Sunstone Hotel Investors (SHO) 2018年年度報告「NYSE」.pdf

1、2018 Annual Report2018 Annual ReportSUNSTONE HOTEL INVESTORS,INC.2018 ANNUAL REPORTCaliforniaCourtyard by Marriott Los Angeles,187Embassy Suites La Jolla,340Hilton San Diego Bayfront,1,190Hyatt Regency San Francisco,804Renaissance Long Beach,374Renaissance Los Angeles Airport,502OregonMarriott Portl

2、and,249HawaiiWailea Beach Resort,547LouisianaHilton New Orleans St.Charles,252JW Marriott New Orleans,501IllinoisEmbassy Suites Chicago,368Hilton Garden Inn Chicago Downtown/Magnificent Mile,361Hyatt Centric Chicago Magnificent Mile,419FloridaOceans Edge Resort&Marina,Key West,175Renaissance Orlando

3、 at SeaWorld,781MassachusettsBoston Park Plaza,1,060Marriott Boston Long Wharf,415New YorkHilton Times Square,New York City,478Renaissance Westchester,West Harrison,348Maryland/Washington DCRenaissance Harborplace,Baltimore,622Renaissance Washington DC,807Property Locations and Room Counts11FEB20160

4、0460395Before reviewing our 2018 results and providing anour Wailea Beach Resort and Hyatt Embarcaderoupdate on the current environment,I would like tomay change in form over time yet will remain highlyshare with you our strategy,which is regularlycoveted destinations for generations to come andrevi

5、ewed,challenged and approved by our Board ofthat the value of the assets will eventually be aDirectors.multiple of our investment in the asset today.This is our StrategyWe refrain from owning or acquiring commodity orpedestrian hotels in secondary and tertiary markets,We create long-term stakeholder

6、 value through thedespite their siren song of higher initial cash flowactive ownership of Long-Term Relevant Real Estate?yields.We also avoid hotels that are subject towithin the hospitality sector.ground leases.Since most ground leases willeventually revert to another party,and the long-termoptiona

7、lity related to these hotels is owned byThis is a straight-forward concept,yet added colorsomeone else,we have reduced,and over time,may be worthwhile.expect to continue to reduce our hotels that aresubject to ground leases.We own Long-Term Relevant Real Estate?.That is,we own hotels at which we bel

8、ieve travelers willNot all of our hotels currently stack up as Long-Termwant to stay,rather than have to stay,forRelevant Real Estate.A small portion of the overalldecades to come.For example,we are highlyvalue of our portfolio is made up of hotels we view toconfident that locations such as the Bost

9、on Publicbe commodity hotels.The percentage of our assetGardens and Long Wharf in Boston,Wailea Beach invalue attributed to commodity hotels has shrunkMaui,Downtown San Diego adjacent to the Bay andmaterially in the past several years and shouldconvention center,Washington,D.C.adjacent to thecontinu

10、e to shrink over time.We view these fewconvention center and within walking distance to theremaining commodity hotels as a bank of value thatWhite House,and the Embarcadero Center in Sanwill be methodically monetized and used to fundFrancisco are,and will continue to be,relevant to afuture investmen

11、ts,including the disciplinedvariety of travelers for generations.We believeacquisition of Long-Term Relevant Real Estate.Thisowning Long-Term Relevant Real Estateif wellprocess is likely to take time,and may occasionallymaintainedreduces the risk of waning demand as isresult in higher-than-normal ca

12、sh balances andgenerally the case with commodity or pedestrianshort-term earnings dilution as has been the caseassets that lose their earnings power over time asover the past two years.We are comfortable capitaltheir improvements age,as hotel brands mandaterecycling these assets,particularly if we c

13、an harvestuneconomic improvements,and as these hotels facethese assets at strong valuations,as we believe ourcompetition from newer products.We believe thatstrategy will result in superior long-term returns forLong-Term Relevant Real Estate takes many forms,our stakeholders.shapes and sizes,but the

14、appeal of the hotel isgenerally in the hotels unique attributes,thedifficulty in replicating the product,and most of all,We take a long-term view of our business,even at thethe long-term desirability of its location.Most of theexpense of short-term disruption or cyclical volatility.time,the lasting

15、value is in the dirt rather than theWhile some in the investment community areimprovements.For example,we are confident thatfocused on near-term results measured in terms ofT O T H E S T O C K H O L D E R S O FS U N S T O N E H O T E L I N V E S T O R S,I N C.:days,months and quarters,our focus is o

