Sunstone Hotel Investors (NYSE: SHO) Third Quarter 2012 Comparable Hotel RevPAR Increased 5.1%

Sunstone Hotel Investors, Inc. (NYSE: SHO) announced results for the third quarter ended September 30, 2012.

Third Quarter 2012 Operational Results (as compared to Third Quarter 2011) ⁽¹⁾:

• Comparable Hotel RevPAR increased 5.1% to $138.01.
• Comparable Hotel EBITDA Margin increased by 130 basis points to 28.8%.
• Adjusted EBITDA increased by 14.6% to $60.1 million.
• Adjusted FFO per diluted share increased by 15.0% to $0.23.
• Income available to common stockholders was $30.9 million (vs. a loss attributable to common stockholders of $24.0 million in 2011).
• Income available to common stockholders per diluted share was $0.23 (vs. a loss attributable to common stockholders per diluted share of $0.20 in 2011).

Ken Cruse, President and Chief Executive Officer, stated, "During the third quarter our portfolio benefitted from solid demand trends and continued improvements in operational efficiency, which helped drive a 130-basis-point increase in our Comparable Hotel EBITDA Margin and a 15% increase in our Adjusted FFO per diluted share.  Also during the third quarter we continued to improve our portfolio quality while deleveraging our balance sheet by acquiring an unlevered primary-market hotel and divesting of four highly levered, low-RevPAR secondary-market hotels."

Mr. Cruse continued, "We continue to make value-adding investments into our portfolio.  We recently completed a $25 million full guestroom and bathroom renovation of our 807-room Renaissance Washington DC. While the renovation resulted in short-term displacement – negatively impacting our portfolio's Comparable Hotel RevPAR by 170 basis points and Hotel EBITDA Margins by 60 basis points in the third quarter – we believe the project will drive material outperformance at this hotel going forward.   To this point, our 2013 group booking pace at the Renaissance Washington DC is now up more than 22% year-over-year, and the hotel now has more group rooms on the books for 2013 than in any year since 2007."

Mr. Cruse added, "In spite of solid industry fundamentals, with any cyclical recovery there will be periods of softer-than-anticipated growth in select markets.  Accordingly, we have moderated our guidance for RevPAR and profitability growth for the remainder of 2012.  With 2013 group booking pace up 8.1%, muted supply trends, and continued growth in transient demand, we remain positive in our outlook for 2013 and beyond." 

(1)

Comparable Hotel RevPAR and Comparable Hotel EBITDA Margin information presented reflect the Company's Comparable 30 Hotel Portfolio, which includes all hotels in which the Company has interests as of September 30, 2012, and also includes prior ownership results as applicable in 2012 and 2011 for the Doubletree Guest Suites Times Square acquired by the Company in January 2011, the JW Marriott New Orleans acquired by the Company in February 2011, the Hilton San Diego Bayfront acquired by the Company in April 2011, the Hyatt Chicago Magnificent Mile acquired by the Company in June 2012 and the Hilton Garden Inn Chicago Downtown/Magnificent Mile acquired by the Company in July 2012. Comparable Hotel EBITDA Margin information excludes current and prior year net property tax and CAM adjustments.

 

 

SELECTED FINANCIAL DATA
($ in millions, except RevPAR and per share amounts)
(unaudited)
		Three Months Ended September 30,									Nine Months Ended September 30,
		2012		2011		% Change					2012		2011		% Change
Total Revenue		$   221.1		$  197.5		11.9%					$   642.8		$   551.1		16.6%
Comparable Hotel RevPAR		$ 138.01		$ 131.36		5.1%					$ 134.36		$ 126.51		6.2%
Comparable Hotel Occupancy		80.7%		78.4%		230 bps					78.9%		75.6%		330 bps
Comparable Hotel ADR		$ 171.02		$ 167.55		2.1%					$ 170.29		$ 167.34		1.8%
Comparable Hotel EBITDA Margin		28.8%		27.5%		130 bps					28.8%		27.6%		120 bps
Net income (loss)		$     39.6		$   (16.6 )							$     38.4		$     73.7
Income available (loss attributable) to common stockholders		$     30.9		$   (24.0 )							$     14.3		$     53.0
Income available (loss attributable) to common stockholders per diluted share		$     0.23		$   (0.20 )							$     0.11		$     0.45
EBITDA		$     96.5		$    38.6							$   205.6		$   229.0
Adjusted EBITDA		$     60.1		$    52.4							$   174.3		$   148.5
FFO		$     30.1		$      9.6							$     81.7		$   134.1
Adjusted FFO		$     31.6		$    23.7							$     87.4		$     67.6
FFO per diluted share (1)		$     0.22		$    0.08							$     0.66		$     1.14
Adjusted FFO per diluted share (1)		$     0.23		$    0.20							$     0.70		$     0.58

