Sunstone Hotel Investors (SHO) Q4 2024 earnings summary

Executive summary

• Achieved full-year Adjusted EBITDA and Adjusted FFO per share at the high end of guidance, despite Q4 headwinds and a year-over-year decline due to the absence of a large asset sale gain.

• Advanced strategic objectives through capital recycling, portfolio investment, and capital return to shareholders, including the acquisition of Hyatt Regency San Antonio Riverwalk and Marriott Long Beach Downtown conversion.

• Returned nearly $100 million to shareholders in 2024 via dividends and share repurchases.

• Net income for 2024 was $43.3 million, down from $206.7 million in 2023, primarily due to a large gain on a hotel sale in 2023.

Financial highlights

• Full-year EBITDA reached $230 million and FFO was $0.80 per diluted share, both at the high end of guidance, though both declined 12.8% and 15.8% year-over-year.

• Q4 results exceeded expectations due to strong ancillary revenue and expense management, but Q4 2024 Adjusted EBITDAre and FFO per share declined 12.0% and 15.8%, respectively.

• Comparable RevPAR for Q4 2024 decreased 1.1% to $199.07; full year RevPAR decreased 2.4% to $214.06.

• Net debt and preferred equity to trailing EBITDA was 4.3x at year-end, expected to decline to 3.9x in 2025.

• Nearly $700 million in total liquidity at year-end, including $180 million in cash and full credit facility capacity.

Outlook and guidance

• 2025 portfolio RevPAR growth projected at 7%-10% over 2024, with Andaz Miami Beach debut contributing nearly 4 points.

• Adjusted EBITDAre guidance for 2025: $245M-$270M; Adjusted FFO per share: $0.86-$0.98, reflecting 12% and 15% growth at midpoint.

• 2025 net income guidance: $46 million to $71 million.

• Expected 2025 capital investments: $80M-$100M, focused on Andaz Miami Beach, Wailea Beach Resort, and Hyatt Regency San Antonio Riverwalk.

• Quarterly cash common dividend expected to continue throughout 2025.