SUNSTONE HOTEL INVESTORS REPORTS RESULTS FOR THIRD QUARTER 2026

Higher full-year earnings expectations accompany common and preferred stock repurchases totaling $196.9 million before expenses through November 5.

Rhea-AI Summary

Sunstone Hotel Investors (SHO) reported third-quarter net income attributable to common stockholders of $38.7 million, reversing a year-earlier loss. Diluted earnings were $0.21 versus a $0.02 loss. Revenue per available room (RevPAR) rose 11.4% to $235.22, while adjusted funds from operations per diluted share increased 17.6% to $0.20.

The company raised its full-year outlook to net income of $92 million to $97 million and adjusted funds from operations of $1.00 to $1.03 per diluted share. Repurchases of common and preferred stock totaled $196.9 million before expenses through November 5. Quarter-end liquidity was $817.9 million; total debt was $955.0 million, with no maturities until January 2028. Sunstone expects approximately $105 million to $115 million in portfolio investment during 2026. A $0.09 common dividend is payable January 15, 2027, to holders of record December 31, 2026.

39 points · 1 major

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0 major · 4 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Major point. Forward-looking: it has not happened yet and may not happen.Full-year net income guidance increased to $92 million–$97 million from $79 million–$89 million.
• Moderate pointThird-quarter common-stockholder earnings reached $38.7 million, or $0.21 diluted, versus losses of $2.9 million, or $0.02.
• Moderate pointThird-quarter RevPAR increased 11.4% year over year to $235.22.
• Moderate pointThird-quarter adjusted EBITDAre, an adjusted real-estate earnings measure, increased 8.8% to $54.5 million.
• Moderate pointThird-quarter adjusted funds from operations per diluted share increased 17.6% to $0.20.
• Moderate pointCommon-stock repurchases through November 5 totaled 13,748,527 shares at $10.43 average, costing $143.4 million before expenses. 6.2% of market cap
• Moderate pointQuarter-end liquidity totaled $817.9 million, including full availability under the $500.0 million revolving credit facility.

32 minor points

• Minor pointThird-quarter net income increased to $40.9 million from $1.3 million a year earlier.
• Minor pointThird-quarter occupancy rose 460 basis points to 72.7%; average daily rate increased 4.4% to $323.55.
• Minor pointThird-quarter total RevPAR, including other hotel revenue per available room, increased 10.5% to $394.97.
• Minor pointRevPAR excluding Andaz Miami Beach rose 10.3% to $238.48; total RevPAR increased 9.6% to $399.89.
• Minor pointOccupancy excluding Andaz Miami Beach rose 410 basis points to 73.8%; average daily rate increased 4.2% to $323.15.
• Minor pointHotel adjusted earnings margin excluding Andaz Miami Beach increased 50 basis points to 26.7% in the third quarter.
• Minor pointThird-quarter adjusted funds from operations attributable to common stockholders rose 17.1% to $37.2 million.
• Minor pointNine-month net income increased to $85.5 million from $17.4 million.
• Minor pointNine-month common-stockholder earnings rose to $80.6 million, or $0.43 diluted, from $5.2 million, or $0.03.
• Minor pointNine-month RevPAR increased 10.8% to $249.34; total RevPAR increased 9.9% to $416.18.
• Minor pointNine-month occupancy rose 390 basis points to 74.4%; average daily rate increased 5.0% to $335.13.
• Minor pointNine-month RevPAR excluding Andaz Miami Beach increased 5.1% to $245.25; total RevPAR rose 4.8% to $411.07.
• Minor pointNine-month occupancy excluding Andaz Miami Beach rose 150 basis points to 74.6%; average daily rate increased 3.0% to $328.75.
• Minor pointNine-month adjusted EBITDAre increased 10.5% to $198.9 million.
• Minor pointNine-month adjusted funds from operations attributable to common stockholders increased 13.5% to $146.3 million.
• Minor pointNine-month adjusted funds from operations per diluted share increased 19.7% to $0.79.
• Minor pointSeries H repurchases through November 5 totaled 1,234,583 shares at $21.52 average, costing $26.6 million before expenses.
• Minor pointSeries H average repurchase price reflected a 13.9% discount to liquidation value.
• Minor pointSeries I repurchases through November 5 totaled 1,308,051 shares at $20.56 average, costing $26.9 million before expenses.
• Minor pointSeries I average repurchase price reflected a 17.7% discount to liquidation value.
• Minor pointRemaining stock-repurchase authorization was $310.6 million as of November 5, 2026.
• Minor pointDebt maturities do not begin until January 2028.
• Minor point. Forward-looking: it has not happened yet and may not happen.Portfolio investment totaled $76.6 million through September; Sunstone expects approximately $105 million to $115 million for 2026.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year diluted common earnings guidance increased to $0.46–$0.49 from $0.37–$0.42.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year RevPAR growth guidance increased to 9.5%–10.5% versus 2025, from 7.0%–9.0%.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year total RevPAR growth guidance increased to 8.5%–9.5% versus 2025, from 7.0%–9.0%.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year adjusted EBITDAre guidance increased to $254 million–$259 million from $245 million–$255 million.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year adjusted funds from operations guidance increased to $184 million–$189 million from $174 million–$184 million.
• Minor point. Forward-looking: it has not happened yet and may not happen.Full-year adjusted funds from operations per diluted share guidance increased to $1.00–$1.03 from $0.93–$0.98.
• Minor point. Forward-looking: it has not happened yet and may not happen.Expected full-year diluted weighted average shares decreased to 183,500,000 from 187,000,000 in prior guidance.
• Minor point. Forward-looking: it has not happened yet and may not happen.Expected corporate overhead expense is approximately $19 million, $0.5 million below the prior midpoint, excluding specified costs.
• Minor point. Forward-looking: it has not happened yet and may not happen.Expected preferred dividends are approximately $15 million, $0.5 million below the prior guidance midpoint.

