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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO ______________
COMMISSION FILE NUMBER 0-26304
SUNSTONE HOTEL INVESTORS, INC.
(Exact name of registrant as specified in its charter)
---------------
MARYLAND 52-1891908
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
115 CALLE DE INDUSTRIAS, SUITE 201, SAN CLEMENTE, CA 92672
(Address of Principal Executive Offices) (Zip Code)
(714) 361-3900
(Registrant's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
--- ---
As of August 14, 1996, there were 10,323,500 shares of Common Stock outstanding.
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SUNSTONE HOTEL INVESTORS, INC.
JUNE 30, 1996 QUARTERLY REPORT
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Introduction to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Sunstone Hotel Investors, Inc.
Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . 4
Consolidated Statements of Income for the Three Months and Six Months
Ended June 30, 1996 and June 30, 1995 . . .. . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statement of Cash Flows for the Six Months Ended
June 30, 1996, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Sunstone Hotel Properties, Inc. (the Lessee)
Balance Sheet as of June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Statement of Operations for the Three Months and Six Months ended June 30, 1996 . . . . . . . . 10
Statement of Cash Flows for the Six Months ended June 30, 1996 . . . . . . . . . . . . . . . . . 11
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . 13
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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SUNSTONE HOTEL INVESTORS, INC.
INTRODUCTION TO THE FINANCIAL STATEMENTS
ITEM 1 - FINANCIAL STATEMENTS
The consolidated financial statements included herein have been
prepared by Sunstone Hotel Investors, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Disclosures normally included in the notes to the financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to such rules and regulations. The Company believes
that the disclosures are adequate to make the information presented not
misleading when read in conjunction with the financial statements included in
the Company's Annual Report on Form 10-K for the period August 16 (inception)
to December 31, 1995.
The financial information presented herein reflects all adjustments,
consisting only of normal recurring accruals, which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented. The results for interim periods are not necessarily
indicative of the results to be expected for the full year.
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SUNSTONE HOTEL INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
----------- -----------
ASSETS:
Investment in hotel properties, net $80,524,000 $49,926,000
Mortgage notes receivable 2,850,000
Cash 317,000 5,222,000
Rent receivable -- Lessee 1,960,000 646,000
Due from affiliates 379,000 21,000
Prepaid expenses and other assets, net 814,000 1,421,000
----------- -----------
$86,844,000 $57,236,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Revolving line of credit $35,956,000 $ 8,400,000
Mortgage notes payable 3,018,000
Accounts payable and other accrued expenses 481,000 1,346,000
Dividends/distributions payable 1,764,000
----------- -----------
39,455,000 11,510,000
----------- -----------
Minority interest 8,728,000 8,231,000
----------- -----------
Stockholders' equity:
Common stock, $.01 par value, 50,000,000
authorized; 6,322,000 issued and outstanding 63,000 63,000
Preferred stock, $.01 par value, 10,000,000
authorized, no shares issued or outstanding
Additional paid-in capital 37,432,000 37,432,000
Retained earnings 1,166,000
----------- -----------
38,661,000 37,495,000
----------- -----------
$86,844,000 $57,236,000
=========== ===========
The accompanying notes are an integral part of these financial statements.
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SUNSTONE HOTEL INVESTORS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Actual Pro Forma Actual Pro Forma
---------- ---------- ----------- ----------
REVENUES:
Lease revenue $2,965,000 $2,113,000 $6,155,000 $4,706,000
Interest income 41,000 60,000
---------- ---------- ---------- ----------
Total Revenues 3,006,000 2,113,000 6,215,000 4,706,000
EXPENSES:
Real estate related depreciation 997,000 671,000 1,846,000 1,176,000
and amortization
Interest expense and amortization 487,000 811,000
of financing costs
Real estate, personal property 313,000 255,000 566,000 382,000
taxes and insurance
General and administrative 128,000 104,000 281,000 208,000
---------- ---------- ---------- ----------
Total expenses 1,925,000 1,030,000 3,504,000 1,766,000
---------- ---------- ---------- ----------
Income before minority interest 1,081,000 1,083,000 2,711,000 2,940,000
Minority interest 204,000 214,000 497,000 519,000
---------- ---------- ---------- ----------
NET INCOME $ 877,000 $ 869,000 $2,214,000 $2,421,000
=========== ========== ========== ==========
NET INCOME PER SHARE $0.14 $0.14 $0.35 $0.38
Weighted average number of shares 6,322,000 6,322,000 6,322,000 6,322,000
The accompanying notes are an integral part of these financial statements.
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SUNSTONE HOTEL INVESTORS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,214,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest 497,000
Depreciation 1,846,000
Amortization of financing costs 114,000
Changes in assets and liabilities:
Rent receivable-Lessee (1,314,000)
Due from affiliates (359,000)
Prepaids and other assets, net 493,000
Accounts payable and accrued expenses (866,000)
------------
Net cash used in operating activities 2,625,000
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, improvements and additions
to hotel properties (36,393,000)
Mortgage notes receivable (2,850,000)
Sale and disposition of hotel properties 3,950,000
------------
Net cash used in investing activities (35,293,000)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving line of credit 28,656,000
Payments on revolving line of credit (1,100,000)
Borrowings on mortgage notes payable 3,018,000
Dividends paid (2,908,000)
Partnership distributions paid (629,000)
Issuance of partnership units 816,000
Stock redemption (90,000)
------------
Net cash provided by
financing activities 27,763,000
------------
Net change in cash (4,905,000)
Cash, beginning of period 5,222,000
------------
Cash, end of period $ 317,000
============
The accompanying notes are an integral part of these financial statements.
