Sunstone Hotel Investors(US:SHO)2025-11-07 18:00Revenue Performance - Total revenues for Q3 2025 were $229.3 million, a 1.3% increase from $226.4 million in Q3 2024[112] - Room revenue increased by 0.6% to $139.5 million in Q3 2025, compared to $138.8 million in Q3 2024[112] - Other operating revenue saw a significant increase of 6.8%, reaching $25.4 million in Q3 2025, up from $23.8 million in Q3 2024[112] - Total revenues for the nine months ended September 30, 2025, increased by $32.1 million, or 4.6%, to $723.2 million compared to the same period in 2024[114] - Room revenue for the nine months ended September 30, 2025, increased by $14.6 million, or 3.4%, to $440.5 million, driven by the Two Renovation Hotels which contributed $7.9 million[114] - Food and beverage revenue for the nine months ended September 30, 2025, increased by $13.0 million, or 6.6%, to $209.6 million, with the Two Renovation Hotels contributing $1.8 million[123] - Other operating revenue for the nine months ended September 30, 2025, increased by $4.5 million, or 6.6%, to $73.1 million[125] Operating Expenses - Total operating expenses rose by 3.5% to $217.4 million in Q3 2025, compared to $210.0 million in Q3 2024[112] - Total operating expenses for the nine months ended September 30, 2025, increased by $42.5 million, or 6.8%, to $664.4 million[114] - Hotel operating expenses increased by $27.4 million, or 6.4%, in the first nine months of 2025 compared to the same period in 2024[126] - Other property-level expenses rose by $5.7 million, or 7.0%, in the first nine months of 2025 compared to the first nine months of 2024, primarily due to increased payroll and related expenses[127] - Corporate overhead expenses decreased by 8.0% to $7.0 million in Q3 2025, compared to $7.6 million in Q3 2024[112] - Corporate overhead expenses increased by $1.0 million, or 4.1%, in the first nine months of 2025 compared to the same period in 2024, mainly due to increased payroll and related expenses[129] - Depreciation and amortization expense increased by $8.5 million, or 9.2%, in the first nine months of 2025 compared to the same period in 2024[130] Net Income and Loss - Net income for Q3 2025 was $1.3 million, a decrease of 59.3% from $3.2 million in Q3 2024[112] - Loss attributable to common stockholders was $2.9 million in Q3 2025, compared to a loss of $0.7 million in Q3 2024, representing a 331.1% increase in loss[112] - Net income for the nine months ended September 30, 2025, decreased by $25.1 million, or 59.1%, to $17.4 million compared to the same period in 2024[114] - Net income for Q3 2025 was $1.322 million, a decrease from $3.249 million in Q3 2024, while net income for the first nine months of 2025 was $17.351 million compared to $42.426 million in the same period of 2024[150] Interest and Financing - Interest expense decreased by 16.1% to $13.4 million in Q3 2025, down from $16.0 million in Q3 2024[112] - Interest income decreased to $4.2 million in the first nine months of 2025 from $10.9 million in the same period in 2024[132] - The company incurred total interest expense of $39.258 million in the first nine months of 2025, a slight decrease from $39.685 million in the same period in 2024[135] - Interest obligations on debt total $247,657,000, with $46,015,000 due within one year[177] Cash Flow and Investments - Net cash provided by operating activities increased to $145.1 million in the first nine months of 2025 from $139.9 million in 2024, driven by increased travel demand and hotel acquisitions[161] - Net cash used in investing activities was $(23.7) million in the first nine months of 2025, a significant improvement from $(339.3) million in the same period of 2024, primarily due to proceeds from hotel sales[162] - The company invested $73.7 million in capital expenditures during the first nine months of 2025, compared to $110.2 million in the same period of 2024[179] Debt and Liquidity - Total debt as of September 30, 2025, was $930.0 million, with an unrestricted cash balance of $121.1 million, providing a solid liquidity position[170][169] - The Amended Credit Agreement expanded the unsecured debt borrowing capacity to $850.0 million and extended the maturity of the revolving credit facility to September 2029[173] - As of September 30, 2025, 70.4% of the company's outstanding debt had fixed interest rates or had been swapped to fixed rates, enhancing interest rate stability[176] - The company has $930 million in total debt, with $65 million due within one year[177] Operational Highlights - The company owned 14 hotels as of September 30, 2025, averaging 500 rooms each[105] - The occupancy rate for the Two Renovation Hotels was 51.0% with an average daily rate (ADR) of $249.74, resulting in a revenue per available room (RevPAR) of $127.37 for the nine months ended September 30, 2025[118] - The acquisition of the Hyatt Regency San Antonio Riverwalk in April 2024 contributed $7.6 million to room revenue for the first nine months of 2025[120] - The Comparable Portfolio's room revenue increased by $1.3 million, or 0.7%, with occupancy increasing by 100 basis points and ADR decreasing by 0.6%[121] - The sale of the Hilton New Orleans St. Charles resulted in a decrease of $2.1 million in room revenue for the third quarter of 2025[122] Adjusted Metrics - Adjusted EBITDAre decreased by $3.5 million, or 6.6%, in Q3 2025 compared to Q3 2024, and decreased by $1.6 million, or 0.9%, in the first nine months of 2025 compared to the same period in 2024[150] - EBITDAre for Q3 2025 was $48.799 million, down from $50.437 million in Q3 2024, while for the first nine months of 2025 it was $165.960 million compared to $172.412 million in the same period of 2024[150] - Adjusted FFO attributable to common stockholders for the Hilton New Orleans St. Charles was $0.1 million in Q3 2025, down from $0.3 million in Q3 2024, while for the first nine months it remained at $3.0 million for both years[156] - Adjusted EBITDAre at the Comparable Portfolio decreased by $0.8 million, or 0.5%, in the first nine months of 2025 compared to the same period in 2024[152] - The Hyatt Regency San Antonio Riverwalk recorded Adjusted EBITDAre of $10.9 million in the first nine months of 2025, up from $8.6 million in the same period of 2024[153] - Adjusted EBITDAre at the Two Renovation Hotels decreased by $0.9 million, or 342.2%, in Q3 2025 compared to Q3 2024[152] Future Outlook - The company expects future cash sources to include operating activities, working capital, and additional debt issuances, while potential inflation and interest rate increases may impact capital availability[166] - The company may seek to obtain mortgages on its 14 unencumbered hotels, which could affect available capital through credit facilities[178]