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Sunstone Hotel Investors
March 2021
Company Presentation
Forward-Looking Statements
This presentation 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: volatility in the debt or equity markets affecting our ability to acquire or sell hotel assets;
international, national and local economic and business conditions, including the likelihood of a U.S. recession, government
shutdown, changes in the European Union or global economic slowdown, as well as any type of flu, disease-related
pandemic or the adverse effects of climate change, affecting the lodging and travel industry; the ability to maintain sufficient
liquidity and our access to capital markets; terrorist attacks or civil unrest, which would affect occupancy rates at our hotels
and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with
the level of our indebtedness and our ability to meet covenants in our debt and equity agreements; relationships with
property managers and franchisors; our ability to maintain our properties in a first-class manner, including meeting capital
expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations
and room rate structures; changes in travel patterns, taxes and government regulations, which influence or determine
wages, prices, construction procedures and costs; our ability to identify, successfully compete for and complete
acquisitions; the performance of hotels after they are acquired; necessary capital expenditures and our ability to fund them
and complete them with minimum disruption; our ability to continue to satisfy complex rules in order for us to qualify as a
REIT for federal income tax purposes; severe weather events or other natural disasters; risks impacting our ability to pay
anticipated future dividends; and other risks and uncertainties associated with our business described in the Company’s
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
presentation, 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 presentation 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.
2
Why Sunstone. . .
3
High quality portfolio of Long-Term Relevant Real Estate®
Ability to take a long-term and balanced approach to the business
and well positioned to capitalize on the recovery
Sector-leading, low-levered balance sheet and significant liquidity
provide protection and opportunity for growth
Management team with superior track record of accretive and well-
timed capital allocation
Best-in-class corporate governance with executive compensation
structure that creates strong alignment with shareholders
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Investment Highlights
Opportunity to invest at cyclically-low valuation with the security
offered by the lowest levered balance sheet in the sector with the
liquidity to growa
Long-Term Relevant Real Estate® Is . . .
4
JW Marriott New OrleansOceans Edge
Resort & Marina
Marriott
PortlandHilton San Diego Bayfront
Hyatt Regency
San Francisco
Marriott Boston
Long Wharf
Renaissance Washington DC Wailea Beach Resort
Boston Park Plaza
What’s Going On . . .
5
Substantially Entire Portfolio Has Resumed Operations, Cash Burn Improving, Positive Trends Emerging
• After suspending operations across most of the portfolio in early 2020, substantially all hotels –
representing 98% of 2019 hotel EBITDA – have since resumed operations.
• Recent forward bookings are encouraging and have gained momentum as vaccine distribution is
becoming more widespread.
• The reopening of hotels, rising occupancy levels and significant cost reductions have allowed us to
improve our monthly cash burn rate.
• Opportunistically completed several disruptive capital projects in 2020 and are now shifting focus to
several value enhancing projects in 2021.
• Best-in-class balance sheet and significant liquidity position Sunstone to capitalize on investment
opportunities as the industry recovers.
In Operations atEnd of Month
April2020
July2020
October2020
December 2020
Number ofHotels
3 9 14 15
% of Total Rooms
20% 43% 86% 92%
% of 2019Hotel EBITDA
17% 37% 82% 98%
Note: Portfolio data in above table based on current 17-hotel portfolio comprised of 9,017 consolidated total rooms and $310 million of consolidated comparable 2019 hotel EBITDA.
0%
15%
30%
45%
60%
75%
0%
15%
30%
45%
60%
75%
Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21
All Hotels Hotels in Operation
What’s Going On . . .
6
Demand Has Troughed and is Steadily Returning
Trailing 7-Day Occupancy
After record setting declines in late March and April, occupancy has been
slowly increasing in recent months. There has been particular strength
around the weekends and holidays from robust leisure demand that should
translate into meaningfully higher occupancies in the coming months as the
weather improves and business travel accelerates.
Note: Reflects data from March 7, 2020 to February 28, 2021.
0
50,000
100,000
150,000
2Q 2021 3Q 2021 4Q 2021
Group Trends are Stabilizing . . .
7
Pace of Cancellations Has Slowed with Increased Likelihood of Groups Attending in Later Quarters
Group Room Nights Canceled by Week 2021 Group Rooms On the Books
44%46%
12%
% Percent of 2019 actual group rooms
Group cancelation volumes have continued to moderate in recent months with the second half of 2021
maintaining encouraging group bookings. We continue to rebook cancelled events and groups are becoming
increasingly intent on conducting their events later in the year.
0
30,000
60,000
90,000
Feb-20 Mar-20 May-20 Jun-20 Aug-20 Sep-20 Nov-20 Dec-20 Feb-21
(10,000)
(5,000)
0
5,000
10,000
15,000
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21
Transient Bookings Accelerating . . .
8
Forward Bookings Reflect Pent Up Demand for Travel
Weekly Transient Pickup For Next 6 Months Transient Pace vs. Same Time 2019
35%
48%
73%
0%
20%
40%
60%
80%
2Q 2021 3Q 2021 4Q 2021
Transient booking trends have increased sharply and point to higher levels of demand in the latter portion
of 2021. Strong demand over weekends and recent holidays would suggest there is significant desire for
leisure travel. Business transient demand is starting to return.
After falling off late in 2020, the volume of
weekly net transient bookings has again
resumed an upward trajectory.
Cash Balance Provides Significant Runway . . .
9
Monthly Cash Burn Projections ($ millions)
Monthly Recurring
Cash Uses
Prior
Estimate
Current
Estimate
Percent
Change
Hotel Cash
Uses $10 - $13 $8 - $11 -17%
Corporate Cash
Requirements$6 - $7 $6 -8%
Total Before
Capital Expenditures$16 - $20 $14 - $17 -14%
Cash Burn Rate Has Improved. Portfolio Should Resume Profitability by the Latter Half of 2021
• As more hotels have resumed operations and occupancy levels have continued to gradually rise, we
have been able to further reduce our cash burn rate.
