1001 Marquette Avenue South Minneapolis, MN 55403

Year Built: 1992
Guestrooms: 821
Suites: 51
Meeting Space, including pre-function (SF): 80,000
Restaurants/Lounges: 2
Gross Building Area(SF): 219,275

Haberhill, LLC, along with its partner, Starwood Capital Group, purchased the 821 room Hilton Minneapolis on March 22, 2006 for $92.0 million. Haberhill, which put the transaction together and negotiated the terms and conditions of both the purchase agreement and long-term management contract with Hilton, serves as the operating partner and asset manager. The hotel is owned by indirect subsidiaries of Starwood Capital Group Global, L.C. and an affiliate of Haberhill LLC. To fund the acquisition, the ownership group borrowed $83.0 million from Greenwich Capital and invested approximately $15 million of equity.

The Hilton is the largest hotel in Minneapolis and connects directly to the convention center by the city’s unique skyway system. Its proximity to the convention center as well as its size makes the hotel the market leader for convention and group business in Minneapolis.

Beginning in the 4th quarter of 2006 and ending in March 2007, we completed the renovation of 740 guest bathrooms, installed new guestroom and hallway carpet and wallpaper and new guestroom desks and desk chairs. This renovation complemented the hotel’s 2005 renovation program, which included a similar renovation of the remaining 81 rooms, a significant expansion of the hotel’s meeting space, as well as a complete renovation of the restaurant and bar facilities.

Subsequent to this renovation, Haberhill and Starwood successfully raised an additional $30 million in Mezzanine financing from an affiliate of AREFIN US Investments LLC in two tranches – $16.5 million in November 2007 and $13.5 million in June 2008. This financing allowed both Haberhill and Starwood Capital to return over 2 times their equity investment in a little over two years. Additionally, the hotel continued to return significant cash flow in excess of debt service on both the Senior and Mezzanine loan facilities.

In 2008, we completed the renovation of all of our suites at a cost of approximately $1 million. In early 2009, we finished the renovation and addition of 10,000 square feet of meeting space at a cost of approximately $1.6 million. The 10,000 square feet of space consisted of an existing 5,000 square feet of breakout space and 5,000 square feet of existing retail tenant space that was under-utilized. Forward bookings in the space currently exceed $3 million.

In June 2010, we sold the Minneapolis Hilton to DiamondRock Hospitality for approximately $156 million.  This sale allowed both Haberhill and Starwood Cpiatl to return an additional $39 million.  Total whole dollar profit for the transaction exceeded $69 million for the transaction.