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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): November 8, 2022

Sunstone Hotel Investors, Inc.

(Exact Name of Registrant as Specified in Its Charter)

    

    

    

 

Maryland

 

001-32319

 

20-1296886

(State or Other Jurisdiction of
Incorporation or Organization)

 

(Commission File Number)

 

(I.R.S. Employer
Identification Number)

200 Spectrum Center Drive, 21st Floor
Irvine, California

 

92618

(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))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value

SHO

New York Stock Exchange

Series H Cumulative Redeemable Preferred Stock, $0.01 par value

SHO.PRH

New York Stock Exchange

Series I Cumulative Redeemable Preferred Stock, $0.01 par value

SHO.PRI

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

Item 2.02.Results of Operations and Financial Condition.

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻ On November 8, 2022, Sunstone Hotel Investors, Inc. (the “Company”) issued a press release regarding its financial results for the third quarter ended September 30, 2022. The press release referred to supplemental financial information that is available on the Company’s website, free of charge, at www.sunstonehotels.com. A copy of the press release and the supplemental financial information are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by this reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, 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 9.01.Financial Statements and Exhibits.

(d) The following exhibits are furnished herewith:

EXHIBIT INDEX

Exhibit No.

     

Description

99.1

Press Release, dated November 8, 2022.

99.2

Supplemental Financial Information for the third quarter ended September 30, 2022.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

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: November 8, 2022

By:

/s/ Aaron R. Reyes

Aaron R. Reyes
(Principal Financial Officer and Duly Authorized Officer)

EX-99.1 2 sho-20221108xex99d1.htm EX-99.1

Exhibit 99.1

2007 Logo Med

For Additional Information:

Aaron Reyes

Sunstone Hotel Investors, Inc.

(949) 382-3018

SUNSTONE HOTEL INVESTORS REPORTS RESULTS FOR THIRD QUARTER 2022

Returns Capital to Shareholders Through Additional Share Repurchases and Dividends

IRVINE, CA – November 8, 2022 – Sunstone Hotel Investors, Inc. (the “Company” or “Sunstone”) (NYSE: SHO), the owner of Long-Term Relevant Real Estate® in the lodging industry, today announced results for the third quarter ended September 30, 2022.

Third Quarter 2022 Operational Results (as compared to Third Quarter 2021):

Net Income (Loss): Net income was $20.5 million as compared to a net loss of $22.1 million.
Comparable Portfolio RevPAR: RevPAR at the comparable 12 hotels the Company owned during both 2022 and 2021 plus The Confidante Miami Beach (the “Comparable Portfolio”), increased 49.0% to $207.18. The average daily rate was $287.75 and occupancy was 72.0%.
Total Portfolio RevPAR: RevPAR at the 15 hotels, which includes the Comparable Portfolio, the Montage Healdsburg and the Four Seasons Resort Napa Valley (the “Total Portfolio”), was $222.50. The average daily rate was $311.62 and occupancy was 71.4%.
Adjusted EBITDAre: Adjusted EBITDAre, excluding noncontrolling interest increased 80.6% to $63.8 million.
Adjusted FFO: Adjusted FFO attributable to common stockholders per diluted share increased 118.2% to $0.24. In 2022, the Company changed its presentation of Adjusted FFO attributable to common stockholders to exclude the noncash amortization expense associated with deferred stock compensation. Adjusted FFO attributable to common stockholders for the prior periods presented in this release have also been adjusted to exclude this expense. The per share impact of this change as compared to the Company’s prior presentation is $0.01 for both of the third quarters of 2022 and 2021.

Information regarding the non-GAAP financial measures disclosed in this release is provided below in “Non-GAAP Financial Measures.” Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included later in this release.

Bryan A. Giglia, Chief Executive Officer, stated, “We are pleased with our operating results in the third quarter which reflect continued strength in leisure travel and incremental growth in corporate and group demand. During the quarter, our operators aggressively grew room rates and delivered operating margins that were near pre-pandemic levels, despite rising costs. We are particularly encouraged by the increasing business volume we saw in September at our urban and group-oriented hotels which contributed to comparable portfolio monthly RevPAR that was above 2019 levels for the first time since the pandemic began. These positive trends have continued into October with our portfolio maintaining strong rates as occupancy continues to rebuild.”

Mr. Giglia continued, “During the third quarter, we successfully allocated capital by making strategic investments in our portfolio, initiating a value enhancing repositioning of our recently acquired resort in Miami and returning additional capital to our shareholders. We recently completed the guestroom renovation at the Hyatt Regency San Francisco and continued to advance the Westin conversion at our hotel in Washington, DC. These internal investments are expected to provide strong returns by enabling the hotels to better capture additional business as corporate and group events increasingly return to these markets. We are pleased with the initial performance of our recently acquired hotel in Miami, which is pacing ahead of expectations leading up to the start of its transformation to Andaz Miami Beach next year. Additionally, we continue to return capital to our shareholders through quarterly dividends and additional share repurchases. Our balance sheet retains capacity for additional capital deployment, and we continue to explore ways to recycle capital into higher growth opportunities.”

1


Unaudited Selected Statistical and Financial Data ($ in millions, except RevPAR, ADR and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2022

    

2021

    

Change

2022

2021

Change

Net Income (Loss)

$

20.5

$

(22.1)

192.6

%

$

73.3

$

(105.3)

169.6

%

Income (Loss) Attributable to Common Stockholders per Diluted Share

$

0.08

$

(0.13)

161.5

%

$

0.27

$

(0.56)

148.2

%

Comparable Portfolio RevPAR (1)

$

207.18

$

139.09

49.0

%

$

194.66

$

101.49

91.8

%

Comparable Portfolio Occupancy (1)

72.0

%  

53.7

%  

1,830

bps

67.1

%  

42.8

%  

2,430

bps

Comparable Portfolio ADR (1)

$

287.75

$

259.02

11.1

%

$

290.10

$

237.13

22.3

%

Total Portfolio RevPAR (2)

$

222.50

N/A

N/A

$

208.84

N/A

N/A

Total Portfolio Occupancy (2)

71.4

%  

N/A

N/A

66.7

%  

N/A

N/A

Total Portfolio ADR (2)

$

311.62

N/A

N/A

$

313.10

N/A

N/A

Comparable Portfolio Adjusted EBITDAre Margin (1)

30.4

%  

23.4

%  

700

bps

31.1

%  

15.2

%  

1,590

bps

Adjusted EBITDAre, excluding noncontrolling interest

$

63.8

$

35.4

80.6

%

$

165.0

$

36.0

358.0

%

Adjusted FFO Attributable to Common Stockholders

$

51.3

$

23.4

119.2

%

$

130.9

$

0.3

42,816.4

%

Adjusted FFO Attributable to Common Stockholders per Diluted Share

$

0.24

$

0.11

118.2

%

$

0.61

$

N/A

(1) Comparable Portfolio operating statistics presented here and elsewhere in this release include both prior ownership results and the Company’s ownership results for The Confidante Miami Beach, acquired by the Company in June 2022.
(2) The Total Portfolio consists of all 15 hotels owned by the Company as of September 30, 2022. Total Portfolio operating statistics presented here and elsewhere in this release include both prior ownership results and the Company’s ownership results for The Confidante Miami Beach, acquired by the Company in June 2022. The Total Portfolio includes the Company’s ownership results for the Montage Healdsburg and the Four Seasons Resort Napa Valley, which were acquired in April 2021 and December 2021, respectively. Both the Montage Healdsburg and the Four Seasons Resort Napa Valley are newly-developed hotels which opened on limited bases in December 2020 and October 2021, respectively. Prior year information is not comparable.

Third Quarter 2022 Highlights

Completed the previously announced Second Amended and Restated Credit Agreement (the “Amended Credit Agreement”) which expanded the Company’s unsecured borrowing capacity and extended the maturity of the in-place term loans. The Amended Credit Agreement continues to provide for a $500.0 million revolving credit facility and increased the aggregate amount of the Company’s two term loans from $108.3 million to $350.0 million. The facilities bear interest pursuant to a leverage-based pricing grid ranging from 1.35% to 2.25% over the applicable adjusted term SOFR. The $500.0 million revolving credit facility has two six-month extension options, which would result in an extended maturity of July 2027. The two term loan facilities each have a balance of $175.0 million and mature in July 2027 and January 2028. The Company utilized the proceeds received from the incremental borrowing on the term loans to fully repay the $230.0 million that was outstanding on its revolving credit facility.
Repurchased $20.0 million of the Company's common stock as of November 4, 2022 (including $11.3 million repurchased subsequent to the end of the third quarter) at an average purchase price of $9.73 per share. The average purchase price per share represents a substantial discount to consensus estimates of NAV and implies a highly attractive valuation multiple on the Company’s stabilized cash flow.
Completed the renovation at the Hyatt Regency San Francisco. As part of the project, the guestrooms and bathrooms were renovated including the replacement of casegoods and softgoods and the conversion of most bathtubs to showers.

2


Recent Developments

Stock Repurchase Program: During the first nine months of 2022, the Company repurchased 7,995,560 shares of its common stock at an average purchase price of $10.82 per share. Year to date through November 4, 2022, the Company has repurchased a total of 9,166,351 shares of its common stock at an average price per share of $10.67 for a total repurchase amount before expenses of $97.8 million, leaving $402.2 million of authorized capacity remaining under the Company’s stock repurchase program.

Capital Investments: The Company invested $34.9 million and $97.5 million into its portfolio during the third quarter and first nine months of 2022, respectively. The majority of the investment consisted primarily of additional progress on the renovation of the Renaissance Washington DC in preparation for its conversion to the Westin brand in 2023, and a rooms renovation at the Hyatt Regency San Francisco which has now been completed. These projects are expected to drive incremental growth upon completion and will further enhance the earnings potential and value of these well-located hotels. In 2022, the Company expects to invest approximately $130 million to $140 million into its portfolio.

Corporate Responsibility Report: In November, the Company published its updated Corporate Responsibility Report. The report includes details on Sunstone’s progress on its Environmental, Social and Governance (“ESG”) initiatives during 2021 and its commitment to enhance its ESG program into 2022. A copy of the report can be found on the Corporate Responsibility page of the Company’s website.

Balance Sheet and Liquidity Update

As of September 30, 2022, the Company had $167.8 million of cash and cash equivalents, including restricted cash of $50.3 million, total assets of $3.1 billion, including $2.9 billion of net investments in hotel properties, total debt of $816.6 million and stockholders’ equity of $2.1 billion.

Operations Update

Operating statistics for the Total Portfolio were as follows:

July

August

September

Third Quarter

October

2022

2022

2022

2022

2022 (1)

RevPAR

$

232.91

$

205.57

$

228.93

$

222.50

$

249.42

Occupancy

73.8

%

69.2

%

71.1

%

71.4

%

75.3

%

Average Daily Rate

$

315.59

$

297.07

$

321.98

$

311.62

$

331.23

Operating statistics for the Comparable Portfolio were as follows:

July

August

September

Third Quarter

October

2022

2022

2022

2022

2022 (1)

RevPAR

$

218.55

$

193.81

$

209.58

$

207.18

$

231.25

Occupancy

74.6

%

69.9

%

71.6

%

72.0

%

75.9

%

Average Daily Rate

$

292.96

$

277.27

$

292.71

$

287.75

$

304.68

July

August

September

Third Quarter

October

2019

2019

2019

2019

2019

RevPAR

$

222.52

$

201.12

$

208.05

$

210.49

$

236.74

Occupancy

87.6

%

85.9

%

80.9

%

84.8

%

88.0

%

Average Daily Rate

$

254.02

$

234.13

$

257.17

$

248.22

$

269.02

Change 2022 vs. 2019

RevPAR

(1.8)

%

(3.6)

%

0.7

%

(1.6)

%

(2.3)

%

Occupancy

(1,300)

bps

(1,600)

bps

(930)

bps

(1,280)

bps

(1,210)

bps

Average Daily Rate

15.3

%

18.4

%

13.8

%

15.9

%

13.3

%

3


October 2022, 2021 and 2019 results for the Comparable Portfolio included the following ($ in millions, except RevPAR and ADR):

October

2022 (1)

2021

2019

Change
2022 vs. 2021

Room Revenue

$

53.9

$

32.9

$

55.2

63.8

%

RevPAR

$

231.25

$

141.29

$

236.74

63.7

%

Occupancy

75.9

%

55.7

%

88.0

%

2,020

bps

Average Daily Rate

$

304.68

$

253.66

$

269.02

20.1

%

(1) October 2022 results are preliminary and may be adjusted during the Company’s month-end close process.

Dividend Update

On November 7, 2022, the Company’s Board of Directors declared a cash dividend of $0.05 per share of common stock, as well as cash dividends of $0.124162 per share payable to its Series G cumulative redeemable preferred stockholder, $0.382813 per share payable to its Series H cumulative redeemable preferred stockholders and $0.356250 per share payable to its Series I cumulative redeemable preferred stockholders. The dividends will be paid on January 17, 2023 to stockholders of record as of December 30, 2022.

Supplemental Disclosures

Contemporaneous with this release, the Company has furnished a Form 8-K with unaudited financial information. This additional information is being provided as a supplement to the information in this release and other filings with the SEC. The Company has no obligation to update any of the information provided to conform to actual results or changes in the Company’s portfolio, capital structure or future expectations.

