UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act: | ||
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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SUNSTONE HOTEL INVESTORS, INC.
QUARTERLY REPORT ON
FORM 10-Q
For the Quarterly Period Ended September 30, 2022
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Item 1. | Financial Statements |
SUNSTONE HOTEL INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
September 30, | December 31, | |||||
| 2022 |
| 2021 | |||
(unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | | ||||
Accounts receivable, net | | | ||||
Prepaid expenses and other current assets | | | ||||
Assets held for sale, net | — | | ||||
Total current assets | | | ||||
Investment in hotel properties, net | | | ||||
Operating lease right-of-use assets, net | | | ||||
Deferred financing costs, net | | | ||||
Other assets, net | | | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | $ | | $ | | ||
Accrued payroll and employee benefits | | | ||||
Dividends and distributions payable | | | ||||
Other current liabilities | | | ||||
Current portion of notes payable, net | | | ||||
Liabilities of assets held for sale | — | | ||||
Total current liabilities | | | ||||
Notes payable, less current portion, net | | | ||||
Operating lease obligations, less current portion | | | ||||
Other liabilities | | | ||||
Total liabilities | | | ||||
Commitments and contingencies (Note 12) | ||||||
Equity: | ||||||
Stockholders’ equity: | ||||||
Preferred stock, $ | ||||||
Series G Cumulative Redeemable Preferred Stock, | | | ||||
| | |||||
| | |||||
Common stock, $ | | | ||||
Additional paid in capital | | | ||||
Retained earnings | | | ||||
Cumulative dividends and distributions | ( | ( | ||||
Total stockholders’ equity | | | ||||
Noncontrolling interest in consolidated joint venture | — | | ||||
Total equity | | | ||||
Total liabilities and equity | $ | | $ | | ||
See accompanying notes to consolidated financial statements.
2
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, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
REVENUES | ||||||||||||
Room | $ | | $ | | $ | | $ | | ||||
Food and beverage | | | | | ||||||||
Other operating | | | | | ||||||||
Total revenues | | | | | ||||||||
OPERATING EXPENSES | ||||||||||||
Room | | | | | ||||||||
Food and beverage | | | | | ||||||||
Other operating | | | | | ||||||||
Advertising and promotion | | | | | ||||||||
Repairs and maintenance | | | | | ||||||||
Utilities | | | | | ||||||||
Franchise costs | | | | | ||||||||
Property tax, ground lease and insurance | | | | | ||||||||
Other property-level expenses | | | | | ||||||||
Corporate overhead | | | | | ||||||||
Depreciation and amortization | | | | | ||||||||
Impairment loss | — | | — | | ||||||||
Total operating expenses | | | | | ||||||||
Interest and other income (loss) | | | | ( | ||||||||
Interest expense | ( | ( | ( | ( | ||||||||
Gain on sale of assets | — | — | | — | ||||||||
(Loss) gain on extinguishment of debt, net | ( | | ( | | ||||||||
Income (loss) before income taxes | | ( | | ( | ||||||||
Income tax benefit (provision), net | | ( | | ( | ||||||||
NET INCOME (LOSS) | | ( | | ( | ||||||||
(Income) loss from consolidated joint venture attributable to noncontrolling interest | — | ( | ( | | ||||||||
Preferred stock dividends and redemption charges | ( | ( | ( | ( | ||||||||
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | | $ | ( | $ | | $ | ( | ||||
Basic and diluted per share amounts: | ||||||||||||
Basic income (loss) attributable to common stockholders per common share | $ | | $ | ( | $ | | $ | ( | ||||
Diluted income (loss) attributable to common stockholders per common share | $ | | $ | ( | $ | | $ | ( | ||||
Basic weighted average common shares outstanding | | | | | ||||||||
Diluted weighted average common shares outstanding | | | | | ||||||||
See accompanying notes to consolidated financial statements.
