Sunstone Hotel Investors, Inc. [SHO] Filings

10-Q 1 sho-20240630x10q.htm 10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-32319

Sunstone Hotel Investors, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Maryland		20-1296886
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

15 Enterprise, Suite 200 Aliso Viejo, California		92656
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (949) 330-4000


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	SHO	New York Stock Exchange
Series H Cumulative Redeemable Preferred Stock, $0.01 par value	SHO.PRH	New York Stock Exchange
Series I Cumulative Redeemable Preferred Stock, $0.01 par value	SHO.PRI	New York Stock Exchange

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. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 1, 2024, there were 203,343,454 shares of Sunstone Hotel Investors, Inc.’s common stock, $0.01 par value per share, outstanding.

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SUNSTONE HOTEL INVESTORS, INC.

QUARTERLY REPORT ON

FORM 10-Q

For the Quarterly Period Ended June 30, 2024

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023	2

	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	3

	Unaudited Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2024 and 2023	4

	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	6

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39

Item 4.	Controls and Procedures	39

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	41

SIGNATURES		42

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PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

SUNSTONE HOTEL INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)



	June 30,		December 31,
	2024		2023
	(unaudited)
ASSETS
Investment in hotel properties, net	$	2,838,560	$	2,585,279
Operating lease right-of-use assets, net		10,483		12,755
Cash and cash equivalents		159,151		426,403
Restricted cash		74,853		67,295
Accounts receivable, net		37,793		31,206
Prepaid expenses and other assets, net		28,897		26,383
Total assets	$	3,149,737	$	3,149,321

LIABILITIES AND STOCKHOLDERS' EQUITY
Debt, net of unamortized deferred financing costs	$	814,263	$	814,559
Operating lease obligations		14,345		16,735
Accounts payable and accrued expenses		57,103		48,410
Dividends and distributions payable		22,987		29,965
Other liabilities		76,112		73,014
Total liabilities		984,810		982,683
Commitments and contingencies (Note 11)
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 June 30, 2024 and December 31, 2023, stated at liquidation preference of $25.00 per share		66,250		66,250
6.125% Series H Cumulative Redeemable Preferred Stock, 4,600,000 shares issued and outstanding at both June 30, 2024 and December 31, 2023, stated at liquidation preference of $25.00 per share		115,000		115,000
5.70% Series I Cumulative Redeemable Preferred Stock, 4,000,000 shares issued and outstanding at both June 30, 2024 and December 31, 2023, stated at liquidation preference of $25.00 per share		100,000		100,000
Common stock, $0.01 par value, 500,000,000 shares authorized, 203,390,392 shares issued and outstanding at June 30, 2024 and 203,479,585 shares issued and outstanding at December 31, 2023		2,034		2,035
Additional paid in capital		2,415,764		2,416,417
Distributions in excess of retained earnings		(534,121)		(533,064)
Total stockholders’ equity		2,164,927		2,166,638

Total liabilities and stockholders' equity	$	3,149,737	$	3,149,321

See accompanying notes to unaudited consolidated financial statements.

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SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)



	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
REVENUES
Room	$	151,296	$	173,399	$	287,111	$	325,837
Food and beverage		71,367		78,815		132,706		149,627
Other operating		24,818		23,898		44,830		44,091
Total revenues		247,481		276,112		464,647		519,555
OPERATING EXPENSES
Room		37,345		42,658		72,896		81,722
Food and beverage		47,742		51,997		92,057		100,532
Other operating		6,394		6,145		12,338		11,902
Advertising and promotion		12,974		13,897		25,106		26,919
Repairs and maintenance		8,979		9,606		17,689		19,052
Utilities		6,295		6,768		12,239		13,860
Franchise costs		4,819		4,560		9,024		8,478
Property tax, ground lease and insurance		19,984		19,378		38,909		38,611
Other property-level expenses		28,120		31,857		55,743		63,634
Corporate overhead		8,168		8,396		15,686		16,864
Depreciation and amortization		31,112		32,397		60,152		64,739
Total operating expenses		211,932		227,659		411,839		446,313
Interest and other income		3,503		4,639		8,956		5,180
Interest expense		(12,693)		(9,223)		(23,703)		(23,017)
Gain on sale of assets, net		—		—		457		—
Gain on extinguishment of debt		38		12		59		9,921
Income before income taxes		26,397		43,881		38,577		65,326
Income tax (provision) benefit, net		(255)		(803)		600		(1,161)
NET INCOME		26,142		43,078		39,177		64,165
Preferred stock dividends		(3,683)		(3,768)		(7,366)		(7,536)
INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	22,459	$	39,310	$	31,811	$	56,629

Basic and diluted per share amounts:
Basic income attributable to common stockholders per common share	$	0.11	$	0.19	$	0.16	$	0.27
Diluted income attributable to common stockholders per common share	$	0.11	$	0.19	$	0.16	$	0.27

Basic weighted average common shares outstanding		202,758		206,181		202,695		206,606
Diluted weighted average common shares outstanding		203,455		206,828		203,227		207,095

See accompanying notes to unaudited consolidated financial statements.

