IRVINE,
Calif., June 1, 2022 /PRNewswire/
-- Sunstone Hotel Investors, Inc. (the "Company" or
"Sunstone") (NYSE: SHO), the owner of Long-Term Relevant Real
Estate® in the lodging industry, announced that it has
entered into a definitive agreement with an affiliate of Park
Hotels & Resorts Inc. ("Park") to acquire Park's 25% interest
in the joint venture that owns the leasehold interest in the
1,190-room Hilton San Diego Bayfront (the "Hotel"). As part of the
transaction, Sunstone will pay Park $102
million in cash and will effectively assume Park's
$55 million share of the existing
mortgage loan on the Hotel, which is already fully consolidated as
part of Sunstone's financial statements. Following the acquisition,
Sunstone will own 100% of the venture's interests in the
Hotel.
The purchase price, including the in-place debt, implies a
$628 million value for the Hotel, or
$527,700 per key, and represents a
13.2x multiple on the Hotel's 2022 forecasted EBITDA and a 6.6%
capitalization rate on 2022 forecasted net operating income. The
Company currently anticipates closing the transaction by the end of
the second quarter 2022 and expects to fund the acquisition
primarily from borrowing on the Company's revolving credit
facility.
Bryan Giglia, Chief Executive
Officer, stated, "We are pleased to announce our acquisition of the
remaining 25% joint venture interest in the Hilton San Diego
Bayfront. This is a very well-located, high-quality asset in a
premier convention and leisure market. The hotel is in excellent
physical condition, and with the recent addition of new meeting
space, a refreshed lobby, and enhanced food & beverage
offerings, the hotel is well positioned to benefit from strong
leisure travel and recovering business transient and corporate
group demand. We thank our partners at Park for their collaboration
over the years and believe this transaction, which consolidates
ownership for Sunstone and provides Park with a fair valuation for
their ownership interest, is a mutually beneficial outcome for both
parties."
The acquisition is subject to the satisfaction of customary
closing conditions, and the Company can give no assurance that the
transaction will close. The forecast amounts referenced in this
release are based on the Company's assumptions of operating
performance and the Company cannot assure you that the forecasts
will be achieved.
About Sunstone Hotel Investors
Sunstone Hotel Investors, Inc. is a lodging real estate
investment trust ("REIT"). Sunstone's strategy is to create
long-term stakeholder value through the acquisition, active
ownership, and disposition of hotels considered to be Long-Term
Relevant Real Estate®. For further information, please visit
Sunstone's website at www.sunstonehotels.com.
For Additional Information
Aaron Reyes
Chief Financial Officer
Sunstone Hotel
Investors, Inc.
(949) 382-3018
Forward-Looking Statements
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," "continue," "could,"
"estimate," "expect," "intend," "may," "plan," "predict,"
"project," "should," "will" and other similar terms and phrases,
including opinions, references to assumptions and forecasts of
future results. Forward-looking statements are not guarantees of
future performance and involve known and unknown risks,
uncertainties and other factors that may cause the actual results
to differ materially from those anticipated at the time the
forward-looking statements are made. These risks include, but are
not limited to: the impact the COVID-19 pandemic has on the
Company's business and the economy, as well as the response of
governments and the Company to the pandemic, and how quickly and
successfully effective vaccines and therapies are distributed and
administered; increased risks related to employee matters,
including increased employment litigation and claims for severance
or other benefits tied to termination or furloughs as a result of
temporary hotel suspensions or reduced hotel operations due to
COVID-19; general economic and business conditions, including a
U.S. recession or increased inflation, trade conflicts and tariffs,
regional or global economic slowdowns and any type of flu or
disease-related pandemic that impacts travel or the ability to
travel, including COVID-19; the need for business-related travel,
including the increased use of business-related technology; rising
hotel operating costs due to labor costs, workers' compensation and
health-care related costs, utility costs, property and liability
insurance costs, unanticipated costs such as acts of nature and
their consequences and other costs that may not be offset by
increased room rates; the ground or airspace leases for two of the
hotels the Company has interests in as of the date of this release;
the need for renovations, repositionings and other capital
expenditures for the Company's hotels; the impact, including any
delays, of renovations and repositionings on hotel operations; new
hotel supply, or alternative lodging options such as timeshare,
vacation rentals or sharing services such as Airbnb, in the
Company's markets, which could harm its occupancy levels and
revenue at its hotels; competition from hotels not owned by the
Company; relationships with, and the requirements, performance and
reputation of, the managers of the Company's hotels; relationships
with, and the requirements and reputation of, the Company's
franchisors and hotel brands; the Company's hotels may become
impaired, or its hotels which have previously become impaired may
become further impaired in the future, which may adversely affect
its financial condition and results of operations; competition for
the acquisition of hotels, and the Company's ability to complete
acquisitions and dispositions; performance of hotels after they are
acquired; changes in the Company's business strategy or acquisition
or disposition plans; the Company's level of debt, including
secured, unsecured, fixed and variable rate debt; financial and
other covenants in the Company's debt and preferred stock; the
impact on the Company's business of potential defaults by the
Company on its debt agreements or leases; volatility in the capital
markets and the effect on lodging demand or the Company's ability
to obtain capital on favorable terms or at all; the Company's need
to operate as a REIT and comply with other applicable laws and
regulations, including new laws, interpretations or court decisions
that may change the federal or state tax laws or the federal or
state income tax consequences of the Company's qualification as a
REIT; potential adverse tax consequences in the event that the
Company's operating leases with its taxable REIT subsidiaries are
not held to have been made on an arm's-length basis; system
security risks, data protection breaches, cyber-attacks and systems
integration issues, including those impacting the Company's
suppliers, hotel managers or franchisors; other events beyond the
Company's control, including climate change, natural disasters,
terrorist attacks or civil unrest; and other risks and
uncertainties associated with the Company's business described in
its filings with the Securities and Exchange Commission. Although
the Company believes the expectations reflected in such
forward-looking statements are based upon reasonable assumptions,
it can give no assurance that the expectations will be attained or
that any deviation will not be material. All forward-looking
information provided herein is as of the date of this release, and
the Company undertakes no obligation to update any forward-looking
statement to conform the statement to actual results or changes in
the Company's expectations.
This release should be read together with the consolidated
financial statements and notes thereto included in our most recent
reports on Form 10-K and Form 10-Q. Copies of these reports are
available on our website at www.sunstonehotels.com and through the
SEC's Electronic Data Gathering Analysis and Retrieval System
("EDGAR") at www.sec.gov.
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SOURCE Sunstone Hotel Investors, Inc.