Sunstone Hotel completes sale of Boston Park Plaza for $370M

Sunstone Hotel Investors announced that it has completed the sale of the 1,060-room Boston Park Plaza for a gross sale price of $370M, or approximately $350,000 per key. The sale price represents a 12.1x multiple on Hotel Adjusted EBITDAre and a 7.1% cap rate on Hotel Net Operating Income for the trailing four quarter period ended June 30, 2023. The Company acquired the Hotel in 2013 and successfully executed a business plan to reinvigorate the well-located historic hotel. Over the course of the Company’s ownership period, the Hotel’s annual earnings nearly doubled and the Hotel generated cumulative Hotel Adjusted EBITDAre of approximately $210 million. Based on the timing of the prior renovation, the Company anticipates that the Hotel will require significant additional investment to maintain its competitive position and sustain its current level of earnings. Inclusive of the Company’s estimate of required near-term capital expenditures, the gross sale price presents a 14.1x multiple on Hotel Adjusted EBITDAre and a 6.1% cap rate on Hotel Net Operating Income for the trailing four quarter period ended June 30, 2023. The Company is evaluating opportunities to reinvest the net proceeds from the sale through a tax deferred exchange. If an exchange is not completed, the Company can utilize existing tax attributes to offset the gain resulting from the sale and retain the net proceeds for future investment. The Company will provide additional details regarding the disposition, including the expected impact on the Company’s fourth quarter operating results, as part of its upcoming quarterly earnings release in early November.