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SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share and per share data)


									Distributions
	Preferred Stock			Common Stock					in Excess of
	Number of			Number of			Additional		Retained
	Shares	Amount		Shares	Amount		Paid in Capital		Earnings		Total
Balance at December 31, 2023 (audited)	11,250,000	$	281,250	203,479,585	$	2,035	$	2,416,417	$	(533,064)	$	2,166,638
Amortization of deferred stock compensation	—		—	—		—		2,887		—		2,887
Issuance of restricted common stock, net	—		—	194,813		2		(3,219)		—		(3,217)
Common stock distributions declared at $0.07 per share	—		—	—		—		—		(14,364)		(14,364)
Series G preferred stock dividends declared at $0.187500 per share	—		—	—		—		—		(497)		(497)
Series H preferred stock dividends declared at $0.382813 per share	—		—	—		—		—		(1,761)		(1,761)
Series I preferred stock dividends declared at $0.356250 per share	—		—	—		—		—		(1,425)		(1,425)
Net income	—		—	—		—		—		13,035		13,035
Balance at March 31, 2024	11,250,000		281,250	203,674,398		2,037		2,416,085		(538,076)		2,161,296
Amortization of deferred stock compensation	—		—	—		—		3,298		—		3,298
Issuance of restricted common stock	—		—	75,002		—		—		—		—
Common stock distributions declared at $0.09 per share	—		—	—		—		—		(18,504)		(18,504)
Series G preferred stock dividends declared at $0.187500 per share	—		—	—		—		—		(497)		(497)
Series H preferred stock dividends declared at $0.382813 per share	—		—	—		—		—		(1,761)		(1,761)
Series I preferred stock dividends declared at $0.356250 per share	—		—	—		—		—		(1,425)		(1,425)
Repurchase of outstanding common stock	—		—	(359,008)		(3)		(3,619)		—		(3,622)
Net income	—		—	—		—		—		26,142		26,142
Balance at June 30, 2024	11,250,000	$	281,250	203,390,392	$	2,034	$	2,415,764	$	(534,121)	$	2,164,927

See accompanying notes to unaudited consolidated financial statements.

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SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share and per share data)


									Distributions
	Preferred Stock			Common Stock					in Excess of
	Number of			Number of			Additional		Retained
	Shares	Amount		Shares	Amount		Paid in Capital		Earnings		Total
Balance at December 31, 2022 (audited)	11,250,000	$	281,250	209,320,447	$	2,093	$	2,465,595	$	(663,977)	$	2,084,961
Amortization of deferred stock compensation	—		—	—		—		2,545		—		2,545
Issuance of restricted common stock, net	—		—	55,970		1		(3,349)		—		(3,348)
Forfeiture of restricted common stock	—		—	(1,435)		—		—		—		—
Common stock distributions declared at $0.05 per share	—		—	—		—		—		(10,449)		(10,449)
Series G preferred stock dividends declared at $0.219536 per share	—		—	—		—		—		(582)		(582)
Series H preferred stock dividends declared at $0.382813 per share	—		—	—		—		—		(1,761)		(1,761)
Series I preferred stock dividends declared at $0.356250 per share	—		—	—		—		—		(1,425)		(1,425)
Repurchase of outstanding common stock	—		—	(1,964,923)		(20)		(18,606)		—		(18,626)
Net income	—		—	—		—		—		21,087		21,087
Balance at March 31, 2023	11,250,000		281,250	207,410,059		2,074		2,446,185		(657,107)		2,072,402
Amortization of deferred stock compensation	—		—	—		—		3,442		—		3,442
Issuance of restricted common stock	—		—	82,552		1		(429)		—		(428)
Forfeiture of restricted common stock	—		—	(6,459)		—		—		—		—
Common stock distributions declared at $0.05 per share	—		—	—		—		—		(10,448)		(10,448)
Series G preferred stock dividends declared at $0.219536 per share	—		—	—		—		—		(582)		(582)
Series H preferred stock dividends declared at $0.382813 per share	—		—	—		—		—		(1,761)		(1,761)
Series I preferred stock dividends declared at $0.356250 per share	—		—	—		—		—		(1,425)		(1,425)
Repurchase of outstanding common stock	—		—	(301,461)		(3)		(2,852)		—		(2,855)
Acquisition of noncontrolling interest, net	—		—	—		—		(299)		—		(299)
Net income	—		—	—		—		—		43,078		43,078
Balance at June 30, 2023	11,250,000	$	281,250	207,184,691	$	2,072	$	2,446,047	$	(628,245)	$	2,101,124

See accompanying notes to unaudited consolidated financial statements.

