S&P affirms Starwood Hotels & Resorts

Standard & Poor's said it affirmed the BB+ ratings on Starwood Hotels & Resorts Worldwide Inc. subsidiary ITT Corp.'s $450 million senior unsecured notes and $150 million senior unsecured notes and removed the ratings from CreditWatch, where they were placed with negative implications on Nov. 15.

Starwood's BB+ corporate credit rating, BB+ senior unsecured debt rating and BB+/BB- mixed shelf ratings were affirmed. The outlook is positive.

S&P said the affirmation reflects the expectation that these obligations will continue to be guaranteed by Starwood and not by Host Marriott Corp. (BB-/stable), a lower-rated entity, in connection with Starwood's agreement to sell 38 hotels to Host Marriott for stock and cash worth $4.1 billion. In lieu of the debt transfers, Starwood will receive an additional cash consideration of $600 million from Host Marriott and will likely redeem the $150 million notes. Starwood's pro forma lease-adjusted total debt is expected to decline to about $3.5 billion following the transaction's close from almost $4.8 billion as of December.

The ratings on Starwood reflects its large, high-quality and geographically diversified hotel portfolio with many well-established brand names, the agency said, partly tempered by the sensitivity of lodging demand to economic cycles and the company's exposure to the performance of its largest owned hotels.

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