sho-2015_Dispositions_DTTS_Folio

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  December 18, 2015

 


 

Sunstone Hotel Investors, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 


 

Maryland

 

001-32319

 

20-1296886

(State or Other Jurisdiction of

 

(Commission File Number)

 

(I.R.S. Employer

Incorporation or Organization)

 

 

 

Identification Number)

 

120 Vantis, Suite 350

 

 

 

 

Aliso Viejo, California

 

 

 

92656

(Address of Principal Executive Offices)

 

 

 

(Zip Code)

 

(949) 330-4000

(Registrant’s telephone number including area code)

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 


 

 

Item 2.01Completion of Acquisition or Disposition of Assets

 

On December 18, 2015, a subsidiary of Sunstone Hotel Investors, Inc. (the “Company”) completed the sale (the “Entity sale”) to an unaffiliated third party (the “Buyer”) of 100% of the membership interests in Times Square Hotel Sub, LLC, the indirect holder of 100% of the leasehold interests through which the 468-room Doubletree Guest Suites Times Square (the “Hotel”), located in New York City, New York, is operated. The contractual gross sale price  was  $540.0 million. Concurrent with the sale, the Company repaid the remaining  $175.0 million balance of the mortgage secured by the Hotel for a total cost of approximately $176.6 million, including a $1.2 million prepayment penalty and $0.3 million in interest. In addition, the Company wrote off $1.7 million in related deferred financing fees.

 

There are no material relationships between the Buyer and the Company or any of its affiliates, or any director or officer of the Company, or any associate of any such director or officer, other than in respect of the Entity sale.

 

Item 7.01Regulation FD Disclosure

 

On December 18, 2015, the Company issued a press release reporting the Entity sale, and that its board of directors declared a dividend of $1.26 per share of common stock to be paid in cash and/or shares of common stock (at the election of the stockholder and subject to a cash limit) on or before January 29, 2016, to stockholders of record at the close of business on December 31, 2015. A copy of that press release is attached to this Current Report on Form 8-K as Exhibit 99.1, and is incorporated by reference herein. The press release has also been posted in the investor relations/press releases section of the Company’s website at www.sunstonehotels.com.

 

The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

 

Item 9.01Financial Statements and Exhibits

 

 

 

(b)

The following pro forma financial statements are furnished herewith:

 

 

 

Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2015

 

Notes to Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2015

 

Unaudited Pro Forma Consolidated Statements of Operations for the Nine Months Ended September 30, 2015 and 2014

 

Notes to Unaudited Pro Forma Consolidated Statements of Operations for the Nine Months Ended September 30, 2015 and 2014

 

Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2014

 

Notes to Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2014

 

 

(d)

The following exhibits are furnished herewith:

 

 

Novemb

 

 

Exhibit No.

 

Description

99.1

 

Press release dated December 18, 2015

 

 

 

 

 

 

 


 

 

Unaudited Pro Forma Financial Information

 

The Company’s historical financial information as of and for the nine months ended September 30, 2015 and 2014 was derived from historical information originally reported in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”) on November 3, 2015. The Company’s historical information for the year ended December 31, 2014 was derived from its audited historical information originally reported in the Company’s Annual Report on Form 10-K filed with the SEC on February 19, 2015.

 

The following unaudited pro forma financial information gives effect to the following transactions:

 

·

The December 2015 sale of the entity (the “Entity sale”) which is the indirect holder of 100% of the leasehold interests through which the Doubletree Guest Suites Times Square (the “Hotel”), located in New York City, New York, is operated. The contractual gross sale price for the Entity sale is $540.0 million; and

·

The December 2015 repayment of debt secured by the Hotel, along with the related write-off of deferred financing fees.

