Exhibit 99.1
For Additional Information:
Bryan Giglia
Vice President – Corporate Finance
Sunstone Hotel Investors, Inc.
(949) 369-4236
SUNSTONE HOTEL INVESTORS PROVIDES BUSINESS UPDATE
Repurchases $64.0 Million of Exchangeable Notes at 47.4% of Par
Retains Significant Liquidity with No Near-Term Debt Maturities
SAN CLEMENTE, CA – March 16, 2009 – Sunstone Hotel Investors, Inc. (the “Company”) (NYSE: SHO) today is providing an interim update on its operations through February and its recent capital markets activity. The Company does not undertake to make updates for any subsequent developments in its business.
Preliminary Operations Update
| | • | | February total portfolio RevPAR was $99.62, down 14.8% to prior year. |
| | • | | Quarter to date through February 28, 2009, total portfolio RevPAR was $95.61, down 12.9% to prior year. |
Arthur Buser, Chief Executive Officer, stated, “We remain focused on eliminating expenses, maximizing the cash flow of each hotel, enhancing our balance sheet and maintaining a strong liquidity position. So far during the quarter we continued to strengthen our balance sheet by repurchasing $64.0 million of our debt at an average price equivalent to 47.4% of par. With a recently renovated portfolio, a significant cash balance, and no near-term debt maturities, we continue to believe Sunstone is well positioned for the current phase of the cycle.”
Finance Update
Through the date of this release, the Company has repurchased $64.0 million of its Operating Partnership’s 4.6% Exchangeable Senior Notes due 2027 (the “Notes”) at an average price equivalent to 47.4% of par, for gross cash consideration of $30.4 million. The Company used available cash to repurchase the Notes through unsolicited open market purchases.
Additionally, the Company has initiated negotiations with its bank group to restructure its credit facility. The Company is also in the process of soliciting bids for new mortgage debt on several of its unencumbered hotels. Given the challenges of the current financing market, the Company gives no assurances that either of these initiatives will be completed.
Ken Cruse, Chief Financial Officer, stated, “We repurchased Notes at a significant discount to par after considering both our liquidity maximization and our leverage reduction goals. Our credit facility and secured debt initiatives are consistent with our objective of maximizing liquidity and, if completed, we believe these transactions will meaningfully enhance our financial flexibility.”
1
Business Update Call
The Company will host a conference call to discuss its operations update on March 16, 2009, at 2 p.m. PDT. A live web cast of the call will be available via the Investor Relations section of the Company’s website atwww.sunstonehotels.com. Alternatively, investors may dial 1-800-240-8621 (for domestic callers) or 303-262-2142 (for international callers). A replay of the web cast will also be archived on the website.
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 44 hotels comprised of 15,029 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 atwww.sunstonehotels.com.
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 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: volatility in the debt or equity markets affecting our ability to acquire or sell hotel assets; national and local economic and business conditions, including the current U.S. recession which may be prolonged; the ability to maintain sufficient liquidity and our access to capital markets; potential terrorist attacks, which would affect occupancy rates at our hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of our indebtedness and our ability to meet covenants in our debt and equity agreements; relationships with property managers and franchisors; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations, which influence or determine wages, prices, construction procedures and costs; our ability to identify, successfully compete for and complete acquisitions; the performance of hotels after they are acquired; necessary capital expenditures and our ability to fund them and complete them with minimum disruption; our ability to continue to satisfy complex rules in order for us to qualify as a REIT for federal income tax purposes; and other risks and uncertainties associated with our business described in the Company’s 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 in this release is as of March 16, 2009, 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.
2
Sunstone Hotel Investors, Inc.