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SUNSTONE HOTEL INVESTORS, INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
--------------
1. ORGANIZATION AND INITIAL PUBLIC OFFERING
Sunstone Hotel Investors, Inc. (the "Company"), a Maryland corporation,
was formed on September 21, 1994, as a real estate investment trust ("REIT").
The Company completed an initial public offering (the "Offering") of 5,910,000
shares of its common stock on August 16, 1995. An additional 404,500 shares of
common stock were issued by the Company on September 3, 1995 upon a partial
exercise of the underwriters' over-allotment option. The offering price of
all shares sold in the Offering was $9.50 per share, resulting in gross
proceeds of approximately $60.0 million and net proceeds (less the
underwriters' discount and offering expenses) of approximately $53.0 million.
The Company contributed all of the net proceeds of the Offering to
Sunstone Hotel Investors, L.P. (the "Partnership") in exchange for an
approximately 82.5% aggregate equity interest in the Partnership. The Company
conducts all its business through and is the sole general partner of the
Partnership (hereafter referred to as the "Company").
In connection with the Offering, the Company acquired seven hotels (the
"Sunstone Hotels") from seven entities controlled by officers and a director of
the Company and acquired the three additional hotels (the "Acquisition Hotels"
and together, the "Initial Hotels") from unrelated third parties in exchange
for (i) 1,288,500 units ("Units") in the Partnership (representing the
remaining 17.5% of equity interest in the Partnership) which are exchangeable
for a like number of shares of the common stock of the Company and (ii) the
payment of mortgage indebtedness for the Sunstone Hotels of approximately $23.5
million and other obligations relating to the Sunstone Hotels and (iii) payment
of approximately $25.8 million to purchase the Acquisition Hotels.
The Company owns as of June 30, 1996, 18 hotels (the "Hotels") and
leases them to Sunstone Hotel Properties, Inc. (the "Lessee") under operating
leases (the "Percentage Leases") providing for the payment of base and
percentage rent. The Lessee is owned by Robert A. Alter, Chairman and President
of the Company (80%), and Charles L. Biederman, Director and Executive Vice
President of the Company (20%). The Lessee has entered into a management
agreement pursuant to which all of the Hotels are managed by Sunstone Hotel
Management, Inc. (the "Management Company"), of which Mr. Alter is the sole
shareholder.
Basis Of Presentation:
For accounting purposes, the Company exercises unilateral control over
the Partnership; hence, the financial statements of the Company and the
Partnership are consolidated. All significant intercompany transactions and
balances have been eliminated.
2. NET INCOME PER SHARE AND PARTNERSHIP UNITS
Net income per share is based on the weighted average number of common
and equivalent shares outstanding during the period. Outstanding options are
included as common equivalent shares using the treasury stock method when the
effect is dilutive. The weighted average number of shares used in determining
net income per share were 6,322,000 for the three months ended June 30, 1996
and 1995. At June 30, 1996, a total of 7,780,800 partnership units were issued
and outstanding. The weighted average number of units outstanding for the
three months ended June 30, 1996 were 7,780,800.
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3. RECENTLY ISSUED ACCOUNTING STANDARDS:
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No 121, "Accounting for the Impairment of Long
Lived Assets and for Long Lived Assets to be Disposed Of." This statement
shall be effective for financial statements for fiscal years beginning after
December 1, 1995. Management has elected early adoption of this statement.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation" which shall be effective for financial statements for fiscal
years beginning after December 15, 1995. Management intends to adopt the
disclosure method and, accordingly, there will be no impact on the Company's
financial position or results of operations.
4. SUBSEQUENT EVENTS AND SIGNIFICANT ACQUISITIONS
On August 13, 1996, the Company issued 4,000,000 shares of its common
stock at a price of $10.00 per share. The net proceeds of $36.8 million were
used as follows: (i) approximately $20.8 million to repay outstanding borrowings
under the line of credit, $8.2 million of which was borrowed to acquire the
188-room Holiday Inn in Renton, Washington on June 28, 1996; and (ii)
approximately $16.0 million to purchase the 155-room Comfort Suites in South
San Francisco, California and a 151-room nationally franchised hotel in Price,
Utah. The Company has granted the underwriters a 30-day option to purchase up
to an additional 600,000 shares of common stock solely to cover
over-allotments, if any.
On April 1, 1996, the Company acquired the Courtyard by Marriott in
Riverside, California for a purchase price of $4.0 million from an affiliate of
the Company in exchange for the assumption of $3.2 million of mortgage debt
and 80,000 partnership units.
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SUNSTONE HOTEL PROPERTIES, INC.
BALANCE SHEET
JUNE 30, 1996
ASSETS:
Cash $1,063,000
Receivables, net 828,000
Inventories 62,000
Prepaid expenses and other assets 1,443,000
----------
$3,396,000
==========
LIABILITIES AND SHAREHOLDERS' DEFICIT:
Rent payable - REIT $1,960,000
Accounts payable, trade 767,000
Advanced deposits 59,000
Sales taxes payable 230,000
Accrued payroll 19,000
Accrued vacation 100,000
Management and accounting fees payable 231,000
Other accrued expenses 797,000
----------
4,163,000
----------
Shareholders' Deficit:
Common stock, no par value, 1,000 shares authorized
100 shares issued and outstanding
Shareholders' deficit (767,000)
----------
$3,396,000
==========
The accompanying notes are an integral part of these financial statements.
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SUNSTONE HOTEL PROPERTIES, INC.
STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1996
------------------ ----------------
REVENUES:
Room $6,970,000 $13,756,000
Food and beverage 426,000 658,000
Other 398,000 716,000
---------- -----------
Total revenues 7,794,000 15,130,000
---------- -----------
EXPENSES:
Room 1,753,000 3,450,000
Food and beverage 436,000 678,000
Other 146,000 339,000
General and administrative 606,000 1,067,000
Franchise costs 264,000 456,000
Advertising and promotion 762,000 1,400,000
Utilities 344,000 638,000
Repairs and maintenance 380,000 696,000
Management fees 141,000 273,000
Rent expense - REIT 2,965,000 6,155,000
---------- -----------
Total expenses 7,797,000 15,152,000
---------- -----------
Net loss $ (3,000) $ (22,000)
========== ===========
The accompanying notes are an integral part of these financial statements.
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SUNSTONE HOTEL PROPERTIES, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30, 1996
Cash flows from operating activities:
Net loss $ (22,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Changes in assets and liabilities:
Receivables, net (362,000)
Inventories 63,000
Prepaid expenses and other assets (510,000)
Rent payable - REIT 1,315,000
Accounts payable, trade 473,000
Advanced deposits (140,000)
Sales taxes payable 5,000
Accrued payroll (223,000)
Accrued vacation 18,000
Due to affiliates (104,000)
Other accrued expenses 613,000
----------
Cash provided by operating activities 1,126,000
----------
Cash flows from investing activities:
Capitalized construction costs (863,000)
----------
Cash used in investing activities (863,000)
----------
Net change in cash 263,000
Cash, beginning of period 800,000
----------
Cash, end of period $1,063,000
==========
The accompanying notes are an integral part of these financial statements.
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SUNSTONE HOTEL PROPERTIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
-----------------
1. ORGANIZATION:
Sunstone Hotel Properties, Inc. (the "Lessee") was incorporated in Colorado
in August 1995 and commenced operations effective with the completion of an
initial public stock offering (the "Offering") by Sunstone Hotel Investors, Inc.
(the "REIT") on August 16, 1995. The Lessee leases hotel properties primarily
located in the western United States from the REIT pursuant to long term leases.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Company completed a $60 million initial public offering ("IPO") on
August 16, 1995 and contributed all of the net proceeds of the IPO to the
Partnership in exchange for an approximately 82.5% aggregate equity interest in
the Partnership. The Company used the proceeds of the IPO to fund the purchase
of three of its hotels and repay indebtedness incurred in connection with the
acquisition of the Sunstone Initial Hotels. From the proceeds of the secondary
offering on August 13, 1996, the Company contributed an additional $36.8 million
of net proceeds to the Partnership and owns an approximately 87.6% interest in
the Partnership. The Company owns as of August 13, 1996, 20 hotels with an
aggregate of 2,612 rooms in seven states, including Arizona (1 hotel),
California (5), Colorado (6), New Mexico (1), Utah (2), Oregon (2), and
Washington (3), and has doubled the number of hotels in its portfolio in the
12 months since the IPO, and increased the number of rooms by 96.7% from 1,328
to 2,612 rooms.
Since the IPO, the Company has implemented its growth strategy by
(i) acquiring underperforming hotels and redeveloping and repositioning certain
of such hotels into nationally franchised mid-price and upscale hotels and (ii)
enhancing the operating performance of its hotels through selective renovation
and improved management and marketing. Additionally, the Company has
significantly increased its franchise and geographic diversification within the
western United States and expanded its ability to finance future growth, through
increased borrowing capacity on its line of credit.
The Company has implemented its external growth strategy by
(i) acquiring eight hotels for purchase prices aggregating $43.5 million and
(ii) acquiring and substantially completing the construction of a Residence Inn
for approximately $5.0 million, which is expected to be opened during the third
quarter of 1996 increasing the number of rooms in its portfolio by 96.7% since
the IPO and (iii) entering into a letter of intent to acquire a 166-room
full-service convention hotel for $8.4 million upon completion of construction
by an unaffiliated developer, which is expected to occur in 1997.
The Company has implemented its internal growth strategy by
(i) completing an aggregate of $4.4 million in redevelopment to two of its
hotels; (ii) completing $1.2 million in renovations to two other of its hotels;
(iii) commencing redevelopment budgeted at $5.5 million to four of its hotels;
and (iv) increasing REVPAR for the seven hotels that were owned by the Company
or its predecessor for the entire quarter of 1995 and 1996 and were not
undergoing redevelopment or significant renovation by 5.5%, from $39.82 to
$42.03. Management believes that the increases in REVPAR for hotels, other than
the renovated hotels in Santa Fe, New Mexico and Steamboat Springs, Colorado,
resulted primarily from the success of the Company's renovation and
redevelopment program, from improvements in management and marketing and from
increases in demand for mid-price and upscale hotel rooms throughout the United
States.
Additionally, the Company has increased availability under the Line of
Credit from $30 million to $50 million, reduced its borrowing rate from LIBOR
plus 2.75% to LIBOR plus 1.90%, with additional reductions to LIBOR plus 1.75%
upon meeting certain other financial conditions, and has applied for a $9.9
million 10-year fixed-rate term loan which will be secured by two of its hotels.
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Internal Growth
The following tables summarize average occupancy, ADR and REVPAR
on a same-unit-sales (1,996 rooms) basis for the hotels.
