"We are pleased to welcome Mike to Sunstone's Board," commented Douglas M. Pasquale, Chairman of the Board. "Mike's extensive lodging industry expertise provides additional depth and experience to our Board and will enhance the Company's commitment to maximize shareholder value." Bryan A. Giglia, Chief Executive Officer, added, "I look forward to working with Mike and benefitting from his unique perspective and success in the sector." Accessibility StatementSkip Navigation ALISO VIEJO, Calif., Nov. 17, 202 ...

Core Insights - Sunstone Hotel Investors (SHO) and National Health Investors (NHI) are being compared for their value to investors, with a focus on which stock offers better value currently [1] Valuation Metrics - Both SHO and NHI have a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions for both companies [3] - SHO has a forward P/E ratio of 11.28, while NHI has a forward P/E of 15.82, suggesting that SHO may be undervalued compared to NHI [5] - The PEG ratio for SHO is 2.82, while NHI's PEG ratio is 3.43, indicating that SHO has a more favorable valuation when considering expected earnings growth [5] - SHO's P/B ratio is 1.08, compared to NHI's P/B of 2.43, further supporting the argument that SHO is the more attractive value option [6] - Based on these valuation metrics, SHO holds a Value grade of B, while NHI has a Value grade of D, reinforcing the conclusion that SHO is the superior value option at this time [6]

Revenue Performance - Total revenues for Q3 2025 were $229.3 million, a 1.3% increase from $226.4 million in Q3 2024[112] - Room revenue increased by 0.6% to $139.5 million in Q3 2025, compared to $138.8 million in Q3 2024[112] - Other operating revenue saw a significant increase of 6.8%, reaching $25.4 million in Q3 2025, up from $23.8 million in Q3 2024[112] - Total revenues for the nine months ended September 30, 2025, increased by $32.1 million, or 4.6%, to $723.2 million compared to the same period in 2024[114] - Room revenue for the nine months ended September 30, 2025, increased by $14.6 million, or 3.4%, to $440.5 million, driven by the Two Renovation Hotels which contributed $7.9 million[114] - Food and beverage revenue for the nine months ended September 30, 2025, increased by $13.0 million, or 6.6%, to $209.6 million, with the Two Renovation Hotels contributing $1.8 million[123] - Other operating revenue for the nine months ended September 30, 2025, increased by $4.5 million, or 6.6%, to $73.1 million[125] Operating Expenses - Total operating expenses rose by 3.5% to $217.4 million in Q3 2025, compared to $210.0 million in Q3 2024[112] - Total operating expenses for the nine months ended September 30, 2025, increased by $42.5 million, or 6.8%, to $664.4 million[114] - Hotel operating expenses increased by $27.4 million, or 6.4%, in the first nine months of 2025 compared to the same period in 2024[126] - Other property-level expenses rose by $5.7 million, or 7.0%, in the first nine months of 2025 compared to the first nine months of 2024, primarily due to increased payroll and related expenses[127] - Corporate overhead expenses decreased by 8.0% to $7.0 million in Q3 2025, compared to $7.6 million in Q3 2024[112] - Corporate overhead expenses increased by $1.0 million, or 4.1%, in the first nine months of 2025 compared to the same period in 2024, mainly due to increased payroll and related expenses[129] - Depreciation and amortization expense increased by $8.5 million, or 9.2%, in the first nine months of 2025 compared to the same period in 2024[130] Net Income and Loss - Net income for Q3 2025 was $1.3 million, a decrease of 59.3% from $3.2 million in Q3 2024[112] - Loss attributable to common stockholders was $2.9 million in Q3 2025, compared to a loss of $0.7 million in Q3 2024, representing a 331.1% increase in loss[112] - Net income for the nine months ended September 30, 2025, decreased by $25.1 million, or 59.1%, to $17.4 million compared to the same period in 2024[114] - Net income for Q3 2025 was $1.322 million, a decrease from $3.249 million in Q3 2024, while net income for the first nine months of 2025 was $17.351 million compared to $42.426 million in the same period of 2024[150] Interest and Financing - Interest expense decreased by 16.1% to $13.4 million