SHO - Earnings call transcript Q2 2022 | Sunstone Hotel Investors, Inc.

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sunstone Hotel Investors Second Quarter 2022 Earnings Call. [Operator Instructions] I would like to remind everyone that this conference is being recorded today, August 3, 2022, at 12:00 p.m. Eastern Time. I will now turn the presentation over to Mr. Officer. Financial Chief Reyes, Aaron Please go sir. ahead,

Aaron Reyes

Thank operator, and good everyone. morning, you,

statements. begin, evaluating XX-Ks from We cause consider and Before contains to those remind and forward-looking which projected. would everyone like results our that the described factors our we these XX-Qs, those subject could uncertainties, other filings I SEC, to are to that caution including risks to forward-looking you prospectuses, in statements in actual this with call differ materially

also call FFO information, property We this including adjusted level financial that contain non-GAAP note may EBITDAre. EBITDAre, and adjusted adjusted

are supplement Valley. our includes Montage Miami Beach, accordance On in We Napa XX portfolio information Healdsburg that accounting call, the Confidante and today's providing our as which comparable to information principles. portfolio, excludes accepted Resort generally a but will prepared Seasons to Four references mean with hotels

call recent your Robert After Please position, available to questions. be results. last, refinancing the transaction performance our to the are earnings operations activity and I'll Robert of our answer Afterwards, the release will a and second are Officer; Chris supplemental, on our ahead. on activity which remarks, start I'd And quarter second details Chief Bryan Operating liquidity the and us With commentary Springer, on Ostapovicz, recent in second like team Additional quarter provide call will been trends. of us our to quarter earnings with go quarter. Bryan. our discuss and off Executive Officer. we Investment completed provided Officer; and Giglia, turn Chief current a With some the on second in our our summary available that, will President over recap have Chief website. Bryan today

Bryan Giglia

Overall, accelerated and monthly early growth of the and pleased as occupancy since group months. Thank With pandemic. continuing strong mid-February onset we you, our began the our in quarter corporate portfolio that summer and into the spring highest morning, with and its the second leisure travel, performance are in everyone. good Aaron, continued the demand generated

pricing or second the management disciplined at levels On maintained approach nearly above in hotel our side, have the strong in XXXX revenue rates every the and remained quarter. with have operators

average Our at achieved as $XXX, is by rate a of resort portfolio ever comparable assets highest by second achieved compared hotels. part quarter group-oriented for driven XX% hotels, quarterly daily XXXX. our increase these a meaningful growing ADR urban the This in demand at growth and our with and

a nearly generated quarter $X,XXX. of assets country second combined wine ADR X Our

at a XX% with We the in are be revenue travel quarter ADR revenue, growth received $XXX these continue the during X% be sequential spot significant once second which bright is levels. XXXX occupancy. within food continued sites XX% numerous portfolio first total our second of beverage of have from Non-room hotels a made portfolio RevPAR We increased quarter publications. the generated and up our a comparable for saw quarter. to pleased of to hotels, again and $XXX how these market-leading ramping recognition Including and and X from up they

the our portfolio QX quarter second was from the outlet room surpassed $XXX the in our group the sales increased banquet QX was in per to driver the this primary grow. for high metric and activity prior out-of-room contribution higher While of spend spend watermark group continued quarter at for XXXX. AV Banquet comparable The from and hotels.

the $XXX available have rolled of approximately hotels. portfolio total programs in meaningful revenue saw room now and revenue generated in quarter destination out-of-room most these $XXX. to an RevPAR fee also per Including the as total out been spend, increase for We of facility our additional

operators our been expenses operating have while been in property cost have industry. costs, other and our that the been successful certain savings, the reducing labor immune impacting not to achieving have pressures cost from and teams Turning permanent

and support moderation to where wage practices seeing some possible. in are best growth, drive our we efforts managers We and efficiencies continue to and benchmark their

