SUNSTONE HOTEL INVESTORS REPORTS RESULTS FOR THIRD QUARTER 2023
- The net income of $15.6 million exceeded the high-end of the guidance range, showing resilience despite disruptions from the Maui fires.
- RevPAR at urban and convention hotels increased by 7.4%, indicating the strong performance of these assets.
- The sale of Boston Park Plaza for $370 million and the repurchase of shares demonstrate strategic capital allocation and confidence in the company's future growth.
- The conversion of Renaissance Washington DC to The Westin Washington, DC Downtown is expected to increase earnings potential and hotel value.
- The Q4 2023 guidance, including an expected net income of $125 to $130 million, indicates a positive outlook for the company's financial performance.
- Net income decreased by 24.1% compared to Q3 2022, potentially signaling challenges in maintaining previous earnings levels.
- Adjusted FFO attributable to common stockholders per diluted share decreased by 4.2% to $0.23, which may raise concerns about the company's financial performance.
- The reduction in expected EBITDAre in the fourth quarter due to the disruption in demand at Wailea Beach Resort and the sale of Boston Park Plaza could impact future financial results negatively.
- The reduction of $2 million to $3 million in expected EBITDAre in the fourth quarter due to the combined impact of the disruption in demand at the Wailea Beach Resort following the Maui fires in early August and the sale of the Boston Park Plaza in late October may affect overall performance.
Third Quarter 2023 Operational Results (as compared to Third Quarter 2022):
- Net Income: Net income was
$15.6 million $20.5 million - Comparable RevPAR: Comparable RevPAR was
$222.54 $305.69 72.8% . RevPAR at the Company's urban and convention hotels increased7.4% . - Adjusted EBITDAre: Adjusted EBITDAre, excluding noncontrolling interest decreased
0.2% to$63.7 million - Adjusted FFO: Adjusted FFO attributable to common stockholders per diluted share decreased
4.2% to$0.23
Information regarding the non-GAAP financial measures disclosed in this release is provided below in "Non-GAAP Financial Measures." Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included later in this release.
Bryan A. Giglia, Chief Executive Officer, stated, "Overall, we are pleased with our results in the third quarter as we delivered earnings above the high-end of our guidance range despite having to navigate disruption from the tragic fires on
Mr. Giglia continued, "Shortly after the end of the quarter, we closed on the sale of Boston Park Plaza for an attractive all-cash price of
Unaudited Selected Statistical and Financial Data ($ in millions, except RevPAR, ADR and per share amounts) | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||
Net Income | $ | 15.6 | $ | 20.5 | (24.1) | % | $ | 79.7 | $ | 73.3 | 8.8 | % | |||||
Income Attributable to Common | $ | 0.06 | $ | 0.08 | (25.0) | % | $ | 0.33 | $ | 0.27 | 22.2 | % | |||||
Comparable RevPAR (1) | $ | 222.54 | $ | 222.50 | 0.0 | % | $ | 229.17 | $ | 208.84 | 9.7 | % | |||||
Comparable Occupancy (1) | 72.8 | % | 71.4 | % | 140 | bps | 73.2 | % | 66.7 | % | 650 | bps | |||||
Comparable ADR (1) | $ | 305.69 | $ | 311.62 | (1.9) | % | $ | 313.08 | $ | 313.10 | 0.0 | % | |||||
Comparable Adjusted EBITDAre | 27.0 | % | 28.4 | % | (140) | bps | 28.9 | % | 29.0 | % | (10) | bps | |||||
Adjusted EBITDAre, excluding | $ | 63.7 | $ | 63.8 | (0.2) | % | $ | 208.8 | $ | 165.0 | 26.5 | % | |||||
Adjusted FFO Attributable to Common | $ | 46.4 | $ | 51.3 | (9.6) | % | $ | 157.6 | $ | 130.9 | 20.4 | % | |||||
Adjusted FFO Attributable to Common | $ | 0.23 | $ | 0.24 | (4.2) | % | $ | 0.76 | $ | 0.61 | 24.6 | % | |||||
(1) Comparable operating statistics presented in this release include all 15 hotels owned by the Company at September 30, 2023, and |
The Company's actual results for the quarter ended September 30, 2023 compare to its guidance previously provided as follows:
Metric ($ in millions, except per share data) | Quarter Ended September 30, 2023 Guidance (1) | Quarter Ended September 30, 2023 Actual Results (unaudited) | Performance Relative to Prior Guidance Midpoint | |||
Net Income | ||||||