• If the pace of recovery continues, we would expect to return to hotel profitability late in the second
quarter or early in the third quarter.
• Our best-in-class balance sheet has allowed us to avoid costly capital raises since the onset of the
pandemic and we expect to retain significant excess cash that we can deploy into value enhancing
internal and external growth opportunities.
Taking a Long-Term and Balanced Approach . . .
10
Opportunistically Using This Time to Complete What Would Otherwise be Highly Disruptive Capital Work
• Installation of four new escalators to serve
subterranean meeting room and ballroom
levels.
• Implemented a new sense of arrival through
a full refreshment of the porte cochere,
including a new ceiling, lighting and
driveway surface.
• Added new extended lanai decks to 32
oceanfront rooms.
• Drained and replastered the serenity pool.
• Completed various other maintenance
projects that would be have been highly
disruptive to guests and hotel operations.
• Demolished existing lobby floor and
replaced with 50,000 square feet of new tile.
• Removed numerous large planters from
lobby to better accommodate traffic flow.
• Repainted lobby and 10-story atrium.
Took advantage of low demand period in 2020 and accelerated several capital projects that would have
otherwise been highly disruptive to hotel operations and guest satisfaction and would have resulted in
significant displacement under normal operations.
How We Approach the Balance Sheet . . .Sector Leading Balance Sheet Going Into the Pandemic with Significant Tangible Liquidity
11
2019 Year-End Net Debt & Preferred to TTM EBITDA
We have long believed that a lowly levered balance sheet is the most appropriate capital
structure for a highly cyclical industry that is subject to operating leverage.
Note: Per company public filings as December 31, 2019. Debt balances calculated on a pro rata basis.
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
SHO HST RLJ DRH XHR RHP PK PEB
0.0x
3.0x
6.0x
9.0x
2019 at 100%No Acquisitions
2019 at 100%With Acquisitions
2019 at 75%No Acquisitions
2019 at 75%With Acquisitions
2019 at 50%No Acquisitions
2019 at 50%With Acquisitions
Substantial Acquisition Capacity . . .
12
Illustrative Net Debt & Preferred / EBITDA at Various Assumed Recovery Levels and Acquisition Volumes
Acquisition Capacity Assuming
EBITDA at 100% of 2019
Comparable Levels
Acquisition Capacity Assuming
EBITDA at 75% of 2019
Comparable Levels
Acquisition Capacity Assuming
EBITDA at 50% of 2019
Comparable Levels
We Retain Significant Capacity Given the Strength of Our Balance Sheet at the Onset of the Pandemic
Note: Based on $292 million of 2019 comparable adjusted corporate EBITDA for the current 17-hotel portfolio. Acquisitions assumed at 16x stabilized EBITDA.
Given the strength of our balance sheet, once we emerge from the waiver period, our debt covenants would still
allow for substantial acquisition capacity even if EBITDA does not immediately return to pre-pandemic levels.
Over $1.5
billion of
acquisitions
$700 million to
$1.0 billion of
acquisitions
$250 million to
$400 million of
acquisitions
90%
100%
110%
120%
130%
140%
150%
160%
170%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (F)
13
Superior Capital Allocation Track Record . . . Acquiring and Disposing of Hotels at Right Points in Cycle While Increasing Our Ownership of LTRR®
Acquisition and Disposition Summary
Chicago Downtown / Mag Mile
Minneapolis
Los Angeles
Rochester 4-Hotel
Portfolio
Indexed Top-25 Market RevPAR
We acquired nearly $2.0 billion of
higher quality hotels, in the early
phase of the cycle . . .
Acquisitions
Dispositions . . . and sold 22 lower quality and
generally commodity hotels for $1.7 billion
as the cycle matured.
Note: Excludes Royal Palm which was owned for less than one year. 2020(F) reflects the pre-pandemic 2020 RevPAR growth forecast for urban hotels per CBRE Hotel Horizons.
$6.50
$8.50
$10.50
$12.50
$14.50
$16.50
$18.50
Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Nov-19 Nov-2014
Superior Capital Allocation Track Record . . . Accretive Capital Allocation
Track record of patient and disciplined accessing of the equity capital markets, and
opportunistically repurchasing shares.
Repurchased $50
million at $13.22
in mid 2019
SHO Price
Issued $79 million at $16.28 in
May & June 2017. Acquired
Oceans Edge Resort & Marina.
Issued $271 million at $13.56 in
November 2013. Acquired Hyatt
Regency Embarcadero.
Issued $55 million
at $15.47 in
December 2016
Issued $45
million at $17.42
in June 2018
Issued $263 million at $14.60
in June 2014. Acquired Wailea
Beach Resort.
Issued $22 million at
$15.96 in November &
December 2014
Repurchased $104
million at $10.61 in
1Q 2020
How We View Corporate Governance . . .
15
Ranked among highest in corporate governance by Green Street Advisors
Culture of transparency with best-in-class disclosure and quarterly supplemental
Opted-out of MUTA, limitations on rights plans, adopted proxy access and
stockholder’s right to amend bylaws, do not allow hedging or pledging of shares held
by executives
Non-classified board with annual election of all directors
Directors have open access to senior management and all employees and regularly
review ESG practices and initiatives
Executive compensation program creates strong shareholder alignment. Adopted
compensation clawback policy and double trigger provision upon change of control.
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Our priority is to maximize shareholder value. Our board structure, corporate charter
and culture of transparency place us at the top of the REIT space in terms of
corporate governance.
Sector Leading Corporate Governance Profile