Sunstone Hotel (UF2) Q3 2026 Earnings Report

The call was strongly positive overall. Third-quarter operating results exceeded expectations, RevPAR and adjusted EBITDA grew at double- and high-single-digit rates, FFO per share increased 18%, full-year guidance was raised, liquidity remained nearly $820 million with low leverage, and management reported improving group and transient demand entering 2027. The principal challenges were expense growth, limited margin expansion, unfavorable group-calendar comparisons, storm-related costs, renovation-related displacement at Key West and limited acquisition supply in the company's preferred transaction range.

For 2026, Sunstone expects rooms RevPAR for all hotels in the portfolio to grow between 9.5% and 10.5% to a range of $245 to $247, including approximately 450 basis points of growth at the midpoint from Andaz Miami Beach; Total RevPAR is expected to increase between 8.5% and 9.5% to a range of $409 to $413, with a similar 450 basis point benefit from Andaz. The updated outlook implies a mid-to-high single-digit revenue growth expectation for the fourth quarter, with approximately 150 basis points of benefit from Andaz, and adjusted EBITDAre is expected to range from $254 million to $259 million, while FFO per diluted share is expected to range from $1 to $1.03. For 2027, total group pace is up mid-to-high single digits, including San Diego up over 10% and Wailea up in the 20s, while transient pace is up 9% for the portfolio; labor this year is running at 4% to 5%, with an expectation for 2027 at the lower end of that. Sunstone expects its 2027 quarterly dividend distribution requirement to be between $0.11 and $0.12 per share or approximately 20% to 30% above its 2026 quarterly distribution, while its revised 2026 outlook does not assume the benefit of additional buyback activity.