SELECTED FINANCIAL INFORMATION
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Actual Pro Forma Actual Pro Forma
---------- --------- ---------- ---------
ALL HOTELS:
Occupancy 62.3% 64.0% 63.2% 66.1%
ADR $59.09 $56.06 $61.43 $58.86
REVPAR $36.81 $35.86 $38.80 $38.89
REVPAR Growth 2.7% (0.2)%
NON-RENOVATION HOTELS:
Occupancy 67.4% 66.4% 68.7% 68.7%
ADR $59.28 $55.47 $61.62 $58.19
REVPAR $39.96 $36.83 $42.34 $39.99
REVPAR Growth 8.5% 5.9%
RENOVATION HOTELS:
Occupancy 53.6% 59.8% 49.7% 59.6%
ADR $58.67 $57.19 $60.81 $60.75
REVPAR $31.43 $34.20 $30.21 $36.19
REVPAR Growth (8.1)% (16.5)%
Dividends $1,789,584 $3,562,852
FFO Payout Ratio 81.7% 76.3%
FAD Payout Ratio 87.2% 81.2%
RESULTS OF OPERATIONS OF THE COMPANY
Comparison of the three months ended June 30, 1996 to June 30, 1995 -- Actual
and Pro Forma Net Income
REVPAR for the eight hotels that were owned by the Company or its
predecessor for the entire second quarter of 1995 and 1996 increased 8.0%, from
$38.83 to $41.92, during such periods. With respect to the ten hotels not
undergoing redevelopment or renovation (i.e., all hotels except the
Doubletree-Santa Fe, New Mexico hotel, the Hampton Inn-Oakland, California
hotel, and the four Cypress Inn hotels located in Washington and Oregon),
REVPAR rose 8.5% from the second quarter of 1996, as compared to the
corresponding period in 1995, from $36.83 to $39.96. At the beginning of the
second quarter of 1996, the Company completed its renovation of the Holiday
Inn-Steamboat Springs, Colorado hotel. In addition, redevelopment work is
expected to be completed early in the third quarter of 1996 at the four Cypress
Inn hotels, which are undergoing significant interior and exterior renovations
and are being rebranded under national franchises, including Hampton Inn,
Holiday Inn Hotel & Suites and Holiday Inn Express. REVPAR for the six hotels
undergoing redevelopment or renovation (not including the Residence Inn-
Highlands Ranch, Colorado hotel which was under construction) decreased 8.1%
from $34.20 to $31.43, for the second quarter of 1996 as compared to the
corresponding period in 1995. However, such renovations are expected to
generate increased revenue at these hotels beginning in the fourth quarter of
1996.
Comparing actual results for the second quarter of 1996 to pro forma
results for the second quarter of 1995, net income increased 1.0%, from
$869,000 to $877,000, and net income per share was unchanged at $0.14, for the
second quarter of 1996 as compared to the corresponding period in 1995 despite
the fact that six hotels were undergoing redevelopment or renovation during the
second quarter of 1996. Actual results for 1996 include the results of the ten
hotels acquired by the Company in connection with its IPO in August 1995, plus
the hotels subsequently acquired (other than the Holiday
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Inn-Renton, Washington hotel acquired on June 28, 1996 and the Residence
Inn-Highlands Ranch, Colorado hotel which is under construction). Pro forma
results for 1995 include the results of the ten hotels acquired by the Company
in connection with the IPO.
THE LESSEE
For a discussion of the Lessee's operations and a comparison of the
quarter ended June 30, 1996, see "Results of Operations of the Company." For
the second quarter of 1996, the Lessee incurred a loss of $3,000. The loss was
primarily a result of the seasonality of certain hotels in the Company's
portfolio combined with the effects of renovation activity during the quarter.
Seasonality and Diversification
Demand is affected by normally recurring seasonal patterns. Historically,
the Company's portfolio of hotels as a whole has performed better in the first
and third quarters due to the positive and negative effects of the winter
season. Future acquisitions may further affect the seasonality of the Company's
current portfolio.
The Company has implemented a business strategy of franchise and
geographic diversification. The following tables summarize certain information
for the Company's hotels with respect to franchise affiliations and
distribution of hotels throughout the western United States for the six months
ended June 30, 1996.
FRANCHISE AFFILIATIONS
(As of June 30, 1996)
Number of Percentage of
Franchise System Rooms Gross Revenues Gross Revenues
---------------- --------- -------------- --------------
Courtyard by Marriott 279 $ 1,629,000 7.2%
Cypress Inns 384 2,237,000 13.3
Hampton Inns 825 7,748,000 58.8
Holiday Inns 517 2,535,000 17.1
Residence Inns 78 N/A N/A
Doubletree Hotels 213 981,000 3.6
----- ----------- -----
2,296 $15,130,000 100.0%
===== ============ =====
GEOGRAPHIC DIVERSIFICATION
(As of June 30, 1996)
Percentage Percentage of
State Rooms of Rooms Gross Revenues Revenues
- ----- ----- ---------- -------------- -------------
Arizona 118 5.1% $ 1,416,000 9.4%
California 562 24.5 3,785,000 25.0
Colorado 753 32.8 6,040,000 39.9
New Mexico 213 9.3 982,000 6.5
Oregon 199 8.7 1,105,000 7.3
Utah 78 3.4 670,000 4.4
Washington 373 16.2 1,132,000 7.5
----- ----- ----------- -----
Total 2,296 100.0% $15,130,000 100.0%
===== ===== =========== =====
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LIQUIDITY AND CAPITAL RESOURCES
Cash Flows Provided by Operating Activities. The Company's operating
activities provide the principal source of cash to fund the Company's operating
expenses, interest expense, recurring capital expenditures and dividend
payments. The Company anticipates that its cash flow provided by leasing the
hotels to the Lessee will provide the necessary funds on a short and long term
basis to meet its operating cash requirements. The Company is required under
the Percentage Leases to make available to the Lessee for the repair,
replacement and refurbishment of furniture, fixtures and equipment an amount
equal to 4% of the room revenue per quarter on a cumulative basis, provided
that such amount may be used for capital expenditures made by the Company with
respect to the hotels. The Company expects that this reserve will be adequate
to fund such periodic repairs, replacements and refurbishments. Since
inception, the Company has paid dividends and distributions totaling $4.4
million representing $0.23 per share on a quarterly basis.
