Sunstone Hotel Investors Reports Results for Third Quarter 2009

Wed Nov 4, 2009 4:10pm EST

* Reuters is not responsible for the content in this press release.

Increases current cash position, including restricted cash, to $409.9 million

SAN CLEMENTE, Calif., Nov. 4 /PRNewswire-FirstCall/ -- Sunstone Hotel
Investors, Inc. (the "Company") (NYSE: SHO) today announced results for the
third quarter ended September 30, 2009.

All RevPAR and hotel EBITDA margin information presented reflect the 38 hotel
portfolio on a pro forma basis, which excludes the W San Diego, which was
conveyed to a receiver during the third quarter, and the Marriott Ontario
Airport, which is in the process of being conveyed to a receiver.

Third Quarter 2009 Operational Results:
    --  Total revenue was $176.0 million.
    --  Total RevPAR was $101.78.
    --  Loss attributable to common stockholders was $23.1 million.
    --  Loss attributable to common stockholders per diluted share was $0.31.
    --  Adjusted EBITDA was $40.1 million.
    --  Adjusted FFO available to common stockholders was $10.3 million.
    --  Adjusted FFO available to common stockholders per diluted share was
        $0.14.

    --  Hotel EBITDA margin was 23.8%.



Art Buser, President and Chief Executive Officer, stated, "We continue to
drive operational efficiencies throughout our portfolio resulting in
impressive margin performance which we believe will enhance our operations for
years to come. We also have executed on a number of finance initiatives
designed to reduce corporate risk and provide capacity to capitalize on future
opportunities. Going forward, we believe nimble, well-capitalized public
lodging companies will have opportunities to create significant long-term
shareholder value."



                                 SELECTED FINANCIAL DATA
                   ($in millions, except RevPAR and per share amounts)
                                      (unaudited)
                                       ----------

                        Three Months Ended             Nine Months Ended
                           September 30,                 September 30,
                        ------------------            -----------------
                      2009     2008     % Change    2009     2008     % Change
                      ----     ----     --------    ----     ----     --------
    Total Revenue    $176.0   $220.1     (20.0)%    $536.7   $663.0    (19.0)%
    Total RevPAR (1) 101.78  $127.49     (20.2)%   $100.75  $125.43    (19.7)%
    Income available
     (loss
     attributable)
     to common
     stockholders    $(23.1)    $4.4    (625.0)%   $(157.7)   $61.6   (356.0)%
    Income available
     (loss
     attributable)
     to common
     stockholders
     per diluted
     share           $(0.31)   $0.09    (444.4)%    $(2.53)   $1.11   (327.9)%
    EBITDA            $37.9    $68.5     (44.7)%     $27.8   $257.2    (89.2)%
    Adjusted EBITDA   $40.1    $68.5     (41.5)%    $123.8   $215.1    (42.4)%
    FFO available
     to common
     stockholders      $5.0    $36.5     (86.3)%    $(55.7)  $119.1   (146.8)%
    Adjusted FFO
     available to
     common
     stockholders     $10.3    $36.5     (71.8)%     $31.0   $119.1    (74.0)%
    FFO available to
     common
     stockholders per
     diluted
     share (2)        $0.07    $0.68     (89.7)%    $(0.89)   $1.99   (144.7)%
    Adjusted FFO
     available to
     common
     stockholders
     per diluted
     share (2)        $0.14    $0.68     (79.4)%     $0.50    $1.99    (74.9)%
    Hotel EBITDA
     margin (1)       23.8%    29.5%    (570) bps    24.5%    29.5%  (500) bps



    (1)  Includes the 38 hotels we owned as of September 30, 2009, excluding
         the Marriott Ontario Airport reclassified as "Operations Held for
         Non-Sale Disposition" on our balance sheets and statements of
         operations, and the W San Diego reclassified as discontinued
         operations on our balance sheets and statements of operations.

    (2)  Reflects Series C convertible preferred stock on an "as-converted"
         basis if such treatment is dilutive.


Contemporaneously with this press release, the Company has filed with the
Securities and Exchange Commission its Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2009.

Disclosure regarding the non-GAAP financial measures in this release is
included on pages 5 and 6. Disclosure regarding the Hotel EBITDA Margin is
included on page 6 of this release. Reconciliations of non-GAAP financial
measures to the most comparable GAAP measure for each of the periods presented
are included on pages 9 and 10 of this release.

Transactions

Equity Offering. Subsequent to the end of the Company's third quarter, the
Company issued 23,000,000 shares of its common stock, including the
underwriters' over-allotment of 3,000,000 shares. Net proceeds from this
offering of approximately $158.6 million were contributed to Sunstone Hotel
Partnership LLC, a subsidiary, which will use the proceeds for working capital
and other general corporate purposes, which may include hotel acquisitions.

Secured Finance Initiatives. The Company has initiated a secured debt
restructuring program to proactively address value and cash flow deficits
among certain of its mortgaged hotels. The primary goal of this program is to
achieve benefits for the Company's stockholders through loan amendments, or in
certain cases, consensual transfers to the lenders of the hotel assets in full
satisfaction of the debt. Loans within the Company's secured debt
restructuring program generally meet two criteria: (1) the hotel is not
generating sufficient cash flow to cover debt service, and under the current
terms of the mortgage, the hotel is not expected to generate sufficient cash
flow for the foreseeable future, and (2) the present value of the hotel is
significantly less than the principal amount of the applicable loan. The loans
secured by such hotels, subject to customary exceptions, are non-recourse to
the Company. As of September 30, 2009, five of the Company's loans totaling
$471.4 million are or have been subject to the Company's secured debt
restructuring program. Each of these five loans is discussed further below.

W San Diego.  Effective September 30, 2009, possession and control of the W
San Diego was transferred to a court-appointed receiver. In connection with
this transfer, the Company deconsolidated this hotel and reclassified the
assets and liabilities, including the $29.0 million hotel asset and the
hotel's $65.0 million mortgage indebtedness, to discontinued operations on its
balance sheets. Additionally, the Company reclassified the W San Diego's
results of operations and cash flows to discontinued operations on its
statements of operations and cash flows. Once title to the hotel is
transferred, the Company will record a gain on extinguishment of debt, and the
net assets and liabilities will be removed from the Company's balance sheets.