 

The unaudited pro forma consolidated balance sheet as of September 30, 2015 is presented as if the Entity sale and related repayment of debt in December 2015 had occurred on September 30, 2015. The unaudited pro forma consolidated statements of operations for both the nine months ended September 30, 2015 and 2014, as well as the year ended December 31, 2014, are presented as if the Entity sale and related repayment of debt in December 2015 had occurred on January 1, 2014. In the opinion of the Company’s management, all significant adjustments necessary to reflect the effects of the Entity sale and related repayment of debt that can be factually supported within the SEC regulations covering the preparation of pro forma financial statements have been made.

 

The unaudited pro forma consolidated financial statements and related notes are presented for informational purposes only and do not purport to represent the Company’s financial position or results of operations as if the transactions had occurred on the dates discussed above. They also do not project or forecast the Company’s consolidated financial position or results of operations for any future date or period.

 

The unaudited pro forma financial statements should be read together with the Company’s historical consolidated financial statements and related notes included in the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2015 filed with the SEC on November 3, 2015, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on February 19, 2015. The pro forma adjustments are based on available information and upon assumptions that management believes are reasonable; however, the Company cannot assure you that actual results would not differ from the pro forma information and perhaps in material and adverse ways.  No attempt has been made to update matters in the unaudited pro forma financials except to the extent expressly provided above.

 

 

 

1

 


 

 

SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2015

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunstone Hotel

 

 

 

 

 

Sunstone Hotel

 

 

Investors, Inc.

 

Entity

 

Repayment of

 

Investors, Inc.

 

    

Historical

 

Sale (A)

 

Debt (B)

    

Pro Forma

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

176,190

 

$

520,574

 

$

(173,434)

 

$

523,330

Restricted cash

 

 

91,541

 

 

 —

 

 

(3,250)

 

 

88,291

Accounts receivable, net

 

 

47,818

 

 

(2,168)

 

 

 —

 

 

45,650

Inventories

 

 

1,363

 

 

(39)

 

 

 —

 

 

1,324

Prepaid expenses

 

 

11,877

 

 

(2,096)

 

 

 —

 

 

9,781

Total current assets

 

 

328,789

 

 

516,271

 

 

(176,684)

 

 

668,376

Investment in hotel properties, net

 

 

3,523,290

 

 

(309,528)

 

 

 —

 

 

3,213,762

Deferred financing fees, net

 

 

10,637

 

 

 —

 

 

(1,824)

 

 

8,813

Goodwill

 

 

990

 

 

 —

 

 

 —

 

 

990

Other assets, net

 

 

8,077

 

 

(444)

 

 

 —

 

 

7,633

Total assets

 

$

3,871,783

 

$

206,299

 

$

(178,508)

 

$

3,899,574

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

33,401

 

$

(1,241)

 

$

 —

 

$

32,160

Accrued payroll and employee benefits

 

 

30,495

 

 

(3,203)

 

 

 —

 

 

27,292

Dividends payable

 

 

12,730

 

 

 —

 

 

 —

 

 

12,730

Other current liabilities

 

 

50,341

 

 

(2,423)

 

 

 —

 

 

47,918

Current portion of notes payable

 

 

206,822

 

 

 —

 

 

(2,278)

 

 

204,544

Total current liabilities

 

 

333,789

 

 

(6,867)

 

 

(2,278)

 

 

324,644

Notes payable, less current portion

 

 

1,106,341

 

 

 —

 

 

(173,165)

 

 

933,176

Capital lease obligations, less current portion

 

 

15,575

 

 

 —

 

 

 —

 

 

15,575

Other liabilities

 

 

35,258

 

 

(618)

 

 

 —

 

 

34,640

Total liabilities

 

 

1,490,963

 

 

(7,485)

 

 

(175,443)

 

 

1,308,035

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 100,000,000 shares authorized.

