Sunstone Hotel Investors, Inc. · NYSE:SHO
Sunstone Hotel Investors — Investor Presentation (January 2011)
29 slides from Sunstone Hotel Investors's investor presentation, Jan 20, 2011
Slide 1: Company Presentation
Exhibit 99.1 Company Presentation January 2011
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forwa
Slide 3: Sunstone's Mission and Vision
Sunstone’s Mission and Vision Mission Sunstone is a hotel investment company focused on maximizing shareholder value through a comprehensive, cycle-appropriate approach to portfolio management. Sunstone’s strategy is predicated on: Acquiring upper-upscale hotels with nationally recognized brands in
Slide 4: Board of Directors
Board of Directors Lewis N. Wolff Co-Chairman • Chairman since October 26, 2004; Co-Chairman since March 19, 2007 • Chairman of Wolff Urban Management, Inc. since 1980 and also CEO. Wolff Urban Management, Inc. is a real estate acquisition, investment, development and management firm. • Co-founder o
Slide 5: Board of Directors
Board of Directors Robert A. Alter Founder and Executive Chairman • Founded predecessor companies in 1988 and served as CEO through October 2007 • Acquired 122 hotels with over 20,000 rooms and disposed of 79 hotels during the 22-year period while CEO • Built 7 ground-up hotels including the JW Marr
Slide 6: Sunstone Portfolio
Sunstone Portfolio 82% of 2010 Revenue from Primary Coastal Markets NY/Bos/Phil Revenue: 30% Chicago/Rochester Revenue: 9% Other Revenue: 18% West Coast Revenue: 25% Baltimore/DC Revenue: 18% 5
Slide 7: Sunstone Portfolio
Sunstone Portfolio Doubletree Guest Suites Times Square Royal Palm South Beach Fairmont Newport Beach Hilton Times Square Marriott Boston Long Wharf Renaissance Washington D.C. 6
Slide 8: Sunstone Portfolio Brand Concentration
Sunstone Portfolio Brand Concentration (by 2010 total revenue) Independent 7
Slide 9: Proven Approach To Portfolio Management
Proven Approach To Portfolio Management Hyatt Regency Century Plaza Case Study Significant stockholder value created through Sunstone’s execution of a proven Renovate, Reposition, Rebrand investment strategy. Hotel acquired September 2005 for $293 million ($404k per key) Developed comprehensive busi
Slide 10: The Royal Palm
The Royal Palm World-class asset in prime location 1.9-acres of beachfront real estate in the heart of South Beach 409 guest rooms: two-thirds have ocean views, one-third are suites Proximity to dining, shopping, entertainment, and the Miami Beach convention center Attractive market fundamentals As
Slide 11: Current Portfolio & Financial Information
Current Portfolio & Financial Information SHO Historical Stats / Performance 2004 (1) 2005(1) 2006(1) 2007(1) 2008(1) 2009(1) 2010(2) Number of Hotels 54 62 51 46 44 38 32 Number of Rooms 13,183 18,069 16,717 16,085 15,029 13,199 12,182 Rooms/Hotel 244 291 328 350 342 347 381 Comparable RevPAR $69.3
Slide 12: Current Portfolio & Financial Information
Current Portfolio & Financial Information Average weighted debt maturity: 6.0 years Average weighted interest rate: 4.72% Assumed debt associated with Doubletree Guest Suites Times Square of approximately $270.0 million to be refinanced during 2011. 11
Slide 13: Near Term Objectives: Enhance Corporate Credit Statistics
Near Term Objectives: Enhance Corporate Credit Statistics Improving credit story Focus is on measured improvement of credit statistics through portfolio growth Minimal dilution Structure transactions with higher equity weighting Long-term focus - build strength, flexibility, and positioning over the
Slide 14: Near Term Objectives: Improve Profitability of Existing Hotels
Near Term Objectives: Improve Profitability of Existing Hotels Primary focus is toward driving rate Weekly revenue management reviews with all operators Benchmark hotels using a sophisticated business intelligence system Roll out beverage cost reduction program throughout portfolio Average of 300 ba
Slide 15: Near Term Objectives: Improve Profitability of Existing Hotels