16、n asset valueand be applauded in the short term,but is moreover years and decades.Yes,decades.It is thislikely than not to result in value destructionlong-term focus that gives us the confidence tononetheless.As a result,there are likely to beacquire and reposition hotels despite the inherentperiods

17、 during which,despite significant efforts byshort-term disruption to earnings.The acquisitionour investment team,we acquire very little.Too oftenand extensive renovation of the Boston Park Plazain the investment environment,motion is confusedand the Wailea Beach Resort completed a few yearswith prog

18、ress and patience is not as practiced as itago have been tremendously successful and haveshould be.I will expand on this topic later.created substantial stockholder value.We willcontinue to look for,and invest in,similarWe employ a low-leveraged capital structure.Aopportunities as we believe we are

19、skilled in creatinglow-leveraged capital structure is unlikely tovalue through such endeavors.maximize short-term levered earnings in good times,but in our view,will result in higher earnings andWe believe in active ownership.As a hotel Realvalue over longer periods of time.The hotel businessEstate

20、Investment Trust(REIT),we are precludedis operationally intensive,capital intensive andfrom operating our hotels,and therefore,we rely oneconomically sensitive.Combining these attributesskilled third-party operators for the day-to-daywith high financial leverage is simply not prudent ifmanagement of

21、 the properties.That said,our assetone wants to be a long-term investor;or at least amanagement,design&construction,engineering,successful long-term investor.History is on our sidelegal and finance teams work actively andof this argument.Our low leverage provides us withcollaboratively with our hote

22、l operators to drivemore optionality to take advantage of variousprofitability,to enhance guest and hotel associateinvestments over time without being beholden to thesatisfaction,to reduce our environmental impact andoften-fickle equity markets.This is the reason weto maintain and enhance the long-t

23、erm value of ourhave proactively built up our financial flexibility andportfolio.This is our day job and I think we are goodstrength and remain one of the lowest-leveredat it.institutional hotel owners.We own hotels that generate a superior level ofWe believe in,and actively employ,stockholder-econo

24、mic earnings such that they can support theirfriendly corporate governance,a strong alignmentlong-term capital needs while also providing anbetween management and stockholder interests,payattractive unlevered return on our investment.This ispractices based on stockholder outcomes and robustnot alway

25、s the case with hotels,particularly olderstakeholder disclosure.We know that stockholdersfull-service,branded hotels that have low roomnot only own the company but also have the finalratesjust the types of hotels we have sold over thedetermination of the companys future.In terms ofpast several years

26、.Furthermore,we keep our hotelscorporate governance,we elect all directors annually,in good condition in order to maximize theirallow bylaws to be amended by stockholders,restrictlong-term appeal to guests.We routinely makethe boards ability to classify directors,allow Proxysignificant investments i

27、n non-guest-facing areas andAccess,pay executives and team members basedbuilding systems that short-term hotel owners arelargely on stockholder returns and operating results,often unwilling to make.These investments can beand require executives and directors to hold acostly,but in our view,are the r

28、ight long-termmeaningful ownership interest in the company.business decisions.After all,if an owner doesnt takeFurthermore,providing robust and honest disclosurecare of the hotel associates and the building,howallows us to have direct conversations with ourshould one expect the hotel associates and

29、thestockholders regarding the business they own.building to take care of the guests that are vital toour long-term success?This is our strategy and our approach to ourbusiness.Not everyone will agree with this strategyWe believe the initial cost basis of our investments isnor invest in Sunstone.That

30、 is fine by us,as we wontas important as the quality of the real estate wetry to be all things to all investors nor change ouracquire.Investing in Long-Term Relevant Realstrategy to suit the whims of the day.Estate at long-term uneconomic prices may feel good2018 ANNUAL REPORTA Review of Recent Even

31、tschallenged,as the economic cycle decelerates,andpotentially contracts.Overall,it was a productive year at Sunstone.Hereare the highlights.Our underwriting discipline and balance sheetphilosophy are likely to result in greater investmentOur comparable portfolio of 21 hotels owned at theactivity in

32、the early and middle stages of a hotelend of 2018 generated a 1.9%increase inoperating cycle rather than in the latter stages of ansame-property EBITDA as a result of a 3.7%operating cycle.This has been the case during thisincrease in comparable revenues and a 4.4%increaseten-year-and-counting opera

