IRVINE, Calif., May well 4, 2022 /PRNewswire/ — Sunstone Hotel Investors, Inc. (the “Business” or “Sunstone”) (NYSE: SHO), the proprietor of Extended-Phrase Applicable Serious Estate® in the lodging marketplace, declared that it has entered into a definitive agreement with an affiliate of Hyatt Resorts Company to purchase the 339-area The Confidante Miami Beach front (the “Lodge”), positioned on 1.5 acres of payment-basic, oceanfront land in Miami Seashore for a buy price tag of $232 million, or $684,000 for every vital. Next the acquisition, the Business expects to go after a total transformation of the property and a rebranding of the Resort to Andaz Miami Seaside.
The purchase price tag represents a 17.3x various on 2022 forecasted lodge EBITDA and a 5.% capitalization price on 2022 forecasted lodge web functioning income. In addition to the order price, Sunstone expects to make investments roughly $60 million to reposition the Lodge into a premiere beachfront resort beneath Hyatt’s luxurious, way of living Andaz manufacturer. Upon completion of the renovation, the Company expects the Hotel to make an 8% to 9% stabilized net operating income yield on the complete investment decision in the Resort, including the planned repositioning. The acquisition will be funded through a mixture of money on hand and from borrowing on the Company’s presently undrawn revolving credit score facility.
Bryan Giglia, Chief Government Officer, stated, “We are excited to announce our planned acquisition of The Confidante Miami Seaside wherever we anticipate to create significant value as a result of an substantial renovation and rebranding of the Hotel to Andaz Miami Seaside. Upon completion of the prepared renovation, we will have reworked the earnings potential of the Lodge and we will individual a leading Miami Beach luxurious resort at a remarkably attractive all-in basis in a resilient, source-constrained sector that has continued to display significant rate expansion. We are also enthusiastic to further our partnership with Hyatt, a single of the world’s leading resort providers, and be portion of the progress of Hyatt’s luxurious Andaz brand name.”
Mr. Giglia ongoing, “The acquisition of The Confidante Miami Seashore will allow us to recycle money from our latest income of three Chicago accommodations into this larger progress and better NAV improving financial investment. This transaction attracts on our sizeable in-household skills and confirmed monitor document of developing price by thriving renovations and repositionings, and returns Sunstone to some of what it does best.”
Sunstone believes the acquisition and renovation of the Lodge will be additive to its stockholders in the adhering to methods:
Benefit-Incorporate Chance: Means to meaningfully improve the earnings opportunity and price of the Hotel by a entire repositioning of the property to produce an immersive and inspiring luxurious life style resort practical experience. Post rebranding, the Business anticipates important ADR expansion as the assets will be equipped to improved contend with nearby luxurious accommodations. Sunstone presently anticipates investing around $60 million to renovate all features of the Hotel. The renovation will include things like relocating the foyer to produce a exclusive oceanview check out-in practical experience, reconcepting the food & beverage stores, reinvigorating the pool and yard recreation region, modernizing the guestrooms, growing the suite combine, and upgrading the meeting and event spaces. The renovation work is predicted to begin in phases, starting up in the fourth quarter of 2022 with completion and rebranding at the moment envisioned to manifest in the very first fifty percent of 2024. The Lodge will keep on being in operation though the renovation is done and will proceed to be managed by Hyatt on repositioning.
Improves Possession of LTRR® and Enhances Range and Scale: Acquisition of remarkably appealing, perfectly located genuine estate that will improve the Firm’s portfolio and supply entry into the beautiful Miami Beach front market. Improves publicity to highly rated leisure desire and offers more equilibrium across the Company’s portfolio of leisure, team-oriented and urban lodges.
Enhances Long-Expression Development Profile: Presents possibility to recycle funds from lower expansion recent tendencies into an asset with meaningful earnings development opportunity upon completion of the repositioning. Although Sunstone expects to see major earnings progress in 2022 and 2023 as need across its current team-oriented and urban hotels return to far more normalized stages, Andaz Miami Seaside will enable for ongoing outsized advancement for the Company in 2024 and outside of on the completion of the renovation and rebranding.
Far more Prudently Utilizes Balance Sheet Ability: The acquisition of the Hotel will be funded with present money and from proceeds been given from the Company’s now undrawn revolving credit facility. The Company’s harmony sheet maintains additional ability for financial debt-funded acquisitions that can additional increase per share NAV and earnings growth.
Compelling Valuation and Income Movement Produce: On completion of the repositioning plan, Sunstone anticipates having an all-in foundation of close to $900,000 for every key for a fully renovated, oceanfront, luxury Miami Beach vacation resort wherever valuations for related assets are nicely in extra of $1 million for each crucial. The Corporation anticipates an eye-catching stabilized NOI generate of 8% to 9% on the full investment in the Resort like the prepared repositioning.
The Organization currently anticipates closing the transaction by the conclude of the second quarter 2022. The acquisition of the Resort is subject to the fulfillment of customary closing conditions, and the Firm can give no assurance that the acquisition of the Resort will shut. The forecast quantities referenced in this release are based mostly on the Company’s assumptions of functioning efficiency and the Company are not able to guarantee you that the forecasts will be reached.
The phrase “Hyatt” is utilised in this release for convenience to refer to Hyatt Inns Company and/or a person or much more of its affiliates.
About Sunstone Resort Traders:
Sunstone Resort Buyers, Inc. is a lodging serious estate financial investment trust (“REIT”). Sunstone’s strategy is to make lengthy-term stakeholder worth through the acquisition, energetic possession, and disposition of motels considered to be Long-Phrase Appropriate Genuine Estate®. For more information and facts, be sure to take a look at Sunstone’s web site at www.sunstonehotels.com.
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Chief Economic Officer
Sunstone Resort Investors, Inc.
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