Sunstone Hotel Investors Reports
Results of Operations for First Quarter 2008
Total Revenue increases 9.4% as Compared to First Quarter 2007
Total Hotel RevPAR increases 3.1% as Compared to First Quarter 2007
SAN CLEMENTE, Calif., May 8 /PRNewswire-FirstCall/ -- Sunstone Hotel
Investors, Inc. (the "Company") (
NYSE:SHO
) today announced results of operations for the first quarter ended March
31, 2008.
First Quarter 2008 Highlights (as compared to first quarter 2007):
-- Total revenue increased by 9.4% to $248.7 million.
-- Total portfolio RevPAR increased 3.1% to $116.69.
-- Comparable Portfolio RevPAR increased 1.6% to $115.36.
-- Total hotel operating profit margin increased 20 bps to 26.3%.
-- Comparable hotel operating profit margin decreased 30 bps to 26.2%.
-- Loss attributable to common stockholders per diluted share increased
from $0.01 to $0.07.
-- Adjusted EBITDA increased 0.8% to $61.4 million.
-- Adjusted FFO available to common stockholders increased 1.0% to
$30.2 million.
-- Adjusted FFO available to common stockholders per diluted share was
flat at $0.48.
Robert A. Alter, Executive Chairman, stated, "We are pleased to
report impressive year-over-year growth in total revenue, total portfolio
RevPAR, and total hotel operating profit margins. In keeping with our
performance over the last four quarters, we delivered results within or
above our previous guidance. We continue to benefit from the substantial
capital investments made in our portfolio over the past two years as
several of our largest hotels continue to ramp-up. Going forward, in spite
of the challenging economic environment, we believe our portfolio is well
positioned for continued growth."
SELECTED FINANCIAL DATA
($ in millions, except RevPAR and per share amounts)
Three Months Ended March 31,
2008 2007 Change
Total Revenue $248.7 $227.4 9.4%
Total RevPAR $116.69 $113.20 3.1%
Comparable RevPAR (1) $115.36 $113.55 1.6%
Loss attributable to common stockholders $4.2 $0.4 1063.5%
Loss attributable to common stockholders
per diluted share $0.07 $0.01 600.0%
FFO available to common stockholders (2) $30.2 $29.9 1.0%
Adjusted FFO available to common
stockholders (2) $30.2 $29.9 1.0%
FFO available to common stockholders
per diluted share (2) $0.48 $0.48 0.0%
Adjusted FFO available to common
stockholders per diluted share (2) $0.48 $0.48 0.0%
EBITDA $61.4 $60.9 0.8%
Adjusted EBITDA $61.4 $60.9 0.8%
Total Hotel Operating Profit Margin 26.3% 26.1% 20 bps
Comparable Hotel Operating Profit Margin 26.2% 26.5% (30) bps
(1) Includes 43 "Comparable" hotels (including prior ownership periods).
Excludes two "Non-comparable" hotels that experienced material and
prolonged business interruption during the current or preceding
calendar year (Renaissance Baltimore and Renaissance Orlando). Please
refer to the Comparable Portfolio information on page 7.
(2) Reflects series C convertible preferred stock on an "as-converted"
basis.
Contemporaneously with this press release, the Company has filed its
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2008 with the Securities and Exchange Commission.
Disclosure regarding the non-GAAP financial measures in this release is
included on page 6. Reconciliations of non-GAAP financial measures to the
most comparable GAAP measure for each of the periods presented are
included on pages 10 through 12 of this release. Disclosure regarding the
Comparable Portfolio is included on page 7 of this release.
Performance Relative to Guidance
The following table reflects our guidance for the first quarter 2008
compared to our actual results.
Guidance Actual First
Quarter 2008
Total Portfolio RevPAR
Growth 2.0% to 4.0% 3.1 %
Comparable RevPAR Growth 1.0% to 3.0% 1.6 %
Adjusted EBITDA $58.5 million to $61.0 million $61.4 million
Adjusted FFO available
to common stockholders
per diluted share $0.43 to $0.47 $0.48
Total Hotel Operating
Profit Margin (25) bps to (75) bps +20 bps
Comparable Hotel
Operating Profit Margin (50) bps to (100) bps (30) bps
Total portfolio RevPAR increased 3.1% as compared to the first quarter
of 2007, driven by an increase of 4.8% in average daily room rate offset
by a decrease of 120 basis points in occupancy. Comparable RevPAR,
excluding two "Non-comparable" hotels that experienced material
and prolonged business interruption during the current or preceding
calendar year (Renaissance Baltimore and Renaissance Orlando), increased
1.6% as compared to the first quarter of 2007, driven by an increase of
4.4% in average daily room rate offset by a decrease of 200 basis points
in occupancy.