Marriott Ontario Airport.  In September 2009, the Company elected to cease the
subsidization of debt service on the non-recourse mortgage for the Marriott
Ontario Airport, which may result in a default under the non-recourse
mortgage. The Company believes the value of this hotel is now significantly
less than the principal amount of the mortgage. Prior to the time that the
Company elected to discontinue subsidizing operating expenses at this hotel,
the Company made several attempts to work with the special servicer handling
the Marriott Ontario Airport loan to seek modification of the repayment terms.
While the special servicer declined the Company's request for a proposed
modification of this loan, the lender was under no duty to agree to any such
proposed modification. At this point, the Company does not expect further
negotiation with the special servicer, and the Company is prepared to convey
the hotel to the lender in lieu of repayment of the debt. In conjunction with
this potential default, the Company has reclassified the assets, liabilities
and results of operations of the Marriott Ontario Airport to "operations held
for non-sale disposition" on its balance sheets, statements of operations and
statements of cash flows. This hotel had a net book value of $16.6 million,
and the amount of debt outstanding under the mortgage was $25.5 million at
September 30, 2009.

Renaissance Westchester.  In August 2009, the Company elected to cease the
subsidization of debt service on the non-recourse mortgage for the Renaissance
Westchester, which resulted in a default under the mortgage. The Company
believes the value of this hotel is now significantly less than the principal
amount of the mortgage. The Company continues to work with the special
servicer responsible for the Renaissance Westchester loan towards reaching a
modification of this loan, but the Company cannot provide any assurance that
it will achieve such a result. Absent a modification, the Company may elect to
surrender the hotel to the lender or cooperate with the lender's appointment
of a receiver. This hotel had a net book value of $25.0 million, and the
amount of debt outstanding under the mortgage was $29.4 million at September
30, 2009.

Massachusetts Mutual Life Insurance Company.  The Company currently is in
discussions with Massachusetts Mutual Life Insurance Company, or Mass Mutual,
to negotiate an amendment to a $246.3 million, 5.95% non-recourse mortgage
loan that matures in 2011. The Company elected not to make the November 1 debt
service payment on this loan, which is expected to result in a default under
this loan.  This loan is currently secured by 11 of the Company's hotels,
comprised of 2,587 rooms --Renaissance Atlanta Concourse; Hilton Huntington;
Courtyard by Marriott Los Angeles; Residence Inn by Marriott Manhattan Beach;
Marriott Provo; Kahler Inn & Suites Rochester; Marriott Rochester; Courtyard
by Marriott San Diego (Old Town); Holiday Inn Downtown, San Diego; Holiday Inn
Express San Diego (Old Town); and Marriott Salt Lake City (University Park).
The Company is seeking an amendment to the terms of this loan because it
believes that the present value of the hotels securing this loan is currently
less than the outstanding principal amount of this loan. The Company cannot
provide any assurances that it will be successful in its efforts to amend the
terms of this loan.  Absent an amendment, the Company may elect to surrender
the hotels to the lender or cooperate with the lender's appointment of a
receiver. The 11 hotels securing this loan had a net book value including
goodwill of $258.8 million at September 30, 2009.

Renaissance Baltimore.  The Company is currently finalizing an amendment to
the $105.2 million non-recourse mortgage loan secured by the Renaissance
Baltimore. If executed, the amendment would result in the elimination of
amortization on this loan for a period of up to 30 months. The Company
anticipates executing this amendment during the fourth quarter.

Hotel Sales. On July 31, 2009, the Company sold the 202-room Hyatt Suites
Atlanta Northwest for gross proceeds of $8.5 million, which equates to 22.7x
projected 2009 EBITDA.

Hotel Acquisitions. The Company believes that the recent declines in demand
for lodging and continuing capital constraints may lead to opportunities to
acquire hotels at discount valuations.  The Company is actively analyzing
various potential hotel acquisition opportunities, with prioritization based
on the following criteria:

    --  Valuation: The Company is analyzing acquisition targets that are
        expected to trade at a discount relative to the Company's current
        enterprise value per key and/or EBITDA multiple.
    --  Value-Add: As the costs of construction, renovations, labor and
        materials have declined from peak levels, the Company is evaluating
        acquisitions where selective renovation/repositioning work add value.
    --  Synergies: Economies of scale, ownership efficiencies, improved
pricing
        power and staff sharing, may be realized by owning multiple hotels
        within the same market.
    --  Outperforming Markets: The Company seeks to invest in strong locations
        within markets that are expected to outperform the U.S. average in
terms
        of growth in lodging demand.

    --  Pipeline: The Company is exploring preferred relationships with
current
        owners of hotel real estate, who may look to divest of such real
estate
        in the future.


While discount acquisition opportunities appear to be increasing in number,
there can be no assurances that the Company will be successful in executing on
its plan to acquire quality hotel assets at discount valuations.

Balance Sheet/Liquidity Update

Ken Cruse, Chief Financial Officer, stated, "We continue to proactively manage
our balance sheet, and remain focused on creating long-term stockholder value.
Through the successful execution of our various finance initiatives this year,
we have positioned the Company to enter the next business cycle in a position
of strength."

As of September 30, 2009, the Company had approximately $251.3 million of cash
and cash equivalents, including restricted cash of $48.7 million. Subsequent
to September 30, 2009, the Company increased its cash position by
approximately $158.6 million to approximately $409.9 million as net proceeds
were received from the Company's equity offering. As of September 30, 2009,
the Company had no outstanding indebtedness under its $85.0 million credit
facility, and had $3.1 million in outstanding irrevocable letters of credit
backed by the credit facility.  The Company continues to maintain a higher
than historical cash balance in light of the ongoing economic downturn and for
acquisition opportunities.

On September 30, 2009, excluding the Marriott Ontario Airport and the W San
Diego, total assets were $2.5 billion, including $2.2 billion of net
investments in hotel properties, total debt was $1.4 billion and stockholders'
equity was $0.9 billion.

Financial Covenants

The Company is subject to compliance with various covenants under its credit
facility, its Series C preferred stock, and its 4.6% Exchangeable Senior Notes
due 2027 (the "Senior Notes"). If the Company fails to meet certain of the
credit facility's covenants, a default may occur, which may result in a
reduction in, or the complete elimination of, funds available under the credit
facility. If the Company fails to meet certain financial covenants for four
consecutive quarters with respect to the Company's Series C preferred stock, a
financial ratio violation will occur. As anticipated, as of September 30,
2009, the Company failed one of the financial covenants regarding its Series C
preferred stock. If the Company remains out of compliance with this covenant
for the next three quarters, a financial ratio violation will occur. If a
financial ratio violation occurs, among other things, the Company would be
restricted from paying dividends on its common stock, and would incur a 50
basis point per quarter dividend increase on the Series C preferred stock. 
Additionally, the Series C preferred stockholders would gain the right to
appoint one board member. Unless operations improve from current levels, the
Company believes it may incur a financial ratio violation with respect to its
Series C preferred stock during the second half of 2010.  In the event the
Company were to default on indebtedness in excess of $300.0 million, and such
default resulted in the acceleration of the maturity of such indebtedness,
either the trustee or the holders of not less than 25% in principal amount of
the outstanding Senior Notes may declare the Senior Notes and any unpaid
interest due and payable. As of November 4, 2009, the only indebtedness
currently in default and whose maturity has been accelerated is the $29.4
million non-recourse loan for the Renaissance Westchester.