In the food EBITDA with been accordingly. for also quarter, as during portfolio they significant costs in labor, have our offerings in that close and to strong EBITDA very same achieved adjusting margin to in If XX% we a hotels was and we are comparable operators the other pro of is in items generated comparable quarter, our to pressures, cost the addition the similar activity with XX.X%. range hotel renovation menu are a a such exclude which coordination these XXXX. Despite X quarter ensure our forma prices rising, combined our in margin hotels

pleased very this shifting operators' level the are our increasingly focus of portfolio deliver levels. EBITDA to to profitability, our with as return we While maximize to ability normalized hotels is occupancy

segmentation. to shifting Now

our Group XXX,XXX room group and roughly XXX,XXX is represents quarter consistent the volume of with volume rates night higher production future nights, group current periods we put room portfolio the but at average a Our the increase X% the XX% were generated and rate. in for in the the XXXX, total which in from XXXX. comparable a This comprised all than demand. prior QX total on higher same with books QX nights was XX% in XX% that segment quarter, room group quarter,

nights the XXXX. on outlook in and the remainder Based that accounted quarter which room at pre-pandemic our about levels our total we business, for performance seeing was comparable XXXX. in saw than the transient we and higher second roughly we of what XX% XX% the quarter, quarter in came of are of $XXX terms the In rate July, encouraged of in same for remain

short-term trends with corporate lead strength reflect contribution higher recent from group booking volumes a increasing activity Our in events. and

pace and nights in Our third group for the that is room This rate pickup than XXXX in XX% for Group for was same time fourth from nearly the quarter what at booked period time imply XXX% only was XXXX. higher third the QX XXXX. X% the same this an fourth pacing down approximately period for and average quarters are of is revenue XX% that of would pre-pandemic time in levels group overall at XXXX. our

booking the down also group where as Diego, in of allow strong to has year corporate Hilton calendars activity has compression us X% XXXX, leisure half progressed as solid EBITDA the with transient year markets. at both year of improved seen travelers. have Boston to the full Bayfront XXXX. growth and should The and in the our San compared active side those is than group take citywide advantage the only We should increased outlook higher hotel's and second demand Boston finish from shown on and

Francisco are by well. encouraged trends recent to in we slower the market While recover, positive has as been San

Our second Francisco by doubled year-over-year, more quarter with occupancy at the Hyatt higher XX%. Regency rates nearly San than

guest on as are generating online. city up the its feedback to remains as trajectory they rooms expect The to Our it continue supply-constrained, positive major desirable a will we come and newly renovated it market, continue long-term great other lodging markets. catches gateway

the not has all we travel strength segments, signs While uniform and recovery are that seeing been the of patterns increasingly markets normalizing. across are

increasing will a recent degree fall has group quarter travel we consistent While of leisure seasons. moved a expect quarter and all business demand in into of experienced increasingly led to as transient amounts corporate seasonal that in our become country certain and peak the of the into portion patterns as larger as traditional wine This the well in strength head group reemerge. segments, is and seasonality markets their with second we acquisitions what higher with as we

XX% balance Our up approximately with that QX QX. their of the resorts nicely. current year they expect full in will year, coming generate wine continue we earnings in QX to country ramp the And for combined and

we year. XXXX, see the XXXX to demand the than put our for more cadence weighed to quarterly lower provide Later, resemble could as on current impact about in Based the that historical on our what travel today, composition by distribution adjustments is of EBITDA context. of comparable we year portfolio. of As the occupancy Aaron earlier to daily year historical digits XXXX points profitability will for would with closely with additional compared full our XX present in quarterly into patterns anticipate be needed some single in normalizes, this some help high portfolios the which information our the to growth Omicron rate XX expect also average full down we

Moving to transaction activity. our

noncore second quarter in the Following capital the the XX% of into quarter, interest San of first X sale we plus Confidante the in additional hotels Miami in Hilton purchase Diego the the redeployed proceeds remaining those Bayfront. the and Beach

a believe We from Bayfront about combination of from transactions San these of are flow growth the provide Andaz potential cash near-term Miami the Diego into the Confidante Beach. long-term the will and they conversion Hilton excited and

capital approach continue to We shareholders. employ to our capital returning to balanced and a allocation

of long-term our year-to-date NAV. create $XX share, capital earnings into an we of deploying our during million hotel into accretive quarter, to per a million average the total the activity we addition publish which estimates $XX own also discount brings of acquisitions, which will believe meaningful repurchase at $XX.XX nearly shares price to an to deployed additional growth, repurchase In

