Sunstone Hotel Investors Reports Results For Third Quarter 2012

ALISO VIEJO, Calif., Nov. 1, 2012 /PRNewswire/ -- Sunstone Hotel Investors, Inc. (the "Company") (NYSE: SHO) today 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.

Earnings Call

The Company will host a conference call to discuss third quarter results on November 2, 2012, at 12:00 p.m. EDT (9:00 a.m. PDT). A live web cast of the call will be available via the Investor Relations section of the Company's website.  Alternatively, investors may dial 1-877-941-8609 (for domestic callers) or 1-480-629-9645 (for international callers). A replay of the web cast will also be archived on the website.

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.

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 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: volatility in the debt or equity markets affecting our ability to acquire or sell hotel assets; international, national and local economic and business conditions, including the likelihood of a prolonged U.S. recession; the ability to maintain sufficient liquidity and our access to capital markets; potential terrorist attacks, which would affect occupancy rates at our hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of our indebtedness and our ability to meet covenants in our debt and equity agreements; relationships with property managers and franchisors; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations, which influence or determine wages, prices, construction procedures and costs; our ability to identify, successfully compete for and complete acquisitions; the performance of hotels after they are acquired; necessary capital expenditures and our ability to fund them and complete them with minimum disruption; our ability to continue to satisfy complex rules in order for us to qualify as a REIT for federal income tax purposes; and other risks and uncertainties associated with our business described in the Company's 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 in this release is as of November 1, 2012, 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 in conjunction 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 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 and April 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

Non-controlling interests:






   (Income) loss from consolidated joint venture attributable to non-controlling interest

(827)

31


(1,694)

(213)

   Depreciation and amortization

(1,422)

(1,414)


(4,261)

(2,598)

   Interest expense

(566)

(549)


(1,703)

(1,005)

   Amortization of deferred financing fees

(56)

(56)


(168)

(103)

   Non-cash interest related to loss on derivative

-

(4)


(1)

(32)

Unconsolidated joint ventures:






   Depreciation and amortization

-

-


-

3

Discontinued operations:






   Depreciation and amortization

977

1,686


4,651

6,767

   Amortization of lease intangibles

-

7


14

21

   Interest expense

1,237

1,912


4,663

5,702

   Amortization of deferred financing fees

13

20


46

59

   Write-off of deferred financing fees

185

-


185

-

EBITDA

96,455

38,619


205,559

228,952







Operations held for investment:






   Amortization of deferred stock compensation

812

697


2,654

2,170

   Non-cash straightline lease expense

694

696


2,083

1,702

   Capital lease obligation interest - cash ground rent

(351)

-


(468)

-

   (Gain) loss on sale of assets

33

(17)


22

(73)

   Loss on extinguishment of debt

-

-


191

-

   Gain on remeasurement of equity interests

-

-


-

(69,230)

   Lawsuit settlement costs, net

-

1,620


110

1,620

   Closing costs - completed acquisitions

590

-


1,965

3,372

   Prior year property tax and CAM adjustments, net

(440)

-


621

-

   Hotel laundry closing costs

424

-


424

-

   Impairment loss

-

10,862


-

10,862

Non-controlling interests:






   Non-cash straightline lease expense

(113)

(114)


(339)

(243)

   Prior year property tax adjustments, net

63

-


(202)

-

Unconsolidated joint ventures:






   Amortization of deferred stock compensation

-

-


-

2

Discontinued operations:






   (Gain) loss on sale of assets

(38,115)

52


(38,292)

(13,966)

   Impairment loss

-

-


-

1,495

   Gain on extinguishment of debt

-

-


-

(18,145)


(36,403)

13,796


(31,231)

(80,434)







Adjusted EBITDA

$   60,052

$    52,415


$   174,328

$   148,518













Reconciliation of Net Income (Loss) to FFO and Adjusted FFO













Net income (loss)

$   39,556

$  (16,553)


$     38,443

$     73,711

Preferred stock dividends

(7,437)

(7,437)


(22,311)

(19,884)

Operations held for investment:






   Real estate depreciation and amortization

36,230

32,196


101,994

87,370

   Amortization of lease intangibles

1,120

1,028


3,176

2,950

   (Gain) loss on sale of assets

33

(17)


22

(73)

Non-controlling interests:






   (Income) loss from consolidated joint venture attributable to non-controlling interest

(827)

31


(1,694)

(213)

   Real estate depreciation and amortization

(1,422)

(1,414)


(4,261)

(2,598)

Discontinued operations:






   Real estate depreciation and amortization

977

1,686


4,651

6,767

   Amortization of lease intangibles

-

7


14

21

   (Gain) loss on sale of assets

(38,115)

52


(38,292)

(13,966)

FFO

30,115

9,579


81,742

134,085







Operations held for investment:






   Non-cash straightline lease expense

694

696


2,083

1,702

   Write-off of deferred financing fees

-

-


3

-

   Non-cash interest related to loss on derivatives

96

1,087


595

2,091

   Loss on extinguishment of debt

-

-


191

-

   Gain on remeasurement of equity interests

-

-


-

(69,230)

   Lawsuit settlement costs, net

-

1,620


110

1,620

   Closing costs - completed acquisitions

590

-


1,965

3,372

   Prior year property tax and CAM adjustments, net

(440)

-


621

-

   Hotel laundry closing costs

424

-


424

-

   Impairment loss

-

10,862


-

10,862

Non-controlling interests:






   Non-cash straightline lease expense

(113)

(114)


(339)

(243)

   Non-cash interest related to loss on derivative

-

(4)


(1)

(32)

   Prior year property tax adjustments, net

63

-


(202)

-

Discontinued operations:






   Write-off of deferred financing fees

185

-


185

-

   Impairment loss

-

-


-

1,495

   Gain on extinguishment of debt

-

-


-

(18,145)


1,499

14,147


5,635

(66,508)







Adjusted FFO

$   31,614

$    23,726


$     87,377

$     67,577







FFO per diluted share

$       0.22

$        0.08


$         0.66

$         1.14







Adjusted FFO per diluted share

$       0.23

$        0.20


$         0.70

$         0.58







Basic weighted average shares outstanding

135,236

117,254


124,271

117,186

Shares associated with unvested restricted stock awards

318

-


235

82

Diluted weighted average shares outstanding (1)

135,554

117,254


124,506

117,268

 

(1)

Diluted weighted average shares outstanding includes 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.

 




Sunstone Hotel Investors, Inc.

Reconciliation of Net Income (Loss) to Non-GAAP Financial Measures

Guidance for Fourth Quarter 2012

(Unaudited and in thousands except per share amounts)







Reconciliation of Net Income (Loss) to Adjusted EBITDA








Quarter Ended


December 31, 2012


Low

High




Net income (loss) (1)

$    (420)

$   4,380

   Depreciation and amortization

37,000

37,000

   Amortization of lease intangibles

1,200

1,200

   Interest expense

17,770

17,770

   Amortization of deferred financing fees

1,000

1,000

   Non-controlling interests

(2,200)

(2,500)

   Non-cash interest related to discount on Senior Notes

300

300

   Amortization of deferred stock compensation

900

900

   Income tax expense associated with the application of net operating loss carryforwards

2,000

2,500

   Capital lease obligation interest - cash ground rent

(300)

(300)

   Non-cash straightline lease expense

750

750

Adjusted EBITDA

$ 58,000

$ 63,000







Reconciliation of Net Income (Loss) to Adjusted FFO







Net income (loss) (1)

$    (420)

$   4,380

   Preferred stock dividends

(7,500)

(7,500)

   Real estate depreciation and amortization

36,700

36,700

   Non-controlling interests

(1,700)

(2,000)

   Amortization of lease intangibles

1,200

1,200

   Income tax expense associated with the application of net operating loss carryforwards

2,000

2,500

   Non-cash straightline lease expense

750

750

Adjusted FFO

$ 31,030

$ 36,030







Adjusted FFO per diluted share

$     0.23

$     0.27




Diluted weighted average shares outstanding

135,700

135,700




(1) Reflects net income adjusted for the impact of income tax expense associated with the application of net operating loss carryforwards.

