Sunstone Hotel Investors (SHO) Reports In-Line Q3 EPS, Revenues Beat

Sunstone Hotel Investors (NYSE: SHO) reported Q3 EPS of $0.12, in-line with the analyst estimate of $0.12. Revenue for the quarter came in at $281.64 million versus the consensus estimate of $278.35 million.

• Net income decreased 63.4% to $33.5 million. Excluding the effect of the four hotels sold during the third and fourth quarters of 2018, net income would have decreased 12.0%.
• Income attributable to common stockholders per diluted common share decreased 68.4% to $0.12. Excluding the effect of the four hotels sold during the third and fourth quarters of 2018, income attributable to common stockholders per diluted common share would have decreased 14.3%.
• 21 Hotel Total Portfolio RevPAR increased 0.9% to $201.93.
• 20 Hotel Comparable Portfolio RevPAR increased 0.9% to $202.57.
• 20 Hotel Comparable Portfolio Adjusted EBITDAre, excluding prior year property tax adjustments, net decreased 1.5% to $85.8 million.
• 20 Hotel Comparable Portfolio Adjusted EBITDAre Margin, excluding prior year property tax adjustments, net decreased 100 basis points to 30.8%.
• Adjusted EBITDAre, excluding noncontrolling interest decreased 4.0% to $81.2 million. Excluding the effect of the four hotels sold during the third and fourth quarters of 2018, Adjusted EBITDAre, excluding noncontrolling interest would have decreased 2.3%.
• Adjusted FFO attributable to common stockholders per diluted share decreased 3.3% to $0.29. Excluding the effect of the four hotels sold during the third and fourth quarters of 2018, Adjusted FFO attributable to common stockholders per diluted share would have remained constant at $0.29.

John Arabia, President and Chief Executive Officer, stated, "We are pleased with our third quarter operating results and earnings, which met or exceeded our previously provided guidance despite moderating revenue growth and a challenging expense environment. Our favorable geographic concentration combined with the quality and condition of our hotels resulted in above average revenue growth compared to the industry average of the Luxury and Upper Upscale hotels in the top 25 markets."

Mr. Arabia added, "Subsequent to the end of the quarter, we were able to take advantage of a favorable transaction market and dispose of the leasehold interest in the Courtyard by Marriott Los Angeles at a trailing cap rate considerably lower than that implied by our current share price. This transaction not only makes sense financially, but further concentrates our 20-hotel portfolio in Long-Term Relevant Real Estate. We expect to distribute the gain on this sale to our stockholders through our fourth quarter dividend. Additionally, we retain significant liquidity that provides us with the ability to create long-term shareholder value through the continued repurchases of our common stock or through the acquisition of additional Long-Term Relevant Real Estate."

For earnings history and earnings-related data on Sunstone Hotel Investors (SHO) click here.

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