Sunstone Hotel Investors(SHO) - 2025 Q2 - Quarterly Results

Corporate Profile and Non-GAAP Financial Measures Disclosures This section introduces Sunstone Hotel Investors, Inc. as a lodging REIT and details the non-GAAP financial measures used for performance evaluation About Sunstone Sunstone Hotel Investors, Inc. is a lodging real estate investment trust (REIT) that, as of August 6, 2025, owns 14 hotels with 6,999 rooms, predominantly under nationally recognized brands - Sunstone Hotel Investors, Inc. (NYSE: SHO) is a lodging REIT[8] - As of August 6, 2025, the company owns 14 hotels comprising 6,999 rooms, with the majority operated under nationally recognized brands[8] - Sunstone's strategy focuses on creating long-term stakeholder value through the acquisition, active ownership, and disposition of well-located hotel and resort real estate[8] Non-GAAP Financial Measures This section outlines the non-GAAP financial measures used by Sunstone, including EBITDAre, Adjusted EBITDAre, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders, hotel Adjusted EBITDAre, and hotel Adjusted EBITDAre margins - The company presents non-GAAP financial measures such as EBITDAre, Adjusted EBITDAre, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders, hotel Adjusted EBITDAre, and hotel Adjusted EBITDAre margins, which are considered useful supplemental measures of operating performance[12] - EBITDAre is presented in accordance with Nareit guidelines, defined as net income plus interest expense, income tax expense, depreciation and amortization, gains or losses on disposition of depreciated property, impairment write-downs, and adjustments for unconsolidated affiliates' EBITDAre[13] - Adjustments to EBITDAre and FFO include the exclusion of amortization of deferred stock compensation, amortization of contract intangibles, gains or losses from debt transactions, cumulative effect of changes in accounting principles, and other non-ordinary course adjustments like lawsuit settlement costs or pre-opening costs[18][19][21] Comparable Corporate Financial Information This section presents consolidated financial statements and reconciliations of net income to key non-GAAP metrics like EBITDAre, Adjusted EBITDAre, FFO, and Adjusted FFO across recent periods Comparable Consolidated Statements of Operations This section provides a consolidated statement of operations for the quarter ended June 30, 2025, and prior quarters, along with trailing 12-month data Comparable Consolidated Statements of Operations (in thousands) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | Trailing 12 Months Ended June 30, 2025 | | :-------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------------------------------ | | Total revenues | $257,412 | $228,980 | $210,653 | $224,080 | $921,125 | | Total operating expenses | $227,204 | $214,279 | $202,262 | $207,380 | $851,125 | | Net income (loss) | $19,307 | $3,485 | $(159) | $2,969 | $25,602 | Comparable Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre, and Total Portfolio Hotel Adjusted EBITDAre This section reconciles net income to EBITDAre, Adjusted EBITDAre, and Total Portfolio Hotel Adjusted EBITDAre across recent quarters and the trailing 12 months Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre (in thousands) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | Trailing 12 Months Ended June 30, 2025 | | :-------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------------------------------ | | Net income | $10,774 | $5,255 | $836 | $3,249 | $20,114 | | EBITDAre | $66,851 | $50,310 | $43,925 | $50,437 | $211,523 | | Adjusted EBITDAre | $72,682 | $57,256 | $48,093 | $53,567 | $231,598 | | Total Portfolio Hotel Adjusted EBITDAre | $75,284 | $58,400 | $48,349 | $56,126 | $238,159 | Comparable Reconciliation of Net Income to FFO and Adjusted FFO