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
Commission file number
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of | (I.R.S. Employer | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
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.
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).
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.
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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of November 1, 2023, there were
SUNSTONE HOTEL INVESTORS, INC.
QUARTERLY REPORT ON
FORM 10-Q
For the Quarterly Period Ended September 30, 2023
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, | |||||
| 2023 |
| 2022 | |||
(unaudited) | ||||||
ASSETS | ||||||
Investment in hotel properties, net | $ | | $ | | ||
Operating lease right-of-use assets, net | | | ||||
Cash and cash equivalents | | | ||||
Restricted cash | | | ||||
Accounts receivable, net | | | ||||
Prepaid expenses and other assets, net | | | ||||
Assets held for sale | | — | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Debt, net of unamortized deferred financing costs | $ | | $ | | ||
Operating lease obligations | | | ||||
Accounts payable and accrued expenses | | | ||||
Dividends and distributions payable | | | ||||
Other liabilities | | | ||||
Liabilities of assets held for sale | | — | ||||
Total liabilities | | | ||||
Commitments and contingencies (Note 12) | ||||||
Stockholders’ equity: | ||||||
Preferred stock, $ | ||||||
Series G Cumulative Redeemable Preferred Stock, | | | ||||
| | |||||
| | |||||
Common stock, $ | | | ||||
Additional paid in capital | | | ||||
Distributions in excess of retained earnings | ( | ( | ||||
Total stockholders’ equity | | | ||||
Total liabilities and stockholders' 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, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
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 | | | | | ||||||||
Total operating expenses | | | | | ||||||||
Interest and other income | | | | | ||||||||
Interest expense | ( | ( | ( | ( | ||||||||
Gain on sale of assets | — | — | — | | ||||||||
Gain (loss) on extinguishment of debt, net | | ( | | ( | ||||||||
Income before income taxes | | | | | ||||||||
Income tax (provision) benefit, net | ( | | ( | | ||||||||
NET INCOME | | | | | ||||||||
Income from consolidated joint venture attributable to noncontrolling interest | — | — | — | ( | ||||||||
Preferred stock dividends | ( | ( | ( | ( | ||||||||
INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | | $ | | $ | | $ | | ||||
Basic and diluted per share amounts: | ||||||||||||
Basic income attributable to common stockholders per common share | $ | | $ | | $ | | $ | | ||||
Diluted income 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)
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) | | $ | | | $ | | $ | | $ | ( | $ | | |||||||
Amortization of deferred stock compensation | — | — | — | — | | — | | ||||||||||||
Issuance of restricted common stock, net | — | — | | | ( | — | ( | ||||||||||||
Forfeiture of restricted common stock | — | — | ( | — | — | — | — | ||||||||||||
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 March 31, 2023 | | $ | | | $ | | $ | | $ | ( | $ | | |||||||
Amortization of deferred stock compensation | — | — | — | — | | — | | ||||||||||||
Issuance of restricted common stock | — | — | | | ( | — | ( | ||||||||||||
Forfeiture of restricted common stock | — | — | ( | — | — | — | — | ||||||||||||
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 | — | — | ( | ( | ( | — | ( | ||||||||||||
Acquisition of noncontrolling interest, net | — | — | — | — | ( | — | ( | ||||||||||||
Net income | — | — | — | — | — | | | ||||||||||||
Balance at June 30, 2023 | | $ | | | $ | | $ | | $ | ( | $ | | |||||||
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, 2023 | | $ | | | $ | | $ | | $ | ( | $ | |
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)
Distributions | Noncontrolling | |||||||||||||||||||||
Preferred Stock | Common Stock | in Excess of | Interest in | |||||||||||||||||||
Number of | Number of | Additional | Retained | Consolidated | ||||||||||||||||||
Shares |
| Amount |
| Shares |
| Amount |
| Paid in Capital |
| Earnings |
| Joint Venture |
| Total | ||||||||
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.
5
SUNSTONE HOTEL INVESTORS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended September 30, | ||||||
| 2023 |
| 2022 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Bad debt expense | | | ||||
Gain on sale of assets | — | ( | ||||
(Gain) loss on extinguishment of debt, net | ( | | ||||
Noncash interest on derivatives, net | ( | ( | ||||
Depreciation | | | ||||
Amortization of franchise fees and other intangibles | | | ||||
Amortization of deferred financing costs | | | ||||
Amortization of deferred stock compensation | | | ||||
Gain on hurricane-related damage | ( | ( | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable, net | | ( | ||||
Prepaid expenses and other assets | ( | | ||||
Accounts payable and other liabilities | ( | | ||||
Operating lease right-of-use assets and obligations | ( | ( | ||||
Net cash provided by operating activities | | | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
Proceeds from sales of assets | — | | ||||
Disposition deposit | | — | ||||
Proceeds from property insurance | | | ||||
Acquisitions of hotel properties and other assets | — | ( | ||||
Renovations and additions to hotel properties and other assets | ( | ( | ||||
Net cash used in investing activities | ( | ( | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
Acquisition of noncontrolling interest, including transaction costs | ( | ( | ||||
Payment of common stock offering costs |