Sunstone Hotel Investors(SHO) - 2025 Q1 - Quarterly Report

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$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$41.5 million[144]. Revenue Breakdown - Room revenue increased by $9.1 million, or 6.7$7.7 million[109]. - Food and beverage revenue increased by $5.8 million, or 9.4$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$217.6 million, an increase of $17.7 million or 8.8$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$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$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].