(1)

Reflects the Series C convertible preferred stock on a "non-converted" basis. On an "as-converted" basis, FFO per diluted share is $0.23 and $0.09, respectively, for the three months ended September 30, 2012 and 2011, and $0.67 and $1.14, respectively, for the nine months ended September 30, 2012 and 2011. On an "as-converted" basis, Adjusted FFO per diluted share is $0.24 and $0.21, respectively, for the three months ended September 30, 2012 and 2011, and $0.71 and $0.59, respectively, for the nine months ended September 30, 2012 and 2011.

Disclosure regarding the non-GAAP financial measures in this release is included on page 6. Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included on pages 9 through 13 of this release. 

The Company's actual results for the quarter ended September 30, 2012 compare to its prior guidance, adjusted for dispositions completed in the third quarter 2012, as follows:

Metric	Quarter Ended September 30, 2012 Guidance (1)	Impact of Dispositions (2)	Adjusted Prior Quarter Ended September 30, 2012 Guidance	Quarter Ended September 30, 2012 Actual Results (3)	Performance Relative to Adjusted Prior Guidance Midpoint
Comparable Hotel RevPAR	+3% - 5%		+3% - 5%	5.1%	+1.1%
Net Income ($ millions)	$1 - $4		$1 - $4	$2.0	($0.5)
Adjusted EBITDA ($ millions)	$57 - $60	($0.3)	$57 - $60	$60.1	+$1.6
Adjusted FFO ($ millions)	$28 - $31	($0.2)	$28 - $31	$31.6	+$2.1
Adjusted FFO per diluted share	$0.20 - $0.23		$0.20 - $0.23	$0.23	+$0.02
Diluted Weighted Average Shares Outstanding	135,700,000		135,700,000	135,554,000	(146,000)

(1) Reflects guidance presented on August 2, 2012.
(2) Reflects supplemental financial data presented in the transaction press release dated September 10, 2012.
(3) Reflects net income adjusted to exclude gain on sale of assets and closing costs - completed acquisition.

Acquisitions / Dispositions Update

On July 19, 2012, the Company completed the previously announced acquisition of the 357-room Hilton Garden Inn Chicago Downtown/Magnificent Mile for a gross purchase price of $91.75 million. The acquisition was funded with a portion of the proceeds received from the Company's public offering of 12.1 million shares of its common stock (including the underwriter's exercise of its overallotment option). 

On August 23, 2012, the Company completed the previously announced sale of the 284-room Marriott Del Mar for a gross sales price of $66.0 million. The Company received net proceeds of $17.7 million after proration adjustments and closing costs, including the assumption of the existing mortgage secured by the hotel which totaled $47.1 million on the date of sale, and recognized a gain on the sale of $25.5 million during the third quarter 2012.

On September 14, 2012, the Company completed the previously announced portfolio sale of the 229-room Doubletree Guest Suites Minneapolis, the 257-room Hilton Del Mar, the 350-room Marriott Troy and an office building next to the Marriott Troy (the "Portfolio Sale") for an adjusted gross sales price of $107.2 million, including the assumption of approximately $75.6 million in mortgage debt and approximately $2.2 million of deferred management fees. The Company received net proceeds from the Portfolio Sale of $28.6 million after proration adjustments, closing costs and the debt and deferred management fee assumptions, and recognized a $12.7 million gain on the sale during the third quarter 2012.