Earnings Call

The Company will host a conference call to discuss third quarter 2022 financial results on November 8, 2022, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time). A live webcast of the call will be available via the Investor Relations section of the Company’s website at www.sunstonehotels.com. Alternatively, interested parties may dial 1-888-330-3573 and reference conference ID 4831656 to listen to the live call. A replay of the webcast will also be archived on the website.

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust (“REIT”) that as of the date of this release owns 15 hotels comprised of 7,735 rooms, the majority of which are operated under nationally recognized brands. Sunstone’s strategy is to create long-term stakeholder value through the acquisition, active ownership and disposition of hotels considered to be Long-Term Relevant Real Estate®. For further information, please visit Sunstone’s website at www.sunstonehotels.com. The Company’s website is provided as a reference only and any information on the website is not incorporated by reference in this release.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will” and other similar terms and phrases, including opinions, references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the impact the COVID-19 pandemic has on the Company’s business and the economy, as well as the response of governments and the Company to the pandemic, and how quickly and successfully effective vaccines and therapies are distributed and administered; increased risks related to employee matters, including increased employment litigation and claims for severance or other benefits tied to termination or furloughs as a result of temporary hotel suspensions or reduced hotel operations due to COVID-19; general economic and business conditions, including a U.S.

4


recession or increased inflation, trade conflicts and tariffs, regional or global economic slowdowns and any type of flu or disease-related pandemic that impacts travel or the ability to travel, including COVID-19; the need for business-related travel, including the increased use of business-related technology; rising hotel operating costs due to labor costs, workers’ compensation and health-care related costs, utility costs, property and liability insurance costs, unanticipated costs such as acts of nature and their consequences and other costs that may not be offset by increased room rates; the ground lease for one of the Company’s hotels; the need for renovations, repositionings and other capital expenditures for the Company’s hotels; the impact, including any delays, of renovations and repositionings on hotel operations; new hotel supply, or alternative lodging options such as timeshare, vacation rentals or sharing services such as Airbnb, in the Company’s markets, which could harm its occupancy levels and revenue at its hotels; competition from hotels not owned by the Company; relationships with, and the requirements, performance and reputation of, the managers of the Company’s hotels; relationships with, and the requirements and reputation of, the Company’s franchisors and hotel brands; the Company’s hotels may become impaired, which may adversely affect its financial condition and results of operations; competition for the acquisition of hotels, and the Company’s ability to complete acquisitions and dispositions; performance of hotels after they are acquired; changes in the Company’s business strategy or acquisition or disposition plans; the Company’s level of debt, including secured, unsecured, fixed and variable rate debt; financial and other covenants in the Company’s debt and preferred stock; the impact on the Company’s business of potential defaults by the Company on its debt agreements or leases; volatility in the capital markets and the effect on lodging demand or the Company’s ability to obtain capital on favorable terms or at all; the Company’s need to operate as a REIT and comply with other applicable laws and regulations, including new laws, interpretations or court decisions that may change the federal or state tax laws or the federal or state income tax consequences of the Company’s qualification as a REIT; potential adverse tax consequences in the event that the Company’s operating leases with its taxable REIT subsidiaries are not held to have been made on an arm’s-length basis; system security risks, data protection breaches, cyber-attacks and systems integration issues, including those impacting the Company’s suppliers, hotel managers or franchisors; other events beyond the Company’s control, including climate change, natural disasters, terrorist attacks or civil unrest; and other risks and uncertainties associated with the Company’s business described in its filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All forward-looking information provided herein is as of the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

This release should be read together with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies of these reports are available on our website at www.sunstonehotels.com and through the SEC’s Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) at www.sec.gov.

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: earnings before interest expense, taxes, depreciation and amortization for real estate, or EBITDAre; Adjusted EBITDAre, excluding noncontrolling interest (as defined below); funds from operations attributable to common stockholders, or FFO attributable to common stockholders; Adjusted FFO attributable to common stockholders (as defined below); hotel Adjusted EBITDAre; and hotel Adjusted EBITDAre margins. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same as the Company. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

We present EBITDAre in accordance with guidelines established by the National Association of Real Estate Investment Trusts (“NAREIT”), as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” We believe EBITDAre is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates.

We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance, and that the presentation of Adjusted EBITDAre, excluding noncontrolling interest, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance. In addition, we use both EBITDAre and Adjusted EBITDAre, excluding noncontrolling interest as measures in determining the value of hotel acquisitions and dispositions.

5


We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to NAREIT’s definition of “FFO applicable to common shares.” Our presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do.

We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance, and may facilitate comparisons of operating performance between periods and our peer companies.

We adjust EBITDAre and FFO attributable to common stockholders for the following items, which may occur in any period, and refer to these measures as either Adjusted EBITDAre, excluding noncontrolling interest or Adjusted FFO attributable to common stockholders:

Amortization of deferred stock compensation: we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels.

Amortization of contract intangibles: we exclude the noncash amortization of any favorable or unfavorable contract intangibles recorded in conjunction with our hotel acquisitions. We exclude the noncash amortization of contract intangibles because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.

Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.

Acquisition costs: under GAAP, costs associated with acquisitions that meet the definition of a business are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company or our hotels.

Cumulative effect of a change in accounting principle: from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.

Other adjustments: we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: lawsuit settlement costs; prior year property tax assessments or credits; the write-off of development costs associated with abandoned projects; property-level restructuring, severance and management transition costs; debt resolution costs; lease terminations; property insurance restoration proceeds or uninsured losses; and other nonrecurring identified adjustments.

In addition, to derive Adjusted EBITDAre, excluding noncontrolling interest we exclude the noncontrolling partner’s pro rata share of the net (income) loss allocated to the Hilton San Diego Bayfront partnership, as well as the noncontrolling partner’s pro rata share of any EBITDAre and Adjusted EBITDAre components (prior to our acquisition of the noncontrolling partner’s equity interest in the partnership in June 2022). We also exclude the amortization of our right-of-use assets and related lease obligations as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. Additionally, we include an adjustment for the cash finance lease expense recorded on the building lease at the Hyatt Centric Chicago Magnificent Mile (prior to the hotel’s sale in February 2022). We determined that the building lease is a finance lease, and, therefore, we include a portion of the lease payment each month in interest expense. We adjust EBITDAre for the finance lease in order to more accurately reflect the actual rent due to the hotel’s lessor in the current period, as well as the operating performance of the hotel. We also exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDAre, excluding noncontrolling interest is not consistent with reflecting the ongoing performance of our assets.

6


To derive Adjusted FFO attributable to common stockholders, we also exclude the noncash interest on our derivatives and finance lease obligation as we believe that these items are not reflective of our ongoing finance costs. Additionally, we exclude the noncontrolling partner’s pro rata share of any FFO adjustments related to our consolidated Hilton San Diego Bayfront partnership components (prior to our acquisition of the noncontrolling partner’s equity interest in the partnership in June 2022). We also exclude the real estate amortization of our right-of-use assets and related lease obligations, which includes the amortization of both our finance and operating lease intangibles (with the exception of our corporate operating lease), as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. In addition, we exclude preferred stock redemption charges, changes to deferred tax assets, liabilities or valuation allowances, and income tax benefits or provisions associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets other than real estate investments.

In presenting hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins, miscellaneous non-hotel items have been excluded. We believe the calculation of hotel Adjusted EBITDAre results in a more accurate presentation of the hotel Adjusted EBITDAre margins for our hotels, and that these non-GAAP financial measures are useful to investors in evaluating our property-level operating performance.

Reconciliations of net income (loss) to EBITDAre, Adjusted EBITDAre, excluding noncontrolling interest, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders, hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins are set forth in the following pages of this release.

7


Sunstone Hotel Investors, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share data)

September 30,

December 31,

    

    

2022

    

2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

117,588

$

120,483

Restricted cash

50,253

42,234

Accounts receivable, net

45,750

28,733

Prepaid expenses and other current assets

14,374

14,338

Assets held for sale, net

76,308

Total current assets

227,965

282,096

Investment in hotel properties, net

2,850,225

2,720,016

Operating lease right-of-use assets, net

17,866

23,161

Deferred financing costs, net

5,382

2,580

Other assets, net

8,945

13,196

Total assets

$

3,110,383

$

3,041,049

Liabilities and Equity

Current liabilities:

Accounts payable and accrued expenses

$

60,512

$

47,701

Accrued payroll and employee benefits

22,413

19,753

Dividends and distributions payable

13,961

3,513

Other current liabilities

68,920

58,884

Current portion of notes payable, net

2,088

20,694

Liabilities of assets held for sale

25,213

Total current liabilities

167,894

175,758

Notes payable, less current portion, net

810,909

588,741

Operating lease obligations, less current portion

18,349

25,120

Other liabilities

9,575

11,656

Total liabilities

1,006,727

801,275

Commitments and contingencies

Equity:

Stockholders' equity:

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

Series G Cumulative Redeemable Preferred Stock, 2,650,000 shares issued and outstanding at both September 30, 2022 and December 31, 2021, stated at liquidation preference of $25.00 per share

66,250

66,250

6.125% Series H Cumulative Redeemable Preferred Stock, 4,600,000 shares issued and outstanding at both September 30, 2022 and December 31, 2021, stated at liquidation preference of $25.00 per share

115,000

115,000

5.70% Series I Cumulative Redeemable Preferred Stock, 4,000,000 shares issued and outstanding at both September 30, 2022 and December 31, 2021, stated at liquidation preference of $25.00 per share

100,000

100,000

Common stock, $0.01 par value, 500,000,000 shares authorized, 211,570,211 shares issued and outstanding at September 30, 2022 and 219,333,783 shares issued and outstanding at December 31, 2021

2,116

2,193

Additional paid in capital

2,487,931

2,631,484

Retained earnings

1,017,890

948,064

Cumulative dividends and distributions

(1,685,531)

(1,664,024)

Total stockholders' equity

2,103,656

2,198,967

Noncontrolling interest in consolidated joint venture

40,807

Total equity

2,103,656

2,239,774

Total liabilities and equity

$

3,110,383

$

3,041,049

8


Sunstone Hotel Investors, Inc.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

    

2022

    

2021

2022

2021

Revenues

Room

$

158,400

$

118,061

$

428,893

$

236,877

Food and beverage

63,476

27,338

174,717

47,547

Other operating

22,438

22,022

64,299

50,840

Total revenues

244,314

167,421

667,909

335,264

Operating expenses

Room

38,791

32,106

106,594

66,692

Food and beverage

47,181

27,440

125,959

49,088

Other operating

6,440

4,643

17,965

9,934

Advertising and promotion

12,325

8,883

34,420

20,800

Repairs and maintenance

9,382

10,001

27,369

22,678

Utilities

7,708

6,164

19,652

14,998

Franchise costs

4,145

4,181

11,429

7,468

Property tax, ground lease and insurance

19,714

17,528

53,160

47,821

Other property-level expenses

29,032

21,633

83,333

48,177

Corporate overhead

7,879

15,422

27,310

32,066

Depreciation and amortization

31,750

32,585

94,003

96,084

Impairment loss

1,014

1,014

Total operating expenses

214,347

181,600

601,194

416,820

Interest and other income (loss)

270

2

4,766

(356)

Interest expense

(9,269)

(7,983)

(20,288)

(23,697)

Gain on sale of assets

22,946

(Loss) gain on extinguishment of debt, net

(770)

61

(962)

371

Income (loss) before income taxes

20,198

(22,099)

73,177

(105,238)

Income tax benefit (provision), net

290

(25)

126

(91)

Net income (loss)

20,488

(22,124)

73,303

(105,329)

(Income) loss from consolidated joint venture attributable to noncontrolling interest

(933)

(3,477)

1,638

Preferred stock dividends and redemption charges

(3,351)

(6,287)

(10,897)

(17,289)

Income (loss) attributable to common stockholders

$

17,137

$

(29,344)

$

58,929

$

(120,980)

Basic and diluted per share amounts:

Basic and diluted income (loss) attributable to common stockholders per common share

$

0.08

$

(0.13)

$

0.27

$

(0.56)

Basic weighted average common shares outstanding

211,010

217,709

213,799

215,765

Diluted weighted average common shares outstanding

211,289

217,709

213,869

215,765

Distributions declared per common share

$

0.05

$

$

0.05

$

9


Sunstone Hotel Investors, Inc.

