Workflow
Sunstone Hotel Investors(SHO)
icon
Search documents
Stable 7%-Plus Yield On Sunstone Hotel Investors And Its Preferred Shares
Seeking Alpha· 2025-06-06 20:51
Group 1 - The focus is on Sunstone Hotel Investors, Inc. (NYSE: SHO), recognized as one of the most stable companies in the REIT sector [1] - Sunstone Hotel Investors has two publicly traded preferred shares [1] - The investing group 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 [1] Group 2 - The article emphasizes the importance of active investor participation and offers a free trial for interested parties [1] - The analyst has a beneficial long position in the shares of SHO.PR.H through various financial instruments [1]
Sunstone Hotel Investors: Series H Preferred Equity Has Significant Duration Risk
Seeking Alpha· 2025-05-06 22:26
Company Overview - Sunstone Hotel Investors, Inc. (SHO) is a hotel Real Estate Investment Trust (REIT) that owns 15 high-end hotels and resorts [1] - The company has a common equity valuation of $1.7 billion [1] Investment Strategy - Binary Tree Analytics (BTA) focuses on providing transparency and analytics for capital market instruments and trades, particularly in Closed-End Funds (CEFs), Exchange-Traded Funds (ETFs), and Special Situations [1] - BTA aims to deliver high annualized returns with a low volatility profile, leveraging over 20 years of investment experience [1]
Sunstone Hotel Investors(SHO) - 2025 Q1 - Quarterly Report
2025-05-06 18:13
Financial Performance - Total revenues for Q1 2025 were $234.1 million, an increase of $16.9 million or 7.8% compared to Q1 2024[108]. - Net income for Q1 2025 was $5.3 million, a decrease of $7.8 million or 59.7% compared to Q1 2024[108]. - Income attributable to common stockholders was $1.3 million in Q1 2025, down $8.0 million or 85.8% from Q1 2024[108]. - Adjusted EBITDAre increased by $2.7 million, or 5.0%, in Q1 2025 compared to Q1 2024, reaching $57.3 million[138]. - FFO attributable to common stockholders decreased to $33.2 million in Q1 2025 from $37.7 million in Q1 2024[144]. - Adjusted FFO attributable to common stockholders increased by $4.0 million, or 10.6%, in Q1 2025 compared to Q1 2024, totaling $41.5 million[144]. Revenue Breakdown - Room revenue increased by $9.1 million, or 6.7%, in Q1 2025, primarily due to the acquisition of the Hyatt Regency San Antonio Riverwalk, which contributed $7.7 million[109]. - Food and beverage revenue increased by $5.8 million, or 9.4%, compared to the first quarter of 2024[113]. - Other operating revenue rose by $2.0 million, or 10.0%, in the first quarter of 2025 compared to the same period in 2024[114]. - Room revenue for the Comparable Portfolio increased by $1.3 million, with occupancy up 70 basis points and average daily room rate up 1.0%, resulting in a 2.0% increase in RevPAR[111]. Operating Expenses - Total operating expenses for Q1 2025 were $217.6 million, an increase of $17.7 million or 8.8% compared to Q1 2024[108]. - Hotel operating expenses increased by $11.0 million, or 8.1%, primarily due to the acquisition of the Hyatt Regency San Antonio Riverwalk, which added $6.8 million in expenses[114]. - Corporate overhead expenses increased by $1.4 million, or 18.4%, in Q1 2025 compared to Q1 2024[108]. - Depreciation and amortization expenses rose by $3.2 million, or 11.1%, in Q1 2025 compared to the same period in 2024[108]. - Interest expense increased by $1.7 million, or 15.2%, in Q1 2025 compared to Q1 2024[108]. Cash Flow and Investments - Net cash provided by operating activities was $32.0 million in Q1 2025, down from $38.5 million in Q1 2024[148]. - Net cash used in investing activities was $28.1 million in Q1 2025, compared to $27.7 million in Q1 2024[149]. - Net cash used in financing activities increased to $35.4 million in Q1 2025 from $33.5 million in Q1 2024[151]. - The company invested $28.2 million for renovations and additions to its portfolio in Q1 2025[149]. - The company invested $28.2 million in capital expenditures during the first three months of 2025, compared to $27.7 million in the same period of 2024[163]. Debt and Financial Position - As of March 31, 2025, the company had an unrestricted cash balance of $72.3 million and total assets of $3.1 billion[156][157]. - The company's total debt was $845.0 million, with $148.8 million in cash and cash equivalents[157]. - 52.7% of the company's outstanding debt had fixed interest rates or had been swapped to fixed rates, mitigating interest rate risks[158][173]. - Contractual obligations totaled $1,005.7 million as of March 31, 2025, with $167.4 million due within one year[161]. - The company has $51.3 million in contractual construction commitments for ongoing renovations as of March 31, 2025[163]. Future Outlook and Risks - The company expects future cash sources to include operating activities, working capital, and debt issuances, but acknowledges potential challenges due to inflation and interest rates[153]. - The company may seek to obtain mortgages on its 15 unencumbered hotels, which could affect available capital through credit facilities[160]. - The company relies on hotel operators to adjust room rates to reflect inflation, but competitive pressures may limit this ability[165]. - If variable interest rates increase or decrease by 50 basis points, the annual interest expense would change by approximately $2.0 million[173]. - The company entered into an interest rate swap fixing the SOFR rate at 4.02% for Term Loan 4, effective January 31, 2025[158].