Attributable to Common Stockholders This section details the reconciliation of net income to FFO and Adjusted FFO attributable to common stockholders, including per share data and equity transactions Reconciliation of Net Income to FFO and Adjusted FFO (in thousands, except per share data) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | Trailing 12 Months Ended June 30, 2025 | | :-------------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------------------------------ | | Net income | $10,774 | $5,255 | $836 | $3,249 | $20,114 | | FFO attributable to common stockholders | $49,372 | $33,242 | $29,155 | $30,638 | $142,407 | | Adjusted FFO attributable to common stockholders | $55,723 | $41,500 | $32,020 | $36,851 | $166,094 | | Comparable Adjusted FFO per diluted share | $0.29 | $0.21 | $0.16 | $0.19 | $0.85 | - Equity transactions include pro forma adjustments for common stock repurchases made during the first and second quarters of 2025 and the third and fourth quarters of 2024, as if they occurred on July 1, 2024[30] Capitalization This section provides a comparative analysis of the company's capitalization structure, including debt and preferred stock, across recent quarters Comparative Capitalization This section provides a comparative overview of the company's capitalization from Q2 2024 to Q2 2025, highlighting changes in common shares outstanding and debt ratios Comparative Capitalization (in thousands, except per share data) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Common share price (end of quarter) | $8.68 | $9.41 | $11.84 | $10.32 | $10.46 | | Common dividends per share | $0.09 | $0.09 | $0.09 | $0.09 | $0.09 | | Common shares outstanding | 190,171 | 200,370 | 200,825 | 200,919 | 203,390 | | Market value of common equity | $1,650,681 | $1,885,477 | $2,377,768 | $2,073,489 | $2,127,464 | | Total debt | $872,000 | $845,000 | $845,000 | $817,437 | $817,978 | | Total capitalization | $2,803,931 | $3,011,727 | $3,504,018 | $3,172,176 | $3,226,692 | | Total debt to total capitalization | 31.1% | 28.1% | 24.1% | 25.8% | 25.4% | Debt and Preferred Stock Summary Schedule This section provides a detailed breakdown of the company's unsecured debt and preferred stock as of June 30, 2025, including interest rates, maturities, and balances Unsecured Debt Summary (as of June 30, 2025, in thousands) | Unsecured Debt | Interest Rate / Spread | Maturity Date | Balance | | :------------- | :--------------------- | :------------ | :------ | | Series A Senior Notes | 4.69% | 01/10/2026 | $65,000 | | Term Loan 3 | 5.92% | 05/01/2026 | $225,000 | | Term Loan 4 | 5.52% | 11/07/2026 | $100,000 | | Term Loan 1 | 5.32% | 07/25/2027 | $175,000 | | Revolving Line of Credit | 5.86% | 07/25/2027 | $27,000 | | Series B Senior Notes | 4.79% | 01/10/2028 | $105,000 | | Term Loan 2 | 5.83% | 01/25/2028 | $175,000 | | Total Unsecured Debt | | | $872,000 | Preferred Stock Summary (as of June 30, 2025, in thousands) | Preferred Stock | Dividend Rate | Maturity | Balance | | :-------------- | :------------ | :------- | :------ | | Series G | 4.500% | Perpetual | $66,250 | | Series H | 6.125% | Perpetual | $115,000 | | Series I | 5.700% | Perpetual | $100,000 | | Total Preferred Stock | | | $281,250 | - The weighted average maturity of debt is 1.7 years, and the average interest rate is 5.51%[37] Property-Level Data and Operating Statistics This section details the company's hotel portfolio, including brand affiliations and key operating statistics such as ADR, Occupancy, RevPAR, and TRevPAR Hotel Information as of August 6, 2025 As of August 6, 2025, Sunstone's portfolio consists of 14 hotels totaling 6,999 rooms, featuring properties under major brands like Hilton, Hyatt, Marriott, Montage, and Four Seasons across various U.S. locations - As of August 6, 2025, the company's portfolio includes 14 