0001295810false0001295810us-gaap:SeriesHPreferredStockMember2024-08-072024-08-070001295810us-gaap:CommonStockMember2024-08-072024-08-070001295810sho:SeriesIPreferredStockMember2024-08-072024-08-0700012958102024-08-072024-08-07

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 7, 2024

Sunstone Hotel Investors, Inc.

(Exact Name of Registrant as Specified in Its Charter)

    

    

    

 

Maryland

 

001-32319

 

20-1296886

(State or Other Jurisdiction of
Incorporation or Organization)

 

(Commission File Number)

 

(I.R.S. Employer
Identification Number)

15 Enterprise, Suite 200
Aliso ViejoCalifornia

 

92656

(Address of Principal Executive Offices)

 

(Zip Code)

(949) 330-4000

(Registrant’s telephone number including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value

SHO

New York Stock Exchange

Series H Cumulative Redeemable Preferred Stock, $0.01 par value

SHO.PRH

New York Stock Exchange

Series I Cumulative Redeemable Preferred Stock, $0.01 par value

SHO.PRI

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Item 2.02.Results of Operations and Financial Condition.

On August 7, 2024, Sunstone Hotel Investors, Inc. (the “Company”) issued a press release regarding its financial results for the second quarter ended June 30, 2024. The press release referred to supplemental financial information that is available on the Company’s website, free of charge, at www.sunstonehotels.com. A copy of the press release and the supplemental financial information are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by this reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01.Financial Statements and Exhibits.

(d) The following exhibits are furnished herewith:

EXHIBIT INDEX

Exhibit No.

     

Description

99.1

Press Release, dated August 7, 2024.

99.2

Supplemental Financial Information for the second quarter ended June 30, 2024.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  

Sunstone Hotel Investors, Inc.

Date: August 7, 2024

By:

/s/ Aaron R. Reyes

Aaron R. Reyes
(Principal Financial Officer and Duly Authorized Officer)

Exhibit 99.1

Graphic

For Additional Information:

Aaron Reyes

Sunstone Hotel Investors, Inc.

(949) 382-3018

SUNSTONE HOTEL INVESTORS REPORTS RESULTS FOR SECOND QUARTER 2024

ALISO VIEJO, CA – August 7, 2024 – Sunstone Hotel Investors, Inc. (the “Company” or “Sunstone”) (NYSE: SHO) today announced results for the second quarter ended June 30, 2024.

Second Quarter 2024 Operational Results (as compared to Second Quarter 2023):

Net Income: Net income was $26.1 million as compared to $43.1 million.
Comparable RevPAR: Comparable RevPAR decreased 2.0% to $232.59. The average daily rate was $322.60 and occupancy was 72.1%. Excluding The Confidante Miami Beach as it transitions to Andaz Miami Beach, RevPAR increased 0.4%. Excluding The Confidante Miami Beach and the Marriott Long Beach Downtown, which was also under renovation in the second quarter of 2024, RevPAR increased 2.1%.
Adjusted EBITDAre: Adjusted EBITDAre decreased 13.6% to $73.5 million.
Adjusted FFO: Adjusted FFO attributable to common stockholders per diluted share decreased 15.2% to $0.28.

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, “We generated second quarter earnings that were consistent with our expectations despite less robust RevPAR growth, as we were able to deliver stronger out-of-room spend and were successful in driving efficiencies and cost reductions across our portfolio. We continue to benefit from our recent investment at The Westin Washington, DC Downtown which produced record earnings in the quarter. We were also encouraged by growing demand for business travel in several of our markets including Boston and San Francisco. While overall leisure demand remains strong, the recovery in Maui has been slower, which has led to lower revenue growth and earnings expectations, primarily in the third quarter, and which is reflected in our updated guidance ranges.”

Mr. Giglia continued, “We remain focused on positioning Sunstone for outsized growth as we move into 2025 and beyond. The renovation and rebranding of our Marriott Long Beach Downtown is now complete, the finished product looks exceptional, and we look forward to seeing the growth in earnings going forward. Work is continuing on the transformation of Andaz Miami Beach, which we expect to debut by the end of the year and further contribute to earnings growth in the years to come. We retain the remaining proceeds from the sale of Boston Park Plaza, which we can use to generate shareholder value through hotel acquisitions or the repurchase of our stock.

1


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,

2024

    

2023

    

Change

2024

2023

Change

Net Income

$

26.1

$

43.1

(39.3)

%

$

39.2

$

64.2

(38.9)

%

Income Attributable to Common Stockholders per Diluted Share

$

0.11

$

0.19

(42.1)

%

$

0.16

$

0.27

(40.7)

%

Comparable Operating Statistics (1)

RevPAR

$

232.59

$

237.37

(2.0)

%

$

224.68

$

232.89

(3.5)

%

Occupancy

72.1

%  

74.3

%

(220)

bps

70.5

%

72.6

%

(210)

bps

Average Daily Rate

$

322.60

$

319.48

1.0

%

$

318.70

$

320.78

(0.6)

%

Comparable Operating Statistics, excluding The Confidante Miami Beach

RevPAR

$

241.96

$

240.99

0.4

%

$

232.19

$

232.53

(0.1)

%

Occupancy

75.0

%  

74.9

%

10

bps

72.7

%

72.5

%

20

bps

Average Daily Rate

$

322.61

$

321.75

0.3

%

$

319.38

$

320.73

(0.4)

%

Comparable Adjusted EBITDAre Margin, excluding The Confidante Miami Beach

30.9

%  

32.3

%

(140)

bps

28.3

%

30.7

%

(240)

bps

Adjusted EBITDAre

$

73.5

$

85.1

(13.6)

%

$

128.0

$

145.1

(11.8)

%

Adjusted FFO Attributable to Common Stockholders

$

56.6

$

67.4

(16.0)

%

$

94.1

$

111.2

(15.3)

%

Adjusted FFO Attributable to Common Stockholders per Diluted Share

$

0.28

$

0.33

(15.2)

%

$

0.46

$

0.54

(14.8)

%

(1)Comparable operating statistics presented in this release include all 15 hotels owned by the Company at June 30, 2024, and include both prior ownership results and the Company's results for the Hyatt Regency San Antonio Riverwalk, acquired by the Company in April 2024.

Recent Developments

Stock Repurchase Program. From the start of the second quarter of 2024 through August 6, 2024, the Company repurchased 698,043 shares of its common stock at an average purchase price of $9.90 per share for a total repurchase amount before expenses of $6.9 million. The average purchase price per share represents a substantial discount to consensus estimates of net asset value and implies a highly attractive valuation multiple on the Company’s stabilized cash flow. The Company currently has $447.8 million remaining under its existing stock repurchase program authorization.

Balance Sheet and Liquidity Update

As of June 30, 2024, the Company had $234.0 million of cash and cash equivalents, including restricted cash of $74.9 million, total assets of $3.1 billion, including $2.8 billion of net investments in hotel properties, total debt of $818.0 million and stockholders’ equity of $2.2 billion.

Capital Investments Update

During the second quarter of 2024, the Company invested $41.0 million into its portfolio. The majority of the investment consisted of the transformational renovation and conversion of The Confidante Miami Beach to Andaz Miami Beach, which is expected to debut late in the fourth quarter of 2024. During the second quarter, the Company substantially completed the remaining renovation work on its newly converted Marriott Long Beach Downtown. The Company currently expects to invest approximately $135 million to $155 million into its portfolio in 2024, with the majority of the investment relating to the conversions of Andaz Miami Beach and the Marriott Long Beach Downtown and a soft goods renovation at Wailea Beach Resort.

