U.S. markets closed
  • S&P 500

    4,136.48
    -43.28 (-1.04%)
     
  • Dow 30

    33,926.01
    -127.93 (-0.38%)
     
  • Nasdaq

    12,006.96
    -193.86 (-1.59%)
     
  • Russell 2000

    1,985.53
    -15.69 (-0.78%)
     
  • Crude Oil

    73.23
    -2.65 (-3.49%)
     
  • Gold

    1,877.70
    -53.10 (-2.75%)
     
  • Silver

    22.40
    -1.22 (-5.17%)
     
  • EUR/USD

    1.0798
    -0.0113 (-1.04%)
     
  • 10-Yr Bond

    3.5320
    +0.1360 (+4.00%)
     
  • GBP/USD

    1.2056
    -0.0173 (-1.41%)
     
  • USD/JPY

    131.1500
    +2.5460 (+1.98%)
     
  • BTC-USD

    23,355.58
    -75.76 (-0.32%)
     
  • CMC Crypto 200

    535.42
    -1.43 (-0.27%)
     
  • FTSE 100

    7,901.80
    +81.64 (+1.04%)
     
  • Nikkei 225

    27,509.46
    +107.41 (+0.39%)
     

SUNSTONE HOTEL INVESTORS REPORTS RESULTS FOR SECOND QUARTER 2022

Cision

Completes Acquisition of The Confidante Miami Beach and the Remaining 25% JV Interest in the Hilton San Diego Bayfront

Amends Credit Agreement to Extend Maturities and Increase Debt Capacity

Continues Share Repurchases and Reinstates Common Dividend

IRVINE, Calif., Aug. 3, 2022 /PRNewswire/ -- Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO), the owner of Long-Term Relevant Real Estate® in the lodging industry, today announced results for the second quarter ended June 30, 2022.

Second Quarter 2022 Operational Results (as compared to Second Quarter 2021):

  • Net Income (Loss): Net income was $37.7 million as compared to a net loss of $27.9 million.

  • Comparable Portfolio RevPAR: RevPAR at the comparable 12 hotels the Company owned during both 2022 and 2021 plus The Confidante Miami Beach (the "Comparable Portfolio"), increased 98.4% to $220.37. The average daily rate was $295.40 and occupancy was 74.6%.

  • Total Portfolio RevPAR: RevPAR at the 15 hotels, which includes the Comparable Portfolio, the Montage Healdsburg and the Four Seasons Resort Napa Valley (the "Total Portfolio"), was $237.28. The average daily rate was $319.79 and occupancy was 74.2%.

  • Adjusted EBITDAre: Adjusted EBITDAre, excluding noncontrolling interest increased 382.9% to $74.0 million.

  • Adjusted FFO: Adjusted FFO attributable to common stockholders per diluted share increased 2,900.0% to $0.30. In 2022, the Company changed its presentation of Adjusted FFO attributable to common stockholders to exclude the noncash amortization expense associated with deferred stock compensation. Adjusted FFO attributable to common stockholders for the prior periods presented in this release have also been adjusted to exclude this expense. The per share impact of this change as compared to the Company's prior presentation is $0.02 for both of the second quarters of 2022 and 2021.

Information regarding the non-GAAP financial measures disclosed in this release is provided below in "Non-GAAP Financial Measures." Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included later in this release.

Bryan A. Giglia, Chief Executive Officer, stated, "Our second quarter results reflect significant sequential growth as increasing amounts of corporate and group demand added to already strong leisure travel. Our portfolio occupancy is at the highest level since early 2020 and with substantial rate growth this year, our resulting comparable RevPAR is approaching pre-pandemic levels. Despite labor and cost challenges, our operators have diligently managed their revenues and expenses and delivered robust profit margins. While growth continues to be uneven across markets, we are encouraged by the trends we are seeing throughout our portfolio."

