ALISO VIEJO, Calif., Aug. 7, 2024 /PRNewswire/ -- Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO) today announced results for the second quarter ended June 30, 2024. Second Quarter 2024 Operational Results (as compared to Second Quarter 2023): Net Income: Net income was $26.1 million as compared to $43.1 million. Comparable RevPAR: Comparable RevPAR decreased 2.0% to $232.59. The average daily rate was $322.60 and occupancy was 72.1%. Excluding The Confidante Miami Beach as it trans ...

Investors interested in REIT and Equity Trust - Other stocks are likely familiar with Sunstone Hotel Investors (SHO) and Gaming and Leisure Properties (GLPI) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look. Sunstone Hotel Investors and Gaming and Leisure Properties are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that SHO's earnings estimate revision activity has been more impressive, so in ...

ALISO VIEJO, Calif., June 24, 2024 /PRNewswire/ -- Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO) announced that it will report financial results for the second quarter 2024 on Wednesday, August 7, 2024, before the market opens. Management will hold its quarterly conference call the same day, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time). A live webcast of the call will be available through the Investor Relations section of the Company's website at www.sunstonehotels.com. A t ...

Art Wager/iStock Unreleased via Getty Images Introduction As I have dedicated a portion of my investment portfolio to fixed income, I am still looking for additional exposure to preferred equity. As the interest rates on the financial markets will move down, the price of fixed rate preferred shares will go up (assuming the creditworthiness of the issuer remains unchanged). I sold my preferred shares in Sunstone Hotel Investors, Inc. (NYSE:SHO) a few months ago on a temporary price spike, but I am wondering ...

Wall Street has a timeless piece of investment wisdom to "buy low, sell high," which is particularly relevant in today's volatile market environment. Despite the recent surge in the main equity indices, not all stocks have participated in the rally, presenting a unique opportunity for savvy investors. That brings us to the topic of our discussion today: Stocks to buy on the dip. Amid the broad market rally, several stocks have lagged, missing out on the notable ascents enjoyed by many shares and exchange-tr ...

[PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I—FINANCIAL%20INFORMATION) This section presents the Company's unaudited consolidated financial statements, management's discussion, and market risk disclosures [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the Company's unaudited consolidated financial statements and related notes, detailing financial position, performance, and cash flows, with Q1 2024 revenues and net income declining due to renovations and a property disposition [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's assets, liabilities, and equity at specific points in time Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------- | :------------------ | | Total assets | $3,142,100 | $3,149,321 | | Cash and cash equivalents | $400,678 | $426,403 | | Debt, net of unamortized deferred financing costs | $814,410 | $814,559 | | Total liabilities | $980,804 | $982,683 | | Total stockholders' equity | $2,161,296 | $2,166,638 | [Unaudited Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) This section details the Company's revenues, expenses, and net income over a specific period Consolidated Statements of Operations Highlights (Three Months Ended March 31, in thousands, except per share data) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Total revenues | $217,166 | $243,443 | $(26,277) | (10.8)% | | Total operating expenses | $199,907 | $218,654 | $(18,747) | (8.6)% | | Interest and other income | $5,453 | $541 | $4,912 | 907.9% | | Interest expense | $(11,010) | $(13,794) | $2,784 | 20.2% | | NET INCOME | $13,035 | $21,087 | $(8,052) | (38.2)% | | INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $9,352 | $17,319 | $(7,967) | (46.0)% | | Basic and diluted per share amounts | $0.05 | $0.08 | $(0.03) | (37.5)% | [Unaudited Consolidated Statements of Equity](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Equity) This section outlines changes in the Company's equity, including net income, distributions, and stock transactions Changes in Stockholders' Equity (Three Months Ended March 31, in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------- | :------------------ | | Balance at period end | $2,161,296 | $2,166,638 | | Net income | $13,035 | $21,087 | | Common stock distributions declared | $(14,364) | $(10,449) | | Preferred stock dividends declared | $(3,683) | $(3,768) | | Issuance of restricted common stock, net | $(3,217) | $(3,348) | [Unaudited Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) This section categorizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, in thousands) | Cash Flow Activity | 2024 | 2023 | | :----------------------------------- | :----- | :----- | | Net cash provided by operating activities | $38,484 | $47,248 | | Net cash used in investing activities | $(27,664) | $(22,474) | | Net cash used in financing activities | $(33,523) | $(36,479) | | Net decrease in cash and cash equivalents and restricted cash | $(22,703) | $(11,705) | | Cash and cash equivalents and restricted cash, end of period | $470,995 | $145,501 | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the accounting policies, significant estimates, and specific financial statement line items [1. Organization and Description of Business](index=10&type=section&id=1.