On August 10, 2026, Sunstone Hotel Investors, Inc. (the “Company”) and Sunstone Hotel Partnership, LLC (the “Operating Partnership”) entered into an equity distribution agreement (the “Equity Distribution Agreement”) with each of BofA Securities, Inc., BTIG, LLC, Cantor Fitzgerald & Co., Capital One Securities, Inc., Huntington Securities, Inc., Jefferies LLC, J.P. Morgan Securities LLC, M&T Securities, Inc., Regions Securities LLC, Truist Securities, Inc. and Wells Fargo Securities, LLC, each in its capacity as sales agent and/or principal in connection with the offering and sale of any Issuance Shares hereunder (each an “Agent” and together, the “Agents”) and, together with Nomura Securities International, Inc. (acting through BTIG, LLC as its agent), and except in the case of BTIG, LLC, Capital One Securities, Inc., and M&T Securities, Inc., in connection with the offering and sale of any Forward Hedge Shares (as defined below) hereunder, as forward seller (each a “Forward Seller,” and together, the “Forward Sellers”), and each of Bank of America, N.A., CF Secured, LLC, Huntington Securities, Inc., Jefferies LLC, JPMorgan Chase Bank, National Association, Nomura Global Financial Products, Inc., Regions Securities LLC, Truist Bank and Wells Fargo Bank, National Association or an affiliate thereof, each as forward purchaser under any Forward Contract (as defined below) (in such capacity, each a “Forward Purchaser,” and together, the “Forward Purchasers”), pursuant to which the Company may issue and sell, from time to time, shares (the “Shares”) of the Company’s common stock, par value $0.01 per share, having an aggregate sale price of up to $300,000,000 (the “Maximum Amount”). Upon entering into the Equity Distribution Agreement, the Company simultaneously terminated the equity distribution agreement it entered into with certain of the same parties on March 1, 2023, in connection with a prior at-the-market offering program. At the time of such termination, shares of common stock having an aggregate gross sales price of up to $300,000,000 remained unsold under such prior program.
The Equity Distribution Agreement provides that, in addition to the issuance and sale of common stock by the Company through a sales agent acting as sales agent or directly to the sales agent acting as principal for its own account at a price agreed upon at the time of sale, the Company also may enter into forward sale agreements (each, a “Forward Contract” and, collectively, the “Forward Contracts”) with any of the Forward Purchasers. The Equity Distribution Agreement includes a form of Master Forward Confirmation, and each Forward Contract will be comprised of the applicable Master Forward Confirmation and the related Supplemental Confirmation with the applicable Forward Purchaser. In connection with any particular Forward Contract, the relevant Forward Purchaser will, at the Company’s request, use commercially reasonable efforts to borrow from third parties and, through the relevant Forward Seller, sell a number of Shares equal to the number of Shares underlying the particular Forward Contract to hedge such Forward Purchaser’s exposure under such Forward Contract.
The net proceeds of this offering and any net proceeds the Company receives pursuant to any settlement of any Forward Contract with the relevant Forward Purchaser will be contributed to the Operating Partnership in exchange for additional membership units of the Operating Partnership. The Company will not initially receive any proceeds from the sale of borrowed Shares under the Forward Contracts, if any. The Company expects to fully physically settle each particular Forward Contract, if any, with the applicable Forward Purchaser on one or more dates specified by the Company on or prior to the maturity date of that particular Forward Contract, in which case the Company will expect to receive aggregate net cash proceeds at settlement equal to the number of Shares underlying the particular Forward Contract multiplied by the applicable forward price. However, the Company may also elect to cash settle or net share settle a particular Forward Contract, in which case the Company may not receive any proceeds from the issuance of Shares, and will instead receive or pay cash (in the case of cash settlement) or receive or deliver Shares of common stock (in the case of net share settlement).
In no event will the aggregate gross sales price of Shares sold by the Company to or through the Agents and by the Forward Purchasers through the Forward Sellers exceed the Maximum Amount.
Each Agent will receive from the Company a commission that will not exceed, but may be lower than, 2.0% of the gross sales price of all Shares sold through it as sales agent under the Equity Distribution Agreement. In connection with each Forward Contract, the Company will pay the applicable Forward Seller, in the form of a reduced initial forward price under the related Forward Contract with the related Forward Purchaser, commissions at a mutually agreed rate that shall not be more than 2.0% of the sales price of all borrowed Shares sold by it as a Forward Seller.
