SUNSTONE HOTEL INVESTORS, INC.
Reconciliation of Net Income (Loss) to Non-GAAP Financial Measures
(Unaudited)
Reconciliation of Net Income (Loss) to EBITDA and EBITDA as adjusted
Three Months Ended June 30, Six Months Ended June 30,
Pro Forma
Pro Forma
2005 2004 2004
2005 2004 2004
Income (loss)
available to
common
stockholders $6,118 $5,852
$3,855 $7,527 $(1,638) $(21,490)
Preferred stock
dividends 2,414
-- -- 2,802
-- --
Minority interest
(OP unit holders) 643 516
(158) 794 (144) (166)
Depreciation and
amortization -
continuing
operations 14,942 13,320
13,893 29,005 26,839 27,732
Depreciation and
amortization -
discontinued
operations
-- -- 831
291 -- 2,057
Amortization of
deferred stock
compensation 483
-- -- 1,014
-- --
Interest expense
� continuing
operations 11,155 11,263
11,743 22,205 22,525 24,083
Interest expense
� discontinued
operations
68 -- 557
281 -- 1,272
Depreciation and
amortization -
deferred financing
fees
560 -- 1,387
1,682 -- 2,509
Prepayment
penalties 2,834
-- -- 2,834
-- --
Write-off of
deferred financing
costs
761 --
-- 761 -- --
Income taxes -
continuing
operations
-- -- (1,502)
-- -- (199)
Income taxes -
discontinued
operations
-- -- 380
-- --
60
EBITDA
39,978 30,951 30,986 69,196 47,582
35,858
(Gain)/loss on
sale of assets (2,384) --
280 (2,384) -- 381
Impairment loss
� continuing
operations
-- --
-- -- 7,439 7,439
Impairment loss
� discontinued
operations
-- --
-- --
-- 16,954
Reserve for contract
interpretation
issue
2,136 --
-- 2,136 --
--
(248) -- 280
(248) 7,439 24,774
Adjusted EBITDA $39,730 $30,951
$31,266 $68,948 $55,021 $60,632
Reconciliation of Net Income (Loss) to FFO and FFO as adjusted
Income (loss)
available to
common
stockholders $6,118 $5,852
$3,855 $7,527 $(1,638) $(21,490)
Minority interest
(OP unit holders) 643 516
(158) 794 (144) (166)
Real estate
depreciation
and amortization -
continuing
operations 14,657 13,000
13,573 28,426 26,099 26,992
Real estate
depreciation and
amortization -
discontinued
operations
-- -- 831
291 -- 2,057
(Gain)/loss on
sale of assets (2,384) --
280 (2,384) -- 381
FFO available to
common
stockholders 19,034 19,368
18,381 34,654 24,317 7,774
(including OP
unit holders)
Prepayment
penalties 2,834
-- -- 2,834
-- --
Write-off of
deferred financing
costs
761 --
-- 761 -- --
Impairment loss
� continuing
operations
-- --
-- -- 7,439 7,439
Impairment loss
� discontinued
operations
-- --
-- --
-- 16,954
Reserve for contract
interpretation
issue
2,136 --
-- 2,136 --
--
5,731 --
-- 5,731 7,439 24,393
Adjusted FFO
available to
common
stockholders $24,765 $19,368 $18,381 $40,385
$31,756 $32,167
(including OP
unit holders)
Adjusted FFO
available to
common stockholders
per share $0.63
$0.49 $1.03
$0.81
Diluted weighted
average shares
outstanding,
including OP
units
39,603 39,603
39,060 39,060
SUNSTONE HOTEL INVESTORS, INC.
