SUNSTONE HOTEL INVESTORS REPORTS RESULTS FOR FIRST QUARTER 2023.

ALISO VIEJO, Calif: Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO), the owner of Long-Term Relevant Real Estate(r) in the lodging industry, today announced results for the first quarter ended March 31, 2023.

First Quarter 2023 Operational Results (as compared to First Quarter 2022):

Net Income: Net income was $21.1 million as compared to $15.1 million. Excluding the gain on three hotels sold during the quarter, first quarter 2022 would have been a net loss of $7.8 million.

Comparable RevPAR: Comparable RevPAR increased 32.0% to $218.82. The average daily rate was $313.94 and occupancy was 69.7%.

Adjusted EBITDAre: Adjusted EBITDAre, excluding noncontrolling interest increased 121.0% to $60.0 million.

Adjusted FFO: Adjusted FFO attributable to common stockholders per diluted share increased 162.5% to $0.21.

Information regarding the non-GAAP financial measures disclosed in this release is provided below in "Non-GAAP Financial Measures." Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included later in this release.

Bryan A. Giglia, Chief Executive Officer, stated, "Our first quarter results exceeded our expectations as corporate and group demand continued to accelerate. Our group hotels performed very well, growing profitability more than 170% over the prior year and contributing to corporate earnings that surpassed the high end of our guidance range. Since the start of the year, we have continued to opportunistically repurchase our common stock, acquiring $21 million of shares at a meaningful discount to our net asset value. Additionally, during the quarter, we took steps to address our only 2023 debt maturity by refinancing the mortgage secured by the Hilton San Diego Bayfront with a new $225 million unsecured term loan, which will unencumber the hotel and extend our maturities. Last, we took advantage of a pullback in interest rates and swapped $175 million of floating rate debt to fixed rates, which will decrease our near-term interest expense and increase the percentage of our total debt and preferred equity that is fixed to nearly 65%."

Mr. Giglia continued, "After a successful first quarter, we are encouraged by our near-term outlook as we expect the investments we made in the portfolio will combine with the ongoing demand recovery to provide additional growth. Over the last year, we have thoughtfully allocated our capital to achieve a balance of short-term earnings accretion and long-term value creation. Our recent investments in the wine country resorts are expected to combine with the completion of the soon-to-be rebranded Westin Washington DC Downtown to add incremental earnings this year. As demand growth begins to normalize across the industry in the coming quarters, we expect the investments we are making now to transform the Andaz Miami Beach will then provide the next layer of our growth."

Unaudited Selected Statistical and Financial Data ($ in millions, except RevPAR, ADR and per share amounts)

Quarter Ended March 31,

2023

2022

Change

Net Income

$

21.1

$

15.1

39.4

%

Income Attributable to Common Stockholders per Diluted Share

$

0.08

$

0.05

60.0

%

Comparable RevPAR (1)

$

218.82

$

165.75

32.0

%

Comparable Occupancy (1)

69.7

%

54.2

%

1,550

bps

Comparable ADR (1)

$

313.94

$

305.82

2.7

%

Comparable Adjusted EBITDAre Margin...