Reconciliation of Net Income (Loss) to Non-GAAP Financial Measures

(Unaudited and in thousands)

Reconciliation of Net Income (Loss) to EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest

Three Months Ended September 30,

Nine Months Ended September 30,

 

2022

    

2021

2022

2021

Net income (loss)

$

20,488

$

(22,124)

$

73,303

$

(105,329)

Operations held for investment:

Depreciation and amortization

31,750

32,585

94,003

96,084

Interest expense

9,269

7,983

20,288

23,697

Income tax (benefit) provision, net

(290)

25

(126)

91

Loss (gain) on sale of assets

12

(22,946)

82

Impairment loss

1,014

1,014

EBITDAre

61,217

19,495

164,522

15,639

Operations held for investment:

Amortization of deferred stock compensation

2,230

3,165

8,661

10,576

Amortization of right-of-use assets and obligations

(350)

(335)

(1,050)

(1,004)

Amortization of contract intangibles, net

(19)

(43)

Finance lease obligation interest - cash ground rent

(351)

(117)

(1,053)

Loss (gain) on extinguishment of debt, net

770

(61)

962

(371)

Prior year property tax adjustments, net

605

(1,384)

Hurricane-related losses net of (insurance restoration proceeds)

1,621

(2,755)

1,621

Property-level severance related to sold hotel

4,562

4,562

Lawsuit settlement cost

691

691

CEO transition costs

7,976

7,976

Noncontrolling interest:

(Income) loss from consolidated joint venture attributable to noncontrolling interest

(933)

(3,477)

1,638

Depreciation and amortization

(791)

(1,456)

(2,407)

Interest expense

(181)

(374)

(501)

Amortization of right-of-use asset and obligation

72

132

217

Lawsuit settlement cost

(173)

(173)

Adjustments to EBITDAre, net

2,631

15,867

483

20,388

Adjusted EBITDAre, excluding noncontrolling interest

$

63,848

$

35,362

$

165,005

$

36,027

10


Sunstone Hotel Investors, Inc.

Reconciliation of Net Income (Loss) to Non-GAAP Financial Measures

(Unaudited and in thousands, except per share data)

Reconciliation of Net Income (Loss) to FFO Attributable to Common Stockholders and

Adjusted FFO Attributable to Common Stockholders

Three Months Ended September 30,

Nine Months Ended September 30,

2022

    

2021

2022

2021

Net income (loss)

 

$

20,488

    

$

(22,124)

$

73,303

$

(105,329)

Preferred stock dividends and redemption charges

(3,351)

(6,287)

(10,897)

(17,289)

Operations held for investment:

Real estate depreciation and amortization

31,313

31,959

92,796

94,206

Loss (gain) on sale of assets

12

(22,946)

82

Impairment loss

1,014

1,014

Noncontrolling interest:

(Income) loss from consolidated joint venture attributable to noncontrolling interest

(933)

(3,477)

1,638

Real estate depreciation and amortization

(791)

(1,456)

(2,407)

FFO attributable to common stockholders

48,450

2,850

127,323

(28,085)

Operations held for investment:

Amortization of deferred stock compensation (1)

2,230

3,165

8,661

10,576

Real estate amortization of right-of-use assets and obligations

(288)

87

(868)

249

Amortization of contract intangibles, net

141

344

Noncash interest on derivatives, net

(39)

(616)

(2,904)

(2,194)

Loss (gain) on extinguishment of debt, net

770

(61)

962

(371)

Prior year property tax adjustments, net

605

(1,384)

Hurricane-related losses net of (insurance restoration proceeds)

1,621

(2,755)

1,621

Property-level severance related to sold hotel

4,562

4,562

Lawsuit settlement cost

691

691

CEO transition costs

7,976

7,976

Preferred stock redemption charges

2,624

6,640

Noncontrolling interest:

Real estate amortization of right-of-use asset and obligation

72

132

217

Lawsuit settlement cost

(173)

(173)

Noncash interest on derivatives, net

(20)

(20)

Adjustments to FFO attributable to common stockholders, net

2,814

20,533

3,572

28,390

Adjusted FFO attributable to common stockholders

$

51,264

$

23,383

$

130,895

$

305

FFO attributable to common stockholders per diluted share

$

0.23

$

0.01

$

0.59

$

(0.13)

Adjusted FFO attributable to common stockholders per diluted share

$

0.24

$

0.11

$

0.61

$

Basic weighted average shares outstanding

211,010

217,709

213,799

215,765

Shares associated with unvested restricted stock awards

594

296

350

287

Diluted weighted average shares outstanding

211,604

218,005

214,149

216,052

(1) Amortization of deferred stock compensation has been added to the adjustments to FFO attributable to common stockholders, net for the three and nine months ended September 30, 2021 to conform to the current year’s presentation.

11


Sunstone Hotel Investors, Inc.

Non-GAAP Financial Measures

Hotel Adjusted EBITDAre and Margins

(Unaudited and in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Comparable Portfolio Adjusted EBITDAre Margin (1)

30.4%

23.4%

31.1%

15.2%

Total revenues

$

244,314

$

167,421

$

667,909

$

335,264

Non-hotel revenues (2)

(19)

(22)

(57)

(66)

Reimbursements to offset net losses (3)

(1,662)

(8,773)

Total Actual Hotel Revenues

244,295

165,737

667,852

326,425

Prior ownership hotel revenues (4)

6,802

22,637

23,631

Non-comparable hotel revenues (5)

(24,726)

(15,381)

(70,552)

(25,433)

Sold hotel revenues (6)

(19,607)

(3,234)

(33,505)

Comparable Portfolio Revenues

$

219,569

$

137,551

$

616,703

$

291,118

Net income (loss)

$

20,488

$

(22,124)

$

73,303

$

(105,329)

Non-hotel revenues (2)

(19)

(22)

(57)

(66)

Reimbursements to offset net losses (3)

(1,662)

(8,773)

Non-hotel operating expenses, net (7)

(270)

(593)

(1,085)

(3,902)

Taxes assessed on commercial rents (8)

115

115

Property-level prior year property tax adjustments, net

605

379

Property-level settlements

691

691

Property-level settlements related to sold hotel

58

Property-level severance related to sold hotel

4,562

4,562

Property-level hurricane-related restoration expenses (9)

1,621

1,614

1,621

Corporate overhead

7,879

15,422

27,310

32,066

Depreciation and amortization

31,750

32,585

94,003

96,084

Impairment loss

1,014

1,014

Interest and other (income) loss

(270)

(2)

(4,766)

356

Interest expense

9,269

7,983

20,288

23,697

Gain on sale of assets

(22,946)

Loss (gain) on extinguishment of debt, net

770

(61)

962

(371)

Income tax (benefit) provision, net

(290)

25

(126)

91

Actual Hotel Adjusted EBITDAre

69,422

40,044

188,615

42,178

Prior ownership hotel Adjusted EBITDAre (4)

464

8,630

3,810

Non-comparable hotel Adjusted EBITDAre (5)

(2,593)

(3,635)

(7,496)

(5,248)

Sold hotel Adjusted EBITDAre (6)

(4,742)

2,172

3,400

Comparable Portfolio Adjusted EBITDAre

$

66,829

$

32,131

$

191,921

$

44,140

*Footnotes on following page

12


(1) Comparable Portfolio Adjusted EBITDAre Margin is calculated as Comparable Portfolio Adjusted EBITDAre divided by Total Comparable Portfolio Revenues.
(2) Non-hotel revenues include the amortization of any favorable or unfavorable contract intangibles recorded in conjunction with the Company's hotel acquisitions.
(3) Reimbursements to offset net losses for the third quarter and first nine months of 2021 include $1.7 million and $8.8 million, respectively, at the Hyatt Regency San Francisco as stipulated by the hotel's operating lease agreement.
(4) Prior ownership hotel revenues and Adjusted EBITDAre include results for The Confidante Miami Beach prior to the Company’s acquisition of the hotel in June 2022. The Company obtained prior ownership information from the hotel’s previous owner during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition. The Company determined the amount to include as pro forma depreciation expense based on the hotel’s actual depreciation expense recognized by the Company in June 2022.
(5) Non-comparable hotel revenues and Adjusted EBITDAre include results for the Montage Healdsburg and the Four Seasons Resort Napa Valley, acquired in April 2021 and December 2021, respectively.
(6) Sold hotel revenues and Adjusted EBITDAre for the first nine months of 2022 include results for the Embassy Suites Chicago and the Hilton Garden Inn Chicago Downtown/Magnificent Mile, sold in March 2022, and the Hyatt Centric Chicago Magnificent Mile, sold in February 2022. Sold hotel revenues and Adjusted EBITDAre for the third quarter and first nine months of 2021 also include results for the Embassy Suites La Jolla and the Renaissance Westchester, sold in December 2021 and October 2021, respectively.
(7) Non-hotel operating expenses, net for the third quarters and first nine months of 2022 and 2021 include the following: the amortization of hotel real estate-related right-of-use assets and obligations; the amortization of a favorable management agreement contract intangible prior to the hotel’s sale in March 2022; prior year property tax credits, net related to sold hotels; and finance lease obligation interest – cash ground rent prior to the hotel’s sale in February 2022.
(8) Taxes assessed on commercial rents for both the third quarter and first nine months of 2022 include $0.1 million at the Hyatt Regency San Francisco.
(9) Property-level hurricane-related restoration expenses for the first nine months of 2022 include a total of $1.6 million incurred at the Hilton New Orleans St. Charles and the JW Marriott New Orleans. Property-level hurricane-related restoration expenses for both the third quarter and first nine months of 2021 include a total of $1.6 million incurred at the Hilton New Orleans St. Charles and the JW Marriott New Orleans.

13


EX-99.2 3 sho-20221108xex99d2.htm EX-99.2

Exhibit 99.2

Graphic

Supplemental Financial Information

For the quarter ended September 30, 2022

November 8, 2022

Graphic

Graphic

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Supplemental Financial Information
November 8, 2022

Table of Contents


Graphic

Supplemental Financial Information
November 8, 2022

CORPORATE PROFILE AND DISCLOSURES
REGARDING NON-GAAP FINANCIAL MEASURES

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

Page 2


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Supplemental Financial Information
November 8, 2022

About Sunstone

Sunstone Hotel Investors, Inc. (the “Company,” “we,” and “our”) (NYSE: SHO) is a lodging real estate investment trust (“REIT”) that as of November 8, 2022 owns 15 hotels comprised of 7,735 rooms, the majority of which are operated under nationally recognized brands. Sunstone’s strategy is to create long-term stakeholder value through the acquisition, active ownership and disposition of hotels considered to be Long-Term Relevant Real Estate®.

This presentation contains unaudited information, and should be read together with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies of these reports are available on our website at www.sunstonehotels.com and through the SEC’s Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) at www.sec.gov.

Corporate Headquarters
200 Spectrum Center Drive, 21st Floor
Irvine, CA 92618
(949) 330-4000

Company Contacts
Bryan Giglia
Chief Executive Officer
(949) 382-3036

Aaron Reyes
Chief Financial Officer
(949) 382-3018

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

Page 3


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Supplemental Financial Information
November 8, 2022

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: earnings before interest expense, taxes, depreciation and amortization for real estate, or EBITDAre; Adjusted EBITDAre, excluding noncontrolling interest (as defined below); funds from operations attributable to common stockholders, or FFO attributable to common stockholders; Adjusted FFO attributable to common stockholders (as defined below); hotel Adjusted EBITDAre; and hotel Adjusted EBITDAre margins. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same as the Company. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

We present EBITDAre in accordance with guidelines established by the National Association of Real Estate Investment Trusts (“NAREIT”), as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” We believe EBITDAre is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates.

We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance, and that the presentation of Adjusted EBITDAre, excluding noncontrolling interest, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance. In addition, we use both EBITDAre and Adjusted EBITDAre, excluding noncontrolling interest as measures in determining the value of hotel acquisitions and dispositions.

We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to NAREIT’s definition of “FFO applicable to common shares.” Our presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently that we do.

We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance, and may facilitate comparisons of operating performance between periods and our peer companies.

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

Page 4


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Supplemental Financial Information
November 8, 2022

We adjust EBITDAre and FFO attributable to common stockholders for the following items, which may occur in any period, and refer to these measures as either Adjusted EBITDAre, excluding noncontrolling interest or Adjusted FFO attributable to common stockholders:

Amortization of deferred stock compensation: we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels.
Amortization of contract intangibles: we exclude the noncash amortization of any favorable or unfavorable contract intangibles recorded in conjunction with our hotel acquisitions. We exclude the noncash amortization of contract intangibles because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.
Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.
Acquisition costs: under GAAP, costs associated with acquisitions that meet the definition of a business are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company or our hotels.
Cumulative effect of a change in accounting principle: from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.
Other adjustments: we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: lawsuit settlement costs; prior year property tax assessments or credits; the write-off of development costs associated with abandoned projects; property-level restructuring, severance and management transition costs; debt resolution costs; lease terminations; property insurance restoration proceeds or uninsured losses; and other nonrecurring identified adjustments.

In addition, to derive Adjusted EBITDAre, excluding noncontrolling interest we exclude the noncontrolling partner’s pro rata share of the net (income) loss allocated to the Hilton San Diego Bayfront partnership, as well as the noncontrolling partner’s pro rata share of any EBITDAre and Adjusted EBITDAre components (prior to our acquisition of the noncontrolling partner’s ownership interest in the partnership in June 2022). We also exclude the amortization of our right-of-use assets and related lease obligations as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. Additionally, we include an adjustment for the cash finance lease expense recorded on the building lease at the Hyatt Centric Chicago Magnificent Mile (prior to the hotel’s sale in February 2022). We determined that the building lease is a finance lease, and, therefore, we include a portion of the lease payment each month in interest expense. We adjust EBITDAre for the finance lease in order to more accurately reflect the actual rent due to the hotel’s lessor in the current period, as well as the operating performance of the hotel. We also exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDAre, excluding noncontrolling interest is not consistent with reflecting the ongoing performance of our assets.

