Shares of San Clemente-based Sunstone Hotel Investors Inc. slumped Thursday, a day after the hotel owner announced plans to sell about $100 million worth of shares to pay off credit lines and to fund a debt buyback.
Sunstone, which owns all or part of 43 hotels, said it plans to sell up to 20.7 million shares of its stock.
The company? shares closed down 9% Thursday on a market value of $290 million as investors fretted about the offering diluting their stakes in the real estate investment trust.
Sunstone said it could use the proceeds of the stock sale to pay back money drawn on a line of credit or put it toward the company? recent buyback of $123.5 million worth of debt due in 2027.
The moves are designed to help Sunstone weather a downturn for hotel operators. The company? shares are down about 70% last year as it struggles with declining revenue and profits as occupancy at its hotels weakens.
Earlier this week, the company sold a Marriott hotel in Napa for $36 million.
Sunstone estimated the hotel would have required about $6 million in renovations to comply with Marriott standards this year.
Proceeds are expected to go toward Sunstone? debt buyback.
Sunstone has $1.7 billion in long-term debt with none of it due in the near term. The company had $174 million in cash at the end of March.