Mr. Giglia continued, "During the quarter, we completed two hotel transactions that we expect to enhance our per share NAV growth and provide additional cash flow and earnings in the coming years as all hotel demand segments stabilize. We also completed an amendment to our bank credit agreement which gives us additional capital allocation flexibility and unlocks capacity in our balance sheet. Additionally, our Board of Directors has reinstated our common dividend, adding to the nearly $80 million in capital that we have returned to shareholders so far this year in the form of share repurchases. We have now completed nearly $700 million of transactions in 2022, and we are pleased with the progress we have made in more effectively recycling capital into new hotels and returning capital to our shareholders."

Unaudited Selected Statistical and Financial Data ($ in millions, except RevPAR, ADR and per share amounts)



Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


Change


2022


2021


Change



















Net Income (Loss)

$

37.7


$

(27.9)


235.0

%


$

52.8


$

(83.2)


163.5

%

Income (Loss) Attributable to Common Stockholders per Diluted Share

$

0.15


$

(0.16)


193.8

%


$

0.19


$

(0.43)


144.2

%



















Comparable Portfolio RevPAR (1)

$

220.37


$

111.09


98.4

%


$

188.26


$

82.24


128.9

%



















Comparable Portfolio Occupancy (1)


74.6

%


48.3

%

2,630

bps



64.6

%


37.2

%

2,740

bps

Comparable Portfolio ADR (1)

$

295.40


$

230.00


28.4

%


$

291.43


$

221.08


31.8

%



















Total Portfolio RevPAR (2)

$

237.28



N/A


N/A



$

201.86



N/A


N/A




















Total Portfolio Occupancy (2)


74.2

%


N/A


N/A




64.3

%


N/A


N/A


Total Portfolio ADR (2)

$

319.79



N/A


N/A



$

313.93



N/A


N/A




















Comparable Portfolio Adjusted EBITDAre Margin


35.0

%


19.3

%

1,570

bps



31.5

%


7.8

%

2,370

bps



















Adjusted EBITDAre, excluding noncontrolling interest

$

74.0


$

15.3


382.9

%


$

101.2


$

0.7


15,111.6

%

Adjusted FFO Attributable to Common Stockholders

$

63.2


$

3.0


1,974.8

%


$

79.6


$

(23.1)


445.1

%

Adjusted FFO Attributable to Common Stockholders per Diluted Share

$

0.30


$

0.01


2,900.0

%


$

0.37


$

(0.11)


436.4

%

(1)

Comparable Portfolio operating statistics presented here and elsewhere in this release include both prior ownership results and the Company's results for The Confidante Miami Beach, acquired by the Company in June 2022.

(2)

The Total Portfolio consists of all 15 hotels owned by the Company as of June 30, 2022. Total Portfolio operating statistics presented here and elsewhere in this release include both prior ownership results and the Company's ownership results for The Confidante Miami Beach, acquired by the Company in June 2022. The Total Portfolio includes the Company's ownership results for the Montage Healdsburg and the Four Seasons Resort Napa Valley, which were acquired in April 2021 and December 2021, respectively. Both the Montage Healdsburg and the Four Seasons Resort Napa Valley are newly-developed hotels which opened on limited bases in December 2020 and October 2021, respectively. Prior year information is not comparable.

Second Quarter 2022 Highlights

  • Completed the previously announced acquisition of the 339-room The Confidante Miami Beach for a contractual purchase price of $232.0 million. The acquisition was funded from available cash and with a $140.0 million draw on the revolving portion of the Company's credit facility. The Company will invest approximately $60.0 million to reposition the hotel under Hyatt's luxury lifestyle Andaz Brand, with the renovation program starting in the fourth quarter of 2022. The Company expects the renovation to be completed in the first half of 2024 when the hotel will debut as the Andaz Miami Beach.

  • Completed the previously announced acquisition of the 25.0% noncontrolling partner's ownership interest in the Hilton San Diego Bayfront for a contractual purchase price of $102.0 million plus 25.0% of closing date working capital and cash and the effective assumption of the partner's ratable share of the existing mortgage loan, which was already fully consolidated on the Company's balance sheet. The acquisition was funded from available cash and with a $90.0 million draw on the revolving portion of the Company's credit facility. Following this acquisition, the Company owns 100% of the Hilton San Diego Bayfront.