Goodwill and Other Impairment Losses

During the third quarter of 2009, in light of the continuing economic
turbulence, the Company determined that an intra-year impairment analysis
should be performed as of September 30, 2009. In conjunction with this
impairment evaluation, the Company determined that the goodwill associated
with the Marriott Rochester may be impaired as of September 30, 2009, and,
accordingly, the Company recorded an impairment loss of $2.2 million to
goodwill and other impairment losses.

Hotel Renovations

During the third quarter of 2009, the Company invested $7.4 million in capital
projects.

Dividend Update 

On October 21, 2009, the Company's board of directors declared a cash dividend
of $0.50 per share payable to its Series A cumulative redeemable preferred
stockholders and a cash dividend of $0.393 per share payable to its Series C
cumulative convertible redeemable preferred stockholders. The dividends will
be paid on January 15, 2010 to stockholders of record on December 31, 2009. No
dividend was declared on the Company's common stock.

The Company intends to make dividends on its stock in amounts equivalent to
100% of its annual taxable income. The level of any future dividends will be
determined by the Company's board of directors after considering taxable
income projections, expected capital requirements, and risks affecting the
Company's business.  In light of the Company's intent to distribute 100% of
its annual taxable income, future dividends may be reduced from past levels,
or eliminated entirely.  Dividends may be made in the form of cash or a
combination of cash and stock consistent with Internal Revenue Code
regulations.

Earnings Call

The Company will host a conference call to discuss third quarter results on
November 4, 2009, at 2:00 p.m. PST. A live web cast of the call will be
available via the Investor Relations section of the Company's website at
www.sunstonehotels.com. Alternatively, investors may dial 1-877-941-2927 (for
domestic callers) or 1-480-629-9725 (for international callers) with passcode
#4173224. A replay of the web cast will also be archived on the website.

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust
("REIT") that, as of the date hereof, has interests in 40 hotels comprised of
14,006 rooms primarily in the upper-upscale segment operated under nationally
recognized brands, such as Marriott, Hyatt, Fairmont and Hilton.  For further
information, please visit the Company's website at www.sunstonehotels.com.

This press release contains forward-looking statements within the meaning of
federal securities laws and regulations. These forward-looking statements are
identified by their use of terms and phrases such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intend," "may," "plan," "predict,"
"project," "should," "will" and other similar terms and phrases, including
references to assumptions and forecasts of future results. Forward-looking
statements are not guarantees of future performance and involve known and
unknown risks, uncertainties and other factors that may cause the actual
results to differ materially from those anticipated at the time the
forward-looking statements are made. These risks include, but are not limited
to: volatility in the debt or equity markets affecting our ability to acquire
or sell hotel assets; national and local economic and business conditions,
including the likelihood of a prolonged U.S. recession; the ability to
maintain sufficient liquidity and our access to capital markets; potential
terrorist attacks, which would affect occupancy rates at our hotels and the
demand for hotel products and services; operating risks associated with the
hotel business; risks associated with the level of our indebtedness and our
ability to meet covenants in our debt and equity agreements; relationships
with property managers and franchisors; our ability to maintain our properties
in a first-class manner, including meeting capital expenditure requirements;
our ability to compete effectively in areas such as access, location, quality
of accommodations and room rate structures; changes in travel patterns, taxes
and government regulations, which influence or determine wages, prices,
construction procedures and costs; our ability to identify, successfully
compete for and complete acquisitions; the performance of hotels after they
are acquired; necessary capital expenditures and our ability to fund them and
complete them with minimum disruption; our ability to continue to satisfy
complex rules in order for us to qualify as a REIT for federal income tax
purposes; and other risks and uncertainties associated with our business
described in the Company's filings with the Securities and Exchange
Commission. Although the Company believes the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give
no assurance that the expectations will be attained or that any deviation will
not be material. All forward-looking information in this release is as of
November 4, 2009, and the Company undertakes no obligation to update any
forward-looking statement to conform the statement to actual results or
changes in the Company's expectations.

This release should be read in conjunction with the consolidated financial
statements and notes thereto included in our most recent reports on Form 10-K
and Form 10-Q. Copies of these reports are available on our website at
www.sunstonehotels.com and through the SEC's Electronic Data Gathering
Analysis and Retrieval System ("EDGAR") at www.sec.gov.

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are
useful to investors as key measures of our operating performance: (1) Earnings
Before Interest Expense, Taxes, Depreciation and Amortization, or EBITDA; (2)
Adjusted EBITDA (as defined below); (3) Funds From Operations, or FFO; (4)
Adjusted FFO (as defined below); and (5) adjusted hotel EBITDA and hotel
EBITDA margin for the purpose of our operating margins.

EBITDA represents income available to common stockholders excluding: (1)
preferred stock dividends; (2) amortization of deferred stock compensation;
(3) interest expense (including prepayment penalties, if any); (4) provision
for income taxes, including income taxes applicable to sale of assets; and (5)
depreciation and amortization. In addition, we have presented Adjusted EBITDA,
which excludes: (1) the impact of any gain or loss from asset sales; (2)
impairment charges; and (3) other adjustments we have identified in this
release. We believe EBITDA and Adjusted EBITDA are useful to investors in
evaluating our operating performance because these measures help investors
evaluate and compare the results of our operations from period to period by
removing the impact of our capital structure (primarily interest expense and
preferred stock dividends) and our asset base (primarily depreciation and
amortization) from our operating results. We also use EBITDA and Adjusted
EBITDA as measures in determining the value of hotel acquisitions and
dispositions. A reconciliation of income available to common stockholders to
EBITDA and Adjusted EBITDA is set forth on page 9.  A reconciliation and the
components of adjusted hotel EBITDA and hotel EBITDA margin are set forth on
page 10. We believe adjusted hotel EBITDA and hotel EBITDA margin are also
useful to investors in evaluating our property-level operating performance.

We compute FFO in accordance with standards established by the National
Association of Real Estate Investment Trusts, or NAREIT, an industry trade
group. The Board of Governors of NAREIT in its March 1995 White Paper (as
clarified in November 1999 and April 2002) defines FFO to mean net income
(loss) (computed in accordance with GAAP), excluding gains and losses from
sales of property, plus real estate-related depreciation and amortization
(excluding amortization of deferred financing costs), and after adjustment for
unconsolidated partnerships and joint ventures. We also present Adjusted FFO,
which excludes prepayment penalties, written-off deferred financing costs,
impairment losses and other adjustments we have identified in this release. We
believe that the presentation of FFO and Adjusted FFO provide useful
information to investors regarding our operating performance because they are
measures of our operations without regard to specified non-cash items such as
real estate depreciation and amortization, gain or loss on sale of assets and
certain other items which we believe are not indicative of the performance of
our underlying hotel properties.  We believe that these items are more
representative of our asset base and our acquisition and disposition
activities than our ongoing operations. We also use FFO as one measure in
determining our results after taking into account the impact of our capital
structure.  A reconciliation of income available to common stockholders to FFO
and Adjusted FFO is set forth on page 9.