Negative

• Moderate pointTotal debt was $955.0 million; its 5.22% weighted average rate includes swaps entered into in October 2026.
• Minor pointNine-month hotel adjusted earnings margin excluding Andaz Miami Beach declined 20 basis points to 28.7%.
• Minor pointHilton Key West Resort & Marina was under renovation during the third quarter, affecting hotel margins.
• Minor point. Forward-looking: it has not happened yet and may not happen.Expected full-year interest expense is approximately $46 million to $49 million, including financing-cost amortization and noncash derivative effects.

News Explained

Completed buybacks changed the common ownership base; $310.6 million of remaining authorization is not reported as spent.

Sunstone reports completed repurchases of 13,748,527 common shares through November 5, 2026; common shares outstanding were 176,575,057 at September 30, 2026, versus 189,709,516 at December 31, 2025, a lower reported share count that changes the ownership base for existing holders.

As of November 5, 2026, $310.6 million remained under the existing stock-repurchase authorization. That is remaining authorization, not a further purchase the release reports as completed.

Key Figures

Net income attributable to common stockholders: $38.7 million RevPAR: $235.22, up 11.4% Adjusted EBITDAre: $54.5 million, up 8.8% +5 more

Net income attributable to common stockholders

$38.7 million

Q3 2026, versus a $2.9 million net loss in Q3 2025

RevPAR

$235.22, up 11.4%

All hotels in the portfolio, Q3 2026 versus Q3 2025

Adjusted EBITDAre

$54.5 million, up 8.8%

Q3 2026 versus Q3 2025

Adjusted FFO per diluted share

$0.20, up 17.6%

Q3 2026 versus Q3 2025

2026 Adjusted FFO per diluted share guidance

$1.00 to $1.03, up $0.06 at the midpoint

Current full-year guidance versus prior guidance of $0.93 to $0.98

2026 RevPAR growth guidance

9.5% to 10.5%, up 200 basis points at the midpoint

Current full-year guidance versus prior guidance of 7.0% to 9.0%

Common and preferred stock repurchases

$117.8 million

Q3 2026, before expenses

Common stock dividend

$0.09 per share

Authorized November 5, 2026; payable January 15, 2027

Previous Earnings Reports

1 past event · Latest: Aug 06

Same Type 1 event

1. Aug 06

   Q2 earnings report

   24h Move

   -3.3%

   Reported stronger quarterly results and raised full-year guidance; the stock's reported 24-hour reaction was negative.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

revpar, adjusted ebitdare, adjusted ffo, reit

4 terms

revpar technical

"RevPAR for all hotels in the portfolio increased 11.4% to $235.22."

RevPAR, or revenue per available room, is a measure used in the hotel industry to show how much money a hotel earns from each of its rooms over a certain period. It helps investors understand how well a hotel is performing financially, similar to how a store's sales per square foot reveal its profitability. Higher RevPAR indicates better use of resources and stronger financial health.

adjusted ebitdare financial

"Adjusted EBITDAre increased 8.8% to $54.5 million."

Adjusted EBITDA is a measure of a company's earnings that shows its profitability by focusing on core operations, excluding certain expenses or income that are unusual or not part of normal business activities. It provides investors with a clearer picture of how well the company is performing day-to-day, much like evaluating a restaurant's regular sales without counting special event or one-time expenses. This helps investors compare companies more fairly and assess their ongoing financial health.

adjusted ffo financial

"Adjusted FFO attributable to common stockholders per diluted share increased 17.6% to $0.20."

Adjusted funds from operations (FFO) is a measure of how much cash a real estate investment generates from its regular business activities, excluding certain adjustments like accounting items or non-recurring expenses. It provides a clearer picture of the company's ongoing financial health, helping investors understand its true cash-generating ability. Think of it as measuring how much money a store makes from sales, after removing one-time costs or gains, to see its steady income flow.

reit financial

"Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT")"

A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate, like shopping centers, apartments, or office buildings. For investors, REITs offer a way to invest in real estate without having to buy property directly, often providing regular income through dividends. They function like a mutual fund for real estate, making it easier for people to add property investments to their portfolio.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Completes Additional Accretive Common and Preferred Stock Repurchases
Further Increases Full Year Outlook

ALISO VIEJO, Calif., Nov. 6, 2026 /PRNewswire/ -- Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO) today announced results for the third quarter ended September 30, 2026.

