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What were the key takeaways from Sunstone Hotel’s earnings call?

- **Revenue Resilience**: Q3 RevPAR growth 2.4% YoY, driven by San Francisco (15%) and convention hotels (3.5%).
- **Margin Expansion**: 140bps urban hotel margin improvement, 100bps at Marriott Boston to 47% EBITDA margin.
- **Andaz Miami Momentum**: Q4 transient bookings near 1,000/week, targeting $12-16M EBITDA in 2026.
- **Liquidity Strength**: $700M liquidity, no debt maturities until 2028, supporting $101M accretive share buybacks.
- **Group Growth**: 80% of 2026 rooms booked, with Q1 2026 group pace up 10% YoY.

**【CEO Opening Remarks】**
- Q3 revenue showed mixed trends: strength in San Francisco offset by softer demand in other regions. RevPAR growth was flat at urban hotels but 3.5% at convention hotels, with San Francisco leading at 15%.
- Margin improvements: 140bps at urban hotels, 100bps at Marriott Boston Long Wharf (47% EBITDA margin). Ancillary spend and cost control offset slower room revenue growth.
- Booking momentum: 6% YoY increase in rooms booked, strongest since pre-pandemic, with 2026 group pace strong in Orlando, Boston, Miami, and San Francisco.

**【CFO Financial Commentary】**
- Q3 adjusted EBITDA: $50M, FFO: $0.17 per share. Total RevPAR growth 2.4% YoY, with 2.3% for comparable portfolio. Margins held within 20bps of prior year despite cost pressures.
- Liquidity: $700M (including $200M cash). Debt maturity extended to 2028, reducing borrowing costs. Repurchased 14% of shares at $8.83 avg price, generating $101M in accretive buybacks.

**【President & CIO Update】**
- Capital investments: San Antonio meeting space renovation completed on budget; San Diego project to begin in phases. Andaz Miami Beach ranks #8 on TripAdvisor, with transient bookings near 1,000/week target.
- Transaction market: Quiet but showing signs of life. Management remains active in recycling assets, disposing $600M since 2022 while acquiring $600M in higher-growth properties.

**【CFO Detailed Financials】**
- Q4 outlook: Mid-single-digit RevPAR growth (400-500bps from Andaz Miami). EBITDA near midpoint of range due to out-of-room spend offsetting moderate room revenue growth.
- Risks: Government shutdown impacting demand, though Q4 group pace remains strong. Liquidity and balance sheet strength provide resilience.

**【Q&A Highlights】**
- **Transaction Market**: Cautious optimism for 2026. Smaller deals more active, but larger transactions constrained by capital availability. Management focused on recycling lower-growth assets.
- **Andaz Miami Beach**: Q1 2026 bookings strong, with EBITDA ramping to $12-16M in 2026. Transient occupancy at 70% in Q4, up from 60% in Q3.
- **Group Bookings**: 80% of 2026 rooms on the books, with Orlando, San Francisco, and Wine Country leading. Q1 2026 group pace up 10% YoY.
- **CapEx**: 2026 spend expected to normalize after 2025's elevated levels, focusing on cyclical renovations (e.g., meeting spaces).

Sunstone Hotel Investors, Inc. (SHO) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

SHO

SHO fundamentals

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