2


2024 Outlook

The Company’s updated full year guidance is impacted by a slower than anticipated recovery in Maui, primarily during the third quarter, and the completion of the renovation work at the recently converted Marriott Long Beach Downtown, which impacted results in the second quarter and extended into the start of the third quarter. For the full year 2024, the Company expects:

Metric ($ in millions, except per share data)

Prior
Full Year 2024
Guidance (1)

Current
Full Year 2024
Guidance (2)

Change in
Full Year 2024
Guidance Midpoint

Net Income

$56 to $77

$55 to $65

- $6

Total Portfolio RevPAR Growth (3)

+ 2.25% to + 5.25%

- 0.25% to + 1.75%

- 300 bps

Total Portfolio RevPAR Growth, excluding The Confidante Miami Beach (3)

+ 4.75% to + 7.75%

+ 2.25% to + 4.25%

- 300 bps

Adjusted EBITDAre

$242 to $263

$242 to $252

- $6

Adjusted FFO Attributable to Common Stockholders

$171 to $192

$173 to $183

- $4

Adjusted FFO Attributable to Common Stockholders per Diluted Share

$0.84 to $0.94

$0.85 to $0.90

- $0.01

Diluted Weighted Average Shares Outstanding

204,500,000

204,000,000

- 500,000

(1)Reflects guidance presented on May 6, 2024.
(2)Detailed reconciliations of Net Income to non-GAAP financial measures are provided later in this release.
(3)RevPAR Growth reflects comparison to full year 2023.

Full year 2024 guidance is based in part on the following full year assumptions:

Full year total Adjusted EBITDAre displacement of approximately $15 million to $16 million in connection with planned capital investments, an increase of $1.5 million relative to the Company’s prior estimate. The increase is the result of the completion of the renovation and conversion of the Marriott Long Beach Downtown, which was previously expected to be completed in the second quarter of 2024 but extended into the start of the third quarter.
Full year interest income of approximately $11 million to $12 million, an increase of $1 million relative to the Company’s prior estimate.
Full year corporate overhead expense (excluding deferred stock amortization) of approximately $21 million to $22 million.
Full year interest expense of approximately $49 million to $52 million, including approximately $3 million in amortization of deferred financing costs, and a $2 million noncash reduction to interest expense from derivatives. Excluding the noncash interest from derivatives, the updated range is $1 million lower than the Company’s prior estimate.
Full year preferred stock dividends of approximately $15 million to $16 million, which includes the Series G, H and I cumulative redeemable preferred stock.
The Confidante Miami Beach is expected to reopen as Andaz Miami Beach by the end of the fourth quarter of 2024, and the Company currently anticipates that the resort will generate an EBITDAre loss of approximately $3 million to $5 million, excluding pre-opening and certain capitalized costs, in 2024 as the comprehensive transformation is completed.

Dividend Update

The Company’s Board of Directors has authorized a cash dividend of $0.09 per share of its common stock, as well as cash dividends of $0.382813 per share payable to its Series H cumulative redeemable preferred stockholders and $0.356250 per share payable to its Series I cumulative redeemable preferred stockholders. The dividends will be paid on October 15, 2024 to stockholders of record as of September 30, 2024.

The Company currently expects to continue to pay a quarterly cash common dividend throughout 2024. Consistent with the Company’s past practice, and to the extent that the expected regular quarterly dividends for 2024 do not satisfy its annual distribution requirements, the Company may pay an additional dividend amount in January 2025. The level of any future quarterly dividends will be determined by the Company’s board of directors after considering long-term operating projections, expected capital requirements and risks affecting the Company’s business.

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.

3


Earnings Call

The Company will host a conference call to discuss second quarter results on August 7, 2024, 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 1-800-715-9871 and reference conference ID 1026321 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 15 hotels comprised of 7,255 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 located in urban and resort destinations in an industry that is highly competitive; events beyond our control, including economic slowdowns or recessions, pandemics, natural disasters, civil unrest and terrorism; inflation adversely affecting our financial condition and results of operations; 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 disproportionately harmed by economic conditions, competition, new hotel supply, real and personal property tax rates 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 require ongoing 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, Hyatt, Hilton, Four Seasons or Montage, and 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 and operating results; 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

4


may restrict the ways in which we use our hotel properties and increase the cost of compliance with such regulations, and noncompliance with such regulations could subject us to penalties, loss of value of our properties or civil damages; corporate responsibility, specifically related to environmental sustainability, social responsibility and corporate governance, or 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 or otherwise comply with the material terms of 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; we could be harmed by inadvertent errors, misconduct or fraud that is difficult to detect; 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 or identify and prevent fraud; we have outstanding debt which may restrict our financial flexibility; certain of our debt is subject to variable interest rates, which creates uncertainty in the amount of interest expense we will incur in the future and may negatively impact our operating results; our stock repurchase program may not enhance long-term stockholder value, could cause volatility in the price of our common and preferred stock and could diminish our cash reserves; 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 (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, 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 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

5


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 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; pre-opening costs associated with extensive renovation projects such as the work being performed at The Confidante Miami Beach; debt resolution costs; lease terminations; property insurance restoration proceeds or uninsured losses; and other nonrecurring identified adjustments.

In addition, to derive Adjusted EBITDAre, we 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. We also exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDAre 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 as we believe that these items are not reflective of our ongoing finance costs. Additionally, we exclude the real estate amortization of our right-of-use assets and related lease obligations, which includes the amortization of our 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. We also 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.

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.

Reconciliations of net income to EBITDAre, Adjusted EBITDAre, 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.

6


Sunstone Hotel Investors, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share data)

June 30,

December 31,

    

    

2024

    

2023

(unaudited)

Assets

Investment in hotel properties, net

$

2,838,560

$

2,585,279

Operating lease right-of-use assets, net

10,483

12,755

Cash and cash equivalents

159,151

426,403

Restricted cash

74,853

67,295

Accounts receivable, net

37,793

31,206

Prepaid expenses and other assets, net

28,897

26,383

Total assets

$

3,149,737

$

3,149,321

Liabilities

Debt, net of unamortized deferred financing costs

$

814,263

$

814,559

Operating lease obligations

14,345

16,735

Accounts payable and accrued expenses

57,103

48,410

Dividends and distributions payable

22,987

29,965

Other liabilities

76,112

73,014

Total liabilities

984,810

982,683

Commitments and contingencies

Stockholders' equity

Preferred stock, $0.01 par value, 100,000,000 shares authorized:

Series G Cumulative Redeemable Preferred Stock, 2,650,000 shares issued and outstanding at both June 30, 2024 and December 31, 2023, stated at liquidation preference of $25.00 per share

66,250

66,250

6.125% Series H Cumulative Redeemable Preferred Stock, 4,600,000 shares issued and outstanding at both June 30, 2024 and December 31, 2023, stated at liquidation preference of $25.00 per share

115,000

115,000

5.70% Series I Cumulative Redeemable Preferred Stock, 4,000,000 shares issued and outstanding at both June 30, 2024 and December 31, 2023, stated at liquidation preference of $25.00 per share

100,000

100,000

Common stock, $0.01 par value, 500,000,000 shares authorized, 203,390,392 shares issued and outstanding at June 30, 2024 and 203,479,585 shares issued and outstanding at December 31, 2023

2,034

2,035

Additional paid in capital

2,415,764

2,416,417

Distributions in excess of retained earnings

(534,121)

(533,064)

Total stockholders' equity

2,164,927

2,166,638

Total liabilities and stockholders' equity

$

3,149,737

$

3,149,321

7


Sunstone Hotel Investors, Inc.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

    

2024

    