Third Quarter 2026 Operational Results (as compared to Third Quarter 2025):

• Net Income (Loss): Net income attributable to common stockholders was $38.7 million, or $0.21 per diluted share, as compared to a net loss attributable to common stockholders of $2.9 million, or $(0.02) per diluted share.
• RevPAR: RevPAR for all hotels in the portfolio increased 11.4% to $235.22. The average daily rate was $323.55 and occupancy was 72.7%. RevPAR excluding Andaz Miami Beach increased 10.3%.
• Total RevPAR: Total RevPAR for all hotels in the portfolio increased 10.5% to $394.97. Total RevPAR excluding Andaz Miami Beach increased 9.6%.
• Hotel Adjusted EBITDAre Margin: Hotel Adjusted EBITDAre Margin, excluding Andaz Miami Beach, increased 50 basis points to 26.7%. Excluding Hilton Key West Resort & Marina, which was under renovation during the quarter, and the impact of one-time items in the current and prior year, margins would have increased approximately 200 basis points.
• Adjusted EBITDAre: Adjusted EBITDAre increased 8.8% to $54.5 million.
• Adjusted FFO: Adjusted FFO attributable to common stockholders per diluted share increased 17.6% to $0.20.

Information regarding the non-GAAP financial measures disclosed in this release is provided below in "Non-GAAP Financial Measures." Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included later in this release.

Bryan A. Giglia, Chief Executive Officer, stated, "Our portfolio performed very well in the third quarter and generated revenue and earnings that meaningfully exceeded our expectations. Our well-located portfolio grew Total RevPAR by over 10% and Adjusted FFO per diluted share by nearly 18%, driven by broad-based strength across demand segments and from the contribution of our recent investments. Given our strong performance in the quarter and our revised expectations for near-term trends, we are once again increasing our full year outlook. While current year fundamentals have been better than expected, we are also encouraged by the trends we are seeing for next year, with robust group pace, further recovery in certain of our markets, and additional contribution from our investment activity."

Mr. Giglia continued, "Our capital allocation activity this year demonstrates the value creation potential of our strategy. By realizing private market values through opportunistic asset sales and redeploying proceeds into the repurchase of nearly $200 million of our common and preferred stock at meaningful discounts, we have increased Adjusted FFO and NAV per share while preserving our leverage profile. Our strong balance sheet and dynamic approach to capital allocation allow us to remain nimble and deploy capital toward the opportunities we believe will offer the most compelling risk-adjusted returns, whether through investments in our portfolio, acquisitions, or the repurchase of our securities."

 

Unaudited Selected Statistical and Financial Data ($ in millions, except RevPAR, ADR and per share amounts).
	Three Months Ended September 30,									Nine Months Ended September 30,
	2026			2025			Change			2026			2025			Change
Net Income	$	40.9		$	1.3		2,993.0	%		$	85.5		$	17.4		392.6	%
Net Income (Loss) Attributable to Common    Stockholders	$	38.7		$	(2.9)		1,416.1	%		$	80.6		$	5.2		1,442.8	%
Net Income (Loss) Attributable to Common    Stockholders per Diluted Share	$	0.21		$	(0.02)		1,150.0	%		$	0.43		$	0.03		1,333.3	%
Total Portfolio Operating Statistics (1)
RevPAR	$	235.22		$	211.15		11.4	%		$	249.34		$	225.00		10.8	%
Occupancy		72.7	%		68.1	%	460	bps			74.4	%		70.5	%	390	bps
Average Daily Rate	$	323.55		$	310.06		4.4	%		$	335.13		$	319.15		5.0	%
Total RevPAR	$	394.97		$	357.35		10.5	%		$	416.18		$	378.54		9.9	%
Operating Statistics, excluding Andaz    Miami Beach (2)
RevPAR	$	238.48		$	216.20		10.3	%		$	245.25		$	233.37		5.1	%
Occupancy		73.8	%		69.7	%	410	bps			74.6	%		73.1	%	150	bps
Average Daily Rate	$	323.15		$	310.18		4.2	%		$	328.75		$	319.25		3.0	%
Total RevPAR	$	399.89		$	364.94		9.6	%		$	411.07		$	392.11		4.8	%
Hotel Adjusted EBITDAre Margin,    excluding Andaz Miami Beach (2)		26.7	%		26.2	%	50	bps			28.7	%		28.9	%	(20)	bps
Adjusted EBITDAre	$	54.5		$	50.1		8.8	%		$	198.9		$	180.0		10.5	%
Adjusted FFO Attributable to Common    Stockholders	$	37.2		$	31.7		17.1	%		$	146.3		$	129.0		13.5	%
Adjusted FFO Attributable to Common    Stockholders per Diluted Share	$	0.20		$	0.17		17.6	%		$	0.79		$	0.66		19.7	%

(1)	Includes the 13 hotels owned by the Company as of September 30, 2026.
(2)	Includes the 13 hotels owned by the Company as of September 30, 2026 except Andaz Miami Beach due to its renovation activity during 2025.