 

 

 

 

 

 

 

 

 

 

 

 

8.0% Series D Cumulative Redeemable Preferred Stock, 4,600,000 shares issued and outstanding at September 30, 2015, stated at liquidation preference of $25.00 per share

 

 

115,000

 

 

 —

 

 

 —

 

 

115,000

Common stock, $0.01 par value, 500,000,000 shares authorized, 207,604,391 shares issued and outstanding at September 30, 2015

 

 

2,076

 

 

 —

 

 

 —

 

 

2,076

Additional paid in capital

 

 

2,457,566

 

 

 —

 

 

 —

 

 

2,457,566

Retained earnings

 

 

416,804

 

 

213,909

 

 

(3,065)

 

 

627,648

Cumulative dividends

 

 

(662,744)

 

 

 —

 

 

 —

 

 

(662,744)

Total stockholders’ equity

 

 

2,328,702

 

 

213,909

 

 

(3,065)

 

 

2,539,546

Non-controlling interests in consolidated joint ventures

 

 

52,118

 

 

(125)

 

 

 —

 

 

51,993

Total equity

 

 

2,380,820

 

 

213,784

 

 

(3,065)

 

 

2,591,539

Total liabilities and equity

 

$

3,871,783

 

$

206,299

 

$

(178,508)

 

$

3,899,574

 

 

 

 

 

 

See accompanying notes to unaudited pro forma consolidated balance sheet.

2

 


 

SUNSTONE HOTEL INVESTORS, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2015

 

The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2015 is based on the Company’s historical unaudited consolidated balance sheet as of September 30, 2015, as adjusted to assume that the following transactions which occurred in December 2015, had occurred on September 30, 2015:

 

·

The sale of the entity (the “Entity” and the “Entity sale”) which is the indirect holder of 100% of the leasehold interests through which the Doubletree Guest Suites Times Square (the “Hotel”), located in New York City, New York, is operated. The contractual gross sale price for the Entity sale is  $540.0 million; and

·

The repayment of debt secured by the Hotel, whose debt balance totaled $175.4 million as of September 30, 2015, as well as the write-off of related deferred financing fees, which totaled $1.8 million as of September 30, 2015.

 

In management’s opinion, all material adjustments to reflect the effects of the preceding transactions have been made. The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2015 is presented for illustrative purposes only, and is not necessarily indicative of what the Company’s actual financial position would have been had the transactions described above occurred on September 30, 2015, nor does it purport to represent the Company’s future financial position.

 

Notes and Management Assumptions:

 

A.Reflects the Entity sale as follows (in thousands):

 

 

 

 

 

Gross sale price

 

$

540,000

Non-cash prorations (1)

 

 

(2,863)

Expected closing costs (2)

 

 

(16,563)

Expected net sale price

 

$

520,574

 

(1)

Non-cash prorations reflect the disposal of the Hotel’s non-cash balance sheet accounts using values in existence as of September 30, 2015.

(2)

Expected closing costs include transfer tax, broker fees, legal fees and other miscellaneous fees and costs.

 

The Company’s estimated gain on the sale of the Entity, along with the associated increase to retained earnings, is calculated as follows using values in existence as of the September 30, 2015 pro forma consolidated balance sheet date (in thousands):

 

 

 

 

 

Gross sale price

 

$

540,000

Expected closing costs

 

 

(16,563)

Investment in hotel property, net

 

 

(309,528)

Net gain on Entity sale

 

$

213,909

 

B.Reflects the Repayment of Debt as follows:

 

·

Repayment of debt secured by the Hotel, whose debt balance totaled $175.4 million as of September 30, 2015;

·

Total prepayment penalty of $1.2 million, which will be included in loss on extinguishment of debt in continuing operations in the Company’s 2015 statement of operations;

·

Write-off of related deferred financing fees which totaled approximately $1.8 million as of September 30, 2015. This write-off will be included in loss on extinguishment of debt in the Company’s 2015 statement of operations; and

·

Release of restricted cash from the lender escrow reserves, which totaled approximately $3.3 million as of September 30, 2015.

 

3

 


 

 

SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunstone Hotel

 

 

 

 

 

Sunstone Hotel

 

 

Investors, Inc.