Total hotel operating profit margins for the first quarter increased 20
basis points (from 26.1% to 26.3%). Comparable hotel operating profit
margins for the first quarter decreased 30 basis points (from 26.5% to
26.2%) (see page 12 for a reconciliation of hotel operating income to the
comparable GAAP measure).
Acquisitions, Dispositions, Investments and Financings
On February 21, 2008, the Company announced that its Board of Directors
had authorized the Company to repurchase up to $150 million of its common
stock during 2008. During the first quarter of 2008, the Company
repurchased 734,307 shares of its common stock at an average price of
$16.11 per share (including transaction costs). The Company is currently
authorized by its Board of Directors to repurchase up to an additional
$138.2 million of its common stock before expiration of the repurchase
program on December 31, 2008.
Balance Sheet/Liquidity Update
As of March 31, 2008, the Company had approximately $69.7 million of
cash and cash equivalents (including restricted cash). As of March 31,
2008, the Company had no outstanding indebtedness under its $200 million
credit facility, and had $10.8 million in outstanding irrevocable letters
of credit backed by the credit facility, leaving, as of that date, $189.2
million available under the credit facility. On March 31, 2008, total
assets were $3.0 billion, including $2.8 billion of net investments in
hotel properties, total debt was $1.7 billion and stockholders' equity was
$1.1 billion.
Hotel Renovations
During the first quarter of 2008, the Company invested $31.8 million in
capital projects. Significant projects completed in the first quarter
include a complete renovation of all guestrooms and the ballroom at the
Marriott Boston Long Wharf, a renovation of the atrium of the Embassy
Suites La Jolla; renovations of the lobby, grounds and certain meeting
rooms at the Hyatt Regency Century Plaza and the addition of a new spa
facility at the Renaissance Orlando.
Management Succession
On March 14, 2008, the Company announced that its Board of Directors
had formed a search committee to conduct a search for a new president and
chief executive officer, replacing Steven R. Goldman, who resigned in the
first quarter.
Outlook
The Company is providing guidance at this time but does not undertake
to make updates for any developments in its business. Achievement of the
anticipated results is subject to risks and uncertainties, including those
disclosed in the Company's filings with the Securities and Exchange
Commission. The Company has provided guidance for the second quarter of
2008 as well as full year 2008. The Company's guidance does not take into
account any additional hotel acquisitions, dispositions, stock repurchases
or financings during 2008. As the level of demand for U.S. lodging is
highly correlated to the overall U.S. economy, changes in U.S. economic
performance could have a material effect on the Company's results of
operations.
Second Quarter 2008 Outlook
For the second quarter 2008, the Company expects total portfolio RevPAR
to increase approximately 4.0% to 6.0% over the second quarter of 2007 and
Comparable RevPAR, excluding two "Non-comparable" hotels (the
Renaissance Orlando and the Renaissance Baltimore), to increase
approximately 4.0% to 6.0% over the second quarter of 2007 (see page 7 for
an explanation of measures relating to comparability). Additionally, for
the second quarter of 2008:
-- Income available to common stockholders is expected to be approximately
$22.0 million to $24.8 million;
-- Adjusted EBITDA is expected to be approximately $86.5 million to
$89.3 million;
-- Adjusted FFO available to common stockholders is expected to be
approximately $54.9 million to $57.7 million;
-- Adjusted FFO available to common stockholders per diluted share is
expected to be approximately $0.88 to $0.92;
-- Total hotel operating profit margins are expected to increase
approximately 50 - 100 basis points compared to the second quarter of
2007; and
-- Comparable hotel operating profit margins are expected to increase
approximately 50 - 100 basis points from the second quarter of 2007.