Recent Developments

Stock Repurchase Program. During the third quarter of 2026, the Company repurchased an aggregate amount of $117.8 million, before expenses, of its common and preferred stock. From the start of this year through November 5, 2026, the Company has allocated a total of $196.9 million, before expenses, into repurchases of its common and preferred stock. The Company believes this repurchase activity has been completed at a discount and generated significant value for its stockholders. As of November 5, 2026, the Company has $310.6 million remaining under its existing stock repurchase program authorization.

• Common stock: During the third quarter of 2026, the Company repurchased 9,368,434 shares at an average purchase price per share of $10.99 for a total repurchase amount before expenses of $103.0 million. From the start of this year through November 5, 2026, the Company has repurchased 13,748,527 shares at an average purchase price per share of $10.43 for a total repurchase amount before expenses of $143.4 million. The average purchase price per share represents a substantial discount to consensus estimates of net asset value and implies a highly attractive valuation multiple on the Company's stabilized cash flow.
• Series H Cumulative Redeemable Preferred Stock: During the third quarter of 2026, the Company repurchased 330,119 shares at an average purchase price per share of $22.30 for a total repurchase amount before expenses of $7.4 million. From the start of this year through November 5, 2026, the Company has repurchased 1,234,583 shares at an average purchase price per share of $21.52 for a total repurchase amount before expenses of $26.6 million. The average repurchase price per share reflects a 13.9% discount to the preferred stock liquidation value.
• Series I Cumulative Redeemable Preferred Stock: During the third quarter of 2026, the Company repurchased 344,439 shares at an average purchase price per share of $21.69 for a total repurchase amount before expenses of $7.5 million. From the start of this year through November 5, 2026, the Company has repurchased 1,308,051 shares at an average purchase price per share of $20.56 for a total repurchase amount before expenses of $26.9 million. The average repurchase price per share reflects a 17.7% discount to the preferred stock liquidation value.

Balance Sheet and Liquidity Update

As of September 30, 2026, the Company had $317.9 million of cash and cash equivalents, including restricted cash of $81.4 million. The Company ended the third quarter with $817.9 million of liquidity, including available cash and full availability under its $500.0 million revolving credit facility. The Company had total debt of $955.0 million with a weighted average interest rate of 5.22%, including the effect of the Company's interest rate derivative swaps entered into in October 2026, and no debt maturities until January 2028.

Capital Investments Update

The Company invested $76.6 million into its portfolio during the first nine months of 2026. The Company currently expects to invest approximately $105 million to $115 million into its portfolio in 2026, with a majority of the investment related to the previously completed renovation of the meeting space at Hilton San Diego Bayfront, renovation work at Hilton Key West Resort & Marina, storm-related restoration work at Wailea Beach Resort, and various other projects across the remaining hotels in the portfolio.

2026 Outlook

The Company is updating its 2026 outlook based on Management's expectations and information available as of the date of this release. Geopolitical developments, changes in economic policies, changes in the health of the economy, or changes in business and consumer sentiment, among other factors, could lead to further revisions to the Company's outlook or cause the Company to withdraw its outlook altogether.

For the full year 2026, the Company now expects:

Metric ($ in millions, except per share data)		Prior Full Year 2026 Guidance (1)		Current Full Year 2026 Guidance (2)		Change in Full Year 2026 Guidance Midpoint
Net Income		$79 to $89		$92 to $97		+$10.5
Net Income Attributable to Common Stockholders per Diluted Share		$0.37 to $0.42		$0.46 to $0.49		+$0.08
RevPAR Growth (3)		7.0% to 9.0%		9.5% to 10.5%		+200 bps
Total RevPAR Growth (3)		7.0% to 9.0%		8.5% to 9.5%		+100 bps
Adjusted EBITDAre		$245 to $255		$254 to $259		+$6.5
Adjusted FFO Attributable to Common Stockholders		$174 to $184		$184 to $189		+$7.5
Adjusted FFO Attributable to Common Stockholders per Diluted Share		$0.93 to $0.98		$1.00 to $1.03		+$0.06
Diluted Weighted Average Shares Outstanding		187,000,000		183,500,000		-3,500,000

(1)	Reflects guidance presented on August 6, 2026.
(2)	Detailed reconciliations of Net Income to non-GAAP financial measures are provided later in this release.
(3)	RevPAR and Total RevPAR Growth reflect comparisons to full year 2025 and include all 13 hotels owned by the Company as of the date of this release. Andaz Miami Beach is expected to contribute approximately 450 basis points of RevPAR and Total RevPAR growth.

Full year 2026 guidance is based in part on the following full year assumptions:

• Full year interest and other income (excluding amounts received from our insurance programs as reimbursement for restoration of property damage) of approximately $7 million to $8 million. This range is unchanged from the Company's prior estimate.
• Full year corporate overhead expense (excluding deferred stock amortization and management transition costs) of approximately $19 million. This estimate is $0.5 million lower than the midpoint of the Company's prior range.
• Full year interest expense of approximately $46 million to $49 million, including approximately $4 million in amortization of deferred financing costs and $7 million of noncash reduction to interest expense on derivatives. Excluding the noncash interest on derivatives, this range is unchanged from the Company's prior estimate.
• Full year preferred stock dividends of approximately $15 million, which includes the Series G, H, and I cumulative redeemable preferred stock. This estimate is $0.5 million lower than the midpoint of the Company's prior range.