 

Entity

 

Repayment of

 

Investors, Inc.

 

    

Historical

 

Sale (A)

 

Debt (B)

    

Pro Forma

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Room

 

$

666,756

 

$

(40,429)

 

$

 —

 

$

626,327

Food and beverage

 

 

219,820

 

 

(3,158)

 

 

 —

 

 

216,662

Other operating

 

 

61,671

 

 

(5,331)

 

 

 —

 

 

56,340

Total revenues

 

 

948,247

 

 

(48,918)

 

 

 —

 

 

899,329

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Room

 

 

169,742

 

 

(12,047)

 

 

 —

 

 

157,695

Food and beverage

 

 

153,412

 

 

(3,925)

 

 

 —

 

 

149,487

Other operating

 

 

16,073

 

 

(582)

 

 

 —

 

 

15,491

Advertising and promotion

 

 

46,252

 

 

(1,805)

 

 

 —

 

 

44,447

Repairs and maintenance

 

 

34,798

 

 

(1,551)

 

 

 —

 

 

33,247

Utilities

 

 

26,736

 

 

(1,625)

 

 

 —

 

 

25,111

Franchise costs

 

 

30,009

 

 

(2,426)

 

 

 —

 

 

27,583

Property tax, ground lease and insurance

 

 

72,413

 

 

(9,861)

 

 

 —

 

 

62,552

Property general and administrative

 

 

109,384

 

 

(4,151)

 

 

 —

 

 

105,233

Corporate overhead

 

 

27,222

 

 

(363)

 

 

 —

 

 

26,859

Depreciation and amortization

 

 

122,911

 

 

(4,789)

 

 

 —

 

 

118,122

Total operating expenses

 

 

808,952

 

 

(43,125)

 

 

 —

 

 

765,827

Operating income

 

 

139,295

 

 

(5,793)

 

 

 —

 

 

133,502

Interest and other income

 

 

3,350

 

 

(3)

 

 

 —

 

 

3,347

Interest expense

 

 

(51,020)

 

 

 —

 

 

5,097

 

 

(45,923)

Loss on extinguishment of debt

 

 

(2)

 

 

 —

 

 

 —

 

 

(2)

Gain on sale of asset

 

 

11,682

 

 

 —

 

 

 —

 

 

11,682

Income before income taxes

 

 

103,305

 

 

(5,796)

 

 

5,097

 

 

102,606

Income tax provision

 

 

(1,256)

 

 

3

 

 

 —

 

 

(1,253)

INCOME FROM CONTINUING OPERATIONS

 

$

102,049

 

$

(5,793)

 

$

5,097

 

$

101,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income attributable to stockholders per common share

 

$

0.42

 

$

(0.03)

 

$

0.03

 

$

0.42

Basic and diluted weighted average common shares outstanding

 

 

207,264

 

 

207,264

 

 

207,264

 

 

207,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and 2014.

 

4

 


 

SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunstone Hotel

 

 

 

 

 

Sunstone Hotel

 

 

Investors, Inc.

 

Entity

 

Repayment of

 

Investors, Inc.

 

    

Historical

 

Sale (A)

 

Debt (B)

    

Pro Forma

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Room

 

$

606,944

 

$

(41,232)

 

$

 —

 

$

565,712

Food and beverage

 

 

192,917

 

 

(2,726)

 

 

 —

 

 

190,191

Other operating

 

 

52,257

 

 

(4,946)

 

 

 —

 

 

47,311

Total revenues

 

 

852,118

 

 

(48,904)

 

 

 —

 

 

803,214

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Room

 

 

159,829

 

 

(11,751)

 

 

 —

 

 

148,078

Food and beverage

 

 

133,666

 

 

(3,556)

 

 

 —

 

 

130,110

Other operating

 

 

15,476

 

 

(601)

 

 

 —

 

 

14,875

Advertising and promotion

 

 

40,740

 

 

(1,588)

 

 