Full Year 2008 Outlook
For the full year 2008, the Company expects total portfolio RevPAR to
increase approximately 2.0% to 5.0% over the full year 2007 and Comparable
RevPAR, excluding two "Non-comparable" hotels (the Renaissance
Orlando and the Renaissance Baltimore), to increase approximately 2.0% to
5.0% over the full year 2007. Additionally, for the full year 2008:
-- Income available to common stockholders is expected to be approximately
$50.3 million to $63.8 million;
-- Adjusted EBITDA is expected to be approximately $310.0 million to
$323.5 million;
-- Adjusted FFO available to common stockholders is expected to be
approximately $183.4 million to $196.9 million;
-- Adjusted FFO available to common stockholders per diluted share is
expected to be approximately $2.93 to $3.14;
-- Total hotel operating profit margins are expected to be from down
approximately 25 basis points to up approximately 50 basis points
compared to the prior year; and
-- Comparable hotel operating profit margins are expected to be from down
approximately 25 basis points to up approximately 50 basis points
compared to the prior year.
Dividend Update
On May 8, 2008, the Company declared a dividend of $0.35 per share
payable to its common stockholders. The Company also declared a dividend
of $0.50 per share payable to its Series A cumulative redeemable preferred
stockholders and a dividend of $0.404 per share payable to its Series C
cumulative convertible redeemable preferred stockholders. The dividends
will be paid on July 15, 2008 to stockholders of record on June 30, 2008.
The level of any future quarterly dividends will be determined by the
Company's Board of Directors after considering operating results, expected
capital requirements and risks affecting the Company's business.
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 46
hotels comprised of 16,080 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
http://www.sunstonehotels.com/
.
Non-GAAP Financial Measures
We present the following non-GAAP financial measures that we believe
are useful to investors as key measures of our operating performance: (1)
Earnings Before Interest Expense, Taxes, Depreciation and Amortization, or
EBITDA; (2) Adjusted EBITDA (as defined below); (3) Funds From Operations,
or FFO; (4) Adjusted FFO (as defined below); and (5) Hotel Operating
Income and Hotel Operating Profit Margin for the purpose of our operating
margins.
EBITDA represents income (loss) available to common stockholders before
minority interest excluding: (1) preferred stock dividends; (2) interest
expense (including prepayment penalties, if any); (3) provision for income
taxes, including income taxes applicable to sale of assets; and (4)
depreciation and amortization. In addition, we have presented Adjusted
EBITDA, which excludes: (1) the impact of any gain or loss from asset
sales; (2) impairment charges; and (3) other adjustments we have
identified in this release. We believe EBITDA and Adjusted EBITDA are
useful to investors in evaluating our operating performance because these
measures help investors evaluate and compare the results of our operations
from period to period by removing the impact of our capital structure
(primarily interest expense and preferred stock dividends) and our asset
base (primarily depreciation and amortization) from our operating results.
We also use EBITDA and Adjusted EBITDA as measures in determining the
value of hotel acquisitions and dispositions. A reconciliation of income
(loss) available to common stockholders to EBITDA and Adjusted EBITDA is
set forth on pages 10 and 11. A reconciliation and the components of Hotel
Operating Income and Hotel Operating Profit Margin are set forth on page
12. We believe Hotel Operating Income and Hotel Operating Profit Margin
are also useful to investors in evaluating our property level operating
performance.
We compute FFO in accordance with standards established by the National
Association of Real Estate Investment Trusts, or NAREIT, an industry trade
group. The Board of Governors of NAREIT in its March 1995 White Paper (as
clarified in November 1999 and April 2002) defines FFO to mean net income
(loss) (computed in accordance with GAAP), excluding gains and losses from
sales of property, plus real estate-related depreciation and amortization
(excluding amortization of deferred financing costs), and after adjustment
for unconsolidated partnerships and joint ventures. We also present
Adjusted FFO, which excludes prepayment penalties, written-off deferred
financing costs, impairment losses and other adjustments we have
identified in this release. We believe that the presentation of FFO and
Adjusted FFO provide useful information to investors regarding our
operating performance because they are measures of our operations without
regard to specified non-cash items such as real estate depreciation and
amortization, gain or loss on sale of assets and certain other items which
we believe are not indicative of the performance of our underlying hotel
properties. We believe that these items are more representative of our
asset base and our acquisition and disposition activities than our ongoing
operations. We also use FFO as one measure in determining our results
after taking into account the impact of our capital structure. A
reconciliation of income available to common stockholders to FFO and
Adjusted FFO is set forth on pages 10 and 11.