Near Term Objectives: Improve Profitability of Existing Hotels Focused renovation program Re-evaluated all 2011 – 2013 projects by their short- and long-term potential to generate incremental EBITDA Executing on revised 2011 CapExplan with focus on minimizing displacement Scope of Work Hotel Budget
Slide 16: Near Term Objectives: Improve Profitability of Existing Hotels
Near Term Objectives: Improve Profitability of Existing Hotels Marriott Boston Long Wharf Lobby Rendering 15
Slide 17: Near Term Objectives: Improve Profitability of Existing Hotels
Near Term Objectives: Improve Profitability of Existing Hotels Marriott Tysons Corner Guestroom Rendering 16
Slide 18: Near Term Objectives: Improve Profitability of Existing Hotels
Near Term Objectives: Improve Profitability of Existing Hotels Renaissance Long Beach Lobby Renovation 17
Slide 19: Near Term Objectives: Improve Profitability of Existing Hotels
Near Term Objectives: Improve Profitability of Existing Hotels Renaissance Washington DC Before Lobby Renovation 18
Slide 20: Near Term Objectives: Improve Profitability of Existing Hotels
Near Term Objectives: Improve Profitability of Existing Hotels Renaissance Washington DC After Lobby Renovation 19
Slide 21: Near Term Objectives: Improve Profitability of Existing Hotels
Near Term Objectives: Improve Profitability of Existing Hotels Renaissance Washington DC After Lobby Renovation 20
Slide 22: Near-term Objectives: Increase Portfolio Size and Quality
Near-term Objectives: Increase Portfolio Size and Quality Early phase of potentially prolonged cyclical recovery Objective is to meaningfully increase the size and quality of Sunstone’s portfolio over the next several years Better visibility Improved access to capital Enhanced total returns Focused
Slide 23: Doubletree Guest Suites Times Square Acquisition
Near-term Objectives: Increase Portfolio Size and Quality Doubletree Guest Suites Times Square Acquisition Top quality asset 2010 Pro-Forma Exceptional location Doubletree Guest Sunstone 31-Hotel Pro-Forma 32- Suites Times Discount valuation Portfolio (1) (2) Square (3) Hotel Portfolio Meaningful po
Slide 24: Near Term Objectives: Improve Communication & Enhance Team
Near Term Objectives: Improve Communication & Enhance Team Communications Maximize accessibility to senior management team Continue inter-quarter update calls Clearly articulate major initiatives Continue to communicate what we have done rather than what we will do Team Build on Sunstone’s “Talent B
Slide 25: Sunstone Organizational Structure
Sunstone Organizational Structure Building a talent-based organization Ken Cruse Bob Alter President Executive Chairman Marc Hoffman TBD EVP & COO CFO Guy Lindsey Bryan Giglia Lindsay Monge TBD SVP – Design & SVP – Treasury & SVP - Finance Administration SVP –Acquisitions Construction 24
Slide 26: Sunstone Valuation – Illustrative Scenarios
Sunstone Valuation – Illustrative Scenarios Based on Company Assumptions Actual - Results May Differ (1) Base RevPAR $ 111.37 Keys 12,182 Debt 1,415.6 Cash (255.0) Net Debt 1,160.6 Pref 276.3 Shares 117.6 Share Price $ 10.50 Common Equity $ 1,234.80 TEV 2,671.7 Adjusted EBITDA 161.9 Adjusted EBITDA
Slide 27: Investment Thesis
Investment Thesis Attractively valued compared to peers Currently trading at approximately $219k / key ($9.7k / key = approx. $1.00 per share) Strong liquidity and access to inexpensive capital Substantial unrestricted cash balance, undrawn revolver Levered to the recovery Primarily fixed-rated debt
Slide 28: Sunstone Hotel Investors
SUNSTONE HOTEL INVESTORS
Slide 29: Sunstone 32-Hotel Portfolio
Sunstone 32-Hotel Portfolio Chain Scale Service Hotel City State Segment(1) Category Rooms Manager Marriott Boston Massachusetts Upper Upscale Full Service 412 Marriott Marriott Del Mar California Upper Upscale Full Service 284 Marriott Marriott Houston Texas Upper Upscale Full Service 390 Interstat
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