to provided $X.XX quarter. dividend of recover of strength our The continuing the dividend by third a Board quarterly our reinstatement approved sheet. our and earnings the Additionally, Directors common balance prudently share per levered hotel our of is for product a

as the we we and positioned prior we are to had the we our pandemic. same earnings encouraged seeing of to trends dividends are well subject portfolio. XXXX, believe always resume future move into we sum place dividend the things quarter are recent we base To the of by While to are up, expectations liquidity, quarterly across third in

our demand continued travel leisure events business assets up with as that well-located coming and resort continues properties. our expect for in at urban robust see already will the group-oriented catch the to demand We quarters and growth corporate

proceeds repurchase formula in that, this will allocate our additional turn to Robert to it to with capital through is opportunities a dividends. owners. to over And our Sunstone recent that hotel recycling provide growth and long-term Additionally, sales capital I'll winning thoughts our on transactions. new some our give shareholders value continues share actively portfolio, returning and We to investing into believe

Robert Springer

Thanks, Bryan.

backyard. closed enhanced resort and during our acquisition pleased estate per transform utilize and earnings where luxury as off-market Hyatt's represents we to and a and with Andaz premier our million. market real resort valuations assets investment, There a past. to portfolio. at on will significant potential. X in-house a expect very purchase prior hotel transaction property compelling has brand. its excess attractive we value-add fee Post X% acres renovated key oceanfront of to quarter, attractive potential an very success beachfront price all-in the a our Starting and an key further to generate and of on quality own enhance sits is type simple of repositioning, X.X at under $XXX,XXX Beach, per in total in to the well-located, The X% generous a This we on the hotel are lifestyle and had the a this yield transactions Confidante renovate $X it of value our the oceanfront to experience great hotel XXX-room and well the for know basis We well Miami is acquire with have opportunity which luxury investment similar in are to have fully reposition expertise a of

marketplace, of we On Bayfront. The coast, square meetings expect our waterfront venue, earnings a hotel and new to the for of This grow continues a makes the we and of and in remaining market in sense of is hotel the addition also this perform redesigned with return. X,XXX completed restaurant the to continue foot great Hilton lot us. well, consolidating with meeting corporate this hotel combined to as asset a a the premier Diego XX% convention acquisition ownership a opposite group San interest

quarter. other rooms finish renovation remain San the schedule. Our Hyatt X in major The room is on Francisco up slated fourth the full at XXX projects Regency renovation to

on and new are next up of progressing brand. renovation have process quarter look schedule the we year. D.C. conversion the We lobby to which The also is upgrade, wrap now rooms Washington, meeting the Renaissance the already rooms, second has been to Work completed, of they and great. and the are on begun during in on Westin selling the space

during While of year. during be these XXXX, off large projects especially we of displacement this will first earlier will year, the impact group fourth of experience Omicron the third quarter should comping XXXX some from provide when and hotels meaningful quarters next the growth these

and our we finalizing internal that growth more With investments round to in are over the turn portfolio, in continued ahead. will help coming that, drive to have quarters. We I'll you with to the next Aaron. of go will Please it share

Aaron Reyes

Thanks, Robert.

and cash amendment term quarter, agreement, extends second we end which full credit restores of equivalents, of cash restricted million the million the capacity, an end $XXX the expands $XXX Subsequent As our we capacity credit had of completed of and to our our of approximately quarter, cash. including the total loan borrowing bank million facility. maturity revolving $XX to our on

We very the existing our pleased are from partnership we banking completed and appreciate amendment, relationships. and to have and support the new

to was the $X.XX quarterly results, expectations and strong can share. NAV surpassed was in Shifting have reflect growth in in quarter one balance additional which earnings use and EBITDAre earnings to sequential diluted share financial demand. the initial in sector release the and leisure to our and per that corporate second we coming capacity continued our in travel million continue our supplemental. per are details the The full We $XX Adjusted and FFO the strongest which quarters. sheets of retain group results, provided of our for grow strength adjusted and

are mentioned quarter. more return second cadence. Bryan seasonality and of our normalizing, result patterns the into full EBITDA XXXX, in travel generated corporate earnings we a seeing quarterly indications year of which our approximately are in that earlier, XX% should In we As traditional the XXXX