in Q3 2025, down from $16.0 million in Q3 2024[112] - Interest income decreased to $4.2 million in the first nine months of 2025 from $10.9 million in the same period in 2024[132] - The company incurred total interest expense of $39.258 million in the first nine months of 2025, a slight decrease from $39.685 million in the same period in 2024[135] - Interest obligations on debt total $247,657,000, with $46,015,000 due within one year[177] Cash Flow and Investments - Net cash provided by operating activities increased to $145.1 million in the first nine months of 2025 from $139.9 million in 2024, driven by increased travel demand and hotel acquisitions[161] - Net cash used in investing activities was $(23.7) million in the first nine months of 2025, a significant improvement from $(339.3) million in the same period of 2024, primarily due to proceeds from hotel sales[162] - The company invested $73.7 million in capital expenditures during the first nine months of 2025, compared to $110.2 million in the same period of 2024[179] Debt and Liquidity - Total debt as of September 30, 2025, was $930.0 million, with an unrestricted cash balance of $121.1 million, providing a solid liquidity position[170][169] - The Amended Credit Agreement expanded the unsecured debt borrowing capacity to $850.0 million and extended the maturity of the revolving credit facility to September 2029[173] - As of September 30, 2025, 70.4% of the company's outstanding debt had fixed interest rates or had been swapped to fixed rates, enhancing interest rate stability[176] - The company has $930 million in total debt, with $65 million due within one year[177] Operational Highlights - The company owned 14 hotels as of September 30, 2025, averaging 500 rooms each[105] - The occupancy rate for the Two Renovation Hotels was 51.0% with an average daily rate (ADR) of $249.74, resulting in a revenue per available room (RevPAR) of $127.37 for the nine months ended September 30, 2025[118] - The acquisition of the Hyatt Regency San Antonio Riverwalk in April 2024 contributed $7.6 million to room revenue for the first nine months of 2025[120] - The Comparable Portfolio's room revenue increased by $1.3 million, or 0.7%, with occupancy increasing by 100 basis points and ADR decreasing by 0.6%[121] - The sale of the Hilton New Orleans St. Charles resulted in a decrease of $2.1 million in room revenue for the third quarter of 2025[122] Adjusted Metrics - Adjusted EBITDAre decreased by $3.5 million, or 6.6%, in Q3 2025 compared to Q3 2024, and decreased by $1.6 million, or 0.9%, in the first nine months of 2025 compared to the same period in 2024[150] - EBITDAre for Q3 2025 was $48.799 million, down from $50.437 million in Q3 2024, while for the first nine months of 2025 it was $165.960 million compared to $172.412 million in the same period of 2024[150] - Adjusted FFO attributable to common stockholders for the Hilton New Orleans St. Charles was $0.1 million in Q3 2025, down from $0.3 million in Q3 2024, while for the first nine months it remained at $3.0 million for both years[156] - Adjusted EBITDAre at the Comparable Portfolio decreased by $0.8 million, or 0.5%, in the first nine months of 2025 compared to the same period in 2024[152] - The Hyatt Regency San Antonio Riverwalk recorded Adjusted EBITDAre of $10.9 million in the first nine months of 2025, up from $8.6 million in the same period of 2024[153] - Adjusted EBITDAre at the Two Renovation Hotels decreased by $0.9 million, or 342.2%, in Q3 2025 compared to Q3 2024[152] Future Outlook - The company expects future cash sources to include operating activities, working capital, and additional debt issuances, while potential inflation and interest rate increases may impact capital availability[166] - The company may seek to obtain mortgages on its 14 unencumbered hotels, which could affect available capital through credit facilities[178]

