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ALISO VIEJO, Calif., May 2, 2017 -- Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO) today announced results for the first quarter ended March 31, 2017.

First Quarter 2017 Operational Results (as compared to First Quarter 2016):

  • Net income, which includes the gain recognized on the Company's February 2017 sale of the Fairmont Newport Beach, increased 5,148.9% to $63.8 million.
  • Income attributable to common stockholders per diluted share increased 1,450.0% to $0.27.
  • 27 Hotel Portfolio RevPAR increased 5.5% to $158.10.
  • 27 Hotel Portfolio Adjusted EBITDA Margin, excluding prior year property tax adjustments, net increased 220 basis points to 27.6%. Excluding the Wailea Beach Resort, due to its extensive repositioning during the first quarter of 2016, the Hotel Portfolio Adjusted EBITDA Margin, excluding prior year property tax adjustments, net would have increased by 190 basis points.
  • Adjusted EBITDA increased 12.5% to $69.6 million.
  • Adjusted FFO attributable to common stockholders per diluted share increased 14.3% to $0.24.

John Arabia, President and Chief Executive Officer, stated, "In the first quarter, our portfolio generated strong revenue and profit growth that notably exceeded our expectations. Not only was demand and pricing stronger than anticipated in a large number of our hotels, but more importantly, our two recently repositioned hotels, the Boston Park Plaza and the Wailea Beach Resort, generated RevPAR and earnings gains that materially exceeded our forecasts. Furthermore, we have been pleasantly surprised that group attendance across our portfolio continues to materialize at the high-end of its historic norm, recent spend on group banquet and audio visual has been robust, and group production and pace for all future periods has accelerated. While increasing supply in a number of hotel markets and various geopolitical risks warrant conservatism and point to a wide range of potential outcomes for hotel revenue growth, first quarter trends have given us greater confidence in our near-term earnings prospects. As a result, we have increased our full-year 2017 earnings guidance."

UNAUDITED SELECTED STATISTICAL AND FINANCIAL DATA

($ in millions, except RevPAR, ADR and per share amounts)

 
 

Three Months Ended March 31,

 
 

2017

 

2016

 

Change

 
                 

Net Income

$

63.8

 

$

1.2

 

5,148.9

%

Income (Loss) Attributable to Common Stockholders per Diluted Share

$

0.27

 

$

(0.02)

 

1,450.0

%

                 

27 Hotel Portfolio RevPAR

$

158.10

 

$

149.80

 

5.5

%

                 

27 Hotel Portfolio Occupancy

 

77.7

%

 

77.8

%

(10)

bps

27 Hotel Portfolio ADR

$

203.48

 

$

192.54

 

5.7

%

                 

27 Hotel Portfolio Adjusted EBITDA Margin

 

27.6

%

 

25.4

%

220

bps

                 

Adjusted EBITDA

$

69.6

 

$

61.8

 

12.5

%

Adjusted FFO Attributable to Common Stockholders

$

53.2

 

$

44.2

 

20.2

%

Adjusted FFO Attributable to Common Stockholders per Diluted Share

$

0.24

 

$

0.21

 

14.3

%

                     

Disclosures regarding the non-GAAP financial measures in this release are included on pages 4 through 6. Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included on pages 9 through 13 of this release. 27 Hotel Portfolio Adjusted EBITDA Margin excludes prior year property tax adjustments, net.

The Company's actual results for the quarter ended March 31, 2017 compare to its guidance originally provided as follows:

             

Metric

 

Quarter Ended
March 31, 2017
Guidance (1)

 

Quarter Ended
March 31, 2017
Actual Results
(unaudited)

 

Performance Relative
to Prior
Guidance Midpoint

Net Income ($ millions)

 

$54  to  $57

 

$64

 

+ $8

27 Hotel Portfolio RevPAR Growth

 

+ 2.5%   to  + 4.5%

 

5.5%

 

+ 2.0%

Adjusted EBITDA ($ millions)

 

$61  to  $64

 

$70

 

+ $7

Adjusted FFO Attributable to Common Stockholders ($ millions)

 

$43  to  $46

 

$53

 

+ $9

Adjusted FFO Attributable to Common Stockholders per Diluted Share

 

$0.19  to  $0.21

 

$0.24

 

+ $0.04

Diluted Weighted Average Shares Outstanding

 

219,600,000

 

219,400,000

 

- 200,000

                 

(1)

Represents guidance presented on February 21, 2017.

Balance Sheet/Liquidity Update

As of March 31, 2017, the Company had $506.2 million of cash and cash equivalents, including restricted cash of $64.4 million.

As of March 31, 2017, the Company had total assets of $3.7 billion, including $3.1 billion of net investments in hotel properties, total consolidated debt of $1.0 billion and stockholders' equity of $2.5 billion.

Capital Improvements

The Company invested $29.9 million into capital improvements of its portfolio during the three months ended March 31, 2017. In 2017, the Company expects to invest approximately $125 million to $140 million into its portfolio, which includes the final payments for the Wailea Beach Resort repositioning completed at the end of 2016.

To view full financial release and corresponding tables please click the PDF icon or visit:
http://phx.corporate-ir.net/phoenix.zhtml?c=181566&p=irol-news&nyo=0​

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT") that as of May 2, 2017 has interests in 27 hotels comprised of 13,226 rooms. Sunstone's hotels are primarily in the urban and resort upper upscale segment and are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. For further information, please visit Sunstone's website at www.sunstonehotels.com.

Sunstone's mission is to create meaningful value for our stockholders by producing superior long-term returns through the ownership of long-term relevant lodging real estate. Our values include transparency, trust, ethical conduct, honest communication and discipline. As demand for lodging generally fluctuates with the overall economy, we seek to own hotels that will maintain a high appeal with travelers over long periods of time and will generate economic earnings materially in excess of recurring capital requirements.

Contact: Bryan Giglia

(949) 382-3036

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