We caution investors that amounts presented in accordance with our
definitions of EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, hotel operating
income and hotel operating profit margin may not be comparable to similar
measures disclosed by other companies, because not all companies calculate
these non-GAAP measures in the same manner. EBITDA, Adjusted EBITDA, FFO,
Adjusted FFO, hotel operating income and hotel operating profit margin
should not be considered as an alternative measure of our net income
(loss), operating performance, cash flow or liquidity. EBITDA, Adjusted
EBITDA, FFO, Adjusted FFO, hotel operating income and hotel operating
profit margin may include funds that may not be available for our
discretionary use due to functional requirements to conserve funds for
capital expenditures and property acquisitions and other commitments and
uncertainties. Although we believe that EBITDA, Adjusted EBITDA, FFO,
Adjusted FFO, hotel operating income and hotel operating profit margin can
enhance an investor's understanding of our results of operations, these
non-GAAP financial measures, when viewed individually, are not necessarily
a better indicator of any trend as compared to GAAP measures such as net
income (loss) or cash flow from operations. In addition, you should be
aware that adverse economic and market conditions may harm our cash flow.
Comparable Portfolio Information
The Company's definition of "Comparable Portfolio" includes
those hotels owned as of the reporting date which have not experienced
material and prolonged business interruption due to renovations,
re-branding or property damage during either the calendar year presented
or the preceding calendar year. For the second quarter and full year 2008,
the Comparable Portfolio is expected to exclude the Renaissance Orlando
and the Renaissance Baltimore. We refer to these excluded hotels as
"Non-comparable" hotels. Also, the revenue and expense items
associated with the Company's two commercial laundry facilities and any
guaranty payments have been shown below the hotel operating income line in
presenting comparable hotel operating margins. Management believes the
definition of Comparable Portfolio as well as the calculation of hotel
operating income results in a more accurate presentation of the trends in
RevPAR and comparable hotel operating margins of the Company's stabilized
portfolio of hotels.
For Additional Information:
Bryan Giglia
Vice President - Corporate Finance
Sunstone Hotel Investors, Inc.
(949) 369-4204
Sunstone Hotel Investors, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
March 31, December 31,
2008 2007
(unaudited)
Assets
Current assets:
Cash and cash equivalents $22,300 $67,412
Restricted cash 47,367 48,442
Accounts receivable, net 45,571 36,703
Due from affiliates 132 932
Inventories 3,287 3,190
Prepaid expenses 11,785 9,021
Total current assets 130,442 165,700
Investment in hotel properties, net 2,789,153 2,786,821
Other real estate, net 14,900 14,526
Investments in unconsolidated joint ventures 30,350 35,816
Deferred financing costs, net 12,545 12,964
Goodwill 16,251 16,251
Other assets, net 13,721 17,074
Total assets $3,007,362 $3,049,152
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $34,064 $28,540
Accrued payroll and employee benefits 11,753 18,133
Due to Interstate SHP 14,359 15,051
Dividends payable 25,784 25,995
Other current liabilities 37,072 39,817
Current portion of notes payable 10,839 9,815
Total current liabilities 133,871 137,351
Notes payable, less current portion 1,709,274 1,712,336
Other liabilities 6,066 6,034
Total liabilities 1,849,211 1,855,721
Commitments and contingencies
Preferred stock, Series C Cumulative
Convertible Redeemable Preferred Stock,
$0.01 par value, 4,102,564 shares
authorized, issued and outstanding at
March 31, 2008 and December 31, 2007,
liquidation preference of $24.375 per
share 99,546 99,496
Stockholders' equity:
Preferred stock, $0.01 par value,
100,000,000 shares authorized.
