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Sunstone Hotel Investors Inc. Message Board

  • mrclean82400 mrclean82400 Oct 29, 2013 12:25 AM Flag

    New hote?

    Well, more shares. Seems like mgt has said they would not be doing that again. A deal too good to pass up? I can't imagine that.

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    • I can't say I am surprised. I have been expecting an acquisition or two since management seems to have spent most our our CapEx already and we should be rolling in cash flow about now.

      I would prefer to add a little more debt, but let's see what mgmt. has to say. Not fair to speculate that this will not be accretive before we find out what we are getting. Mgmt has seemed pretty mindful of making investments with good metrics so hopefully that is the case here. The stock has been trading near multi-year highs, so at least the timing allows is very good.

      Hopefully, this is the a catalyst to proper this stock to the $17-$22 range because I have been finding reasons to get there scarce and have been considering selling. IMO, management has deleveraged this company too much - particularly with the shares issued to eliminate the preferred shares. This stock would be tracking 10-25% higher today with the fewer shares outstanding and fixed payments on the Preferred or if mgmt. had retired the Preferred with bank debt paid off in tranches over a number of years.

      As it is, we have recently added trophy properties in Boston and Chicago and should soon see the full impact f those on the bottom line. So, there is a more solid asset and income base underneath these shares than ever before.

      • 2 Replies to thunderingherdny
      • dennis-mahoney@sbcglobal.net dennis-mahoney Dec 9, 2013 12:38 PM Flag

        Getting rid of preferred stock and avoiding debt both increase the earnings available to common shareholders. Business risks are then shared equally by all equity holders and nobody has a priority claim to earnings. This should enhance the safety of the common shares and cause the rate of return to rise. Leveraging is not as foolproof as it was before the financial crisis. The absence of leveraging is respected more than before the financial crisis which showed that the biggest borrowers failed or were bailed out by the government or sold at firesale prices.

        Sentiment: Strong Buy

      • Well, it is a very nice hotel without a doubt. But not a bargain. I guess perhaps they are thinking that with the new office in the area things will get better. But nice asset, provides diversification so I am not complaining.

 
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