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

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Supplemental Financial Information
November 8, 2022

To derive Adjusted FFO attributable to common stockholders, we also exclude the noncash interest on our derivatives and finance lease obligation as we believe that these items are not reflective of our ongoing finance costs. Additionally, we exclude the noncontrolling partner’s pro rata share of any FFO adjustments related to our consolidated Hilton San Diego Bayfront partnership components (prior to our acquisition of the noncontrolling partner’s ownership interest in the partnership in June 2022). We also exclude the real estate amortization of our right-of-use assets and related lease obligations, which includes the amortization of both our finance and operating lease intangibles (with the exception of our corporate operating lease), as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. In addition, we exclude preferred stock redemption charges, changes to deferred tax assets, liabilities or valuation allowances, and income tax benefits or provisions associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets other than real estate investments.

In presenting hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins, miscellaneous non-hotel items have been excluded. We believe the calculation of hotel Adjusted EBITDAre results in a more accurate presentation of the hotel Adjusted EBITDAre margins for our hotels, and that these non-GAAP financial measures are useful to investors in evaluating our property-level operating performance.

Reconciliations of net income (loss) to EBITDAre, Adjusted EBITDAre, excluding noncontrolling interest, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders, hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins are set forth in the following pages of this supplemental package. Beginning with the quarter ended March 31, 2022, the Company’s calculation of Adjusted FFO attributable to common stockholders excludes the noncash amortization expense associated with deferred stock compensation. Adjusted FFO attributable to common stockholders for the prior periods presented in this supplemental package have also been adjusted to exclude this expense.

The Total Portfolio consists of all 15 hotels owned by the Company as of September 30, 2022. The Total Portfolio includes both prior ownership results and the Company’s ownership results for The Confidante Miami Beach, acquired by the Company in June 2022. Total Portfolio operating statistics for the first nine months of 2021 include both prior ownership results and the Company’s ownership results for the Montage Healdsburg, acquired in April 2021. The Company obtained prior ownership information from the previous owners of The Confidante Miami Beach and the Montage Healdsburg during the due diligence periods before acquiring the hotels. The Company performed limited reviews of the information as part of its analyses of the acquisitions.

The Comparable Portfolio includes the same 12 hotels owned by the Company during the third quarters and first nine months of 2022, 2021 and 2019 plus both prior ownership results and the Company’s ownership results for The Confidante Miami Beach, acquired by the Company in June 2022.

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

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Supplemental Financial Information
November 8, 2022

PRO FORMA CORPORATE FINANCIAL INFORMATION

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 7


Graphic

Supplemental Financial Information
November 8, 2022

Pro Forma Consolidated Statements of Operations

Q3 2022 – Q4 2021, Trailing 12 Months

Quarter Ended (1)

Trailing 12 Months

(Unaudited and in thousands, except per share data)

September 30,

June 30,

March 31,

December 31,

Ended

2022

    

2022

    

2022

    

2021

   

September 30, 2022 (1)

Revenues

Room

$

158,400

$

167,194

$

115,515

$

109,660

$

550,769

Food and beverage

63,476

74,307

42,911

37,133

217,827

Other operating

22,438

18,711

24,360

20,838

86,347

Total revenues

244,314

260,212

182,786

167,631

854,943

Operating Expenses

Room

38,791

38,626

30,425

29,615

137,457

Food and beverage

47,181

48,304

34,233

31,334

161,052

Other expenses

88,746

87,269

75,023

69,235

320,273

Corporate overhead

7,879

8,717

10,714

8,203

35,513

Depreciation and amortization

31,750

31,720

31,711

30,766

125,947

Impairment loss

1,671

1,671

Total operating expenses

214,347

214,636

182,106

170,824

781,913

Interest and other income

270

116

4,380

13

4,779

Interest expense

(9,269)

(5,938)

(4,964)

(6,440)

(26,611)

(Loss) gain on extinguishment of debt, net

(770)

21

(213)

(292)

(1,254)

Income (loss) before income taxes

20,198

39,775

(117)

(9,912)

49,944

Income tax benefit (provision), net

290

(28)

(136)

(18)

108

Net income (loss)

$

20,488

$

39,747

$

(253)

$

(9,930)

$

50,052

Total Portfolio Hotel Adjusted EBITDAre (2)

$

69,422

$

87,308

$

42,687

$

38,050

$

237,467

Pro Forma Adjusted EBITDAre (3)

$

63,848

$

80,031

$

37,103

$

34,287

$

215,269

Pro Forma Adjusted FFO attributable to common stockholders (4)

$

51,264

$

69,051

$

26,183

$

23,074

$

169,572

Pro Forma Adjusted FFO attributable to common stockholders per diluted share (4)

$

0.24

$

0.33

$

0.12

$

0.11

$

0.80

*Footnotes on page 11

PRO FORMA CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
November 8, 2022

Pro Forma Consolidated Statements of Operations

Q4 2021 – Q1 2021, FY 2021

Quarter Ended (1)

Year Ended (1)

(Unaudited and in thousands, except per share data)

December 31,

September 30,

June 30,

March 31,

December 31,

2021

    

2021

    

2021

    

2021

    

2021

Revenues

Room

$

109,660

$

105,973

$

82,045

$

36,080

$

333,758

Food and beverage

37,133

27,739

17,020

6,659

88,551

Other operating

20,838

20,904

17,162

11,808

70,712

Total revenues

167,631

154,616

116,227

54,547

493,021

Operating Expenses

Room

29,615

28,216

21,668

11,591

91,090

Food and beverage

31,334

25,975

17,160

7,430

81,899

Other expenses

69,235

65,033

51,374

38,142

223,784

Corporate overhead

8,203

15,422

9,467

7,177

40,269

Depreciation and amortization

30,766

30,196

30,285

28,183

119,430

Impairment losses

1,671

1,014

2,685

Total operating expenses

170,824

165,856

129,954

92,523

559,157

Interest and other income (loss)

13

2

21

(379)

(343)

Interest expense

(6,440)

(7,019)

(7,100)

(6,693)

(27,252)

(Loss) gain on extinguishment of debt, net

(292)

61

88

222

79

Loss before income taxes

(9,912)

(18,196)

(20,718)

(44,826)

(93,652)

Income tax provision, net

(18)

(25)

(23)

(43)

(109)

Net loss

$

(9,930)

$

(18,221)

$

(20,741)

$

(44,869)

$

(93,761)

Total Portfolio Hotel Adjusted EBITDAre (2)

$

38,050

$

35,766

$

21,533

$

(7,911)

$

87,438

Pro Forma Adjusted EBITDAre (3)

$

34,287

$

33,090

$

19,886

$

(8,513)

$

78,750

Pro Forma Adjusted FFO attributable to common stockholders (4)

$

23,074

$

21,876

$

8,366

$

(19,515)

$

33,801

Pro Forma Adjusted FFO attributable to common stockholders per diluted share (4)

$

0.11

$

0.10

$

0.04

$

(0.09)

$

0.16

*Footnotes on page 11

PRO FORMA CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
November 8, 2022

Pro Forma Consolidated Statements of Operations

Q4 2019 – Q1 2019, FY 2019

Quarter Ended (1)

Year Ended (1)

(Unaudited and in thousands, except per share data)

December 31,

September 30,

June 30,

March 31,

December 31,

2019

    

2019

    

2019

    

2019

    

2019

Revenues

Room

$

140,388

$

145,477

$

154,320

$

140,689

$

580,874

Food and beverage

59,112

53,525

67,089

63,338

243,064

Other operating

17,415

17,523

16,271

15,124

66,333

Total revenues

216,915

216,525

237,680

219,151

890,271

Operating Expenses

Room

36,422

37,604

37,604

35,979

147,609

Food and beverage

40,345

38,763

42,286

41,704

163,098

Other expenses

73,100

71,415

73,549

73,328

291,392

Corporate overhead

7,275

7,395

8,078

7,516

30,264

Depreciation and amortization

28,231

28,315

27,684

27,541

111,771

Total operating expenses

185,373

183,492

189,201

186,068

744,134

Interest and other income

3,060

3,762

4,811

4,924

16,557

Interest expense

(6,880)

(9,074)

(11,634)

(10,149)

(37,737)

Income before income taxes

27,722

27,721

41,656

27,858

124,957

Income tax (provision) benefit, net

(1,034)

749

(2,676)

3,112

151

Net income

$

26,688

$

28,470

$

38,980

$

30,970

$

125,108

Comparable Portfolio Hotel Adjusted EBITDAre (5)

$

67,146

$

68,778

$

84,305

$

68,415

$

288,644

Pro Forma Adjusted EBITDAre (3)

$

64,653

$

66,936

$

82,652

$

67,767

$

282,008

Pro Forma Adjusted FFO attributable to common stockholders (4)

$

53,324

$

56,618

$

71,082

$

55,805

$

236,829

Pro Forma Adjusted FFO attributable to common stockholders per diluted share (4)

$

0.25

$

0.27

$

0.34

$

0.27

$

1.13

*Footnotes on page 11

PRO FORMA CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
November 8, 2022

Pro Forma Consolidated Statements of Operations

Footnotes

(1) Excludes results for the Renaissance Westchester, the Embassy Suites La Jolla and the Hyatt Centric Chicago Magnificent Mile due to their sales in October 2021, December 2021 and February 2022, respectively, along with the Embassy Suites Chicago and the Hilton Garden Inn Chicago Downtown/Magnificent Mile due to their sale in March 2022. Includes prior ownership results for The Confidante Miami Beach acquired by the Company in June 2022, adjusted for the Company's pro forma depreciation expense. Pro Forma Consolidated Statements of Operations for each of the quarters and the year ended December 31, 2019 also excludes results for the Courtyard by Marriott Los Angeles, the Renaissance Harborplace and the Renaissance Los Angeles Airport due to their sales in October 2019, July 2020 and December 2020, respectively, as well as results for the Hilton Times Square due to the assignment-in-lieu agreement executed in December 2020 between the Company and the hotel’s mortgage holder which transferred the Company’s leasehold interest in the hotel to the mortgage holder, and the elimination of interest expense on the mortgage loan secured by the Renaissance Washington DC due to its repayment in December 2020.
(2) Total Portfolio Hotel Adjusted EBITDAre reconciliations for the third quarters and first nine months of 2022 and 2021 can be found later in this presentation. Additional details can be found in our earnings release, furnished in Exhibit 99.1 to our 8-K filed on November 8, 2022.
(3) Pro Forma Adjusted EBITDAre reconciliations for each of the quarters, years and the Trailing 12 Months included in this presentation can be found in the following pages and reflect the adjustments noted in Footnote 1 above, along with the elimination of noncontrolling interest due to the Company's acquisition of the outside 25% ownership interest in the joint venture that owned the Hilton San Diego Bayfront in June 2022.
(4) Pro Forma Adjusted FFO attributable to common stockholders and Pro Forma Adjusted FFO attributable to common stockholders per diluted share reconciliations for each of the quarters, years and the Trailing 12 Months included in this presentation can be found in the following pages and reflect the adjustments noted in Footnotes 1 and 3 above, along with repurchases totaling 3,783,936 shares of common stock in the second, third and fourth quarters of 2019, 9,770,081 shares of common stock in the first quarter of 2020 and 7,995,560 shares of common stock in the first, second and third quarters of 2022, partially offset by issuances totaling 2,913,682 shares of common stock in the second quarter of 2021.
(5) Comparable Portfolio Hotel Adjusted EBITDAre reconciliations for the third quarter and first nine months of 2019 can be found later in this presentation.