Sunstone Hotel Investors(SHO) - 2025 Q1 - Earnings Call Transcript
2025-05-06 15:32
Financial Data and Key Metrics Changes - The first quarter adjusted EBITDA was $57 million, and adjusted FFO was $0.21 per diluted share, reflecting a 17% increase from the prior year [24] - Comparable rooms RevPAR increased by 3.8% in the first quarter, while total RevPAR grew by 4.3%, contributing to an 80 basis point expansion in hotel margins [24] - The company repurchased $21 million of stock at a blended repurchase price of $8.9 per share, indicating a strong capital return strategy [15] Business Line Data and Key Metrics Changes - The Andaz Miami Beach opened on May 3, 2025, and is expected to contribute significantly to earnings growth in the coming years [6][8] - The renovated Marriott Long Beach Downtown posted a solid 145% increase in RevPAR, showcasing the benefits of recent investments [12] - Group production at Wailea increased nearly 20% in the first quarter compared to the prior year, indicating positive trends in group demand [12] Market Data and Key Metrics Changes - Washington DC saw a 24% increase in RevPAR due to the inauguration, while New Orleans hotels grew RevPAR by 25% driven by the Super Bowl [9] - San Francisco experienced a 9% increase in RevPAR, supported by increased commercial activity in the downtown area [9] - The company noted softer performance in San Diego but expects solid growth in the second quarter as the market recovers [10] Company Strategy and Development Direction - The company aims to continue a balanced and nimble approach to capital allocation, utilizing a strong balance sheet and future asset recycling to drive growth in FFO and NAV per share [8][16] - The strategy includes capital investment activities ranging from $80 million to $100 million for the year, focusing on enhancing existing properties [20] - The company is looking to recycle additional capital into share repurchases, potentially through asset sales, to enhance shareholder value [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about increased macroeconomic uncertainty and declining business and consumer confidence, leading to a more cautious outlook for the year [14] - The updated outlook for total portfolio RevPAR growth is projected to range from 4% to 7% compared to 2024, reflecting a more moderated view [26] - Despite headwinds, the midpoints of the updated outlook for EBITDA and FFO still equate to healthy annual growth rates of 8-10% [27] Other Important Information - The company has nearly $150 million in total cash and cash equivalents, providing significant liquidity for future investments [25] - The opening of the Andaz Miami Beach is expected to drive substantial earnings growth, particularly in the fourth quarter [39] - The company is focused on maintaining a strong balance sheet with net leverage of only 4.5 times trailing EBITDA [24] Q&A Session Summary Question: Can you discuss the underwriting trajectory for the Andaz Miami Beach? - Management expressed confidence in the Andaz's market positioning and expected EBITDA of $6-7 million for the year, primarily in the fourth quarter [39] Question: Can you elaborate on the updated outlook and changes in Wailea? - The revised expectations for Andaz are $6-7 million, with a $4 million forecast revision for Wailea due to a challenging operating environment [45] Question: What held back performance in Maui during the first quarter? - Management noted that the luxury market in Wailea faced competition from Kaanapali, which is recovering faster, impacting occupancy [56] Question: What is the strategy regarding non-core assets? - The company is focused on recycling capital and will consider divesting non-core assets when appropriate, but no immediate sales are planned [68] Question: What are the expectations for luxury assets in the current market? - Management indicated that luxury assets have a focused group of investors, and while transaction volumes are slower, they remain open to capital recycling opportunities [79]
Sunstone Hotel (SHO) Q1 Earnings: Taking a Look at Key Metrics Versus Estimates
ZACKS· 2025-05-06 14:36
Core Insights - Sunstone Hotel Investors (SHO) reported revenue of $234.07 million for the quarter ended March 2025, reflecting a year-over-year increase of 7.8% [1] - The company's EPS was $0.21, significantly higher than $0.05 in the same quarter last year, indicating strong earnings growth [1] - Revenue fell short of the Zacks Consensus Estimate of $237.58 million by 1.48%, while EPS exceeded the consensus estimate of $0.18 by 16.67% [1] Revenue Breakdown - Room revenue was reported at $144.92 million, slightly below the estimated $147.44 million, but still showing a year-over-year increase of 6.7% [4] - Other operating revenues reached $22.02 million, surpassing the average estimate of $21.56 million, with a year-over-year growth of 10% [4] - Food and beverage revenues totaled $67.13 million, exceeding the estimated $65.67 million, and reflecting a 9.4% increase compared to the previous year [4] Stock Performance - Over the past month, shares of Sunstone Hotel have returned +7.3%, underperforming the Zacks S&P 500 composite's +11.5% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), suggesting potential underperformance relative to the broader market in the near term [3]