comprise the anticipated our we acquisitions, and will year year recent Given contribution our approximately the currently our EBITDA. second expect of from to XX% Omicron-impacted that full XX% the to start quarter

the than there compared more year second quarterly to Confidante but an half in third contributes our in Beach, year our While our quarter up first. our made the XX%. at the $XXX excludes XX-hotel Historically, generally comparable of which resorts, of to of country less $XXX fourth ADR includes distribution quarter. of portfolio, the is earnings generated current variation RevPAR wine full X the the as Miami of our XXXX, In a earnings occupancy

increase As could of the Bryan XXXX. the comparable XXXX given we to expect earlier, year full portfolio for digits in in the the be year, percent the mentioned what we compared high remainder single ADR that as in see

be XX points lower occupancy XXXX, in than impact likely While Omicron which by earlier to is skewed is to year. XX the the

Montage ADR Four total $XX garnered to impressive assets approximately by portfolio expected Seasons are to for the Healdsburg rates these XXXX. the Given and X Napa, add of

D.C. and experience we to approximately continues demand quarters renovation of million $X to due EBITDA third rebound, our hotel in-progress Washington, work. displacement As of million in to expect the the and displacement fourth $X in at revenue hotel

to turning Now dividends.

one for consistent routine common prior the has with of reinstated many Our And Board A to are dividend to now as Board quarterly ask and has please that questions with quarter. dividend please preferred call we third for our This base base as the yourself the declared is go payout Series share can to I open $X.XX quarterly the we We that able you so our Series amount per the securities. distributions participants limit Operator, speak Separately, possible. we distributed to question. with that, the also ahead. pandemic.

Operator

with Barclays. of come Our Anthony Powell first line from will Instructions] the question [Operator

Anthony Powell

reported the the I road benches we're and you're and XXXX, to of the So the year. what in in for this as data some that I make kind concentrate on for group. also pent-up you guess, we sure so for back year demand ask seeing get quarter not wanted in people very the quarter for group guess just strong, any seeing I

Bryan Giglia

what lead the the year we During group nights QX, The also to strong. level room the XX,XXX that and tend only of something up in those in be bookings to shorter the we the up in for much this XXXX what be throughout very quarter, -- in tend we've for about stronger were In that quarter XXXX. we seeing year compared picked is when were business quarter, point were to seeing the than for QX bookings in volumes same to in larger second seen of even group Most year and we were term. quarter, XXXX the bookings X,XXX. picked group

QX or were either bookings those QX. of majority the so for And QX,

of We -- about pace lot yet. XX because talked haven't that, a haven't we

window focus realized see something into we that is we think have what the to what into as this that's I based seen. we We move compared we good into into more shorter-term to QX our the that, will QX traditionally on do of because short-term, QX we'll get quarter that And would as QX, start in quarter. production. on booked window expectation and that next

because side, the On But window quarter, as groups events have up the strength continue rate Aaron the shorter talked that -- last minute. demand We a the But we've larger year, for the the in into expect Omicron conditioned and because rates to an have would little to book be we strength strength. QX, to quarter of we bit when seen then a now, said, been that we're also booking XXXX. about be we've bit into little we the do either interesting seen. that will for to is next and and continue a year. rest just move pent-up last see look of environment of are to based corporate sort as groups QX on the in this And that quarter, hit recognize what pent-up in that's quite had there's of year, of comp you you

Operator

come Duane of Pfennigwerth ISI. the Your line from with Evercore question next will

Duane Pfennigwerth

to comment longer think you you how term to looking are from be portfolio sell? potential shape just forward? what on continue the there sales Can may beyond attributes geography, San Francisco and here? markets you your the do asset of recover, As to are about looking going How you assets assets like

Bryan Giglia

Okay.

proceeds a group We're mix have resort non-long-term we of resorts more on capital transient JVP part San what basis growth, transient high much So capital hotels. than sold were now, million had quality, higher into at Since XX% run much our we of Right Diego. of strategy. very healthier those rate to what be when roughly and always at previously roughly about $XXX allocation quality, portfolio, now our hotels group, business we you we've is at portfolio mainly leisure, and look XX% our then and a the million the than XX% going into and balanced of higher recycling mix looking redeployed a $XXX XXXX, going pandemic.