%20Organization%20and%20Description%20of%20Business) This note describes the Company's business as a REIT and its hotel portfolio - Sunstone Hotel Investors, Inc. operates as a self-managed and self-administered Real Estate Investment Trust (REIT), investing in hotels through its Operating Partnership and TRS Lessee[27](index=27&type=chunk) - As of March 31, 2024, the Company owned **14 hotels**, a decrease from 15 hotels as of March 31, 2023[29](index=29&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements - The Company applies the two-class method for computing earnings per share, including unvested share-based payment awards with non-forfeitable dividend rights as participating securities[35](index=35&type=chunk)[37](index=37&type=chunk) - No hotels were impaired during the three months ended March 31, 2024, and 2023, following recoverability assessments[48](index=48&type=chunk) - The Company is currently evaluating new accounting standards ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) for additional disclosure requirements[63](index=63&type=chunk)[64](index=64&type=chunk) [3. Investment in Hotel Properties](index=18&type=section&id=3.%20Investment%20in%20Hotel%20Properties) This note details the Company's investment in hotel properties, including gross value and depreciation Investment in Hotel Properties, Net (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------- | :------------------ | | Investment in hotel properties, gross | $3,745,134 | $3,712,685 | | Accumulated depreciation and amortization | $(1,156,285) | $(1,127,406) | | Investment in hotel properties, net | $2,588,849 | $2,585,279 | | Construction in progress | $75,672 | $61,247 | [4. Fair Value Measurements and Interest Rate Derivatives](index=18&type=section&id=4.%20Fair%20Value%20Measurements%20and%20Interest%20Rate%20Derivatives) This note provides information on the fair value of financial instruments and derivative contracts Interest Rate Derivatives Fair Value (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :--------------------------------- | :------------- | :---------------- | | Estimated Fair Value of Assets (Liabilities) | $2,058 | $16 | | Noncash interest on derivatives, net (Q1) | $(2,042) | $1,832 | Fair Value of Debt (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Carrying Amount | $818,512 | $819,050 | | Fair Value | $806,482 | $805,212 | [5. Prepaid Expenses and Other Assets](index=21&type=section&id=5.%20Prepaid%20Expenses%20and%20Other%20Assets) This note details the components of prepaid expenses and other current assets Prepaid Expenses and Other Assets, Net (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------- | :------------------ | | Total prepaid expenses and other assets, net | $33,943 | $26,383 | | Prepaid expenses | $14,316 | $8,123 | | Interest rate derivatives | $2,058 | $417 | [6. Notes Payable](index=21&type=section&id=6.%20Notes%20Payable) This note outlines the Company's debt structure, including mortgage loans and credit facilities Notes Payable (in thousands) | Debt Type | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------- | :------------------ | | Mortgage Loans | $73,512 | $74,050 | | Unsecured Corporate Credit Facilities | $575,000 | $575,000 | | Unsecured Senior Notes | $170,000 | $170,000 | | Total debt | $818,512 | $819,050 | | Debt, net of unamortized deferred financing costs | $814,410 | $814,559 | Interest Expense (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :----------------------------------- | :----- | :----- | | Interest expense on debt | $12,313 | $11,417 | | Noncash interest on derivatives, net | $(2,042) | $1,832 | | Amortization of deferred financing costs | $739 | $545 | | Total interest expense | $11,010 | $13,794 | - Approximately **51.1%** of the Company's outstanding debt had fixed interest rates or had been swapped to fixed interest rates as of March 31, 2024[76](index=76&type=chunk)[142](index=142&type=chunk) [7. Other Liabilities](index=23&type=section&id=7.%20Other%20Liabilities) This note details various other liabilities, including advance deposits and taxes payable Other Liabilities (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------- | :------------------ | | Total other liabilities | $84,485 | $73,014 | | Advance deposits | $61,650 | $45,432 | | Property, sales and use taxes payable | $10,070 | $6,903 | [8. Leases](index=23&type=section&id=8.%20Leases) This note provides information on the Company's operating lease assets and obligations Operating Lease Information (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------- | :------------------ | | Right-of-use assets, net | $11,619 | $12,755 | | Lease obligations | $15,588 | $16,735 | | Weighted average remaining lease term | 29 years | N/A | | Weighted average discount rate | 5.4% | N/A | Components of Lease Expense (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :----------------------------------- | :----- | :----- | | Operating lease cost | $1,352 | $1,359 | | Variable lease cost | $2,135 | $2,086 | | Sublease income | $(297) | $(297) | | Total lease cost | $3,190 | $3,148 | [9. Stockholders' Equity](index=24&type=section&id=9.%20Stockholders'%20Equity) This note details changes in stockholders' equity, including preferred stock dividends and share repurchases - The annual dividend rate for Series G preferred stock increased in January 2024 to the greater of **3.0%** or the Montage Healdsburg's annual net operating income yield, with a further increase to **4.5%** expected in the second half of 2024[85](index=85&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) Stock Repurchase Program Activity (Three Months Ended March 31, in thousands, except share data) | Metric | 2024 | 2023 | | :----------------------------------- | :----- | :----- | | Number of common shares repurchased | — | 1,964,923 | | Cost, including fees and commissions | $— | $18,626 | | Amount available for repurchase (as of Mar 31) | $454,700 | N/A | - The Company has **$300.0 million** available under its 'At the Market' Agreements, with no common stock issued in Q1 2024 or Q1 2023[90](index=90&type=chunk) [10. Incentive Award Plan](index=26&type=section&id=10.