#United States #Aliso Viejo #hotel sale #Sunstone Hotel #Hilton New Orleans

Sunstone Hotel Investors Finalizes Sale of Hilton New Orleans St. Charles

In a significant move for its portfolio, Sunstone Hotel Investors, Inc. announced the successful sale of the Hilton New Orleans St. Charles. The hotel, boasting 252 rooms, was sold for an impressive gross sale price of $47 million, translating to roughly $187,000 per room. This transaction highlights Sunstone's strategy of optimizing its real estate investments while enhancing shareholder value through strategic capital allocation.

The sale price is notable as it reflects a 10.1x multiple on the hotel's adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for 2024, alongside a cap rate of 8.7% based on the hotel's net operating income. When accounting for expected near-term capital expenditures required to maintain the hotel's competitive edge, the effective sale multiple rises to 13.4x while the cap rate adjusts to 6.6%. As the broader market for hospitality remains challenging, Sunstone executives emphasize the importance of such divestitures to ensure robust ongoing operations.

Bryan Giglia, CEO of Sunstone, expressed satisfaction with the sale, underscoring the attractive pricing achieved. He noted, “We are pleased to announce the disposition of the Hilton New Orleans St. Charles. We were able to divest the hotel at attractive pricing, eliminating immediate defensive capital expenditures, while simultaneously recycling proceeds into share buybacks at a compelling discount.” This strategy is consistent with the company's longstanding approach of managing its assets to enhance long-term shareholder value.

In anticipation of this sale, Sunstone has been proactive in managing its stock buybacks, utilizing the proceeds from the sale to reinvest in its own shares. Year to date, as of June 6, 2025, the company has repurchased 6.8 million shares, priced at an average of $8.84 per share, culminating in a buyback total of approximately $60 million. This effort is a continuation of their strategy initiated in 2022, where Sunstone deployed $252 million to repurchase about 25.8 million shares, illustrating its commitment to delivering value to shareholders.

New Orleans continues to hold a strong appeal as a market for group events and leisure travel, providing a backdrop for Sunstone’s future ventures and investments. Despite this divestiture, the company retains a foothold in the city through its ownership of the JW Marriott hotel, maintaining a diversified exposure to this vibrant market.

Looking forward, Sunstone remains vigilant in evaluating new hotel investment opportunities, while also considering the relative advantages of stock repurchases as a strategic capital allocation. As market conditions fluctuate, the company's ability to adapt quickly is crucial in navigating future economic uncertainties.

About Sunstone Hotel Investors

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust (REIT) focused on creating long-term stakeholder value through strategic acquisition, management, and disposal of high-quality hotel properties. Learn more about their initiatives at Sunstone Hotels.

In conclusion, the sale of the Hilton New Orleans St. Charles encapsulates Sunstone Hotel Investors’ commitment to sound financial practices, shareholder equity, and adaptability in a competitive landscape. With ongoing efforts to streamline their portfolio and optimize capital allocations, Sunstone continues to position itself as a key player in the hospitality real estate market.