where portfolio. forward, future The need the future sell a in As to bottom there's is no sales of market we values are opportunistic look improve harvest -- portfolio way sales redeploy then tax-efficient the we private and off be in assets gains to be new will additional will we position. realized fantastic into the growth. All can asset opportunities those a see quality where

-- have higher or proceeds take in advantage to of do those Now from we of redeploy portfolio, in assets we could that resort come growth because can is that go take look brought from achieve La will can key assets them that those and be from advantage did and we the our where are more urban take future internal opportunistic, dynamics growth. they assets, better market what find a market we that come other Jolla, to at a balance either price, come is hold we've of growth sales we think The as and either back some use than that's can assets higher value value can clearing and then the the past too. those done and

there's Francisco or what be transient end asset to pace. a has we're recovery assets to San your good we where at of use the call where either question and could group Boston shock to what market look a constrained. market. portfolio very believe still more -- deploy continues it velocity you in that's So don't bookings, life in, XXXX. that long-term bookings, future. still we just When a at rebounding interesting several quarters special can different San saw supply go different timing But it's grow I the an is anyone. our a long way in at To fantastic is that's situation think to the where them. acceleration investment be Francisco, a we've the much we of like we'll specific a it of be thesis this is markets thing it about similar having seen ago. to different to to the The It going

but Francisco from the of San been good, meaningful provide So expect quarters our view year a we to it is that for to is acceleration next line on both and the and growth, a and coming rest and into years over bottom slower year. top recover, line this the it's

Operator

next come Street. from line of question Green with the Your Darling Chris will

Chris Darling

the market has Bryan, markets, the to also out views on to fears we've some fundamentals macro and the in accelerate, your continuing some but more X think past X get evolved choppiness how or seen I'm transaction months. hoping Obviously, there. I over are there's debt

get So views how just evolved. valuations curious to your on

Bryan Giglia

Sure. I Robert add start -- that on in Why and then I'll don't can also.

market, So There point. flow cash factor. have exactly that market increasing, yes, to are transaction increases you availability, but have your debt rate either or have the X offsetting the and where interest operations you through the factors then competing you

for For up, hotel been primary in then market over a and CMBS owners, hotel time lack where hotel the over private of market mechanism come CMBS if term, the points it's we'll is seizes it, funding slows better And going time, matured over for the years, at decade, back significantly and a as you that look the owners, there's back. transactions. down is especially

amount I pace That I in where of absolutely going fair slow out is typically of uncertainty in is than points now less see is it down we're transactions transactions. the think still I done. get there one a market of efficient think be. those -- we'll that right to there would

at the it much again than always has then of it at to done, continue as will things rates back will that And point. an come and of then we at debt of saw the at the to point year. hotels be transactions impact be cash the slower other and what there a this to will get flow beginning the will flow and offsetting a legs I are start performance now and We're can think factors that, absolutely several interest and that its pricing back. that other pace the But economic typically really until factor that. concerns hotels market of where market

any, to I that think a the cloudy in be Robert? little will it's impact if environment. current going probably have bit what, on

Robert Springer

Yes. transactions, larger I there's challenges Well a add. the think on agree. will said, don't think, debt slow finance. think in as pointed the Obviously, I to have impact see allocation. in slowdown will Bryan transactions markets I in definitely the down we especially decisions much out, do as an they're just transactions. movements do REITs will harder making markets capital as also are to equity I

down So much the slow it's we here impact a we that impact still on said, as will expect recovery Bryan term, intact. but very than that there. values is And statement think we do feel more the in a from lodging or shorter-term near things of more longer-term

Operator

Truist from come with line Patrick Securities. will question of next Our Scholes the

Patrick Scholes

on higher-end staying the customer back of again, demand or from demand call, namely over pressure With to resorts did well instead Europe some hot that for that Florida opening the up Western X, to resorts. Any would pressure seen choosing on in go exceptionally domestically? look last year you of or to have any I Europe what resorts,

