Strategic Hotels & Resorts (BEE)

6. FINANCIAL INSTRUMENTS

Financial instruments that potentially subject the Group to concentration of credit risk consist principally of cash and cash equivalents, marketable securities and accounts receivable. Concentration of credit risk with respect to trade accounts receivable is limited due to the large number of customers. No single customer accounted for more than 10% of consolidated revenues during the six months ended June 30, 2006 and 2005.

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BRE/GROSVENOR SHAREHOLDER S.A.R.L. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

All amounts are in thousands of US Dollars, except as indicated

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk and credit risk. These are summarized below.

11. Financial instruments

Fair values of current assets and current liabilities are equal to their reported carrying amounts because of the short maturity of those instruments. The carrying value of the bank debt approximates its fair value, as this instrument bears interest at floating rate. If the outstanding demand notes payable, which bear interest at fixed rates, are repaid at their latest maturity dates then the fair value of these notes would be estimated as to be $ 1,549,000 at June 30, 2006.

Financial instruments, which potentially subject the Group to concentrations of credit risk, consist principally of trade accounts receivable. Concentrations of credit risk with respect to trade accounts receivable are limited due to a large number of customers and their dispersion across many geographical areas.

12. Financial instruments

Fair values of current assets and current liabilities are equal to their reported carrying amounts because of the short maturity of those instruments. The carrying value of the bank debt approximates its fair value, as this instrument bears interest at floating rate. If the outstanding demand notes payable, which bear interest at fixed rates, are repaid at their latest maturity dates then the fair value of these notes would be estimated as to be $ 1,632,000 at December 31, 2005 (2004: $ 1,744,000).

Financial instruments, which potentially subject the Group to concentrations of credit risk, consist principally of trade accounts receivable. Concentrations of credit risk with respect to trade accounts receivable are limited due to a large number of customers and their dispersion across many geographical areas.

12. Financial instruments

Fair values of current assets and current liabilities are equal to their reported carrying amounts because of the short maturity of those instruments. The carrying value of the bank debt approximates its fair value, as this instrument bears interest at floating rate. If the outstanding demand notes payable, which bear interest at fixed rates, are repaid at their latest maturity dates then the fair value of these notes would be estimated as to be $ 1,632,000 at December 31, 2005 (2004: $ 1,744,000).

Financial instruments, which potentially subject the Group to concentrations of credit risk, consist principally of trade accounts receivable. Concentrations of credit risk with respect to trade accounts receivable are limited due to a large number of customers and their dispersion across many geographical areas.