Sunstone Hotel Investors, Inc. · NYSE:SHO
Sunstone Hotel Investors — Investor Presentation (June 2011)
34 slides from Sunstone Hotel Investors's investor presentation, Jun 6, 2011
Slide 1: Company Presentation June 2011
Exhibit 99.1 Company Presentation June 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: Mission and Investment Strategy
Sunstone Mission and Investment Strategy Sunstone is focused on generating superior, risk-adjusted shareholder returns through acquiring, asset managing and capital recycling institutional-quality hotels. Investment Highlights High-quality portfolio of institutional-quality, upper upscale hotels loc
Slide 4: Own thirty-three institutional-quality, primarily upper-upscale hotels
Sunstone Portfolio – We own… 460-room Hilton Times Square 807-room Renaissance Washington D.C. 494-room Renaissance Orlando 412-room Marriott Long Wharf Boston 460-room Doubletree Guest Suites Times Square …thirty-three institutional-quality, primarily upper-upscale hotels. 1,190-room Hilton San Die
Slide 5: Geographically diverse portfolio: 2010 total revenue by region
Sunstone Portfolio – We own… …a geographically diverse portfolio located primarily in coastal, urban markets. 2010 Total Revenue by Region (number of hotels in parentheses)
Slide 6: Hotels and rooms by region
Sunstone Portfolio – We own… Hotel Rooms Hotel Rooms Northeast Region Marriott Boston Long Wharf Marriott Boston Quincy Doubletree Guest Suites Times Square (Hilton Suites) (1) Hilton Times Square Renaissance Westchester Marriott West Philadelphia Renaissance Washington, D.C. Marriott Tysons Corner
Slide 7: Top-10 EBITDA producing hotels
Sunstone Portfolio – We own… Top-10 EBITDA Producing Hotels (1) Rooms % of pro forma 2010 (1) (1) Pro forma Hotel EBITDA and pro forma metrics includes prior ownership of acquired hotels and 100% ownership of the Hilton San Diego Bayfront. …a geographically diverse portfolio located primarily in coa
Slide 8: Corporate Profile: capital structure, valuation metrics and 2011 guidance
Sunstone Corporate Profile – We are… Valuation Sensitivity 2010 Pro Forma & 2011 Guidance (4) Capital Structure / Valuation Metrics …a top quality lodging REIT with an enterprise value of over $3 billion. A change of: Would result in a share price change of: $10,000 per key $1.10 1.0x in EBITDA mult
Slide 9: Pro forma adjusted corporate EBITDA buildup
Sunstone Corporate Profile – We are… … increasing our cash flow through disciplined internal and external investments and proactive asset management. Pro Forma Adjusted Corporate EBITDA Buildup
Slide 10: Experienced Management Team
Ken Cruse Marc Hoffman Lindsay Monge Guy Lindsey Bryan Giglia John Arabia Robert Springer Experienced Management Team – We are… President (1) EVP & COO SVP – Treasury & Administration SVP – Design & Construction SVP – Finance EVP & CFO SVP – Acquisitions …a cohesive management team singularly focuse
Slide 11: Opportunity to improve valuation and unlock intrinsic value
Sunstone Corporate Profile – We have… …a significant opportunity to improve valuation by removing overhang issues and unlocking our portfolio’s intrinsic value. Management transition – we will build investor confidence by completing our leadership transition and consistently executing on our busines
Slide 12: Expect significant internal growth over the next several years
Sunstone Portfolio – We expect… …our portfolio to generate significant internal growth over the next several years, driven by: Cyclical recovery – we are in the early stages of what we believe will be a strong and prolonged recovery. PKF expects a 6 - 7% RevPAR CAGR (2010 – 2015) Renovations – we ex
Slide 13: Rebranding Doubletree Times Square to Hilton Suites Times Square
Sunstone Portfolio – We are… Rebranding Doubletree Times Square to Hilton Suites Times Square Capitalize on the strength of a higher-rated brand with international draw Control of all Times Square Hilton branded product Conversion expected following a renovation of the hotel (anticipated completion
Slide 14: Completed or about to complete significant renovations
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. In 2011, we expect to invest approximately $100 – 115 million renovating and repositioning our portfolio. 1Q 2011 completed projects include: Embassy Suites Chicago – guestrooms/bath
Slide 15: Recent Renovations
Sunstone Portfolio – Recent Renovations
Slide 16: Proven Acquisitions Execution
Proven Acquisitions Execution – We have acquired… …major urban hotels at attractive spreads to our WACC, primarily sourced in off-market deals:
