ARGUS Downgrades Sunstone Hotel Investors (SHO) to Sell
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ARGUS downgrades Sunstone Hotel Investors Inc. (NYSE: SHO) from Hold to Sell, based on a weakened economy and lodging industry.
ARGUS analyst says, "In 2008, we project lower returns from renovated properties and think the tight credit market will limit the number of acquisitions Sunstone can make. Sunstone is likely to be unable to purchase large portfolios of hotels at a discount as it has in the past, but rather is likely to buy individual properties at higher prices to fuel its growth. We think the company's debt level is likely to restrict its ability to acquire additional upscale properties in urban markets. We expect growth in overall lodging industry demand to slow as leisure travel likely weakens. In addition, we are concerned about additional supply in some of Sunstone's markets, particularly San Diego and other parts of California. On a more positive note, we expect the current credit crunch to restrict construction of new (competing) hotels."
Sunstone Hotel Investors, Inc. is a real estate investment trust (REIT).
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