 —

 

 

39,152

Repairs and maintenance

 

 

33,640

 

 

(1,612)

 

 

 —

 

 

32,028

Utilities

 

 

25,588

 

 

(1,499)

 

 

 —

 

 

24,089

Franchise costs

 

 

28,360

 

 

(2,474)

 

 

 —

 

 

25,886

Property tax, ground lease and insurance

 

 

63,015

 

 

(9,677)

 

 

 —

 

 

53,338

Property general and administrative

 

 

93,793

 

 

(4,240)

 

 

 —

 

 

89,553

Corporate overhead

 

 

21,410

 

 

(127)

 

 

 —

 

 

21,283

Depreciation and amortization

 

 

115,588

 

 

(4,413)

 

 

 —

 

 

111,175

Total operating expenses

 

 

731,105

 

 

(41,538)

 

 

 —

 

 

689,567

Operating income

 

 

121,013

 

 

(7,366)

 

 

 —

 

 

113,647

Interest and other income

 

 

2,588

 

 

(7)

 

 

 —

 

 

2,581

Interest expense

 

 

(54,666)

 

 

 —

 

 

5,161

 

 

(49,505)

Loss on extinguishment of debt

 

 

(531)

 

 

 —

 

 

 —

 

 

(531)

Income before income taxes

 

 

68,404

 

 

(7,373)

 

 

5,161

 

 

66,192

Income tax benefit

 

 

79

 

 

23

 

 

 —

 

 

102

INCOME FROM CONTINUING OPERATIONS

 

$

68,483

 

$

(7,350)

 

$

5,161

 

$

66,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income attributable to stockholders per common share

 

$

0.29

 

$

(0.04)

 

$

0.03

 

$

0.28

Basic and diluted weighted average common shares outstanding

 

 

188,901

 

 

188,901

 

 

188,901

 

 

188,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and 2014.

 

5

 


 

SUNSTONE HOTEL INVESTORS, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

 

The accompanying unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and 2014 are based on the Company’s historical unaudited consolidated statements of operations for the nine months ended September 30, 2015 and 2014, as adjusted to assume that the following transactions which occurred in December 2015, had occurred on January 1, 2014:

 

·

The sale of the entity (the “Entity sale”) which is the indirect holder of 100% of the leasehold interests through which the Doubletree Guest Suites Times Square (the “Hotel”), located in New York City, New York, is operated; and

·

The repayment of debt secured by the Hotel.

 

In management’s opinion, all material adjustments to reflect the effects of the preceding transactions have been made. The accompanying unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and 2014 are presented for illustrative purposes only, and are not necessarily indicative of what the Company’s actual results of operations would have been had the transactions described above occurred on January 1, 2014, nor does it purport to represent the Company’s future financial position or results of operations.

 

Notes and Management Assumptions:

 

A.Reflects the results of operations for the Hotel for the nine months ended September 30, 2015 and 2014.

 

B.Reflects interest expense of $5.1 million and $5.2 million that was recognized during the nine months ended September 30, 2015 and 2014, respectively, on the debt secured by the Hotel, which was repaid in December 2015.

 

6

 


 

SUNSTONE HOTEL INVESTORS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2014

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunstone Hotel

 

 

 

 

 

Sunstone Hotel

 

 

Investors, Inc.

 

Entity

 

Repayment of

 

Investors, Inc.

