Sunstone Hotel Investors Completes Disposition Of Embassy Suites La Jolla And Acquisition Of Four Seasons Resort Napa Valley

Rhea-AI Summary

On December 2, 2021, Sunstone Hotel Investors (NYSE: SHO) completed the sale of the Embassy Suites La Jolla for $226.7 million, equating to $667,000 per room, showcasing a 22.3x multiple on 2019 Hotel Adjusted EBITDAre. The proceeds helped fund the acquisition of the Four Seasons Resort Napa Valley for a gross purchase price of $177.5 million, which includes vineyards and wine inventory. The new acquisition is expected to generate a 6% to 7% net operating income yield upon stabilization.

Positive

• Completed sale of Embassy Suites La Jolla for $226.7 million, enhancing liquidity.
• Acquired Four Seasons Napa for $177.5 million, aiming for a 6% to 7% net operating income yield.
• Strategically aligns with Sunstone's focus on Long-Term Relevant Real Estate®.

Negative

• None.

IRVINE, Calif., Dec. 6, 2021 /PRNewswire/ -- Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO), the owner of Long-Term Relevant Real Estate® in the hospitality sector, announced today that it completed the previously announced sale of the Embassy Suites La Jolla and the previously announced acquisition of Four Seasons Resort Napa Valley ("Four Seasons Napa").

On December 2, 2021, the Company sold the 340-room Embassy Suites La Jolla for a contractual sale price of $226.7 million or approximately $667,000 per key. The sale price represents a 22.3x multiple on 2019 Hotel Adjusted EBITDAre and a 4.0% cap rate on 2019 Hotel Net Operating Income. A portion of the funds from the sale were used to acquire Four Seasons Napa.  Net proceeds, after those applied to the purchase of Four Seasons Napa, were allocated to repay a portion of the Company's outstanding term loans and have been offered to repay a portion of the Company's senior notes.  

On December 1, 2021, the Company acquired the fee-simple interest in the 85-room Four Seasons Napa for a gross purchase price of $177.5 million. The acquisition includes nearly 4.5 acres of vineyards and the Elusa Winery, along with the inventory of prior wine vintages. The acquisition was funded through a combination of cash on hand, funds from the sale of the Embassy Suites La Jolla, and from borrowings on the Company's revolving credit facility. Upon stabilization, the Company expects the resort to generate a 6% to 7% net operating income yield. The acquisition of Four Seasons Napa will further advance Sunstone's strategy of owning a portfolio of Long-Term Relevant Real Estate®. For additional information on the acquisition, please refer to the Four Seasons Napa presentation located in the Investor Relations section of the Company's website.

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT") that as of the date of this release has interests in 17 hotels comprised of 8,544 rooms, the majority of which are operated under nationally recognized brands. Sunstone's business is to acquire, own, asset manage and renovate or reposition hotels considered to be Long-Term Relevant Real Estate®.

For Additional Information:
Bryan Giglia
Sunstone Hotel Investors, Inc.
(949) 382-3036

Aaron Reyes
Sunstone Hotel Investors, Inc.
(949) 382-3018

View original content:https://www.prnewswire.com/news-releases/sunstone-hotel-investors-completes-disposition-of-embassy-suites-la-jolla-and-acquisition-of-four-seasons-resort-napa-valley-301437575.html

SOURCE Sunstone Hotel Investors, Inc.

FAQ

What was the sale price of Embassy Suites La Jolla by Sunstone Hotel Investors?

The Embassy Suites La Jolla was sold for $226.7 million.

How much did Sunstone pay for the Four Seasons Resort Napa Valley?

Sunstone acquired the Four Seasons Resort Napa Valley for $177.5 million.

What is the expected return from the Four Seasons Napa acquisition?

The expected net operating income yield from the Four Seasons Napa is between 6% to 7%.

What was the purpose of selling the Embassy Suites La Jolla?

The sale was used to fund the acquisition of Four Seasons Napa and repay outstanding loans.