Aaron Reyes

I see any has from little seen into in July, STAR good been there. bit. on Maui, across the fill we Key was demand, we able at rates rate that portfolio in side a more the West to a to it's impact side, look places, I market businesses where little that market's group and look that the the there's bit. of a a when one the the group a some bit resorts, other the we've QX hotel late granted hotel, hard you if summer It with dip of on you data, at occupancy But Rates amount business look of leisure. that pressure during the at a for and handful that's down are to still you has strength have think occupancy, -- on businesses of Patrick. where been a it. little we the summer portfolio to also see mean, QX, some up, QX, or go that continue But we incentive look when lot up. up, the Yes,

of to so the to And of that weeks strength. comes look we couple start year an we and schools rest to as as market, the as end summer over in next And earlier out the continue good see look year. seems QX we hotels. end Napa are and demand QX up. both earlier really every -- are those still hotels into remember, and we and And see building When QX, into at QX good of ramping

than we're especially layered business they doing but group so to will little base, still crush to starting before high remember it. of compress the that both because a Four Montage get we're stabilization which us the hoping allow behind where Montage rates. season those are to during group at but will on, Four they're Seasons we -- good during a were is building then away from And we Seasons, see later underwrote and us, be ways the allow and hotels, when open we and open hotels them. Those as opened they

takes continue we I to as would year. as than that QX. Key optimistic year. get bit like very West And we're business transient expect for Hawaii, into later We the a book for of strong to the looking rest is you It longer imagine. that the little said,

Operator

Katz with Our next David from come line of will Jefferies. the question

David Katz

you so that we available about in and now think that of expanding or slowdown something like about other us return given what conditions just in could that sounds the just would have the wind is all up capital. you your the commentary update with availability how challenging availability the in So or some underwriting for terms of a of channel properties, Was it square would took that? or the how that

Bryan Giglia

We our not existing with credit partners a as a bank for going thank allowing the debt, on, So said, that through our actually so we gets but and time of the the Aaron acquisition did have after we tighter, term to capital at little process credit debt. extending $XXX the only again, have want Diego where on to and expand our facility JV drawn facility and the loan expand interest. -- Confidante or million We us point. San did in about period

today something capacity and be adding because have line. add little getting to deploy times, especially David, now by acquire. to additional to -- that line access our of and assets capacity recycle pointed the million sometimes bit do us out the taking It nimble to more dislocation others us dislocation, $XXX a the then if be loans might why there's we constrained. access some not out the in or allows today when That's So have where we a so market to access from have go find the to full might be allowed difficult. and pay important are term fully other where them additional $XXX in where is having line, past it's certain you've we that debt can the we there not now it where to million, draw, a or off have we it replenish line ahead now more capacity, undrawn to But absolutely is. is where market this on without to but debt to term

the for thought to go draw, but longer-term not importantly, only to And future into we to more placement a it find line opportunities. to and that important very permanent line why replenish deploy be more or so able that that's was

Operator

Bank. will line from of question with Our Deutsche the Chris next come Woronka

Chris Woronka

to think at But can rates don't a Question potential. call of as are guys to had a that think variable overall is kind situation down of rate rates, more, to a on we a they're drove call want a now it. QX, peak? I top, you you do is further behind there's know because hotels more of but potential. inflation in potentially back close couple we recovery up a adding going kind on bit were lot get on I to in top just forward, you're time catching of if different I look it at are still ways and one a expansion little more or when occupancy margin expense margin your And where you getting add and growth,

Bryan Giglia

down continued margin, margins it still Well, quarter-over-quarter QX XXX-plus we've room -- San at a be Francisco look what And and large seen that it on should There's and and expectations to QX weighing on point based story in for if is be. as will and largest the acceleration on correct. your where next absolutely normalizes basis. hotel a you our back margin would Francisco, year. help in very San QX a into

what XXX and along view compared said achieve expect basis XXX to we margins to all to we points Our is on improvement of 'XX.

portfolio are, as cuts the rate sort stall throughout cost said, they have. obviously has rates bit, helped if of or where Even that plateau quite or you margins a

