Sunstone Hotel Investors Sells The Leasehold Interest In The 203-Room Sheraton Cerritos For $42.0 Million
Published on : Thursday, May 12, 2016
Sunstone Hotel Investors, Inc. (the “Company” or “Sunstone”) today announced that it has sold (the “Sale”) the leasehold interest in the 203-room Sheraton Cerritos (the “Hotel”) for a contractual price of $42.0 million (or approximately $206,900 per key). The contractual gross sale price of $42.0 millionrepresents a 10.5x multiple on 2015 Hotel Adjusted EBITDA of $4.0 million, and a 8.2% capitalization rate on 2015 Hotel net operating income. The transaction resulted in an estimated net book gain of approximately $17.5 million to $18.5 million, and is expected to increase 2016 taxable income by approximately $16.0 million to $17.0 million.
Robert Springer, Chief Investment Officer, stated, “We are pleased to announce the sale of the leasehold interest in the Sheraton Cerritos. The sale, which is consistent with our capital allocation strategy, increases our portfolio quality, increases our portfolio RevPAR, reduces our number of hotels subject to ground leases and allows us to avoid a required $6.0 million to $7.0 millionrenovation planned for 2017.”
The Sale is expected to reduce the Company’s full year 2016 Adjusted EBITDA and Adjusted FFO attributable to common stockholders by approximately $2.9 million, and the Company’s net income by approximately $1.9 million. Full year Adjusted EBITDA, Adjusted FFO attributable to common stockholders and net income impact excludes one-time closing costs resulting from the Sale.
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