Total Portfolio RevPAR Growth (as compared to the third quarter of 2022) | - | 0.0 % | - 50 bps | |||
Adjusted EBITDAre | ||||||
Adjusted FFO Attributable to Common Stockholders | ||||||
Adjusted FFO Attributable to Common Stockholders per Diluted Share | ||||||
Diluted Weighted Average Shares Outstanding | 207,500,000 | 206,000,000 | - 1,500,000 |
(1) Represents guidance presented on August 4, 2023. |
Recent Developments
Boston Park Plaza Disposition: On October 26, 2023, the Company sold the 1,060-room Boston Park Plaza for a contractual gross sale price of
The Westin
Stock Repurchase Program. During the third quarter of 2023, the Company repurchased 1,561,375 shares of its common stock at an average purchase price of
Balance Sheet and Liquidity Update
As of September 30, 2023, the Company had
Operations Update
October 2023, 2022 and 2019 results included the following ($ in millions, except RevPAR and ADR):
October | |||||||||||||||||
12 Comparable Hotels (1) | 2023 (2) | 2022 | 2019 | Change | Change | ||||||||||||
Room Revenue | $ | 46.1 | $ | 45.7 | $ | 47.0 | 0.9 | % | (1.9) | % | |||||||
RevPAR | $ | 230.19 | $ | 227.93 | $ | 234.71 | 1.0 | % | (1.9) | % | |||||||
Occupancy | 73.5 | % | 73.2 | % | 86.4 | % | 30 | bps | (1,290) | bps | |||||||
Average Daily Rate | $ | 313.19 | $ | 311.38 | $ | 271.65 | 0.6 | % | 15.3 | % | |||||||
October | |||||||||||||||||
14 Comparable Hotels (3) | 2023 (2) | 2022 | 2019 | Change | Change | ||||||||||||
Room Revenue | $ | 51.8 | $ | 51.6 | N/A | 0.4 | % | N/A | |||||||||
RevPAR | $ | 250.17 | $ | 249.05 | N/A | 0.4 | % | N/A | |||||||||
Occupancy | 73.0 | % | 72.6 | % | N/A | 40 | bps | N/A | |||||||||
Average Daily Rate | $ | 342.70 | $ | 343.05 | N/A | (0.1) | % | N/A | |||||||||
(1) The 12 Comparable Hotels exclude the Boston Park Plaza, which was sold in October 2023, and the Montage Healdsburg and the |
(2) October 2023 results are preliminary and may be adjusted during the Company's month-end close process. |
(3) The 14 Comparable Hotels include all hotels owned by the Company at September 30, 2023 except the Boston Park Plaza and |
Capital Investments Update
The Company invested
2023 Outlook
For the fourth quarter of 2023, the Company expects:
Metric ($ in millions, except per share data) | Quarter Ended | |
Net Income | ||
Total Portfolio RevPAR Growth (2) | - | |
Total Portfolio RevPAR Growth, excluding The Confidante Miami Beach (2) | - | |
Adjusted EBITDAre | ||
Adjusted FFO Attributable to Common Stockholders | ||
Adjusted FFO Attributable to Common Stockholders per Diluted Share | ||
Diluted Weighted Average Shares Outstanding | 205,500,000 |
(1) Detailed reconciliations of Net Income to non-GAAP financial measures are provided later in this release. |
(2) RevPAR Growth reflects comparison to the fourth quarter of 2022. |
Fourth quarter 2023 guidance is based in part on the following full year assumptions:
- A reduction of
$2 million $3 million Maui fires in early August and the sale of the Boston Park Plaza in late October. - Full year total Adjusted EBITDAre displacement of approximately
$12 million $13 million - Full year corporate overhead expense (excluding deferred stock amortization) of approximately
$21.0 million $22.0 million $0.5 million - Full year interest expense of approximately
$49 million $50 million $3 million $3 million - Full year preferred stock dividends of approximately
$14 million
Dividend Update
The Company expects to declare a fourth quarter common dividend that will be payable to stockholders of record as of December 29, 2023. The fourth quarter dividend will be paid in cash and will consist of the Company's recently increased regular
On November 2, 2023, the Company's Board of Directors declared cash dividends of
Supplemental Disclosures
Contemporaneous with this release, the Company has furnished a Form 8-K with unaudited financial information. This additional information is being provided as a supplement to the information in this release and other filings with the SEC. The Company has no obligation to update any of the information provided to conform to actual results or changes in the Company's portfolio, capital structure or future expectations.