%20Incentive%20Award%20Plan) This note describes the Company's incentive award plan and related compensation expenses Amortization Expense for Incentive Awards (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :----------------------------------- | :----- | :----- | | Amortization expense, including forfeitures | $2,770 | $2,427 | | Capitalized compensation cost | $117 | $118 | Non-Vested Restricted Stock Award Activity (Three Months Ended March 31, 2024) | Metric | Number of Shares | Weighted-Average Grant Date Fair Value | | :----------------------------------- | :--------------- | :------------------------------------- | | Unvested at January 1, 2024 | 1,032,266 | $11.11 | | Granted | 369,075 | $10.76 | | Vested | (471,413) | $11.20 | | Unvested at March 31, 2024 | 929,928 | $10.93 | Non-Vested Restricted Stock Unit Activity (Target Performance, Three Months Ended March 31, 2024) | Metric | Target Number of Shares | Weighted-Average Grant Date Fair Value | | :----------------------------------- | :---------------------- | :------------------------------------- | | Unvested at January 1, 2024 | 1,076,160 | $10.69 | | Granted | 475,746 | $11.50 | | Vested | (119,732) | $11.21 | | Forfeited | (50,100) | $11.21 | | Unvested at March 31, 2024 | 1,382,074 | $10.90 | [11. Commitments and Contingencies](index=28&type=section&id=11.%20Commitments%20and%20Contingencies) This note outlines the Company's contractual commitments, management fees, and potential liabilities Management Fees (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :----------------------------------- | :----- | :----- | | Basic management fees | $5,974 | $6,728 | | Incentive management fees | $3,029 | $3,527 | | Total basic and incentive management fees | $9,003 | $10,255 | Franchise Costs (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :----------------------------------- | :----- | :----- | | Franchise assessments | $3,882 | $3,611 | | Franchise royalties | $323 | $307 | | Total franchise costs | $4,205 | $3,918 | - As of March 31, 2024, the Company had **$85.4 million** in remaining commitments for ongoing hotel renovations[102](index=102&type=chunk) Geographic Concentration of Hotels (as of March 31, 2024) | Location | Number of Hotels | Percentage of Total Rooms | Trailing 12-Month Total Consolidated Revenue | | :--------- | :--------------- | :------------------------ | :------------------------------------------ | | California | 5 | 39% | 44% | | Florida | 3 | 19% | 15% | | Hawaii | 1 | 8% | 17% | [12. Subsequent Event](index=32&type=section&id=12.%20Subsequent%20Event) This note discloses significant events occurring after the balance sheet date, such as property acquisitions - On April 23, 2024, the Company acquired the Hyatt Regency San Antonio Riverwalk for **$230.0 million**, funded by available cash and proceeds from a prior hotel sale[111](index=111&type=chunk) - In connection with the acquisition, Hyatt Corporation will contribute **$8.0 million** of key money[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the Company's financial condition and operating results for Q1 2024, highlighting revenue and net income declines due to renovations and a property disposition, alongside discussions on liquidity, capital, and critical accounting estimates [Overview](index=37&type=section&id=Overview) This section provides a general description of the Company's business and hotel portfolio - Sunstone Hotel Investors, Inc. operates as a self-managed and self-administered REIT, owning **14 upper upscale and luxury hotels** in urban and resort destinations as of March 31, 2024[119](index=119&type=chunk)[120](index=120&type=chunk) [Operating Activities](index=37&type=section&id=Operating%20Activities) This section describes the Company's revenue sources, expense categories, and key performance indicators - Revenues are primarily derived from room, food and beverage, and other operating activities, while expenses include various property-level and corporate overhead costs[121](index=121&type=chunk)[122](index=122&type=chunk) - Key performance indicators include Occupancy, Average Daily Rate (ADR), Revenue per Available Room (RevPAR), EBITDAre, and Funds From Operations (FFO), with both GAAP and non-GAAP adjustments used for evaluation[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - Operating results are influenced by overall demand for hotel rooms, new hotel development (supply), and the effectiveness of operators in managing revenues and expenses, with economic conditions and inflationary pressures being significant factors[127](index=127&type=chunk) [Operating Results](index=42&type=section&id=Operating%20Results) This section presents a detailed comparison of the Company's financial performance for the current and prior periods Summary of Operating Results (Three Months Ended March 31, in thousands, except statistical data) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Total revenues | $217,166 | $243,443 | $(26,277) | (10.8)% | | NET INCOME | $13,035 | $21,087 | $(8,052) | (38.2)% | | INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $9,352 | $17,319 | $(7,967) | (46.0)% | | Interest and other income | $5,453 | $541 | $4,912 | 907.9% | | Interest expense | $(11,010) | $(13,794) | $2,784 | 20.2% | - Room revenue decreased by **$16.6 million (10.9%)** in Q1 2024, primarily due to a **$9.4 million** decrease from two renovation hotels (The Confidante Miami Beach and Renaissance Long Beach) and an **$11.2 million** decrease from the sale of the Boston Park Plaza[130](index=130&type=chunk)[131](index=131&type=chunk) Comparable Portfolio Performance (12 hotels, Three Months Ended March 31) | Metric | 2024 | 2023 | Change | | :-------------------- | :----- | :----- | :----- | | Occupancy | 72.5% | 69.5% | +300 bps | | ADR | $329.75 | $337.27 | (2.2)% | | RevPAR | $239.07 | $234.40 | +2.0% | Non-GAAP Financial Measures (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Adjusted EBITDAre | $54,511 | $60,029 | $(5,518) | (9.2)% | | Adjusted FFO attributable to common stockholders | $37,518 | $43,824 | $(6,306) | (14.4)% | [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's cash flows, available capital, and contractual obligations - Net cash provided by operating activities decreased to **$38.5 million** in Q1 2024 from **$47.2 million** in Q1 2023, primarily due to decreased operating cash at renovation hotels, the Boston Park Plaza sale, and higher interest payments[164](index=164&type=chunk)[166](index=166&type=chunk) - Net cash used in investing activities increased to **$27.7 million** in Q1 2024 from **$22.5 million** in Q1 2023, driven by renovations and additions to hotel properties[167](index=167&type=chunk) - As of March 31, 2024, the Company had an unrestricted cash balance of **$400.7 million**, with **$500.0 million** capacity available under its unsecured revolving credit facility[173](index=173&type=chunk)[174](index=174&type=chunk) Contractual Obligations (as of March 31, 2024, in thousands) | Obligation | Total | Less Than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | | :--------------------------------- | :------ | :--------------- | :----------- | :----------- | :---------------- | | Notes payable | $818,512 | $73,512 | $290,000 | $455,000 | $— | | Interest obligations on notes payable | $145,026 | $46,683 | $77,634 | $20,709 | $— | | Operating lease obligations | $14,616 | $5,889 | $5,524 | $2,153 | $1,050 | | Construction commitments | $85,428 | $85,428 | $— | $— | $— | [Inflation](index=58&type=section&id=Inflation) This section addresses the impact of inflationary pressures on the Company's expenses and pricing strategies - Inflation negatively impacts expenses such as wages, benefits, food, commodity costs, property taxes, insurance, utilities, and borrowing costs[183](index=183&type=chunk) - The Company relies on hotel operators to adjust room rates and pricing to mitigate inflation, but competitive pressures may limit this ability[183](index=183&type=chunk) [Seasonality and Volatility](index=58&type=section&id=Seasonality%20and%20Volatility) This section explains the seasonal nature of the lodging industry and factors causing operating result volatility - The lodging industry experiences seasonality, leading to quarterly fluctuations in revenues[184](index=184&type=chunk) - Operating results are subject to volatility from factors including renovations, economic conditions, natural disasters, competition, and changes in travel patterns[185](index=185&type=chunk) [Critical Accounting Estimates](index=58&type=section&id=Critical%20Accounting%20Estimates) This section identifies key accounting estimates requiring significant management judgment and assumptions - Critical accounting estimates include impairment of investments in hotel properties, depreciation and amortization expense, and income taxes, all requiring significant management judgment and assumptions about future events[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Company's primary market risk exposure is to variable interest rates on its debt. It uses derivative financial instruments to manage this risk, with 51.1% of its debt fixed or swapped to fixed rates. A 50 basis point change in variable rates would impact annual interest expense by approximately $2.0 million - The Company's primary market risk is from variable interest rates on its debt[191](index=191&type=chunk) - As of March 31, 2024, **51.1%** of the Company's debt obligations were fixed or subject to interest rate swap derivatives[192](index=192&type=chunk) - A **50 basis point** increase or decrease in variable interest rates would result in an approximate **$2.0 million** annual change in interest expense[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2024. No material changes in internal control over financial reporting occurred during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2024[194](index=194&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2024[195](index=195&type=chunk) [PART II—OTHER INFORMATION](index=60&type=section&id=PART%20II—OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal, risk, and equity matters [Item 1. Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The Company reported no legal proceedings for the quarter ended March 31, 2024 - No legal proceedings were reported for the quarter ended March 31, 2024[197](index=197&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) No new material risk factors were identified in this quarterly report. The Company refers to the risks detailed in its Annual Report on Form 10-K - No new risk factors were reported in this quarterly period[198](index=198&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the common stock withheld by the Company to cover employee tax obligations related to restricted share vesting. The Company's stock repurchase program had $454.7 million remaining as of March 31, 2024, with no repurchases under the program during the quarter Common Stock Withheld for Employee Tax Obligations (Quarter Ended March 31, 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--------------------------------- | :------------------------- | :------------------------- | | January 1, 2024 - January 31, 2024 | 66,429 | $10.64 | | February 1, 2024 - February 29, 2024 | 207,785 | $11.02 | | March 1, 2024 - March 31, 2024 | 19,780 | $11.16 | | Total | 293,994 | $10.94 | - As of March 31, 2024, **$454.7 million** remained available for repurchase under the Company's stock repurchase program, with no repurchases made during the quarter[201](index=201&type=chunk)[204](index=204&type=chunk) [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities for the quarter ended March 31, 2024 - No defaults