2023

2024

2023

Revenues

Room

$

151,296

$

173,399

$

287,111

$

325,837

Food and beverage

71,367

78,815

132,706

149,627

Other operating

24,818

23,898

44,830

44,091

Total revenues

247,481

276,112

464,647

519,555

Operating expenses

Room

37,345

42,658

72,896

81,722

Food and beverage

47,742

51,997

92,057

100,532

Other operating

6,394

6,145

12,338

11,902

Advertising and promotion

12,974

13,897

25,106

26,919

Repairs and maintenance

8,979

9,606

17,689

19,052

Utilities

6,295

6,768

12,239

13,860

Franchise costs

4,819

4,560

9,024

8,478

Property tax, ground lease and insurance

19,984

19,378

38,909

38,611

Other property-level expenses

28,120

31,857

55,743

63,634

Corporate overhead

8,168

8,396

15,686

16,864

Depreciation and amortization

31,112

32,397

60,152

64,739

Total operating expenses

211,932

227,659

411,839

446,313

Interest and other income

3,503

4,639

8,956

5,180

Interest expense

(12,693)

(9,223)

(23,703)

(23,017)

Gain on sale of assets, net

457

Gain on extinguishment of debt

38

12

59

9,921

Income before income taxes

26,397

43,881

38,577

65,326

Income tax (provision) benefit, net

(255)

(803)

600

(1,161)

Net income

26,142

43,078

39,177

64,165

Preferred stock dividends

(3,683)

(3,768)

(7,366)

(7,536)

Income attributable to common stockholders

$

22,459

$

39,310

$

31,811

$

56,629

Basic and diluted per share amounts:

Basic and diluted income attributable to common stockholders per common share

$

0.11

$

0.19

$

0.16

$

0.27

Basic weighted average common shares outstanding

202,758

206,181

202,695

206,606

Diluted weighted average common shares outstanding

203,455

206,828

203,227

207,095

Distributions declared per common share

$

0.09

$

0.05

$

0.16

$

0.10

8


Sunstone Hotel Investors, Inc.

Reconciliation of Net Income to Non-GAAP Financial Measures

(Unaudited and in thousands)

Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre

Three Months Ended June 30,

Six Months Ended June 30,

    

2024

    

2023

2024

2023

Net income

$

26,142

$

43,078

$

39,177

$

64,165

Depreciation and amortization

31,112

32,397

60,152

64,739

Interest expense

12,693

9,223

23,703

23,017

Income tax provision (benefit), net

255

803

(600)

1,161

Gain on sale of assets, net

(457)

EBITDAre

70,202

85,501

121,975

153,082

Amortization of deferred stock compensation

3,181

3,325

5,951

5,752

Amortization of right-of-use assets and obligations

(107)

(17)

(118)

(69)

Amortization of contract intangibles, net

(18)

(36)

Gain on extinguishment of debt

(38)

(12)

(59)

(9,921)

Gain on insurance recoveries

(314)

(3,722)

(314)

(3,722)

Pre-opening costs

599

599

Adjustments to EBITDAre, net

3,321

(444)

6,059

(7,996)

Adjusted EBITDAre

$

73,523

$

85,057

$

128,034

$

145,086

9


Sunstone Hotel Investors, Inc.

Reconciliation of Net Income to Non-GAAP Financial Measures

(Unaudited and in thousands, except per share data)

Reconciliation of Net Income to FFO Attributable to Common Stockholders and

Adjusted FFO Attributable to Common Stockholders

Three Months Ended June 30,

Six Months Ended June 30,

2024

    

2023

2024

2023

Net income

    

$

26,142

    

$

43,078

$

39,177

$

64,165

Preferred stock dividends

(3,683)

(3,768)

(7,366)

(7,536)

Real estate depreciation and amortization

30,771

32,240

59,526

64,431

Gain on sale of assets, net

(457)

FFO attributable to common stockholders

53,230

71,550

90,880

121,060

Amortization of deferred stock compensation

3,181

3,325

5,951

5,752

Real estate amortization of right-of-use assets and obligations

(130)

(128)

(252)

(247)

Amortization of contract intangibles, net

287

85

518

168

Noncash interest on derivatives, net

(189)

(3,711)

(2,231)

(1,879)

Gain on extinguishment of debt

(38)

(12)

(59)

(9,921)

Gain on insurance recoveries

(314)

(3,722)

(314)

(3,722)

Pre-opening costs

599

599

Prior year income tax benefit, net

(948)

Adjustments to FFO attributable to common stockholders, net

3,396

(4,163)

3,264

(9,849)

Adjusted FFO attributable to common stockholders

$

56,626

$

67,387

$

94,144

$

111,211

FFO attributable to common stockholders per diluted share

$

0.26

$

0.35

$

0.45

$

0.58

Adjusted FFO attributable to common stockholders per diluted share

$

0.28

$

0.33

$

0.46

$

0.54

Basic weighted average shares outstanding

202,758

206,181

202,695

206,606

Shares associated with unvested restricted stock awards

932

733

820

659

Diluted weighted average shares outstanding

203,690

206,914

203,515

207,265

10


Sunstone Hotel Investors, Inc.

Reconciliation of Net Income to Non-GAAP Financial Measures

Guidance for Full Year 2024

(Unaudited and in thousands, except for per share amounts)

Reconciliation of Net Income to Adjusted EBITDAre

Year Ended

December 31, 2024

    

Low

    

High

Net income

$

54,600

$

64,600

Depreciation and amortization

123,000

123,000

Interest expense

50,500

50,500

Income tax provision, net

200

200

Amortization of deferred stock compensation

11,000

11,000

Pre-opening costs

4,000

4,000

Other items

(800)

(800)

Gain on sale of assets, net

(500)

(500)

Adjusted EBITDAre

$

242,000

$

252,000

Reconciliation of Net Income to Adjusted FFO Attributable to Common Stockholders

Year Ended

December 31, 2024

    

Low

    

High

Net income

    

$

54,600

$

64,600

Preferred stock dividends

(15,500)

(15,500)

Real estate depreciation and amortization

122,500

122,500

Amortization of deferred stock compensation

11,000

11,000

Pre-opening costs

4,000

4,000

Noncash interest on derivatives, net

(2,000)

(2,000)

Prior year income tax benefit, net

(900)

(900)

Other items, net

(200)

(200)

Gain on sale of assets, net

(500)

(500)

Adjusted FFO attributable to common stockholders

$

173,000

$

183,000

Adjusted FFO attributable to common stockholders per diluted share

$

0.85

$

0.90

Diluted weighted average shares outstanding

204,000

204,000

11


Sunstone Hotel Investors, Inc.

Non-GAAP Financial Measures

Hotel Adjusted EBITDAre and Margins

(Unaudited and in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Comparable Hotel Adjusted EBITDAre Margin (1)

30.7%

31.8%

27.9%

30.6%

Comparable Hotel Adjusted EBITDAre Margin, Excluding The Confidante Miami Beach (1)

30.9%

32.3%

28.3%

30.7%

Total revenues

$

247,481

$

276,112

$

464,647

$

519,555

Non-hotel revenues (2)

(18)

(36)

Total Actual Hotel Revenues

247,481

276,094

464,647

519,519

Prior ownership hotel revenues (3)

4,200

12,609

17,737

27,314

Sold hotel revenues (4)

(33,522)

(51,562)

Comparable Hotel Revenues

251,681

255,181

482,384

495,271

The Confidante Miami Beach revenues (5)

(132)

(8,705)

(4,147)

(23,286)

Comparable Hotel Revenues, Excluding The Confidante Miami Beach

$

251,549

$

246,476

$

478,237

$

471,985

Net income

$

26,142

$

43,078

$

39,177

$

64,165

Non-hotel revenues (2)

(18)

(36)

Non-hotel operating expenses, net (6)

(296)

(275)

(574)

(625)

Property-level adjustments (7)

661

180

(583)

362

Corporate overhead

8,168

8,396

15,686

16,864

Depreciation and amortization

31,112

32,397

60,152

64,739

Interest and other income

(3,503)

(4,639)

(8,956)

(5,180)

Interest expense

12,693

9,223

23,703

23,017

Gain on sale of assets, net

(457)