Other to that have costs, fixed the it menu, we I different decent X% this think control of to pretty when offset the then been we taxes, it couple look we to larger maybe year. been fighting either beverage kind thought be determined this a those And food you same a ways costs have see sometimes at labor other actually also. the the cost of where less the real we've side make are will on we closer and range run, through would to taxes sure able little with long those I by year. estate pricing costs think over be that in real also being of components, able estate in of X%, X%

we're the increase up we put has in way But additional big volumes. something and cost normal we are to X%, savings several about the I last on normalize side think been years. area. running, the been hotels over at some place look and in back the we efficiencies way beverage food a the Insurance that that's other once the X% and

feel there as lot of that we said, good have parts. to While you margins still path moving we a normalize. are, We better a once

Operator

James. Raymond will line from with Bill Our Crow next come question the of

Bill Crow

ones in Any material quarter? A of attrition cancellation quick here. or second fees the collected couple

Bryan Giglia

probably Did -- Bill We -- another Yes. you have can one,

Bill Crow

for Sure. wondering starting shape quarter the of to overall. really important group And in quarter just the San up? that's specifically how I outlook, typically Yes. and that's mean next I'm the Francisco a year first year.

Bryan Giglia

Okay.

had little call quarter would X% the you when of quarter, the one million So X%, on million to, cancellations and Omicron there. normally we of compared if X.X%, million have the around in you portfolio million $X.X cancellations to like [$X] of Cancellations, been impact, remember for $X.X the In about it, $X.X XXXX. second first back quarter bit first go cancellations. the saw we

the basis. a expectations million a going that, few the back on were that's normalize is year to our of for -- to $X.X rest there quarterly So

I'll over been point. year-over-year So Francisco been that fantastic from good supplemental San has San in -- in from but financials to we've pickup market get that material. growth second. up there a legal. we We've We've very that to still but turn Francisco, nothing growth strong. into just one-offs, a couple far the start, in seen and also absolutely a quarter, Chris seen has we to 'XX, this lagged it's the our you see as seen But got can definitely as of business second transient and In

trajectory the is are quarter, I rates know Francisco year, on Chris, definitely you in story current do have? San the the into looking So improving. up. first the next

Chris Ostapovicz

has what in it Bryan especially certainly citywide in side. thought seen the performed than not had much When as we've on QX, past. we certainly Francisco, been what consider the in, mentioned, San has there you going the production rate better

And confident care activity. 'XX Omicron there canceled. of impact QX better was citywide we thing part fellow I the to We specifically, the in pretty expect other 'XX, cancellation that health much obviously, that at and look we we're of last JPMorgan kind than have don't with the obviously going a the QX at we right than is As and us -- now, received. the but going second from fourth to a our we most third well into going continue room we on for of what our going And the better very now, renovation And XXXX. rate see expected are have -- quarter rooms traction renovated even right selling had we all remember quarter.

fairly speaking. perform we're QX, relatively that well So we'll confident in

Operator

question comes with from Our Smedes Rose of Citi. next line the

Smedes Rose

I to thinking the business consensus that to to since the that wanted NAV. needs to how discount expect you sort forward $X.XX reflects steep here about would Does year-end? then a And going pretty confidence little do to at trade something just in need continue program is And of that bit you're the us you reflect distributed? return of that ask to at share put taxable think about true-up be in or just some a back income least dividend. at maybe you you still about sort just help repurchase capital

Bryan Giglia

would the policy dividend X in past believe today, or be And any producing X and so taxable have assets taxable X function on the true-up so support of a far the way we then as always the the then of dividend the dividend their income support dividend as that. the the we're losses based at and trailing NOLs taxable through hotels our a flow right to sufficient back, that we from now on hotels dividend. ramp the the today we hotels that for stand group where $X.XX are quarter is have Where up you looked income to of of dividend had cash trailing stand and sale the comes And from gains performance income we've or base dividend even standpoint, pay that we basis, quarters providing the have. come is that in rents Where is on and trailing dividend seen dividend. and a on we to we enough that

as we still bring want it the we we balance like group be remain capital on leverage of some more we our back started any by capacity balance. capital, balance to balance deploy be to portfolio that. our and want tried and we lessening repurchase that We comes that in forward, to in leisure, on dividends areas as sure to other a XX% make sheet other our look and some urban think XX% our but now focused things healthy business And more obviously we return between opportunities also. see just to we of dividends capital, that, balanced our when see into dependence on those we resorts in -- capital true-up to needs at share group, improve, to use the will shareholders, XX% of balance have We transient. much bringing doing when capital our based returning we in in use the then so of by being do sheet, of way in future Going deploy where can bringing return and we we've and to

