Repurchases $64.0 Million of Exchangeable Notes at 47.4% of Par
Retains Significant Liquidity with No Near-Term Debt Maturities
SAN CLEMENTE, Calif., March 16, 2009 - Sunstone Hotel Investors, Inc.
(the "Company") (NYSE: SHO) today is providing an interim update on its
operations through February and its recent capital markets activity. The
Company does not undertake to make updates for any subsequent developments
in its business.
Preliminary Operations Update
-
February total portfolio RevPAR was $99.62, down 14.8% to prior year.
-
Quarter to date through February 28, 2009, total portfolio RevPAR was $95.61,
down 12.9% to prior year.
Arthur Buser, Chief Executive Officer, stated, "We remain focused on eliminating
expenses, maximizing the cash flow of each hotel, enhancing our balance
sheet and maintaining a strong liquidity position. So far during the quarter
we continued to strengthen our balance sheet by repurchasing $64.0 million
of our debt at an average price equivalent to 47.4% of par. With a recently
renovated portfolio, a significant cash balance, and no near-term debt
maturities, we continue to believe Sunstone is well positioned for the
current phase of the cycle."
Finance Update
Through the date of this release, the Company has repurchased $64.0
million of its Operating Partnership's 4.6% Exchangeable Senior Notes due
2027 (the "Notes") at an average price equivalent to 47.4% of par, for
gross cash consideration of $30.4 million. The Company used available cash
to repurchase the Notes through unsolicited open market purchases.
Additionally, the Company has initiated negotiations with its bank group
to restructure its credit facility. The Company is also in the process
of soliciting bids for new mortgage debt on several of its unencumbered
hotels. Given the challenges of the current financing market, the Company
gives no assurances that either of these initiatives will be completed.
Ken Cruse, Chief Financial Officer, stated, "We repurchased Notes at
a significant discount to par after considering both our liquidity maximization
and our leverage reduction goals. Our credit facility and secured debt
initiatives are consistent with our objective of maximizing liquidity and,
if completed, we believe these transactions will meaningfully enhance our
financial flexibility. "
Business Update Call
The Company will host a conference call to discuss its operations update
on March 16, 2009, at 2 p.m. PDT. A live web cast of the call will be available
via the Investor Relations section of the Company's website at www.sunstonehotels.com.
Alternatively, investors may dial 1-800-240-8621 (for domestic callers)
or 303-262-2142 (for international callers). A replay of the web cast will
also be archived on the website.
Sunstone Hotel Investors, Inc.
Debt Summary (Unaudited - dollars in thousands)
Interest
February 28,
Rate / Maturity 2009
Debt
Collateral Spread
Date Balance
----
---------- ------
---- -------
Fixed Rate Debt
---------------
Secured Mortgage
Hilton Times
Debt
Square
5.92% 12/1/2010 $81,000
Secured Mortgage
Debt (2)
11 Hotels
5.95% 5/1/2011 248,164
Courtyard by
Secured Mortgage
Marriott Los
Debt (2)
Angeles
Courtyard by
Secured Mortgage
Marriott San
Debt (2)
Diego
Secured Mortgage
Debt (2)
Hilton Huntington
Holiday Inn
Secured Mortgage
Express San
Debt (2)
Diego (Old Town)
Holiday Inn San
Secured Mortgage
Diego
Debt (2)
(Harborview)
Secured Mortgage
Debt (2)
Marriott Provo
Secured Mortgage
Debt (2)
Marriott Rochester
Secured Mortgage
Marriott Salt
Debt (2)
Lake City
Secured Mortgage
Renaissance
Debt (2)
Concourse
Residence Inn by
Secured Mortgage
Marriott
Debt (2)
Manhattan Beach
Secured Mortgage
Rochester Inn &
Debt (2)
Suites
Secured Mortgage
Renaissance
Debt
Long Beach
4.98% 7/1/2012 34,606
Secured Mortgage
Renaissance
Debt
Westchester
4.98% 7/1/2012 29,663