upon senior securities were reported for the quarter ended March 31, 2024[202](index=202&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The Company reported no mine safety disclosures for the quarter ended March 31, 2024 - No mine safety disclosures were reported for the quarter ended March 31, 2024[203](index=203&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) No other information was reported, specifically no Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter - No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter ended March 31, 2024[205](index=205&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, certifications from executive officers, and XBRL financial data files - Exhibits include Articles of Amendment and Restatement, Bylaws, Articles Supplementary for various preferred stock series, Certifications of Principal Executive and Financial Officers, and XBRL Instance, Schema, Calculation, Label, and Presentation Linkbase Documents[206](index=206&type=chunk) [SIGNATURES](index=64&type=section&id=SIGNATURES) The report was duly signed on May 6, 2024, by Aaron R. Reyes, Chief Financial Officer of Sunstone Hotel Investors, Inc - The report was signed by Aaron R. Reyes, Chief Financial Officer, on May 6, 2024[211](index=211&type=chunk)

Financial Data and Key Metrics Changes - Adjusted EBITDAre for Q1 was $55 million, and adjusted FFO was $0.18 per diluted share, with an estimated $3 million of earnings displacement at the Marriott Long Beach Downtown due to its conversion [26][27] - Full year adjusted EBITDAre is expected to range from $242 million to $263 million, with adjusted FFO per diluted share projected between $0.84 and $0.94 [48][49] - The company anticipates total portfolio full year RevPAR growth to range from 2.25% to 5.25% compared to 2023, with a range of 4.75% to 7.75% when excluding the Confidante Miami Beach [39] Business Line Data and Key Metrics Changes - Convention hotels led the portfolio with over 7% RevPAR growth in Q1, driven by the newly converted Westin Washington DC Downtown, which saw rooms RevPAR grow by 52% and total RevPAR by more than 77% [15] - Group room revenue pace for the remainder of the year is up approximately 9%, with strong performance expected across Boston, DC, Orlando, Long Beach, and Wailea [20] - The company experienced a decline in leisure demand, but comparable resorts still generated profitability well ahead of pre-pandemic levels [14] Market Data and Key Metrics Changes - The acquisition of the Hyatt Regency San Antonio Riverwalk for $230 million is expected to yield 8% in the current year, which is higher than the previous returns from Boston Park Plaza [32] - The San Antonio market is expected to benefit from a $500 million redevelopment of the Alamo and a multi-billion dollar airport expansion, which should drive additional visitation [71][77] - The convention center in San Antonio has recently undergone a multi-million dollar upgrade, with positive citywide pace expected for 2025 and 2026 [73] Company Strategy and Development Direction - The company continues to execute on three strategic objectives: recycling capital, investing in the portfolio, and returning capital to shareholders, which is expected to drive incremental earnings and value over the next several years [23] - The company is focused on internal investments, including the transformation of Andaz Miami Beach, which remains on schedule for completion by the end of the year [13] - The strategy includes evaluating additional acquisition opportunities and maintaining significant investment capacity for future growth [22][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the outlook for 2024, expecting the headwinds faced in Q1 to shift into tailwinds, particularly in the second half of the year [8][20] - The company noted that improved labor productivity helped offset lower group mix and decline in average rates during Q1 [18] - Management highlighted that the recent investments and acquisitions are paving the way for significant earnings growth into 2025 [24] Other Important Information - The board of directors declared a 29% increase in the quarterly dividend to $0.09 per share, reflecting the incremental income generated by the acquisition of the Hyatt Regency San Antonio [30] - The company maintains a strong balance sheet with over $240 million in total cash and cash equivalents, and nearly $740 million in total liquidity [40][41] Q&A Session Summary Question: April RevPAR trends and prospects for acceleration in Q2 - Management indicated that April was expected to be a transition quarter, with slightly down RevPAR but anticipated growth in May and June as comparisons ease [54][55] Question: Insights on the transactions market and competitive landscape - Management noted that while the near-term deal flow has slowed, being a cash buyer positions the company favorably in the current market [66][67] Question: Supply-demand dynamics in San Antonio and historical performance - Management highlighted the strong demand drivers in San Antonio, including leisure and convention business, and expressed confidence in the investment's growth potential [70][74] Question: Capital deployment strategy and focus segments - Management emphasized a balanced approach to capital deployment, targeting hotels with significant group components and immediate growth potential [82][84]

Exhibit 99.2 Supplemental Financial Information For the quarter ended March 31, 2024 May 6, 2024 Supplemental Financial Information May 6, 2024 Table of Contents | Corporate Profile And Disclosures Regarding Non-GAAP Financial Measures | 2 | | --- | --- | | Comparable Corporate Financial Information | 6 | | Capitalization | 12 | | Property-Level Data And Operating Statistics | 15 | | Property-Level Revenues, Adjusted EBITDAre & Adjusted EBITDAre Margins | 19 | Supplemental Financial Information May 6, 2024 ...