Cash flows from Investing and Financing Activities. Additionally, the
Company intends to finance the acquisition of additional hotels, hotel
renovations and non-recurring capital improvements principally through the Line
of Credit with Bank One of Arizona, N.A. and, when market conditions warrant,
to issue additional equity or debt securities. As of August 13, 1996, the
Company had $30 million available on its $50.0 million Line of Credit.
Interest accrues on advances under the Line of Credit at a rate equal to LIBOR
plus 1.90%, and reduced to LIBOR plus 1.75% if the Company satisfies certain
financial requirements. The Line of Credit provides for a $5 million working
capital subfacility and a $5 million construction subfacility. The Company has
the option each year to extend the two-year revolving term period by an
additional year upon the payment of a 0.375% extension fee and certain other
conditions. Upon termination of the revolving term period, the Company may
under certain conditions, including payment of a 1% fee, convert the
outstanding balance into a three-year term loan. The Line of Credit is
guaranteed by Mr. Alter, Mr. Biederman and certain other individuals and is
secured by first mortgages on 15 of its hotels and may be secured by additional
hotels acquired by the Company in the future. However, the Company has the
option of owning hotels not subject to the lien securing the Line of Credit so
long as no proceeds under the Line of Credit are used with respect to such
hotels and any other lender loaning against such hotels limit its liens to only
those hotels. This feature of the Line of Credit gives the Company the ability
to separately finance on a long-term basis certain of its hotels. The Company
has applied for a $9.9 million, 10-year fixed rate loan to be secured by the
Hampton Inns in Denver, Colorado, and Mesa, Arizona. The Line of Credit may be
retired in whole or in part from the proceeds of public or private issuances of
equity or debt securities by the Company and may be refinanced in whole or in
part with fixed-rate financing. However, because Messrs. Alter and Biederman
and certain affiliates would suffer adverse tax consequences if the Company's
mortgage indebtedness were reduced below $8.4 million, the Company does not
anticipate reducing its mortgage indebtedness below this amount.
The Company continues to pursue its strategy of redeveloping, renovating
and repositioning underperforming hotels. As of June 30, 1996, redevelopment
and renovation work was substantially completed at three hotels for $5.1
million. The Company expects that redevelopment of additional hotels will be
completed by the second quarter of 1997 for an additional $9.0 million. The
redevelopment and renovation program is expected to be funded entirely by
excess operating cash flows and borrowings under the Line of Credit.
Since the IPO, the Company has expended over $44.0 million in acquiring
hotel assets. As part of its investment strategy, the Company plans to acquire
additional hotels. Future acquisitions are expected to be funded through the
use of the Line of Credit or other borrowings and the issuance of additional
equity or debt securities. The Company's Articles of Incorporation limits
consolidated indebtedness to 50% of the Company's investment in hotel
properties, at cost on a consolidated basis, after giving effect to the
Company's use of proceeds from any indebtedness. Management believes that it
will have access to capital resources sufficient to satisfy the Company's cash
requirements and to expand and develop its business in accordance with its
strategy for future growth.
Inflation. Operators of hotels in general possess the ability to adjust
room rates quickly. However, competitive pressures may limit the Lessee's
ability to raise room rates in the face of inflation.
Funds From Operations (FFO). Management believes that FFO is one measure
of financial performance of an equity REIT such as the Company. On a pro forma
basis, FFO (as defined by the National Association of Real Estate Investment
Trusts) (1) for the second quarter of 1996 grew by 18.5% as indicated in the
following table:
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Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Actual Pro Forma Actual Pro Forma
---------- --------- ---------- ----------
Income before minority interest $1,081,000 1,083,000 $2,711,000 2,940,000
Real estate related depreciation 997,000 671,000 1,846,000 1,176,000
---------- ---------- ---------- -----------
Funds from operations $2,078,000 $1,754,000 $4,557,000 $4,116,000
========== ========== ========== ==========
Weighted average number of units 7,780,800 7,659,500 7,745,330 7,659,500
- -------------------
(1) With respect to the presentation of FFO, management elected early
adoption of the "new definition" as recommended in the March 1995 NAREIT
White Paper on Funds From Operations beginning January 1, 1995.
Management and industry analysts generally consider funds from operations
to be one measure of the financial performance of an equity REIT that
provides a relevant basis for comparison among REITs and it is presented
to assist investors in analyzing the performance of the Company. Funds
From Operations is defined as income before minority interest (computed
in accordance with generally accepted accounting principles), excluding
gains (losses) from debt restructuring and sales of property and real
estate related depreciation and amortization (excluding amortization of
financing costs). Funds From Operations does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles and is not necessarily indicative of cash available
to fund cash needs. Funds From Operating should not be considered an
alternative to net income as an indication of the Company's financial
performance or as an alternative to cash flows from operating activities
as a measure of liquidity.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 17, 1996, at the Company's 1996 Annual Meeting of Stockholders,
the following matters were submitted and voted on by securityholders and were
adopted.
A. The ratification of Coopers & Lybrand, LLP, as independent
auditors of the Company for the fiscal year ending December 31, 1996.
The results of the vote are as follows:
FOR AGAINST ABSTAINED
--------- ------- ---------
5,253,117 21,500 5,456
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------------ ---------------------------------------------------------------------- ------------
3.1 Amended Articles of Incorporation of the Company, as further amended
by the Articles of Amendment of the Company, as filed with the State
Department of Assessments and Taxation of Maryland on November 9,
1994, filed as Exhibit 3.1 to the Company's Registration Statement No.