PRO FORMA CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre

Q3 2022 – Q4 2021, Trailing 12 Months

Quarter Ended

Trailing 12 Months

September 30,

June 30,

March 31,

December 31,

Ended

(In thousands)

2022

2022

2022

2021

September 30, 2022

Net income

$

20,488

$

37,692

$

15,123

$

138,324

$

211,627

Operations held for investment:

Depreciation and amortization

31,750

30,893

31,360

32,598

126,601

Interest expense

9,269

5,938

5,081

7,201

27,489

Income tax (benefit) provision, net

(290)

28

136

18

(108)

Gain on sale of assets

(22,946)

(152,524)

(175,470)

Impairment loss

1,671

1,671

EBITDAre

61,217

74,551

28,754

27,288

191,810

Operations held for investment:

Amortization of deferred stock compensation

2,230

2,853

3,578

2,212

10,873

Amortization of right-of-use assets and obligations

(350)

(354)

(346)

(340)

(1,390)

Amortization of contract intangibles, net

(19)

(18)

(6)

(43)

Finance lease obligation interest - cash ground rent

(117)

(351)

(468)

Property-level severance

(284)

(284)

Loss (gain) on extinguishment of debt, net

770

(21)

213

428

1,390

Lawsuit settlement cost

21

21

CEO transition costs

815

815

Hurricane-related losses net of (insurance restoration proceeds)

138

(2,893)

2,612

(143)

Noncontrolling interest:

Income from consolidated joint venture attributable to noncontrolling interest

(2,343)

(1,134)

(335)

(3,812)

Depreciation and amortization

(666)

(790)

(791)

(2,247)

Interest expense

(206)

(168)

(160)

(534)

Amortization of right-of-use asset and obligation

60

72

73

205

Lawsuit settlement cost

(5)

(5)

Adjustments to EBITDAre, net

2,631

(557)

(1,591)

3,895

4,378

Adjusted EBITDAre, excluding noncontrolling interest

63,848

73,994

27,163

31,183

196,188

Sold hotel Adjusted EBITDAre (1)

2,172

(1,434)

738

Acquisition hotel Adjusted EBITDAre (2)

6,037

7,768

4,538

18,343

Pro Forma Adjusted EBITDAre

$

63,848

$

80,031

$

37,103

$

34,287

$

215,269

*Footnotes on page 14

PRO FORMA CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income to FFO and Adjusted FFO Attributable to Common Stockholders

Q3 2022 – Q4 2021, Trailing 12 Months

Quarter Ended

Trailing 12 Months

September 30,

June 30,

March 31,

December 31,

Ended

(In thousands, except per share data)

2022

2022

2022

2021

September 30, 2022

Net income

$

20,488

$

37,692

$

15,123

$

138,324

$

211,627

Preferred stock dividends

(3,351)

(3,773)

(3,773)

(3,349)

(14,246)

Operations held for investment:

Real estate depreciation and amortization

31,313

30,456

31,027

31,976

124,772

Gain on sale of assets

(22,946)

(152,524)

(175,470)

Impairment loss

1,671

1,671

Noncontrolling interest:

Income from consolidated joint venture attributable to noncontrolling interest

(2,343)

(1,134)

(335)

(3,812)

Real estate depreciation and amortization

(666)

(790)

(791)

(2,247)

FFO attributable to common stockholders

48,450

61,366

17,507

14,972

142,295

Operations held for investment:

Amortization of deferred stock compensation

2,230

2,853

3,578

2,212

10,873

Real estate amortization of right-of-use assets and obligations

(288)

(294)

(286)

87

(781)

Amortization of contract intangibles, net

141

143

60

344

Noncash interest on derivatives, net

(39)

(1,023)

(1,842)

(1,211)

(4,115)

Property-level severance

(284)

(284)

Loss (gain) on extinguishment of debt, net

770

(21)

213

428

1,390

Lawsuit settlement cost

21

21

CEO transition costs

815

815

Hurricane-related losses net of (insurance restoration proceeds)

138

(2,893)

2,612

(143)

Noncontrolling interest:

Real estate amortization of right-of-use asset and obligation

60

72

73

205

Noncash interest on derivatives, net

(2)

2

1

1

Lawsuit settlement cost

(5)

(5)

Adjustments to FFO attributable to common stockholders, net

2,814

1,854

(1,096)

4,749

8,321

Adjusted FFO attributable to common stockholders

51,264

63,220

16,411

19,721

150,616

Sold hotel Adjusted FFO (1)

2,172

(1,024)

1,148

Acquisition hotel Adjusted FFO (2)

5,831

7,600

4,377

17,808

Pro Forma Adjusted FFO attributable to common stockholders

$

51,264

$

69,051

$

26,183

$

23,074

$

169,572

Pro Forma Adjusted FFO attributable to common stockholders per diluted share

$

0.24

$

0.33

$

0.12

$

0.11

$

0.80

Basic weighted average shares outstanding

211,010

213,183

217,271

217,870

214,834

Shares associated with unvested restricted stock awards

594

354

305

445

425

Diluted weighted average shares outstanding

211,604

213,537

217,576

218,315

215,258

Equity transactions (3)

(729)

(2,918)

(7,254)

(7,996)

(4,724)

Pro Forma diluted weighted average shares outstanding

210,875

210,619

210,322

210,319

210,534

*Footnotes on page 14

PRO FORMA CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre,

FFO and Adjusted FFO Attributable to Common Stockholders

Q3 2022 – Q4 2021, Trailing 12 Months Footnotes

(1) Sold Hotel Adjusted EBITDAre and Adjusted FFO include results for the Renaissance Westchester, the Embassy Suites La Jolla and the Hyatt Centric Chicago Magnificent Mile sold in October 2021, December 2021 and February 2022, respectively, along with the Embassy Suites Chicago and the Hilton Garden Inn Chicago Downtown/Magnificent Mile sold in March 2022.
(2) Acquisition hotel Adjusted EBITDAre and Adjusted FFO include prior ownership results for The Confidante Miami Beach acquired by the Company in June 2022, along with the elimination of noncontrolling interest due to the Company's acquisition of the outside 25% ownership interest in the joint venture that owned the Hilton San Diego Bayfront in June 2022.
(3) Equity Transactions represent repurchases totaling 3,879,025, 3,235,958 and 880,577 shares of common stock in the first, second and third quarters of 2022, respectively.

PRO FORMA CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income (Loss) to EBITDAre and Adjusted EBITDAre

Q4 2021 – Q1 2021, FY 2021

Quarter Ended

Year Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands)

2021

2021

2021

2021

2021

Net income (loss)

$

138,324

$

(22,124)

$

(27,918)

$

(55,287)

$

32,995

Operations held for investment:

Depreciation and amortization

32,598

32,585

32,729

30,770

128,682

Interest expense

7,201

7,983

8,065

7,649

30,898

Income tax provision, net

18

25

23

43

109

(Gain) loss on sale of assets, net

(152,524)

12

70

(152,442)

Impairment losses

1,671

1,014

2,685

EBITDAre

27,288

19,495

12,899

(16,755)

42,927

Operations held for investment:

Amortization of deferred stock compensation

2,212

3,165

4,659

2,752

12,788

Amortization of right-of-use assets and obligations

(340)

(335)

(338)

(331)

(1,344)

Finance lease obligation interest - cash ground rent

(351)

(351)

(351)

(351)

(1,404)

Property-level severance

(284)

(284)

Property-level severance related to sold hotels

4,562

4,562

Loss (gain) on extinguishment of debt, net

428

(61)

(88)

(222)

57

Prior year property tax adjustments, net

605

(1,162)

(827)

(1,384)

Lawsuit settlement cost

21

691

712

CEO transition costs

815

7,976

8,791

Hurricane-related losses

2,612

1,621

4,233

Noncontrolling interest:

(Income) loss from consolidated joint venture attributable to noncontrolling interest

(335)

(933)

596

1,975

1,303

Depreciation and amortization

(791)

(791)

(806)

(810)

(3,198)

Interest expense

(160)

(181)

(159)

(161)

(661)

Amortization of right-of-use asset and obligation

73

72

73

72

290

Lawsuit settlement cost

(5)

(173)

(178)

Adjustments to EBITDAre, net

3,895

15,867

2,424

2,097

24,283

Adjusted EBITDAre, excluding noncontrolling interest

31,183

35,362

15,323

(14,658)

67,210

Sold hotel Adjusted EBITDAre (1)

(1,434)

(4,742)

2,391

5,751

1,966

Acquisition hotel Adjusted EBITDAre (2)

4,538

2,470

2,172

394

9,574

Pro Forma Adjusted EBITDAre

$

34,287

$

33,090

$

19,886

$

(8,513)

$

78,750

*Footnotes on page 17

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 15


Text

Description automatically generated with low confidence

Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income (Loss) to FFO and Adjusted FFO Attributable to Common Stockholders

Q4 2021 – Q1 2021, FY 2021

Quarter Ended

Year Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands, except per share data)

2021

2021

2021

2021

2021

Net income (loss)

$

138,324

$

(22,124)

$

(27,918)

$

(55,287)

$

32,995

Preferred stock dividends and redemption charges

(3,349)

(6,287)

(7,795)

(3,207)

(20,638)

Operations held for investment:

Real estate depreciation and amortization

31,976

31,959

32,104

30,143

126,182

(Gain) loss on sale of assets, net

(152,524)

12

70

(152,442)

Impairment losses

1,671

1,014

2,685

Noncontrolling interest:

(Income) loss from consolidated joint venture attributable to noncontrolling interest

(335)

(933)

596

1,975

1,303

Real estate depreciation and amortization

(791)

(791)

(806)

(810)

(3,198)

FFO attributable to common stockholders

14,972

2,850

(3,819)

(27,116)

(13,113)

Operations held for investment:

Amortization of deferred stock compensation

2,212

3,165

4,659

2,752

12,788

Real estate amortization of right-of-use assets and obligations

87

87

77

85

336

Noncash interest on derivatives, net

(1,211)

(616)

(709)

(869)

(3,405)

Property-level severance

(284)

(284)

Property-level severance related to sold hotels

4,562

4,562

Loss (gain) on extinguishment of debt, net

428

(61)

(88)

(222)

57

Prior year property tax adjustments, net

605

(1,162)

(827)

(1,384)

Lawsuit settlement cost

21

691

712

Preferred stock redemption charges

2,624

4,016

6,640

CEO transition costs

815

7,976

8,791

Hurricane-related losses

2,612

1,621

4,233

Noncontrolling interest:

Real estate amortization of right-of-use asset and obligation

73

72

73

72

290

Noncash interest on derivatives, net

1

(20)

(19)

Lawsuit settlement cost

(5)

(173)

(178)

Adjustments to FFO attributable to common stockholders, net

4,749

20,533

6,866

991

33,139

Adjusted FFO attributable to common stockholders

19,721

23,383

3,047

(26,125)

20,026

Sold hotel Adjusted FFO (1)

(1,024)

(4,129)

3,005

6,356

4,208

Acquisition hotel Adjusted FFO (2)

4,377

2,309

2,013

233

8,932

Equity transactions (3)

313

301

21

635

Pro Forma Adjusted FFO attributable to common stockholders

$

23,074

$

21,876

$

8,366

$

(19,515)

$

33,801

Pro Forma Adjusted FFO attributable to common stockholders per diluted share

$

0.11

$

0.10

$

0.04

$

(0.09)

$

0.16

Basic weighted average shares outstanding

217,870

217,709

215,113

214,438

216,296

Shares associated with unvested restricted stock awards

445

296

352

210

326

Diluted weighted average shares outstanding

218,315

218,005

215,465

214,648

216,622

Equity transactions (3)

(7,996)

(7,996)

(5,526)

(5,082)

(6,662)

Pro Forma diluted weighted average shares outstanding

210,319

210,009

209,939

209,566

209,960

*Footnotes on page 17

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 16


Text

Description automatically generated with low confidence

Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income (Loss) to EBITDAre, Adjusted EBITDAre,

FFO and Adjusted FFO Attributable to Common Stockholders

Q4 2021 – Q1 2021, FY 2021 Footnotes

(1) Sold hotel Adjusted EBITDAre and Adjusted FFO include results for the Renaissance Westchester, the Embassy Suites La Jolla and the Hyatt Centric Chicago Magnificent Mile sold in October 2021, December 2021 and February 2022, respectively, along with the Embassy Suites Chicago and the Hilton Garden Inn Chicago Downtown/Magnificent Mile sold in March 2022.
(2) Acquisition hotel Adjusted EBITDAre and Adjusted FFO include prior ownership results for The Confidante Miami Beach acquired by the Company in June 2022, along with the elimination of noncontrolling interest due to the Company's acquisition of the outside 25% ownership interest in the joint venture that owned the Hilton San Diego Bayfront in June 2022.
(3) Equity Transactions represent the reduction in preferred stock dividends due to the redemptions of the 6.95% Series E and 6.45% Series F Cumulative Redeemable Preferred Stocks in June 2021 and August 2021, respectively, offset by the issuances of the 6.125% Series H and 5.70% Series I Cumulative Redeemable Preferred Stocks in May 2021 and July 2021, respectively. It also includes issuances totaling 2,913,682 shares of common stock in the second quarter of 2021 and repurchases totaling 7,995,560 shares of common stock in the first, second and third quarters of 2022.