Gain on extinguishment of debt

(38)

(12)

(59)

(9,921)

Income tax provision (benefit), net

255

803

(600)

1,161

Actual Hotel Adjusted EBITDAre

75,194

89,133

127,489

154,546

Prior ownership hotel Adjusted EBITDAre (3)

2,128

4,681

7,232

10,920

Sold hotel Adjusted EBITDAre (4)

(12,675)

(13,678)

Comparable Hotel Adjusted EBITDAre

77,322

81,139

134,721

151,788

The Confidante Miami Beach Adjusted EBITDAre (5)

483

(1,420)

721

(7,087)

Comparable Hotel Adjusted EBITDAre, Excluding The Confidante Miami Beach

$

77,805

$

79,719

$

135,442

$

144,701

*Footnotes on following page

12


(1)Comparable Hotel Adjusted EBITDAre Margin is calculated as Comparable Hotel Adjusted EBITDAre divided by Comparable Hotel Revenues. Comparable Hotel Adjusted EBITDAre Margin, Excluding The Confidante Miami Beach is calculated as Comparable Hotel Adjusted EBITDAre, Excluding The Confidante Miami Beach divided by Comparable Hotel Revenues, Excluding The Confidante Miami Beach.
(2)Non-hotel revenues include the amortization of any favorable or unfavorable contract intangibles recorded in conjunction with the Company's hotel acquisitions.
(3)Prior ownership hotel revenues and Adjusted EBITDAre include results for the Hyatt Regency San Antonio Riverwalk prior to the Company’s acquisition of the hotel in April 2024. The Company obtained prior ownership information from the previous owner of the Hyatt Regency San Antonio Riverwalk during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition.
(4)Sold hotel revenues and Adjusted EBITDAre include results for the Boston Park Plaza, sold in October 2023.
(5)The Confidante Miami Beach is undergoing a comprehensive renovation and conversion to Andaz Miami Beach and results are not comparable to prior periods.
(6)Non-hotel operating expenses, net include the amortization of hotel real estate-related right-of-use assets and obligations. Non-hotel operating expenses, net for the first six months of 2023 also include a prior year property tax credit related to a sold hotel.
(7)Property-level adjustments for the second quarter and first six months of 2024 include $0.1 million and $0.2 million, respectively, in taxes assessed on commercial rents at the Hyatt Regency San Francisco, and for both the second quarter and first six months of 2024, property-level adjustments include $0.6 million in pre-opening costs at The Confidante Miami Beach. Property-level adjustments for the first six months of 2024 also include a $1.3 million COVID-19-related relief grant received at the Marriott Boston Long Wharf. Property-level adjustments for the second quarter and first six months of 2023 include $0.2 million and $0.4 million, respectively, in taxes assessed on commercial rents at the Hyatt Regency San Francisco.

13


Exhibit 99.2

Graphic

Supplemental Financial Information

For the quarter ended June 30, 2024

August 7, 2024

Graphic

Graphic

Graphic



Graphic

Supplemental Financial Information
August 7, 2024

CORPORATE PROFILE AND DISCLOSURES
REGARDING NON-GAAP FINANCIAL MEASURES

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

Page 2


Graphic

Supplemental Financial Information
August 7, 2024

About Sunstone

Sunstone Hotel Investors, Inc. (the “Company,” “we,” and “our”) (NYSE: SHO) is a lodging real estate investment trust (“REIT”) that as of August 7, 2024 owns 15 hotels comprised of 7,255 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.

This presentation contains unaudited information and 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.

Corporate Headquarters
15 Enterprise, Suite 200
Aliso Viejo, CA 92656
(949) 330-4000

Company Contacts
Bryan Giglia
Chief Executive Officer
(949) 382-3036

Aaron Reyes
Chief Financial Officer
(949) 382-3018

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

Page 3


Graphic

Supplemental Financial Information
August 7, 2024

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 (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, 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 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 the Nareit 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.

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

Page 4


Graphic

Supplemental Financial Information
August 7, 2024

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 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; pre-opening costs associated with extensive renovation projects such as the work being performed at The Confidante Miami Beach; debt resolution costs; lease terminations; property insurance restoration proceeds or uninsured losses; and other nonrecurring identified adjustments.

In addition, to derive Adjusted EBITDAre, we 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. We also exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDAre 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 as we believe that these items are not reflective of our ongoing finance costs. Additionally, we exclude the real estate amortization of our right-of-use assets and related lease obligations, which includes the amortization of our 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. We also 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.

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.

Reconciliations of net income to EBITDAre, Adjusted EBITDAre, 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 supplemental package.

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

Page 5


Graphic

Supplemental Financial Information
August 7, 2024

COMPARABLE CORPORATE FINANCIAL INFORMATION

COMPARABLE CORPORATE FINANCIAL INFORMATION

Page 6


Graphic

Supplemental Financial Information
August 7, 2024

Comparable Consolidated Statements of Operations

Q2 2024 – Q3 2023, Trailing 12 Months

Quarter Ended (1)

Trailing 12 Months (1)

(Unaudited and in thousands, except per share data)

June 30,

March 31,

December 31,

September 30,

Ended

2024

    

2024

    

2023

    

2023

    

June 30, 2024

Revenues

Room

$

153,790

$

144,437

$

135,551

$

141,504

$

575,282

Food and beverage

72,552

64,989

64,914

59,412

261,867

Other operating

25,339

21,277

21,196

23,894

91,706

Total revenues

251,681

230,703

221,661

224,810

928,855

Operating Expenses

Room

37,922

37,518

35,298

35,661

146,399

Food and beverage

48,312

46,368

45,952

44,564

185,196

Other expenses

88,490

87,896

84,965

86,763

348,114

Corporate overhead

8,168

7,518

7,421

7,127

30,234

Depreciation and amortization

31,112

31,063

31,158

31,157

124,490

Total operating expenses

214,004

210,363

204,794

205,272

834,433

Interest and other income

3,503

5,453

4,137

1,218

14,311

Interest expense

(12,693)

(11,010)

(16,768)

(11,894)

(52,365)

Income before income taxes

28,487

14,783

4,236

8,862

56,368

Income tax (provision) benefit, net

(255)

(93)

863

(602)

(87)

Net income

$

28,232

$

14,690

$

5,099

$

8,260

$

56,281

Comparable Hotel Adjusted EBITDAre (2)

$

77,322

$

57,399

$

55,578

$

57,634

$

247,933

Comparable Adjusted EBITDAre (3)

$

75,651

$

59,615

$

54,951

$

54,411

$

244,628

Comparable Adjusted FFO attributable to common stockholders (4)

$

58,754

$

42,622

$

39,255

$

37,049

$

177,680

Comparable Adjusted FFO attributable to common stockholders per diluted share (4)

$

0.29

$

0.21

$

0.19

$

0.18

$

0.88

*Footnotes on page 8

COMPARABLE CORPORATE FINANCIAL INFORMATION

Page 7


Graphic

Supplemental Financial Information
August 7, 2024

Comparable Consolidated Statements of Operations

Footnotes

(1)Includes results for all 15 hotels owned by the Company as of June 30, 2024. Also includes prior ownership results for the Hyatt Regency San Antonio Riverwalk acquired by the Company in April 2024, adjusted for the Company's pro forma depreciation expense. The Company obtained prior ownership information from the previous owner of the Hyatt Regency San Antonio Riverwalk during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition. Excludes results for the Boston Park Plaza sold in October 2023. Also excludes the gain on sale of assets, net, extinguishment of debt, and income tax related to hotels either sold or disposed of in prior years.
(2)Comparable Hotel Adjusted EBITDAre reconciliation for the second quarter of 2024 can be found later in this presentation. Additional details can be found in our earnings release, furnished in Exhibit 99.1 to our 8-K filed on August 7, 2024. Comparable Hotel Adjusted EBITDAre presented for the trailing 12 months ended June 30, 2024 includes all hotels owned by the Company as of June 30, 2024.
(3)Comparable Adjusted EBITDAre reconciliation for the second quarter of 2024 can be found in the following pages and reflect the adjustments noted in Footnote 1 above.
(4)Comparable Adjusted FFO attributable to common stockholders and Comparable Adjusted FFO attributable to common stockholders per diluted share reconciliations for the second quarter of 2024 can be found in the following pages and reflect the adjustments noted in Footnote 1 above, along with repurchases of the Company's common stock totaling 0.4 million shares in the second quarter of 2024 and 1.6 million and 2.1 million shares in the third and fourth quarters of 2023, respectively.