Earnings Call
The Company will host a conference call to discuss third quarter financial results on November 7, 2023, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time). A live webcast of the call will be available via the Investor Relations section of the Company's website at www.sunstonehotels.com. Alternatively, interested parties may dial 1-888-330-3573 and reference conference ID 4831656 to listen to the live call. A replay of the webcast will also be archived on the 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 owns 14 hotels comprised of 6,675 rooms, the majority of which are operated under nationally recognized brands. Sunstone's strategy is to create long-term stakeholder value through the acquisition, active ownership and disposition of well-located hotel and resort real estate. For further information, please visit Sunstone's website at www.sunstonehotels.com. The Company's website is provided as a reference only and any information on the website is not incorporated by reference in this release.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will" and other similar terms and phrases, including opinions, references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: we own upper upscale and luxury hotels in an industry that is highly competitive; events beyond our control, including economic slowdowns or recessions, pandemics, natural disasters, civil unrest and terrorism; rising hotel operating costs, including wages, employee-related benefits, food costs, commodity costs, including those used to renovate or reposition our hotels, property taxes, property and liability insurance and utilities may not be offset by increased room rates; system security risks, data protection breaches, cyber-attacks and systems integration issues, including those impacting the Company's suppliers, hotel managers or franchisors; a significant portion of our hotels are geographically concentrated so we may be harmed by economic downturns or natural disasters in these areas of the country; we face possible risks associated with the physical and transitional effects of climate change; uninsured or underinsured losses could harm our financial condition; the operating results of some of our hotels are significantly reliant upon group and transient business generated by large corporate customers, and the loss of such customers for any reason could harm our operating results; the increased use of virtual meetings and other similar technologies could lessen the need for business-related travel, and, therefore, demand for rooms in our hotels may be adversely affected; our hotels have an ongoing need for capital investment and we may incur significant capital expenditures in connection with acquisitions, repositionings and other improvements, some of which are mandated by applicable laws or regulations or agreements with third parties, and the costs of such renovations, repositionings or improvements may exceed our expectations or cause other problems; delays in the acquisition, renovation or repositioning of hotel properties may have adverse effects on our results of operations and returns to our stockholders; accounting for the acquisition of a hotel property or other entity involves assumptions and estimations to determine fair value that could differ materially from the actual results achieved in future periods; volatility in the debt and equity markets may adversely affect our ability to acquire, renovate, refinance or sell our hotels; we may pursue joint venture investments that could be adversely affected by our lack of sole decision-making authority, our reliance on a co-venturer's financial condition and disputes between us and our co-venturer; we may be subject to unknown or contingent liabilities related to recently sold or acquired hotels, as well as hotels we may sell or acquire in the future; we may seek to acquire a portfolio of hotels or a company, which could present more risks to our business and financial results than the acquisition of a single hotel; the sale of a hotel or portfolio of hotels is typically subject to contingencies, risks and uncertainties, any of which may cause us to be unsuccessful in completing the disposition; the illiquidity of real estate investments and the lack of alternative uses of hotel properties could significantly limit our ability to respond to adverse changes in the performance of our hotels; we may issue or invest in hotel loans, including subordinated or mezzanine loans, which could involve greater risks of loss than senior loans secured by income-producing real properties; if we make or invest in mortgage loans with the intent of gaining ownership of the hotel secured by or pledged to the loan, our ability to perfect an ownership interest in the hotel is subject to the sponsor's willingness to forfeit the property in lieu of the debt; one of our hotels is subject to a ground lease with an unaffiliated party, the termination of which by the lessor for any reason, including due to our default on the lease, could cause us to lose the ability to operate the hotel altogether and may adversely affect our results of operations; because we are a REIT, we depend on third-parties to operate our hotels; we are subject to risks associated with our operators' employment of hotel personnel; most of our hotels operate under a brand owned by Marriott, Hilton, Hyatt, Four Seasons or Montage. Should any of these brands experience a negative event, or receive negative publicity, our operating results may be harmed; our franchisors and brand managers may adopt new policies or change existing policies which could result in increased costs that could negatively impact our hotels; future adverse litigation judgments or settlements resulting