 




Sunstone Hotel Investors, Inc.

Reconciliation of Net Income to Non-GAAP Financial Measures

Guidance for Full Year 2012

(Unaudited and in thousands except per share amounts)







Reconciliation of Net Income to Adjusted EBITDA








Year Ended


December 31, 2012


Low

High




Net income (1)

$     6,550

$   12,250

   Depreciation and amortization

140,000

140,000

   Amortization of lease intangibles

4,300

4,300

   Interest expense

78,000

78,000

   Amortization of deferred financing fees

3,700

3,700

   Non-controlling interests

(9,000)

(10,200)

   Non-cash interest related to discount on Senior Notes

1,000

1,000

   Amortization of deferred stock compensation

3,400

3,400

   Income tax expense associated with the application of net operating loss carryforwards

2,000

2,500

   Capital lease obligation interest - cash ground rent

(950)

(950)

   Non-cash straightline lease expense

3,000

3,000

Adjusted EBITDA

$ 232,000

$ 237,000







Reconciliation of Net Income to Adjusted FFO







Net income (1)

$     6,550

$   12,250

   Preferred stock dividends

(30,000)

(30,000)

   Real estate depreciation and amortization

138,900

138,900

   Non-controlling interests

(6,300)

(7,500)

   Amortization of lease intangibles

4,300

4,300

   Income tax expense associated with the application of net operating loss carryforwards

2,000

2,500

   Non-cash straightline lease expense

3,000

3,000

Adjusted FFO

$ 118,450

$ 123,450







Adjusted FFO per diluted share

$       0.93

$       0.97




Diluted weighted average shares outstanding

127,500

127,500




(1) Reflects net income adjusted for the impact of income tax expense associated with the application of net operating loss carryforwards.

 

 














Sunstone Hotel Investors, Inc.

Comparable Hotel EBITDA and Margins

(Unaudited and in thousands except hotels and rooms)




































Three Months Ended September 30, 2012


Three Months Ended September 30, 2011



Actual (1)


Prior Ownership
Adjustments (2)


Comparable (3)


Actual (4)


Prior Ownership
Adjustments (5)


Comparable (6)

Number of Hotels

30




30


28


2


30

Number of Rooms

12,854




12,854


12,080


774


12,854














Hotel EBITDA Margin (7)

29.0%


40.2%


29.0%


27.0%


35.6%


27.5%

Hotel EBITDA Margin adjusted for prior year property tax and CAM adjustments (8)

28.8%




28.8%


27.0%




27.5%














Hotel Revenues












     Room revenue

$     156,725


$                   805


$         157,530


$     139,824


$                9,762


$          149,586

     Food and beverage revenue

46,191


59


46,250


40,920


1,711


42,631

     Other operating revenue

13,126


49


13,175


11,902


689


12,591

Total Hotel Revenues

216,042


913


216,955


192,646


12,162


204,808














Hotel Expenses












     Room expense

39,672


243


39,915


35,528


2,181


37,709

     Food and beverage expense

34,654


55


34,709


32,405


911


33,316

     Other hotel expense

56,095


146


56,241


51,147


3,621


54,768

     General and administrative expense

23,008


102


23,110


21,559


1,116


22,675

Total Hotel Expenses

153,429


546


153,975


140,639


7,829


148,468














Hotel EBITDA

62,613


367


62,980


52,007


4,333


56,340

Prior year property tax and CAM adjustments

(440)


-


(440)


-


-


-

Hotel EBITDA adjusted for prior year property tax and CAM adjustments

62,173


367


62,540


52,007


4,333


56,340














Non-hotel operating income

1,246


-


1,246


1,049


-


1,049

Amortization of lease intangibles

(1,120)


-


(1,120)


(1,028)


-


(1,028)

Non-cash straightline lease expense

(694)


-


(694)


(696)


-


(696)

Capital lease obligation interest - cash ground rent

351


-


351


-


351


351

Hotel laundry closing costs

(424)


-


(424)


-


-


-

Management company transition costs

(32)