Balance Sheet/Liquidity Update

In September 2012, the Company amended and restated its $150.0 million senior unsecured revolving credit facility, which was scheduled to mature in November 2013. The pricing on the amended revolving credit facility was reduced and the 1% LIBOR floor was eliminated. The maturity of the credit facility was extended by two years to November 2015 with an option to extend to November 2016. The amended credit facility's interest rate is based on a pricing grid with a range of 175 to 350 basis points, which represents a reduction from the previous grid that ranged from 325 to 425 basis points over LIBOR depending on the Company's leverage ratio. The credit facility also includes an accordion option that allows the Company to request additional lender commitments up to a total of $350.0 million.

As of September 30, 2012, the Company had approximately $241.3 million of cash and cash equivalents, including restricted cash of $76.8 million.

As of September 30, 2012, the Company had total assets of approximately $3.1 billion, including $2.8 billion of net investments in hotel properties, total consolidated debt of $1.4 billion and stockholders' equity of $1.5 billion.

John Arabia, Chief Financial Officer, stated, "We continue to methodically execute on our balanced business plan and patiently de-lever our balance sheet in a shareholder friendly manner. Since the end of 2011, we have decreased total leverage by approximately$190 million, reducing our net debt plus preferred to Adjusted EBITDA, from approximately 8.2 times to approximately 6.8 times. We will continue to look for opportunities to grow the Company through highly-equitized acquisitions, but only when such acquisitions may be executed at attractive valuations relative to our cost of equity. Accordingly, given the recent softness in the value of our shares, we do not see equity-funded acquisitions as an attractive option at this time. The recent amendment to our undrawn credit facility provides us with incremental access to capital at a lower cost and with less restrictive covenants. That said, we do not currently expect to use our credit facility to fund acquisitions."

Capital Improvements

The Company invested $28.2 million in capital improvements into its portfolio during the third quarter of 2012, and $76.6 million during the nine months ended September 30, 2012.

The Company will begin renovating several of its hotels beginning in the fourth quarter 2012 and continuing into 2013. The Company expects approximately $2 million of revenue disruption during the fourth quarter 2012 and $6.0 - $8.0 million of revenue disruption during full-year 2013, the majority of which is expected to occur during the first quarter 2013. Significant near term renovations include:

• Hilton Times Square:  The Company expects to invest approximately $15.0 million to fully renovate all guestrooms, guest bathrooms and corridors of the 460-room Hilton Times Square, creating a rich and appealing new rooms product. The renovation is expected to commence in January 2013 and is expected to be completed by April 2013.
• Hyatt Chicago Magnificent Mile:  The Company expects to invest approximately $25.0 million on a complete renovation and repositioning of the 417-room Hyatt Chicago Magnificent Mile. The complete renovation will include all public spaces and guestrooms/bathrooms, elevating the hotel to a sophisticated destination catering to high-rated business transient and group travelers. The renovation is expected to commence during the fourth quarter 2012 and is expected to be completed during the third quarter 2013. 
• Hyatt Regency Newport Beach:  The Company expects to invest approximately $12.0 million to renovate all guestrooms and recreation facilities, as well as certain public spaces of the 403-room Hyatt Regency Newport Beach, establishing the hotel as a high quality resort destination catering to a broad range of business, leisure and group travelers. The renovation is expected to commence during the fourth quarter 2012 and is expected to be completed during the second quarter 2013.  
• Renaissance Westchester:  The Company expects to invest approximately $12.0 million to renovate all guestrooms and public spaces of the 347-room Renaissance Westchester, transforming the rooms and public spaces into stylish yet functional meeting, socializing and relaxing venues. The renovation is expected to commence during the fourth quarter 2012 and is expected to be completed during the second quarter 2013.  

Hurricane Sandy Update

Following a preliminary physical inspection of its hotels, the Company is pleased to report that none of its hotels have reported any material damage related to Hurricane Sandy.  The Company is assessing the short-term earnings impact of Hurricane Sandy and has included preliminary expectations for fourth quarter disruption in its 2012 Outlook.  

