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Sunstone to Sell Hyatt Regency San Francisco Hotel to Blackstone Fund
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Key Takeaways
SHO agreed to sell the 821-room Hyatt Regency San Francisco for $279 million to a Blackstone fund.
Sunstone used about $70 million of expected proceeds to repurchase common and preferred shares.
SHO expects the sale to close in late July or early August 2026 and update its outlook afterward.
Sunstone Hotel Investors, Inc. (SHO - Free Report) has entered into a definitive agreement to sell the Hyatt Regency San Francisco, an 821-room hotel, to funds affiliated with Blackstone Real Estate. The transaction is valued at $279 million, equating to approximately $340,000 per key. This strategic move reflects the company's ongoing efforts to optimize its portfolio and enhance shareholder value.
The agreed sale price represents a strong valuation for the property, amounting to a 21.4-times multiple of Hotel Adjusted EBITDAre and a 3.5% capitalization rate based on Hotel Net Operating Income for the trailing 12 months ended May 31, 2026.
In anticipation of the sale, Sunstone proactively deployed approximately $70 million of the sales proceeds into the discounted repurchase of its common and preferred stock during 2026. The company repurchased 4.4 million shares of its common stock at an average price of $9.24 per share, representing a total investment of approximately $40.5 million. Additionally, it repurchased 1.4 million combined shares of Series H and Series I Cumulative Redeemable Preferred Stock at an average price of $20.37 per share, totaling approximately $27.8 million.
The company stated that it is currently evaluating further opportunities to deploy the remaining proceeds from the sale in ways that generate the best risk-adjusted returns for shareholders. Sunstone expects the sale to close in late July or early August 2026 and plans to provide additional details regarding the disposition, including the expected impact on the company’s full-year outlook, during its upcoming earnings release.
Management emphasized its commitment to maximizing shareholder value through disciplined capital allocation. By repurchasing shares at discounts to both net asset value and liquidation value, Sunstone's board and management team believe they have already created meaningful value for investors. They also remain focused on evaluating strategic alternatives that could result in further value creation.
Conclusion
This sale provides Sunstone with additional capital while supporting its broader strategy to optimize its portfolio. By using a portion of the proceeds to repurchase common and preferred shares at discounted prices, the company has already taken steps to create value for shareholders while evaluating further capital allocation opportunities.
In the past three months, shares of this Zacks Rank #1 (Strong Buy) company have gained 26.8% compared with the industry's 10.4% growth.
View the Zacks #1 Rank List
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Sunstone to Sell Hyatt Regency San Francisco Hotel to Blackstone Fund
Key Takeaways
Sunstone Hotel Investors, Inc. (SHO - Free Report) has entered into a definitive agreement to sell the Hyatt Regency San Francisco, an 821-room hotel, to funds affiliated with Blackstone Real Estate. The transaction is valued at $279 million, equating to approximately $340,000 per key. This strategic move reflects the company's ongoing efforts to optimize its portfolio and enhance shareholder value.
The agreed sale price represents a strong valuation for the property, amounting to a 21.4-times multiple of Hotel Adjusted EBITDAre and a 3.5% capitalization rate based on Hotel Net Operating Income for the trailing 12 months ended May 31, 2026.
In anticipation of the sale, Sunstone proactively deployed approximately $70 million of the sales proceeds into the discounted repurchase of its common and preferred stock during 2026. The company repurchased 4.4 million shares of its common stock at an average price of $9.24 per share, representing a total investment of approximately $40.5 million. Additionally, it repurchased 1.4 million combined shares of Series H and Series I Cumulative Redeemable Preferred Stock at an average price of $20.37 per share, totaling approximately $27.8 million.
The company stated that it is currently evaluating further opportunities to deploy the remaining proceeds from the sale in ways that generate the best risk-adjusted returns for shareholders. Sunstone expects the sale to close in late July or early August 2026 and plans to provide additional details regarding the disposition, including the expected impact on the company’s full-year outlook, during its upcoming earnings release.
Management emphasized its commitment to maximizing shareholder value through disciplined capital allocation. By repurchasing shares at discounts to both net asset value and liquidation value, Sunstone's board and management team believe they have already created meaningful value for investors. They also remain focused on evaluating strategic alternatives that could result in further value creation.
Conclusion
This sale provides Sunstone with additional capital while supporting its broader strategy to optimize its portfolio. By using a portion of the proceeds to repurchase common and preferred shares at discounted prices, the company has already taken steps to create value for shareholders while evaluating further capital allocation opportunities.
In the past three months, shares of this Zacks Rank #1 (Strong Buy) company have gained 26.8% compared with the industry's 10.4% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the broader REIT sector are Pebblebrook Hotel Trust (PEB - Free Report) and Industrial Logistics Properties Trust (ILPT - Free Report) , each sporting a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PEB’s 2026 FFO per share is pegged at $1.68, which indicates year-over-year growth of 6.33%.
The Zacks Consensus Estimate for ILPT’s full-year FFO per share is pinned at $1.34, which calls for an increase of 39.58% from the year-ago period.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.