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 17


Graphic

Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre

Q4 2019 – Q1 2019, FY 2019

Quarter Ended

Year Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands)

2019

2019

2019

2019

2019

Net income

$

45,414

$

33,545

$

45,918

$

17,916

$

142,793

Operations held for investment:

Depreciation and amortization

37,264

37,573

36,524

36,387

147,748

Interest expense

10,822

13,259

15,816

14,326

54,223

Income tax provision (benefit), net

1,034

(749)

2,676

(3,112)

(151)

Gain on sale of assets

(42,935)

(42,935)

Impairment loss

24,713

24,713

EBITDAre

76,312

83,628

100,934

65,517

326,391

Operations held for investment:

Amortization of deferred stock compensation

2,145

2,146

2,900

2,122

9,313

Amortization of right-of-use assets and obligations

(259)

(253)

(251)

(19)

(782)

Finance lease obligation interest - cash ground rent

(407)

(589)

(590)

(589)

(2,175)

Prior year property tax adjustments, net

(121)

(9)

109

189

168

Prior owner contingency funding

(900)

(900)

Noncontrolling interest:

Income from consolidated joint venture attributable to noncontrolling interest

(998)

(2,508)

(1,955)

(1,599)

(7,060)

Depreciation and amortization

(803)

(793)

(640)

(639)

(2,875)

Interest expense

(476)

(532)

(558)

(560)

(2,126)

Amortization of right-of-use asset and obligation

73

72

73

72

290

Adjustments to EBITDAre, net

(846)

(2,466)

(1,812)

(1,023)

(6,147)

Adjusted EBITDAre, excluding noncontrolling interest

75,466

81,162

99,122

64,494

320,244

Sold/Disposed hotel Adjusted EBITDAre (1)

(15,066)

(17,992)

(21,581)

(3,428)

(58,067)

Acquisition hotel Adjusted EBITDAre (2)

4,253

3,766

5,111

6,701

19,831

Pro Forma Adjusted EBITDAre

$

64,653

$

66,936

$

82,652

$

67,767

$

282,008

*Footnotes on Page 20

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 18


Graphic

Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income to FFO and Adjusted FFO Attributable to Common Stockholders

Q4 2019 – Q1 2019, FY 2019

Quarter Ended

Year Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands, except per share data)

2019

2019

2019

2019

2019

Net income

$

45,414

$

33,545

$

45,918

$

17,916

$

142,793

Preferred stock dividends

(3,208)

(3,208)

(3,207)

(3,207)

(12,830)

Operations held for investment:

Real estate depreciation and amortization

36,639

36,951

35,900

35,770

145,260

Gain on sale of assets

(42,935)

(42,935)

Impairment loss

24,713

24,713

Noncontrolling interest:

Income from consolidated joint venture attributable to noncontrolling interest

(998)

(2,508)

(1,955)

(1,599)

(7,060)

Real estate depreciation and amortization

(803)

(793)

(640)

(639)

(2,875)

FFO attributable to common stockholders

58,822

63,987

76,016

48,241

247,066

Operations held for investment:

Amortization of deferred stock compensation

2,145

2,146

2,900

2,122

9,313

Real estate amortization of right-of-use assets and obligations

147

146

146

151

590

Noncash interest on derivatives and finance lease obligations, net

(857)

1,155

3,634

2,119

6,051

Prior year property tax adjustments, net

(121)

(9)

109

189

168

Prior owner contingency funding

(900)

(900)

Noncash income tax provision (benefit), net

934

390

2,648

(3,284)

688

Noncontrolling interest:

Real estate amortization of right-of-use asset and obligation

73

72

73

72

290

Adjustments to FFO attributable to common stockholders, net

2,321

3,900

8,610

1,369

16,200

Adjusted FFO attributable to common stockholders

61,143

67,887

84,626

49,610

263,266

Sold/Disposed hotel Adjusted FFO (1)

(13,225)

(16,144)

(19,747)

(1,608)

(50,724)

Acquisition hotel Adjusted FFO (2)

3,704

3,162

4,480

6,069

17,415

Debt and equity transactions (3)

1,702

1,713

1,723

1,734

6,872

Pro Forma Adjusted FFO attributable to common stockholders

$

53,324

$

56,618

$

71,082

$

55,805

$

236,829

Pro Forma Adjusted FFO attributable to common stockholders per diluted share

$

0.25

$

0.27

$

0.34

$

0.27

$

1.13

Basic weighted average shares outstanding

223,638

224,530

227,389

227,219

225,681

Shares associated with unvested restricted stock awards

448

253

145

260

276

Diluted weighted average shares outstanding

224,086

224,783

227,534

227,479

225,957

Equity transactions (3)

(14,853)

(15,745)

(18,622)

(18,636)

(16,950)

Pro Forma diluted weighted average shares outstanding

209,233

209,038

208,912

208,843

209,007

*Footnotes on Page 20

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 19


Graphic

Supplemental Financial Information
November 8, 2022

Pro Forma Reconciliation of Net Income to EBITDAre, Adjusted EBITDAre,

FFO and Adjusted FFO Attributable to Common Stockholders

Q4 2019 – Q1 2019, FY 2019 Footnotes

(1) Sold/Disposed hotel Adjusted EBITDAre and Adjusted FFO include results for the Courtyard by Marriott Los Angeles, the Renaissance Harborplace, the Renaissance Los Angeles Airport, the Renaissance Westchester, the Embassy Suites La Jolla and the Hyatt Centric Chicago Magnificent Mile sold in October 2019, July 2020, December 2020, October 2021, December 2021 and February 2022, respectively, along with the Embassy Suites Chicago and Hilton Garden Inn Chicago Downtown/Magnificent Mile sold in March 2022. In addition, includes results for the Hilton Times Square due to the assignment-in-lieu agreement executed in December 2020 between the Company and the hotel's mortgage holder, which transferred the Company's leasehold interest in the hotel to the mortgage holder.
(2) Acquisition hotel Adjusted EBITDAre and Adjusted FFO include prior ownership results for The Confidante Miami Beach acquired by the Company in June 2022, along with the elimination of noncontrolling interest due to the Company's acquisition of the outside 25% ownership interest in the joint venture that owned the Hilton San Diego Bayfront in June 2022.
(3) Debt and Equity Transactions represent the reduction in interest expense on the mortgage loan secured by the Renaissance Washington DC due to its repayment in December 2020, along with the reduction in preferred stock dividends due to the redemptions of the 6.95% Series E and 6.45% Series F Cumulative Redeemable Preferred Stocks in June 2021 and August 2021, respectively, offset by the issuances of the 6.125% Series H and 5.70% Series I Cumulative Redeemable Preferred Stocks in May 2021 and July 2021, respectively. It also includes repurchases totaling 3,783,936 shares of common stock in the second, third and fourth quarters of 2019, 9,770,081 shares of common stock in the first quarter of 2020 and 7,995,560 shares of common stock in the first, second and third quarters of 2022, partially offset by issuances totaling 2,913,682 shares of common stock in the second quarter of 2021.

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 20


Graphic

Supplemental Financial Information
November 8, 2022

CAPITALIZATION

CAPITALIZATION

Page 21


Graphic

Supplemental Financial Information
November 8, 2022

Comparative Capitalization
Q3 2022 – Q3 2021

September 30,

June 30,

March 31,

December 31,

September 30,

(In thousands, except per share data)

    

2022

    

2022

    

2022

    

2021

    

2021

Common Share Price & Dividends

At the end of the quarter

$

9.42

$

9.92

$

11.78

$

11.73

$

11.94

High during quarter ended

$

12.22

$

12.68

$

12.07

$

13.23

$

12.48

Low during quarter ended

$

9.42

$

9.64

$

10.15

$

10.48

$

10.68

Common dividends per share

$

0.05

$

$

$

$

Common Shares & Units

Common shares outstanding

211,570

212,451

215,668

219,334

219,334

Units outstanding

Total common shares and units outstanding

211,570

212,451

215,668

219,334

219,334

Capitalization

Market value of common equity

$

1,992,991

$

2,107,512

$

2,540,568

$

2,572,785

$

2,618,845

Liquidation value of preferred equity - Series G

66,250

66,250

66,250

66,250

66,250

Liquidation value of preferred equity - Series H

115,000

115,000

115,000

115,000

115,000

Liquidation value of preferred equity - Series I

100,000

100,000

100,000

100,000

100,000

Consolidated debt

816,647

805,443

575,934

611,437

745,484

Consolidated total capitalization

3,090,888

3,194,205

3,397,752

3,465,472

3,645,579

Noncontrolling interest in consolidated debt

(55,000)

(55,000)

(55,000)

Pro rata total capitalization

$

3,090,888

$

3,194,205

$

3,342,752

$

3,410,472

$

3,590,579

Consolidated debt to consolidated total capitalization

26.4

%  

25.2

%  

17.0

%  

17.6

%  

20.4

%  

Pro rata debt to pro rata total capitalization

26.4

%  

25.2

%  

15.6

%  

16.3

%  

19.2

%  

Consolidated debt and preferred equity to consolidated total capitalization

35.5

%  

34.0

%  

25.2

%  

25.8

%  

28.2

%  

Pro rata debt and preferred equity to pro rata total capitalization

35.5

%  

34.0

%  

24.0

%  

24.6

%  

27.1

%  

CAPITALIZATION

Page 22


Graphic

Supplemental Financial Information
November 8, 2022

Debt Summary Schedule

(In thousands)

Interest Rate /

Maturity

September 30, 2022

Debt

    

Collateral

    

Spread

    

Date (1)

    

Balance

Secured Mortgage Debt (2)

Hilton San Diego Bayfront

3.82%

12/09/2023

$

220,000

Secured Mortgage Debt

JW Marriott New Orleans

4.15%

12/11/2024

76,647

Series A Senior Notes (3)

Unsecured

5.69%

01/10/2026

65,000

Term Loan 1 (4)

Unsecured

4.60%

07/25/2027

175,000

Series B Senior Notes (3)

Unsecured

5.79%

01/10/2028

105,000

Term Loan 2 (4)

Unsecured

3.63%

01/25/2028

175,000

TOTAL CONSOLIDATED DEBT

$

816,647

Preferred Stock

Series G cumulative redeemable preferred (5)

2.268%

perpetual

$

66,250

Series H cumulative redeemable preferred

6.125%

perpetual

115,000

Series I cumulative redeemable preferred

5.70%

perpetual

100,000

Total Preferred Stock

$

281,250

Debt Statistics

% Fixed Rate Debt

42.4

%  

% Floating Rate Debt

57.6

%  

Average Interest Rate

4.38

%  

Weighted Average Maturity of Debt (1)

3.6 years

(1) Maturity Date assumes the exercise of the final available extension for the mortgage secured by the Hilton San Diego Bayfront. By extending the mortgage, the Company's weighted average maturity of debt increases from 3.4 years to 3.6 years.
(2) Interest on the mortgage debt secured by the Hilton San Diego Bayfront bears a blended rate of one-month LIBOR plus 105 basis points.
(3) The 2020 and 2021 amendments to the Company's Senior Notes increased the annual interest rates on the Senior Notes by 1.25% through September 30, 2022. From October 1, 2022 to December 31, 2022, the increase in the annual rate will decrease to 1.00%. The Company expects the increase in the annual interest rate on the Senior Notes will be eliminated as of January 1, 2023. The interest rates presented reflect the terms of the Senior Notes amendments as of October 1, 2022.
(4) Pursuant to the Second Amended Credit Agreement, interest rates on the term loans are calculated on a leverage-based pricing grid ranging from 135 to 220 basis points over the applicable adjusted term SOFR. The interest rate for Term Loan 2 includes the effect of the Company's interest rate derivative swap agreement.
(5) The Series G cumulative redeemable preferred stock has an initial dividend rate equal to the Montage Healdsburg's annual net operating income yield on the Company's investment in the resort. During the first six months of 2022, the Company declared cash dividends of $0.44295 per share and together with the cash dividends of $0.124162 per share the Company declared for the last six months of 2022, this equates to an annual yield of 2.268%. The annual dividend rate may increase in 2023 to the greater of 3.0% or the rate equal to the Montage Healdsburg's annual net operating income yield on the Company's total investment in the resort.

CAPITALIZATION

Page 23


Graphic

Supplemental Financial Information
November 8, 2022

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 24


Graphic

Supplemental Financial Information
November 8, 2022

Hotel Information as of November 8, 2022

Hotel

    

Location

    

Brand

    

Number of
Rooms

    

% of Total
Rooms

    

Interest

    

Year Acquired

1

  

Hilton San Diego Bayfront (1) (2)

California

Hilton

1,190

15.38%

Leasehold

2011 / 2022

2

Boston Park Plaza

Massachusetts

Independent

1,060

13.70%

Fee Simple

2013

3

Hyatt Regency San Francisco

California

Hyatt

821

10.61%

Fee Simple

2013

4

Renaissance Washington DC

Washington DC

Marriott

807

10.43%

Fee Simple

2005

5

Renaissance Orlando at SeaWorld®

Florida

Marriott

781

10.10%

Fee Simple

2005

6

Wailea Beach Resort

Hawaii

Marriott

547

7.07%

Fee Simple

2014

7

JW Marriott New Orleans (3)

Louisiana

Marriott

501

6.48%

Fee Simple

2011

8

Marriott Boston Long Wharf

Massachusetts

Marriott

415

5.37%

Fee Simple

2007

9

Renaissance Long Beach

California

Marriott

374

4.84%

Fee Simple

2005

10

The Confidante Miami Beach

Florida

Hyatt

339

4.38%

Fee Simple

2022

11

The Bidwell Marriott Portland

Oregon

Marriott

258

3.34%

Fee Simple

2000

12

Hilton New Orleans St. Charles

Louisiana

Hilton

252

3.26%

Fee Simple

2013

13

Oceans Edge Resort & Marina

Florida

Independent

175

2.26%

Fee Simple

2017

14

Montage Healdsburg

California

Montage

130

1.68%

Fee Simple

2021

15

Four Seasons Resort Napa Valley (4)

California

Four Seasons

85

1.10%

Fee Simple

2021

Total Portfolio

7,735

100%

(1) In June 2022, the Company acquired the 25.0% noncontrolling partner's ownership interest in the Hilton San Diego Bayfront. Following this acquisition, the Company owns 100% of the hotel.
(2) The ground lease at the Hilton San Diego Bayfront matures in 2071.
(3) Hotel is subject to a municipal airspace lease that matures in 2044 and applies only to certain balcony space fronting Canal Street that is not integral to the hotel’s operations.
(4) The number of rooms at the Four Seasons Resort Napa Valley excludes rooms provided by owners of the separately owned Four Seasons Private Residences Napa Valley who may periodically elect to participate in the residential rental program.

