IRVINE, Calif., December 23, 2020 / PRNewswire / – Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO), the owner of Long-Term Relevant Real Estate® in the hospitality industry, announced today that it has completed a series of improvers Transactions that include: Extension of the waiver period for the Company's financial covenant tests $ 500 million undrawn revolving credit facility; $ 185 million of financed term credit facilities and $ 205 million outstanding unsecured debt facilities; Coping with the remaining short-term terms; Providing a solution with the dedicated servicer for the Hilton Times Square secured mortgage loan; and reducing the company's monthly cash usage.
John ArabiaThe President and CEO stated, "We are pleased to announce the second amendment to our unsecured debt arrangements that will extend the contract term through the first quarter of 2022. This will provide more flexibility and provide the company with the short-term contract relief it needs." and the ability to invest in any acquisition opportunities that arise. We appreciate the overwhelming support of our longstanding relationships with lenders and non-holders, especially given the challenging environment. We also continued to strengthen our balance sheet and address our remaining short-term issues with maturities by reaching an agreement with the lender in Hilton Times Square and repaying the Renaissance Washington DC-backed mortgage that we expect to close by the end of the year. "
Credit Facility, Term Loans, and Covenant Waiver Extension for Senior Unsecured Notes
The company has successfully completed the second amendment to its existing unsecured credit facility arrangements. The changed unsecured credit facilities extend the covenant waiver period June 30, 2021 to March 31, 2022. In addition, the changes extend the change in the required quarterly tested financial covenants to simplify compliance for four quarters after the covenant waiver period has expired. The company must meet certain minimum liquidity thresholds until it is able to meet its financial covenants before the change. The second change allowed the company to use the net proceeds from the previously completed sale of Renaissance Los Angeles Airport to repay the Renaissance Washington DC-backed mortgage loan. The repayment of the loan is roughly eliminated $ 9.7 million annual debt servicing and will leave the company with only three mortgages left. After the loan is prepaid, the Renaissance Washington DC is added as a guarantor for the unsecured debt facility. All other financial covenants remain essentially the same as the previous change. The company has not drawn any amounts on theirs $ 500 million revolving credit facility.
Hilton Times Square resolution
The company has successfully entered into an agreement with the owner of the Hilton Times Square-backed mortgage loan. In exchange for a $ 20 million Payment, the credit of approx. $ 3 million Due to the limited cash held by the Shareholder, the assignment of the Company's interest in the hotel, and the retention of certain potential employee-related obligations, the Company has met all outstanding debt obligations, including regular and default interest or late fees that may be assessed. In addition, the company expects an approximate depreciation $ 22 million of various accrued costs related to the rental charge on the property, including, but not limited to, accrued taxes, payments in lieu of taxes, accrued base rents, and accrued relief payments. The company expects to remove from its balance sheet the net assets and liabilities associated with the hotel for the period just ended December 31, 2020, however, may retain certain contingent liabilities until these items are resolved.
About Sunstone Hotel Investors, Inc.
Sunstone Hotel Investors, Inc. is a real estate investment trust ("REIT") that has interests in 17 hotels with 9,017 rooms at the time of this writing. Sunstone's business is to acquire, own, manage, renovate or reposition hotels that are considered Real Estate® in the long term. Most of these operate under nationally recognized brands such as Marriott, Hilton and Hyatt. For more information, please visit Sunstone's website at www.sunstonehotels.com.
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by the use of words and expressions such as "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "may", "plan", " "predict", "project", "should", "will" and other similar terms and expressions, including opinions, references to assumptions and projections of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from those anticipated at the time the forward-looking statements are made, including but not limited to: the impact of the global COVID-19 pandemic on the Company's business and the Government and corporate response to the outbreak; including increased risks related to employee matters Increased labor law disputes and claims to severance pay or other benefits in connection with termination or vacation due to temporary hotel suspensions or reduced hotel operations due to COVID-19; the impact of any existing default or potential default by us on our debt or lease agreements on our business; General economic and business conditions, including a U.S. recession, trade disputes and tariffs between the U.S. and its trading partners, changes in the European Union, or a global economic slowdown that may lessen the desire for vacation travel or the need for business travel than any type of flu or disease-related pandemic or the adverse effects of climate change affecting the accommodation and travel industries at international, national and local levels; the company's need to act as a REIT and comply with other applicable laws and regulations, including new laws, interpretations, or court decisions that may change the federal or state tax law or the federal or state income tax consequences of qualifying the company as a REIT; Rising hotel operating costs due to labor costs, employee compensation and health care-related costs, including the impact of the Patient Protection and Affordable Care Act or its possible replacement, ancillary costs, insurance and unexpected costs such as natural events and their consequences and other factors that may not be increased by higher Room rates are offset; Relationships with, and the requirements and reputation of, the company's franchisors and hotel brands; Relationships with the managers of the company's hotels, as well as their requirements, performance and reputation; the land, building or air space leases for three of the 17 hotels in which the company is involved at the time of this publication; Competition for hotel acquisitions and the company's ability to make acquisitions and divestments; Performance of hotels after their acquisition; new hotel offerings or alternative accommodation options such as timeshare, vacation rentals or sharing services such as Airbnb in the company's markets, which could affect occupancy and income in the hotels; Competition from hotels that are not owned by the company; the need for renovations, repositioning and other investments for the company's hotels; the impact of renovations and repositioning on hotel operations, including any delays; Changes in the company's business strategy or acquisition or disposal plans; the company's debt, including secured, unsecured, fixed rate and floating rate debt; financial and other obligations relating to the debt and preferred stock of the company; The company's hotels may be affected, or the previously affected hotels may continue to be affected in the future, which could adversely affect the company's financial position and results of operations. Volatility in the capital markets and the impact on the demand for deposit or the ability of the company to obtain capital on favorable terms or at all; potential adverse tax consequences in the event that the Company's operating leases with its taxable REIT subsidiaries were not concluded on market terms; System security risks, data breaches, cyber attacks, including those affecting the company's hotel managers or other third parties, and system integration issues; other events beyond the control of the company, including natural disasters, terrorist attacks, or civil unrest; and other risks and uncertainties relating to our business described in the company's filings with the Securities and Exchange Commission. Although the company believes that the expectations contained in such forward-looking statements are based on reasonable assumptions, there can be no guarantee that the expectations will be met or that differences will not be material. All forward-looking information provided herein is as of the date of this release and the company assumes no obligation to update forward-looking statements to reflect actual results or changes in company expectations.
This press release should be read in conjunction with the consolidated financial statements and related notes 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 collection and retrieval system ("EDGAR") at www.sec.gov.
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