Dividend Update

On November 5, 2026, the Company's Board of Directors authorized a cash dividend of $0.09 per share of its common stock. The Company's Board of Directors also authorized cash dividends of $0.937500 per share payable to its Series G cumulative redeemable preferred stockholder, $0.382813 per share payable to its Series H cumulative redeemable preferred stockholders, and $0.356250 per share payable to its Series I cumulative redeemable preferred stockholders. The common and preferred dividends will be paid on January 15, 2027 to stockholders of record as of December 31, 2026.

The amount of any future quarterly dividends will be determined by the Company's Board of Directors after considering long-term operating projections, expected capital requirements, and risks affecting the Company's business.

Supplemental Disclosures

Contemporaneous with this release, the Company has furnished a Form 8-K with unaudited financial information. This additional information is being provided as a supplement to the information in this release and other filings with the SEC. The Company has no obligation to update any of the information provided to conform to actual results or changes in the Company's portfolio, capital structure or future expectations.

Earnings Call

The Company will host a conference call to discuss third quarter results on November 6, 2026, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time). A live webcast of the call will be available via the Investor Relations section of the Company's website at www.sunstonehotels.com. Alternatively, interested parties may dial 1-833-461-5787 and reference meeting ID 981 061 229 to listen to the live call. A transcript of the webcast will also be archived on the website.

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT") that as of the date of this release owns 13 hotels comprised of approximately 6,200 rooms, all of which are operated under nationally recognized brands. Sunstone's strategy is to create long-term stakeholder value through the acquisition, active ownership, and disposition of well-located hotel and resort real estate. For further information, please visit Sunstone's website at www.sunstonehotels.com. The Company's website is provided as a reference only and any information on the website is not incorporated by reference in this release.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will" and other similar terms and phrases, including opinions, references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks, uncertainties, and other factors include, but are not limited to, those described in the sections entitled "Special Note Regarding Forward-Looking Statements," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2025 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2026, and other risks and uncertainties associated with the Company's business described in its filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All forward-looking information provided herein is as of the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

This release should be read together with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies of these reports are available on our website at www.sunstonehotels.com and through the SEC's Electronic Data Gathering Analysis and Retrieval System ("EDGAR") at www.sec.gov.

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: earnings before interest expense, taxes, depreciation and amortization for real estate, or EBITDAre; Adjusted EBITDAre (as defined below); funds from operations attributable to common stockholders, or FFO attributable to common stockholders; Adjusted FFO attributable to common stockholders (as defined below); hotel Adjusted EBITDAre; and hotel Adjusted EBITDAre margins. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same as we do. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

We present EBITDAre in accordance with guidelines established by the National Association of Real Estate Investment Trusts ("Nareit"), as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." We believe EBITDAre is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. Nareit defines EBITDAre as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.

We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance, and that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income, is beneficial to an investor's complete understanding of our operating performance. In addition, we use both EBITDAre and Adjusted EBITDAre as measures in determining the value of hotel acquisitions and dispositions.

We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to Nareit's definition of "FFO applicable to common shares." Our presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current Nareit definition, or that interpret the current Nareit definition differently than we do.

We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance and may facilitate comparisons of operating performance between periods and our peer companies.

We adjust EBITDAre and FFO attributable to common stockholders for the following items, which may occur in any period, and refer to these measures as either Adjusted EBITDAre or Adjusted FFO attributable to common stockholders:

• Amortization of deferred stock compensation: we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels.
• Amortization of contract intangibles: we exclude the noncash amortization of any favorable or unfavorable contract intangibles recorded in conjunction with our hotel acquisitions. We exclude the noncash amortization of contract intangibles because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.
• Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.
• Cumulative effect of a change in accounting principle: from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.
• Other adjustments: we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: lawsuit settlement costs; the write-off of development costs associated with abandoned projects; non-real estate-related impairment losses; property-level restructuring, severance, and management transition costs; pre-opening costs associated with extensive renovation projects; debt resolution costs; lease terminations; property insurance restoration proceeds or uninsured losses; and other nonrecurring identified adjustments.

In addition, to derive Adjusted EBITDAre, we exclude the amortization of our right-of-use assets and related lease obligations as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. We also exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDAre is not consistent with reflecting the ongoing performance of our assets.

To derive Adjusted FFO attributable to common stockholders, we also exclude the noncash interest on our derivatives as we believe that these items are not reflective of our ongoing finance costs. Additionally, we exclude the real estate amortization of our right-of-use assets and related lease obligations (with the exception of our corporate operating lease) as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. We also exclude gains or losses on the redemptions or repurchases of preferred stock, changes to deferred tax assets, liabilities or valuation allowances, and income tax benefits or provisions associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets.

In presenting hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins, miscellaneous non-hotel items have been excluded. We believe the calculation of hotel Adjusted EBITDAre results in a more accurate presentation of the hotel Adjusted EBITDAre margins for our hotels, and that these non-GAAP financial measures are useful to investors in evaluating our property-level operating performance.