Financial Data and Key Metrics Changes - The third-quarter RevPAR increased by 2% compared to last year, while total RevPAR grew by 2.4% [14] - Adjusted EBITDA RE for the third quarter was $50 million, and adjusted FFO was $0.17 per diluted share [14] - For the first nine months of the year, comparable portfolio total RevPAR growth was 2.3%, with margins held within 20 basis points of the prior year [15] Business Line Data and Key Metrics Changes - Urban hotels experienced generally flat RevPAR growth, with Marriott Long Beach Downtown showing outsized growth post brand conversion [4] - Convention hotels reported better-than-expected performance with RevPAR growth of 3.5% [5] - San Francisco hotels achieved over 15% RevPAR growth, while Washington, D.C. faced weaker government-related demand [6] Market Data and Key Metrics Changes - The company booked 6% more rooms than the prior year, marking the strongest third-quarter booking volume since before the pandemic [6] - Positive group pace is anticipated for 2026, particularly in Orlando, Boston, Miami Beach, San Francisco, and Wine Country [7] - The resort portfolio faced softer performance due to weaker demand in South Florida and Maui, although there were signs of recovery in Maui [8] Company Strategy and Development Direction - The company aims to close the valuation discount and improve total shareholder returns through purposeful asset recycling [21] - Despite a challenging transaction market, the company disposed of over $600 million in lower-quality assets and acquired approximately $600 million in better real estate [22] - The company is focused on maintaining a strong balance sheet with net leverage of 3.5 times trailing earnings [16] Management's Comments on Operating Environment and Future Outlook - The operating environment remains choppy, with uncertainty from the government shutdown, but the company maintains its full-year earnings outlook [17] - The fourth quarter is projected to be the strongest for RevPAR growth, with total portfolio RevPAR growth expected in the mid-single-digit range [18] - Management is optimistic about benefiting from recent investments and delivering above-market growth in 2026 [10] Other Important Information - The company completed a renovation of the meeting space in San Antonio and is about to begin a similar project in San Diego [12] - The board has authorized a $0.09 per share common dividend for the fourth quarter [20] - The company has repurchased 11.4 million shares year-to-date at an average price of $8.83 per share, totaling $101 million [19] Q&A Session Summary Question: Thoughts on Q4 and mid-single-digit total RevPAR range - Management confirmed that Q4 was expected to be the strongest quarter for RevPAR growth, with Andaz Miami Beach contributing significantly to the growth [30] Question: Changes in the transaction market for 2026 - Management noted slight improvements in the transaction market, with expectations for continued improvement in 2026 [33] Question: Large buyers in the transaction market - Management indicated that while the market is challenging, they continue to look for opportunities to recycle assets [38] Question: EBITDA ramp for Andaz Miami Beach - Management expressed confidence in achieving the EBITDA range of $12 million-$16 million for next year, with strong bookings anticipated [41] Question: Group pace for 2026 - Management reported that they expect to have around 80% of room nights on the books for 2026, consistent with the prior year [45] Question: Ancillary spending and expense control - Management highlighted that out-of-room revenue growth has outpaced room revenue growth, contributing positively to overall performance [70] Question: G&A as a percentage of revenues - Management stated that G&A for the quarter was lower as a percentage, with guidance for the full year set at $20 million-$21 million [72]

分组1 - Sunstone Hotel Investors reported quarterly funds from operations (FFO) of $0.17 per share, exceeding the Zacks Consensus Estimate of $0.15 per share, but down from $0.18 per share a year ago, representing an FFO surprise of +13.33% [1] - The company achieved revenues of $229.32 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.90% and showing an increase from $226.39 million year-over-year [2] - Over the last four quarters, Sunstone Hotel has consistently surpassed consensus FFO estimates, achieving this four times [2] 分组2 - The stock has underperformed, losing about 21.6% since the beginning of the year, while the S&P 500 has gained 14.3% [3] - The current consensus FFO estimate for the upcoming quarter is $0.20 on revenues of $228.63 million, and for the current fiscal year, it is $0.84 on revenues of $947.58 million [7] - The Zacks Industry Rank for REIT and Equity Trust - Other is in the top 32% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Financial Performance - For the quarter ended September 30, 2025, total revenues were $229.32 million, a decrease from $257.41 million in the previous quarter[25] - Room revenue for Q3 2025 was $139.52 million, compared to $154.06 million in Q2 2025, reflecting a decline of approximately 9.4%[25] - Net income for the quarter was $1.27 million, significantly lower than $19.31 million in the previous quarter, indicating a decrease of about 93.4%[25] - Total operating expenses for Q3 2025 were $217.48 million, down from $227.20 million in Q2 2025, representing a reduction of approximately 4.8%[25] - Corporate overhead expenses were $6.97 million for Q3 2025, a decrease from $8.35 million in Q2 2025, reflecting cost management strategies[25] - Net income for Q3 2025 was $1,322,000, with a trailing 12-month total of $18,187,000[27] - Adjusted EBITDAre for Q3 2025 was $50,052,000, with a trailing 12-month total of $228,083,000[27] - FFO attributable to common stockholders for Q3 2025 was $30,641,000, with a trailing 12-month total of $142,410,000[28] - Total Portfolio Revenues for Q3 2025 reached $229.32 million, a slight increase from $224.08 million in Q3 2024, reflecting a 1.0% growth[56] - Adjusted EBITDA for the Total Portfolio in Q3 2025 was $52.65 million, down from $56.13 million in Q3 2024, resulting in a margin decrease from 25.0% to 23.0%[56] - For the nine months ended September 30, 2025, the Total Portfolio Revenues were $715.71 million, compared to $698.76 million in the same period of 2024, marking a 2.4% increase[57] - The Adjusted EBITDA margin for the Total Portfolio for the nine months ended September 30, 2025, was 26.0%, a decrease from 26.9% in 2024[57] Debt and Capitalization - The company reported a loss on extinguishment of debt amounting to $180, indicating ongoing financial restructuring efforts[25] - Total debt as of September 30, 2025, was $930,000,000, representing 31.1% of total capitalization[34] - Market value of common equity increased to $1,779,474,000 as of September 30, 2025, compared to $1,650,681,000 in the previous quarter[34] - Total capitalization as of September 30, 2025, was $2,990,724,000[34] - The average interest rate on total debt was 5.16% as of September 30, 2025[37] Operational Metrics - The company owns 14 hotels with a total of 6,999 rooms, primarily under nationally recognized brands, focusing on long-term stakeholder value[8] - The total portfolio consists of 6,999 rooms across various hotels, with the Hilton San Diego Bayfront accounting for 1,190 rooms, representing 17% of the total[44] - For Q3 2025, the Hilton San Diego Bayfront reported an ADR of $281, occupancy of 85.5%, and RevPAR of $240, reflecting an 8.6% increase compared to Q3 2024[49] - The Hyatt Regency San Francisco achieved an ADR of $292, with occupancy at 86.8%, resulting in a RevPAR of $253, marking a 15.3% increase year-over-year[49] - The total portfolio's TRevPAR for Q3 2025 was $355, a 2.4% increase from Q3 2024[49] - The Andaz Miami Beach, which opened in May 2025, reported a 100% occupancy rate for Q3 2025, with an ADR of $305[49] - The Four Seasons Resort Napa Valley experienced a 9.3% decrease in ADR to $1,231, with occupancy at 59.5% for the nine months ended September 30, 2025[51] - The Montage Healdsburg's RevPAR for Q3 2025 was $701, down 6.6% from Q3 2024, with occupancy at 62.9%[49] Strategic Initiatives - Future strategies include potential acquisitions and dispositions of well-located hotel properties to enhance portfolio value[8] - The company emphasizes the importance of non-GAAP measures like FFO and Adjusted FFO to assess ongoing operational performance[15][16] - The company continues to focus on strategic renovations and acquisitions to enhance portfolio performance and operational efficiency[59] - The company acquired the remaining 25% interest in the Hilton San Diego Bayfront in June 2022, resulting in full ownership of the hotel[44] - The Series G cumulative redeemable preferred stock's dividend rate will increase to a minimum of 3.0% and 4.5% starting