San Clemente-based hotel owner Sunstone Hotel Investors Inc. reported first-quarter revenue that fell short of Wall Street expectations but surpassed them on a measure of profitability as it cut costs to deal with the ongoing hotel downturn.
The company reported revenue of $188.6 million, down 15% from a year earlier and below the $192.2 million analysts were looking for on average.
Sunstone’s revenue per available room, or sales from rooms available to guests during the quarter, fell 16% to $96.18.
Funds from operations, a measure of cash flow for hotel operators that analysts track as a measure of profitability, was $7.8 million, down nearly 70% from a year earlier but ahead of the $7.3 million analysts were looking for.
“Despite one of the most challenging economic environments in recent history, we are pleased with our ability to control costs,” Chief Executive Art Buser said.
Sunstone’s shares were flat in afterhours trading on a market value of $360 million.
During regular trading they closed down 12% with a larger downturn on Wall Street and after a runup that saw the stock more than double since early April.
The stock is off about 65% in the past 12 months.
Sunstone declined to provide an outlook for the current quarter but said it plans to periodically update investors, like it did recently when it offered investors an update on the first quarter.
Also on Thursday, the company said it reached an agreement with two lenders to rework a $200 million line of credit.
The credit line is being converted to an $85 million debt backed by mortgages on five hotels and has a higher interest rate.
Sunstone also is in the process of buying back debt that matures in 2027 and acquired $64 million worth in the first quarter.
The company upped the amount it’s paying buy back debt from $600 to $700 per $1,000 principal amount and also boosted a cash payment to debt holders.
Its current offer to buy back debt was extended to May 19.
Sunstone had $1.6 billion in total debt at the end of the quarter and $173.9 million in cash.
