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Friday, Feb 23, 2024

Sunstone Hands Back Second Hotel, Stops Paying on Another

San Clemente-based Sunstone Hotel Investors Inc. has turned over to lenders its second hotel since June after it couldn’t come to terms on reworking a mortgage.

Sunstone forfeited its Marriott Ontario Airport, a 299-room hotel across the street from LA-Ontario International Airport.

In June, Sunstone said it planned to turn over the W Hotel in San Diego to lenders, saying it may not be the company’s last forfeiture.

Sunstone’s shares closed down 3% Thursday on a market value of about $550 million.

Chief Financial Officer Ken Cruse said on a conference call Wednesday the company ended unsuccessful talks to rework a $26 million loan on the Marriott Ontario Airport.

Sunstone said it also has stopped making payments on a mortgage for the Renaissance Westchester Hotel in White Plains, N.Y., and is in talks with lenders about reworking the loan.

It said it reached a deal for new terms on a $105.4 million mortgage on the Renaissance Baltimore Harborplace Hotel. The deal allows Sunstone to pay interest only for up to 30 months.

Sunstone acquired the Marriott Ontario Airport in 2003 for $25.7 million.

Amid the worst hotel downturn in recent memory, the company had marked the hotel’s value down to $16.7 million, or 35% less than what it paid for it.

As with the W Hotel in San Diego, Sunstone decided not to continue paying on a mortgage that’s substantially more than what the hotel is worth.

Sunstone owns all or part of some 39 hotels. The company’s slump continues, it told investors and analysts Wednesday.

August revenue per available room, a performance measure covering occupancy and room rates, was down 21% from a year earlier to $105.65.

The company said it is seeing some uptick in hard-hit business travel, with better bookings at its 807-room Renaissance Washington DC Hotel and 781-room Renaissance Orlando Hotel-Airport.

But Chief Executive Art Buser said he doesn’t expect the industry’s slump to bottom this year.

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