Sunstone Hotel Investors, Inc. (NYSE:SHO) Q4 2023 Earnings Conference Call February 23, 2024 1:00 PM ET Company Participants Aaron Reyes - CFO Bryan Giglia - CEO Robert Springer - President and Chief Investment Officer Conference Call Participants Chris Darling - Green Street Duane Pfennigwerth - Evercore ISI Smedes Rose - Citi Chris Woronka - Deutsche Bank Floris Van Dijkum - Compass Point Operator Good morning, ladies and gentlemen, thanks for standing by. Welcome to the Sunstone Hotel Investors Fourth Qu ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) As a REIT, the company owns 14 upper upscale hotels, focusing on a value-add lifecycle investment approach with third-party management **Portfolio Overview as of December 31, 2023** | Metric | Value | | :--- | :--- | | Number of Hotels | 14 | | Number of Rooms | 6,675 | | Locations | 6 states and Washington, DC | - The company's mission is to provide superior stockholder returns by investing in hotels where value can be added through capital investment, repositioning, and asset management, while actively recycling capital into new growth opportunities[16](index=16&type=chunk) - As of year-end 2023, hotels are managed by various third parties, including **Marriott (6 hotels)**, **Hyatt (2 hotels)**, and others like Four Seasons, Hilton, and Montage managing one hotel each[17](index=17&type=chunk) - As of February 23, 2024, the company had 40 employees; the workforce as of December 31, 2023, was approximately **40% female** and **35% ethnic, racial minorities**, and other underrepresented communities[48](index=48&type=chunk)[52](index=52&type=chunk) **Executive Officers as of February 23, 2024** | Name | Age | Position | | :--- | :--- | :--- | | Bryan A. Giglia | 47 | Chief Executive Officer | | Robert C. Springer | 46 | President and Chief Investment Officer | | David M. Klein | 54 | Executive Vice President and General Counsel | | Christopher G. Ostapovicz | 54 | Executive Vice President and Chief Operating Officer | | Aaron R. Reyes | 45 | Executive Vice President and Chief Financial Officer | [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from industry competition, economic conditions, cybersecurity threats, and its REIT qualification requirements - The lodging industry is highly competitive, with competition based on location, price, service levels, and brand reputation; the company's upper upscale and luxury hotels are particularly susceptible to revenue decreases during economic downturns[75](index=75&type=chunk)[78](index=78&type=chunk) - Cybersecurity breaches pose a significant risk, as the company and its third-party managers rely on IT systems that store sensitive guest data; past incidents at third-party managers have impacted company hotels[83](index=83&type=chunk)[84](index=84&type=chunk) **Geographic Concentration as of December 31, 2023** | State | Number of Hotels | Percentage of Total Rooms | Percentage of Total Consolidated Revenue | | :--- | :--- | :--- | :--- | | California | 5 | 39% | 44% | | Florida | 3 | 19% | 17% | | Hawaii | 1 | 8% | 17% | - The company faces risks from climate change, including physical risks like severe storms and transitional risks like increased regulation and shifts in consumer preferences[90](index=90&type=chunk)[92](index=92&type=chunk) - As of December 31, 2023, the company had approximately **$819.1 million of outstanding debt**, which may restrict financial flexibility and requires a substantial portion of cash flow for debt service[148](index=148&type=chunk) - Failure to qualify as a REIT would result in federal and state corporate income tax on the company's income, substantially reducing cash available for distributions to stockholders[158](index=158&type=chunk) [Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - There are no unresolved staff comments[194](index=194&type=chunk) [Cybersecurity](index=36&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity program relies on third-party hotel managers for property-level security while overseeing corporate systems internally - Due to its REIT structure, the company does not operate or manage its hotels and relies on third-party managers' programs to protect property-level systems from cybersecurity threats[195](index=195&type=chunk) - The company has implemented a corporate cybersecurity risk management program guided by frameworks such as ISO 27000 and NIST CSF[197](index=197&type=chunk) - The Board of Directors has delegated oversight of cybersecurity risk to the Audit Committee, which receives quarterly reports from management[200](index=200&type=chunk)[201](index=201&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) The company's portfolio consists of 14 Luxury and Upper Upscale hotels with 6,675 rooms across key US markets **Hotel Portfolio Summary as of December 31, 2023** | Hotel | City | State | Chain Scale Segment | Rooms | Manager | | :--- | :--- | :--- | :--- | :--- | :--- | | Four Seasons Resort Napa Valley | Calistoga | California | Luxury | 85 | Four Seasons | | Hilton New Orleans St. Charles | New Orleans | Louisiana | Upper Upscale | 252 | IHR | | Hilton San Diego Bayfront | San Diego | California | Upper Upscale | 1,190 | Hilton | | Hyatt Regency San Francisco | San Francisco | California | Upper Upscale | 821 | Hyatt | | JW Marriott New Orleans | New Orleans | Louisiana | Luxury | 501 | Marriott | | Marriott Boston Long Wharf | Boston | Massachusetts | Upper Upscale | 415 | Marriott | | Montage Healdsburg | Healdsburg | California | Luxury | 130 | Montage | | Oceans Edge Resort & Marina | Key West | Florida | Upper Upscale | 175 | Singh | | Renaissance Long Beach | Long Beach | California | Upper Upscale | 374 | Marriott | | Renaissance Orlando at SeaWorld® | Orlando | Florida | Upper Upscale | 781 | Marriott | | The Bidwell Marriott Portland | Portland | Oregon | Upper Upscale | 258 | Sage | | The Confidante Miami Beach | Miami Beach | Florida | Upper Upscale | 339 | Hyatt | | The Westin Washington, DC Downtown | Washington DC | D.C. | Upper Upscale | 807 | Marriott | | Wailea Beach Resort | Wailea | Hawaii | Upper Upscale | 547 | Marriott | | **Total** | | | | **6,675** | | [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) The company is not involved in any legal proceedings expected to have a material adverse effect on its financial condition - The company does not believe that any pending legal matters will have a material adverse effect on its financial position or results of operations[206](index=206&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[207](index=207&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE, and it maintains a stock repurchase program to return value to shareholders - The company's common stock is traded on the New York Stock Exchange under the symbol 'SHO'[209](index=209&type=chunk) - In February 2023, the board reauthorized the stock repurchase program, restoring the **$500.0 million** amount; from February 1 through December 31, 2023, the company repurchased 4,821,387 shares for **$45.4 million**, leaving **$454.7 million** remaining under the program[214](index=214&type=chunk) **Common Stock Repurchases for Q4 2023** | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Dollar Value Remaining Under Program | | :--- | :--- | :--- | :--- | | Oct 1 - Oct 31, 2023 | 163,449 | $9.18 | $474,031,549 | | Nov 1 - Nov 30, 2023 | 1,553,308 | $9.73 | $458,913,642 | | Dec 1 - Dec 31, 2023 | 426,676 | $9.89 | $454,693,415 | | **Total** | **2,143,433** | **$9.72** | **$454,693,415** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Financial performance improved in 2023, driven by stronger urban travel demand, asset sales, and active capital management **Portfolio Changes (2022-2023)** | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Hotels at start of year | 15 | 17 | | Acquisitions | 0 | 1 | | Dispositions | (1) | (3) | | **Hotels at end of year** | **14** | **15** | | Rooms at start of year | 7,735 | 8,544 | | Rooms from acquisitions | 0 | 339 | | Rooms from dispositions | (1,060) | (1,148) | | **Rooms at end of year** | **6,675** | **7,735** | - In October 2023, the company sold the Boston Park Plaza for gross proceeds of **$370.0 million**, recording a gain of **$123.8 million**[222](index=222&type=chunk) **Consolidated Operating Results (in thousands)** | | 2023 | 2022 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | **$986,480** | **$912,053** | **$74,427** | **8.2%** | | Total operating expenses | $867,824 | $816,175 | $51,649 | 6.3% | | Gain on sale of assets | $123,820 | $22,946 | $100,874 | 439.6% | | **NET INCOME** | **$206,708** | **$90,766** | **$115,942** | **127.7%** | | **INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS** | **$192,720** | **$73,042** | **$119,678** | **163.8%** | **Reconciliation of Net Income to Adjusted EBITDAre (in thousands)** | | 2023 | 2022 | | :--- | :--- | :--- | | Net income | $206,708 | $90,766 | | EBITDAre | $266,191 | $227,959 | | **Adjusted EBITDAre, excluding noncontrolling interest** | **$263,446** | **$233,782** | **Reconciliation of Net Income to Adjusted FFO (in thousands)** | | 2023 | 2022 | | :--- | :--- | :--- | | Net income | $206,708 | $90,766 | | FFO attributable to common stockholders | $195,335 | $173,459 | | **Adjusted FFO attributable to common stockholders** | **$196,513** | **$184,628** | - As of December 31, 2023, the company had an unrestricted cash balance of **$426.4 million** and **$500.0 million** available for borrowing under its unsecured revolving credit facility[273](index=273&type=chunk) - Total debt as of December 31, 2023, was **$819.1 million**; approximately **51.2%** of this debt had fixed interest rates or had been swapped to fixed rates[274](index=274&type=chunk)[277](index=277&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure from its variable-rate debt, which is partially mitigated by derivatives - The company uses derivative financial instruments, such as interest rate caps and swaps, to manage interest rate risk on its floating rate debt[292](index=292&type=chunk) - As of December 31, 2023, **51.2%** of the company's debt obligations were fixed or subject to interest rate swaps; a 50 basis point change in market interest rates on its variable rate debt would change annualized interest expense by approximately **$2.0 million**[293](index=293&type=chunk) [Financial Statements and Supplementary Data](index=56&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the company's audited consolidated financial statements and supplementary data - This item refers to the consolidated financial statements and the report of the independent registered public accounting firm, which are included later in the filing[294](index=294&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=56&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None reported[295](index=295&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period[296](index=296&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework[299](index=299&type=chunk) - Ernst & Young LLP, the independent registered public accounting firm, issued an unqualified audit report on the effectiveness of the company's internal control over financial reporting[300](index=300&type=chunk) [Other Information](index=58&type=section&id=Item%209B.