-


(32)


-


-


-

Prior year property tax and CAM adjustments

440


-


440


-


-


-

Corporate overhead

(6,148)


-


(6,148)


(6,852)


-


(6,852)

Depreciation and amortization 

(36,529)


-


(36,529)


(32,490)


(3,060)


(35,550)

Impairment loss

-


-


-


(10,862)


-


(10,862)

Operating Income

19,263


367


19,630


1,128


1,624


2,752














Interest and other income

18


-


18


1,543


-


1,543

Interest expense 

(19,709)


-


(19,709)


(20,021)


(351)


(20,372)

Income from discontinued operations

39,984


-


39,984


797


-


797

Net Income (Loss)

$       39,556


$                   367


$           39,923


$     (16,553)


$                1,273


$          (15,280)

 

(1)

Actual represents the Company's ownership results for the 30 hotels held for investment as of September 30, 2012.

(2)

Prior Ownership Adjustments represent prior ownership results for the Hilton Garden Inn Chicago Downtown/Magnificent Mile acquired by the Company on July 19, 2012.  

(3)

Comparable represents the Company's ownership results and prior ownership results as applicable for the 30 hotels held for investment as of September 30, 2012.

(4)

Actual represents the Company's ownership results for the 28 hotels held for investment as of September 30, 2011.  

(5)

Prior Ownership Adjustments represent prior ownership results for the Hyatt Chicago Magnificent Mile acquired by the Company on June 4, 2012 and the Hilton Garden Inn Chicago Downtown/Magnificent Mile acquired by the Company on July 19, 2012, along with the Company's pro forma adjustments for capital lease obligation interest and depreciation expense.

(6)

Comparable represents the Company's ownership results, prior ownership results and the Company's pro forma adjustments for capital lease obligation interest and depreciation expense as applicable for the 30 hotels held for investment as of September 30, 2012.

(7)

Hotel EBITDA Margin is calculated as Hotel EBITDA divided by total hotel revenues.

(8)

Hotel EBITDA Margin for the three months ended September 30, 2012 includes the additional benefit of $250,000 in prior year property tax credits and a $190,000 prior year CAM refund. Without this benefit, Comparable Hotel EBITDA margin for the three months ended September 30, 2012 would have been 28.8%.

 














Sunstone Hotel Investors, Inc.

Comparable Hotel EBITDA and Margins

(Unaudited and in thousands except hotels and rooms)




































Nine Months Ended September 30, 2012


Nine Months Ended September 30, 2011



Actual (1)


Prior Ownership
Adjustments (2)


Comparable (3)


Actual (4)


Prior Ownership
Adjustments (5)


Comparable (6)

Number of Hotels

30




30


28


2


30

Number of Rooms

12,854




12,854


12,080


774


12,854














Hotel EBITDA Margin(7)

29.1%


21.0%


28.9%


27.5%


29.9%


27.7%

Hotel EBITDA Margin adjusted for prior year property tax and CAM adjustments, net (8)

29.0%




28.8%


27.4%




27.6%














Hotel Revenues












     Room revenue

$     443,022


$              15,204


$          458,226


$ 380,826


$              48,848


$          429,674

     Food and beverage revenue

148,574


2,149


150,723


124,838


16,413


141,251

     Other operating revenue

36,553


1,046


37,599


31,801


4,676


36,477

Total Hotel Revenues

628,149


18,399


646,548


537,465


69,937


607,402














Hotel Expenses












     Room expense

112,667


4,064


116,731


96,804


11,829


108,633

     Food and beverage expense

104,530


1,416


105,946


93,303


10,138


103,441

     Other hotel expense

159,667


7,144


166,811


138,763


20,567


159,330

     General and administrative expense

68,311


1,904


70,215


60,965


6,513


67,478

Total Hotel Expenses

445,175


14,528


459,703


389,835


49,047


438,882














Hotel EBITDA

182,974


3,871


186,845


147,630


20,890


168,520

Prior year property tax and CAM adjustments, net

(565)


-


(565)


(600)


-


(600)