COMPARABLE CORPORATE FINANCIAL INFORMATION

Page 8


Graphic

Supplemental Financial Information
August 7, 2024

Comparable Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre

Q2 2024 – Q3 2023, Trailing 12 Months

Quarter Ended

Trailing 12 Months

June 30,

March 31,

December 31,

September 30,

Ended

(In thousands)

2024

2024

2023

2023

June 30, 2024

Net income

$

26,142

$

13,035

$

126,985

$

15,558

$

181,720

Depreciation and amortization

31,112

29,040

29,135

33,188

122,475

Interest expense

12,693

11,010

16,768

11,894

52,365

Income tax provision (benefit), net

255

(855)

2,799

602

2,801

Gain on sale of assets, net

(457)

(123,820)

(124,277)

EBITDAre

70,202

51,773

51,867

61,242

235,084

Amortization of deferred stock compensation

3,181

2,770

2,512

2,511

10,974

Amortization of right-of-use assets and obligations

(107)

(11)

(20)

(13)

(151)

Amortization of contract intangibles, net

(19)

(19)

Gain on extinguishment of debt

(38)

(21)

(8)

(9)

(76)

Gain on insurance recoveries

(314)

(314)

Pre-opening costs

599

599

Property-level severance

297

297

Adjustments to EBITDAre, net

3,321

2,738

2,781

2,470

11,310

Adjusted EBITDAre

73,523

54,511

54,648

63,712

246,394

Sold hotel Adjusted EBITDAre (1)

(5,420)

(12,926)

(18,346)

Acquisition hotel Adjusted EBITDAre (2)

2,128

5,104

5,723

3,625

16,580

Comparable Adjusted EBITDAre

$

75,651

$

59,615

$

54,951

$

54,411

$

244,628

*Footnotes on page 11

COMPARABLE CORPORATE FINANCIAL INFORMATION

Page 9


Graphic

Supplemental Financial Information
August 7, 2024

Comparable Reconciliation of Net Income to FFO and Adjusted FFO Attributable to Common Stockholders

Q2 2024– Q3 2023, Trailing 12 Months

Quarter Ended

Trailing 12 Months

June 30,

March 31,

December 31,

September 30,

Ended

(In thousands, except per share data)

2024

2024

2023

2023

June 30, 2024

Net income

$

26,142

$

13,035

$

126,985

$

15,558

$

181,720

Preferred stock dividends

(3,683)

(3,683)

(3,226)

(3,226)

(13,818)

Real estate depreciation and amortization

30,771

28,755

28,979

33,025

121,530

Gain on sale of assets, net

(457)

(123,820)

(124,277)

FFO attributable to common stockholders

53,230

37,650

28,918

45,357

165,155

Amortization of deferred stock compensation

3,181

2,770

2,512

2,511

10,974

Real estate amortization of right-of-use assets and obligations

(130)

(122)

(134)

(124)

(510)

Amortization of contract intangibles, net

287

231

105

84

707

Noncash interest on derivatives, net

(189)

(2,042)

3,600

(1,469)

(100)

Gain on extinguishment of debt

(38)

(21)

(8)

(9)

(76)

Gain on insurance recoveries

(314)

(314)

Pre-opening costs

599

599

Property-level severance

297

297

Income tax related to hotel disposition

(948)

3,662

2,714

Adjustments to FFO attributable to common stockholders, net

3,396

(132)

10,034

993

14,291

Adjusted FFO attributable to common stockholders

56,626

37,518

38,952

46,350

179,446

Sold hotel Adjusted FFO (1)

(5,420)

(12,926)

(18,346)

Acquisition hotel Adjusted FFO (2)

2,128

5,104

5,723

3,625

16,580

Comparable Adjusted FFO attributable to common stockholders

$

58,754

$

42,622

$

39,255

$

37,049

$

177,680

Comparable Adjusted FFO attributable to common stockholders per diluted share

$

0.29

$

0.21

$

0.19

$

0.18

$

0.88

Basic weighted average shares outstanding

202,758

202,631

203,612

205,570

203,643

Shares associated with unvested restricted stock awards

932

665

613

411

655

Diluted weighted average shares outstanding

203,690

203,296

204,225

205,981

204,298

Equity transactions (3)

(323)

(359)

(1,523)

(3,482)

(1,422)

Comparable diluted weighted average shares outstanding

203,367

202,937

202,702

202,499

202,876

*Footnotes on page 11

COMPARABLE CORPORATE FINANCIAL INFORMATION

Page 10


Graphic

Supplemental Financial Information
August 7, 2024

Comparable Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre,

FFO and Adjusted FFO Attributable to Common Stockholders

Q2 2024 – Q3 2023, Trailing 12 Months Footnotes

(1)Sold hotel Adjusted EBITDAre and Adjusted FFO include results for the Boston Park Plaza sold in October 2023.
(2)Acquisition hotel Adjusted EBITDAre and Adjusted FFO include prior ownership results for the Hyatt Regency San Antonio Riverwalk acquired by the Company in April 2024.
(3)Equity transactions represent repurchases of the Company’s common stock totaling 0.4 million in the second quarter of 2024 and 1.6 million and 2.1 million shares in the third and fourth quarters of 2023, respectively.

COMPARABLE CORPORATE FINANCIAL INFORMATION

Page 11


Graphic

Supplemental Financial Information
August 7, 2024

CAPITALIZATION

CAPITALIZATION

Page 12


Graphic

Supplemental Financial Information
August 7, 2024

Comparative Capitalization
Q2 2024 – Q2 2023

June 30,

March 31,

December 31,

September 30,

June 30,

(In thousands, except per share data)

    

2024

    

2024

    

2023

    

2023

    

2023

Common Share Price & Dividends

At the end of the quarter

$

10.46

$

11.14

$

10.73

$

9.35

$

10.12

High during quarter ended

$

11.09

$

11.38

$

11.05

$

10.50

$

10.79

Low during quarter ended

$

9.96

$

10.42

$

9.04

$

8.67

$

9.39

Common dividends per share

$

0.09

$

0.07

$

0.13

$

0.07

$

0.05

Common Shares & Units

Common shares outstanding

203,390

203,674

203,480

205,623

207,185

Units outstanding

Total common shares and units outstanding

203,390

203,674

203,480

205,623

207,185

Capitalization

Market value of common equity

$

2,127,464

$

2,268,933

$

2,183,336

$

1,922,578

$

2,096,709

Liquidation value of preferred equity - Series G

66,250

66,250

66,250

66,250

66,250

Liquidation value of preferred equity - Series H

115,000

115,000

115,000

115,000

115,000

Liquidation value of preferred equity - Series I

100,000

100,000

100,000

100,000

100,000

Total debt

817,978

818,512

819,050

819,582

820,100

Total capitalization

$

3,226,692

$

3,368,695

$

3,283,636

$

3,023,410

$

3,198,059

Total debt to total capitalization

25.4

%  

24.3

%  

24.9

%  

27.1

%  

25.6

%  

Total debt and preferred equity to total capitalization

34.1

%  

32.6

%  

33.5

%  

36.4

%  

34.4

%  

CAPITALIZATION

Page 13


Graphic

Supplemental Financial Information
August 7, 2024

Debt Summary Schedule

(In thousands)