We caution investors that amounts presented in accordance with our definitions
of EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, adjusted hotel EBITDA and hotel
EBITDA margin may not be comparable to similar measures disclosed by other
companies, because not all companies calculate these non-GAAP measures in the
same manner. EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, adjusted hotel EBITDA
and hotel EBITDA margin should not be considered as an alternative measure of
our net income (loss), operating performance, cash flow or liquidity. EBITDA,
Adjusted EBITDA, FFO, Adjusted FFO, adjusted hotel EBITDA and hotel EBITDA
margin may include funds that may not be available for our discretionary use
due to functional requirements to conserve funds for capital expenditures and
property acquisitions and other commitments and uncertainties. Although we
believe that EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, adjusted hotel EBITDA
and hotel EBITDA margin can enhance an investor's understanding of our results
of operations, these non-GAAP financial measures, when viewed individually,
are not necessarily a better indicator of any trend as compared to GAAP
measures such as net income (loss) or cash flow from operations. In addition,
you should be aware that adverse economic and market conditions may harm our
cash flow.

Hotel EBITDA Margin Information

The revenue and expense items associated with the Company's two commercial
laundry facilities and the one hotel property held for non-sale disposition,
any guaranty payments, and other miscellaneous non-hotel items have been shown
below the adjusted hotel EBITDA line in presenting hotel EBITDA margins.
Management believes the calculation of adjusted hotel EBITDA results in a more
accurate presentation of hotel EBITDA margins of the Company's portfolio of
hotels. See page 10 for a reconciliation of adjusted hotel EBITDA to the
comparable GAAP measure.


***Tables to Follow***




    Mass Mutual 11 Asset Crossed Portfolio    Hyatt Suites Atlanta Northwest
                (in thousands)                       (in thousands)

                             Full Year 2009                     Full Year 2009
                              Forecast (1)                         Forecast
    Total Revenue                $110,174     Total Revenue         $5,841

    Net Loss                      $(5,117)    Net Loss               $(525)

    Plus: Depreciation             14,514     Plus:  Depreciation      900
    Plus: Interest Expense         14,616                              ---
    Plus: Penalties (2)               987     Adjusted Hotel EBITDA   $375
                                      ---                             ====
    Adjusted Hotel EBITDA          25,000
                                   ------
    Less: Interest Expense        (14,616)
    Less: Penalties                  (987)
    Less: Amortization (3)        (23,037)
    Less: FF&E Reserves            (4,407)
                                   ------
    Portfolio Cash Flow          $(18,047)
                                 ========

    (1)  Pro forma for full year amortization and penalties.
    (2)  Assumes full-year of yield maintenance payments on excess
         amortization.
    (3)  Assumes full-year of amortization payments.



                         Sunstone Hotel Investors, Inc.
                          Consolidated Balance Sheets
                       (In thousands, except share data)

                                                  September 30,   December 31,
                                                       2009           2008
                                                       ----           ----
                                                    (unaudited)
    Assets
    Current assets:
      Cash and cash equivalents                     $202,578        $176,748
      Restricted cash                                 48,685          40,105
      Accounts receivable, net                        24,674          34,119
      Due from affiliates                                 79             109
      Inventories                                      2,560           2,731
      Prepaid expenses                                 8,724           7,199
      Investment in hotel properties of
       discontinued operations, net                       -          169,848
      Investment in hotel property of operations
       held for non-sale disposition, net             16,597               -
      Other current assets of discontinued
       operations, net                                    -            4,790
      Other current assets of operations held for
       non-sale disposition, net                       1,724             847
                                                       -----             ---
    Total current assets                             305,621         436,496

    Investment in hotel properties, net            2,155,052       2,256,962
    Investment in hotel property of operations
     held for non-sale disposition, net                   -           26,001
    Other real estate, net                            14,117          14,640
    Investments in unconsolidated joint ventures      25,948          28,770
    Deferred financing costs, net                      8,405          11,200
    Goodwill                                           6,450          13,404
    Other assets, net                                 12,220          18,138
                                                      ------          ------

    Total assets                                  $2,527,813      $2,805,611
                                                  ==========      ==========

    Liabilities and Stockholders' Equity
    Current liabilities:
      Accounts payable and accrued expenses          $22,623         $16,798
      Accrued payroll and employee benefits            8,429           8,096
      Due to Interstate SHP                           13,150          15,163
      Dividends payable                                5,137          12,499
      Other current liabilities                       30,361          29,890
      Current portion of notes payable               288,863          12,452
      Current portion of note payable of
       operations held for non-sale disposition       25,547             550
      Other current liabilities of discontinued
       operations, net                                35,428          70,100
      Other current liabilities of operations
       held for non-sale disposition                     969             911
                                                         ---             ---
    Total current liabilities                        430,507         166,459

    Notes payable, less current portion            1,131,188       1,592,850
    Note payable, less current portion of
     operations held for non-sale disposition             -           25,406
    Other liabilities                                  6,496           6,388
                                                       -----           -----
    Total liabilities                              1,568,191       1,791,103

    Commitments and contingencies                         -               -

    Preferred stock, Series C Cumulative
     Convertible Redeemable Preferred Stock,
     $0.01 par value, 4,102,564 shares
     authorized, issued and outstanding at
     September 30, 2009 and December 31,
     2008, liquidation preference of $24.375
     per share                                        99,846          99,696

    Stockholders' equity:
      Preferred stock, $0.01 par value,
       100,000,000 shares authorized. 8.0% Series
       A Cumulative Redeemable Preferred Stock,
       7,050,000 shares issued and outstanding at
       September 30, 2009 and December 31, 2008,
       stated at liquidation preference of $25.00
       per share                                     176,250         176,250
      Common stock, $0.01 par value, 500,000,000
       shares authorized, 73,861,385 shares issued
       and outstanding at September 30, 2009 and
       47,864,654 shares issued and outstanding
       at December 31, 2008                              739             479
      Additional paid in capital                     960,089         829,274
      Retained earnings                              119,016         260,659
      Cumulative dividends                          (392,390)       (347,922)
      Accumulated other comprehensive loss            (3,928)         (3,928)
                                                      ------          ------
    Total stockholders' equity                       859,776         914,812
                                                     -------         -------