33、ting cycle as we acquiredin comparable property expenses.Food&beveragenearly$2 billion of high quality hotels between 2011revenue and other hotel revenues,which collectivelyand 2015,and then invested another$460 million ofmade up 31%of our hotel revenues,werecapital into our portfolio between 2015 a

34、nd 2017,surprisingly strong and helped offset some of theincluding repositioning several of these hotels,impact of rising expenses at our hotels,particularly increating hundreds of millions of dollars ofwages&benefits and property taxes.Overall,ourstockholder value along the way.In the past fewopera

35、ting results exceeded both our expectations andyears,we have found few hotel investments that metthe results of many of our hotel REIT peers.our return requirements.On the flip side,we havehad more success selling into a competitive marketthose assets we dont believe have long-termWe advanced our st

36、rategy of creating value throughrelevance or the ability to deliver our requiredthe ownership of Long-Term Relevant Real Estate byreturns.Our recent pause in acquisition activity hasdisposing of six commodity hotels,including onenot been met with universal applause,but we believeincredibly well-loca

37、ted hotel that unfortunately wasthat our investment discipline and substantialsubject to a relatively short-term ground lease.Theseinvestment capacity will eventually lead to significantsix hotels,which generated an average EBITDA perearnings growth and value creation,and that ourguestroom 49%lower

38、than the remainder of ourpatience will be rewarded.portfolio,were collectively sold for gross proceeds ofapproximately$350 million.These recent sales bringour total disposition of off-strategy hotels to overIn 2018,we completed several notable capital$1billion in the past four years and haveprojects

39、 that are expected to increase the applicableconcentrated the value of our remaining portfoliohotels long-term relevance,drive earnings growth,into Long-Term Relevant Real Estate.Only a handfuland most importantly,value creation going forward.of these off-strategy hotels remain in our portfolioMost

40、notably,we developed 46,000 square feet ofand we expect to methodically cull these assets at theadditional state-of-the-art meeting space at ourappropriate time.Renaissance Orlando that will allow us to attract agreater number of highly profitable corporate groupcustomers.Furthermore,the guestrooms

41、at both ourDespite underwriting billions of dollars of potentialMarriott Boston Long Wharf and JW Marriott Newinvestments in the past year,our 2018 investmentOrleans underwent substantial renovation,includingactivity was limited to two small-in-size butenlarging the bathrooms,adding showers andsigni

42、ficant-in-advancing-strategy acquisitions,providing more luxurious amenities.We expect theseincluding acquiring the ground lease under our JWnon-routine capital projects to not only generateMarriott New Orleans and the perpetual right to usereturns well in excess of our cost of capital but alsovario

43、us spaces at our Renaissance Washington D.C.advance our strategic objectives.(which were previously leased)for a collective$33million.Both transactions improved thelong-term relevance and earnings potential of theseAs our hotel dispositions outpaced our investmentstwo assets.Other acquisitions did n

44、ot materialize asin 2018,our low-leveraged balance sheet became lesspricing expectations on quality hotels continued tolevered and our already sizable investment capacityincrease despite a moderating outlook for earningsgrew.Our ratio of net debt plus preferred equity togrowth.Current pricing expect

45、ations do not appear2018 Adjusted EBITDA stands at roughly 1.5 times,to give us a margin of safety on these potentialwhich is below the 2.5 to 3.0 times we had targetedinvestments,particularly if you share our view thatfor the latter part of an operating cycle.Similarly,hotel profit growth in the co

46、ming years is likely to beour unrestricted cash balance at year end,afteradjusting for our sizable fourth quarter dividends,SUNSTONE HOTEL INVESTORS,INC.13MAR201622162810was$683 million,or nearly$3.00 per common share.We may continue to sell the few remainingOur fortress balance sheet gives us incre

47、diblepedestrian hotels within our portfolio and todurability and optionality in the event of anmethodically reinvest our sizeable investmenteconomic downturn and represents significantcapacity if and when we find the right investments atinvestment capacity and unrealized earnings whenthe right price

48、.Given the significant level ofattractive investments present themselves.Today,wecompetition for quality hotels,it may continue to becould acquire approximately$575million toadvisable to sell assets at this time which may$625 million of on-strategy hotels or buy backcontinue to result in higher-than

49、-normal cash levelsapproximately$500 million of common stock andin the interim.We will also continue to monitor ourremain at or below our 3.0 times target ratio of netshare price and may buy back our shares in the rightdebt and preferred equity to Adjusted EBITDA.circumstances.We remain mindful that