Interest Rate /

Maturity

June 30, 2024

Debt

    

Collateral

    

Spread

    

Date (1)

    

Balance

Secured Mortgage Debt

JW Marriott New Orleans

4.15%

12/11/2024

$

72,978

Series A Senior Notes

Unsecured

4.69%

01/10/2026

65,000

Term Loan 3 (2)

Unsecured

6.78%

05/01/2026

225,000

Term Loan 1 (3)

Unsecured

5.27%

07/25/2027

175,000

Revolving Line of Credit

Unsecured

Adj. SOFR + 1.40%

07/25/2027

Series B Senior Notes

Unsecured

4.79%

01/10/2028

105,000

Term Loan 2 (3)

Unsecured

6.78%

01/25/2028

175,000

Total Debt

$

817,978

Preferred Stock

Series G cumulative redeemable preferred (4)

1.621%

perpetual

$

66,250

Series H cumulative redeemable preferred

6.125%

perpetual

115,000

Series I cumulative redeemable preferred

5.70%

perpetual

100,000

Total Preferred Stock

$

281,250

Debt and Preferred Statistics

Debt Statistics

Debt and Preferred Statistics

% Fixed Rate Debt

51.1

%  

63.6

%  

% Floating Rate Debt

48.9

%  

36.4

%  

Average Interest Rate

5.80

%  

5.57

%  

Weighted Average Maturity of Debt

2.5 years

N/A

(1)Maturity Date assumes the exercise of all available extensions for the Revolving Line of Credit and Term Loan 3. By extending these loans, the Company's weighted average maturity of debt increases from 2.3 years to 2.5 years.
(2)Interest rates on Term Loan 3 are calculated on a leverage-based pricing grid ranging from 135 to 220 basis points over the applicable adjusted term SOFR. Term Loan 3 has an initial term of two years with one 12-month extension, which would result in an extended maturity of May 2026.
(3)Pursuant to the Second Amended Credit Agreement, interest rates on Term Loan 1 and Term Loan 2 are calculated on a leverage-based pricing grid ranging from 135 to 220 basis points over the applicable adjusted term SOFR. The Company did not achieve its 2023 sustainability performance metric as specified in the Second Amended Credit Agreement, resulting in the pricing grid returning to its range of 135 to 220 basis points in May 2024, an increase of 0.02% from the previous year. The pricing grid is evaluated annually and is subject to the Company's ability to satisfy its sustainability metric. The interest rate for Term Loan 1 includes the effects of the Company's interest rate derivative swaps.
(4)The Series G cumulative redeemable preferred stock had an initial dividend rate equal to the Montage Healdsburg's annual net operating income yield on the Company's total investment in the resort, resulting in cash dividends of $0.030365 per share declared for the last six months of 2023. During the first half of 2024, the dividend rate increased to the greater of 3.0% or the rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s total investment in the resort, resulting in cash dividends of $0.375 per share declared for the first six months of 2024. The total dividends declared during the last twelve months equate to an annual yield of 1.621%. In the second half of 2024, the dividend rate is expected to increase to the greater of 4.5% or the rate equal to the Montage Healdsburg's annual net operating income yield on the Company's total investment in the resort.

CAPITALIZATION

Page 14


Graphic

Supplemental Financial Information
August 7, 2024

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 15


Graphic

Supplemental Financial Information
August 7, 2024

Hotel Information as of August 7, 2024

Hotel

    

Location

    

Brand

    

Number of
Rooms

    

% of Total
Rooms

    

Interest

    

Year Acquired

1

  

Hilton San Diego Bayfront (1) (2)

California

Hilton

1,190

16%

Leasehold

2011 / 2022

2

Hyatt Regency San Francisco

California

Hyatt

821

11%

Fee Simple

2013

3

The Westin Washington, DC Downtown

Washington DC

Marriott

807

11%

Fee Simple

2005

4

Renaissance Orlando at SeaWorld®

Florida

Marriott

781

11%

Fee Simple

2005

5

Hyatt Regency San Antonio Riverwalk

Texas

Hyatt

630

9%

Fee Simple

2024

6

Wailea Beach Resort

Hawaii

Marriott

547

8%

Fee Simple

2014

7

JW Marriott New Orleans (3)

Louisiana

Marriott

501

7%

Fee Simple

2011

8

Marriott Boston Long Wharf

Massachusetts

Marriott

415

6%

Fee Simple

2007

9

Marriott Long Beach Downtown

California

Marriott

376

5%

Fee Simple

2005

10

The Confidante Miami Beach

Florida

Hyatt

287

4%

Fee Simple

2022

11

The Bidwell Marriott Portland

Oregon

Marriott

258

4%

Fee Simple

2000

12

Hilton New Orleans St. Charles

Louisiana

Hilton

252

3%

Fee Simple

2013

13

Oceans Edge Resort & Marina

Florida

Independent

175

2%

Fee Simple

2017

14

Montage Healdsburg (4)

California

Montage

130

2%

Fee Simple

2021

15

Four Seasons Resort Napa Valley (4)

California

Four Seasons

85

1%

Fee Simple

2021

Total Portfolio

7,255

100%

(1)In June 2022, the Company acquired the 25.0% noncontrolling partner's ownership interest in the Hilton San Diego Bayfront. Following this acquisition, the Company owns 100% of the hotel.
(2)The ground lease at the Hilton San Diego Bayfront matures in 2071.
(3)Hotel is subject to a municipal airspace lease that matures in 2044 and applies only to certain balcony space that is not integral to the hotel’s operations.
(4)The number of rooms excludes rooms provided by owners of the separately owned private residences at each resort who may periodically elect to participate in the applicable resort’s residential rental program.

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 16


Graphic

Supplemental Financial Information
August 7, 2024

Property-Level Operating Statistics

ADR, Occupancy, RevPAR and Total RevPAR (TRevPAR)

Q2 2024/2023

ADR

Occupancy

RevPAR

TRevPAR

Hotels sorted by number of rooms

For the Three Months Ended June 30,

For the Three Months Ended June 30,

For the Three Months Ended June 30,

For the Three Months Ended June 30,

    

2024

    

2023

2024 vs.

2023

    

2024

    

2023

2024 vs.

2023

    

2024

    

2023

2024 vs.

2023

2024

2023

2024 vs. 2023

Hilton San Diego Bayfront

$

282

$

277

1.8%

86.7%

85.7%

100

bps

$

244

$

237

3.0%

$

437

$

435

0.6%

Hyatt Regency San Francisco

284

291

(2.4)%

76.7%

72.9%

380

bps

218

212

2.7%

290

317

(8.4)%

The Westin Washington, DC Downtown (1)

319

292

9.3%

76.8%

63.1%

1,370

bps

245

184

33.0%

386

272

41.9%

Renaissance Orlando at SeaWorld®

195

195

0.3%

67.8%

78.9%

(1,110)

bps

132

154

(13.8)%

300

345

(12.8)%

Hyatt Regency San Antonio Riverwalk

204

203

0.8%

76.7%

69.9%

680

bps

157

142

10.6%

264

220

20.2%

Wailea Beach Resort

668

682

(2.2)%

71.4%

75.2%

(380)

bps

477

513

(7.1)%

754

783

(3.6)%

JW Marriott New Orleans

249

258

(3.5)%

72.5%

75.7%

(320)

bps

181

195

(7.6)%

257

263

(2.4)%

Marriott Boston Long Wharf

406

405

0.1%

86.0%

79.7%

630

bps

349

323

8.0%

490

448

9.3%

Marriott Long Beach Downtown (1)