Hotel EBITDA adjusted for prior year property tax and CAM adjustments, net

182,409


3,871


186,280


147,030


20,890


167,920














Non-hotel operating income

3,413


-


3,413


3,245


-


3,245

Amortization of lease intangibles

(3,176)


-


(3,176)


(2,950)


(140)


(3,090)

Non-cash straightline lease expense

(2,083)


-


(2,083)


(1,702)


(386)


(2,088)

Capital lease obligation interest - cash ground rent

468


585


1,053


-


1,053


1,053

Hotel laundry closing costs

(424)


-


(424)


-


-


-

Management company transition costs

(641)


-


(641)


(82)


-


(82)

Prior year property tax and CAM adjustments, net

565


-


565


600


-


600

Corporate overhead

(18,975)


-


(18,975)


(20,771)


-


(20,771)

Depreciation and amortization 

(102,899)


(5,531)


(108,430)


(88,241)


(15,486)


(103,727)

Impairment loss

-


-


-


(10,862)


-


(10,862)

Operating Income

58,657


(1,075)


57,582


26,267


5,931


32,198














Equity in earnings of unconsolidated joint ventures

-


-


-


21


-


21

Interest and other income

155


-


155


2,970


-


2,970

Interest expense 

(59,309)


(585)


(59,894)


(55,449)


(4,061)


(59,510)

Loss on extinguishment of debt

(191)


-


(191)


-


-


-

Gain on remeasurement of equity interests

-


-


-


69,230


-


69,230

Income from discontinued operations

39,131


-


39,131


30,672


-


30,672

Net Income

$       38,443


$             (1,660)


$            36,783


$   73,711


$                1,870


$            75,581

 

(1)

Actual represents the Company's ownership results for the 30 hotels held for investment as of September 30, 2012.

(2)

Prior Ownership Adjustments represent prior ownership results for the Hyatt Chicago Magnificent Mile acquired by the Company on June 4, 2012 and the Hilton Garden Inn Chicago Downtown/Magnificent Mile acquired by the Company on July 19, 2012, along with the Company's pro forma adjustments for capital lease obligation interest and depreciation expense.  

(3)

Comparable represents the Company's ownership results, prior ownership results and the Company's pro forma adjustments for capital lease obligation interest and depreciation expense as applicable for the 30 hotels held for investment as of September 30, 2012.

(4)

Actual represents the Company's ownership results for the 28 hotels held for investment as of September 30, 2011.  

(5)

Prior Ownership Adjustments represent prior ownership results for the Doubletree Guest Suites Times Square acquired by the Company on January 14, 2011, the JW Marriott New Orleans acquired by the Company on February 15, 2011, the Hilton San Diego Bayfront acquired by the Company on April 15, 2011, the Hyatt Chicago Magnificent Mile acquired by the Company on June 4, 2012 and the Hilton Garden Inn Chicago Downtown/Magnificent Mile acquired by the Company on July 19, 2012, along with the Company's pro forma adjustments for non-cash amortization of lease intangibles, non-cash straightline lease expense, capital lease obligation interest and depreciation expense.  

(6)

Comparable represents the Company's ownership results, prior ownership results and the Company's pro forma adjustments for non-cash amortization of lease intangibles, non-cash straightline lease expense, capital lease obligation interest and depreciation expense as applicable for the 30 hotels held for investment as of September 30, 2012.

(7)

Hotel EBITDA Margin is calculated as Hotel EBITDA divided by total hotel revenues.

(8)

Hotel EBITDA Margin for the nine months ended September 30, 2012 includes the additional net benefit of $0.4 million in prior year property tax credits and a $0.2 million prior year CAM refund. Hotel EBITDA Margin for the nine months ended September 30, 2011 includes the additional net benefit of $0.6 million due to prior year property tax credits and assessments. Without these additional net benefits, Comparable Hotel EBITDA margin for the nine months ended September 30, 2012 and 2011 would have been 28.8% and 27.6%, respectively.

SOURCE Sunstone Hotel Investors, Inc.



RELATED LINKS
http://www.sunstonehotels.com

More by this Source

Best of Content We Love 2014 


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.