Sunstone Hotel Investors has entered into a new equity distribution agreement that allows the hotel real estate investment trust to offer and sell up to USD 300 million of its common stock through a group of sales agents. The arrangement was disclosed in a regulatory filing and replaces the company’s previous at-the-market equity programme. 
The new agreement allows Sunstone to sell shares from time to time through the participating sales agents, either as an at-the-market offering or through negotiated transactions. The company can also sell shares directly to the sales agents acting as principals. The offering can continue until the entire USD 300 million has been sold or the agreement is terminated. 
The sales agents named in the agreement include BofA Securities, BTIG, Cantor Fitzgerald, Capital One Securities, Huntington Securities, Jefferies, J.P. Morgan, M&T Securities, Regions Securities, Truist Securities and Wells Fargo Securities. The arrangement also allows Sunstone to enter into separate forward sale agreements with certain financial institutions. 
Under the forward sale structure, shares may be borrowed and sold in the market by the relevant forward sellers to hedge the exposure of the forward purchasers. Sunstone would generally receive the proceeds when the forward sales are settled, although the company has the option, subject to the terms of the agreements, to settle certain forward transactions in cash or shares. 
The company has said that the sales agents can receive compensation of up to 2% of the gross sales price of shares sold under the agreement. For forward transactions, the applicable forward sellers can also receive a commission of up to 2%, structured as a reduction in the initial forward price. Sunstone estimates that expenses related to the offering, excluding sales agent compensation, will be about USD 250,000. 
The new programme also replaces Sunstone’s earlier at-the-market programme. When the previous programme was terminated, common stock with an aggregate gross sales value of up to USD 300 million remained unsold. 
Sunstone’s common stock trades on the New York Stock Exchange under the ticker SHO. The prospectus filing noted that the stock had a reported closing price of USD 11.08 per share at the end of the previous trading week. 
The company currently owns 13 hotels comprising 6,178 rooms. Sunstone operates as a lodging REIT focused on the ownership, acquisition and disposition of hotel and resort properties. 
The new equity programme comes as Sunstone continues to manage its capital spending, property sales and share repurchases. The company invested USD 53.4 million in its portfolio during the first half of 2026 and expects full-year capital investments of about USD 105 million to USD 115 million. The revised investment range includes additional spending related to repair and restoration work at Wailea Beach Resort following severe weather damage in Hawaii. Sunstone expects insurance programmes to reimburse most of those additional costs. 
The company also completed the previously announced USD 279 million sale of Hyatt Regency San Francisco. A portion of the proceeds was used to repay USD 25 million outstanding on its revolving credit facility. Following the transaction and debt repayment, Sunstone had approximately USD 430 million in cash and cash equivalents, including restricted cash, while total debt stood at about USD 955 million. 
At the same time, Sunstone has continued its stock repurchase programme. Through the first part of August, the company had allocated USD 70.1 million, before expenses, towards repurchasing common and preferred stock during the year. Its remaining authorised repurchase capacity stood at USD 437.4 million. 
The company had also raised its full-year 2026 outlook following its second-quarter performance. It currently expects net income of USD 79 million to USD 89 million, adjusted EBITDAre of USD 245 million to USD 255 million and adjusted funds from operations attributable to common stockholders of USD 174 million to USD 184 million. Full-year RevPAR and total RevPAR growth are expected to be between 7% and 9%. 
The equity distribution agreement gives Sunstone another route to raise capital as required, while allowing it to determine the timing and amount of shares sold. However, any issuance of additional common stock could increase the number of shares outstanding and may affect earnings per share, return on equity and dividends per share, as noted in the offering documents. 
Source Reuters