Hotel Online  Special Report



 Sunstone Hotel Investors, Inc. Acquiring the 444 room Hilton Times Square, 
New York City for Approximately $242.5 million

SAN CLEMENTE, Calif., Jan. 26, 2006 - Sunstone Hotel Investors, Inc. (NYSE: SHO) announced today that it has signed a purchase and sale agreement to acquire the Hilton Times Square located in New York City on 42nd Street a half block west of Times Square for a purchase price of approximately $242.5 million, or a 12.8x multiple on projected 2006 EBITDA (see reconciliation of EBITDA to net income below).  The hotel is currently managed by Hilton Hotels. The acquisition, which is expected to close during the first quarter 2006, remains subject to certain closing conditions.
Sunstone will finance the acquisition through the assumption of $81.0 million of debt due in 2010 with a rate of 5.9% per annum, additional debt proceeds generated from the pending refinancing of two assets and through an anticipated equity offering.
Robert A. Alter, Sunstone's Chief Executive Officer, stated, "We are very excited to announce the acquisition of this strongly performing hotel in New York City.  Times Square is a terrific submarket with diverse demand generators."

About the Hilton Times Square
The Hilton Times Square hotel is part of a mixed-use complex developed by Forest City Ratner.  The hotel, which opened in 2002, is surrounded by Broadway theatres, fashion houses, nightclubs, shopping, fine New York restaurants and a number of corporate headquarters.  Soaring 44 stories above Manhattan Island, occupying the 21st thru 44th floors of a mixed-use entertainment/retail complex, the Hilton Times Square hotel offers oversized guest rooms (330 sq. ft standard room) with spectacular panoramic views.

About Sunstone Hotel Investors, Inc.
Sunstone Hotel Investors, Inc. is a Southern California-based lodging real estate investment trust (REIT).  Assuming the close of this acquisition, Sunstone will own 62 hotels with an aggregate of 18,061 rooms primarily in the upper-upscale and upscale segments operated under franchises from nationally recognized brands such as Marriott, Hyatt, Hilton, InterContinental and Fairmont.

This news release contains forward-looking statements within the meaning of federal securities laws and regulations, including references to forecasts of future results.  

            Reconciliation of Net Income to EBITDA - Full Year 2006 Forecast
                                      (in millions)

           Net Income                        $10.1
           Depreciation expense (1)       4.0
           Interest expense                   4.8
           EBITDA                             $18.9

           (1) Depreciation expense is a preliminary estimate based on the
           purchase price.  The Company expects to obtain a purchase price
           allocation from an independent third party which may cause this
           estimate to change.


     Bryan Giglia
    Director of Finance
    Sunstone Hotel Investors, Inc.
    (949) 369-4236

Also See: Hilton Opens Two New Luxury Hotels Open On Same Day; 900+ Rooms Added To N.Y.C. Hotel Capacity, Hotels Feature Larry Forgione Gourmet Restaurants / June 2000
New York City is Adding Nearly 5,000 New Hotel Rooms to its Current Inventory of 70,723 by the End of 2007 / November 2005

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