2012 Outlook

Achievement of the Company's anticipated results is subject to risks and uncertainties, including those disclosed in the Company's filings with the Securities and Exchange Commission.  The Company's guidance includes the Company's ownership period for all 2012 acquisitions and dispositions, as well as preliminary expected disruption resulting from Hurricane Sandy subject to further review, and does not take into account the impact of any future hotel acquisitions, dispositions, re-brandings, management changes, transition costs, prior-year property tax assessments and/or credits, debt repurchases or financings during 2012.  Assuming no additional capital transactions are completed in 2012, the Company expects to apply net operating loss carryforwards to reduce taxable income in 2012. The application of the net operating loss carryforwards is viewed as a non-recurring event and therefore the Company will treat any state and federal taxes associated with the application of net operating loss carryforwards as a one-time expense and add them back to Adjusted EBITDA and Adjusted FFO.

For the fourth quarter of 2012, the Company expects:

Metric	Quarter Ended December 31, 2012 Guidance
Comparable Hotel RevPAR	+1.5% - 3.0%
Net Income (Loss) ($ millions) (1)	$(1) - $4
Adjusted EBITDA ($ millions)	$58 - $63
Adjusted FFO ($ millions)	$31 - $36
Adjusted FFO per diluted share	$0.23 - $0.27
Diluted Weighted Average Shares Outstanding	135,700,000

(1) Reflects net income adjusted for the impact of income tax expense associated

with the application of net operating loss carryforwards.

For the full year 2012, the Company expects: 

Metric	Prior 2012 FY Guidance (1)	Impact of Dispositions (2)	Adjusted Prior 2012 FY Guidance	Current 2012 FY Guidance (Prior to Hurricane Sandy Impact)	Change to Adjusted Prior Guidance Midpoint	Current 2012 FY Guidance (Including Current Estimate of Hurricane Sandy Impact)	Change to Adjusted Prior Guidance Midpoint
Comparable Hotel RevPAR	+5% - 7%		+5% - 7%	+5% - 5.5%	(0.75%)	+4.5% - 5.0%	(1.25%)
Net Income ($ millions) (3)	$15 - $22	($0.1)	$15 - $22	$11 - $14	($6.0)	$7 - $12	($9.0)
Adjusted EBITDA ($ millions)	$239 - $245	($3.0)	$236 - $242	$236 - $239	($1.5)	$232 - $237	($4.5)
Adjusted FFO ($ millions)	$123 - $130	($1.8)	$121 - $128	$122 - $125	($1.0)	$118 - $123	($4.0)
Adjusted FFO per diluted share	$0.97 - $1.02	($0.01)	$0.96 - $1.01	$0.96 - $0.98	($0.02)	$0.93 - $0.97	($0.04)
Diluted Weighted Average Shares Outstanding	127,900,000		127,900,000	127,500,000	(400,000)	127,500,000	(400,000)

(1) Reflects guidance presented on August 2, 2012.
(2) Reflects supplemental financial data presented in the transaction press release dated September 10, 2012.
(3) Reflects net income adjusted for the impact of income tax expense associated with the application of net operating loss carryforwards.

Fourth-quarter and full-year 2012 guidance is also based on the following assumptions:

• Full-year capital investment of $85 to $100 million, including the $25 million renovation of the Renaissance Washington DC. Hotel revenue disruption of $3 to $5 million related to renovation projects, with approximately $2 million of hotel revenue renovation disruption in the fourth quarter.
• Fourth-quarter RevPAR guidance assumes that hotel revenue renovation disruption will negatively impact fourth-quarter RevPAR growth by 50 to 75 basis points
• Hotel revenue and EBITDA disruption of $3 to $4 million and $2 to $4 million, respectively, for the fourth-quarter and full-year related to Hurricane Sandy, resulting in a reduction to fourth-quarter and full-year RevPAR growth of 100 to 150 basis points and 30 to 60 basis points, respectively.
• Full-year comparable Hotel EBITDA Margins to increase by 50 to 100 basis points, which includes the impact of renovation displacement and Hurricane Sandy disruption.
• Full-year corporate overhead expense (excluding stock amortization and one-time expenses related to future acquisition closing costs) of $19 to $20 million.
• Full-year interest expense of approximately $80 to $82 million, including $4 million in amortization of deferred financing fees.
• Full-year preferred dividends (Series A, C and D) of approximately $30 million.