from legal proceedings could have an adverse effect on our financial condition; claims by persons regarding our properties could affect the attractiveness of our hotels or cause us to incur additional expenses; the hotel business is seasonal and seasonal variations in business volume at our hotels will cause quarterly fluctuations in our revenue; changes in the debt and equity markets may adversely affect the value of our hotels; certain of our hotels have in the past become impaired and additional hotels may become impaired in the future; laws and governmental regulations may restrict the ways in which we use our hotel properties and increase the cost of compliance with such regulations. Noncompliance with such regulations could subject us to penalties, loss of value of our properties or civil damages; corporate responsibility, specifically related to ESG factors and commitments, may impose additional costs and expose us to new risks that could adversely affect our results of operations, financial condition and cash flows; our franchisors and brand managers may require us to make capital expenditures pursuant to property improvement plans or to comply with brand standards; termination of any of our franchise, management or operating lease agreements could cause us to lose business or lead to a default or acceleration of our obligations under certain of our debt instruments; the growth of alternative reservation channels could adversely affect our business and profitability; the failure of tenants in our hotels to make rent payments under our retail and restaurant leases may adversely affect our results of operations; we rely on our corporate and hotel senior management teams, the loss of whom may cause us to incur costs and harm our business; if we fail to maintain effective internal control over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results; we have outstanding debt which may restrict our financial flexibility; certain of our debt is subject to variable interest rates, which can create uncertainty in forecasting our interest expense and may negatively impact our operating results; and other risks and uncertainties associated with the Company's business described in its filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All forward-looking information provided herein is as of the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
This release should be read together with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies of these reports are available on our website at www.sunstonehotels.com and through the SEC's Electronic Data Gathering Analysis and Retrieval System ("EDGAR") at www.sec.gov.
Non-GAAP Financial Measures
We present the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: earnings before interest expense, taxes, depreciation and amortization for real estate, or EBITDAre; Adjusted EBITDAre, excluding noncontrolling interest (as defined below); funds from operations attributable to common stockholders, or FFO attributable to common stockholders; Adjusted FFO attributable to common stockholders (as defined below); hotel Adjusted EBITDAre; and hotel Adjusted EBITDAre margins. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same as the Company. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.
We present EBITDAre in accordance with guidelines established by the National Association of Real Estate Investment Trusts ("Nareit"), as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." We believe EBITDAre is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. Nareit defines EBITDAre as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.
We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance, and that the presentation of Adjusted EBITDAre, excluding noncontrolling interest, when combined with the primary GAAP presentation of net income, is beneficial to an investor's complete understanding of our operating performance. In addition, we use both EBITDAre and Adjusted EBITDAre, excluding noncontrolling interest as measures in determining the value of hotel acquisitions and dispositions.
We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to Nareit's definition of "FFO applicable to common shares." Our presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current Nareit definition, or that interpret the current Nareit definition differently than we do.
We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance, and may facilitate comparisons of operating performance between periods and our peer companies.
We adjust EBITDAre and FFO attributable to common stockholders for the following items, which may occur in any period, and refer to these measures as either Adjusted EBITDAre, excluding noncontrolling interest or Adjusted FFO attributable to common stockholders:
- Amortization of deferred stock compensation: we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels.
- Amortization of contract intangibles: we exclude the noncash amortization of any favorable or unfavorable contract intangibles recorded in conjunction with our hotel acquisitions. We exclude the noncash amortization of contract intangibles because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.
- Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.
- Cumulative effect of a change in accounting principle: from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.
- Other adjustments: we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: lawsuit settlement costs; the write-off of development costs associated with abandoned projects; property-level restructuring, severance and management transition costs; debt resolution costs; lease terminations; property insurance restoration proceeds or uninsured losses; and other nonrecurring identified adjustments.