50、 the industryEither investment,if implemented,would addis likely in the latter part of an operating cycle,albeitmeaningfully to our earnings per share.one that has had muted growth in comparison to pastrecoveries,and may continue to grow slowly foryears.In any event,we are well positioned andOur Inc

51、ome Attributable to Common Stockholdersprepared from a financial and human capitalper diluted share was$1.05 in 2018.Our Adjustedstandpoint to successfully navigate nearly anyEBITDA of$332 million decreased 2.0%versusscenario that may come.2017.Similarly,our Adjusted Funds FromOperations per diluted

52、 share declined 4.1%from theprior year to$1.17.These unlevered and levered*earnings metrics declined as lost earnings from assetssold in 2017 and 2018 offset our comparable hotelIn closing,I would like to thank Sunstones Board ofEBITDA growth and the contribution from ourDirectors and our 48 employe

53、es for their significantselect investments made over the past two years.talents and tireless focus and efforts to createstakeholder value.I want to thank the hotel teamsAlthough our total stockholder return in 2018 ofsome of the most talented,caring and hardworking?17.3%was disappointing,our trailin

54、g three-yearpeople I have ever metfor their constantand five-year total stockholder returns of 19.8%anddedication to serving our guests and making their28.0%,respectively,remain strong.Our one-yeardays better.I would also like to thank our brand,return effectively matched those of our definedoperati

55、ng,investment and capital partners for theirlodging peer group,while our three-and five-yearenergy,talents,ongoing support and collaborationtotal stockholder returns have materially exceededwe could not be successful without them.And finally,the average total returns of our primary peers.OurI would

56、like to thank our stockholdersthe ownersprimary peers generated average stockholder returnsof our companyfor their support and trust,forof?17.5%,10.1%and 1.0%,respectively,over theseinvesting in us,and for giving us the opportunity totime periods,as of the end of 2018.run this great business.Our Out

57、lookWarmest regards,In general,our business seems to be demonstratingthe characteristics witnessed in the latter parts of theoperating cycle.That is,hotel revenue growth hasbeen moderating while expense growth acceleratesdue to rising costs such as wages&benefits andproperty taxes.In 2019,we expect

58、hotel revenues togrow modestly,margins to contract a bit,andcomparable property-level EBITDA to remainroughly flat to the prior year.2018 ANNUAL REPORTJOHN V.ARABIAPRESIDENT&CHIEF EXECUTIVE OFFICER?Our Company?Competitive Strengths?.?.?.?.?.?.?Business Strategy?Competition?Management Agreements?Fran

59、chise Agreements?Tax Status?Taxable REIT Subsidiary?Ground,Building and Air Lease Agreements?Corporate Office?Employees?Environmental?ADA Regulation?Inflation?Securities Exchange Act Reports?Executive Officers of the Registrant?Risks Related to Our Business?In the past,events beyond our control,incl

60、uding economic slowdowns,natural disasters,civil unrest and terrorism,harmed the operating performance of the hotel industry generally and the performance of our hotels,and if these or similar events occur again,our operating and financial results may be harmed by declines in average daily room rate

61、s and/or occupancy.?Volatility in the debt and equity markets may adversely affect our ability to acquire,renovate,refinance or sell hotel assets.?Changes in the debt and equity markets may adversely affect the value of our hotels.?Any replacement of LIBOR as the basis on which interest on our varia

62、ble-rate debt is calculated may harm our financial results,profitability and cash flows.?As of December 31,2018,we had approximately$982.8 million of consolidated outstanding debt,and carrying such debt may impair our financial flexibility or harm our business and financial results by imposing requi

63、rements on our business.?We anticipate that we will refinance our indebtedness from time to time to repay our debt,and our inability to refinance on favorable terms,or at all,could impact our operating results.?If we were to default on our secured debt in the future,the loss of our property securing

64、 the debt may negatively affect our ability to satisfy other obligations.?Financial covenants in our debt instruments may restrict our operating or acquisition activities.?Many of our existing mortgage debt agreements contain“cash trap”provisions that could limit our ability to use funds for other c

65、orporate purposes or to make distributions to our stockholders.?Cash generated by our hotels that secure our existing mortgage debt agreements is distributed to us only after the related debt service and certain impound amounts are paid,which could affect our liquidity and limit our ability to use f

66、unds for other corporate purposes or to make distributions to our stockholders.?Our organizational documents contain no limitations on the amount of debt we may incur,so we may become too highly leveraged.?We face competition for hotel acquisitions and dispositions,and we may not be successful in co