8.0% Series A Cumulative
Redeemable Preferred Stock,
7,050,000 shares issued and
outstanding at March 31, 2008
and December 31, 2007, stated
at liquidation preference of
$25.00 per share 176,250 176,250
Common stock, $0.01 par value,
500,000,000 shares authorized,
58,178,259 shares issued and
outstanding at March 31, 2008
and 58,815,271 shares issued and
outstanding at December 31, 2007 582 588
Additional paid in capital 976,959 987,554
Retained earnings 192,263 191,208
Cumulative dividends (287,449) (261,665)
Total stockholders' equity 1,058,605 1,093,935
Total liabilities and stockholders'
equity $3,007,362 $3,049,152
Sunstone Hotel Investors, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended March 31,
2008 2007
Revenues
Room $160,826 $146,383
Food and beverage 69,743 64,094
Other operating 18,178 16,936
Total revenues 248,747 227,413
Operating expenses
Room 37,091 33,468
Food and beverage 52,026 46,534
Other operating 9,379 9,628
Advertising and promotion 13,862 12,784
Repairs and maintenance 9,927 9,132
Utilities 9,633 8,160
Franchise costs 8,286 7,574
Property tax, ground lease and insurance 14,903 13,672
Property general and administrative 28,897 26,268
Corporate overhead 6,758 7,331
Depreciation and amortization 31,575 26,179
Total operating expenses 222,337 200,730
Operating income 26,410 26,683
Equity in net losses of unconsolidated
joint ventures (1,466) (1,351)
Interest and other income 593 679
Interest expense (24,482) (22,514)
Income from continuing operations 1,055 3,497
Income from discontinued operations - 1,331
Net income 1,055 4,828
Preferred stock dividends and accretion (5,232) (5,187)
Loss attributable to common stockholders $(4,177) $(359)
Basic and diluted per share amounts:
Loss from continuing operations
attributable to common stockholders $(0.07) $(0.03)
Income from discontinued operations - 0.02
Basic and diluted loss attributable
to common stockholders per common share $(0.07) $(0.01)
Weighted average common shares outstanding:
Basic and diluted 58,717 57,799
Dividends paid per common share $0.35 $0.32
Sunstone Hotel Investors, Inc.
Reconciliation of Loss Attributable to Common Stockholders to Non-GAAP
Financial Measures
(Unaudited and in thousands except per share amounts)
Reconciliation of Loss Attributable to Common Stockholders to EBITDA and
Adjusted EBITDA
Three Months
Ended March 31,
2008 2007
Loss attributable to common stockholders $(4,177) $(359)
Series A and C preferred stock dividends 5,232 5,187
Amortization of deferred stock compensation 1,049 1,245
Continuing operations:
Depreciation and amortization 31,575 26,179
Interest expense 24,063 22,239
Amortization of deferred financing fees 419 275
Unconsolidated joint venture:
Depreciation and amortization 1,274 1,233
Interest expense 1,521 1,917
Amortization of deferred financing fees 398 330
Discontinued operations:
Depreciation and amortization - 1,407
Interest expense - 1,205
Amortization of deferred financing fees - 13
EBITDA 61,354 60,871
Adjusted EBITDA $61,354 $60,871
Reconciliation of Loss Attributable to Common Stockholders to FFO
and Adjusted FFO
Loss attributable to common stockholders $(4,177) $(359)
Series C preferred stock dividends 1,707 1,662
Real estate depreciation and
amortization - continuing operations 31,402 25,960
Real estate depreciation and
amortization - unconsolidated joint venture 1,274 1,233
Real estate depreciation and amortization
- discontinued operations - 1,407
FFO available to common stockholders 30,206 29,903
Adjusted FFO available to common stockholders $30,206 $29,903
FFO available to common stockholders
per diluted share $0.48 $0.48
Adjusted FFO available to common
stockholders per diluted share $0.48 $0.48
Diluted weighted average shares
outstanding (1) 62,897 62,079
(1) Diluted weighted average shares outstanding includes the Series C
Convertible Preferred Stock on an as-converted basis. Additionally,
during the third quarter of 2007, the Company revised its methodology
for computation of diluted earnings per share by applying the treasury
stock method to unvested restricted stock awards. As a result of the
revision, the unvested restricted stock awards for purposes of
calculating FFO and Adjusted FFO available to common stockholders per
diluted share have been decreased by 306,632 shares for the three
months ended March 31, 2007.
Sunstone Hotel Investors, Inc.
