Sunstone Hotel Investors Inc (SHO) Q4 2024 Earnings Call Highlights: Strong Performance and Strategic Initiatives Drive Future Growth

Sunstone Hotel Investors Inc (SHO) recently reported its fourth quarter and full year 2024 earnings, highlighting strong performance and strategic initiatives that position the company for future growth. The company's earnings call provided valuable insights into its operational results, strategic moves, and outlook for 2025.



Fourth Quarter and Full Year 2024 Operational Results

Sunstone's fourth quarter 2024 operational results showed a decrease in net income, comparable RevPAR, adjusted EBITDAre, and adjusted FFO compared to the same period in 2023. However, excluding the gain on the hotel sold during the fourth quarter 2023, net income would have been $3.2 million. Comparable RevPAR decreased 1.1% to $199.07, with the average daily rate and occupancy both experiencing slight declines. Adjusted EBITDAre decreased 12.0% to $48.1 million, and adjusted FFO attributable to common stockholders per diluted share decreased 15.8% to $0.16.

For the full year 2024, net income was $43.3 million, excluding the gain on the hotel sold during 2023, net income would have been $82.9 million. Comparable RevPAR decreased 2.4% to $214.06, with the average daily rate and occupancy both experiencing slight declines. Adjusted EBITDAre decreased 12.8% to $229.7 million, and adjusted FFO attributable to common stockholders per diluted share decreased 15.8% to $0.80.



Strategic Initiatives and Future Growth

Sunstone's Chief Executive Officer, Bryan Giglia, highlighted several strategic initiatives that contributed to the company's earnings in 2024 and positioned it for future growth. These initiatives include:

1. Conversion of The Westin Washington, DC Downtown: The conversion of this hotel resulted in it becoming one of the premier convention hotels in the city, contributing significantly to Sunstone's earnings in 2024.
2. Acquisition of the Hyatt Regency San Antonio Riverwalk: Sunstone acquired this hotel at a compelling current yield with attractive future growth opportunities, demonstrating its commitment to recycling capital, investing in its portfolio, and returning capital to shareholders.

Giglia also mentioned that Sunstone's earnings in 2025 are expected to benefit from the recently completed conversion of the Marriott Long Beach Downtown and the debut of Andaz Miami Beach in the first quarter. The company's strong liquidity position and embedded earnings growth provide for a well-covered dividend and the ability to repurchase common stock at a discount to NAV, which is evidenced by its return of nearly $100 million to shareholders during the year.



Conclusion

Sunstone Hotel Investors Inc (SHO) reported strong performance and strategic initiatives in its Q4 2024 earnings call, positioning the company for future growth in 2025 and beyond. The company's active capital recycling strategy, including the return of nearly $100 million to shareholders, demonstrates its commitment to investing in its portfolio and returning value to investors. With a strong liquidity position and embedded earnings growth, Sunstone is well-positioned to continue driving growth and success in the coming years.