IRVINE,
Calif., June 2, 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 that it has completed the previously
announced acquisition of the 339-room The Confidante Miami Beach
(the "Hotel") for a purchase price of $232
million, or $684,000 per key.
The Company will invest approximately $60 million to reposition the Hotel into a
premiere beachfront resort under Hyatt's luxury, lifestyle Andaz
brand. Upon completion of the renovation, Sunstone will own a
well-located, fully renovated, beachfront resort at a highly
attractive all-in basis. The Company expects the Hotel will
generate an 8% to 9% stabilized net operating income yield on the
total investment in the Hotel, including the planned repositioning.
The renovation program will begin in phases, starting in the fourth
quarter of 2022 with completion expected to occur in the first half
of 2024 when the Hotel will debut as Andaz Miami Beach.
The Company expects the Hotel will generate $3.5 to $4.0
million of EBITDA during its ownership period in 2022. The
acquisition was funded from available cash and with $140 million of proceeds received from the
Company's previously undrawn revolving credit facility. Together
with the expected funding for the previously announced acquisition
of the remaining 25% joint venture interest in the Hilton San Diego
Bayfront which is expected to close by the end of June, the Company
anticipates having an outstanding credit facility balance at the
end of the second quarter of approximately $240 million. Based on the Company's anticipated
leverage ratio as of the end of the second quarter, borrowings on
the credit facility are expected to bear interest at the rate of
one-month LIBOR plus 1.50%.
Operations Update
The Company's operations for April and May 2022 reflect accelerating hotel demand as
compared to the first quarter of 2022. While leisure travel
continues to be robust, the greatest demand growth is occurring at
the Company's urban and group-oriented hotels which are
experiencing an increase in near-term booking activity, higher than
expected attendance at group events, and increased business
transient volume.
- Occupancy at the comparable 12 hotels the Company owned during
both 2022 and 2019 (the "12 Hotel Comparable Portfolio") has
improved from down more than 2,800 bps as compared to 2019 in the
first quarter of 2022 to down only 1,240 bps in Q2 2022 QTD.
- Average Daily Rate at the 12 Hotel Comparable Portfolio has
exceeded 2019 levels in each month of 2022 and is higher by 11.3%
so far in Q2 2022 QTD.
- As of April 30, 2022, group
revenue pace for the 12 Hotel Comparable Portfolio for Q2 through
Q4 2022 was down only 15% as compared to the same time in 2019,
with average rates approximately 5% higher than in 2019.
- As of mid-May, the 12 Hotel Comparable Portfolio had 87% of the
total transient room nights on-the-books for June to December as
compared to the same time in 2019, with average rates approximately
31% higher than in 2019.
- In the second quarter 2019, the 12 Hotel Comparable Portfolio
generated RevPAR of $229.50. Based on
stronger demand acceleration in April and May, the Company
currently anticipates that RevPAR at the 12 Hotel Comparable
Portfolio for the second quarter 2022 will be down only 6% to 8% as
compared to the second quarter of 2019.
Operating statistics
for the 12 Hotel Comparable Portfolio as of May 31, 2022 were as
follows:
|
|
|
Occupancy
|
|
ADR
|
|
RevPAR
|
|
2022
|
Change vs.
2019
|
|
2022
|
|
Change vs.
2019
|
|
2022
|
Change vs.
2019
|
April
|
75.7 %
|
(1,290)
bps
|
|
$
|
296.52
|
|
13.1 %
|
|
$
|
224.47
|
(3.3) %
|
May (1)
|
73.4 %
|
(1,180)
bps
|
|
$
|
286.73
|
|
9.4 %
|
|
$
|
210.46
|
(5.8) %
|
Q2 2022 QTD
(1)
|
74.5 %
|
(1,240)
bps
|
|
$
|
291.62
|
|
11.3 %
|
|
$
|
217.26
|
(4.6) %
|
2022 YTD (1)
|
61.8 %
|
(2,170)
bps
|
|
$
|
285.64
|
|
10.7 %
|
|
$
|
176.53
|
(18.0) %
|
Operating statistics
for all 14 hotels owned by the Company as of May 31, 2022 were as
follows:
|
|
|
|
April
2022
|
|
May 2022
(1)
|
|
Q2 2022 QTD
(1)
|
|
2022 YTD
(1)
|
Occupancy
|
|
|
75.3 %
|
|
|
73.1 %
|
|
|
74.2 %
|
|
|
61.5 %
|
ADR
|
|
$
|
319.81
|
|
$
|
314.41
|
|
$
|
317.11
|
|
$
|
309.07
|
RevPAR
|
|
$
|
240.82
|
|
$
|
229.83
|
|
$
|
235.30
|
|
$
|
190.08
|
|
(1) Results for
May 2022 are preliminary and may be adjusted during the month end
closing process. Preliminary Q2 2022 QTD
and 2022 YTD reflect preliminary results through May 31,
2022.