Dividend Update

On October 31, 2012, the Company's Board of Directors declared a cash dividend of $0.50 per share payable to its Series A and Series D cumulative redeemable preferred stockholders and a cash dividend of $0.393 per share payable to its Series C cumulative convertible redeemable preferred stockholders. The dividends will be paid on or before January 15, 2013 to stockholders of record on December 31, 2012.  No dividend was declared on the Company's common stock, as the Company intends to deploy excess cash flow from operations toward internal renovation investments and gradual deleveraging.

Subject to certain limitations, the Company intends to make dividends on its stock in amounts equivalent to 100% of its annual taxable income.  The Company expects to apply net operating loss carryforwards to reduce its taxable income in 2012, which will affect the level of common stock dividends declared for 2012. The level of any future dividends will be determined by the Company's Board of Directors after considering taxable income projections, expected capital requirements, risks affecting the Company's business and in context of the Company's leverage-reduction initiatives.  As a result, common stock dividends may be made in the form of cash or a combination of cash and stock consistent with Internal Revenue Service guidelines.

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 information prepared in accordance with generally accepted accounting principles. The Company undertakes 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.

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. ("Sunstone") is a lodging real estate investment trust ("REIT") that has interests in 30 hotels comprised of 12,854 rooms.  Sunstone's hotels are primarily in the upper upscale segment and are generally operated under nationally recognized brands, such as Marriott, Hilton, Hyatt, Fairmont and Sheraton. For further information, please visit Sunstone's website at www.sunstonehotels.com.

Sunstone's mission is to create meaningful value for our stockholders by becoming the premier hotel owner.  Our values include transparency, trust, ethical conduct, communication and discipline.  We seek to employ a balanced, cycle-appropriate corporate strategy that encompasses the following:

• Proactive portfolio management;
• Intensive asset management;
• Disciplined external growth; and
• Measured balance sheet improvement.

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance: Earnings Before Interest Expense, Taxes, Depreciation and Amortization, or EBITDA; Adjusted EBITDA (as defined below); Funds From Operations, or FFO; Adjusted FFO (as defined below); and comparable hotel EBITDA and comparable hotel EBITDA margin.

EBITDA represents net income (loss) excluding: non-controlling interests; interest expense; provision for income taxes, including income taxes applicable to sale of assets; and depreciation and amortization. In addition, we have presented Adjusted EBITDA, which includes EBITDA but excludes: amortization of deferred stock compensation; the impact of any gain or loss from asset sales; impairment charges; prior year property tax and other adjustments; and any other adjustments we have identified in this release. We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because these measures help investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization) from our operating results. We also use EBITDA and Adjusted EBITDA as measures in determining the value of hotel acquisitions and dispositions. A reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is set forth on page 9.  Reconciliations and the components of comparable hotel EBITDA and comparable hotel EBITDA margin are set forth on pages 12 and 13. We believe comparable hotel EBITDA and comparable hotel EBITDA margin are also useful to investors in evaluating our property-level operating performance.

We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group. The Board of Governors of NAREIT in its March 1995 White Paper (as clarified in November 1999 andApril 2002) defines FFO to mean net income (loss) (computed in accordance with GAAP), excluding non-controlling interests, gains and losses from sales of property, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs) and real estate-related impairment losses, and after adjustment for unconsolidated partnerships and joint ventures. We also present Adjusted FFO, which includes FFO but excludes penalties, written-off deferred financing costs, non-real estate-related impairment losses and any other adjustments we have identified in this release. We believe that the presentation of FFO and Adjusted FFO provide useful information to investors regarding our operating performance because they are measures of our operations without regard to specified non-cash items such as real estate depreciation and amortization, gain or loss on sale of assets and certain other items which we believe are not indicative of the performance of our underlying hotel properties.  We believe that these items are more representative of our asset base and our acquisition and disposition activities than our ongoing operations. We also use FFO as one measure in determining our results after taking into account the impact of our capital structure.  A reconciliation of net income (loss) to FFO and Adjusted FFO is set forth on page 9. 

