Highlights

  • Second quarter revenue rose 6.7% to $277.1 million, and net income was $26.0 million versus $10.8 million.
  • RevPAR at the 14 hotels owned in both periods grew 9.3%, while non-GAAP Adjusted EBITDAre rose 5.5% to $76.7 million.
  • Sunstone sold Hyatt Regency San Francisco for $279.0 million on July 30 and repaid its $25.0 million credit facility draw.
  • Six-month operating cash flow was $107.4 million, and repurchases totaled $40.6 million of common and $28.2 million of preferred stock.

Sunstone Hotel Investors (NYSE:SHO) shares were trading near their 52-week high at USD 12.60 on October 21, 2026, up 1.57%. The lodging real estate investment trust rebranded its Key West resort on July 1, sold Hyatt Regency San Francisco on July 30, and filed its second quarter 2026 report on August 6 with higher revenue, earnings and Adjusted FFO.

Based in Aliso Viejo, California, Sunstone is a Maryland corporation that operates as a self-managed REIT. It owns hotels in convention, urban and resort destinations, run by independent managers. At June 30, 2026 it owned 14 hotels, averaging 475 rooms each excluding the San Francisco hotel, which was held for sale. It reports a single hotel segment. Its fiscal year ends December 31.

Second Quarter Results

Revenue for the quarter ended June 30, 2026 was $277.1 million, up from $259.8 million. Room revenue grew 7.8% to $168.3 million, food and beverage revenue rose 1.1% to $78.9 million, and other operating revenue rose 16.5% to $29.9 million. Net income was $26.0 million against $10.8 million, and net income attributable to common stockholders was $26.0 million, or $0.14 per diluted share, versus $6.8 million, or $0.03. The prior-year quarter included an $8.8 million loss on the sale of the Hilton New Orleans St. Charles.

Across the 14 hotels owned in both periods, occupancy rose 300 basis points and average daily rate rose 5.1%, lifting RevPAR 9.3%. Andaz Miami Beach, which reopened in May 2025 after a renovation, added $7.6 million of room revenue. The 13-hotel Comparable Portfolio saw RevPAR up 4.3%, helped by leisure demand at Wailea Beach Resort and transient strength tied to FIFA World Cup matches in San Francisco and Boston.

Costs rose too. Hotel operating expenses grew 5.1% and other property-level expenses 10.8%, and total operating expenses rose 5.9% to $242.9 million. Non-GAAP Adjusted EBITDAre increased 5.5% to $76.7 million, although Comparable Portfolio Adjusted EBITDAre slipped 0.3%. Non-GAAP Adjusted FFO attributable to common stockholders rose 6.0% to $59.0 million.

At Wailea Beach Resort, March storms caused wind and water damage. Sunstone recorded a $1.6 million write-off of damaged assets, $2.4 million of insurance claim recoveries and $1.2 million of business interruption proceeds, and is pursuing further recoveries.

Sale, Balance Sheet and Capital Returns

The Hyatt Regency San Francisco sale for $279.0 million closed on July 30, after Sunstone received a $25.0 million deposit in the first half. It repaid the $25.0 million credit facility balance the next day, restoring full borrowing capacity on the $500.0 million facility.

At June 30, Sunstone had $980.0 million of unsecured corporate-level debt, $94.4 million of unrestricted cash, and $203.7 million of cash including restricted cash. In January, it drew $90.0 million on a term loan to repay $65.0 million of Series A senior notes at maturity.

For the six months, Sunstone repurchased 4,380,093 common shares for $40.6 million and Series H and Series I preferred shares for $28.2 million, and invested $53.4 million in renovations and additions. Diluted EPS was $0.22 versus $0.04, and Adjusted EBITDAre was $144.4 million versus $129.9 million. The company declared a $0.09 common distribution in each of the first two quarters. After further preferred repurchases of $1.5 million in July, $437.4 million remained under its repurchase program.

Outlook and Risks

The 10-Q gives no numerical guidance. Sunstone said its main sources of cash will remain operations, borrowings, asset sales and capital offerings, while its uses include hotel investments, debt repayment, repurchases of common and preferred stock and distributions. It cautioned that sales and financings may not be completed, and that inflation, tariffs, fuel costs, geopolitical uncertainty and government shutdowns could pressure operations, even as operators have historically adjusted rates to offset costs. These are company statements, not forecasts.