hotels with a total of 6,999 rooms[44] - The hotels are operated under nationally recognized brands such as Hilton, Hyatt, Marriott, Montage, and Four Seasons[44] - Andaz Miami Beach debuted in May 2025, following a transformative renovation and conversion from The Confidante Miami Beach[45] Property-Level Operating Statistics (ADR, Occupancy, RevPAR and Total RevPAR (TRevPAR)) This section presents property-level operating statistics, including ADR, Occupancy, RevPAR, and TRevPAR, for Q2 and YTD 2025 compared to 2024, highlighting impacts from renovation activities Total Portfolio Operating Statistics (Excluding Renovation Hotel) - Q2 2025 vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | YoY Change | | :------- | :------ | :------ | :--------- | | ADR | $323 | $328 | (1.3)% | | Occupancy | 77.2% | 75.1% | +210 bps | | RevPAR | $250 | $246 | +1.4% | | TRevPAR | $417 | $405 | +2.8% | Total Portfolio Operating Statistics (Excluding Renovation Hotel) - YTD 2025 vs. YTD 2024 | Metric | YTD 2025 | YTD 2024 | YoY Change | | :------- | :------- | :------- | :--------- | | ADR | $321 | $324 | (1.1)% | | Occupancy | 75.0% | 72.5% | +250 bps | | RevPAR | $241 | $235 | +2.3% | | TRevPAR | $397 | $384 | +3.4% | - Operating statistics for Q2 and YTD 2025 and 2024 were impacted by renovation activity at Marriott Long Beach Downtown and Andaz Miami Beach, with Andaz Miami Beach resuming operations in May 2025 after suspending them in March 2024 for renovation[53] Property-Level Revenues, Adjusted EBITDAre & Adjusted EBITDAre Margins This section analyzes property-level revenues, Adjusted EBITDAre, and corresponding margins for the total portfolio, highlighting performance for Q2 and YTD 2025 compared to 2024 Q2 2025/2024 For Q2 2025, the total portfolio (excluding renovation hotels) generated $255.08 million in revenues and $77.61 million in Hotel Adjusted EBITDAre, with a margin of 30.4%, a slight decrease of 50 bps from Q2 2024 Total Portfolio (Excluding Renovation Hotel) Performance - Q2 2025 vs. Q2 2024 (in thousands) | Metric | Q2 2025 | Q2 2024 | Margin Change (bps) | | :-------------------- | :------ | :------ | :------------------ | | Total Revenues | $255,083 | $248,070 | | | Hotel Adjusted EBITDAre | $77,613 | $76,673 | | | Hotel Adjusted EBITDAre Margins | 30.4% | 30.9% | (50) bps | - Andaz Miami Beach, impacted by renovation, reported Total Revenues of $2,329 thousand and Hotel Adjusted EBITDAre of $(2,329) thousand, resulting in a (100.0)% margin for Q2 2025[56] - Marriott Long Beach Downtown experienced a significant increase in Hotel Adjusted EBITDAre margin from (0.2)% in Q2 2024 to 31.7% in Q2 2025, a change of 3,190 bps, likely reflecting recovery from prior renovation impacts[56] Q2 YTD 2025/2024 For the first six months of 2025, the total portfolio (excluding renovation hotels) achieved $483.93 million in revenues and $136.49 million in Hotel Adjusted EBITDAre, maintaining a 28.2% margin, consistent with YTD 2024 Total Portfolio (Excluding Renovation Hotel) Performance - YTD 2025 vs. YTD 2024 (in thousands) | Metric | YTD 2025 | YTD 2024 | Margin Change (bps) | | :-------------------- | :------- | :------- | :------------------ | | Total Revenues | $483,931 | $470,531 | | | Hotel Adjusted EBITDAre | $136,488 | $132,701 | | | Hotel Adjusted EBITDAre Margins | 28.2% | 28.2% | — bps | Actual Portfolio Performance - YTD 2025 vs. YTD 2024 (in thousands) | Metric | YTD 2025 | YTD 2024 | | :-------------------- | :------- | :------- | | Total Revenues | $493,837 | $464,647 | | Hotel Adjusted EBITDAre | $136,680 | $127,489 | | Hotel Adjusted EBITDAre Margins | 27.7% | 27.4% | - Renovation activities at Andaz Miami Beach and Marriott Long Beach Downtown continued to impact YTD results, with Andaz Miami Beach showing a negative Hotel Adjusted EBITDAre margin of (113.9)% for YTD 2025[59]