|
Share Repurchase Update
Since the beginning of April through June
1, 2022, the Company has repurchased 1.9 million shares of
its common stock at an average price of $11.01 per share for a total purchase price of
$21.2 million. Year to date, the
Company has repurchased 5.8 million shares of its common stock at
an average price of $11.13 per share
for a total purchase price of $64.6
million. The Company has $435.4
million remaining under its existing share repurchase
authorization. The authorization has no stated expiration date and
future repurchases will depend on various factors, including the
Company's capital availability and the price of the Company's
common stock. The Company will provide the details of future stock
repurchase activity, if any, as part of its quarterly financial
reporting.
About Sunstone Hotel Investors
Sunstone Hotel Investors, Inc. is a lodging real estate
investment trust ("REIT"). Sunstone's strategy is to create
long-term stakeholder value through the acquisition, active
ownership, and disposition of hotels considered to be Long-Term
Relevant Real Estate®. For further information, please visit
Sunstone's website at www.sunstonehotels.com.
For Additional Information
Aaron Reyes
Chief Financial Officer
Sunstone Hotel Investors, Inc.
(949) 382-3018
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: the impact the COVID-19 pandemic has on the
Company's business and the economy, as well as the response of
governments and the Company to the pandemic, and how quickly and
successfully effective vaccines and therapies are distributed and
administered; increased risks related to employee matters,
including increased employment litigation and claims for severance
or other benefits tied to termination or furloughs as a result of
temporary hotel suspensions or reduced hotel operations due to
COVID-19; general economic and business conditions, including a
U.S. recession or increased inflation, trade conflicts and tariffs,
regional or global economic slowdowns and any type of flu or
disease-related pandemic that impacts travel or the ability to
travel, including COVID-19; the need for business-related travel,
including the increased use of business-related technology; rising
hotel operating costs due to labor costs, workers' compensation and
health-care related costs, utility costs, property and liability
insurance costs, unanticipated costs such as acts of nature and
their consequences and other costs that may not be offset by
increased room rates; the ground or airspace leases for two of the
hotels the Company has interests in as of the date of this release;
the need for renovations, repositionings and other capital
expenditures for the Company's hotels; the impact, including any
delays, of renovations and repositionings on hotel operations; new
hotel supply, or alternative lodging options such as timeshare,
vacation rentals or sharing services such as Airbnb, in the
Company's markets, which could harm its occupancy levels and
revenue at its hotels; competition from hotels not owned by the
Company; relationships with, and the requirements, performance and
reputation of, the managers of the Company's hotels; relationships
with, and the requirements and reputation of, the Company's
franchisors and hotel brands; the Company's hotels may become
impaired, or its hotels which have previously become impaired may
become further impaired in the future, which may adversely affect
its financial condition and results of operations; competition for
the acquisition of hotels, and the Company's ability to complete
acquisitions and dispositions; performance of hotels after they are
acquired; changes in the Company's business strategy or acquisition
or disposition plans; the Company's level of debt, including
secured, unsecured, fixed and variable rate debt; financial and
other covenants in the Company's debt and preferred stock; the
impact on the Company's business of potential defaults by the
Company on its debt agreements or leases; volatility in the capital
markets and the effect on lodging demand or the Company's ability
to obtain capital on favorable terms or at all; the Company's need
to operate as a REIT and comply with other applicable laws and
regulations, including new laws, interpretations or court decisions
that may change the federal or state tax laws or the federal or
state income tax consequences of the Company's qualification as a
REIT; potential adverse tax consequences in the event that the
Company's operating leases with its taxable REIT subsidiaries are
not held to have been made on an arm's-length basis; system
security risks, data protection breaches, cyber-attacks and systems
integration issues, including those impacting the Company's
suppliers, hotel managers or franchisors; other events beyond the
Company's control, including climate change, natural disasters,
terrorist attacks or civil unrest; 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.
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SOURCE Sunstone Hotel Investors, Inc.