Secured Mortgage
Rochester laundry
Debt
facility
9.88% 6/1/2013 3,985
Secured Mortgage
Doubletree
Debt
Minneapolis
5.34% 5/1/2015 18,359
Secured Mortgage
Debt
Hilton Del Mar 5.34%
5/1/2015 26,625
Secured Mortgage
Debt
Marriott Houston 5.34%
5/1/2015 24,440
Secured Mortgage
Debt
Marriott Ontario 5.34%
5/1/2015 25,871
Secured Mortgage
Debt
Marriott Park City 5.34% 5/1/2015
15,933
Secured Mortgage
Marriott
Debt
Philadelphia
5.34% 5/1/2015 28,868
Secured Mortgage
Debt
Marriott Troy
5.34% 5/1/2015 37,376
Secured Mortgage
Marriott Tysons
Debt
Corner
5.34% 5/1/2015 47,691
Secured Mortgage
Debt
The Kahler Grand 5.34%
5/1/2015 29,400
Secured Mortgage
Debt
Valley River Inn 5.34%
5/1/2015 12,268
Secured Mortgage
Renaissance
Debt
Harborplace
5.13% 1/1/2016 106,599
Secured Mortgage
Debt
Marriott Del Mar 5.69% 1/11/2016
48,000
Secured Mortgage
Debt
Hilton Houston 5.66%
3/11/2016 34,000
Renaissance
Secured Mortgage
Orlando Resort at
Debt
Sea World
5.52% 7/1/2016 87,098
Secured Mortgage
Embassy Suites
Debt
Chicago
5.58% 3/1/2017 75,000
Secured Mortgage
Marriott Boston
Debt
Long Wharf
5.58% 4/11/2017 176,000
Secured Mortgage
Debt
W Hotel San Diego 6.14% 1/1/2018
65,000
Secured Mortgage
Embassy Suites
Debt
La Jolla
6.60% 6/1/2019 70,000
Secured Mortgage
Renaissance
Debt
Washington D.C. 5.95% 5/1/2021
135,000
Exchangeable Senior
Notes
Guaranty
4.60% 1/1/2027 237,000
-------
Total Fixed Rate
Debt
1,697,946
L + 0.90% -
Credit Facility
Unsecured 1.50%
2011
-
---
TOTAL DEBT
$1,697,946
==========
Preferred Stock
---------------
Series A
cumulative
redeemable
preferred
8.00% perpetual $176,250
========
Series C
cumulative
convertible
redeemable
preferred
6.29% perpetual $100,000
========
Debt Statistics
---------------
% Fixed Rate Debt
100.0%
% Floating
Rate Debt
0.0%
Average
Interest Rate
5.53%
Weighted
Average
Maturity of
Debt
(includes
amounts
outstanding
on the Credit
Facility) (3)
8.1 years
March 16,
Recent 2009
Debt
Collateral Events (1) Balance
----
---------- ---------- -------
Fixed Rate Debt
---------------
Secured
Hilton Times
Mortgage Debt
Square
$81,000
Secured Mortgage
Debt (2)
11 Hotels
248,164
Courtyard by
Secured Mortgage
Marriott Los
Debt (2)
Angeles
Courtyard by
Secured Mortgage
Marriott San
Debt (2)
Diego
Secured Mortgage
Debt (2)
Hilton Huntington
Holiday Inn
Secured Mortgage
Express San
Debt (2)
Diego (Old Town)
Holiday Inn San
Secured Mortgage
Diego
Debt (2)
(Harborview)
Secured Mortgage
Debt (2)
Marriott Provo
Secured Mortgage
Debt (2)
Marriott Rochester
Secured Mortgage
Marriott Salt
Debt (2)
Lake City
Secured Mortgage
Renaissance
Debt (2)
Concourse
Residence Inn by
Secured Mortgage
Marriott
Debt (2)
Manhattan Beach
Secured Mortgage
Rochester Inn &
Debt (2)
Suites
Secured
Renaissance
Mortgage Debt
Long Beach
34,606
Secured
Renaissance
Mortgage Debt
Westchester
29,663
Secured
Rochester laundry
Mortgage Debt
facility
3,985
Secured
Doubletree
Mortgage Debt
Minneapolis
18,359
Secured
Mortgage Debt
Hilton Del Mar
26,625
Secured
Mortgage Debt
Marriott Houston
24,440
Secured
Mortgage Debt
Marriott Ontario
25,871
Secured
Mortgage Debt
Marriott Park City
15,933
Secured
Marriott
Mortgage Debt
Philadelphia
28,868
Secured
Mortgage Debt
Marriott Troy
37,376
Secured
Marriott Tysons
Mortgage Debt
Corner
47,691
Secured
Mortgage Debt
The Kahler Grand
29,400
Secured
Mortgage Debt
Valley River Inn
12,268
Secured
Renaissance
Mortgage Debt
Harborplace
106,599
Secured
Mortgage Debt
Marriott Del Mar
48,000
Secured
Mortgage Debt
Hilton Houston
34,000
Renaissance
Secured
Orlando Resort at
Mortgage Debt
Sea World
87,098
Secured
Embassy Suites
Mortgage Debt
Chicago
75,000
Secured
Marriott Boston
Mortgage Debt
Long Wharf
176,000
Secured
Mortgage Debt
W Hotel San Diego
65,000
Secured
Embassy Suites
Mortgage Debt
La Jolla
70,000
Secured
Renaissance
Mortgage Debt
Washington D.C.
