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Sunstone Hotel Investors recorded higher-than-expected revenue during the past quarter, aided by strong performance in the San Francisco market, which offset weaker demand elsewhere. Despite a decline in net income to USD 1.3 million compared with USD 3.2 million in the same quarter last year, the company's completion of a new credit agreement improved financial flexibility and addressed debt maturities. Sunstone has retained its full-year outlook, projecting steady growth in RevPAR and adjusted EBITDA.
Sunstone Hotel Investors posted quarterly revenue of USD 229.32 million, surpassing analysts' expectations of USD 227.66 million as reported by eight market analysts. However, the company's net income for the quarter fell to USD 1.3 million from USD 3.2 million in the corresponding period of the previous year. Adjusted funds from operations (FFO) stood at USD 31.7 million, translating to USD 0.17 per share, while revenue per available room (RevPAR) reached USD 216.12. Advertisement
A stronger showing in the San Francisco market played a significant role in offsetting subdued demand across other regions. Additionally, the completion of a new credit agreement enabled Sunstone to effectively manage its debt maturities while reducing borrowing costs, thereby enhancing overall financial flexibility.
The company has maintained its outlook for the remainder of 2025, reaffirming its previous guidance. Sunstone expects full-year RevPAR growth in the range of 3% to 5%, and anticipates adjusted EBITDAre to fall between USD 226 million and USD 240 million.
According to analysts' reports, the company's stock currently carries an average rating of 'buy.' Among the 11 analysts covering Sunstone, four have rated it as 'strong buy' or 'buy,' six as 'hold,' and one as 'sell' or 'strong sell.' The broader peer group of specialised REITs holds an average consensus recommendation of 'buy.' Wall Street's median 12-month price target for Sunstone Hotel Investors stands at USD 10, reflecting a 7.2% upside from its recent closing price of USD 9.28.
Sunstone's quarterly performance reflected a mix of resilience and caution, with stronger market conditions in San Francisco cushioning overall earnings amid regional variations in demand. The recent credit agreement has bolstered the company's balance sheet, providing greater flexibility for future operations. By maintaining its existing 2025 outlook, Sunstone signalled confidence in achieving stable revenue and profitability targets, supported by improved cost efficiencies and a disciplined financial approach.
Source - Reuters
5th Jun, 2025
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