Sunstone Hotel Investors(SHO) - 2025 Q1 - Earnings Call Transcript
2025-05-06 14:30
Financial Data and Key Metrics Changes - The first quarter adjusted EBITDA was $57 million, and adjusted FFO was $0.21 per diluted share, reflecting a 17% increase from the prior year [25] - Comparable rooms RevPAR increased by 3.8% in the first quarter, while total RevPAR grew by 4.3%, contributing to an 80 basis point expansion in hotel margins [24] - The company repurchased $21 million of stock at a blended repurchase price of $8.9 per share, equating to a compelling multiple on earnings [15][16] Business Line Data and Key Metrics Changes - The Andaz Miami Beach opened on May 3, 2025, and is expected to contribute significantly to earnings growth in the coming years [6][7] - The recently renovated Marriott Long Beach Downtown posted a solid 145% increase in RevPAR [12] - Group production at Wailea was up nearly 20% in the first quarter relative to the prior year, indicating optimism for future growth [12] Market Data and Key Metrics Changes - Washington DC saw a 24% increase in RevPAR due to the inauguration, while New Orleans hotels grew RevPAR by 25% driven by the Super Bowl [8][9] - San Francisco generated RevPAR growth of 9% due to increased commercial activity [9] - The company noted softer performance in Wailea, but expects recovery as the Kaanapali submarket normalizes [11][12] Company Strategy and Development Direction - The company is focused on a balanced and nimble approach to capital allocation, utilizing a strong balance sheet and future asset recycling to drive growth in FFO and NAV per share [7][17] - Capital investment activity for the year is expected to be in the range of $80 to $100 million, with ongoing renovations and upgrades across various properties [21] - The company aims to recycle capital and return value to shareholders through share repurchases and potential asset sales [16][66] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased macroeconomic uncertainty and declining business and consumer confidence, leading to a more cautious outlook for the year [14] - The updated outlook reflects expectations of total portfolio RevPAR growth ranging from 4% to 7% compared to 2024, with adjusted EBITDAre estimated between $235 million to $260 million [27][28] - Management remains optimistic about the long-term recovery in markets like San Francisco and Wailea, despite short-term challenges [10][56] Other Important Information - The company has nearly $150 million in total cash and cash equivalents, equating to approximately $650 million in total liquidity [26] - The Board of Directors authorized a $0.09 per share common dividend for the second quarter [29] Q&A Session Summary Question: Can you discuss the underwriting trajectory for the Andaz Miami Beach? - Management expressed confidence in the Andaz's market positioning and expected EBITDA of $6 to $7 million for the resort this year, primarily in the fourth quarter [34][37] Question: Can you elaborate on the updated outlook and changes in Wailea? - The revised expectation for Andaz is $6 million to $7 million, with a $4 million forecast revision for Wailea due to a challenging operating environment [43][44] Question: What held back performance in Maui and how does it compare to peers? - Management noted that Wailea's luxury market is recovering, and as Kaanapali normalizes, they expect to benefit from increased demand [50][52] Question: What is the strategy regarding non-core assets and potential sales? - Management indicated a focus on recycling capital and remains open to divesting non-core assets when appropriate, with a current inclination to repurchase shares [62][66] Question: What are the expectations for luxury assets in the current market? - Management highlighted ongoing conversations regarding luxury assets, noting that while transaction volumes are slower, they remain focused on capital recycling [74][75]
Sunstone Hotel Investors (SHO) Tops Q1 FFO Estimates
ZACKS· 2025-05-06 13:41
Sunstone Hotel Investors (SHO) came out with quarterly funds from operations (FFO) of $0.21 per share, beating the Zacks Consensus Estimate of $0.18 per share. This compares to FFO of $0.18 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of 16.67%. A quarter ago, it was expected that this hotel real estate investment trust would post FFO of $0.14 per share when it actually produced FFO of $0.16, delivering a surprise of 14.29%. Over ...