The revenue and expense items associated with our commercial laundry facility, BuyEfficient and other miscellaneous non-hotel items have been excluded in presenting comparable hotel EBITDA margins. Management believes the calculation of comparable hotel EBITDA results in a more accurate presentation of hotel EBITDA margins of the Company's 30 comparable hotels. See pages 12 and 13 for a reconciliation of comparable EBITDA to the most comparable GAAP measure. Our 30 comparable hotels include all hotels in which the Company has interests as of September 30, 2012, and also includes prior ownership results as applicable in 2011 and 2012 for the Doubletree Guest Suites Times Square acquired by the Company in January 2011, the JW Marriott New Orleans acquired by the Company in February 2011, the Hilton San Diego Bayfront acquired by the Company in April 2011, the Hyatt Chicago Magnificent Mile acquired by the Company in June 2012 and the Hilton Garden Inn Chicago Downtown/Magnificent Mile acquired by the Company in July 2012.

We caution investors that amounts presented in accordance with our definitions of EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, comparable hotel EBITDA and comparable hotel EBITDA margin may not be comparable to similar measures disclosed by other companies, because not all companies calculate these non-GAAP measures in the same manner. EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, comparable hotel EBITDA and comparable hotel EBITDA margin should not be considered as an alternative measure of our net income (loss), operating performance, cash flow or liquidity. EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, comparable hotel EBITDA and comparable hotel EBITDA margin may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, comparable hotel EBITDA and comparable hotel EBITDA margin can enhance an investor's understanding of our results of operations, these non-GAAP financial measures, when viewed individually, are not necessarily better indicators of any trend as compared to GAAP measures such as net income (loss) or cash flow from operations. In addition, you should be aware that adverse economic and market conditions may harm our cash flow.

For Additional Information:

Bryan Giglia 

Senior Vice President – Corporate Finance 

Sunstone Hotel Investors, Inc. 

(949) 382-3036

 

Sunstone Hotel Investors, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
		September 30,		December 31,
		2012		2011
		(unaudited)
Assets
Current assets:
	Cash and cash equivalents	$           164,469		$         149,852
	Restricted cash	76,790		55,778
	Accounts receivable, net	28,534		31,182
	Inventories	2,664		2,517
	Prepaid expenses	9,554		10,008
	Assets held for sale, net	0		144,479
Total current assets		282,011		393,816
Investment in hotel properties, net		2,800,682		2,650,258
Other real estate, net		9,855		9,754
Deferred financing fees, net		12,865		14,421
Goodwill		13,088		13,088
Other assets, net		26,441		19,903
Total assets		$        3,144,942		$      3,101,240
Liabilities and Equity
Current liabilities:
	Accounts payable and accrued expenses	$             25,267		$           26,310
	Accrued payroll and employee benefits	22,326		20,727
	Due to Third-Party Managers	9,050		9,039
	Dividends payable	7,437		7,437
	Other current liabilities	37,829		25,979
	Current portion of notes payable	77,579		51,279
	Notes payable of assets held for sale	0		124,543
	Liabilities of assets held for sale	0		3,354
Total current liabilities		179,488		268,668
Notes payable, less current portion		1,318,102		1,394,655
Capital lease obligations, less current portion		15,630		-
Other liabilities		14,789		12,623
Total liabilities		1,528,009		1,675,946
Commitments and contingencies		-		-
Preferred stock, Series C Cumulative Convertible Redeemable Preferred Stock, $0.01 par value, 4,102,564 shares authorized, issued and outstanding at September 30, 2012 and December 31, 2011, liquidation preference of $24.375 per share
		100,000		100,000
Equity:
Stockholders' equity:
	Preferred stock, $0.01 par value, 100,000,000 shares authorized.
	8.0% Series A Cumulative Redeemable Preferred Stock, 7,050,000 shares issued and outstanding at September 30, 2012 and December 31, 2011, stated at liquidation preference of $25.00 per share
		176,250		176,250
	8.0% Series D Cumulative Redeemable Preferred Stock, 4,600,000 shares issued and outstanding at September 30, 2012 and December 31, 2011, stated at liquidation preference of $25.00 per share
		115,000		115,000
	Common stock, $0.01 par value, 500,000,000 shares authorized, 135,237,438 shares issued and outstanding at September 30, 2012 and 117,265,090 shares issued and outstanding at December 31, 2011
		1,352		1,173
	Additional paid in capital	1,492,528		1,312,566
	Retained earnings	147,329		110,580
	Cumulative dividends	(467,707)		(445,396)
	Accumulated other comprehensive loss	(4,740)		(4,916)
Total stockholders' equity		1,460,012		1,265,257
Non-controlling interest in consolidated joint ventures		56,921		60,037
Total equity		1,516,933		1,325,294
Total liabilities and equity		$        3,144,942		$      3,101,240

