Sunstone Sells Century City Hyatt
SAN CLEMENTE, CA, June 2, 2008. Sunstone Hotel Investors, Inc. (NYSE: SHO) announced today that it has sold its 726-room Hyatt Regency Century Plaza to Los Angeles real estate investor Next Century Associates, LLC for gross cash proceeds of approximately $366.5 million, which equates to approximately $505,000 per room and approximately 18.6x the hotel's 2007 EBITDA (excluding guaranty payments).
"Shortly after I returned as interim CEO, we received an offer, which ultimately led to today's announcement," said Bob Alter, Executive Chairman. "This sale marks the conclusion of yet another highly successful hotel investment for Sunstone through which we created significant value for our stockholders by renovating, rebranding and repositioning an underperforming asset."
"We acquired the Century Plaza hotel in October of 2005 for approximately $400,000 per room and implemented a business plan that included conducting a major renovation, installing Hyatt as our new manager and positioning the hotel to maximize its appeal to both group and business travelers in light of the reemergence of Century City as the premier entertainment business market. In addition to a complete rooms and public space renovation, we added the successful X-Bar lounge and created a high-end Equinox health club in an underutilized 35,000 square foot building on the hotel grounds."
"During our ownership period, we implemented a number of successful asset management initiatives aimed at unlocking new revenue streams and achieving a strong return on our invested capital. Due in large part to the successful execution of our plan and a strong performance by the Hyatt team, the hotel's annual EBITDA nearly tripled during our ownership period. Additionally, during our ownership period we received a total of $27 million in yield support payments from Hyatt, which guaranteed an annual 10% return on our equity through the third quarter of 2007. The combination of a well-planned renovation, creative asset management and meaningful yield support from Hyatt enabled Sunstone to realize a total internal rate of return of approximately 19% upon sale." http://www.sunstonehotels.com
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