Sunstone Hotel Investors(SHO) - 2025 Q1 - Quarterly Results
2025-05-06 11:45
Financial Performance - For Q1 2025, total revenues reached $234.065 million, a 9% increase from $214.770 million in Q4 2024[25] - Room revenue for Q1 2025 was $144.921 million, up 8.0% from $133.191 million in Q4 2024[25] - Net income for Q1 2025 was $5.255 million, compared to $836,000 in Q4 2024, reflecting a significant increase[25] - Total operating expenses for Q1 2025 were $217.594 million, an increase from $205.384 million in Q4 2024[25] - Adjusted EBITDAre for Q1 2025 reached $57,256,000, up from $48,093,000 in Q4 2024, indicating a growth of approximately 18%[27] - Total Portfolio Hotel Adjusted EBITDAre for the trailing 12 months was $244,466,000, compared to $232,439,000 for the previous period, showing an increase of about 5.2%[27] - FFO attributable to common stockholders for Q1 2025 was $33,242,000, an increase from $29,155,000 in Q4 2024, representing a growth of approximately 14.3%[28] - Adjusted FFO attributable to common stockholders for Q1 2025 was $41,500,000, compared to $32,020,000 in Q4 2024, marking an increase of about 29.5%[28] - Total portfolio revenues for Q1 2025 reached $234.065 million, an increase from $230.703 million in Q1 2024, reflecting a growth of 1.0%[54] - Adjusted EBITDAre for the total portfolio in Q1 2025 was $60.772 million, compared to $57.399 million in Q1 2024, representing a year-over-year increase of 4.1%[54] - The overall adjusted EBITDAre margin for the total portfolio improved to 26.0% in Q1 2025, up from 24.9% in Q1 2024, indicating a margin expansion of 110 basis points[54] Debt and Equity - Interest expense for Q1 2025 was $12.682 million, compared to $10.440 million in Q4 2024, indicating increased borrowing costs[25] - The market value of common equity decreased to $1,885,477,000 as of March 31, 2025, down from $2,377,768,000 at the end of Q4 2024[34] - Total debt remained stable at $845,000,000 as of March 31, 2025, unchanged from the previous quarter[34] - The total debt to total capitalization ratio increased to 28.1% in Q1 2025, compared to 24.1% in Q4 2024[34] - The average interest rate on total debt was reported at 5.45% as of March 31, 2025[36] - The diluted weighted average shares outstanding for Q1 2025 was 201,624,000, slightly down from 202,233,000 in Q4 2024[28] - The annual dividend rate on Series G preferred stock increased from 3.0% to 4.5% in Q3 2024, and will further increase to 6.5% in Q3 2025[39] Hotel Operations - The company owns 15 hotels with a total of 7,253 rooms as of May 6, 2025[8] - The total portfolio consists of 7,253 rooms across various hotels, with Hilton San Diego Bayfront accounting for 16% of total rooms[44] - The average daily rate (ADR) for Hilton San Diego Bayfront was $288 in Q1 2025, a decrease of 0.7% compared to Q1 2024[49] - The occupancy rate for the total portfolio was 70.1% in Q1 2025, up from 68.9% in Q1 2024[51] - RevPAR for Hyatt Regency San Francisco increased by 8.6% to $232 in Q1 2025 compared to Q1 2024[49] - The Andaz Miami Beach, which reopened in May 2025 after renovation, had an ADR of $270, with a significant impact on overall portfolio statistics[51] - The total revenue per available room (TRevPAR) for the total portfolio increased by 3.2% to $358 in Q1 2025 compared to Q1 2024[51] - The occupancy rate for the Four Seasons Resort Napa Valley was 43.6% in Q1 2025, down from 60.0% in Q1 2024[49] - The company owns 100% of the Hilton San Diego Bayfront following the acquisition of the remaining 25% interest in June 2022[44] Acquisitions and Strategy - The company plans to continue its strategy of acquiring well-located hotel and resort real estate to enhance long-term stakeholder value[8] - The acquisition of the Hyatt Regency San Antonio Riverwalk in April 2024 is included in the financial results for Q1 2025[25] - The company acquired the Hyatt Regency San Antonio Riverwalk in April 2024, which included prior ownership results[51] - The total