Reconciliations of net income to EBITDAre, Adjusted EBITDAre, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders, hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins are set forth in the following pages of this release.

For Additional Information:
Aaron Reyes
Sunstone Hotel Investors, Inc.
(949) 382-3018

 

Sunstone Hotel Investors, Inc Consolidated Balance Sheets (In thousands, except share and per share data)
		September 30,					December 31,
		2026					2025
		(unaudited)
ASSETS
Investment in hotel properties, net		$		2,491,537			$		2,771,180
Operating lease right-of-use assets, net				3,704					4,418
Cash and cash equivalents				236,521					109,189
Restricted cash				81,365					76,531
Accounts receivable, net				39,817					33,662
Prepaid expenses and other assets, net				42,091					34,025
Total assets		$		2,895,035			$		3,029,005
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Debt, net of unamortized deferred financing costs		$		944,032			$		918,086
Operating lease obligations				5,959					7,348
Accounts payable and accrued expenses				52,928					63,146
Dividends and distributions payable				19,547					22,975
Other liabilities				85,968					72,832
Total liabilities				1,108,434					1,084,387
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, 100,000,000 shares authorized:
Series G Cumulative Redeemable Preferred Stock, 2,650,000 shares issued and    outstanding at both September 30, 2026 and December 31, 2025, stated at    liquidation preference of $25.00 per share				66,250					66,250
6.125% Series H Cumulative Redeemable Preferred Stock, 3,644,584 shares issued    and outstanding at September 30, 2026 and 4,545,903 shares issued and outstanding    at December 31, 2025, stated at liquidation preference of $25.00 per share				91,115					113,648
5.70% Series I Cumulative Redeemable Preferred Stock, 2,836,743 shares issued    and outstanding at September 30, 2026 and 3,990,973 shares issued and outstanding    at December 31, 2025, stated at liquidation preference of $25.00 per share				70,919					99,774
Common stock, $0.01 par value, 500,000,000 shares authorized, 176,575,057 shares    issued and outstanding at September 30, 2026 and 189,709,516 shares issued and    outstanding at December 31, 2025				1,766					1,897
Additional paid in capital				2,160,464					2,298,398
Distributions in excess of retained earnings				(603,913)					(635,349)
Total stockholders' equity				1,786,601					1,944,618
Total liabilities and stockholders' equity		$		2,895,035			$		3,029,005

 

Sunstone Hotel Investors, Inc. Unaudited Consolidated Statements of Operations (In thousands, except per share data)
		Three Months Ended September 30,						Nine Months Ended September 30,
		2026			2025			2026			2025
Revenues
Room		$	140,053		$	139,523		$	469,368		$	440,492
Food and beverage			68,601			64,419			221,792			209,573
Other operating			25,064			25,381			79,376			73,095
Total revenues			233,718			229,323			770,536			723,160
Operating expenses
Room			37,818			39,303			122,958			119,272
Food and beverage			50,424			48,717			155,793			150,566
Other operating			7,123			6,337			21,763			18,707
Advertising and promotion			13,083			13,420			41,336			40,758
Repairs and maintenance			10,671			9,954			32,592			29,514
Utilities			7,648			7,832			22,049			21,624
Franchise costs			4,417			4,471			13,962			13,773
Property tax, ground lease and insurance			20,179			19,574			61,734			57,425
Other property-level expenses			27,853			26,926			95,550			88,184
Corporate overhead			6,410			6,970			22,005			24,221
Depreciation and amortization			30,287			33,928			98,724			100,328
Impairment and other losses			—			—			1,639			—
Total operating expenses			215,913			217,432			690,105			664,372
Interest and other income			2,620			3,160			7,944			7,024
Interest expense			(10,729)			(13,412)			(33,788)			(39,258)
Gain (loss) on sale of assets			31,489			—			31,489			(8,751)
Loss on extinguishment of debt			—			(180)			—			(180)
Income before income taxes			41,185			1,459			86,076			17,623
Income tax provision, net			(296)			(137)			(605)			(272)
Net income			40,889			1,322			85,471			17,351
Preferred stock dividends, net of gain on repurchases			(2,196)			(4,262)			(4,844)			(12,125)
Net income (loss) attributable to common stockholders		$	38,693		$	(2,940)		$	80,627		$	5,226
Basic and diluted income (loss) per share
Basic and diluted net income (loss) attributable to common    stockholders per common share		$	0.21		$	(0.02)		$	0.43		$	0.03
Basic weighted average common shares outstanding			181,502			189,253			185,040			195,110
Diluted weighted average common shares outstanding			181,502			189,253			185,212			195,866
Distributions declared per common share		$	0.09		$	0.09		$	0.27		$	0.27

 