3
SUNSTONE HOTEL INVESTORS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share and per share data)
Noncontrolling | |||||||||||||||||||||||||
Preferred Stock | Common Stock | Cumulative | Interest in | ||||||||||||||||||||||
Number of | Number of | Additional | Retained | Dividends and | Consolidated | ||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid in Capital |
| Earnings |
| Distributions |
| Joint Venture |
| Total Equity | ||||||||
Balance at December 31, 2021 (audited) | | $ | | | $ | | $ | | $ | | $ | ( | $ | | $ | | |||||||||
Amortization of deferred stock compensation | — | — | — | — | | — | — | — | | ||||||||||||||||
Issuance of restricted common stock, net | — | — | | | ( | — | — | — | ( | ||||||||||||||||
Series G preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Series H preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Series I preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Repurchase of outstanding common stock | — | — | ( | ( | ( | — | — | — | ( | ||||||||||||||||
Net income | — | — | — | — | — | | — | | | ||||||||||||||||
Balance at March 31, 2022 | | $ | | | $ | | $ | | $ | | $ | ( | $ | | $ | | |||||||||
Amortization of deferred stock compensation | — | — | — | — | | — | — | — | | ||||||||||||||||
Issuance of restricted common stock | — | — | | | ( | — | — | — | ( | ||||||||||||||||
Forfeiture of restricted common stock | — | — | ( | — | — | — | — | — | — | ||||||||||||||||
Series G preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Series H preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Series I preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Repurchase of outstanding common stock | — | — | ( | ( | ( | — | — | — | ( | ||||||||||||||||
Distribution to noncontrolling interest | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||
Acquisition of noncontrolling interest, net | — | — | — | — | ( | — | — | ( | ( | ||||||||||||||||
Net income | — | — | — | — | — | | — | | | ||||||||||||||||
Balance at June 30, 2022 | | $ | | | $ | | $ | | $ | | $ | ( | $ | — | $ | | |||||||||
Amortization of deferred stock compensation | — | — | — | — | | — | — | — | | ||||||||||||||||
Common stock distributions and distributions payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Series G preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Series H preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Series I preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Repurchase of outstanding common stock | — | — | ( | ( | ( | — | — | — | ( | ||||||||||||||||
Net income | — | — | — | — | — | | — | — | | ||||||||||||||||
Balance at September 30, 2022 | | $ | | | $ | | $ | | $ | | $ | ( | $ | — | $ | | |||||||||
See accompanying notes to consolidated financial statements.
4
SUNSTONE HOTEL INVESTORS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share and per share data)
Noncontrolling | |||||||||||||||||||||||||
Preferred Stock | Common Stock | Cumulative | Interest in | ||||||||||||||||||||||
Number of | Number of | Additional | Retained | Dividends and | Consolidated | ||||||||||||||||||||
Shares |
| Amount |
| Shares |
| Amount |
| Paid in Capital |
| Earnings |
| Distributions |
| Joint Venture |
| Total Equity | |||||||||
Balance at December 31, 2020 (audited) | | $ | | | $ | | $ | | $ | | $ | ( | $ | | $ | | |||||||||
Amortization of deferred stock compensation | — | — | — | — | | — | — | — | | ||||||||||||||||
Issuance of restricted common stock, net | — | — | | | ( | — | — | — | ( | ||||||||||||||||
Series E preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Series F preferred stock dividends and dividends payable at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||
Contribution from noncontrolling interest | — | — | — | — | — | — | — | | | ||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||
Balance at March 31, 2021 | | $ | | | $ | | $ | | $ | | $ | ( | $ | | $ | | |||||||||
Amortization of deferred stock compensation | — | — | — | — | | — | — | — | | ||||||||||||||||
Repurchase of common stock for employee tax obligations net of restricted common stock issued | — | — | ( | ( | ( | — | — | — | ( | ||||||||||||||||
Net proceeds from issuance of common stock | — | — | | | | — | — | — | | ||||||||||||||||
Net issuance of Series G preferred stock in connection with hotel acquisition | | | — | — | ( | — | — | — | | ||||||||||||||||
Net proceeds from issuance of Series H preferred stock | | | — | — | ( | — | — | — | | ||||||||||||||||
Redemption of Series E preferred stock | ( | ( | — | — | | — | ( | — | ( | ||||||||||||||||
Series E preferred stock dividends at $ | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||