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SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	39,177	$	64,165
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense		164		71
Gain on sale of assets, net		(457)		—
Gain on extinguishment of debt		(59)		(9,921)
Noncash interest on derivatives, net		(2,231)		(1,879)
Depreciation		59,554		64,480
Amortization of franchise fees and other intangibles		598		223
Amortization of deferred financing costs		1,478		1,220
Amortization of deferred stock compensation		5,951		5,752
Gain on insurance recoveries		(314)		(3,722)
Changes in operating assets and liabilities:
Accounts receivable, net		(3,399)		(2,205)
Prepaid expenses and other assets		(1,034)		(243)
Accounts payable and other liabilities		(6,033)		(10,884)
Operating lease right-of-use assets and obligations		(118)		(69)
Net cash provided by operating activities		93,277		106,988
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of hotel property		(229,330)		—
Proceeds from property insurance		168		—
Renovations and additions to hotel properties and other assets		(68,686)		(49,219)
Net cash used in investing activities		(297,848)		(49,219)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of noncontrolling interest, including transaction costs		—		(299)
Payment of common stock offering costs		—		(428)
Repurchases of outstanding common stock		(3,622)		(21,481)
Repurchases of common stock for employee tax obligations		(3,217)		(3,348)
Proceeds from note payable		—		225,000
Payments on notes payable		(1,072)		(221,036)
Payments of deferred financing costs		—		(2,332)
Dividends and distributions paid		(47,212)		(27,537)
Net cash used in financing activities		(55,123)		(51,461)
Net (decrease) increase in cash and cash equivalents and restricted cash		(259,694)		6,308
Cash and cash equivalents and restricted cash, beginning of period		493,698		157,206
Cash and cash equivalents and restricted cash, end of period	$	234,004	$	163,514

See accompanying notes to unaudited consolidated financial statements.

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SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Supplemental Disclosure of Cash Flow Information


	June 30,
	2024		2023
Cash and cash equivalents	$	159,151	$	107,846
Restricted cash		74,853		55,668
Total cash and cash equivalents and restricted cash shown on the consolidated statements of cash flows	$	234,004	$	163,514


	Six Months Ended June 30,
	2024		2023
Cash paid for interest, net of capitalized interest	$	25,517	$	24,330
Cash paid for income taxes, net	$	3,391	$	1,128
Operating cash flows used for operating leases	$	2,802	$	2,782

Changes in operating lease right-of-use assets	$	2,272	$	2,189
Changes in operating lease obligations		(2,390)		(2,258)
Changes in operating lease right-of-use assets and lease obligations, net	$	(118)	$	(69)

Supplemental Disclosure of Noncash Investing and Financing Activities


	Six Months Ended June 30,
	2024		2023
Accrued renovations and additions to hotel properties and other assets	$	23,876	$	14,593
Operating lease right-of-use asset obtained in exchange for operating lease obligation	$	—	$	2,163
Amortization of deferred stock compensation — construction activities	$	234	$	235
Dividends and distributions payable	$	22,987	$	14,891

See accompanying notes to unaudited consolidated financial statements.

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SUNSTONE HOTEL INVESTORS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Sunstone Hotel Investors, Inc. (the “Company”) was incorporated in Maryland on June 28, 2004 in anticipation of an initial public offering of common stock, which was consummated on October 26, 2004. The Company elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes, commencing with its taxable year ended on December 31, 2004. The Company, through its 100% controlling interest in Sunstone Hotel Partnership, LLC (the “Operating Partnership”), of which the Company is the sole managing member, and the subsidiaries of the Operating Partnership, including Sunstone Hotel TRS Lessee, Inc. (the “TRS Lessee”) and its subsidiaries, invests in hotels where it can add value through capital investment, hotel repositioning and asset management. In addition, the Company seeks to capitalize on its portfolio’s embedded value and balance sheet strength to actively recycle past investments into new growth and value creation opportunities in order to deliver strong stockholder returns and superior per share net asset value growth.