Sunstone Hotel Investors, Inc. Reconciliation of Net Income to Non-GAAP Financial Measures (Unaudited and in thousands) Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre
	Three Months Ended September 30,						Nine Months Ended September 30,
	2026			2025			2026				2025
Net income	$	40,889		$	1,322		$	85,471		$	17,351
Depreciation and amortization		30,287			33,928			98,724			100,328
Interest expense		10,729			13,412			33,788			39,258
Income tax provision, net		296			137			605			272
(Gain) loss on sale of assets		(31,489)			—			(31,489)			8,751
Impairment and other losses		—			—			1,639			—
EBITDAre		50,712			48,799			188,738			165,960
Amortization of deferred stock compensation		2,015			1,905			7,461			6,741
Amortization of right-of-use assets and obligations		(233)			(158)			(675)			(458)
Loss on extinguishment of debt		—			180			—			180
(Gain) loss on property damage, net		1,144			(674)			601			(773)
Property-level pre-opening and management transition costs		841			—			959			6,471
Property-level legal settlement costs		—			—			935			—
Management transition costs		—			—			907			1,869
Adjustments to EBITDAre, net		3,767			1,253			10,188			14,030
Adjusted EBITDAre	$	54,479		$	50,052		$	198,926		$	179,990

 

Sunstone Hotel Investors, Inc. Reconciliation of Net Income to Non-GAAP Financial Measures (Unaudited and in thousands, except per share data) Reconciliation of Net Income to FFO Attributable to Common Stockholders and Adjusted FFO Attributable to Common Stockholders
	Three Months Ended September 30,						Nine Months Ended September 30,
	2026			2025			2026				2025
Net income	$	40,889		$	1,322		$	85,471		$	17,351
Preferred stock dividends, net of gain on repurchases		(2,196)			(4,262)			(4,844)			(12,125)
Real estate depreciation and amortization		29,946			33,581			97,696			99,278
(Gain) loss on sale of assets		(31,489)			—			(31,489)			8,751
Impairment and other losses		—			—			1,639			—
FFO attributable to common stockholders		37,150			30,641			148,473			113,255
Amortization of deferred stock compensation		2,015			1,905			7,461			6,741
Real estate amortization of right-of-use assets and obligations		(200)			(130)			(586)			(390)
Amortization of contract intangibles, net		312			315			941			944
Noncash interest on derivatives, net		(2,995)			(495)			(7,080)			668
Loss on extinguishment of debt		—			180			—			180
(Gain) loss on property damage, net		1,144			(674)			601			(773)
Property-level pre-opening and management transition costs		841			—			959			6,471
Property-level legal settlement costs		—			—			935			—
Management transition costs		—			—			907			1,869
Gain on preferred stock repurchases, net		(1,452)			—			(6,637)			—
Income tax related to hotel disposition		361			—			361			—
Adjustments to FFO attributable to common stockholders, net		26			1,101			(2,138)			15,710
Adjusted FFO attributable to common stockholders	$	37,176		$	31,742		$	146,335		$	128,965
FFO attributable to common stockholders per diluted share	$	0.20		$	0.16		$	0.80		$	0.58
Adjusted FFO attributable to common stockholders per diluted    share	$	0.20		$	0.17		$	0.79		$	0.66
Basic weighted average shares outstanding		181,502			189,253			185,040			195,110
Shares associated with unvested restricted stock awards		320			859			405			863
Diluted weighted average shares outstanding		181,822			190,112			185,445			195,973

 

Sunstone Hotel Investors, Inc. Reconciliation of Net Income to Non-GAAP Financial Measures Guidance for Full Year 2026 (Unaudited and in thousands, except for per share amounts) Reconciliation of Net Income to Adjusted EBITDAre
		Year Ended
		December 31, 2026
			Low					High
Net income		$		92,000			$		97,000
Depreciation and amortization				128,000					128,000
Interest expense				47,500					47,500
Income tax provision, net				1,000					1,000
Gain on sale of assets				(31,500)					(31,500)
Impairment and other losses				2,000					2,000
Amortization of deferred stock compensation				9,500					9,500
Property-level pre-opening and management transition costs				2,500					2,500
Property-level legal settlement costs				1,000					1,000
Management transition costs				1,000					1,000
Loss on property damage, net				1,000					1,000
Adjusted EBITDAre		$		254,000			$		259,000

 

Reconciliation of Net Income to Adjusted FFO Attributable to Common Stockholders
		Year Ended
		December 31, 2026
			Low					High
Net income		$		92,000			$		97,000
Preferred stock dividends, net of gain on repurchases				(7,000)					(7,000)
Net income attributable to common stockholders				85,000					90,000
Real estate depreciation and amortization				127,000					127,000
Gain on sale of assets				(31,500)					(31,500)
Impairment and other losses				2,000					2,000
Amortization of deferred stock compensation				9,500					9,500
Property-level pre-opening and management transition costs				2,500					2,500
Property-level legal settlement costs				1,000					1,000
Management transition costs				1,000					1,000
Loss on property damage, net				1,000					1,000
Amortization of intangibles, net				1,000					1,000
Noncash interest on derivatives, net				(7,000)					(7,000)
Gain on preferred stock repurchases, net				(8,000)					(8,000)
Income tax related to hotel disposition				500					500
Adjusted FFO attributable to common stockholders		$		184,000			$		189,000
Net income attributable to common stockholders per diluted share		$		0.46			$		0.49
Adjusted FFO attributable to common stockholders per diluted share		$		1.00			$		1.03
Diluted weighted average shares outstanding				183,500					183,500