Reconciliation of Net Income to Non-GAAP Financial Measures
Quarter Ended September 30, 2005 and Year Ended 2005 (Unaudited)
Reconciliation of Net Income to EBITDA and EBITDA as adjusted
Pro Forma 2005 (1)
Quarter Ended Year Ended
Year Ended
September 30, December 31,
December 31,
Low End High End Low End High End Low End High
End
of Range of Range of Range of Range of Range of Range
Income available
to common
stockholders $4,700 $7,400 $23,400
$27,000 $31,300 $34,900
Preferred stock
dividends
2,400 2,400 7,700
7,700 9,600 9,600
Minority interest 500
800 2,500 2,900 3,100
3,500
Depreciation and
amortization -
continuing
operations 18,000 18,000
65,000 65,000 74,000 74,000
Depreciation and
amortization
deferred
financing fees 700
700 2,900 2,900 2,800
2,800
Amortization of
deferred stock
compensation 300
300 1,400 1,400 1,400
1,400
Interest expense
� continuing
operations 15,400 15,400
53,400 53,400 61,100 61,100
Prepayment
penalties,
write-off of
deferred
financing costs
associated with
the early
retirement of debt --
-- 3,600 3,600 3,600
3,600
EBITDA
$42,000 $45,000 $159,900 $163,900 $186,900 $190,900
(Gain)/loss on
sale of assets $--
$-- $(2,400) $(2,400) $(2,400) $(2,400)
Reserve for
contract
interpretation
issue
-- -- 2,100
2,100 2,100 2,100
Adjusted EBITDA $42,000 $45,000 $159,600 $163,600 $186,600 $190,600
Reconciliation of Net Income to FFO and FFO as adjusted
Income available
to common
stockholders $4,700
$7,400 $23,400 $27,000 $31,300 $34,900
Minority interest 500
800 2,500 2,900 3,100
3,500
Real estate
depreciation and
amortization -
continuing
operations 17,800 17,800
64,000 64,000 73,000 73,000
(Gain)/loss on
sale of assets --
-- (2,400) (2,400) (2,400) (2,400)
FFO available to
common stockholders
(including OP
unit holders) 23,000 26,000 87,500
91,500 105,000 109,000
Prepayment
penalties,
write-off of
deferred
financing
costs
associated with
the early
retirement of debt -- --
3,600 3,600 3,600 3,600
Reserve for contract
interpretation
issue
-- -- 2,100
2,100 2,100 2,100
Adjusted FFO
available to
common stockholders
(including OP
unit holders) $23,000 $26,000 $93,200 $97,200
$110,700 $114,700
Diluted weighted
average shares
outstanding,
including OP
units (2) 49,999 49,999
44,496 44,496 49,999 49,999
Adjusted FFO
available to
common
stockholders
(including OP
unit holders)
per share and
unit (2) $0.46
$0.52 $2.09 $2.18
$2.21 $2.29
(1) Pro forma EBITDA & FFO include the acquisition hotels,
including
those closed in July 2005, as if they were acquired, and the related
financings were completed, on January 1, 2005.
(2) Diluted weighted average shares outstanding includes Series
C
Convertible Preferred on an as-converted basis.
SUNSTONE HOTEL INVESTORS, INC.
Hotel Operating Results
(unaudited)
Quarter Ended Six
Months Ended
Pro Forma
Pro Forma
June 30, June 30, June 30,
June 30,
2005 2004
2005 2004
Number of Hotels (1)
51 51
51 51
Number of Rooms (1) 12,630
12,630 12,630
12,630
% change in hotel
RevPAR (1)
11.3%
9.8%
Hotel operating profit
margin (2) (3) 31.2%
28.2% 28.9%
26.7%
Hotel Revenues
Room revenue
92,593 83,199 172,217
157,343
Food and beverage
revenue
28,986 27,388 54,761
52,635
Other operating
revenue
10,615 10,080 21,773
21,004
Total Hotel Revenues 132,194 120,667
248,751 230,982
Hotel Expenses
Room expense
19,449 18,047 37,233
35,106
Food and beverage
expense
19,579 18,771 37,870
36,242
Other hotel expense 37,497
36,387 74,978
71,690
General and
administrative
expense
14,413 13,380 26,865
26,374
Total Hotel Expenses 90,938
86,585 176,946
169,412
Hotel Operating Income 41,256 34,082
71,805 61,570
General and
administrative
� corporate
2,763 2,763
5,751 5,751
Depreciation and
amortization
15,425 13,803 30,019
27,853
Impairment loss
-- 0
-- 7,439
Operating Income
23,068 17,516 36,035
20,527
Interest and other
income
1,398 114
1,704 216
Interest expense
(15,247) (11,263) (27,415)
(22,525)
Minority interest
(643) (516)
(794) 144
Benefit from
(provision for)
income tax
-- --
--
Gain from discontinued
operations
2,092 --
2,935 --
Reserve for contract
dispute (4)
(2,136) --
(2,136) --
NET INCOME (LOSS)
8,532 5,851(5) 10,329
(1,638)(5)
(1) Includes 51 hotels. Excludes Rochester Residence Inn
(opened
June 2004) which was not open for the entire period in 2004 and
hotels acquired during, or subsequent to, Q2 2005.
(2) Quarter and six months ended June 30, 2005 hotel operating
profit
margin is calculated as the hotel adjusted operating income divided
by the hotel revenues per the schedule above. We use hotel
operating income for the same reasons as EBITDA, which are more
fully set forth on page 11 of this release.
(3) Quarter and six months ended June 30, 2004 Pro forma hotel
operating
profit margin is calculated as the pro forma hotel adjusted
operating income divided by the pro forma hotel revenues per the
schedule above. We use hotel operating income for the same reasons
as EBITDA, which are more fully set forth on page 11 of this
release.
