Sunstone Hotel Investors (SHO) Q1 2026 earnings summary

Executive summary

• Q1 2026 results exceeded expectations, with net income rising to $18.6 million, up 253% year-over-year, and Adjusted EBITDAre reaching $68 million, up 18% year-over-year, driven by strong group and transient demand, especially at Andaz Miami Beach and key resorts.

• RevPAR increased 14.6% to $255.04, with occupancy at 74.1% and ADR at $344.19; excluding Andaz Miami Beach, RevPAR rose 5.7%.

• Portfolio is diversified across major convention, resort, and urban markets, supporting sustained growth and resilience.

• Significant capital returned to shareholders since 2022, including $560 million via dividends and share repurchases, with $49.2 million repurchased year-to-date.

• Board authorized a $0.09/share common dividend for Q2 2026 and routine preferred distributions.

Financial highlights

• Total revenues for Q1 2026 were $259.7 million, up 11% year-over-year, with room revenue up 11.1%, food and beverage up 10.7%, and other operating revenue up 10.7%.

• Adjusted FFO per diluted share was $0.27, up nearly 29% year-over-year, and Adjusted FFO attributable to common stockholders was $50.1 million.

• Margins expanded by 140 basis points, with Adjusted EBITDAre margin (excluding Andaz Miami Beach) improving to 27.1%.

• Net leverage at 3.5x trailing earnings (4.6x–4.7x including preferred equity), with no debt maturities before 2028.

• Cash and cash equivalents at quarter-end were $166.7 million; total debt was $955.0 million.

Outlook and guidance

• Full-year 2026 guidance raised: net income expected at $34–$48 million, RevPAR growth at 5.0%–7.5%, Adjusted EBITDAre at $238–$252 million, and Adjusted FFO per diluted share at $0.88–$0.96.

• Capital investments for 2026 expected at $95–$115 million, focused on key renovations and restorations.

• Guidance remains cautious due to macroeconomic uncertainty, inflation, geopolitical instability, and potential volatility in travel demand and fuel prices.

• First quarter accounted for 28% of full-year earnings; Q2 expected at 28–29%.

• Strong liquidity position with $91.1 million in unrestricted cash and $500 million available under the credit facility.