As a REIT, certain tax laws limit the amount of “non-qualifying” income the Company can earn, including income derived directly from the operation of hotels. The Company leases all of its hotels to its TRS Lessee, which in turn enters into long-term management agreements with third parties to manage the operations of the Company’s hotels, in transactions that are intended to generate qualifying income.

As of both June 30, 2024 and 2023, the Company owned 15 hotels.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements as of June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023, include the accounts of the Company, the Operating Partnership, the TRS Lessee and their controlled subsidiaries. All significant intercompany balances and transactions have been eliminated. If the Company determines that it has an interest in a variable interest entity, the Company will consolidate the entity when it is determined to be the primary beneficiary of the entity.

The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and in conformity with the rules and regulations of the Securities and Exchange Commission. In the Company’s opinion, the interim financial statements presented herein reflect all adjustments, consisting solely of normal and recurring adjustments, which are necessary to fairly present the interim financial statements. These financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 23, 2024. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The Company does not have any comprehensive income other than what is included in net income. If the Company has any comprehensive income in the future such that a statement of comprehensive income would be necessary, the Company will include such statement in one continuous consolidated statement of operations.

The Company has evaluated subsequent events through the date of issuance of these financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Earnings Per Share

The Company applies the two-class method when computing its earnings per share. Net income per share for each class of stock is calculated assuming all of the Company’s net income is distributed as dividends to each class of stock based on their contractual rights.

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Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid), which include the Company’s time-based restricted stock awards, are considered participating securities and are included in the computation of earnings per share.

Basic earnings attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period, including shares of the Company’s performance-based restricted stock units for which all necessary conditions have been satisfied except for the passage of time. Diluted earnings attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not anti-dilutive. Potential common shares consist of time-based unvested restricted stock awards and performance-based restricted stock units, using the more dilutive of either the two-class method or the treasury stock method. The Company’s performance-based restricted stock units are considered for computing diluted net income per common share as of the beginning of the period in which all necessary conditions have been satisfied and the only remaining vesting condition is a service vesting condition.

The following table sets forth the computation of basic and diluted earnings per common share (unaudited and in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net income	$	26,142	$	43,078	$	39,177	$	64,165
Preferred stock dividends		(3,683)		(3,768)		(7,366)		(7,536)
Distributions paid to participating securities		(84)		(52)		(149)		(104)
Undistributed income allocated to participating securities		(19)		(144)		—		(194)
Numerator for basic and diluted income attributable to common stockholders	$	22,356	$	39,114	$	31,662	$	56,331
Denominator:
Weighted average basic common shares outstanding		202,758		206,181		202,695		206,606
Unvested restricted stock units		697		647		532		489
Weighted average diluted common shares outstanding		203,455		206,828		203,227		207,095

Basic income attributable to common stockholders per common share	$	0.11	$	0.19	$	0.16	$	0.27
Diluted income attributable to common stockholders per common share	$	0.11	$	0.19	$	0.16	$	0.27

In its calculation of diluted earnings per share, the Company excluded 929,928 anti-dilutive unvested time-based restricted stock awards for the three and six months ended June 30, 2024, and 1,032,564 anti-dilutive unvested time-based restricted stock awards for the three and six months ended June 30, 2023, respectively.

The Company also had unvested performance-based restricted stock units as of June 30, 2024 and 2023 that are not considered participating securities as the awards contain forfeitable rights to dividends or dividend equivalents. The performance-based restricted stock units were granted based on either target market condition thresholds or pre-determined stock price targets. Based on the Company’s common stock performance, the Company excluded 188,004 anti-dilutive performance-based restricted stock units from its calculations of diluted earnings per share for the three and six months ended June 30, 2024 and 2023 (see Note 10).

Restricted Cash

Restricted cash primarily includes reserves for operating expenses and capital expenditures required by certain of the Company’s management, franchise and debt agreements. At times, restricted cash also includes hotel acquisition or disposition-related earnest money held in escrow reserves pending completion of the associated transaction. In addition, restricted cash as of December 31, 2023 included $0.2 million held in escrow related to certain current and potential employee-related obligations at one of the Company’s former hotels. In the second quarter of 2024, the escrow agreement was terminated and the remaining $0.1 million of restricted cash held in escrow was returned to the Company (see Note 11). As of both June 30, 2024 and December 31, 2023, restricted cash included $0.2 million held as collateral for certain letters of credit (see Note 11).