67、mpleting hotel acquisitions or dispositions that meet our criteria,which may impede our business strategy.?Delays in the acquisition and renovation or repositioning of hotel properties may have adverse effects on our results of operations and returns to our stockholders?Accounting for the acquisitio

68、n of a hotel property or other entity requires an allocation of the purchase price to the assets acquired and the liabilities assumed in the transaction at their respective relative or estimated fair values.Should the allocation be incorrect,our assets and liabilities may be overstated or understate

69、d,which may also affect depreciation expense on our statement of operations?The acquisition of a portfolio of hotels or a company presents more risks to our business and financial results than the acquisition of a single hotel.?We may be subject to unknown or contingent liabilities related to recent

70、ly sold or acquired hotels,as well as hotels that we may sell or acquire in the future.?The sale of a hotel or a portfolio of hotels is typically subject to contingencies,risks and uncertainties,any of which may cause us to be unsuccessful in completing the disposition.?Joint venture investments cou

71、ld be adversely affected by our lack of sole decision-making authority,our reliance on a co-venturers financial condition and disputes between us and our co-venturers.?The hotel loans in which we may invest in the future involve greater risks of loss than senior loans secured by income-producing rea

72、l properties?If we make or invest in mortgage loans with the intent of gaining ownership of the hotel secured by or pledged to the loan,our ability to perfect an ownership interest in the hotel is subject to the sponsors willingness to forfeit the property in lieu of the debt.?Certain of our long-li

73、ved assets and goodwill have in the past become impaired and may become impaired in the future.?We own primarily urban and resort upper upscale hotels,and the upper upscale segment of the lodging market is highly competitive and may be subject to greater volatility than other segments of the market,

74、which could negatively affect our profitability.?Rising operating expenses or low occupancy rates could reduce our cash flow and funds available for future distributions.?A significant portion of our hotels are geographically concentrated and,accordingly,we could be disproportionately harmed by econ

75、omic downturns or natural disasters in these areas of the country.?The operating results of some of our individual hotels are significantly impacted by group contract business and room nights generated by large corporate transient customers,and the loss of such customers for any reason could harm ou

76、r operating results.?The need for business-related travel,and,therefore,demand for rooms in our hotels may be materially and adversely affected by the increased use of business-related technology.?A substantial number of our hotels operate under a brand owned by Marriott,Hilton or Hyatt.Should any o

77、f these brands experience a negative event,or receive negative publicity,our operating results may be harmed.?Because all but two of our hotels are operated under franchise agreements or are brand managed,termination of these franchise,management or operating lease agreements could cause us to lose

78、business at our hotels or lead to a default or acceleration of our obligations under certain of our notes payable.?Our franchisors and brand managers may require us to make capital expenditures pursuant to property improvement plans,or PIPs,and the failure to make the expenditures required under the

79、 PIPs or to comply with brand standards could cause the franchisors or hotel brands to terminate the franchise,management or operating lease agreements.?Our franchisors and brand managers may change certain policies or cost allocations that could negatively impact our hotels.?Because we are a REIT,w

80、e depend on third parties to operate our hotels,which could harm our results of operations.?We are subject to risks associated with the employment of hotel personnel,which could increase our expenses or expose us to additional liabilities.?System security risks,data protection breaches,cyber-attacks

81、 and systems integration issues could disrupt our internal operations or services provided to guests at our hotels,and any such disruption could reduce our expected revenue,increase our expenses,damage our reputation and adversely affect our stock price.?Our hotels have an ongoing need for renovatio

82、ns and potentially significant capital expenditures in connection with acquisitions,repositionings and other capital improvements,some of which are mandated by applicable laws or regulations or agreements with third parties,and the costs of such renovations,repositionings or improvements may exceed

83、our expectations or cause other problems.?Because five of the 21 hotels are subject to ground,building or air leases with unaffiliated parties,termination of these leases by the lessors could cause us to lose the ability to operate these hotels altogether and incur substantial costs in restoring the

84、 premises.?The failure of tenants in our hotels to make rent payments under our retail and restaurant leases may adversely affect our results of operations.?Because we are a REIT,we depend on the TRS Lessee and its subsidiaries to make rent payments to us,and their inability to do so could harm our

85、revenue and our ability to make distributions to our stockholders.?If we fail to maintain effective internal control over financial reporting and disclosure controls and procedures in the future,we may not be able to accurately report our financial results,which could have an adverse effect on our b