33-84346 and incorporated herein by this reference....................
3.2 Bylaws of the Company, as currently in effect, filed as Exhibit 3.2 to
the Company's Registration Statement No. 33-84346 and incorporated
herein by this reference..............................................
3.3 Articles of Amendment of the Company, as filed with the State
Department of Assessments and Taxation of Maryland on June 19, 1995,
filed as Exhibit 3.3 to the Company's Registration Statement No.
33-84346 and incorporated herein by this reference....................
10.1 Form of First Amended and Restated Agreement of Limited Partnership of
the Partnership, filed as Exhibit 10.1 to the Company's Registration
Statement No. 33-84346 and incorporated herein by this reference......
10.1.1 First Amendment to First Amended and Restated Agreement of Limited
Partnership dated as of December 12, 1995, filed as Exhibit 10.36 to
the Company's Annual Report on Form 10-K for the year ended December
31, 1995 (the "1995 10-K") and incorporated herein by this
reference.............................................................
10.1.2 Second Amendment to First Amended and Restated Agreement of Limited
Partnership dated as of December 28, 1995, filed as Exhibit 10.1.2 to
the Company's 1995 10-K and incorporated herein by this reference.....
10.1.3 Third Amendment to First Amended and Restated Agreement of Limited
Partnership dated as of March 17, 1996, filed as Exhibit 10.1.3 to the
Company's amended Quarterly Report on Form 10-Q/A for the period
ending March 31, 1996 (the "First Quarter 1996 10-Q/A") and
incorporated herein by this reference.................................
10.1.4 Fourth Amendment to First Amended and Restated Agreement of Limited
Partnership dated as of March 28, 1996, filed as Exhibit 10.1.4 to
the Company's Registration Statement No. 333-07685 and incorporated
herein by this reference..............................................
10.1.5 Fifth Amendment to First Amended and Restated Agreement of Limited
Partnership dated as of July 31, 1996, filed as Exhibit 10.1.5 to the
Company's Registration Statement No. 333-07685 and incorporated herein
by this reference.....................................................
10.2 Form of Percentage Lease, filed as Exhibit 10.2 to the Company's
Registration Statement No. 33-84346 and incorporated herein by this
reference.............................................................
10.2.1 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Hampton Inn Hotel located in Denver S.E., Colorado,
filed as Exhibit 10.2.1 to the Company's 1995 10-K and incorporated
herein by this reference..............................................
10.2.2 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Hampton Inn Hotel located in Pueblo, Colorado,
filed as Exhibit 10.2.2 to the Company's 1995 10-K and incorporated
herein by this reference..............................................
10.2.3 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Courtyard By Marriott Hotel located in Fresno,
California, filed as Exhibit 10.2.3 to the Company's 1995 10-K and
incorporated herein by this reference.................................
10.2.4 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Hampton Inn Hotel located in Mesa, Arizona, filed
as Exhibit 10.2.4 to the Company's 1995 10-K and incorporated herein
by this reference.....................................................
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19
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------------ ---------------------------------------------------------------------- ------------
10.2.5 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Holiday Inn Hotel located in Steamboat Springs,
Colorado, filed as Exhibit 10.2.5 to the Company's 1995 10-K and
incorporated herein by this reference.................................
10.2.6 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Holiday Inn Hotel located in Craig, Colorado, filed
as Exhibit 10.2.6 to the Company's 1995 10-K and incorporated herein
by this reference.....................................................
10.2.7 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Holiday Inn Hotel located in Provo, Utah, filed as
Exhibit 10.2.7 to the Company's 1995 10-K and incorporated herein by
this reference........................................................
10.2.8 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P. as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Hampton Inn Hotel located in Silverthorne,
Colorado, filed as Exhibit 10.2.7 to the Company's 1995 10-K and
incorporated herein by this reference.................................
10.2.9 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Doubletree Hotel located in Santa Fe, New Mexico,
filed as Exhibit 10.2.9 to the Company's 1995 10-K and incorporated
herein by this reference..............................................
10.2.10 Lease Agreement dated as of August 16, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Hampton Inn Hotel located in Arcadia, California,
filed as Exhibit 10.2.10 to the Company's 1995 10-K and incorporated
herein by this reference..............................................
10.2.11 Lease Agreement dated as of December 13, 1995 by and between Sunstone
Hotel Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc.,
as lessee, for the Hampton Inn Hotel located in Oakland, California,
filed as Exhibit 10.2.11 to the Company's 1995 10-K and incorporated
herein by this reference..............................................
10.2.12 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel
Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as
lessee, for the Cypress Inn Hotel located in Clackamas, Oregon, filed
as Exhibit 10.2.12 to the Company's First Quarter 1996 10-Q/A and
incorporated herein by this reference.................................
10.2.13 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel
Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as
lessee, for the Cypress Inn Hotel located in Kent, Washington, filed
as Exhibit 10.2.13 to the Company's First Quarter 1996 10-Q/A and
incorporated herein by this reference.................................
10.2.14 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel
Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as
lessee, for the Cypress Inn Hotel located in Poulsbo, Washington,
filed as Exhibit 10.2.14 to the Company's First Quarter 1996 10-Q/A
and incorporated herein by this reference.............................
10.2.15 Lease Agreement dated February 2, 1996 by and between Sunstone Hotel
Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as
lessee, for the Cypress Inn Hotel located in Portland, Oregon, filed
as Exhibit 10.2.15 to the Company's First Quarter 1996 10-Q/A and
incorporated herein by this reference.................................