Reconciliation of Income Available to Common Stockholders to Non-GAAP
Financial Measures
Guidance for the Quarter Ending June 30, 2008 and Full Year 2008
(Unaudited and in thousands except per share amounts)
Reconciliation of Income Available to Common Stockholders to EBITDA and
Adjusted EBITDA
Quarter Ending Full Year
June 30, 2008 December 31, 2008
Low End High End Low End High End
of of of of
Range Range Range Range
Income available to common
stockholders $22,000 $24,800 $50,300 $63,800
Series A preferred stock dividends 3,500 3,500 14,100 14,100
Series C preferred stock dividends 1,700 1,700 6,700 6,700
Amortization of deferred stock
compensation 1,600 1,600 5,800 5,800
Continuing operations:
Depreciation and amortization 30,100 30,100 122,000 122,000
Interest expense 24,200 24,200 97,000 97,000
Amortization of deferred
financing fees 400 400 1,700 1,700
Unconsolidated joint venture:
Depreciation and amortization 1,300 1,300 5,200 5,200
Interest expense 1,300 1,300 5,500 5,500
Amortization of deferred
financing fees 400 400 1,700 1,700
EBITDA 86,500 89,300 310,000 323,500
Adjusted EBITDA $86,500 $89,300 $310,000 $323,500
Reconciliation of Income Available to Common Stockholders to FFO
and Adjusted FFO
Income available to common
stockholders $22,000 $24,800 $50,300 $63,800
Series C preferred stock dividends 1,700 1,700 6,700 6,700
Continuing operations:
Real estate depreciation and
amortization 29,900 29,900 121,200 121,200
Unconsolidated joint venture:
Depreciation and amortization 1,300 1,300 5,200 5,200
FFO available to common stockholders 54,900 57,700 183,400 196,900
Adjusted FFO available to common
stockholders $54,900 $57,700 $183,400 $196,900
Adjusted FFO available to common
stockholders per diluted share $0.88 $0.92 $2.93 $3.14
Diluted weighted average shares
outstanding (1) 62,419 62,419 62,641 62,641
(1) Diluted weighted average shares outstanding includes the Series C
Convertible Preferred Stock on an as-converted basis.
Sunstone Hotel Investors, Inc.
Comparable Hotel Operating Margins
(Unaudited and in thousands except hotels and rooms)
Three Months Ended March 31, 2008
Actual Non- Comparable
March 31, comparable March 31,
2008 (1) Hotels (2) 2008 (3)
Number of Hotels 45 (2) 43
Number of Rooms 15,620 (1,403) 14,217
Hotel operating profit margin (7) 26.3% 27.1% 26.2%
Hotel Revenues
Room revenue $160,826 $(15,452) $145,374
Food and beverage revenue 69,743 (9,903) 59,840
Other operating revenue 13,991 (1,334) 12,657
Total Hotel Revenues 244,560 (26,689) 217,871
Hotel Expenses
Room expense 37,091 (3,216) 33,875
Food and beverage expense 52,026 (6,455) 45,571
Other hotel expense 62,727 (6,315) 56,412
General and administrative
expense 28,469 (3,480) 24,989
Total Hotel Expenses 180,313 (19,466) 160,847
Hotel Operating Income 64,247 (7,223) 57,024
Hotel performance guaranty - - -
Non-hotel operating income 496 - 496
Corporate overhead (6,758) 60 (6,698)
Depreciation and amortization (31,575) 3,517 (28,058)
Operating Income 26,410 (3,646) 22,764
Equity in net losses of
unconsolidated joint ventures (1,466) - (1,466)
Interest and other income 593 (22) 571
Interest expense (24,482) 1,244 (23,238)
Income from discontinued operations - - -
Net Income $1,055 $(2,424) $(1,369)
Three Months Ended March 31, 2007
Actual Comparable
March Prior Prior Non- March
31, Ownership Ownership comparable 31,
2007 Adjustments Adjustments Subtotal Hotels 2007
(4) (5) (6) (2) (3)
Number
of Hotels 44 1 45 (2) 43
Number
of Rooms 15,156 464 15,620 (1,403) 14,217
Hotel
operating
profit
margin (7) 26.5% 22.4% 17.8% 26.1% 22.3% 26.5%
Hotel Revenues
Room