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Investments in Hotel Properties

Investments in hotel properties, including land, buildings, furniture, fixtures and equipment (“FF&E”) and identifiable intangible assets are recorded at their respective relative fair values for an asset acquisition or at their estimated fair values for a business acquisition. Property and equipment purchased after the hotel acquisition date is recorded at cost. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Interest imputed during construction or renovation projects is capitalized, using the Company’s weighted average interest rate on its variable rate debt, including the effects of interest rate swap derivatives, until construction is substantially complete or the assets are placed in service. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation is removed from the Company’s accounts and any resulting gain or loss is included in the consolidated statements of operations.

Depreciation expense is based on the estimated life of the Company’s assets. The life of the assets is based on a number of assumptions, including the cost and timing of capital expenditures to maintain and refurbish the Company’s hotels, as well as specific market and economic conditions. Hotel properties are depreciated using the straight-line method over estimated useful lives primarily ranging from five years to forty years for buildings and improvements and three years to twelve years for FF&E. Intangible assets are amortized using the straight-line method over the shorter of their estimated useful life or over the length of the related agreement.

The Company’s investment in hotel properties, net also includes initial franchise fees which are recorded at cost and amortized using the straight-line method over the terms of the franchise agreements ranging from fifteen years to twenty years. All other franchise fees that are based on the Company’s results of operations are expensed as incurred.

While the Company believes its estimates are reasonable, a change in the estimated lives could affect depreciation expense and net income or the gain or loss on the sale of any of the Company’s hotels. The Company has not changed the useful lives of any of its assets during the periods discussed.

Impairment losses are recorded on investments in hotel properties to be held and used by the Company whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Factors the Company considers when assessing whether impairment indicators exist include, but are not limited to, hotel disposition strategy and hold period, a significant decline in operating results not related to renovations or repositionings, significant changes in the manner in which the Company uses the asset, physical damage to the property due to unforeseen events such as natural disasters, and other market and economic conditions.

Recoverability of assets that will continue to be used is measured by comparing the carrying amount of the asset to the related total future undiscounted net cash flows. If an asset’s carrying value is not recoverable through those cash flows, the asset is considered to be impaired. The impairment is measured by the difference between the asset’s carrying amount and its fair value. The Company performs a fair value assessment using valuation techniques such as discounted cash flows and comparable sale transactions in the market to estimate the fair value of the hotel and, if appropriate and available, current estimated net sales proceeds from pending offers. The Company’s judgment is required in determining the discount rate, terminal capitalization rate, the estimated growth of r

Sunstone Hotel Investors, Inc. [SHO] Filings
Sunstone Hotel Investors, Inc. [SHO-PH] Filings
Sunstone Hotel Investors, Inc. [SHO-PI] Filings
10-Q	[2024-08-07]
10-Q	[2024-05-06]
10-K	[2024-02-23]
10-Q	[2023-11-07]
10-Q	[2023-08-04]
10-Q	[2023-05-05]
10-K	[2023-02-23]
10-Q	[2022-11-08]
10-Q	[2022-08-03]
10-Q	[2022-05-04]
10-K	[2022-02-23]
10-Q	[2021-11-04]
10-Q	[2021-08-04]
10-Q	[2021-05-05]
10-K	[2021-02-12]
10-Q	[2020-11-06]
10-Q	[2020-08-05]
10-Q	[2020-05-11]
10-K	[2020-02-19]
10-Q	[2019-11-05]
10-Q	[2019-08-05]
10-Q	[2019-05-08]
10-K	[2019-02-14]
10-Q	[2018-11-06]
10-Q	[2018-08-01]
10-Q	[2018-05-08]
10-K	[2018-02-14]
10-Q	[2017-11-01]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-23]
10-Q	[2016-11-02]
10-Q	[2016-08-08]
10-Q	[2016-05-03]
10-K	[2016-02-23]
10-Q	[2015-11-03]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-02-19]
10-Q	[2014-11-04]
10-Q	[2014-08-08]
10-Q	[2014-05-07]
10-K	[2014-02-25]
10-Q	[2013-11-12]
10-Q	[2013-08-07]
10-Q	[2013-05-08]
10-K	[2013-02-25]
10-Q	[2012-11-06]
10-Q	[2012-08-07]
10-Q	[2012-05-03]
10-K	[2012-02-28]

Sunstone Hotel Investors, Inc. [SHO] Filings

Sunstone Hotel Investors, Inc. [SHO-PH] Filings

Sunstone Hotel Investors, Inc. [SHO-PI] Filings