  • Repurchased 3,235,958 shares of the Company's common stock during the quarter at an average purchase price of $10.65 per share for a total repurchase amount before expenses of $34.4 million.

Recent Developments

Stock Repurchase Program: During the first six months of 2022, the Company repurchased 7,114,983 shares of its common stock at an average purchase price of $10.94 per share. Year to date, including shares repurchased subsequent to the end of the second quarter, the Company has repurchased a total of 7,249,427 shares of its common stock at an average price per share of $10.92 for a total repurchase amount before expenses of $79.2 million, leaving $420.8 million of authorized capacity remaining under the Company's stock repurchase program.

Unsecured Debt Agreements. In July 2022, the Company entered into a Second Amended and Restated Credit Agreement (the "Amended Credit Agreement") which expands its unsecured borrowing capacity and extends the maturity of the in-place loans. The Amended Credit Agreement continues to provide for a $500.0 million revolving credit facility and increases the aggregate amount of the Company's two term loans from $108.3 million to $350.0 million. The facilities will bear interest pursuant to a leverage-based pricing grid ranging from 1.35% to 2.25% over the applicable adjusted term SOFR. The $500.0 million revolving credit facility has two six-month extension options, which would result in an extended maturity of July 2027. The two term loan facilities each have a balance of $175.0 million and mature in July 2027 and January 2028. The Company utilized the proceeds received from the incremental borrowing on the term loans to fully repay the $230.0 million that was outstanding on its revolving credit facility.

Resumption of Common Dividend. The Company's Board of Directors has declared a cash dividend of $0.05 per share of common stock payable on October 17, 2022 to holders of record as of September 30, 2022. The quarterly dividend amount of $0.05 per share of common stock is consistent with the Company's pre-pandemic base quarterly dividend amount which was last paid in April 2020.

Capital Investments: The Company invested $32.3 million and $62.6 million into its portfolio during the second quarter and first six months of 2022, respectively. The majority of the investment consisted primarily of additional progress on the renovation of the Renaissance Washington DC in preparation for its conversion to the Westin brand in 2023, and a rooms renovation at the Hyatt Regency San Francisco which will be completed later this year. These projects are expected to drive incremental growth upon completion and will further enhance the earnings potential and value of these well-located hotels. In 2022, the Company expects to invest approximately $130 million to $150 million into its portfolio.

Balance Sheet and Liquidity Update

As of June 30, 2022, the Company had $152.9 million of cash and cash equivalents, including restricted cash of $45.6 million, total assets of $3.1 billion, including $2.8 billion of net investments in hotel properties, total debt of $805.4 million and stockholders' equity of $2.1 billion.

Operations Update

Operating statistics for the Total Portfolio were as follows:






April


May


June


Second Quarter


July




2022


2022


2022


2022


2022 (1)


RevPAR


$

244.31



$

228.45



$

239.89



$

237.28



$


233.15


Occupancy



75.7

%



73.0

%



74.1

%



74.2

%




73.8

%

Average Daily Rate


$

322.73



$

312.95



$

323.74



$

319.79



$


315.92


Operating statistics for the Comparable Portfolio were as follows:




April


May


June


Second Quarter


July



2022


2022


2022


2022


2022 (1)

RevPAR


$

228.81



$

210.27



$

222.84



$

220.37



$

218.72


Occupancy



76.1

%



73.3

%



74.6

%



74.6

%



74.6

%

Average Daily Rate


$

300.67



$

286.86



$

298.71



$

295.40



$

293.19

























April


May


June


Second Quarter


July



2019


2019


2019


2019


2019

RevPAR


$

230.82



$

219.46



$

227.57



$

225.77



$

222.52


Occupancy



88.7

%



84.9

%



87.9

%



87.1

%



87.6

%

Average Daily Rate


$

260.23



$

258.49



$

258.90



$

259.21



$

254.02

























Change 2022 vs. 2019

RevPAR



(0.9)

%



(4.2)

%



(2.1)

%



(2.4)

%



(1.7)

%

Occupancy



(1,260)

bps



(1,160)