    Total liabilities and stockholders' equity    $2,527,813      $2,805,611
                                                  ==========      ==========



                          Sunstone Hotel Investors, Inc.
                 Unaudited Consolidated Statements of Operations
                      (In thousands, except per share data)


                                      Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                      ------------------   ------------------
                                        2009       2008       2009      2008
                                        ----       ----       ----      ----

     Revenues
     Room                            $119,177   $149,192   $351,550  $438,332
     Food and beverage                 40,715     52,610    136,180   168,839
     Other operating                   13,853     14,983     41,353    44,289
     Total revenues of operations
      held for non-sale disposition     2,271      3,352      7,649    11,507
                                        -----      -----      -----    ------
     Total revenues                   176,016    220,137    536,732   662,967
                                      -------    -------    -------   -------
     Operating expenses
     Room                              29,118     31,977     84,005    94,628
     Food and beverage                 31,958     39,654    100,735   122,693
     Other operating                    7,222      8,146     21,797    24,283
     Advertising and promotion          9,740     11,102     31,336    34,271
     Repairs and maintenance            7,534      8,243     23,086    24,839
     Utilities                          7,768      9,455     22,598    25,629
     Franchise costs                    6,833      8,522     19,494    23,703
     Property tax, ground lease and
      insurance                        12,272     11,880     36,103    37,266
     Property general and
      administrative                   20,153     24,414     61,907    73,447
     Corporate overhead                 4,340      5,122     14,929    17,031
     Depreciation and amortization     26,511     26,399     80,391    79,726
     Total operating expenses of
      operations held for non-sale
      disposition                       2,324      3,032      7,564     9,776
     Goodwill and other impairment
      losses                            2,209          -     64,045         -
     Impairment loss of operations
      held for non-sale disposition         -          -      8,857         -
                                          ---        ---      -----       ---
     Total operating expenses         167,982    187,946    576,847   567,292
                                      -------    -------    -------   -------
     Operating income (loss)            8,034     32,191    (40,115)   95,675
     Equity in net losses of
      unconsolidated joint ventures      (515)       (23)    (2,616)   (1,545)
     Interest and other income            240      1,365      1,116     3,044
     Interest expense                 (24,467)   (24,216)   (70,516)  (72,259)
     Interest expense of operations
      held for non-sale disposition      (375)      (361)    (1,074)   (1,079)
     Gain (loss) on extinguishment
      of debt                             (20)         -     54,559         -
                                          ---        ---     ------       ---
     Income (loss) from continuing
      operations                      (17,103)     8,956    (58,646)   23,836
     Income (loss) from discontinued
      operations                         (845)       963    (82,997)   54,631
                                         ----        ---    -------    ------
     Net income (loss)                (17,948)     9,919   (141,643)   78,467
     Dividends paid on unvested
      restricted stock compensation         -       (278)      (447)     (741)
     Preferred stock dividends and
      accretion                        (5,187)    (5,233)   (15,562)  (15,697)
     Undistributed income allocated
      to unvested restricted stock
      compensation                          -          -          -       (69)
     Undistributed income allocated
      to Series C preferred stock           -          -          -      (355)
                                          ---        ---        ---      ----
     Income available (loss
      attributable) to common
      stockholders                   $(23,135)    $4,408  $(157,652)  $61,605
                                     ========     ======  =========   =======

    Basic per share amounts:
      Income (loss) from continuing
       operations available
       (attributable) to common
       stockholders                    $(0.30)     $0.07     $(1.20)    $0.13
      Income (loss) from
       discontinued operations          (0.01)      0.02      (1.33)     0.98
                                        -----       ----      -----      ----
    Basic income available (loss
     attributable) to common
     stockholders per common share     $(0.31)     $0.09     $(2.53)    $1.11
                                       ======      =====     ======     =====

    Diluted per share amounts:
      Income (loss) from continuing
       operations available
       (attributable) to common
       stockholders                    $(0.30)     $0.07     $(1.20)    $0.13
      Income (loss) from discontinued
       operations                       (0.01)      0.02      (1.33)     0.98
                                        -----       ----      -----      ----
    Diluted income available (loss
     attributable) to common
     stockholders per common share     $(0.31)     $0.09     $(2.53)    $1.11
                                       ======      =====     ======     =====

    Weighted average common shares
     outstanding:
      Basic                            73,857     49,878     62,382    55,573
                                       ======     ======     ======    ======
      Diluted                          73,857     49,950     62,382    55,652
                                       ======     ======     ======    ======

    Dividends declared per common
     share                                 $-      $0.35         $-     $1.05
                                           ==      =====         ==     =====



                         Sunstone Hotel Investors, Inc.
        Reconciliation of Income Available (Loss Attributable) to Common
                   Stockholders to Non-GAAP Financial Measures
             (Unaudited and in thousands except per share amounts)


        Reconciliation of Income Available (Loss Attributable) to Common
                   Stockholders to EBITDA and Adjusted EBITDA



                                      Three Months Ended   Nine Months Ended
                                         September 30,       September 30,
                                         --------------      --------------
                                         2009      2008      2009      2008
                                         ----      ----      ----      ----

    Income available (loss
     attributable) to common
     stockholders                    $(23,135)   $4,408  $(157,652)   $61,605
    Dividends paid on unvested
     restricted stock compensation          -       278        447        741
    Series A and C preferred stock
     dividends                          5,187     5,233     15,562     15,697
    Undistributed income allocated
     to unvested restricted stock
     compensation                           -         -          -         69
    Undistributed income allocated
     to Series C preferred stock            -         -          -        355
    Amortization of deferred stock
     compensation                         938     1,117      3,286      3,255
    Continuing operations:
       Depreciation and amortization   26,511    26,399     80,391     79,726
       Interest expense                20,492    22,895     64,010     68,387
       Amortization of deferred
        financing fees                    718       431      1,626      1,257
       Write-off of deferred financing
        fees                                -         -        284          -
       Loan penalties and fees          3,020         -      3,020          -
       Non-cash interest related to
        discount on Senior Notes          237       890      1,576      2,615
    Unconsolidated joint ventures:
       Depreciation and amortization    1,306     1,271      3,860      3,808
       Interest expense                   638     1,214      1,986      3,971
       Amortization of deferred
        financing fees                     45       328        137      1,053
       Amortization of deferred stock
        compensation                       12        13         28         77
    Operations held for non-sale
     disposition:
       Depreciation and amortization      202       301        814        906
       Interest expense                   349       356      1,041      1,067
       Amortization of deferred
        financing fees                      4         5         11         12
       Loan penalties and fees             22         -         22          -
    Discontinued operations:
       Depreciation and amortization      314     2,344      4,298      9,559
       Interest expense                 1,021     1,021      3,028      3,040
       Amortization of deferred
        financing fees                      2         2          7          7
       Loan penalties and fees             51         -         51          -
                                           --       ---         --        ---
    EBITDA                             37,934    68,506     27,833    257,207
                                       ------    ------     ------    -------

