SUNSTONE HOTEL INVESTORS TO ACQUIRE THE CONFIDANTE MIAMI BEACH AND REPOSITION AS ANDAZ MIAMI BEACH

IRVINE, Calif., May perhaps 4, 2022 /PRNewswire/ — Sunstone Lodge Buyers, Inc. (the “Corporation” or “Sunstone”) (NYSE: SHO), the owner of Extensive-Phrase Relevant Actual Estate® in the lodging industry, announced that it has entered into a definitive arrangement with an affiliate of Hyatt Resorts Company to receive the 339-area The Confidante Miami Beach (the “Lodge”), situated on 1.5 acres of fee-uncomplicated, oceanfront land in Miami Beach for a order cost of $232 million, or $684,000 for every crucial. Subsequent the acquisition, the Corporation expects to pursue a comprehensive transformation of the home and a rebranding of the Hotel to Andaz Miami Seaside.

The buy rate signifies a 17.3x many on 2022 forecasted lodge EBITDA and a 5.% capitalization rate on 2022 forecasted hotel internet operating money. In addition to the order value, Sunstone expects to make investments close to $60 million to reposition the Resort into a premiere beachfront vacation resort beneath Hyatt’s luxurious, way of life Andaz model. On completion of the renovation, the Company expects the Lodge to create an 8% to 9% stabilized net operating cash flow produce on the total expense in the Lodge, which include the prepared repositioning. The acquisition will be funded by a combination of hard cash on hand and from borrowing on the Company’s at present undrawn revolving credit facility.

Bryan Giglia, Main Govt Officer, mentioned, “We are enthusiastic to announce our prepared acquisition of The Confidante Miami Beach front in which we count on to produce substantial price by an considerable renovation and rebranding of the Hotel to Andaz Miami Seashore. Upon completion of the prepared renovation, we will have remodeled the earnings prospective of the Resort and we will personal a leading Miami Seaside luxurious vacation resort at a extremely beautiful all-in basis in a resilient, supply-constrained current market that has continued to show significant rate expansion. We are also psyched to even more our relationship with Hyatt, just one of the world’s premier hotel corporations, and be element of the development of Hyatt’s luxury Andaz manufacturer.”

Mr. Giglia continued, “The acquisition of The Confidante Miami Beach front lets us to recycle funds from our the latest sales of 3 Chicago inns into this increased advancement and improved NAV maximizing expenditure. This transaction draws on our substantial in-home skills and established monitor history of making worth through prosperous renovations and repositionings, and returns Sunstone to some of what it does very best.”

Tale proceeds

Transaction Rationale

Sunstone thinks the acquisition and renovation of the Hotel will be additive to its stockholders in the subsequent strategies:

Price-Incorporate Opportunity: Capability to meaningfully boost the earnings opportunity and worth of the Hotel as a result of a whole repositioning of the house to produce an immersive and inspiring luxurious life-style resort encounter. Submit rebranding, the Organization anticipates major ADR growth as the assets will be capable to better compete with nearby luxurious resorts. Sunstone now anticipates investing about $60 million to renovate all elements of the Resort. The renovation will incorporate relocating the foyer to make a distinctive oceanview check-in experience, reconcepting the food items & beverage shops, reinvigorating the pool and backyard recreation spot, modernizing the guestrooms, expanding the suite mix, and upgrading the assembly and event areas. The renovation perform is expected to begin in phases, setting up in the fourth quarter of 2022 with completion and rebranding at the moment expected to occur in the initially fifty percent of 2024. The Lodge will continue being in operation though the renovation is concluded and will carry on to be managed by Hyatt on repositioning.

Boosts Ownership of LTRR® and Improves Range and Scale: Acquisition of extremely attractive, perfectly located real estate that will develop the Firm’s portfolio and offer entry into the desirable Miami Seaside sector. Will increase publicity to hugely rated leisure demand and provides a lot more harmony across the Company’s portfolio of leisure, team-oriented and urban inns.

Improves Extended-Term Advancement Profile: Gives possibility to recycle money from decrease development current dispositions into an asset with meaningful earnings progress potential on completion of the repositioning. Whilst Sunstone expects to see sizeable earnings progress in 2022 and 2023 as demand throughout its present team-oriented and city inns return to a lot more normalized stages, Andaz Miami Beach will enable for ongoing outsized development for the Organization in 2024 and over and above on the completion of the renovation and rebranding.

Additional Prudently Makes use of Balance Sheet Capability: The acquisition of the Hotel will be funded with existing money and from proceeds acquired from the Firm’s at the moment undrawn revolving credit history facility. The Firm’s stability sheet maintains more ability for credit card debt-funded acquisitions that can even more enhance for each share NAV and earnings development.

Powerful Valuation and Hard cash Flow Generate: On completion of the repositioning system, Sunstone anticipates obtaining an all-in basis of approximately $900,000 for each vital for a fully renovated, oceanfront, luxury Miami Beach resort where by valuations for related belongings are properly in extra of $1 million for each important. The Business anticipates an beautiful stabilized NOI yield of 8% to 9% on the total investment decision in the Lodge including the prepared repositioning.

The Organization at the moment anticipates closing the transaction by the conclude of the next quarter 2022. The acquisition of the Hotel is matter to the gratification of customary closing disorders, and the Organization can give no assurance that the acquisition of the Hotel will shut. The forecast quantities referenced in this launch are dependent on the Company’s assumptions of operating functionality and the Business simply cannot guarantee you that the forecasts will be attained.

The phrase “Hyatt” is utilised in this release for comfort to refer to Hyatt Lodges Corporation and/or a person or extra of its affiliates.

About Sunstone Resort Buyers:

Sunstone Hotel Investors, Inc. is a lodging serious estate expense trust (“REIT”). Sunstone’s technique is to produce long-expression stakeholder worth by the acquisition, active ownership, and disposition of resorts thought of to be Very long-Expression Suitable Actual Estate®. For even more details, be sure to check out Sunstone’s web-site at www.sunstonehotels.com.

For Extra Info:

Aaron Reyes
Chief Money Officer
Sunstone Resort Buyers, Inc.
(949) 382-3018

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Resource Sunstone Resort Investors, Inc.