revenue $146,383 $3,117 $5,451 $154,951 $(13,023) $141,928
Food and
beverage
revenue 64,094 1,953 2,332 68,379 (8,147) 60,232
Other
operating
revenue 11,593 130 788 12,511 (951) 11,560
Total Hotel
Revenues 222,070 5,200 8,571 235,841 (22,121) 213,720
Hotel Expenses
Room
expense 33,468 857 1,542 35,867 (3,074) 32,793
Food and
beverage
expense 46,534 1,300 1,825 49,659 (5,583) 44,076
Other hotel
expense 57,857 1,189 2,495 61,541 (5,719) 55,822
General and
administrative
expense 25,384 691 1,182 27,257 (2,803) 24,454
Total Hotel
Expenses 163,243 4,037 7,044 174,324 (17,179) 157,145
Hotel
Operating
Income 58,827 1,163 1,527 61,517 (4,942) 56,575
Hotel
performance
guaranty 955 955 - 955
Non-hotel
operating
income 411 411 - 411
Corporate
overhead (7,331) (7,331) 13 (7,318)
Depreciation
and
amortization (26,179) (26,179) 3,110 (23,069)
Operating
Income 26,683 1,163 1,527 29,373 (1,819) 27,554
Equity in
net losses of
unconsolidated
joint ventures(1,351) (1,351) - (1,351)
Interest and
other income 679 679 (92) 587
Interest
expense (22,514) (22,514) 1,224 (21,290)
Income from
discontinued
operations 1,331 1,331 - 1,331
Net Income $4,828 $1,163 $1,527 $7,518 $(687) $6,831
(1) Represents our ownership results for the 45 hotels we owned as of
the end of the period.
(2) Represents our ownership results for the two "non-comparable"
hotels that experienced material and prolonged business interruption
during either the current or preceding calendar year (Renaissance
Baltimore and Renaissance Orlando).
(3) Represents our ownership and prior ownership results (for the
2007 period) for 43 "comparable" hotels we owned as of March 31, 2008,
excluding the two "non-comparable" hotels that experienced material
and prolonged business interruption during either the current or
preceding calendar year (Renaissance Baltimore and Renaissance
Orlando).
(4) Represents our ownership results for the same 44 hotels we owned
as of the end of the period.
(5) Represents prior ownership results for the 1 hotel acquired subsequent
to March 31, 2007.
(6) Represents prior ownership results for the 2 hotels acquired during
the first quarter of 2007.
(7) Hotel operating profit margin is calculated as hotel operating income
divided by total hotel revenues.
Sunstone Hotel Investors, Inc.
Comparable Portfolio Operating Statistics by Region
(Unaudited)
Three Months Ended March 31, 2008
Average
Number Number Occupancy Daily Comparable
Region of Hotels of Rooms Percentages Rate RevPAR
California 18 5,529 78.3% $161.84 $126.72
Other West (1) 7 2,123 76.7% 127.52 97.81
Midwest (2) 8 2,500 60.2% 132.03 79.48
Middle Atlantic (3) 8 3,476 66.9% 206.76 138.32
South (4) 2 589 79.2% 120.58 95.50
Total Comparable
Portfolio 43 14,217 72.2% $159.78 $115.36
Percent
Three Months Ended March 31, 2007 Change
in
Occupancy Average Comparable Comparable
Region Percentages Daily Rate RevPAR RevPAR
California 76.9% $159.19 $122.42 3.5%
Other West (1) 80.1% 117.19 93.87 4.2%
Midwest (2) 64.8% 124.94 80.96 -1.8%
Middle Atlantic (3) 71.6% 193.02 138.20 0.1%
South (4) 81.8% 124.54 101.87 -6.3%
Total Comparable
Portfolio 74.2% $153.03 $113.55 1.6%
(1) Includes Oregon, Utah and Texas.
(2) Includes Illinois, Michigan and Minnesota.
(3) Includes Maryland, Massachusetts, Virginia, District of Columbia,
New York and Pennsylvania. Excludes the Renaissance Baltimore which
experienced material and prolonged business interruption during either
the current or preceding calendar year.
(4) Includes Florida and Georgia. Excludes the Renaissance Orlando which
experienced material and prolonged business interruption during either
the current or preceding calendar year.