    (Gain) loss on sale of assets         (18)        -     12,698    (42,108)
    (Gain) loss on extinguishment
     of debt                               20         -    (54,559)         -
    Impairment loss - continuing
     operations                         2,209         -     64,045          -
    Impairment loss - operations
     held for non-sale disposition          -         -      8,857          -
    Impairment loss - discontinued
     operations                             -         -     64,964          -
                                          ---       ---     ------        ---
                                        2,211         -     96,005    (42,108)
                                        -----       ---     ------    -------

    Adjusted EBITDA                   $40,145   $68,506   $123,838   $215,099
                                      =======   =======   ========   ========


        Reconciliation of Income Available (Loss Attributable) to Common
                      Stockholders to FFO and Adjusted FFO


    Income available (loss
     attributable) to common
     stockholders                    $(23,135)   $4,408  $(157,652)   $61,605
    Dividends paid on unvested
     restricted stock compensation          -       278        447        741
    Series C preferred stock
     dividends                              -     1,708          -      5,122
    Undistributed income allocated
     to unvested restricted stock
     compensation                           -         -          -         69
    Undistributed income allocated
     to Series C preferred stock            -         -          -        355
    Real estate depreciation and
     amortization - continuing
     operations                        26,367    26,211     79,930     79,090
    Real estate depreciation and
     amortization - operations held
     for non-sale disposition             202       301        814        906
    Real estate depreciation and
     amortization - unconsolidated
     joint ventures                     1,288     1,259      3,806      3,784
    Real estate depreciation and
     amortization - discontinued
     operations                           314     2,344      4,298      9,559
    (Gain) loss on sale of assets         (18)        -     12,698    (42,108)
                                          ---       ---     ------    -------
    FFO available to common
     stockholders                       5,018    36,509    (55,659)   119,123
                                        -----    ------    -------    -------

    Continuing operations:
       Write-off of deferred
        financing fees                      -         -        284          -
       Loan penalties and fees          3,020         -      3,020          -
    Operations held for non-sale
     disposition:
       Loan penalties and fees             22         -         22          -
    Discontinued operations:
       Loan penalties and fees             51         -         51          -

    (Gain) loss on extinguishment
     of debt                               20         -    (54,559)         -
    Impairment loss - continuing
     operations                         2,209         -     64,045          -
    Impairment loss - operations
     held for non-sale disposition          -         -      8,857          -
    Impairment loss - discontinued
     operations                             -         -     64,964          -
                                          ---       ---     ------        ---
                                        5,322         -     86,684          -
                                        -----       ---     ------        ---

    Adjusted FFO available to
     common stockholders              $10,340   $36,509    $31,025   $119,123
                                      =======   =======    =======   ========

    FFO available to common
     stockholders per diluted share     $0.07     $0.68     $(0.89)     $1.99
                                        =====     =====     ======      =====

    Adjusted FFO available to
     common stockholders per diluted
     share                              $0.14     $0.68      $0.50      $1.99
                                        =====     =====      =====      =====

    Diluted weighted average shares
     outstanding before adjustments
     for Series C preferred stock      73,929    49,950     62,382     55,652
    Shares associated with Series C
     preferred stock                        -     4,103          -      4,103
                                          ---     -----        ---      -----
    Diluted weighted average shares
     outstanding (1)                   73,929    54,053     62,382     59,755
                                       ======    ======     ======     ======

    2008 restated due to stock
     dividend (2):
      FFO available to common
       stockholders per diluted
       share                                      $0.61                 $1.83
                                                  =====                 =====
      Adjusted FFO available to common
       stockholders per diluted share             $0.61                 $1.83
                                                  =====                 =====
      Diluted weighted average shares
       outstanding                               59,497                64,941
                                                 ======                ======



    (1)  Diluted weighted average shares outstanding includes the Series C
         convertible preferred stock on an "as-converted" basis if such
         treatment is dilutive.

    (2)  Diluted weighted average common shares and per share FFO and Adjusted
         FFO for the three and nine months ended September 30, 2008 have been
         retroactively adjusted for the effect of shares of common stock
         issued pursuant to the stock dividend paid in January 2009 on an
         "as-converted" basis for the Series C convertible preferred stock.



                          Sunstone Hotel Investors, Inc.
                               Hotel EBITDA Margins
               (Unaudited and in thousands except hotels and rooms)



                                       Three Months Ended   Nine Months Ended
                                          September 30,       September 30,
                                       ------------------   ------------------
                                       2009 (1)  2008 (1)   2009 (1)  2008 (1)
                                       --------  --------   --------  --------
    Number of Hotels                        38        38         38        38
    Number of Rooms                     13,247    13,247     13,247    13,247

                                          ----      ----       ----      ----
    Hotel EBITDA margin (2)               23.8%     29.5%      24.5%     29.5%
                                          ====      ====       ====      ====

    Hotel Revenues
         Room revenue                 $119,177  $149,192   $351,550  $438,332
         Food and beverage revenue      40,715    52,610    136,180   168,839
         Other operating revenue         9,817    11,016     29,484    32,508
                                         -----    ------     ------    ------
    Total Hotel Revenues               169,709   212,818    517,214   639,679

    Hotel Expenses
         Room expense                   29,411    32,245     84,751    95,377
         Food and beverage expense      31,972    39,666    100,770   122,730
         Other hotel expense            48,169    54,097    144,211   160,787
         General and administrative
          expense                       19,702    23,996     60,571    72,153
                                        ------    ------     ------    ------
    Total Hotel Expenses               129,254   150,004    390,303   451,047

    Adjusted Hotel EBITDA               40,455    62,814    126,911   188,632

    Marriott Ontario Airport:
         Total revenues of operations
          held for non-sale
          disposition                    2,271     3,352      7,649    11,507
         Total operating expenses of
          operations held for non-sale
          disposition                   (2,324)   (3,032)    (7,564)   (9,776)
         Impairment loss of operations
          held for non-sale
          disposition                        -         -     (8,857)        -
    Non-hotel operating income             692       578      1,985     1,600
    Prior year property tax
     supplementals and credits, net          -         -       (874)      469
    Corporate overhead                  (4,340)   (5,122)   (14,929)  (17,031)
    Depreciation and amortization      (26,511)  (26,399)   (80,391)  (79,726)
    Goodwill and other impairment
     losses                             (2,209)        -    (64,045)        -
                                        ------       ---    -------       ---
    Operating Income (Loss)              8,034    32,191    (40,115)   95,675