capital. as confident, those, continue renovation, sure company flow 'XX we've cash in-place but between XX% the sequenced we're and probably we -- now, we're under in it as acquired And hopefully, we has sub use that So and way return we cash we have which multiple to acquiring levers a as good just over flow, have growing making XXx then things go our interest improved, things Diego, balance we'll now. San in then multiple can it layering which the the over the with

share current our cash to to and good balance repurchase that's return then look dividends capital shareholders. we'll And So to flow.

Operator

will Bellisario Baird. come from Michael the Our with final question of line

Michael Bellisario

have questions. I X

other. them the quick. First ask one is very both I'll

net said know recent pro any to one, or softness see you picture the forma calculation what could for bigger you up slowing, you're emerge, were And to signs but customer seeing you'd Just share if of then see transactions. some you see leverage you cracks think not an do were markets terms have first? segments that guys segments, that what in of I adjusted updated you fundamentals. pop or

Bryan Giglia

Aaron wrong. I'll me don't correct I'm can a I where Why the leverage take -- then crack Okay. at and

now. So a tricky leverage right is little

whatever think up, renovated today. continued which short-term that by it's some ramp wine use left the assets best was flow some Confidante. still said place of the is them. in in country then say it in the contribute look I we at once It way probably and have obviously just doing will ramp to normalization less let's We'll X cash have that

we think stabilized in year be of XX% said kind would somewhere range. I our the

between probably preferred you X take a plus is X.Xx EBITDA, look and you somewhere to and leverage. our all portfolio net if So debt at that

it pro it of but do I the because earnings you Confidante, current in of fair So the that's the power portfolio. look forma-ing a that to a that, way little at think is have? Aaron represents

Aaron Reyes

that. to Yes, add Mike, just to

the you in forma neighborhood think about the certainly Bryan, pro think, as I adjustments.

stabilization that but If as a just the the some something that look in current basis, you'd X that to on financial pretty, with and attractive adjust see statements of on it's supplemental, handle it's we've assets of you that the the for on very some face provided you actually would of only level. debt-to-EBITDA certainly, new get our you leverage information manageable sub-X% of then net the at a

Michael Bellisario

your if of to what's the where Yes. And cracks? -- to there first, will be crack going then cracks question

Bryan Giglia

somewhere have at for real Europe with we our going Wailea, portfolio, When focus capital places and example -- have maybe we of demand we on look the were some that as and our to well, okay, it and families an starts all or drivers multiple option take that now try estate, of, to Wailea the else.

Canada. to maybe some doesn't, international of while doesn't back of more X or our have travelers. we month traveler room But Maui come a X% Hawaii to recently couple of move a from just Asian inbound okay, those, U.S. that Oahu, more or X% that's And some So normalized -- then an also up opened historic there. ago nights

seen we've so quick. back travelers And Canadian come those

other we lot inbound. a markets, haven't seen of international So

markets drive just really years. over would that we've really to confined other secondary go we or in. the of travelers general, that the that don't lodging last X.X U.S. of exposure but I would be able because concern much compression at had be the or there's the portfolio that resort I can look when When and in to come rate probably push this elsewhere, been tertiary this, have and travelers have rate think the So also market areas

it some Key to to full, others. the want you Florida, If tertiary more secondary go of feel you're those And to that the to where start markets So seeing you or be to first. markets. are would feel going to you it to of the if probably want Miami, will to West, start go primary out then those to I That's go some than more there compresses guess we want it cracks, markets. should and markets other it

Operator

will closing now for over the Giglia any Bryan remarks. turn to call I back

Bryan Giglia

everyone we forward that and break has and soon. to wanted get the you conferences thank the to look and in everyone summer Thank good a for school back all you. hope I kids those company, seeing to interest at

Operator

gentlemen, for that and Thank meeting. all does today's you Ladies conclude joining.

You may now disconnect.

Sunstone Hotel Investors (SHO) 4 Aug 222022 Q2 Earnings call transcript