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Sunstone Hotel Investors sells Hyatt Regency Century Plaza, begins Dutch auction tender offer
By Lisa Kerner
Charlotte, N.C., June 2 - Sunstone Hotel Investors, Inc. said it began a modified Dutch auction tender offer to purchase up to 6.2 million shares, or approximately 11%, of its common stock at a price not less than $18.65 and not greater than $21.15 per share.
The offer is expected to end at midnight ET on June 27, unless extended, a company news release stated.
Sunstone Hotel Investors (NYSE: SHO) stock closed at $19.25 on May 30.
The offer is also an offer to purchase the series C convertible redeemable preferred stock held by one investor and convertible at the rate of one share of common stock for each share of series C preferred, Sunstone Hotel Investors said.
"We feel that we have enhanced our balance sheet and improved our liquidity position through the sale of the Hyatt Regency Century Plaza, and through this offer, we intend to use a portion of the sale proceeds to repurchase shares at what we believe to be a meaningful discount to warranted value," chief financial officer Ken Cruse stated in the release.
Sunstone Hotel Investors sold is 726-room Hyatt Regency Century Plaza to Los Angeles real estate investor Next Century Associates, LLC for gross cash proceeds of some $366.5 million, or about $505,000 per room, and approximately 18.6 times the hotel's 2007 EBITDA, excluding guaranty payments, it was announced on Monday.
The Hyatt Regency was acquired by Sunstone Hotel Investors in October 2005 for about $400,000 per room, executive chairman Bob Alter said in a separate company news release.
J.P. Morgan Securities Inc. is the dealer manager for the tender offer, and D.F. King & Co., Inc. is the information agent. The depositary is American Stock Transfer & Trust Co.
Sunstone Hotel Investors is a lodging real estate investment trust based in San Clemente, Calif.
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