Sunstone Hotel Investors, Inc. — Second Quarter 2026 Earnings Summary

Financial Performance

• Net income attributable to common stockholders was $26.0 million ($0.14 per diluted share) for the quarter ended June 30, 2026, compared to $6.8 million ($0.03 per diluted share) in the prior year period.
• Net income for the six months ended June 30, 2026, was $44.6 million, compared to $16.0 million in the prior year period.
• RevPAR for all hotels increased 9.3% to $263.61 for the quarter, with an average daily rate (ADR) of $339.71 and occupancy of 77.6%.
• Total RevPAR for all hotels increased 7.7% to $434.00 for the quarter.
• Adjusted EBITDAre increased 5.5% to $76.7 million for the quarter.
• Adjusted FFO attributable to common stockholders per diluted share increased 14.3% to $0.32 for the quarter.
• Total assets were $3.0 billion as of June 30, 2026, including $2.7 billion in net investments in hotel properties and assets held for sale.
• Total debt was $980.0 million as of June 30, 2026.
• Stockholders' equity was $1.9 billion as of June 30, 2026.
• Cash and cash equivalents were $203.7 million as of June 30, 2026, including $109.3 million in restricted cash.

Guidance and Future Outlook

• The Company increased its full-year 2026 Net Income guidance to a range of $79 million to $89 million, up from a prior range of $34 million to $48 million.
• Full-year 2026 Net Income per diluted share guidance was raised to $0.37 to $0.42, up from $0.11 to $0.18.
• Full-year 2026 RevPAR growth guidance was raised to 7.0% to 9.0%, up from 5.0% to 7.5%.
• Full-year 2026 Total RevPAR growth guidance was raised to 7.0% to 9.0%, up from 5.0% to 7.5%.
• Full-year 2026 Adjusted EBITDAre guidance was raised to $245 million to $255 million, up from $238 million to $252 million.
• Full-year 2026 Adjusted FFO attributable to common stockholders guidance was raised to $174 million to $184 million, up from $166 million to $180 million.
• Full-year 2026 Adjusted FFO per diluted share guidance was raised to $0.93 to $0.98, up from $0.88 to $0.96.
• Full-year 2026 diluted weighted average shares outstanding guidance was lowered to 187 million from 188 million.
• Full-year interest and other income guidance was raised to $7 million to $8 million.
• Full-year corporate overhead expense guidance was lowered to $19 million to $20 million.
• Full-year interest expense guidance remains $49 million to $52 million.
• Full-year preferred stock dividends guidance was lowered to $15 million to $16 million.
• Capital investment for 2026 is expected to be approximately $105 million to $115 million.

Business Segments and Product Lines

• The portfolio consists of 13 hotels with 6,178 rooms as of the release date.
• The Company converted the former Oceans Edge Resort & Marina to the Hilton Key West Resort & Marina on July 1, 2026.
• The Company sold the 821-room Hyatt Regency San Francisco on July 30, 2026, for a gross sale price of $279 million.
• Andaz Miami Beach is excluded from certain comparable statistics due to renovation activity during 2025 and is expected to contribute approximately 450 basis points to full-year RevPAR and Total RevPAR growth.
• The Company invested $53.4 million into its portfolio during the first six months of 2026.

Market and Competitive Landscape

• Revenue and profitability exceeded expectations driven by robust leisure demand from increased summer travel and special events.
• Sustained strength was observed in group and corporate demand.
• The sale of Hyatt Regency San Francisco realized an attractive private market value for a low-yielding asset.

Risks and Challenges

• Geopolitical developments, changes in economic policies, economic health, and business/consumer sentiment could lead to further revisions of the outlook.
• Severe weather in March 2026 impacted the Hawaiian Islands, causing damage to Wailea Beach Resort requiring repair and restoration work.
• The Company expects to be reimbursed for the majority of incremental expenditures related to the Wailea Beach Resort damage under insurance programs.

Management Commentary and Tone

• CEO Bryan A. Giglia stated the company was pleased with performance, noting revenue and profitability meaningfully exceeded expectations.
• Management highlighted that the sale of Hyatt Regency San Francisco allows for the delivery of future growth value to shareholders today.
• Management indicated that proceeds from the sale and stock repurchases are expected to generate additional shareholder value and grow NAV per share.

Other Key Points

• During the second quarter of 2026, the Company repurchased $32.2 million of common and preferred stock.
• From the start of 2026 through August 5, 2026, the Company allocated $70.1 million into stock repurchases.
• As of August 5, 2026, $437.4 million remained under the existing stock repurchase program authorization.
• Common stock repurchases in Q2 2026 included 1,195,325 shares at an average price of $9.52.
• Preferred stock repurchases in Q2 2026 included Series H (328,438 shares at $21.07) and Series I (687,458 shares at $20.25).
• On August 5, 2026, the Board authorized a quarterly cash dividend of $0.09 per common share, payable October 15, 2026.
• Preferred dividends authorized were $0.382813 per share for Series H and $0.356250 per share for Series I, payable October 15, 2026.
• Subsequent to the quarter, the Company used a portion of the Hyatt Regency San Francisco sale proceeds to repay a $25.0 million balance on its revolving credit facility.
• Adjusting for the sale proceeds and debt repayment, the Company had approximately $430.0 million in cash and cash equivalents and total debt outstanding of $955.0 million.