In addition, to derive Adjusted EBITDAre, excluding noncontrolling interest we exclude the noncontrolling partner's pro rata share of the net (income) loss allocated to the Hilton San Diego Bayfront partnership prior to our acquisition of the noncontrolling partner's interest in June 2022, as well as the noncontrolling partner's pro rata share of any EBITDAre and Adjusted EBITDAre components. We also exclude the amortization of our right-of-use assets and related lease obligations as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. Additionally, we include an adjustment for the cash finance lease expense recorded on the building lease at the Hyatt Centric Chicago Magnificent Mile (prior to the hotel's sale in February 2022). We determined that the building lease was a finance lease, and, therefore, we included a portion of the lease payment each month in interest expense. We adjust EBITDAre for the finance lease in order to more accurately reflect the actual rent due to the hotel's lessor in the respective period, as well as the operating performance of the hotel. We also exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDAre, excluding noncontrolling interest is not consistent with reflecting the ongoing performance of our assets.
To derive Adjusted FFO attributable to common stockholders, we also exclude the noncash interest on our derivatives and finance lease obligation as we believe that these items are not reflective of our ongoing finance costs. Additionally, we exclude the noncontrolling partner's pro rata share of any FFO adjustments related to our consolidated Hilton San Diego Bayfront partnership components prior to our acquisition of the noncontrolling partner's interest in June 2022. We also exclude the real estate amortization of our right-of-use assets and related lease obligations, which includes the amortization of both our finance and operating lease intangibles (with the exception of our corporate operating lease), as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. In addition, we exclude preferred stock redemption charges, changes to deferred tax assets, liabilities or valuation allowances, and income tax benefits or provisions associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets other than real estate investments.
In presenting hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins, miscellaneous non-hotel items have been excluded. We believe the calculation of hotel Adjusted EBITDAre results in a more accurate presentation of the hotel Adjusted EBITDAre margins for our hotels, and that these non-GAAP financial measures are useful to investors in evaluating our property-level operating performance.
Comparable operating statistics 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. We obtained prior ownership information from the previous owner of The Confidante Miami Beach during the due diligence period before acquiring the hotel. We performed a limited review of the information as part of our analysis of the acquisition. We believe providing comparable hotel data is useful to us and to investors in evaluating our operating performance because this measure helps us and investors evaluate and compare the results of our operations from period to period by removing the fluctuations caused by any acquisitions or dispositions.
Reconciliations of net income to EBITDAre, Adjusted EBITDAre, excluding noncontrolling interest, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders, hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins are set forth in the following pages of this release.
For Additional Information:
Aaron Reyes
Sunstone Hotel Investors, Inc.
(949) 382-3018
Sunstone Hotel Investors, Inc. | ||||||
September 30, | December 31, | |||||
2023 | 2022 | |||||
(unaudited) | ||||||
Assets | ||||||
Investment in hotel properties, net | $ | 2,580,421 | $ | 2,840,928 | ||
