The following is a summary of the Sunstone Hotel Investors, Inc. (SHO) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Sunstone Hotel Investors reported a generally stable financial performance for Q3 2024, adjusting for labor activity impacts, with sustained strength in group activity and recovery in business travel, although leisure demand moderated.

• Comparable RevPAR growth, excluding the Confidante Miami Beach, was effectively flat, but excluding the Hilton San Diego Bayfront, showed an increase of 2.4%.

• Adjusted EBITDAre for the third quarter was approximately $54 million, with FFO at $0.18 per diluted share.

• Guidance for full-year adjusted EBITDAre is forecasted to range from $220 million to $230 million, with adjusted FFO per diluted share projected between $0.75 and $0.80.

Business Progress:

• The company advanced on several value-enhancing projects including renovations at the Marriott Long Beach Downtown, the rebranded Westin Washington, DC Downtown, and the JW Marriott in New Orleans.

• The transformation of the Confidante to Andaz Miami Beach has faced delays and increased costs but is expected to be a significant asset post-renovation.

• Sunstone has utilized market conditions to repurchase $26 million in stock year-to-date and maintains strong balance sheet with nearly $700 million in total liquidity.

Opportunities:

• Strong growth potential for 2025 is anticipated, driven by the embedding of citywide events, improved group pace in key markets, and the contributions from newly repositioned properties like Andaz Miami Beach and Long Beach.

• The company has strategic plans to leverage its portfolio to enter new markets and improve its existing asset base, focusing on high-quality group events and transient customers.

Risks:

• The near-term outlook remains muted due to several impacting factors, including severe weather effects on Florida assets, continued labor disruptions in San Diego, and a subdued leisure environment in Maui.

• The ongoing alterations and enhancements of properties, such as the Andaz Miami Beach, are encountering delays and increased investment due to unforeseen regulatory and operational challenges.

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