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Orient-Express Hotels Buying 2 Prime Assets in Sicily for $117M

Grand Hotel Timeo, Sicily

(HAMILTON, BERMUDA) -- Orient-Express Hotels Ltd.  (NYSE: OEH) is buying a plate of history in Sicily. The Bermuda-based lodging company has contracted to purchase the 83-room Grand Hotel Timeo and the 78-room Villa Sant'Andrea, both in Taormina, Sicily. The total purchase price is  $117 million (EUR 81 million).

Grand Hotel Timeo was built in 1873; the Villa Sant'Andrea in 1830.

The acquisition from The Framon Group is scheduled to close in late January. Orient-Express plans to invest another $16 million (EUR 11 million) to refurbish both properties and have them reopen for the 2010 summer tourist season.

The $117 million price includes  the assumption of existing financing of EUR 44 million ($64 million), a new medium term bank loan of EUR 6 million ($9 million) and vendor financing of EUR 5 million ($7 million).

Commenting on the transaction, Paul White, President and Chief Executive of Orient-Express Hotels says, "Having significantly strengthened our balance sheet in 2009 through the sale of non-core assets, we have identified this rare opportunity to acquire the internationally renowned Grand Hotel Timeo, with its sister hotel, Villa Sant' Andrea.

Paul White

"Elements of this transaction meet every one of Orient-Express Hotels' investment criteria, including the unique and iconic status of the Grand Hotel Timeo; the location of the properties not only in Sicily, one of Italy's fast growing tourist destinations, but in Taormina itself; the financial upside; and of course, barriers to entry."

Orient-Express Hotels Ltd. (http://www.orient-express.com), are owners or part-owners and managers of 50 luxury hotel, restaurant, tourist train and river cruise properties operating in 25 countries.

"These hotels typify Orient-Express Hotels' core business - established properties with history and personality," adds White.

"Currently, they both punch below their weight and because they occupy a premier position in the Sicilian market. We are confident we can make significant improvements in performance, as we integrate the properties into the Orient-Express Hotels collection and bring RevPAR and operating margins in line with our existing Italian portfolio."

Villa Sant'Andrea

White says his company's "approach to funding this financially accretive acquisition, along with the Company's continued disposal of non-core assets and sales of developed Real Estate, should ensure that we remain on track to achieve our key financial objective of deleveraging the Company's balance sheet by the
end of 2011."

White notes that Sicily, the largest Mediterranean island, has been growing in popularity as a tourist destination and was recently voted Conde Nast Traveller UK Readers' favorite holiday destination in the magazine's 2009 Travel Awards.

The Grand Hotel Timeo is adjacent to one of the city's most famous attractions, the legendary Greek Theater, which dates back to the 2nd century AD.

Looking out across the sea, Villa Sant'Andrea, is right on the beach. The two properties, linked by a private shuttle, "have the synergy of Hotel Splendido and Splendido Mare, giving guests the best of both worlds Taormina has to offer," says White.

He says The Grand Hotel Timeo occupies "an excellent position in the historical center of the city. From the hotel's panoramic terrace, guests can admire spectacular views of Mount Etna and the coastline."

Since the 19th century and the era of the Grand Tour, the hotel has been popular with an elite group of international travelers.

Orient-Express anticipates that following the  refurbishment, The Grand Hotel Timeo will trade at RevPAR levels closer to those of its key Italian properties, Hotel Cipriani in Venice and Hotel Splendido in Portofino.

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