    Equity in net losses of
     unconsolidated joint ventures        (515)      (23)    (2,616)   (1,545)
    Interest and other income              240     1,365      1,116     3,044
    Interest expense                   (24,467)  (24,216)   (70,516)  (72,259)
    Interest expense of operations
     held for non-sale disposition        (375)     (361)    (1,074)   (1,079)
    Gain (loss) on extinguishment of
     debt                                  (20)        -     54,559         -
    Income (loss) from discontinued
     operations                           (845)      963    (82,997)   54,631
                                          ----       ---    -------    ------
    Net Income (Loss)                 $(17,948)   $9,919  $(141,643)  $78,467
                                      ========    ======  =========   =======


    (1)  Represents our ownership results for the 38 hotels we owned as of the
         end of the period, excluding the Marriott Ontario Airport,
         reclassified as "Operations Held for Non-Sale Disposition" on our
         balance sheets and statements of operations, and the W San Diego,
         reclassified as discontinued operations on our balance sheets and
         statements of operations.
    (2)  Hotel EBITDA margin is calculated as adjusted hotel EBITDA divided by
         total hotel revenues.



                          Sunstone Hotel Investors, Inc.
                          Operating Statistics by Region
                                   (Unaudited)


                                        Three Months Ended September 30, 2009
                                        -------------------------------------
                      Number    Number     Occupancy    Average    Comparable
        Region      of Hotels  of Rooms   Percentages  Daily Rate    RevPAR
        ------      ---------  --------   -----------  ----------    ------
    California (1)         13     3,680        80.9%    $123.38      $99.81
    Other West (2)          7     2,123        66.8%     107.67       71.92
    Midwest (3)             7     2,177        73.5%     124.74       91.68
    Middle
     Atlantic (4)           9     4,099        74.9%     178.07      133.37
    South (5)               2     1,168        71.6%     105.57       75.59
                          ---     -----        ----      ------       -----

        Total              38    13,247        74.7%    $136.25     $101.78
                           ==    ======        ====     =======     =======



                  Three Months Ended September 30, 2008    Percent
                  -------------------------------------   Change in
                    Occupancy     Average    Comparable   Comparable
      Region       Percentages  Daily Rate     RevPAR       RevPAR
      ------       -----------  ----------     ------       ------
    California (1)       83.4%    $151.24     $126.13       -20.9%
    Other West (2)       78.9%     117.66       92.83       -22.5%
    Midwest (3)          74.1%     148.82      110.28       -16.9%
    Middle
     Atlantic (4)        80.5%     207.61      167.13       -20.2%
    South (5)            76.1%     123.87       94.27       -19.8%
                         ----      ------       -----       -----

        Total            79.6%    $160.16     $127.49       -20.2%
                         ====     =======     =======       =====



                                          Nine Months Ended September 30, 2009
                                          ------------------------------------
                       Number     Number    Occupancy    Average   Comparable
        Region      of Hotels    of Rooms  Percentages  Daily Rate    RevPAR
        ------      ---------    --------  -----------  ----------    ------
    California (1)         13       3,680        75.2%    $126.37     $95.03
    Other West (2)          7       2,123        66.4%     114.29      75.89
    Midwest (3)             7       2,177        64.9%     127.60      82.81
    Middle
     Atlantic (4)           9       4,099        71.7%     185.15     132.75
    South (5)               2       1,168        71.0%     127.48      90.51
                          ---       -----        ----      ------      -----

        Total              38      13,247        70.6%    $142.70    $100.75
                           ==      ======        ====     =======    =======




                   Nine Months Ended September 30, 2008     Percent
                   ------------------------------------    Change in
                    Occupancy      Average   Comparable    Comparable
        Region     Percentages   Daily Rate    RevPAR        RevPAR
        ------     -----------   ----------    ------        ------
    California (1)       81.5%     $150.58     $122.72       -22.6%
    Other West (2)       77.7%      120.66       93.75       -19.1%
    Midwest (3)          69.1%      146.34      101.12       -18.1%
    Middle
     Atlantic (4)        76.6%      210.70      161.40       -17.8%
    South (5)            78.3%      148.77      116.49       -22.3%
                         ----       ------      ------       -----

        Total            77.1%     $162.69     $125.43       -19.7%
                         ====      =======     =======       =====



    (1)  Does not include the Marriott Ontario Airport, reclassified as
         "Operations Held for Non-Sale Disposition" on our balance sheets
         and statements of operations, and the W San Diego, reclassified as
         discontinued operations on our balance sheets and statements of
         operations.
    (2)  Includes Oregon, Texas and Utah.
    (3)  Includes Illinois, Michigan and Minnesota.
    (4)  Includes Maryland, Massachusetts, New York, Pennsylvania, Virginia
         and District of Columbia.
    (5)  Includes Florida and Georgia.



                          Sunstone Hotel Investors, Inc.
                          Operating Statistics by Brand
                                   (Unaudited)


                                         Three Months Ended September 30, 2009
                                         -------------------------------------
                      Number of   Number    Occupancy    Average    Comparable
          Brand         Hotels   of Rooms  Percentages  Daily Rate    RevPAR
          -----        -------   --------  -----------  ----------    ------
    Marriott (1)           23      8,221        73.4%    $135.78      $99.66
    Hilton                  7      2,435        76.7%     168.24      129.04
    InterContinental        2        345        86.7%      99.39       86.17
    Hyatt                   1        403        82.8%     129.78      107.46
    Other Brand
     Affiliations (2)       2        647        76.9%     115.82       89.07
    Independent             3      1,196        72.1%      97.15       70.05
                          ---      -----        ----       -----       -----

          Total            38     13,247        74.7%    $136.25     $101.78
                           ==     ======        ====     =======     =======



                    Three Months Ended September 30, 2008       Percent
                    -------------------------------------      Change in
                      Occupancy     Average   Comparable      Comparable
          Brand      Percentages  Daily Rate    RevPAR          RevPAR
          -----      -----------  ----------    ------          ------
    Marriott (1)           79.1%    $155.09     $122.68         -18.8%
    Hilton                 82.9%     207.72      172.20         -25.1%
    InterContinental       74.4%     130.60       97.17         -11.3%
    Hyatt                  85.6%     164.33      140.67         -23.6%
    Other Brand
     Affiliations (2)      82.7%     146.57      121.21         -26.5%
    Independent            74.0%     101.79       75.32          -7.0%
                           ----      ------       -----          ----

          Total            79.6%    $160.16     $127.49         -20.2%
                           ====     =======     =======         =====