Operating lease right-of-use assets, net | 13,884 | 15,025 | ||||
Cash and cash equivalents | 113,768 | 101,223 | ||||
Restricted cash | 71,228 | 55,983 | ||||
Accounts receivable, net | 28,646 | 42,092 | ||||
Prepaid expenses and other assets, net | 33,106 | 27,566 | ||||
Assets held for sale | 247,776 | — | ||||
Total assets | $ | 3,088,829 | $ | 3,082,817 | ||
Liabilities and Stockholders' Equity | ||||||
Debt, net of unamortized deferred financing costs | $ | 814,702 | $ | 812,681 | ||
Operating lease obligations | 17,884 | 19,012 | ||||
Accounts payable and accrued expenses | 60,854 | 73,735 | ||||
Dividends and distributions payable | 17,765 | 13,995 | ||||
Other liabilities | 74,542 | 78,433 | ||||
Liabilities of assets held for sale | 15,397 | — | ||||
Total liabilities | 1,001,144 | 997,856 | ||||
Commitments and contingencies | ||||||
Stockholders' equity: | ||||||
Preferred stock, | ||||||
Series G Cumulative Redeemable Preferred Stock, 2,650,000 shares issued | 66,250 | 66,250 | ||||
| 115,000 | 115,000 | ||||
| 100,000 | 100,000 | ||||
Common stock, | 2,056 | 2,093 | ||||
Additional paid in capital | 2,434,649 | 2,465,595 | ||||
Distributions in excess of retained earnings | (630,270) | (663,977) | ||||
Total stockholders' equity | 2,087,685 | 2,084,961 | ||||
Total liabilities and stockholders' equity | $ | 3,088,829 | $ | 3,082,817 | ||
Sunstone Hotel Investors, Inc. | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Revenues | ||||||||||||
Room | $ | 158,467 | $ | 158,400 | $ | 484,304 | $ | 428,893 | ||||
Food and beverage | 64,007 | 63,476 | 213,634 | 174,717 | ||||||||
Other operating | 25,226 | 22,438 | 69,317 | 64,299 | ||||||||
Total revenues | 247,700 | 244,314 | 767,255 | 667,909 | ||||||||
Operating expenses | ||||||||||||
Room | 41,034 | 38,791 | 122,756 | 106,594 | ||||||||
Food and beverage | 47,777 | 47,181 | 148,309 | 125,959 | ||||||||
Other operating | 6,129 | 6,440 | 18,031 | 17,965 | ||||||||
Advertising and promotion | 12,767 | 12,325 | 39,686 | 34,420 | ||||||||
Repairs and maintenance | 10,060 | 9,382 | 29,112 | 27,369 | ||||||||
Utilities | 7,784 | 7,708 | 21,644 | 19,652 | ||||||||
Franchise costs | 4,278 | 4,145 | 12,756 | 11,429 | ||||||||
Property tax, ground lease and insurance | 21,709 | 19,714 | 60,320 | 53,160 | ||||||||
Other property-level expenses | 29,020 | 29,032 | 92,654 | 83,333 | ||||||||
Corporate overhead | 7,127 | 7,879 | 23,991 | 27,310 | ||||||||
Depreciation and amortization | 33,188 | 31,750 | 97,927 | 94,003 | ||||||||
Total operating expenses | 220,873 | 214,347 | 667,186 | 601,194 | ||||||||
Interest and other income | 1,218 | 270 | 6,398 | 4,766 | ||||||||
Interest expense | (11,894) | (9,269) | (34,911) | (20,288) | ||||||||
Gain on sale of assets | — | — | — | 22,946 | ||||||||
Gain (loss) on extinguishment of debt, net | 9 | (770) | 9,930 | (962) | ||||||||
Income before income taxes | 16,160 | 20,198 | 81,486 | 73,177 | ||||||||
Income tax (provision) benefit, net | (602) | 290 | (1,763) | 126 | ||||||||
Net income | 15,558 | 20,488 | 79,723 | 73,303 | ||||||||
Income from consolidated joint venture attributable to | — | — | — | (3,477) | ||||||||
Preferred stock dividends | (3,226) | (3,351) | (10,762) | (10,897) | ||||||||
Income attributable to common stockholders | $ | 12,332 | $ | 17,137 | $ | 68,961 | $ | 58,929 | ||||
Basic and diluted per share amounts: | ||||||||||||
Basic and diluted income attributable to common stockholders | $ | 0.06 | $ | 0.08 | $ | 0.33 | $ | 0.27 | ||||
Basic weighted average common shares outstanding | 205,570 | 211,010 | 206,257 | 213,799 | ||||||||
Diluted weighted average common shares outstanding | 205,782 | 211,289 | 206,553 | 213,869 | ||||||||
Distributions declared per common share | $ | 0.07 | $ | 0.05 | $ | 0.17 | $ | 0.05 | ||||
Sunstone Hotel Investors, Inc. | ||||||||||||