10.2.16 Lease Agreement dated March 28, 1996 by and between Sunstone Hotel
Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as
lessee, for the Courtyard By Marriott Hotel located in Riverside,
California, filed as Exhibit 10.2.16 to the Company's Registration
Statement No. 333-07685 and incorporated herein by this reference.....
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20
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------------ ---------------------------------------------------------------------- ------------
10.2.17 Lease Agreement dated June 28, 1996 by and between Sunstone Hotel
Investors, L.P., as lessor, and Sunstone Hotel Properties, Inc., as
lessee, for the Holiday Inn Hotel located in Renton, Washington, filed
as Exhibit 10.2.17 to the Company's Registration Statement
No. 333-07685 and incorporated herein by this reference...............
10.3 Form of Right of First Refusal and Option to Purchase, filed as
Exhibit 10.3 to the Company's Registration Statement No. 33-84346 and
incorporated herein by this reference.................................
10.4 Form of Alter Employment Agreement, filed as Exhibit 10.4 to the
Company's Registration Statement No. 33-84346 and incorporated herein
by this reference.....................................................
10.5 Form of Biederman Employment Agreement, filed as Exhibit 10.5 to the
Company's Registration Statement No. 33-84346 and incorporated herein
by this reference.....................................................
10.6 Form of Indemnification Agreement to be entered into with officers and
directors of the Company, filed as Exhibit 10.6 to the Company's
Registration Statement No. 33-84346 and incorporated herein by this
reference.............................................................
10.7 1994 Stock Incentive Plan, filed as Exhibit 10.7 to the Company's
Registration Statement No. 33-84346 and incorporated herein by this
reference.............................................................
10.8 Form of Notice of Grant of Stock Option and Form of Stock Option
Agreement (and Addendum thereto) to be generally used in connection
with the Discretionary Option Grant Program of the 1994 Stock
Incentive Plan, filed as Exhibit 10.8 to the Company's Registration
Statement No. 33-84346 and incorporated herein by this reference......
10.9 Form of Stock Purchase Agreement to be generally used in connection
with the Discretionary Option Grant Program of the 1994 Stock
Incentive Plan, filed as Exhibit 10.9 to the Company's Registration
Statement No. 33-84346 and incorporated herein by this reference......
10.10 1994 Directors Plan, filed as Exhibit 10.10 to the Company's
Registration Statement No. 33-84346 and incorporated herein by this
reference.............................................................
10.11 Form of Notice of Grant of Automatic Stock Option, Automatic Stock
Option Agreement, Stock Purchase Agreement and Automatic Direct Stock
Issuance Agreement to be generally used in connection with the 1994
Directors Plan, filed as Exhibit 10.11 to the Company's Registration
Statement No. 33-84346 and incorporated herein by this reference......
10.12 Agreement of Purchase and Sale between the Partnership and FBA Hotel
Venture dated as of September 23, 1994, filed as Exhibit 10.12 to the
Company's Registration Statement No. 33-84346 and incorporated herein
by this reference.....................................................
10.13 Agreement of Purchase and Sale between the Partnership and M R C Hotel
Partners, Ltd. dated as of September 23, 1994, filed as Exhibit 10.13
to the Company's Registration Statement No. 33-84346 and incorporated
herein by this reference..............................................
10.14 Agreement of Purchase and Sale between the Partnership and Arapahoe
South Hotel Partnership dated as of September 23, 1994, filed as
Exhibit 10.14 to the Company's Registration Statement No. 33-84346 and
incorporated herein by this reference.................................
10.15 Agreement of Purchase and Sale between the Partnership and C and R
Hotel Venture dated as of September 23, 1994, filed as Exhibit 10.15
to the Company's Registration Statement No. 33-84346 and incorporated
herein by this reference..............................................
10.16 Agreement of Purchase and Sale between the Partnership and Craig Hotel
Partners Limited Liability Co. dated as of September 23, 1994, filed
as Exhibit 10.16 to the Company's Registration Statement No. 33-84346
and incorporated herein by this reference.............................
10.17 Agreement of Purchase and Sale between the Partnership and Provo Hotel
Partners Limited Liability Co. dated as of September 23, 1994, filed
as Exhibit 10.17 to the Company's Registration Statement No. 33-84346
and incorporated herein by this reference.............................
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21
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------------ ---------------------------------------------------------------------- ------------
10.18 Agreement of Purchase and Sale between the Partnership and Steamboat
Hotel Partners, Ltd. dated as of September 23, 1994, filed as Exhibit
10.18 to the Company's Registration Statement No. 33-84346 and
incorporated herein by this reference.................................
10.19 Hotel Sale Agreement between the Management Company and Western
Hospitality Group, LLC dated as of June 14, 1995, filed as Exhibit
10.19 to the Company's Registration Statement No. 33-84346 and
incorporated herein by this reference.................................
10.20 Real Property Purchase and Sale Agreement and Joint Escrow
Instructions between the Management Company and Hampton Inns, Inc.,
dated as of June 19, 1995, filed as Exhibit 10.20 to the Company's
Registration Statement No. 33-84346 and incorporated herein by this
reference.............................................................
10.21 Hotel Sale Agreement between the Management Company and Sunworld
Properties dated as of June 19, 1995, filed as Exhibit 10.21 to the
Company's Registration Statement No. 33-84346 and incorporated herein
by this reference.....................................................
10.22 First Amendment to Agreement of Purchase and Sale between the
Partnership and FBA Hotel Venture dated as of June 19, 1995, filed as
Exhibit 10.22 to the Company's Registration Statement No. 33-84346 and
incorporated herein by this reference.................................