Debt Summary
(Unaudited—dollars in thousands)
| | | | | | | | | | | | | | | | | | | |
Debt | | Collateral | | Interest Rate / Spread | | | Maturity
Date | | February 28, 2009
Balance | | | Recent
Events (1) | | | March 16, 2009
Balance | |
Fixed Rate Debt | | | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt | | Hilton Times Square | | 5.92 | % | | 12/1/2010 | | $ | 81,000 | | | | | | | $ | 81,000 | |
Secured Mortgage Debt (2) | | 11 Hotels | | 5.95 | % | | 5/1/2011 | | | 248,164 | | | | | | | | 248,164 | |
Secured Mortgage Debt (2) | | Courtyard by Marriott Los Angeles | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Courtyard by Marriott San Diego | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Hilton Huntington | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Holiday Inn Express San Diego (Old Town) | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Holiday Inn San Diego (Harborview) | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Marriott Provo | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Marriott Rochester | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Marriott Salt Lake City | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Renaissance Concourse | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Residence Inn by Marriott Manhattan Beach | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt (2) | | Rochester Inn & Suites | | | | | | | | | | | | | | | | | |
Secured Mortgage Debt | | Renaissance Long Beach | | 4.98% | | | 7/1/2012 | | | 34,606 | | | | | | | | 34,606 | |
Secured Mortgage Debt | | Renaissance Westchester | | 4.98% | | | 7/1/2012 | | | 29,663 | | | | | | | | 29,663 | |
Secured Mortgage Debt | | Rochester laundry facility | | 9.88% | | | 6/1/2013 | | | 3,985 | | | | | | | | 3,985 | |
Secured Mortgage Debt | | Doubletree Minneapolis | | 5.34% | | | 5/1/2015 | | | 18,359 | | | | | | | | 18,359 | |
Secured Mortgage Debt | | Hilton Del Mar | | 5.34% | | | 5/1/2015 | | | 26,625 | | | | | | | | 26,625 | |
Secured Mortgage Debt | | Marriott Houston | | 5.34% | | | 5/1/2015 | | | 24,440 | | | | | | | | 24,440 | |
Secured Mortgage Debt | | Marriott Ontario | | 5.34% | | | 5/1/2015 | | | 25,871 | | | | | | | | 25,871 | |
Secured Mortgage Debt | | Marriott Park City | | 5.34% | | | 5/1/2015 | | | 15,933 | | | | | | | | 15,933 | |
Secured Mortgage Debt | | Marriott Philadelphia | | 5.34% | | | 5/1/2015 | | | 28,868 | | | | | | | | 28,868 | |
Secured Mortgage Debt | | Marriott Troy | | 5.34% | | | 5/1/2015 | | | 37,376 | | | | | | | | 37,376 | |
Secured Mortgage Debt | | Marriott Tysons Corner | | 5.34% | | | 5/1/2015 | | | 47,691 | | | | | | | | 47,691 | |
Secured Mortgage Debt | | The Kahler Grand | | 5.34% | | | 5/1/2015 | | | 29,400 | | | | | | | | 29,400 | |
Secured Mortgage Debt | | Valley River Inn | | 5.34% | | | 5/1/2015 | | | 12,268 | | | | | | | | 12,268 | |
Secured Mortgage Debt | | Renaissance Harborplace | | 5.13% | | | 1/1/2016 | | | 106,599 | | | | | | | | 106,599 | |
Secured Mortgage Debt | | Marriott Del Mar | | 5.69% | | | 1/11/2016 | | | 48,000 | | | | | | | | 48,000 | |
Secured Mortgage Debt | | Hilton Houston | | 5.66% | | | 3/11/2016 | | | 34,000 | | | | | | | | 34,000 | |
Secured Mortgage Debt | | Renaissance Orlando Resort at Sea World | | 5.52% | | | 7/1/2016 | | | 87,098 | | | | | | | | 87,098 | |
Secured Mortgage Debt | | Embassy Suites Chicago | | 5.58% | | | 3/1/2017 | | | 75,000 | | | | | | | | 75,000 | |
Secured Mortgage Debt | | Marriott Boston Long Wharf | | 5.58% | | | 4/11/2017 | | | 176,000 | | | | | | | | 176,000 | |
Secured Mortgage Debt | | W Hotel San Diego | | 6.14% | | | 1/1/2018 | | | 65,000 | | | | | | | | 65,000 | |
Secured Mortgage Debt | | Embassy Suites La Jolla | | 6.60% | | | 6/1/2019 | | | 70,000 | | | | | | | | 70,000 | |
Secured Mortgage Debt | | Renaissance Washington D.C. | | 5.95% | | | 5/1/2021 | | | 135,000 | | | | | | | | 135,000 | |
Exchangeable Senior Notes | | Guaranty | | 4.60% | | | 1/1/2027 | | | 237,000 | | | | (50,988 | ) | | | 186,012 | |
| | | | | | | | | | | | | | | | | | | |
Total Fixed Rate Debt | | | | | | | | | | 1,697,946 | | | | (50,988 | ) | | | 1,646,958 | |
Credit Facility | | Unsecured | | L + 0.90%-1.50% | | | 2011 | | | — | | | | | | | | — | |
| | | | | | | | | | | | | | | | | | | |
TOTAL DEBT | | | | | | | | | $ | 1,697,946 | | | $ | (50,988 | ) | | $ | 1,646,958 | |
| | | | | | | | | | | | | | | | | | | |
Preferred Stock | | | | | | | | | | | | | | | | | | | |
Series A cumulative redeemable preferred | | | | 8.00% | | | perpetual | | $ | 176,250 | | | | — | | | $ | 176,250 | |
| | | | | | | | | | | | | | | | | | | |
Series C cumulative convertible redeemable preferred | | | | 6.29% | | | perpetual | | $ | 100,000 | | | | — | | | $ | 100,000 | |
| | | | | | | | | | | | | | | | | | | |
Debt Statistics | | | | | | | | | | | | | | | | | | | |
% Fixed Rate Debt | | | | | | | | | | 100.0 | % | | | | | | | 100.0 | % |
% Floating Rate Debt | | | | | | | | | | 0.0 | % | | | | | | | 0.0 | % |
Average Interest Rate | | | | | | | | | | 5.53 | % | | | | | | | 5.56 | % |
Weighted Average Maturity of Debt (includes amounts outstanding on the Credit Facility) (3) | | | 8.1 years | | | | | | | | 7.8 years | |
| (1) | Reflects repurchases of our Operating Partnership's 4.6% Exchangeable Senior Notes. |
| (2) | Cross-collateralized loan with life insurance company. |
| (3) | 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 would be approximately 6 years. |
3