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 25


Graphic

Supplemental Financial Information
November 8, 2022

Property-Level Operating Statistics

ADR, Occupancy and RevPAR

Q3 2022/2021/2019

ADR

Occupancy

RevPAR

Hotels sorted by number of rooms

For the Three Months Ended September 30,

For the Three Months Ended September 30,

For the Three Months Ended September 30,

    

2022

    

2021

2019

    

2022 vs. 2019

    

2022

    

2021

2019

    

2022 vs. 2019

    

2022

    

2021

2019

    

2022 vs. 2019

Hilton San Diego Bayfront (1)

$

286.56

$

232.43

$

262.84

9.0%

87.9%

67.1%

89.1%

(120)

bps

$

251.89

$

155.96

$

234.19

7.6%

Boston Park Plaza

$

238.87

$

185.66

$

239.18

(0.1)%

90.1%

52.1%

96.3%

(620)

bps

$

215.22

$

96.73

$

230.33

(6.6)%

Hyatt Regency San Francisco (1)

$

281.26

$

199.35

$

308.12

(8.7)%

62.4%

52.1%

92.4%

(3,000)

bps

$

175.51

$

103.86

$

284.70

(38.4)%

Renaissance Washington DC (1)

$

211.46

$

154.56

$

198.93

6.3%

47.9%

19.2%

79.0%

(3,110)

bps

$

101.29

$

29.68

$

157.15

(35.5)%

Renaissance Orlando at SeaWorld®

$

158.60

$

152.44

$

128.70

23.2%

69.5%

47.0%

68.6%

90

bps

$

110.23

$

71.65

$

88.29

24.8%

Wailea Beach Resort

$

721.50

$

649.79

$

465.12

55.1%

82.3%

79.4%

88.8%

(650)

bps

$

593.79

$

515.93

$

413.03

43.8%

JW Marriott New Orleans

$

194.83

$

189.47

$

174.99

11.3%

56.9%

51.0%

78.3%

(2,140)

bps

$

110.86

$

96.63

$

137.02

(19.1)%

Marriott Boston Long Wharf

$

412.47

$

357.86

$

380.36

8.4%

85.0%

57.2%

94.0%

(900)

bps

$

350.60

$

204.70

$

357.54

(1.9)%

Renaissance Long Beach

$

209.71

$

196.95

$

183.73

14.1%

74.1%

69.4%

83.8%

(970)

bps

$

155.40

$

136.68

$

153.97

0.9%

The Confidante Miami Beach

$

222.54

$

213.17

$

143.14

55.5%

62.8%

64.4%

71.0%

(820)

bps

$

139.76

$

137.28

$

101.63

37.5%

The Bidwell Marriott Portland

$

187.22

$

166.32

$

210.27

(11.0)%

55.5%

42.6%

88.3%

(3,280)

bps

$

103.91

$

70.85

$

185.67

(44.0)%

Hilton New Orleans St. Charles

$

150.49

$

156.27

$

139.90

7.6%

55.6%

38.4%

68.8%

(1,320)

bps

$

83.67

$

60.01

$

96.25

(13.1)%

Oceans Edge Resort & Marina (1)

$

350.96

$

366.02

$

180.60

94.3%

65.3%

72.8%

83.5%

(1,820)

bps

$

229.18

$

266.46

$

150.80

52.0%

Comparable Portfolio (2)

$

287.75

$

259.02

$

248.22

15.9%

72.0%

53.7%

84.8%

(1,280)

bps

$

207.18

$

139.09

$

210.49

(1.6)%

Montage Healdsburg

$

1,267.66

$

1,246.45

N/A

N/A

53.6%

63.9%

N/A

N/A

$

679.47

$

796.48

N/A

N/A

Four Seasons Resort Napa Valley

$

1,976.80

N/A

N/A

N/A

41.4%

N/A

N/A

N/A

$

818.40

N/A

N/A

N/A

Total Portfolio (3)

$

311.62

71.4%

$

222.50

*Footnotes on page 29

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 26


Text

Description automatically generated with low confidence

Supplemental Financial Information
November 8, 2022

Property-Level Operating Statistics

ADR, Occupancy and RevPAR

Q3 YTD 2022/2021/2019

ADR

Occupancy

RevPAR

Hotels sorted by number of rooms

For the Nine Months Ended September 30,

For the Nine Months Ended September 30,

For the Nine Months Ended September 30,

    

2022

    

2021

2019

    

2022 vs. 2019

    

2022

    

2021

2019

    

2022 vs. 2019

    

2022

    

2021

2019

    

2022 vs. 2019

Hilton San Diego Bayfront (1)

$

274.76

$

202.62

$

257.32

6.8%

76.8%

44.1%

81.1%

(430)

bps

$

211.02

$

89.36

$

208.69

1.1%

Boston Park Plaza

$

222.50

$

166.83

$

217.24

2.4%

74.4%

33.4%

91.4%

(1,700)

bps

$

165.54

$

55.72

$

198.56

(16.6)%

Hyatt Regency San Francisco (1)

$

262.03

$

197.60

$

322.89

(18.8)%

55.3%

27.9%

89.2%

(3,390)

bps

$

144.90

$

55.13

$

288.02

(49.7)%

Renaissance Washington DC (1)

$

242.60

$

140.68

$

230.93

5.1%

51.6%

42.8%

79.7%

(2,810)

bps

$

125.18

$

60.21

$

184.05

(32.0)%

Renaissance Orlando at SeaWorld®

$

183.62

$

144.32

$

165.99

10.6%

68.0%

37.2%

78.1%

(1,010)

bps

$

124.86

$

53.69

$

129.64

(3.7)%

Wailea Beach Resort

$

684.67

$

601.59

$

469.49

45.8%

81.3%

63.1%

91.7%

(1,040)

bps

$

556.64

$

379.60

$

430.52

29.3%

JW Marriott New Orleans

$

232.10

$

174.01

$

205.67

12.9%

59.2%

41.3%

84.4%

(2,520)

bps

$

137.40

$

71.87

$

173.59

(20.8)%

Marriott Boston Long Wharf

$

381.40

$

321.78

$

337.94

12.9%

65.8%

34.9%

87.5%

(2,170)

bps

$

250.96

$

112.30

$

295.70

(15.1)%

Renaissance Long Beach

$

209.25

$

176.63

$

193.19

8.3%

74.8%

60.2%

82.9%

(810)

bps

$

156.52

$

106.33

$

160.15

(2.3)%

The Confidante Miami Beach

$

309.49

$

210.54

$

199.68

55.0%

72.7%

75.3%

80.1%

(740)

bps

$

225.00

$

158.54

$

159.94

40.7%

The Bidwell Marriott Portland

$

171.19

$

156.99

$

190.04

(9.9)%

49.1%

24.0%

85.2%

(3,610)

bps

$

84.05

$

37.68

$

161.91

(48.1)%

Hilton New Orleans St. Charles

$

179.95

$

133.92

$

168.21

7.0%

56.0%

36.2%

76.6%

(2,060)

bps

$

100.77

$

48.48

$

128.85

(21.8)%

Oceans Edge Resort & Marina (1)

$

451.74

$

399.96

$

244.81

84.5%

76.4%

78.9%

90.2%

(1,380)

bps

$

345.13

$

315.57

$

220.82

56.3%

Comparable Portfolio (2)

$

290.10

$

237.13

$

254.13

14.2%

67.1%

42.8%

84.6%

(1,750)

bps

$

194.66

$

101.49

$

214.99

(9.5)%

Montage Healdsburg

$

1,096.14

$

1,095.70

N/A

N/A

57.0%

48.6%

N/A

N/A

$

624.80

$

532.51

N/A

N/A

Four Seasons Resort Napa Valley

$

1,757.55

N/A

N/A

N/A

45.1%

N/A

N/A

N/A

$

792.66

N/A

N/A

N/A

Total Portfolio (3)

$

313.10

66.7%

$

208.84

*Footnotes on page 29

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 27


Graphic

Supplemental Financial Information
November 8, 2022

Property-Level Operating Statistics

Total RevPAR (TRevPAR)

Q3 and YTD 2022/2021/2019

Hotels sorted by number of rooms

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

    

2022

2021

    

2019

    

2022 vs. 2019

    

2022

2021

    

2019

    

2022 vs. 2019

Hilton San Diego Bayfront (1)

$

435.88

$

234.98

$

394.00

10.6%

$

366.79

$

133.71

$

364.67

0.6%

Boston Park Plaza

$

297.27

$

131.79

$

309.64

(4.0)%

$

234.58

$

73.69

$

275.05

(14.7)%

Hyatt Regency San Francisco (1)

$

245.90

$

137.86

$

377.78

(34.9)%

$

212.29

$

71.96

$

407.67

(47.9)%

Renaissance Washington DC (1)

$

166.29

$

49.69

$

254.73

(34.7)%

$

192.75

$

72.14

$

292.43

(34.1)%

Renaissance Orlando at SeaWorld®

$

251.12

$

134.72

$

207.76

20.9%

$

279.21

$

101.68

$

293.54

(4.9)%

Wailea Beach Resort

$

854.83

$

713.07

$

594.74

43.7%

$

816.98

$

514.20

$

614.80

32.9%

JW Marriott New Orleans

$

147.50

$

130.74

$

176.68

(16.5)%

$

174.71

$

92.96

$

228.09

(23.4)%

Marriott Boston Long Wharf

$

477.65

$

272.55

$

478.49

(0.2)%

$

346.11

$

151.07

$

411.89

(16.0)%

Renaissance Long Beach

$

194.45

$

172.17

$

210.53

(7.6)%

$

201.03

$

127.71

$

221.18

(9.1)%

The Confidante Miami Beach

$

241.78

$

211.77

$

189.96

27.3%

$

357.01

$

245.66

$

282.64

26.3%

The Bidwell Marriott Portland

$

140.22

$

85.57

$

212.05

(33.9)%

$

113.84

$

46.48

$

186.06

(38.8)%

Hilton New Orleans St. Charles

$

99.10

$

70.39

$

111.71

(11.3)%

$

131.01

$

60.72

$

146.35

(10.5)%

Oceans Edge Resort & Marina (1)

$

371.84

$

402.72

$

256.39

45.0%

$

510.27

$

458.76

$

343.32

48.6%

Comparable Portfolio (2)

$

317.37

$

198.55

$

313.35

1.3%

$

300.40

141.55

$

328.42

(8.5)%

Montage Healdsburg

$

1,143.87

$

1,286.05

N/A

N/A

$

1,100.20

$

878.80

N/A

N/A

Four Seasons Resort Napa Valley

$

1,319.24

N/A

N/A

N/A

$

1,296.27

N/A

N/A

N/A

Total Portfolio (3)

$

343.03

$

325.29

*Footnotes on page 29

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 28


Graphic

Supplemental Financial Information
November 8, 2022

Property-Level Operating Statistics

Q3 and YTD 2022/2021/2019 Footnotes

(1) Operating statistics for the third quarter and first nine months of 2022 are impacted by room renovations at the Hyatt Regency San Francisco and the Renaissance Washington DC. Operating statistics for the third quarter and first nine months of 2019 are impacted by room renovations at the Hilton San Diego Bayfront, the Hyatt Regency San Francisco and the Oceans Edge Resort & Marina.
(2) Comparable Portfolio operating statistics include the same 12 hotels owned by the Company during the third quarters and first nine months of 2022, 2021 and 2019 plus The Confidante Miami Beach acquired by the Company in June 2022. Comparable Portfolio operating statistics for the first nine months of 2022 and the third quarters and first nine months of 2021 and 2019 include prior ownership information obtained by the Company from the previous owner of The Confidante Miami Beach during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition.
(3) Total Portfolio consists of all 15 hotels owned by the Company as of September 30, 2022. Total Portfolio operating statistics for the first nine months of 2022 include rooms provided by the owners of the separately owned Four Seasons Private Residences Napa Valley who may periodically elect to participate in the residential rental program at the Four Seasons Resort Napa Valley. Total Portfolio operating statistics for the first nine months of 2021 include prior ownership results for the Montage Healdsburg. The Company obtained prior ownership information from the previous owner of the Montage Healdsburg during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition.