Slide 17: Acquisition of Doubletree Guest Suites Times Square
Proven Acquisitions Execution – We acquired… 460-key premier Times Square location 540 square foot standard rooms Upscaling to Hilton Suites after renovation Managed by Highgate Hotels All-in acquisition cost of $286.0 million or $622,000 per key (approximately $500,000 per key net of signage value)
Slide 18: Acquisition of JW Marriott New Orleans
Proven Acquisitions Execution – We acquired… 494-key luxury hotel centrally located in downtown New Orleans Managed by Marriott All-in acquisition cost of $94.3 million or $190,000 per key 12.8x multiple on 2010 EBITDA Assumed $42.2 million, fixed 5.45% non- recourse senior mortgage Strong Market Dy
Slide 19: Acquisition of Hilton San Diego Bayfront
Proven Acquisitions Execution – We acquired… 1,190-key upper-upscale hotel centrally located in downtown San Diego Top-quality convention property Managed by Hilton Acquisition value of $475.0 million (based on 100%) or $399,000 per key 13.7x multiple on 2010 EBITDA $240.0 million, non-recourse seni
Slide 20: Balance Sheet Management: strong liquidity and lower leverage
Balance Sheet Management – We are focused on… …maintaining our strong liquidity and access to capital, increasing our financial flexibility and lowering our cost of capital through a gradual and methodical reduction of our leverage: Highly equitized acquisitions that will enhance our growth profile
Slide 21: Balance Sheet Management: measured improvement of leverage profile
Balance Sheet Management – We are focused on… Measured improvement of leverage profile • Cyclical cash flow growth • Transactions structured with higher equity content Long-term focus: build strength, flexibility, and positioning over several years • 18-month credit target: 1.65x Fixed Charge Covera
Slide 22: Balance Sheet Management: staggered debt maturity schedule
Balance Sheet Management – We are focused on… …maintaining a well staggered debt maturity schedule consisting of low rated, primarily property-secured, non-recourse debt:
Slide 23: Mission and Investment Strategy
Sunstone Mission and Investment Strategy Sunstone is focused on generating superior, risk-adjusted shareholder returns through acquiring, asset managing and capital recycling institutional-quality hotels. Investment Highlights High-quality portfolio of institutional-quality, upper upscale hotels loc
Slide 24: Sunstone Hotel Investors
SUNSTONE HOTEL INVESTORS
Slide 25: 2011 Taxable Income Projection
Sunstone Corporate Profile – We are… 2011 Taxable Income Projection …likely to reintroduce common dividends in 2011. 2011 Guidance (1) Midpoint of 2011 Adjusted EBITDA Guidance (1) $209,700 Interest expense 78,500 Amortization of deferred financing 2,400 Tax depreciation (2) 92,000 Preferred dividen
Slide 26: 33-Hotel Portfolio
Sunstone 33-Hotel Portfolio Hotel State Region Chain Scale Service Rooms Manager Segment (1) Category West Region Renaissance Long Beach California West Upper Upscale Full Service Marriott Renaissance Los Angeles Airport California West Upper Upscale Full Service Marriott Courtyard by Marriott Los A
Slide 27: Marriott Boston Long Wharf lobby renderings
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. Marriott Boston Long Wharf lobby renderings:
Slide 28: Renaissance Long Beach lobby renovation
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. Renaissance Long Beach completed lobby renovation:
Slide 29: Renaissance Washington D.C. lobby renovation
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. Renaissance Washington D.C. completed lobby renovation:
Slide 30: Philadelphia Marriott lobby renovation
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. Philadelphia Marriott completed lobby renovation:
Slide 31: Boston Marriott Quincy renovation
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. Boston Marriott Quincy completed rooms and public space renovation:
Slide 32: Embassy Suites Chicago rooms renovation
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. Embassy Suites Chicago completed rooms renovation:
Slide 33: Doubletree Minneapolis renovation
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. Doubletree Minneapolis completed rooms and public space renovation:
Slide 34: Renaissance Orlando pool and function lawn
Sunstone Portfolio – We have… …completed, or are about to complete, significant renovations throughout our portfolio. Renaissance Orlando themed pool experience and 10,000 sq. ft. function lawn - 2Q 2011 estimated completion date:
Sunstone Hotel Investors — Investor Presentation (June 2011) on 6ix