135,000
Exchangeable
Senior Notes
Guaranty
(50,988) 186,012
------- -------
Total Fixed
Rate Debt
(50,988) 1,646,958
Credit Facility
Unsecured
-
-
TOTAL DEBT
$(50,988) $1,646,958
======== ==========
Preferred Stock
---------------
Series A
cumulative
redeemable
preferred
- $176,250
=== ========
Series C cumulative
convertible
redeemable preferred
- $100,000
=== ========
Debt Statistics
---------------
% Fixed Rate Debt
100.0%
% Floating
Rate Debt
0.0%
Average
Interest Rate
5.56%
Weighted Average
Maturity of Debt
(includes amounts
outstanding on the
Credit Facility) (3)
7.8 years
(1) Reflects repurchases of our Operating
Partnership's 4.6% Exchangeable
Senior Notes.
(2) Cross-collateralized loan with
life insurance company.
(3) Assumes the exchangeable senior
notes remain outstanding to maturity.
If the exchangeable
senior notes were redeemed upon the first call
date, the
weighted average maturity would be approximately 6 years. |
About Sunstone Hotel Investors, Inc.
Sunstone Hotel Investors, Inc. is a lodging real estate investment
trust ("REIT") that, as of the date hereof, has interests in 44 hotels
comprised of 15,029 rooms primarily in the upper-upscale segment operated
under nationally recognized brands, such as Marriott, Hilton, Hyatt, Fairmont
and Starwood. For further information, please visit the Company's website
at www.sunstonehotels.com.
Forward-Looking Statements
This press release contains forward-looking statements
within the meaning of federal securities laws and regulations. These forward-looking
statements are identified by their use of terms and phrases such as "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intend," "may,"
"plan," "predict," "project," "should," "will" and other similar terms
and phrases, including references to assumptions and forecasts of future
results. Forward-looking statements are not guarantees of future performance
and involve known and unknown risks, uncertainties and other factors that
may cause the actual results to differ materially from those anticipated
at the time the forward-looking statements are made. These risks include,
but are not limited to: volatility in the debt or equity markets affecting
our ability to acquire or sell hotel assets; national and local economic
and business conditions, including the current U.S. recession which may
be prolonged; the ability to maintain sufficient liquidity and our access
to capital markets; potential terrorist attacks, which would affect occupancy
rates at our hotels and the demand for hotel products and services; operating
risks associated with the hotel business; risks associated with the level
of our indebtedness and our ability to meet covenants in our debt and equity
agreements; relationships with property managers and franchisors; our ability
to maintain our properties in a first-class manner, including meeting capital
expenditure requirements; our ability to compete effectively in areas such
as access, location, quality of accommodations and room rate structures;
changes in travel patterns, taxes and government regulations, which influence
or determine wages, prices, construction procedures and costs; our ability
to identify, successfully compete for and complete acquisitions; the performance
of hotels after they are acquired; necessary capital expenditures and our
ability to fund them and complete them with minimum disruption; our ability
to continue to satisfy complex rules in order for us to qualify as a REIT
for federal income tax purposes; and other risks and uncertainties associated
with our business described in the Company's filings with the Securities
and Exchange Commission. Although the Company believes the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that the expectations will be attained
or that any deviation will not be material. All forward-looking information
in this release is as of March 16, 2009, and the Company undertakes no
obligation to update any forward-looking statement to conform the statement
to actual results or changes in the Company's expectations.
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