no representation as to the accuracy or completeness thereof, and we have
relied upon such public information without further verification.
The opinions set forth in the Opinion are not intended by Xxxxxxxx Xxxxx, and
should not be construed, to be investment advice in any manner whatsoever.
Furthermore, no opinion, counsel or interpretation is intended in matters that
require legal, accounting, tax or other appropriate professional advice. It is
assumed that such opinions, counsel or interpretations have been or will be
obtained from the appropriate professional sources.
Xxxxxxxx Xxxxx assumes that the Partnerships and the General Partners have
complied with all applicable federal, state, and local regulations and laws,
unless the lack of compliance is specifically noted in the Opinion.
For purposes of the Opinion, Xxxxxxxx Xxxxx has not undertaken any inquiry as
to, or taken into consideration, the possible tax consequences of the Offer
Price or the Transaction (including whether the Limited Partners will recognize
taxable income as a result of accepting the Offer Price for their Units). Such
tax consequences could be material and could affect the analysis underlying the
conclusions reached in the Opinion.
Except to the extent specifically disclosed in writing to Xxxxxxxx Xxxxx, the
Opinion also assumes that the Partnerships and the General Partners have no
material contingent assets or liabilities, no unusual obligations or substantial
commitments other than those incurred in the ordinary course of business, and no
pending or threatened litigation that would have a material effect on the
Partnerships and the General Partners.