86、usiness.?Risks Related to Our Organization and Structure?Provisions of Maryland law and our organizational documents may limit the ability of a third party to acquire control of our company and may serve to limit our stock price.?Aggregate Stock and Common Stock Ownership Limits.?Authority to Issue

87、Stock.?Number of Directors,Board Vacancies,Term of Office.?Limitation on Stockholder Requested Special Meetings.?Advance Notice Provisions for Stockholder Nominations and Proposals.?Authority of our Board to Amend our Bylaws.?or?Duties of Directors.?Unsolicited Takeover Provisions.?We rely on our se

88、nior management team,the loss of whom could cause us to incur costs and harm our business.?Risks Related to the Lodging and Real Estate Industries?A number of factors,many of which are common to the lodging industry and beyond our control,could affect our business,including the following:?The hotel

89、business is seasonal and seasonal variations in revenue at our hotels can be expected to cause quarterly fluctuations in our revenue.?e.g.,?The growth of alternative reservation channels could adversely affect our business and profitability.?The illiquidity of real estate investments and the lack of

90、 alternative uses of hotel properties could significantly limit our ability to respond to adverse changes in the performance of our hotels and harm our financial condition.?Claims by persons relating to our properties could affect the attractiveness of our hotels or cause us to incur additional expe

91、nses.?Uninsured and underinsured losses could harm our financial condition,results of operations and ability to make distributions to our stockholders.?We face possible risks associated with the physical effects of climate change.?Terrorist attacks and military conflicts may adversely affect the hos

92、pitality industry.?We may not be able to recover fully under our existing terrorism insurance for losses caused by some types of terrorist acts,and federal terrorism legislation does not ensure that we will be able to obtain terrorism insurance in adequate amounts or at acceptable premium levels in

93、the future.?Laws and governmental regulations may restrict the ways in which we use our hotel properties and increase the cost of compliance with such regulations.Noncompliance with such regulations could subject us to penalties,loss of value of our properties or civil damages.?Tax Risks?If we fail

94、to qualify as a REIT,our distributions will not be deductible by us and our income will be subject to federal and state taxation,reducing our cash available for distribution.?Even as a REIT,we may become subject to federal,state or local taxes on our income or property,reducing our cash available fo

95、r distribution.?Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.?If the leases of our hotels to the TRS Lessee are not respected as true leases for federal income tax purposes,we would fail to qualify as a REIT.?We may be subject to taxes in the event

96、 our operating leases are held not to be on an arms-length basis.?The TRS Lessee is subject to special rules that may result in increased taxes.?We may be required to pay a penalty tax upon the sale of a hotel.?We may be subject to corporate level income tax on certain built-in gains.?If a transacti

97、on intended to qualify as a Section 1031 Exchange is later determined to be taxable,we may face adverse consequences,and if the laws applicable to such transactions are amended or repealed,we may not be able to dispose of properties on a tax deferred basis?Legislative or other actions affecting REIT

98、s could have a negative effect on us.?Risks Related to Our Common Stock?The market price of our equity securities may vary substantially.?Our distributions to stockholders may vary.?Distributions on our common stock may be made in the form of cash,stock,or a combination of both.?The IRS may disallow

99、 our use of stock dividends to satisfy our distribution requirements.?Shares of our common stock that are or become available for sale could affect the share price.?Our earnings and cash distributions will affect the market price of shares of our common stock.?Fourth Quarter 2018 Purchases of Equity

100、 Securities:?Overview?2018 Highlights?Operating Activities?Revenues.?Room revenue?Food and beverage revenue?Other operating revenue?Expenses.?Room expense?Food and beverage expense?Other operating expense?Property tax,ground lease and insurance expense?Other property-level expenses?Corporate overhea

101、d expense,?Depreciation and amortization expense?Impairment loss?Other Revenue and Expense.?Gain on sale of assets,?Interest and other income,?Interest expense,?Loss on extinguishment of debt,?Income tax(provision)benefit?net?Income from discontinued operations?Income from consolidated joint venture

102、 attributable to noncontrolling interest,?Preferred stock dividends and redemption charge,?Operating Performance Indicators?Occupancy?;?Average daily room rate,?Revenue per available room,?Comparable RevPAR,?RevPAR index,?EBITDAre?Adjusted EBITDAre,excluding noncontrolling interest?re?re?Funds from