10.23 First Amendment to Agreement of Purchase and Sale between the
Partnership and M R C Hotel Partners, Ltd. dated as of June 19, 1995,
filed as Exhibit 10.23 to the Company's Registration Statement No.
33-84346 and incorporated herein by this reference....................
10.24 First Amendment to Agreement of Purchase and Sale between the
Partnership and Arapahoe South Hotel Partnership dated as of June 19,
1995, filed as Exhibit 10.24 to the Company's Registration Statement
No. 33-84346 and incorporated herein by this reference................
10.25 First Amendment to Agreement of Purchase and Sale between the
Partnership and C and R Hotel Venture dated as of June 19, 1995, filed
as Exhibit 10.25 to the Company's Registration Statement No. 33-84346
and incorporated herein by this reference.............................
10.26 First Amendment to Agreement of Purchase and Sale between the
Partnership and Craig Hotel Partners Limited Liability Co. dated as of
June 19, 1995, filed as Exhibit 10.26 to the Company's Registration
Statement No. 33-84346 and incorporated herein by this reference......
10.27 First Amendment to Agreement of Purchase and Sale between the
Partnership and Provo Hotel Partners Limited Liability Co. dated as of
June 19, 1995, filed as Exhibit 10.27 to the Company's Registration
Statement No. 33-84346 and incorporated herein by this reference......
10.28 First Amendment to Agreement of Purchase and Sale between the
Partnership and Steamboat Hotel Partners, Ltd. dated as of June 19,
1995, filed as Exhibit 10.28 to the Company's Registration Statement
No. 33-84346 and incorporated herein by this reference................
10.29 Form of Agreement Respecting Lessee Unit Purchase between the Company,
the Partnership, the Lessee, Robert A. Alter and Charles Biederman,
filed as Exhibit 10.29 to the Company's Registration Statement No.
33-84346 and incorporated herein by this reference....................
10.30 Form of Third Party Pledge Agreement among the Partnership, Robert A.
Alter and Charles Biederman, filed as Exhibit 10.30 to the Company's
Registration Statement No. 33-84346 and incorporated herein by this
reference.............................................................
10.30.1 Amendment Number One to Third Party Pledge Agreement effective as of
December 13, 1995, filed as Exhibit 10.34 to the Company's 1995 10-K
and incorporated herein by this reference.............................
10.30.2 Amendment Number Two to Third Party Pledge Agreement effective as of
February 2, 1996, filed as Exhibit 10.30.2 to the Company's
Registration Statement No. 333-07685 and incorporated herein by this
reference.............................................................
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22
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------------ ---------------------------------------------------------------------- ------------
10.30.3 Amendment Number Three to Third Party Pledge Agreement effective as of
May 30, 1996, filed as Exhibit 10.30.3 to the Company's Registration
Statement No. 333-07685, and incorporated herein by this reference....
10.30.4 Amendment Number Four to Third Party Pledge Agreement effective as of
June 28, 1996, filed as Exhibit 10.30.4 to the Company's Registration
Statement No. 333-07685, and incorporated herein by this reference....
10.31 First Amendment to Hotel Sale Agreement between the Management Company
and Sunworld Properties, filed as Exhibit 10.31 to the Company's
Registration Statement No. 33-84346 and incorporated herein by this
reference.............................................................
10.32 First Amendment to Hotel Sale Agreement between the Management Company
and Western Hospitality Group, LLC, filed as Exhibit 10.32 to the
Company's Registration Statement No. 33-84346 and incorporated herein
by this reference.....................................................
10.33 Commitment Letter for Revolving Line of Credit issued by Bank One,
Arizona, NA in favor of the Company dated as of July 20, 1995, filed
as Exhibit 10.33 to the Company's Registration Statement No. 33-84346
and incorporated herein by this reference.............................
10.34 Hampton Inn Oakland Contribution Agreement dated as of December 13,
1995, filed as Exhibit 10.35 to the Company's 1995 10-K and
incorporated herein by this reference.................................
10.35 Loan Agreement by and between the Partnership and Bank One, Arizona,
N.A. dated as of October 25, 1995, filed as Exhibit 10.38 to the
Company's 1995 10-K and incorporated herein by this reference.........
10.35.1 Amended and Restated Loan Agreement by and between the Partnership and
Bank One, Arizona, N.A. dated as of June 21, 1996, filed as
Exhibit 10.35.1 to the Company's Registration Statement No. 333-07685,
and incorporated herein by this reference.............................
10.36 Purchase and Sale Agreement and Joint Escrow Instructions dated
December 20, 1995 between the Partnership and HL Project I Limited
Liability Company, a Delaware limited liability company, filed as
Exhibit 10.36 to the Company's First Quarter 1996 10-Q/A and
incorporated herein by this reference.................................
10.37 Purchase and Sale Agreement dated May 28, 1996 between the Partnership
and Renton Joint Venture, a Washington joint venture, filed as
Exhibit 10.37 to the Company's Registration Statement No. 333-07685,
and incorporated herein by this reference.............................
10.38 Capital Contribution Agreement dated March 28, 1996 between the
Partnership and Riverside Hotel Partners, Inc., filed as Exhibit 10.38
to the Company's Registration Statement No. 333-07685, and
incorporated herein by this reference.................................
- --------------
(a) Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K:
A Current Report on Form 8-K dated June 28, 1996, was filed in
July, 1996, with disclosure under Items 2 and 7.
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23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Clemente, State of California, on August 14, 1996.
SUNSTONE HOTEL INVESTORS, INC.
By: /s/ ROBERT A. ALTER
-----------------------------------
Robert A. Alter
President, Chief Financial Officer,
Secretary and Chairman of the Board
of Directors
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