 

 

Sunstone Hotel Investors, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)
(In thousands, except per share data)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2012		2011		2012		2011
Revenues
Room		$   156,725		$   139,824		$   443,022		$   380,826
Food and beverage		46,191		40,920		148,574		124,838
Other operating		18,163		16,743		51,243		45,454
Total revenues		221,079		197,487		642,839		551,118
Operating expenses
Room		39,911		35,325		112,566		96,160
Food and beverage		34,616		32,366		104,426		93,165
Other operating		6,986		6,506		20,074		18,112
Advertising and promotion		10,740		9,669		31,760		27,250
Repairs and maintenance		8,299		7,775		24,561		22,094
Utilities		7,686		7,867		21,039		20,914
Franchise costs		8,306		7,282		22,443		19,046
Property tax, ground lease and insurance		18,102		16,484		52,237		43,641
Property general and administrative		24,493		22,881		73,202		64,595
Corporate overhead		6,148		6,852		18,975		20,771
Depreciation and amortization		36,529		32,490		102,899		88,241
Impairment loss		-		10,862		-		10,862
Total operating expenses		201,816		196,359		584,182		524,851
Operating income		19,263		1,128		58,657		26,267
Equity in earnings of unconsolidated joint ventures		-		-		-		21
Interest and other income		18		1,543		155		2,970
Interest expense		(19,709)		(20,021)		(59,309)		(55,449)
Loss on extinguishment of debt		-		-		(191)		-
Gain on remeasurement of equity interests		-		-		-		69,230
Income (loss) from continuing operations		(428)		(17,350)		(688)		43,039
Income from discontinued operations		39,984		797		39,131		30,672
Net income (loss)		39,556		(16,553)		38,443		73,711
(Income) loss from consolidated joint venture attributable to non-controlling interest		(827)		31		(1,694)		(213)
Distributions to non-controlling interest		(8)		(8)		(24)		(22)
Preferred stock dividends		(7,437)		(7,437)		(22,311)		(19,884)
Undistributed income allocated to unvested restricted stock compensation		(352)		-		(162)		(638)
Income available (loss attributable) to common stockholders		$     30,932		$   (23,967)		$     14,252		$     52,954
Comprehensive income (loss)		$     39,615		$   (16,553)		$     38,619		$     73,711
Basic per share amounts:
Income (loss) from continuing operations available (attributable) to common stockholders		$       (0.07)		$       (0.21)		$       (0.20)		$         0.19
Income from discontinued operations		0.30		0.01		0.31		0.26
Basic income available (loss attributable) to common stockholders per common share		$         0.23		$       (0.20)		$         0.11		$         0.45
Diluted per share amounts:
Income (loss) from continuing operations available (attributable) to common stockholders		$       (0.07)		$       (0.21)		$       (0.20)		$         0.19
Income from discontinued operations		0.30		0.01		0.31		0.26
Diluted income available (loss attributable) to common stockholders per common share		$         0.23		$       (0.20)		$         0.11		$         0.45
Weighted average common shares outstanding:
Basic		135,236		117,254		124,271		117,186
Diluted		135,236		117,254		124,271		117,186

 

 

Sunstone Hotel Investors, Inc.
Reconciliation of Net Income (Loss) to Non-GAAP Financial Measures
(Unaudited and in thousands, except per share amounts)
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2012	2011		2012	2011
Net income (loss)	$   39,556	$  (16,553)		$     38,443	$     73,711
Operations held for investment:
Depreciation and amortization	36,529	32,490		102,899	88,241
Amortization of lease intangibles	1,120	1,028		3,176	2,950
Interest expense	18,417	17,841		55,095	50,351
Amortization of deferred financing fees	929	823		2,825	2,215
Write-off of deferred financing fees	-	-		3	-
Non-cash interest related to discount on Senior Notes	267	270		791	792
Non-cash interest related to loss on derivatives	96	1,087		595	2,091

Logos, product and company names mentioned are the property of their respective owners.

Reader Comments:

Be the first to leave a comment for this article

Tweet