235

229

2.7%

49.5%

79.6%

(3,010)

bps

116

182

(36.1)%

158

233

(31.9)%

The Bidwell Marriott Portland

155

182

(14.6)%

70.6%

61.1%

950

bps

110

111

(1.3)%

150

153

(2.4)%

Hilton New Orleans St. Charles

180

188

(4.0)%

72.4%

77.5%

(510)

bps

131

145

(10.3)%

152

192

(21.1)%

Oceans Edge Resort & Marina

306

362

(15.4)%

82.2%

78.5%

370

bps

252

284

(11.5)%

438

466

(6.0)%

Montage Healdsburg

1,130

1,145

(1.2)%

59.2%

62.1%

(290)

bps

669

711

(5.9)%

1,275

1,296

(1.6)%

Four Seasons Resort Napa Valley

1,431

1,640

(12.8)%

62.6%

49.6%

1,300

bps

896

813

10.1%

1,715

1,398

22.7%

Comparable Portfolio, Excluding Renovation Hotel (2)

323

322

0.3%

75.0%

74.9%

10

bps

242

241

0.4%

396

388

2.0%

Add: Renovation Hotel (1)

The Confidante Miami Beach

264

(100.0)%

0.0%

63.2%

(6,320)

bps

167

(100.0)%

5

282

(98.2)%

Comparable Portfolio (3)

$

323

$

319

1.0%

72.1%

74.3%

(220)

bps

$

233

$

237

(2.0)%

$

380

$

383

(0.8)%

*Footnotes on page 19

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 17


Graphic

Supplemental Financial Information
August 7, 2024

Property-Level Operating Statistics

ADR, Occupancy, RevPAR and Total RevPAR (TRevPAR)

Q2 YTD 2024/2023

ADR

Occupancy

RevPAR

TRevPAR

Hotels sorted by number of rooms

For the Six Months Ended June 30,

For the Six Months Ended June 30,

For the Six Months Ended June 30,

For the Six Months Ended June 30,

    

2024

    

2023

2024 vs.

2023

    

2024

    

2023

2024 vs.

2023

    

2024

    

2023

2024 vs.

2023

2024

2023

    

2024 vs.

2023

Hilton San Diego Bayfront

$

286

$

281

1.7%

84.2%

84.3%

(10)

bps

$

241

$

237

1.6%

$

433

$

433

(0.2)%

Hyatt Regency San Francisco

303

307

(1.2)%

71.2%

69.5%

170

bps

216

213

1.3%

292

310

(5.9)%

The Westin Washington, DC Downtown (1)

294

272

8.1%

71.9%

55.4%

1,650

bps

211

151

40.3%

340

219

55.0%

Renaissance Orlando at SeaWorld®

214

208

2.9%

74.4%

81.1%

(670)

bps

159

169

(5.6)%

348

376

(7.3)%

Hyatt Regency San Antonio Riverwalk

206

207

(0.4)%

74.4%

72.4%

200

bps

153

150

2.3%

250

240

4.5%

Wailea Beach Resort

683

711

(3.9)%

76.2%

77.4%

(120)

bps

520

550

(5.4)%

780

817

(4.5)%

JW Marriott New Orleans

260

261

(0.4)%

70.4%

74.2%

(380)

bps

183

194

(5.5)%

255

265

(3.9)%

Marriott Boston Long Wharf

353

356

(0.7)%

76.8%

69.4%

740

bps

271

247

9.9%

388

349

11.0%

Marriott Long Beach Downtown (1)

231

234

(1.1)%

41.1%

76.9%

(3,580)

bps

95

180

(47.1)%

130

234

(44.8)%

The Bidwell Marriott Portland

150

172

(12.9)%

64.5%

55.9%

860

bps

97

96

0.5%

135

133

1.4%

Hilton New Orleans St. Charles

190

197

(3.5)%

76.2%

76.1%

10

bps

144

150

(3.4)%

168

184

(8.5)%

Oceans Edge Resort & Marina

363

416

(12.8)%

81.9%

78.6%

330

bps

297

327

(9.2)%

476

499

(4.6)%

Montage Healdsburg

1,030

1,062

(3.0)%

48.5%

52.6%

(410)

bps

500

559

(10.5)%

957

1,008

(5.1)%

Four Seasons Resort Napa Valley

1,305

1,539

(15.2)%

48.3%

40.0%

830

bps

630

615

2.4%

1,233

1,106

11.5%

Comparable Portfolio, Excluding Renovation Hotel (2)

319

321

(0.4)%

72.7%

72.5%

20

bps

232

233

(0.1)%

376

374

0.7%

Add: Renovation Hotel (1)

The Confidante Miami Beach

269

322

(16.3)%

22.3%

73.5%

(5,120)

bps

60

237

(74.6)%

73

380

(80.8)%

Comparable Portfolio (3)

$

319

$

321

(0.6)%

70.5%

72.6%

(210)

bps

$

225

$

233

(3.5)%

$

363

$

374

(2.9)%

*Footnotes on page 19

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 18


Graphic

Supplemental Financial Information
August 7, 2024

Property-Level Operating Statistics

Q2 and YTD 2024/2023 Footnotes

(1)Operating statistics for the second quarter and first six months of 2024 are impacted by renovation activity at Marriott Long Beach Downtown and The Confidante Miami Beach. In March 2024, operations at The Confidante Miami Beach were temporarily suspended to allow for extensive renovation work to be performed. The Company expects the resort to resume operations as Andaz Miami Beach in the fourth quarter of 2024. Operating statistics for the second quarter and first six months of 2023 are impacted by renovation activity at The Westin Washington, DC Downtown.
(2)Comparable Portfolio, Excluding Renovation Hotel includes all hotels owned by the Company as of June 30, 2024, with the exception of The Confidante Miami Beach due to its renovation activity during the second quarter and first six months of 2024. Amounts included in this presentation for the Hyatt Regency San Antonio Riverwalk, acquired by the Company in April 2024, include both prior ownership results and the Company’s results. The Company obtained prior ownership information from the previous owner of the Hyatt Regency San Antonio Riverwalk during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition.
(3)Comparable Portfolio consists of all hotels owned by the Company as of June 30, 2024, and includes prior ownership information for the Hyatt Regency San Antonio Riverwalk as discussed in Note 2.

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 19


Graphic

Supplemental Financial Information
August 7, 2024

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre &

ADJUSTED EBITDAre MARGINS

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 20


Graphic

Supplemental Financial Information
August 7, 2024

Property-Level Revenues, Adjusted EBITDAre and Adjusted EBITDAre Margins

Q2 2024/2023

Hotels sorted by number of rooms

For the Three Months Ended June 30,

2024

2023

(In thousands)

Hotel Adjusted

Hotel Adjusted

Hotel Adjusted

Total

Hotel Adjusted

EBITDAre

Total

Hotel Adjusted

EBITDAre

EBITDAre

    

Revenues

    

EBITDAre

    

Margins

    

Revenues

    

EBITDAre

    

Margins

    

Margin Change

Hilton San Diego Bayfront

$

47,328

$

14,971

31.6%

$

47,061

$

15,833

33.6%

(200)

bps

Hyatt Regency San Francisco

21,701

1,609

7.4%

23,693

4,749

20.0%

(1,260)

bps

The Westin Washington, DC Downtown (1)

28,340

11,506

40.6%

19,975

5,967

29.9%

1,070

bps

Renaissance Orlando at SeaWorld®

21,352

6,321

29.6%

24,497

8,328

34.0%

(440)

bps

Hyatt Regency San Antonio Riverwalk

15,152

6,743

44.5%

12,609

4,681

37.1%

740

bps

Wailea Beach Resort

37,544

13,548

36.1%

38,960

14,656

37.6%

(150)

bps

JW Marriott New Orleans

11,711

4,538

38.7%

11,993

5,270

43.9%

(520)

bps

Marriott Boston Long Wharf

18,498

7,948

43.0%

16,915

6,908

40.8%

220

bps

Marriott Long Beach Downtown (1)