Reconciliation of Net Income to EBITDAre and AdjustedEBITDAre, Excluding Noncontrolling Interest | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Net income | $ | 15,558 | $ | 20,488 | $ | 79,723 | $ | 73,303 | ||||
Operations held for investment: | ||||||||||||
Depreciation and amortization | 33,188 | 31,750 | 97,927 | 94,003 | ||||||||
Interest expense | 11,894 | 9,269 | 34,911 | 20,288 | ||||||||
Income tax provision (benefit), net | 602 | (290) | 1,763 | (126) | ||||||||
Gain on sale of assets | — | — | — | (22,946) | ||||||||
EBITDAre | 61,242 | 61,217 | 214,324 | 164,522 | ||||||||
Operations held for investment: | ||||||||||||
Amortization of deferred stock compensation | 2,511 | 2,230 | 8,263 | 8,661 | ||||||||
Amortization of right-of-use assets and obligations | (13) | (350) | (82) | (1,050) | ||||||||
Amortization of contract intangibles, net | (19) | (19) | (55) | (43) | ||||||||
Finance lease obligation interest - cash ground rent | — | — | — | (117) | ||||||||
(Gain) loss on extinguishment of debt, net | (9) | 770 | (9,930) | 962 | ||||||||
Hurricane-related insurance restoration proceeds net of losses | — | — | (3,722) | (2,755) | ||||||||
Noncontrolling interest | — | — | — | (5,175) | ||||||||
Adjustments to EBITDAre, net | 2,470 | 2,631 | (5,526) | 483 | ||||||||
Adjusted EBITDAre, excluding noncontrolling interest | $ | 63,712 | $ | 63,848 | $ | 208,798 | $ | 165,005 | ||||
Sunstone Hotel Investors, Inc. | ||||||||||||
Reconciliation of Net Income to FFO Attributable to Common Stockholders and | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Net income | $ | 15,558 | $ | 20,488 | $ | 79,723 | $ | 73,303 | ||||
Preferred stock dividends | (3,226) | (3,351) | (10,762) | (10,897) | ||||||||
Operations held for investment: | ||||||||||||
Real estate depreciation and amortization | 33,025 | 31,313 | 97,456 | 92,796 | ||||||||
Gain on sale of assets | — | — | — | (22,946) | ||||||||
Noncontrolling interest | — | — | — | (4,933) | ||||||||
FFO attributable to common stockholders | 45,357 | 48,450 | 166,417 | 127,323 | ||||||||
Operations held for investment: | ||||||||||||
Amortization of deferred stock compensation | 2,511 | 2,230 | 8,263 | 8,661 | ||||||||
Real estate amortization of right-of-use assets and obligations | (124) | (288) | (371) | (868) | ||||||||
Amortization of contract intangibles, net | 84 | 141 | 252 | 344 | ||||||||
Noncash interest on derivatives, net | (1,469) | (39) | (3,348) | (2,904) | ||||||||
(Gain) loss on extinguishment of debt, net | (9) | 770 | (9,930) | 962 | ||||||||
Hurricane-related insurance restoration proceeds net of losses | — | — | (3,722) | (2,755) | ||||||||
Noncontrolling interest | — | — | — | 132 | ||||||||
Adjustments to FFO attributable to common stockholders, net | 993 | 2,814 | (8,856) | 3,572 | ||||||||
Adjusted FFO attributable to common stockholders | $ | 46,350 | $ | 51,264 | $ | 157,561 | $ | 130,895 | ||||
FFO attributable to common stockholders per diluted share | $ | 0.22 | $ | 0.23 | $ | 0.80 | $ | 0.59 | ||||
Adjusted FFO attributable to common stockholders per diluted share | $ | 0.23 | $ | 0.24 | $ | 0.76 | $ | 0.61 | ||||
Basic weighted average shares outstanding | 205,570 | 211,010 | 206,257 | 213,799 | ||||||||
Shares associated with unvested restricted stock awards | 411 | 594 | 473 | 350 | ||||||||
Diluted weighted average shares outstanding | 205,981 | 211,604 | 206,730 | 214,149 | ||||||||
Sunstone Hotel Investors, Inc. | ||||||
Reconciliation of Net Income to Adjusted EBITDAre | ||||||
Quarter Ended | ||||||
December 31, 2023 | ||||||
Low | High | |||||
Net income | $ | 124,900 | $ | 130,300 | ||
Depreciation and amortization | 28,800 | 28,800 | ||||
Interest expense | 14,200 | 13,800 | ||||
Income tax provision | 600 | 600 | ||||
Amortization of deferred stock compensation | 2,500 | 2,500 | ||||