 

    

Historical

 

Sale (A)

 

Debt (B)

    

Pro Forma

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Room

 

$

811,709

 

$

(59,088)

 

$

 —

 

$

752,621

Food and beverage

 

 

259,358

 

 

(3,706)

 

 

 —

 

 

255,652

Other operating

 

 

70,931

 

 

(6,619)

 

 

 —

 

 

64,312

Total revenues

 

 

1,141,998

 

 

(69,413)

 

 

 —

 

 

1,072,585

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Room

 

 

214,899

 

 

(15,980)

 

 

 —

 

 

198,919

Food and beverage

 

 

180,053

 

 

(4,762)

 

 

 —

 

 

175,291

Other operating

 

 

21,012

 

 

(795)

 

 

 —

 

 

20,217

Advertising and promotion

 

 

54,992

 

 

(2,182)

 

 

 —

 

 

52,810

Repairs and maintenance

 

 

45,901

 

 

(2,163)

 

 

 —

 

 

43,738

Utilities

 

 

34,141

 

 

(2,057)

 

 

 —

 

 

32,084

Franchise costs

 

 

38,271

 

 

(3,545)

 

 

 —

 

 

34,726

Property tax, ground lease and insurance

 

 

84,665

 

 

(13,008)

 

 

 —

 

 

71,657

Property general and administrative

 

 

126,737

 

 

(5,880)

 

 

 —

 

 

120,857

Corporate overhead

 

 

28,739

 

 

(145)

 

 

 —

 

 

28,594

Depreciation and amortization

 

 

155,845

 

 

(5,982)

 

 

 —

 

 

149,863

Total operating expenses

 

 

985,255

 

 

(56,499)

 

 

 —

 

 

928,756

Operating income

 

 

156,743

 

 

(12,914)

 

 

 —

 

 

143,829

Interest and other income

 

 

3,479

 

 

(9)

 

 

 —

 

 

3,470

Interest expense

 

 

(72,315)

 

 

 —

 

 

6,873

 

 

(65,442)

Loss on extinguishment of debt

 

 

(4,638)

 

 

 —

 

 

 —

 

 

(4,638)

Income before income taxes

 

 

83,269

 

 

(12,923)

 

 

6,873

 

 

77,219

Income tax provision

 

 

(179)

 

 

28

 

 

 —

 

 

(151)

INCOME FROM CONTINUING OPERATIONS

 

$

83,090

 

$

(12,895)

 

$

6,873

 

$

77,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income attributable to stockholders per common share

 

$

0.34

 

$

(0.07)

 

$

0.04

 

$

0.31

Basic and diluted weighted average common shares outstanding

 

 

192,674

 

 

192,674

 

 

192,674

 

 

192,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited pro forma consolidated statement of operations for the year ended December 31, 2014.

7

 


 

SUNSTONE HOTEL INVESTORS, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2014

 

The accompanying unaudited pro forma consolidated statement of operations for the year ended December 31, 2014 is based on the Company’s historical audited consolidated statement of operations for the year ended December 31, 2014, as adjusted to assume that the following transactions which occurred in December 2015, had occurred on January 1, 2014:

 

·

The sale of the entity (the “Entity sale”) which is the indirect holder of 100% of the leasehold interests through which the Doubletree Guest Suites Times Square (the “Hotel”), located in New York City, New York, is operated; and

·

The repayment of debt secured by the Hotel.

 

In management’s opinion, all material adjustments to reflect the effects of the preceding transactions have been made. The accompanying unaudited pro forma consolidated statement of operations for the year ended December 31, 2014 is presented for illustrative purposes only, and is not necessarily indicative of what the Company’s actual results of operations would have been had the transactions described above occurred on January 1, 2014, nor do they purport to represent the Company’s future financial position or results of operations.

 

Notes and Management Assumptions:

 

A.Reflects the results of operations for the Hotel for the year ended December 31, 2014.

 

B.Reflects interest expense of $6.9 million that was recognized during the year ended December 31, 2014 on the debt secured by the Hotel, which debt was repaid in December 2015.

 

8

 


 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

 

 

 

Sunstone Hotel Investors, Inc.

 

 

 

 

Date: December 18, 2015

 

By:

/s/   Bryan A. Giglia

 

 

 

Bryan A. Giglia

Chief Financial Officer

 

9

 


 

EXHIBIT INDEX

 

 

 

 

Exhibit No.

 

Description

99.1

 

Press Release dated December 18, 2015

 

 

 

10