Sunstone Hotel Investors, Inc. Sells Six Slower Growth
Located in Secondary Markets to DLJ Real Estate Partners
for $150.5 Million
SAN CLEMENTE, Calif., July 2, 2007 - Sunstone Hotel Investors, Inc.
(NYSE: SHO) announced that on June 29, 2007, it completed the sale of six
non-core hotels for gross proceeds of $150.5 million, or approximately
10.7x projected 2007 EBITDA, to affiliates of DLJ Real Estate Partners.
The sold hotels include the following properties:
# of Rooms
Hilton Garden Inn Lake Oswego,
Hawthorn Suites Sacramento,
Steve Goldman, Chief Executive Officer, stated, "The sale of these
six hotels is consistent with our strategy of recycling capital from smaller,
slower growth assets located in secondary and tertiary markets, into larger
scale hotels with higher long term yield potential. This transaction will
allow management to concentrate its efforts on a core group of large assets,
which will more directly impact cash flows. By employing a like-kind exchange'
structure with assets we acquired earlier this year, we were able to defer
substantial gains on the sale of these assets."
Goldman added, "Over the past two years, Sunstone has sold 26 hotels
with an average of 194 rooms per hotel, and has acquired 100% ownership
in 16 hotels with an average of 462 rooms per hotel. Additionally, by the
end of 2007, we will have invested approximately $300 million into our
existing portfolio. As a result, we have transformed Sunstone's portfolio
from a collection of mid-level suburban assets into a collection of institutional
quality hotels located in urban markets with high barriers to entry. We
believe this strategy has positioned the Company for superior long-term
Room Statistics Comparison
6 Hotel Portfolio(1) Acquisitions(2) Difference
Occ (%) (3)
ADR ($) (3)
Keys per Hotel
(1) Reflects 6 hotel portfolio sold June 29, 2007.
(2) Reflects the 16 hotels acquired in 2005 - 2007
Times Square joint venture.
(3) Room statistics reflect the period ended March
Use of Proceeds
Net proceeds of approximately $141 million from this sale will be used
to repay amounts outstanding under the Company's revolving credit facility
and the balance of the net proceeds will be used for general corporate
purposes. The Company's net proceeds may be affected by customary post-closing
Impact on Third & Fourth Quarter 2007
The impact of this sale on the Company's projected earnings was contemplated
in the full year guidance provided in the Company's earnings release dated
May 2, 2007. For the quarter ending September 30, 2007, the six hotels
represent approximately $3.9 million of projected EBITDA (reconciliation
to net income below). For the quarter ending December 31, 2007, the six
hotels represent approximately $3.4 million of projected EBITDA (reconciliation
to net income below). The Company plans to give third quarter guidance
and update full year guidance during its second quarter earnings call.
About Sunstone Hotel Investors, Inc.
Sunstone Hotel Investors, Inc. is a Southern California-based lodging
real estate investment trust (REIT). The Company has interests in 47 hotels
with an aggregate of 16,426 rooms primarily in the luxury and upper-upscale
segments operated under nationally recognized brands such as Marriott,
Hyatt, Hilton, Starwood and Fairmont.
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," "could," "estimate," "expect," "intend," "may," "plan," "predict,"
"project," "should," "will," "continue" and other similar terms and phrases,
including references to assumptions and forecasts of future results.