Knobias Clip Report (01-15-20009) SHO
Submitted By Knobias ClipReport
SHO: Shares Decline Following Operations Update and Guidance from Management
By Fain Hughes, fhughes@knobias.com
Shares of Sunstone Hotel Investors, Inc. (SHO) weakened during Thursday’s session following an update by the Company on its operations through December 31, 2008.
The December total portfolio RevPAR was $86.38, down 13.7% to prior year. December comparable portfolio RevPAR was $87.13, down 13.3% to prior year. Fourth quarter total portfolio RevPAR was $107.16, down 11.4% to prior year. Fourth quarter comparable portfolio RevPAR was $107.91, down 10.6% to prior year. The total 2008 total portfolio RevPAR was $119.45, down 2.2% to prior year. The 2008 comparable portfolio RevPAR was $119.18, down 2.3% to prior year.
Robert A. Alter, Executive Chairman and CEO of Sunstone, commented in a conference call, “We expect this softness to continue into 2009, and we expect year-over-year RevPAR declines to be greater in the first half of 2009. However, we continue to out-yield our peers amd maintain our fair share of the market share.”
He added, “We have a high quality portfolio, strong liquidity, and strong balance sheet. We not only expect to ride out this recession, but we expect to be in a position to capitalize on future opportunities.”
Arthur L. Buser, President of Sunstone, noted, “In a very challenging environment, we have been successful in yield managing the mix of business in our hotels and practically eliminating costs to improve margins.”
For the full year 2008, the Company expects total portfolio RevPAR to range from a decrease of approximately 1.0% to a decrease of approximately 4.0% compared to the full year 2007. Adjusted EBITDA is expected to be approximately $275.0 million to $285.0 million. Adjusted FFO available to common stockholders per diluted share is expected to be approximately $2.58 to $2.75.
Ken Cruse, CFO of Sunstone concluded, “We believe that the liquidity provided by our excess cash, our absence of near term debt maturities and our portfolio’s limited capital requirements are critical advantages in this challenging environment.”
A fourth quarter dividend will be paid on January 15, 2009 to stockholders of record at the close of business on December 19, 2008. Based on stockholder elections, the dividend will consist of approximately $7.3 million in cash and approximately 5.0 million shares of the Company’s common stock.
The Company also announced yesterday that Mr. Buser has been appointed CEO and a director, effective January 22, 2009. Mr. Alter will remain as Executive Chairman.
Wachovia downgraded SHO today to Market Perform from Outperform because the firm does not expect the sector’s fundamentals to bottom until late 2009 at the earliest, and they see no short-term catalysts for the shares.
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