(4) Total reserve of $2.1 million for 2003 - 2005 disputes have
been
excluded from 2005 quarter and six month ended results.
(5) Pro forma income from continuing operations.
SUNSTONE HOTEL INVESTORS, INC.
Debt Summary
(unaudited)
Interest Rate / Maturity
Debt
Collateral
Spread Date
Fixed Rate Debt
Secured Mortgage Debt 1 hotel
8.51% 2007
Secured Mortgage Debt 1 hotel
8.25% 2008
Secured Mortgage Debt 1 hotel
8.25% 2008
Secured Mortgage
Debt (3)
26 hotels
5.95% 2011
Secured Mortgage Debt Rochester
laundry
facility
9.88% 2013
Secured Mortgage Debt 10 hotels
- individual,
non cross-collateralized
loans
5.34% 2015
Secured Mortgage Debt 2 hotels
- individual,
non cross-collateralized
loans
4.98% 2012
Secured Mortgage Debt 2 hotels
- individual,
non cross-collateralized
loans
5.20% 2016
Secured Mortgage Debt 1 hotel
8.78% 2009
Secured Mortgage Debt 1 hotel
7.50% 2008
Total Fixed Rate Debt
Floating Rate Debt
Secured Mortgage
Debt (3)
26 hotels
L + 2.35% 2007
Unsecured Term Loan
Facility
No mortgages L + 2.25%
2008
Total Floating Rate Debt
TOTAL MORTGAGE DEBT
Secured Revolving
Credit Facility 8 hotels
L + 1.50% - 2.00% 2007
TOTAL DEBT
Preferred / Convertible Stock
Series A & B
8.00% perpetual
Series C
6.45% perpetual
% Fixed
% Floating
Average Interest Rate (1)
Weighted Average Maturity of Debt
Q2 2005 Recent
31-Jul-05
Ending Balance Events (2) Ending Balance
Fixed Rate Debt
Secured Mortgage Debt
13,884,318
13,884,318
Secured Mortgage Debt
37,415,926
37,415,926
Secured Mortgage Debt
36,356,501
36,356,501
Secured Mortgage Debt (3) 250,000,000
250,000,000
Secured Mortgage Debt
6,296,916
6,296,916
Secured Mortgage Debt
276,000,000
276,000,000
Secured Mortgage Debt
65,000,000
65,000,000
Secured Mortgage Debt
185,000,000
185,000,000
Secured Mortgage Debt
9,157,265
9,157,265
Secured Mortgage Debt
-- 53,970,216
53,970,216
Total Fixed Rate Debt
879,110,926
933,081,142
Floating Rate Debt
Secured Mortgage Debt (3) 13,085,440
-- 13,085,440
Unsecured Term Loan
Facility
$75,000,000
$75,000,000
Total Floating Rate Debt
88,085,440
88,085,440
TOTAL MORTGAGE DEBT
$967,196,366
$1,021,166,582
Secured Revolving Credit
Facility
--
--
TOTAL DEBT
$967,196,366
$1,021,166,582
Preferred / Convertible Stock
Series A & B
$121,250,000
$121,250,000
Series C
$100,000,000
$100,000,000
% Fixed
90.9%
91.4%
% Floating
9.1%
8.6%
Average Interest Rate (1)
5.80%
5.89%
Weighted Average Maturity
of Debt
7.59 years
7.19 years
(1) Assumes LIBOR of 3.35%
(2) Reflects debt assumed from 75% interest in Renaissance Washington,
D.C. acquisition
(3) Cross-collateralized loan with life insurance company
SUNSTONE HOTEL INVESTORS, INC.