 

Sunstone Hotel Investors, Inc. Non-GAAP Financial Measures Hotel Adjusted EBITDAre and Margins (Unaudited and in thousands)
		Three Months Ended September 30,						Nine Months Ended September 30,
		2026			2025			2026			2025
Total Portfolio Hotel Adjusted EBITDAre Margin			25.1 %			24.3 %			28.1 %			27.7 %
Hotel Adjusted EBITDAre Margin, excluding Andaz    Miami Beach			26.7 %			26.2 %			28.7 %			28.9 %
Actual revenues		$	233,718		$	229,323		$	770,536		$	723,160
Sold hotel revenues (1)			(8,556)			(25,600)			(66,589)			(82,793)
Total Portfolio Hotel Revenues			225,162			203,723			703,947			640,367
Andaz Miami Beach revenues (2)			(7,754)			(5,312)			(40,851)			(7,773)
Hotel Revenues, excluding Andaz Miami Beach		$	217,408		$	198,411		$	663,096		$	632,594
Net income		$	40,889		$	1,322		$	85,471		$	17,351
Non-hotel operating expenses, net (3)			10			(280)			22			(971)
Property-level adjustments (4)			2,244			189			5,909			7,012
Corporate overhead			6,410			6,970			22,005			24,221
Depreciation and amortization			30,287			33,928			98,724			100,328
Impairment and other losses			—			—			1,639			—
Interest and other income			(2,620)			(3,160)			(7,944)			(7,024)
Interest expense			10,729			13,412			33,788			39,258
Gain (loss) on sale of assets			(31,489)			—			(31,489)			8,751
Loss on extinguishment of debt			—			180			—			180
Income tax provision, net			296			137			605			272
Actual Hotel Adjusted EBITDAre			56,756			52,698			208,730			189,378
Sold hotel Adjusted EBITDAre (1)			(325)			(3,139)			(11,031)			(11,843)
Total Portfolio Hotel Adjusted EBITDAre			56,431			49,559			197,699			177,535
Andaz Miami Beach Adjusted EBITDAre (2)			1,637			2,494			(7,652)			5,298
Hotel Adjusted EBITDAre, excluding Andaz Miami    Beach		$	58,068		$	52,053		$	190,047		$	182,833

(1)	Sold hotel revenues and Adjusted EBITDAre include results for Hyatt Regency San Francisco, which the Company sold in July 2026, and Hilton New Orleans St. Charles, which the Company sold in June 2025.
(2)	Andaz Miami Beach underwent a transformational renovation during 2025, and as a result, our results for the third quarter and first nine months of 2026 are not comparable to those for the same periods in 2025.
(3)	Non-hotel operating expenses, net include the amortization of hotel real estate-related right-of-use assets and obligations, corporate-level current year property taxes and insurance, as well as any prior year property taxes assessed on sold hotels, net of any refunds received.
(4)	Property-level adjustments include non-operational and nonrecurring items. For the three months ended September 30, 2026, adjustments primarily consisted of severe weather-related restoration expenses. For the nine months ended September 30, 2026, adjustments primarily consisted of severe weather-related restoration expenses and legal settlement costs. For the nine months ended September 30, 2025, adjustments primarily consisted of pre-opening costs related to Andaz Miami Beach.

 

View original content:https://www.prnewswire.com/news-releases/sunstone-hotel-investors-reports-results-for-third-quarter-2026-302931458.html

SOURCE Sunstone Hotel Investors, Inc.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Sunstone Hotel Investors' third-quarter 2026 earnings?

Sunstone reported $38.7 million in net income attributable to common stockholders, or $0.21 per diluted share, versus a $2.9 million loss, or $0.02 per diluted share, a year earlier. Adjusted funds from operations attributable to common stockholders were $37.2 million, or $0.20 per diluted share.

What is Sunstone Hotel Investors' updated full-year 2026 outlook?

Sunstone expects $92 million to $97 million in net income and $0.46 to $0.49 in diluted earnings attributable to common stockholders. Its outlook also includes adjusted funds from operations of $1.00 to $1.03 per diluted share and RevPAR growth of 9.5% to 10.5% versus full-year 2025.

Which projects are included in Sunstone Hotel Investors' 2026 capital investment plan?

Most planned investment relates to the completed meeting-space renovation at Hilton San Diego Bayfront, renovation work at Hilton Key West Resort & Marina, storm-related restoration at Wailea Beach Resort, and other hotel projects. Sunstone expects approximately $105 million to $115 million in portfolio investment during 2026.

How much preferred stock dividend will Sunstone Hotel Investors pay in January 2027?

Sunstone authorized dividends of $0.937500 per Series G share, $0.382813 per Series H share and $0.356250 per Series I share. These preferred dividends are payable January 15, 2027, to stockholders of record as of December 31, 2026.

How much does Sunstone expect Andaz Miami Beach to contribute to 2026 hotel revenue growth?

Sunstone expects Andaz Miami Beach to contribute approximately 450 basis points to both full-year 2026 RevPAR growth and total RevPAR growth. Both growth measures compare with full-year 2025 and include all 13 hotels owned as of the announcement.