Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Sunstone Hotel Investors (SHO) and National Health Investors (NHI) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while o ...

Core Points - Sunstone Hotel Investors, Inc. appointed Michael Barnello to its Board of Directors effective November 15, 2025, increasing the board size to nine directors [1] - The addition of Barnello is expected to enhance the company's commitment to maximizing shareholder value, leveraging his extensive lodging industry expertise [2] - Barnello is a founder and managing partner at Badlands Hotel Capital and previously served as President and CEO of LaSalle Hotel Properties, which owned 41 properties totaling approximately 10,400 guest rooms [3] 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] Related Entities - Tarsadia Capital, LLC is an investment management company with a long history of investing in hotels and hospitality assets, expressing confidence in Barnello's addition to the board [4]

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]