Sunstone Hotel Investors (SHO) Q4 2025 earnings summary

Executive summary

• Fourth quarter operating results exceeded expectations, with net income rising to $7.2 million from $0.8 million year-over-year and full-year net income at $24.6 million, impacted by a hotel sale; excluding this, net income would have been $33.3 million.

• Broad-based portfolio strength and strategic execution on capital recycling, portfolio investment, and capital return to shareholders drove performance.

• Completed the sale of Hilton New Orleans St. Charles at a mid-6% cap rate for $47 million, with proceeds fully recycled into stock repurchases at a discount.

• Returned over $170 million to shareholders via dividends and share repurchases in 2025; $500 million repurchase authorization restored.

Financial highlights

• Total RevPAR grew 7.4% in Q4, or 12.5% including Andaz Miami Beach; rooms RevPAR up 9.6% with a 540 bps benefit from Andaz.

• Q4 Adjusted EBITDAre was $57 million (up 17.6% to $56.6 million); Adjusted FFO per diluted share increased 25% to $0.20.

• Full-year margin growth of 40 bps on 3.5% total RevPAR growth, reflecting strong cost management.

• Q4 portfolio occupancy was 69.0% (up 390 bps); ADR was $319.01 (up 3.5%).

• Excluding Andaz Miami Beach, Q4 RevPAR grew 4.2% and full-year RevPAR 2.1%.

Outlook and guidance

• 2026 net income guidance: $21–$46 million; Adjusted EBITDAre: $225–$250 million; Adjusted FFO per diluted share: $0.81–$0.94.

• 2026 rooms RevPAR expected to increase 4%-7% to $234-$241, with Andaz contributing ~400 bps at midpoint.

• Total RevPAR guidance for 2026 is 3.5%-6.5% ($385-$396), also with a 400 bps Andaz benefit.

• Full-year interest expense projected at $53–$56 million; preferred dividends at $16–$17 million.

• First quarter expected to be the strongest, representing ~25% of full-year projections.