103、operations(“FFO”)attributable to common stockholders?Adjusted FFO attributable to common stockholders?Factors Affecting Our Operating Results.?Demand.?Supply?Revenues and Expenses?Operating Results?Operating Statistics?Summary of Operating Results?Room Revenue.?Food and Beverage Revenue.?Other Opera

104、ting Revenue.?Hotel Operating Expenses.?Other Property-Level Expenses.?Corporate Overhead Expense.?Depreciation and Amortization Expense.?Impairment Loss?Gain on Sale of Assets?Interest and Other Income.?Interest Expense.?Liquidity and Capital ResourcesDebt?Loss on Extinguishment of Debt?Income Tax(

105、Provision)Benefit,Net.?Income from Discontinued Operations,Net of Tax.?Income from Consolidated Joint Venture Attributable to Noncontrolling Interest.?Preferred Stock Dividends and Redemption Charge.?Non-GAAP Financial Measures?re?re?re?re?re?re?re?re?re?re?re?re?re?Amortization of deferred stock co

106、mpensation?Amortization of favorable and unfavorable contracts?Ground rent adjustments?Undepreciated asset transactions?re?Gains or losses from debt transactions?Acquisition costs?Noncontrolling interest?re?re?Cumulative effect of a change in accounting principle?Other adjustments?re?re?re?re?re?re?

107、re?re?Amortization of favorable and unfavorable contracts?Noncash ground rent?Gains or losses from debt transactions?Acquisition costs?Noncontrolling interest?Cumulative effect of a change in accounting principle?Other adjustments?re?re?Investing Activities?Acquisitions?Dispositions?Renovations.?Liq

108、uidity and Capital Resources?Operating activities.?Investing activities?Financing activities?Future.?Cash Balance?Debt.?2018 Debt transactions?2017 Debt transactions.?2016 Debt transactions.?Contractual Obligations?Capital Expenditures and Reserve Funds?Seasonality and Volatility?e.g.,?Inflation?Cri

109、tical Accounting Policies?Impairment of long-lived assets?Acquisition related assets and liabilities.?Depreciation and amortization expense?Income taxes?New Accounting Standards and Accounting Changes?(a)Evaluation of Disclosure Controls and Procedures?(b)Managements Report on Internal Control over

110、Financial Reporting?(c)Changes in Internal Control over Financial Reporting?Statement of Cash Flows(Topic 230):Restricted Cash(a consensus of the FASB Emerging Issues Task Force)?(Note 12)?Supplemental Disclosure of Cash Flow Information?Supplemental Disclosure of Noncash Investing and Financing Act

111、ivities?Basis of Presentation?Use of Estimates?Cash and Cash Equivalents?Restricted Cash?Accounts Receivable?Inventories?Acquisitions of Hotel Properties and Other Entities?Investments in Hotel Properties?Assets Held for Sale?Deferred Financing Costs?Interest Rate Derivatives?Revenue Recognition?Adv

112、ertising and Promotion Costs?Stock Based Compensation?Income Taxes?Comprehensive Income?Noncontrolling Interest?Dividends?Earnings Per Share?Segment Reporting?Recent Accounting Pronouncements?Revenue from Contracts with Customers(Topic 606)?Revenue from Contracts with Customers(Topic 606):Principal

113、versus Agent Considerations(Reporting Revenue Gross versus Net)?Revenue from Contracts with Customers(Topic 606):Narrow-Scope Improvements and Practical Expedients?Revenue Recognition?Leases(Topic 842)?Leases(Topic 842):Land Easement Practical Expedient for Transition to Topic 842?Codification Impro

114、vements to Topic 842,Leases?Leases(Topic 842):Targeted Improvements?Leases(Topic 842):Narrow-Scope Improvements for Lessors?Financial Instruments-Credit Losses(Topic 326):Measurement of Credit Losses on Financial Instruments?Codification Improvements to Topic 326,Financial Instruments-Credit Losses?

115、Statement of Cash Flows(Topic 230):Restricted Cash(a consensus of the FASB Emerging Issues Task Force)?Business Combinations(Topic 805):Clarifying the Definition of a Business?Intangibles Goodwill and Other(Topic 350):Simplifying the Test for Goodwill Impairment?Compensation Stock Compensation(Topic

116、 718):Scope of Modification Accounting?Fair Value Measurement(Topic 820):Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement?Acquisitions-2018?Acquisitions-2017?Unaudited Pro Forma Results?Intangible Assets?Disposals-2018?Disposals-2017?Disposals-2016?Discontinued