%20Other%20Information) The company reports no other information under this item - None[313](index=313&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=58&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reports no information under this item - None[314](index=314&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=58&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors and corporate governance is incorporated by reference from the company's 2024 Proxy Statement - The required information is incorporated by reference from the definitive Proxy Statement to be filed with the SEC[316](index=316&type=chunk) [Executive Compensation](index=58&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive Proxy Statement - The required information is incorporated by reference from the definitive Proxy Statement to be filed with the SEC[317](index=317&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=58&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's definitive Proxy Statement - Most of the required information is incorporated by reference from the definitive Proxy Statement[318](index=318&type=chunk) - As of December 31, 2023, **2,581,199 securities** were available for future issuance under the 2022 Incentive Award Plan[320](index=320&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=58&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related transactions and director independence is incorporated by reference from the Proxy Statement - The required information is incorporated by reference from the definitive Proxy Statement to be filed with the SEC[321](index=321&type=chunk) [Principal Accountant Fees and Services](index=59&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the Proxy Statement - The required information is incorporated by reference from the definitive Proxy Statement to be filed with the SEC[322](index=322&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=59&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report - This item provides an index of all financial statements, schedules, and exhibits filed with or incorporated by reference into the Form 10-K[324](index=324&type=chunk) [Form 10-K Summary](index=64&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no information for the Form 10-K Summary - None[330](index=330&type=chunk) Financial Statements and Notes [Report of Independent Registered Public Accounting Firm](index=67&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued unqualified opinions on the company's financial statements and internal controls over financial reporting - Ernst & Young LLP issued an unqualified opinion, stating the financial statements are fairly presented in conformity with U.S. GAAP[343](index=343&type=chunk) - The audit firm also provided an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2023[344](index=344&type=chunk) - The impairment assessment of hotel properties was identified as a **Critical Audit Matter** due to the significant management judgment required to identify impairment indicators[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk) [Consolidated Financial Statements](index=69&type=section&id=Consolidated%20Financial%20Statements) The financial statements show significant net income growth in 2023, driven by higher revenues and gains on asset sales **Consolidated Balance Sheet Highlights (in thousands)** | | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Investment in hotel properties, net | $2,585,279 | $2,840,928 | | Cash and cash equivalents | $426,403 | $101,223 | | **Total assets** | **$3,149,321** | **$3,082,817** | | Debt, net | $814,559 | $812,681 | | **Total liabilities** | **$982,683** | **$997,856** | | **Total stockholders' equity** | **$2,166,638** | **$2,084,961** | **Consolidated Statement of Operations Highlights (in thousands)** | | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Total revenues | $986,480 | $912,053 | | Total operating expenses | $867,824 | $816,175 | | Gain on sale of assets | $123,820 | $22,946 | | **Net Income** | **$206,708** | **$90,766** | | **Income attributable to common stockholders** | **$192,720** | **$73,042** | | **Diluted EPS** | **$0.93** | **$0.34** | **Consolidated Cash Flow Highlights (in thousands)** | | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $198,131 | $209,384 | | Net cash provided by (used in) investing activities | $258,082 | $(165,721) | | Net cash used in financing activities | $(119,721) | $(49,174) | | **Net increase (decrease) in cash** | **$336,492** | **$(5,511)** | [Notes to Consolidated Financial Statements](index=74&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key financial activities, including asset sales, debt management, equity repurchases, and capital expenditure commitments - In June 2022, the company acquired The Confidante Miami Beach for **$232.0 million** and the remaining 25% interest in the Hilton San Diego Bayfront for a total of **$104.5 million**[422](index=422&type=chunk)[423](index=423&type=chunk) - In October 2023, the company sold the Boston Park Plaza for net proceeds of **$364.5 million**, recognizing a gain of **$123.8 million**[427](index=427&type=chunk) **Notes Payable Summary as of Dec 31, 2023 (in thousands)** | Debt Type | Balance Outstanding | | :--- | :--- | | Mortgage Loans | $74,050 | | Unsecured Corporate Credit Facilities | $575,000 | | Unsecured Senior Notes | $170,000 | | **Total debt** | **$819,050** | - In May 2023, the company entered into a new **$225.0 million term loan** (Term Loan 3) and used the proceeds to repay the **$220.0 million mortgage** on the Hilton San Diego Bayfront[449](index=449&type=chunk)[450](index=450&type=chunk) - As of December 31, 2023, the company had outstanding construction commitments totaling **$64.3 million** for ongoing hotel renovations[507](index=507&type=chunk)