portfolio included results from 15 hotels in Q1 2025, compared to 14 hotels in Q1 2024, indicating a slight increase in the number of properties contributing to revenues[56] Performance Metrics - Adjusted EBITDAre and hotel Adjusted EBITDAre margins are used to evaluate ongoing performance, excluding certain nonrecurring items[20] - The Hilton San Diego Bayfront reported total revenues of $44.640 million in Q1 2025, with an adjusted EBITDAre of $13.426 million and a margin of 30.1%, down 80 basis points from the previous year[54] - The JW Marriott New Orleans achieved an impressive adjusted EBITDAre margin of 49.9% in Q1 2025, up 1,150 basis points from 38.4% in Q1 2024[54] - The Hyatt Regency San Francisco saw total revenues increase to $24.521 million in Q1 2025, with an adjusted EBITDAre margin of 10.7%, down 120 basis points year-over-year[54] - The total portfolio, excluding renovation hotels, generated revenues of $233.933 million in Q1 2025, with an adjusted EBITDAre of $61.247 million and a margin of 26.2%, up 80 basis points from the previous year[54] - The Andaz Miami Beach, which underwent extensive renovations, reported a significant negative adjusted EBITDAre of $(475,000) in Q1 2025, reflecting a margin decline of 359.8%[56]
SUNSTONE HOTEL INVESTORS REPORTS RESULTS FOR FIRST QUARTER 2025
Prnewswire· 2025-05-06 11:30
Core Insights - Sunstone Hotel Investors, Inc. reported first quarter results for 2025, highlighting a slight earnings increase despite a challenging operating environment [1][3] - The company opened the Andaz Miami Beach after a significant renovation, which is expected to enhance its portfolio value [3][8] - Adjustments to the full-year outlook were made due to increased economic uncertainty and variability in operating trends [3][14] Financial Performance - Net income for Q1 2025 was $5.3 million, down 59.7% from $13.0 million in Q1 2024 [4][7] - Adjusted FFO attributable to common stockholders increased by 10.6% to $41.5 million, with per diluted share rising 16.7% to $0.21 [4][7] - Total Portfolio RevPAR increased by 2.2% to $221.63, with occupancy at 70.1% [4][7] Operational Highlights - The Andaz Miami Beach features 287 guestrooms, a full-service spa, and premium dining options, positioning it as a key asset for future revenue growth [8][9] - The company repurchased 821,771 shares at an average price of $9.74 per share during Q1 2025, totaling $8.0 million [9] - As of March 31, 2025, the company had $148.8 million in cash and cash equivalents, with total assets of $3.1 billion [11] Capital Investments - Sunstone invested $28.2 million in its portfolio during Q1 2025, primarily for the Andaz Miami Beach transformation [12][13] - The company anticipates investing approximately $80 million to $100 million in 2025, focusing on ongoing renovations and improvements [13] Updated Guidance - The updated guidance for 2025 reflects a decrease in expected net income to a range of $33 million to $58 million, down from the previous estimate of $46 million to $71 million [14] - Total Portfolio RevPAR growth expectations were adjusted to 4.0% to 7.0%, down from 7.0% to 10.0% [14] Dividend Information - The Board of Directors authorized a cash dividend of $0.09 per share for common stock, payable on July 15, 2025 [16][17] - The company plans to continue quarterly cash dividends throughout 2025, subject to Board approval [17]
We Are Buying REIT Preferred Stocks Part 2: Summit Hotel Or Sunstone Hotel Preferreds?
Seeking Alpha· 2025-04-02 17:41
Group 1 - The article discusses a shift in investment strategy towards REIT preferred stocks due to improved spread conditions, making them more attractive for investment [1] - The investment group "Trade With Beta" offers services including frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, and hedging strategies [1] - The analyst has disclosed a beneficial long position in specific preferred shares, indicating a personal investment interest in the discussed stocks [1]