in Q1 and Q3 2024, respectively, and to at least 6.5% from Q3 2025, based on the Montage Healdsburg's annual net operating income yield[39] Renovation Impact - The Andaz Miami Beach, under renovation, reported a significant negative Adjusted EBITDA of $(2.49) million for Q3 2025, compared to $(0.56) million in Q3 2024[56] - The Hyatt Regency San Antonio Riverwalk, acquired in April 2024, showed a significant decline in Q3 2025 Adjusted EBITDA margin to 15.9%, down from 33.5% in Q3 2024[56] - The Marriott Long Beach Downtown, also undergoing renovation, showed a notable improvement in Q3 2025 with an Adjusted EBITDA margin of 23.3%, up from 11.6% in Q3 2024[56]

Core Viewpoint - Sunstone Hotel Investors, Inc. reported third-quarter results for 2025, showing a decline in net income and adjusted funds from operations, while maintaining its outlook for the year despite macroeconomic challenges [4][6][14]. Financial Performance - Net income for Q3 2025 was $1.3 million, down 59.3% from $3.2 million in Q3 2024 [5][6]. - Adjusted FFO attributable to common stockholders per diluted share decreased 5.6% to $0.17 [6][11]. - Total Portfolio RevPAR increased by 2.0% to $216.12, with an average daily rate of $307.43 and occupancy at 70.3% [6][11]. Operational Highlights - Strong performance in San Francisco helped offset weaker demand in other markets [4]. - The company successfully recast its credit facilities, addressing all debt maturities through 2028 and lowering borrowing costs [4][9]. Stock Repurchase Program - In Q3 2025, the company repurchased 258,870 shares at an average price of $8.70, totaling $2.3 million [11]. - Year-to-date, the company has repurchased 11,392,876 shares for $100.6 million, representing nearly 14% of shares outstanding at the start of 2022 [11]. Balance Sheet and Liquidity - As of September 30, 2025, the company had $197.6 million in cash and cash equivalents, total assets of $3.0 billion, and total debt of $930.0 million [12]. - Stockholders' equity stood at $2.0 billion [12]. Capital Investments - The company invested $73.7 million into its portfolio in the first nine months of 2025, expecting to invest an additional $80 million to $100 million by year-end [13]. 2025 Outlook - The company maintains its 2025 outlook, expecting net income between $14 million to $28 million and total portfolio RevPAR growth of 3.0% to 5.0% [15][14].

Group 1 - The article emphasizes the importance of timing in trading closed-end funds, highlighting the potential for directional and arbitrage opportunities due to market price deviations [1] - The focus is on Sunstone Hotel Investors, Inc. (SHO), identified as a reliable hotel REIT, suggesting it as a better investment alternative [2] - The investment service provided includes frequent picks for mispriced preferred stocks and baby bonds, along with weekly reviews of over 1200 equities and IPO previews [2] Group 2 - The article mentions that the analyst has a beneficial long position in SHO.PR.H, indicating a vested interest in the stock [2] - It clarifies that the views expressed may not reflect those of Seeking Alpha as a whole, emphasizing the independence of the analysts [3]

Group 1 - The article emphasizes the importance of timing in trading closed-end funds, highlighting the potential for directional and arbitrage opportunities due to market price deviations [1] - The focus is on Sunstone Hotel Investors, Inc. (SHO), identified as a reliable hotel REIT, suggesting it as a better investment alternative [2] - The investment service Trade With Beta offers features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, and hedging strategies [2]

Core Points - Sunstone Hotel Investors, Inc. will report its financial results for the third quarter of 2025 on November 7, 2025, before the market opens [1] - A quarterly conference call will be held on the same day at 11:00 a.m. Eastern Time [1] - The call will be accessible via a live webcast on the Company's website and through a dedicated phone line [2] Company Overview - Sunstone Hotel Investors, Inc. is a lodging real estate investment trust (REIT) focused on creating long-term stakeholder value through the acquisition, active ownership, and disposition of well-located hotel and resort real estate [3]