5,421

(13)

(0.2)%

7,919

2,486

31.4%

(3,160)

bps

The Bidwell Marriott Portland

3,515

749

21.3%

3,599

876

24.3%

(300)

bps

Hilton New Orleans St. Charles

3,479

1,132

32.5%

4,413

1,981

44.9%

(1,240)

bps

Oceans Edge Resort & Marina

6,976

2,304

33.0%

7,424

2,789

37.6%

(460)

bps

Montage Healdsburg

15,709

4,177

26.6%

15,335

3,365

21.9%

470

bps

Four Seasons Resort Napa Valley

14,823

2,272

15.3%

12,083

1,830

15.1%

20

bps

Comparable Portfolio, Excluding Renovation Hotel (2)

251,549

77,805

30.9%

246,476

79,719

32.3%

(140)

bps

Add: Renovation Hotel (1)

The Confidante Miami Beach

132

(483)

(365.9)%

8,705

1,420

16.3%

(38,220)

bps

Comparable Portfolio (3)

251,681

77,322

30.7%

255,181

81,139

31.8%

(110)

bps

Less: Prior Ownership (4)

Hyatt Regency San Antonio Riverwalk

(4,200)

(2,128)

N/A

(12,609)

(4,681)

37.1%

N/A

Add: Sold Hotel (5)

N/A

33,522

12,675

37.8%

N/A

Actual Portfolio (6)

$

247,481

$

75,194

30.4%

$

276,094

$

89,133

32.3%

N/A

*Footnotes on page 23

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 21


Graphic

Supplemental Financial Information
August 7, 2024

Property-Level Revenues, Adjusted EBITDAre and Adjusted EBITDAre Margins

Q2 YTD 2024/2023

Hotels sorted by number of rooms

For the Six Months Ended June 30,

2024

2023

(In thousands)

Hotel Adjusted

Hotel Adjusted

Hotel Adjusted

Total

Hotel Adjusted

EBITDAre

Total

Hotel Adjusted

EBITDAre

EBITDAre

    

Revenues

    

EBITDAre

    

Margins

    

Revenues

    

EBITDAre

    

Margins

    

Margin Change

Hilton San Diego Bayfront

$

93,716

$

29,285

31.2%

$

93,362

$

30,872

33.1%

(190)

bps

Hyatt Regency San Francisco

43,627

4,228

9.7%

46,096

8,423

18.3%

(860)

bps

The Westin Washington, DC Downtown (1)

49,923

16,191

32.4%

32,030

6,573

20.5%

1,190

bps

Renaissance Orlando at SeaWorld®

49,492

16,448

33.2%

53,120

19,421

36.6%

(340)

bps

Hyatt Regency San Antonio Riverwalk

28,689

11,847

41.3%

27,314

10,920

40.0%

130

bps

Wailea Beach Resort

77,677

29,104

37.5%

80,876

31,456

38.9%

(140)

bps

JW Marriott New Orleans

23,243

8,968

38.6%

24,046

10,745

44.7%

(610)

bps

Marriott Boston Long Wharf

29,277

9,630

32.9%

26,224

7,954

30.3%

260

bps

Marriott Long Beach Downtown (1)

8,842

(2,031)

(23.0)%

15,873

4,997

31.5%

(5,450)

bps

The Bidwell Marriott Portland

6,332

953

15.1%

6,212

1,044

16.8%

(170)

bps

Hilton New Orleans St. Charles

7,706

2,741

35.6%

8,373

3,502

41.8%

(620)

bps

Oceans Edge Resort & Marina

15,150

5,910

39.0%

15,801

6,767

42.8%

(380)

bps

Montage Healdsburg

23,252

2,598

11.2%

23,719

2,055

8.7%

250

bps

Four Seasons Resort Napa Valley

21,311

(430)

(2.0)%

18,939

(28)

(0.1)%

(190)

bps

Comparable Portfolio, Excluding Renovation Hotel (2)

478,237

135,442

28.3%

471,985

144,701

30.7%

(240)

bps

Add: Renovation Hotel (1)

The Confidante Miami Beach

4,147

(721)

(17.4)%

23,286

7,087

30.4%

(4,780)

bps

Comparable Portfolio (3)

482,384

134,721

27.9%

495,271

151,788

30.6%

(270)

bps

Less: Prior Ownership (4)

Hyatt Regency San Antonio Riverwalk

(17,737)

(7,232)

N/A

(27,314)

(10,920)

40.0%

N/A

Add: Sold Hotel (5)

N/A

51,562

13,678

26.5%

N/A

Actual Portfolio (6)

$

464,647

$

127,489

27.4%

$

519,519

$

154,546

29.7%

N/A

*Footnotes on page 23

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 22


Graphic

Supplemental Financial Information
August 7, 2024

Property-Level Revenues, Adjusted EBITDAre and Adjusted EBITDAre Margins

Q2 and YTD 2024/2023 Footnotes

(1)Hotel Adjusted EBITDAre for the second quarter and first six months of 2024 is impacted by renovation activity at Marriott Long Beach Downtown and The Confidante Miami Beach. In March 2024, operations at The Confidante Miami Beach were temporarily suspended to allow for extensive renovation work to be performed. The Company expects the resort to resume operations as Andaz Miami Beach in the fourth quarter of 2024. Adjusted EBITDAre for the second quarter and first six months of 2023 is impacted by renovation activity at The Westin Washington, DC Downtown.
(2)Comparable Portfolio, Excluding Renovation Hotel includes all hotels owned by the Company as of June 30, 2024, with the exception of The Confidante Miami Beach due to its renovation activity during the second quarter and first six months of 2024. Amounts included in this presentation for the Hyatt Regency San Antonio Riverwalk, acquired by the Company in April 2024, include both prior ownership results and the Company's results. The Company obtained prior ownership information from the previous owner of the Hyatt Regency San Antonio Riverwalk during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition.
(3)Comparable Portfolio consists of all hotels owned by the Company as of June 30, 2024, and includes prior ownership information for the Hyatt Regency San Antonio Riverwalk as discussed in Note 2.
(4)Prior Ownership includes results for the Hyatt Regency San Antonio Riverwalk prior to the Company’s acquisition of the hotel in April 2024 as discussed in Note 2.
(5)Sold Hotel includes the Boston Park Plaza sold in October 2023.
(6)Actual Portfolio includes results for the 15 hotels owned by the Company during the second quarters and first six months of 2024 and 2023.

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 23


v3.24.2.u1
Document and Entity Information
Aug. 07, 2024
Document Type 8-K
Amendment Flag false
Document Period End Date Aug. 07, 2024
Entity Registrant Name Sunstone Hotel Investors, Inc.
Entity Central Index Key 0001295810
Entity Incorporation, State or Country Code MD
Entity File Number 001-32319
Entity Tax Identification Number 20-1296886
Entity Address, Address Line One 15 Enterprise, Suite 200
Entity Address, City or Town Aliso Viejo
Entity Address, State or Province CA
Entity Address, Postal Zip Code 92656
City Area Code 949
Local Phone Number 330-4000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Common Stock  
Title of 12(b) Security Common Stock, $0.01 par value
Trading Symbol SHO
Security Exchange Name NYSE
Series H Cumulative Redeemable Preferred Stock  
Title of 12(b) Security Series H Cumulative Redeemable Preferred Stock, $0.01 par value
Trading Symbol SHO.PRH
Security Exchange Name NYSE
Series I Cumulative Redeemable Preferred Stock  
Title of 12(b) Security Series I Cumulative Redeemable Preferred Stock, $0.01 par value
Trading Symbol SHO.PRI
Security Exchange Name NYSE

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