Sunstone Hotel Investors, Inc.
Comparable Portfolio Operating Statistics by Brand
(Unaudited)
Three Months Ended March 31, 2008
Average
Number Number Occupancy Daily Comparable
Brand of Hotels of Rooms Percentages Rate RevPAR
Marriott (1) 24 7,682 72.6% $155.09 $112.60
Hilton 6 1,955 73.5% 200.58 147.43
InterContinental 3 665 55.1% 109.33 60.24
Hyatt 3 1,331 79.6% 196.95 156.77
Other Brand
Affiliations (2) 4 1,385 77.0% 150.19 115.65
Independent 3 1,199 63.0% 101.02 63.64
Total Comparable
Portfolio 43 14,217 72.2% $159.78 $115.36
Percent
Three Months Ended March 31, 2007 Change
in
Occupancy Average Comparable Comparable
Brand Percentages Daily Rate RevPAR RevPAR
Marriott (1) 73.7% $151.21 $111.44 1.0%
Hilton 76.4% 183.43 140.14 5.2%
InterContinental 73.5% 107.14 78.75 -23.5%
Hyatt 76.6% 189.32 145.02 8.1%
Other Brand
Affiliations (2) 80.5% 150.34 121.02 -4.4%
Independent 63.7% 92.59 58.98 7.9%
Total Comparable
Portfolio 74.2% $153.03 $113.55 1.6%
(1) Excludes the Renaissance Baltimore and Renaissance Orlando which
experienced material and prolonged business interruption during either
the current or preceding calendar year.
(2) Includes a Sheraton, a Wyndham, a Fairmont and a W Hotel.
Sunstone Hotel Investors, Inc.
Debt Summary
(Unaudited - dollars in thousands)
Interest March 31, May 1,
Rate/ Maturity 2008 Recent 2008
Debt Collateral Spread Date Balance Events (1) Balance
Fixed Rate Debt
Secured Mortgage
Debt 1 hotel 5.92% 2010 $81,000 $81,000
Secured Mortgage
Debt (2) 11 hotels 5.95% 2011 248,164 248,164
Secured Mortgage
Debt (3) 2 hotels 4.98% 2012 65,000 65,000
Rochester
Secured Mortgage laundry
Debt facility 9.88% 2013 4,642 4,642
Secured Mortgage
Debt (3) 10 hotels 5.34% 2015 271,714 271,714
Secured Mortgage
Debt (3) 2 hotels 5.21% 2016 196,593 196,593
Secured Mortgage
Debt 1 hotel 5.69% 2016 48,000 48,000
Secured Mortgage
Debt 1 hotel 5.66% 2016 34,000 34,000
Secured Mortgage
Debt 1 hotel 5.58% 2017 75,000 75,000
Secured Mortgage
Debt 1 hotel 5.58% 2017 176,000 176,000
Secured Mortgage
Debt 1 hotel 6.14% 2018 65,000 65,000
Secured Mortgage
Debt 1 hotel 6.60% 2019 70,000 70,000
Secured Mortgage
Debt 1 hotel 5.95% 2021 135,000 135,000
Exchangeable
Senior
Notes Guaranty 4.60% 2027 250,000 250,000
Total Fixed
Rate Debt 1,720,113 1,720,113
Credit Facility Unsecured L +
0.90%
- 1.50% 2011 - $20,000 20,000
TOTAL DEBT $1,720,113 $20,000 $1,740,113
Preferred Stock
Series A
cumulative
redeemable
preferred 8.00% perpetual $176,250 - $176,250
Series C
cumulative
convertible
redeemable
preferred 6.63% perpetual $100,000 - $100,000
Debt Statistics
% Fixed Rate Debt 100.0% 98.9%
% Floating Rate Debt 0.0% 1.1%
Average Interest Rate (4) 5.51% 5.49%
Weighted Average Maturity of Debt
(includes amounts outstanding on
the Credit Facility) (5) 9.01 years 8.94 years
(1) Reflects additional draws on our credit facility.
(2) Cross-collateralized loan with life insurance company.
(3) Individual, non cross-collateralized loans.
(4) Assumes LIBOR of 2.7%.
(5) 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 date would be 7.0 years.
Source: Sunstone Hotel Investors, Inc.
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