Gain on sale of assets | (123,000) | (123,000) | ||||
Adjusted EBITDAre | $ | 48,000 | $ | 53,000 | ||
Reconciliation of Net Income to Adjusted FFO Attributable to Common Stockholders | ||||||
Quarter Ended | ||||||
December 31, 2023 | ||||||
Low | High | |||||
Net income | $ | 124,900 | $ | 130,300 | ||
Preferred stock dividends | (3,200) | (3,200) | ||||
Real estate depreciation and amortization | 28,500 | 28,500 | ||||
Amortization of deferred stock compensation | 2,500 | 2,500 | ||||
Gain on sale of assets | (123,000) | (123,000) | ||||
Adjusted FFO attributable to common stockholders | $ | 29,700 | $ | 35,100 | ||
Adjusted FFO attributable to common stockholders per diluted share | $ | 0.14 | $ | 0.17 | ||
Diluted weighted average shares outstanding | 205,500 | 205,500 | ||||
Sunstone Hotel Investors, Inc. | |||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Comparable Hotel Adjusted EBITDAre Margin (1) | 27.0 % | 28.4 % | 28.9 % | 29.0 % | |||||||||
Total revenues | $ | 247,700 | $ | 244,314 | $ | 767,255 | $ | 667,909 | |||||
Non-hotel revenues (2) | (19) | (19) | (55) | (57) | |||||||||
Total Actual Hotel Revenues | 247,681 | 244,295 | 767,200 | 667,852 | |||||||||
Prior ownership hotel revenues (3) | — | — | — | 22,637 | |||||||||
Sold hotel revenues (4) | — | — | — | (3,234) | |||||||||
Comparable Hotel Revenues | $ | 247,681 | $ | 244,295 | $ | 767,200 | $ | 687,255 | |||||
Net income | $ | 15,558 | $ | 20,488 | $ | 79,723 | $ | 73,303 | |||||
Non-hotel revenues (2) | (19) | (19) | (55) | (57) | |||||||||
Non-hotel operating expenses, net (5) | (270) | (270) | (895) | (1,085) | |||||||||
Taxes assessed on commercial rents (6) | 82 | 115 | 444 | 115 | |||||||||
Property-level hurricane-related restoration expenses (7) | — | — | — | 1,614 | |||||||||
Corporate overhead | 7,127 | 7,879 | 23,991 | 27,310 | |||||||||
Depreciation and amortization | 33,188 | 31,750 | 97,927 | 94,003 | |||||||||
Interest and other income | (1,218) | (270) | (6,398) | (4,766) | |||||||||
Interest expense | 11,894 | 9,269 | 34,911 | 20,288 | |||||||||
Gain on sale of assets | — | — | — | (22,946) | |||||||||
(Gain) loss on extinguishment of debt, net | (9) | 770 | (9,930) | 962 | |||||||||
Income tax provision (benefit), net | 602 | (290) | 1,763 | (126) | |||||||||
Actual Hotel Adjusted EBITDAre | 66,935 | 69,422 | 221,481 | 188,615 | |||||||||
Prior ownership hotel Adjusted EBITDAre (3) | — | — | — | 8,630 | |||||||||
Sold hotel Adjusted EBITDAre (4) | — | — | — | 2,172 | |||||||||
Comparable Hotel Adjusted EBITDAre | $ | 66,935 | $ | 69,422 | $ | 221,481 | $ | 199,417 | |||||
*Footnotes on following page
(1) Comparable Hotel Adjusted EBITDAre Margin is calculated as Comparable Hotel Adjusted EBITDAre divided by Comparable Hotel |
(2) Non-hotel revenues include the amortization of any favorable or unfavorable contract intangibles recorded in conjunction with the |
(3) Prior ownership hotel revenues and Adjusted EBITDAre for the first nine months of 2022 include results for The Confidante Miami Beach |
(4) Sold hotel revenues and Adjusted EBITDAre for the first nine months of 2022 include results for the Embassy Suites Chicago and the Hilton Garden Inn Chicago Downtown/Magnificent Mile, sold in March 2022, and the Hyatt Centric Chicago Magnificent Mile, sold in February 2022. |
(5) Non-hotel operating expenses, net for both the third quarters and first nine months of 2023 and 2022 include the amortization of hotel real |
(6) Taxes assessed on commercial rents for both the third quarters of 2023 and 2022 include |
(7) Property-level hurricane-related restoration expenses for the first nine months of 2022 include |
View original content:https://www.prnewswire.com/news-releases/sunstone-hotel-investors-reports-results-for-third-quarter-2023-301979328.html
SOURCE Sunstone Hotel Investors, Inc.
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