Pro Forma Hotel Operating Statistics by Region
(unaudited)
Quarter ended June 30, 2005
Number Number Occupancy
Average
REGION
of Hotels of Rooms Percentages Daily Rate RevPAR
California
18 3,824 83.8%
$111.90 $93.74
Other West (1)
16 3,440 69.9%
$82.16 $57.42
Midwest (2)
8 2,614 66.6%
$122.81 $81.81
Middle Atlantic (3)
3 782
77.0% $140.65 $108.30
South (4)
3 895
77.0% $123.14 $94.77
Southwest (5)
3 1,075 79.3%
$91.33 $72.43
Total Portfolio
51 12,630 75.2%
$107.04 $80.45
Six months ended June 30, 2005
Number Number Occupancy
Average
REGION
of Hotels of Rooms Percentages Daily Rate RevPAR
California
18 3,824 81.6%
$107.56 $87.82
Other West (1)
16 3,440 68.7%
$84.69 $58.14
Midwest (2)
8 2,614 61.6%
$117.62 $72.39
Middle Atlantic (3)
3 782
68.2% $137.44 $93.75
South (4)
3 895
68.0% $123.73 $84.13
Southwest (5)
3 1,075 79.5%
$90.19 $71.66
Total Portfolio
51 12,630 72.0%
$104.49 $75.23
Quarter ended June 30, 2004
Occupancy Average
Percent Change
REGION
Percentages Daily Rate RevPAR
in RevPAR
California
79.7% $102.17 $81.47
15.1%
Other West (1)
68.1% $77.03
$52.43 9.5%
Midwest (2)
65.8% $113.21 $74.46
9.9%
Middle Atlantic (3)
79.0% $126.95 $100.30
8.0%
South (4)
75.4% $117.03 $88.26
7.4%
Southwest (5)
84.0% $80.15
$67.33 7.6%
Total Portfolio
73.7% $98.34
$72.46 11.0%
Six months ended June 30, 2004
Occupancy Average
Percent Change
REGION
Percentages Daily Rate RevPAR
in RevPAR
California
76.7% $100.02 $76.70
14.5%
Other West (1)
65.8% $80.52
$52.96 9.8%
Midwest (2)
61.8% $108.57 $67.06
7.9%
Middle Atlantic (3)
75.1% $124.35 $93.41
0.4%
South (4)
64.2% $116.02 $74.45
13.0%
Southwest (5)
82.5% $85.30
$70.40 1.8%
Total Portfolio
70.2% $97.66
$68.52 9.8%
(1) Includes Colorado, Idaho, Oregon, Utah and Washington.
(2) Includes Illinois, Michigan and Minnesota. Does not
include
Residence Inn by Marriott located in Rochester, Minnesota (opened
June 2004) which does not have a comparable period in 2004.
(3) Includes New Jersey, New York and Pennsylvania.
(4) Includes Georgia and Virginia
(5) Includes New Mexico and Texas
SUNSTONE HOTEL INVESTORS, INC.
Pro Forma Hotel Operating Statistics by Brand
(unaudited)
Quarter ended June 30, 2005
Number Number Occupancy Average
Brand
of Hotels of Rooms Percentages Daily Rate RevPAR
Marriott (1)
24 5,660 76.8%
$114.23 $87.73
Hilton
5 1,333 77.8%
$144.21 $112.13
InterContinental
13 2,539 72.7%
$84.44 $61.41
Hyatt
4 1,029 76.5%
$112.48 $86.09
Other Franchise
Affiliations (2)
2 834
79.8% $85.20 $67.99
Independent
3 1,235 65.7%
$85.61 $56.26
Total Portfolio
51 12,630 75.2%
$107.04 $80.45
Six months ended June 30, 2005
Number Number Occupancy Average
Brand
of Hotels of Rooms Percentages Daily Rate RevPAR
Marriott (1)
24 5,660 74.5%
$113.66 $84.73
Hilton
5 1,333 71.8%
$132.36 $95.10
InterContinental
13 2,539 68.4%
$80.93 $55.38
Hyatt
4 1,029 74.1%
$109.83 $81.36
Other Franchise
Affiliations (2)
2 834
82.5% $85.29 $70.36
Independent
3 1,235 59.2%
$84.18 $49.80
Total Portfolio
51 12,630 72.0%
$104.49 $75.23
Quarter ended June 30, 2004
Occupancy Average
Percent Change
Brand
Percentages Daily Rate RevPAR
in RevPAR
Marriott (1)
75.2% $105.62 $79.47
10.4%
Hilton
76.2% $131.45 $100.22
11.9%
InterContinental
72.5% $77.47
$56.19 9.3%
Hyatt
71.4% $101.20 $72.24
19.2%
Other Franchise
Affiliations (2)
82.6% $78.69
$64.99 4.6%
Independent
62.2% $79.78
$49.59 13.4%
Total Portfolio
73.7% $98.34
$72.46 11.0%
Six months ended June 30, 2004
Occupancy Average
Percent Change
Brand
Percentages Daily Rate RevPAR
in RevPAR
Marriott (1)
72.0% $106.52 $76.69
10.5%
Hilton
68.7% $124.55 $85.60
11.1%
InterContinental
68.5% $75.72
$51.86 6.8%
Hyatt
68.8% $99.74
$68.58 18.6%
Other Franchise
Affiliations (2)
82.3% $84.31
$69.37 1.4%
Independent
59.9% $78.33
$46.90 6.2%
Total Portfolio
70.2% $97.66
$68.52 9.8%
(1) Does not include Residence Inn by Marriott located in Rochester,
Minnesota (opened June 2004) which does not have a comparable period
in 2004.
(2) Includes Sheraton and Wyndham |