117、Operations?Fair Value Measurements?Interest Rate Derivatives?Fair Value of Debt?Notes Payable Transactions-2018?Notes Payable Transactions-2017?Deferred Financing Costs and Losses on Extinguishment of Debt?Interest Expense?Other Current Liabilities?Other Liabilities?Characterization of Distributions

118、?Series D Cumulative Redeemable Preferred Stock?Series E Cumulative Redeemable Preferred Stock?Series F Cumulative Redeemable Preferred Stock?Common Stock?Dividends and Distributions?Stock Grants?Stock Options?Management Agreements?License and Franchise Agreements?Renovation and Construction Commitm

119、ents?Capital Leases?Ground,Building and Air Leases?Employment Agreements?401(k)Savings and Retirement Plan?Collective Bargaining Agreements?Concentration of Risk?Other?5MAR201906225717The following graph compares the total shareholder return of our common shares against thecumulative total returns o

120、f the S&P 500 Index,the MSCI US REIT Index and the FTSE NAREITEquity Lodging/Resorts Index for the period from December 31,2013 to December 31,2018.Thegraph assumes an initial investment of$100 in our common shares and in each of the indices,and alsoassumes the reinvestment of dividends.The performa

121、nce graph is not indicative of future investmentperformance.We do not make or endorse any predictions as to future share price performance.201320142015201820172016FTSE NAREIT Equity Lodging/ResortsS&P 500 Total ReturnMSCI US REIT Index Total ReturnSunstone Hotel Investors,Inc.$170$160$150$140$130$12

122、0$110$90$100201320142015201620172018Sunstone HotelInvestors,Inc.$100.00$127.17$106.87$136.67$154.72$128.03MSCI US REIT IndexTotal Return$100.00$130.38$133.67$145.16$152.52$145.55S&P 500 Total Return$100.00$113.69$115.26$129.05$157.22$150.33FTSE NAREIT EquityLodging/Resorts$100.00$132.50$100.14$124.5

123、2$133.45$116.34CORPORATEInformationBOARD OF DIRECTORSEXECUTIVE OFFICERSCommon Stock of the Company is a i ba rA.VnhoJa i ba rA.VnhoJDirector and President&President&Chief Executive Ofcertraded on the New York Stock ExchangeChief Executive Ofcerunder the symbol SHO.Marc A.HofmanExecutive Vice Preside

124、nt&Series E Preferred Stock is traded on the W.Blake BairdChief Operating OfcerNew York Stock Exchange under the Directorsymbol“SHO PR E”.Bryan A.GigliaZ.Jamie BeharExecutive Vice President&INDEPENDENTr e c i f fOl a i cnaniFf e i hCr o t c e r iDREGISTERED PUBLICACCOUNTANTSr egn i rpS.Ct r eboRToma

125、s A.Lewis,Jr.Ernst&Young LLP&tned i s e rPe c iVevi t u c exEDirectorChief Investment OfcerFORM 10-K ANDDavid M.KleinOTHER MATERIALSExecutive Vice President&General CounselA copy of the Companys Annual Reporton Form 10-K as fled with theSecurities and Exchange Commission,isavailable free of charge t

126、o itsstockholders.Such requests should bemade to:Murray J.McCabeDirectorDouglas M.PasqualeChairmanKeith P.RussellDirectorINVESTOR RELATIONSSunstone Hotel Investors,Inc.200 Spectrum Center Drive21st FloorIrvine,CA 92618(949)330-CEO AND CFOCERTIFICATIONSANNUAL MEETING OFSTOCKHOLDERSTe Annual Meeting w

127、ill be held at8:30 A.M.on May 3,2019 at:200 Spectrum Center Drive2nd FloorIrvine,CA 92618TRANSFER AGENTAmerican Stock Transfer&Trust Co.LLC6201 15th AvenueBrooklyn,NY 11219(800)937-5449In 2018,the Companys Chief ExecutiveOfcer(CEO)provided to the NewYork Stock Exchange the annual CEOcertifcation reg

128、arding the Companyscompliance with the New York StockExchanges corporate governance listingstandards.In addition,all requiredcertifcations by the Companys CEOand Chief Financial Ofcer regarding thequality of the Companys publicdisclosures in its fscal 2018 reports werefled with the U.S.Securities andExchange Commission.Series F Preferred Stock is traded on the New York Stock Exchange under the symbol“SHO PR F”.STOCK LISTINGAndrew BatinovichDirector200 Spectrum Center Drive 21st FloorIrvine,CA 2018 Annual Report