Sunstone Hotel to Offer Shares - Analyst Blog
June 21 2012 - 12:41PM
Zacks
Sunstone Hotel Investors, Inc. (SHO), a real
estate investment trust (REIT), has recently priced a secondary
offering of 11 million shares at $10.45 each.To cover any
over-allotments, Sunstone Hotel also plans to offer a 30-day option
to the underwriters for purchasing an additional 1.65 million
shares.
The net proceeds from the offering will be contributed to its
subsidiary Sunstone Hotel Partnership, LLC, in exchange for
additional membership units in the operating partnership.
The operating partnership will eventually utilize the net
proceeds to fund the acquisition of the Hilton Garden Inn Chicago
Downtown/Magnificent Mile and other such potential future
acquisitions, for renovation of the Hyatt Chicago Magnificent Mile
hotel, and for other general corporate purposes.
Recently, Sunstone Hotel entered into an agreement to acquire
the 357-room Hilton Garden Inn Chicago Downtown/Magnificent Mile
for $91.75 million. Post acquisition, the hotel is expected to
generate approximately $4.1 million of EBITDA and $3.7 million of
net operating income in 2012.
As of March 31, 2012, the company had approximately $198.2
million of cash and cash equivalents, including restricted cash of
$72.0 million and total consolidated debt of $1.6
billion.
California-based Sunstone Hotel owns, acquires and renovates
luxury and upscale full-service hotels across the United States.
The company operates the hotels under world class brands like
Marriot, Hiton, Fairmont and Sheraton.
Sunstone Hotel currently retains a Zacks #2 Rank, which
translates into a short-term Buy rating. We also have a long-term
Neutral recommendation on the stock. One of its competitors,
Host Hotels & Resorts Inc. (HST) also holds a
Zacks #2 Rank.
HOST HOTEL&RSRT (HST): Free Stock Analysis Report
SUNSTONE HOTEL (SHO): Free Stock Analysis Report
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