                                          Nine Months Ended September 30, 2009
                                          ------------------------------------
                      Number of   Number    Occupancy    Average   Comparable
          Brand         Hotels   of Rooms  Percentages  Daily Rate   RevPAR
          -----         ------   --------  -----------  ----------   ------
    Marriott (1)           23      8,221        70.3%    $146.38    $102.91
    Hilton                  7      2,435        72.1%     163.75     118.06
    InterContinental        2        345        76.2%     103.47      78.84
    Hyatt                   1        403        74.5%     125.67      93.62
    Other Brand
     Affiliations (2)       2        647        73.3%     124.30      91.11
    Independent             3      1,196        64.7%     100.18      64.82
                          ---      -----        ----      ------      -----

          Total            38     13,247        70.6%    $142.70    $100.75
                           ==     ======        ====     =======    =======



                     Nine Months Ended September 30, 2008    Percent
                     ------------------------------------   Change in
                      Occupancy     Average   Comparable   Comparable
          Brand      Percentages  Daily Rate    RevPAR       RevPAR
          -----      -----------  ----------    ------       ------
    Marriott (1)           76.9%    $162.34     $124.84      -17.6%
    Hilton                 80.4%     198.31      159.44      -26.0%
    InterContinental       73.0%     131.65       96.10      -18.0%
    Hyatt                  81.3%     154.26      125.41      -25.3%
    Other Brand
     Affiliations (2)      81.1%     149.59      121.32      -24.9%
    Independent            68.7%     101.76       69.91       -7.3%
                           ----      ------       -----       ----

          Total            77.1%    $162.69     $125.43      -19.7%
                           ====     =======     =======      =====


    (1)  Does not include the Marriott Ontario Airport, reclassified as
         "Operations Held for Non-Sale Disposition" on our balance sheets
         and statements of operations.
    (2)  Includes a Fairmont and a Sheraton. Does not include the W San Diego,
         reclassified as discontinued operations on our balance sheets and
         statements of operations.



                           Sunstone Hotel Investors, Inc.
                                   Debt Summary
                         (Unaudited - dollars in thousands)

                                                 September           November
                               Interest             30,                 4,
                                 Rate/  Maturity   2009     Recent     2009
     Debt          Collateral   Spread    Date    Balance  Events(1)  Balance
     ----          ----------   ------    ----    -------  ---------  -------

    Fixed
    Rate Debt
    ---------
    Secured        Hilton Times
    Mortgage Debt  Square        5.92%  12/1/2010    $81,000          $81,000

    Secured
    Mortgage Debt
    (2)            11 Hotels     5.95%   5/1/2011    246,342          246,342

    Secured        Renaissance
    Mortgage Debt  Long Beach    4.98%   7/1/2012     34,186           34,186

    Secured        Renaissance
    Mortgage Debt  Westchester   4.98%   7/1/2012     29,352           29,352

                   Rochester
    Secured        laundry
    Mortgage Debt  facility      9.88%   6/1/2013      3,533            3,533

    Secured        Doubletree
    Mortgage Debt  Minneapolis   5.34%   5/1/2015     18,130           18,130

    Secured        Hilton Del
    Mortgage Debt  Mar           5.34%   5/1/2015     26,292           26,292

    Secured        Marriott
    Mortgage Debt  Houston       5.34%   5/1/2015     24,135           24,135

                   Marriott
    Secured        Ontario
    Mortgage Debt  Airport       5.34%   5/1/2015     25,547           25,547

                   Marriott
    Secured        Park
    Mortgage Debt  City          5.34%   5/1/2015     15,733           15,733

    Secured        Marriott
    Mortgage Debt  Philadelphia  5.34%   5/1/2015     28,507           28,507

    Secured        Marriott
    Mortgage Debt  Troy          5.34%   5/1/2015     36,908           36,908

                   Marriott
    Secured        Tysons
    Mortgage Debt  Corner        5.34%   5/1/2015     47,095           47,095

    Secured        The Kahler
    Mortgage Debt  Grand         5.34%   5/1/2015     29,032           29,032

    Secured        Valley River
    Mortgage Debt  Inn           5.34%   5/1/2015     12,115           12,115

    Secured        Renaissance
    Mortgage Debt  Harborplace   5.13%   1/1/2016    105,241          105,241

    Secured        Marriott Del
    Mortgage Debt  Mar           5.69%  1/11/2016     48,000           48,000

                   Hilton
    Secured        Houston
    Mortgage Debt  North         5.66%  3/11/2016     33,802           33,802

                   Renaissance
                   Orlando
                   Resort
    Secured        at Sea
    Mortgage Debt  World(R)      5.52%   7/1/2016     86,125           86,125

                   Embassy
    Secured        Suites
    Mortgage Debt  Chicago       5.58%   3/1/2017     75,000           75,000

                   Marriott
    Secured        Boston Long
    Mortgage Debt  Wharf         5.58%  4/11/2017    176,000          176,000

                   Embassy
    Secured        Suites
    Mortgage Debt  La Jolla      6.60%   6/1/2019     70,000           70,000

    Secured        Renaissance
    Mortgage Debt  Washington DC 5.95%   5/1/2021    134,453          134,453

    Exchangeable
    Senior Notes   Guaranty      4.60%  7/15/2027     62,500           62,500
                                                      ------           ------
    Total Fixed
    Rate Debt                                      1,449,028        1,449,028
                                 L +
    Credit                       3.75%-
    Facility       5 Hotels      5.25%  7/17/2011         -                -
                                                         ---              ---
    TOTAL DEBT                                    $1,449,028   $-  $1,449,028
                                                  ==========   ==  ==========

    Preferred
    Stock
    -----------------
     Series A
     Cumulative
     redeemable
     preferred                   8.00%  perpetual   $176,250   $-    $176,250
                                                    ========   ==    ========
     Series C
     Cumulative
     convertible
     redeemable
     preferred                   6.45%  perpetual   $100,000   $-    $100,000
                                                    ========   ==    ========

     Debt Statistics
    -----------------
    % Fixed Rate Debt                                  100.0%           100.0%
    % Floating Rate Debt                                 0.0%             0.0%
    Average Interest Rate                               5.61%            5.61%
    Weighted Average Maturity of Debt (includes
     amounts outstanding on the Credit Facility)(3) 6.3 years        6.3 years



    (1)  Reflects net additional draws and repayments on our credit facility.
    (2)  Cross-collateralized loan with life insurance company.
    (3)  Assumes the exchangeable senior notes remain outstanding to maturity.
         If the exchangeable senior notes were redeemed upon the first call
         date, the weighted average maturity would be approximately 6 years.


    Bryan Giglia
    Vice President - Corporate Finance
    Sunstone Hotel Investors, Inc.
    (949) 369-4236




SOURCE  Sunstone Hotel Investors, Inc.

Bryan Giglia, Vice President - Corporate Finance of Sunstone Hotel Investors,
Inc., +1-949-369-4236
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.