PROPERTY-LEVEL DATA AND OPERATING STATISTICS

Page 29


Graphic

Supplemental Financial Information
November 8, 2022

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre &

ADJUSTED EBITDAre MARGINS

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 30


Graphic

Supplemental Financial Information
November 8, 2022

Property-Level Revenues, Adjusted EBITDAre and Adjusted EBITDAre Margins

Q3 2022/2021

Hotels sorted by number of rooms

For the Three Months Ended September 30,

2022

2021

(In thousands)

Hotel Adjusted

Hotel Adjusted

Hotel Adjusted

Total

Hotel Adjusted

EBITDAre

Total

Hotel Adjusted

EBITDAre

EBITDAre

    

Revenues

    

EBITDAre

    

Margins

    

Revenues

    

EBITDAre

    

Margins

    

Margin Change

Hilton San Diego Bayfront

$

47,720

$

17,244

36.1%

$

25,726

$

8,020

31.2%

490

bps

Boston Park Plaza

28,989

9,086

31.3%

12,852

391

3.0%

2,830

bps

Hyatt Regency San Francisco (1)

18,574

1,657

8.9%

10,413

(1,334)

(12.8)%

2,170

bps

Renaissance Washington DC (1)

12,346

1,335

10.8%

3,689

(2,328)

(63.1)%

7,390

bps

Renaissance Orlando at SeaWorld®

18,043

4,685

26.0%

9,681

1,374

14.2%

1,180

bps

Wailea Beach Resort

43,019

17,860

41.5%

35,885

16,007

44.6%

(310)

bps

JW Marriott New Orleans

6,798

1,449

21.3%

6,027

1,909

31.7%

(1,040)

bps

Marriott Boston Long Wharf

18,237

8,236

45.2%

10,406

3,018

29.0%

1,620

bps

Renaissance Long Beach

6,691

1,815

27.1%

5,924

1,966

33.2%

(610)

bps

The Confidante Miami Beach

7,540

756

10.0%

6,802

464

6.8%

320

bps

The Bidwell Marriott Portland

3,328

792

23.8%

2,031

181

8.9%

1,490

bps

Hilton New Orleans St. Charles

2,298

343

14.9%

1,632

196

12.0%

290

bps

Oceans Edge Resort & Marina

5,986

1,571

26.2%

6,483

2,267

35.0%

(880)

bps

Comparable Portfolio (2)

219,569

66,829

30.4%

137,551

32,131

23.4%

700

bps

Montage Healdsburg

13,681

2,146

15.7%

15,381

3,635

23.6%

(790)

bps

Four Seasons Resort Napa Valley

11,045

447

4.0%

N/A

N/A

Total Portfolio (3)

244,295

69,422

28.4%

152,932

35,766

23.4%

N/A

Less: Prior Ownership (4)

The Confidante Miami Beach

N/A

(6,802)

(464)

6.8%

N/A

Add: Sold Hotels (5)

N/A

19,607

4,742

24.2%

N/A

Actual Portfolio (6)

$

244,295

$

69,422

28.4%

$

165,737

$

40,044

24.2%

N/A

*Footnotes on page 35

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 31


Graphic

Supplemental Financial Information
November 8, 2022

Property-Level Revenues, Adjusted EBITDAre and Adjusted EBITDAre Margins

Q3 2022/2019

Hotels sorted by number of rooms

For the Three Months Ended September 30,

2022

2019

(In thousands)

Hotel Adjusted

Hotel Adjusted

Hotel Adjusted

Total

Hotel Adjusted

EBITDAre

Total

Hotel Adjusted

EBITDAre

EBITDAre

    

Revenues

    

EBITDAre

    

Margins

    

Revenues

    

EBITDAre

    

Margins

    

Margin Change

Hilton San Diego Bayfront (1)

$

47,720

$

17,244

36.1%

$

43,134

$

15,020

34.8%

130

bps

Boston Park Plaza

28,989

9,086

31.3%

30,195

11,289

37.4%

(610)

bps

Hyatt Regency San Francisco (1)

18,574

1,657

8.9%

27,985

7,116

25.4%

(1,650)

bps

Renaissance Washington DC (1)

12,346

1,335

10.8%

18,912

4,136

21.9%

(1,110)

bps

Renaissance Orlando at SeaWorld®

18,043

4,685

26.0%

14,928

3,625

24.3%

170

bps

Wailea Beach Resort

43,019

17,860

41.5%

29,932

11,644

38.9%

260

bps

JW Marriott New Orleans

6,798

1,449

21.3%

8,143

2,465

30.3%

(900)

bps

Marriott Boston Long Wharf

18,237

8,236

45.2%

18,269

7,994

43.8%

140

bps

Renaissance Long Beach

6,691

1,815

27.1%

7,243

2,216

30.6%

(350)

bps

The Confidante Miami Beach

7,540

756

10.0%

6,187

5

0.1%

990

bps

The Bidwell Marriott Portland

3,328

792

23.8%

4,858

2,181

44.9%

(2,110)

bps

Hilton New Orleans St. Charles

2,298

343

14.9%

2,589

392

15.1%

(20)

bps

Oceans Edge Resort & Marina (1)

5,986

1,571

26.2%

4,128

695

16.8%

940

bps

Comparable Portfolio (2)

219,569

66,829

30.4%

216,503

68,778

31.8%

(140)

bps

Montage Healdsburg

13,681

2,146

15.7%

N/A

N/A

Four Seasons Resort Napa Valley

11,045

447

4.0%

N/A

N/A

Total Portfolio (3)

244,295

69,422

28.4%

216,503

68,778

31.8%

N/A

Less: Prior Ownership (4)

The Confidante Miami Beach

N/A

(6,187)

(5)

0.1%

N/A

Add: Sold/Disposed Hotels (5)

N/A

71,301

17,992

25.2%

N/A

Actual Portfolio (6)

$

244,295

$

69,422

28.4%

$

281,617

$

86,765

30.8%

N/A

*Footnotes on page 35

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 32


Text

Description automatically generated with low confidence

Supplemental Financial Information
November 8, 2022

Property-Level Revenues, Adjusted EBITDAre and Adjusted EBITDAre Margins

Q3 YTD 2022/2021

Hotels sorted by number of rooms

For the Nine Months Ended September 30,

2022

2021

(In thousands)

Hotel Adjusted

Hotel Adjusted

Hotel Adjusted

Total

Hotel Adjusted

EBITDAre

Total

Hotel Adjusted

EBITDAre

EBITDAre

    

Revenues

    

EBITDAre

    

Margins

    

Revenues

    

EBITDAre

    

Margins

    

Margin Change

Hilton San Diego Bayfront

$

119,160

$

40,225

33.8%

$

43,440

$

4,920

11.3%

2,250

bps

Boston Park Plaza

67,884

16,395

24.2%

21,323

(5,893)

(27.6)%

5,180

bps

Hyatt Regency San Francisco (1)

47,581

3,278

6.9%

16,128

(8,370)

(51.9)%

5,880

bps

Renaissance Washington DC (1)

42,465

8,763

20.6%

15,892

(194)

(1.2)%

2,180

bps

Renaissance Orlando at SeaWorld®

59,530

18,725

31.5%

21,680

811

3.7%

2,780

bps

Wailea Beach Resort

122,001

51,541

42.2%

76,786

32,613

42.5%

(30)

bps

JW Marriott New Orleans

23,895

8,081

33.8%

12,714

2,535

19.9%

1,390

bps

Marriott Boston Long Wharf

39,212

14,159

36.1%

17,116

1,314

7.7%

2,840

bps

Renaissance Long Beach

20,526

6,393

31.1%

13,040

4,029

30.9%

20

bps

The Confidante Miami Beach

33,040

9,947

30.1%

23,631

3,810

16.1%

1,400

bps

The Bidwell Marriott Portland

8,018

1,531

19.1%

3,274

(1,091)

(33.3)%

5,240

bps

Hilton New Orleans St. Charles

9,013

3,077

34.1%

4,177

227

5.4%

2,870

bps

Oceans Edge Resort & Marina

24,378

9,806

40.2%

21,917

9,429

43.0%

(280)

bps

Comparable Portfolio (2)

616,703

191,921

31.1%

291,118

44,140

15.2%

1,590

bps

Montage Healdsburg

39,046

4,647

11.9%

25,433

5,248

20.6%

(870)

bps

Four Seasons Resort Napa Valley

31,506

2,849

9.0%

N/A

N/A

Total Portfolio (3)

687,255

199,417

29.0%

316,551

49,388

15.6%

N/A

Less: Prior Ownership (4)

The Confidante Miami Beach

(22,637)

(8,630)

38.1%

(23,631)

(3,810)

16.1%

N/A

Add: Sold Hotels (5)

3,234

(2,172)

(67.2)%

33,505

(3,400)

(10.1)%

N/A

Actual Portfolio (6)

$

667,852

$

188,615

28.2%

$

326,425

$

42,178

12.9%

N/A

*Footnotes on page 35

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 33


Text

Description automatically generated with low confidence

Supplemental Financial Information
November 8, 2022

Property-Level Revenues, Adjusted EBITDAre and Adjusted EBITDAre Margins

Q3 YTD 2022/2019

Hotels sorted by number of rooms

For the Nine Months Ended September 30,

2022

2019

(In thousands)

Hotel Adjusted

Hotel Adjusted

Hotel Adjusted

Total

Hotel Adjusted

EBITDAre

Total

Hotel Adjusted

EBITDAre

EBITDAre

    

Revenues

    

EBITDAre

    

Margins

    

Revenues

    

EBITDAre

    

Margins

    

Margin Change

Hilton San Diego Bayfront (1)

$

119,160

$

40,225

33.8%

$

118,470

$

38,209

32.3%

150

bps

Boston Park Plaza

67,884

16,395

24.2%

79,594

25,329

31.8%

(760)

bps

Hyatt Regency San Francisco (1)

47,581

3,278

6.9%

89,524

24,284

27.1%

(2,020)

bps

Renaissance Washington DC (1)

42,465

8,763

20.6%

64,426

18,291

28.4%

(780)

bps

Renaissance Orlando at SeaWorld®

59,530

18,725

31.5%

62,586

21,395

34.2%

(270)

bps

Wailea Beach Resort

122,001

51,541

42.2%

91,809

37,016

40.3%

190

bps

JW Marriott New Orleans

23,895

8,081

33.8%

31,197

12,983

41.6%

(780)

bps

Marriott Boston Long Wharf

39,212

14,159

36.1%

46,665

17,770

38.1%

(200)

bps

Renaissance Long Beach

20,526

6,393

31.1%

22,582

7,226

32.0%

(90)

bps

The Confidante Miami Beach

33,040

9,947

30.1%

27,315

6,011

22.0%

810

bps

The Bidwell Marriott Portland

8,018

1,531

19.1%

12,648

5,109

40.4%

(2,130)

bps

Hilton New Orleans St. Charles

9,013

3,077

34.1%

10,068

2,734

27.2%

690

bps

Oceans Edge Resort & Marina (1)

24,378

9,806

40.2%

16,402

5,141

31.3%

890

bps

Comparable Portfolio (2)

616,703

191,921

31.1%

673,286

221,498

32.9%

(180)

bps

Montage Healdsburg

39,046

4,647

11.9%

N/A

N/A

Four Seasons Resort Napa Valley

31,506

2,849

9.0%

N/A

N/A

Total Portfolio (3)

687,255

199,417

29.0%

673,286

221,498

32.9%

N/A

Less: Prior Ownership (4)

The Confidante Miami Beach

(22,637)

(8,630)

38.1%

(27,315)

(6,011)

22.0%

N/A

Add: Sold/Disposed Hotels (5)

3,234

(2,172)

(67.2)%

196,174

43,001

21.9%

N/A

Actual Portfolio (6)

$

667,852

$

188,615

28.2%

$

842,145

$

258,488

30.7%

N/A

*Footnotes on page 35

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 34


Text

Description automatically generated with low confidence

Supplemental Financial Information
November 8, 2022

Property-Level Revenues, Adjusted EBITDAre and Adjusted EBITDAre Margins

Q3 and Q3 YTD 2022/2021/2019 Footnotes

(1) Hotel Adjusted EBITDAre for the third quarter and first nine months of 2022 are impacted by room renovations at the Hyatt Regency San Francisco and the Renaissance Washington DC. Hotel Adjusted EBITDAre for the third quarter and first nine months of 2019 are impacted by room renovations at the Hilton San Diego Bayfront, the Hyatt Regency San Francisco and the Oceans Edge Resort & Marina.
(2) Comparable Portfolio includes the same 12 hotels owned by the Company during the third quarters and first nine months of 2022, 2021 and 2019 plus The Confidante Miami Beach acquired by the Company in June 2022. Amounts included in this presentation for The Confidante Miami Beach include both prior ownership results and the Company's results. The Company obtained prior ownership information from the previous owner of The Confidante Miami Beach during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition.
(3) Total Portfolio consists of all 15 hotels owned by the Company as of September 30, 2022. The Total Portfolio includes the Company’s ownership results for the Montage Healdsburg and the Four Seasons Resort Napa Valley, which were acquired in April 2021 and December 2021, respectively. Both the Montage Healdsburg and the Four Seasons Resort Napa Valley are newly-developed hotels that opened on limited bases in December 2020 and October 2021, respectively. Prior year information is not comparable.
(4) Prior Ownership includes results for The Confidante Miami Beach prior to the Company’s acquisition of the hotel in June 2022.
(5) Sold Hotels for the first nine months of 2022, 2021 and 2019 include results for the Hyatt Centric Chicago Magnificent Mile, sold in February 2022, and the Embassy Suites Chicago and Hilton Garden Inn Chicago Downtown/Magnificent Mile, sold in March 2022. Sold Hotels for the third quarter and first nine months of 2021 and 2019 also include results for the Embassy Suites La Jolla and the Renaissance Westchester, sold in December 2021 and October 2021, respectively. Sold/Disposed Hotels for the third quarter and first nine months of 2019 also include results for the Renaissance Los Angeles Airport sold in December 2020, the Hilton Times Square assigned to its mortgage holder in December 2020, the Renaissance Harborplace sold in July 2020, and the Courtyard by Marriott Los Angeles sold in October 2019.
(6) Actual Portfolio includes results for the 15 hotels and 18 hotels owned by the Company during the third quarter and first nine months of 2022, respectively, and the 18 hotels and 21 hotels owned by the Company during the third quarters and first nine months of 2021 and 2019, respectively.

PROPERTY-LEVEL REVENUES, ADJUSTED EBITDAre & ADJUSTED EBITDAre MARGINS

Page 35