Sunstone Disposes Hilton New Orleans St. Charles Hotel for $47M

Core Insights - Sunstone Hotel Investors, Inc. (SHO) sold the Hilton New Orleans St. Charles for a gross sale price of $47 million, equating to approximately $187,000 per room [1][8] Financial Metrics - The sale price reflects a multiple of 10.1 times the 2024 Hotel Adjusted EBITDAre and an 8.7% cap rate on 2024 Hotel Net Operating Income (NOI) [2] - Including estimated near-term capital expenditures, the gross sale price reflects a multiple of 13.4 times the Hotel Adjusted EBITDAre and a 6.6% cap rate on 2024 Hotel NOI [2] Capital Allocation - Proceeds from the hotel sale were fully reinvested into share repurchases, taking advantage of favorable market conditions [3][8] - From early 2025 to June 6, the company repurchased 6.8 million shares at an average price of $8.84 per share, totaling $60 million before expenses [4] - Since the start of 2022, the company has allocated $252 million to repurchase 25.8 million shares, representing nearly 12% of shares outstanding at the beginning of the period, at an average price of $9.77 per share [4] Shareholder Value - The repurchase activity has resulted in an accretive allocation of capital, creating significant value for shareholders through an implied cash flow multiple and discount to net asset value [5] - The company anticipates that the hotel will require periodic renovations to maintain its competitive position and earnings level [5] Management Commentary - CEO Bryan Giglia stated that the company divested the hotel at attractive pricing, eliminated near-term capital expenditures, and reinvested proceeds into higher-yielding investments through stock repurchases [6] - The company continues to view New Orleans as an attractive lodging market for group events and leisure travel, maintaining exposure through ownership of the JW Marriott [6] Company Strategy - Sunstone's strategy focuses on creating long-term shareholder value through the acquisition, active ownership, and disposition of well-located hotel and resort real estate [7] - Despite a challenging macroeconomic environment, the company remains engaged in capital allocation opportunities [7]