Hotel owner Sunstone Hotel Investors Inc. of San Clemente has sold off its management arm as part of its conversion to a real estate investment trust.
The company sold its Sunstone Hotel Properties Inc. to Arlington, Va.-based Interstate Hotels & Resorts Inc., which bills itself as the nation’s largest independent hotel manager.
The move was part of a required restructuring for Sunstone’s REIT conversion. Publicly traded REITs have to hire third-party operators to manage their holdings.
Sunstone went public last month, raising $360 million.
Interstate Hotels takes over management of Sunstone’s 54 hotels in 16 states. The pact was detailed in August in a filing with the Securities and Exchange Commission. Sunstone said it expected to get $8 million in cash for the unit.
Under the agreement, Sunstone’s senior operating team now reports to Interstate Hotels, but will remain in their existing offices. Interstate Hotels is entering into a long-term management contract for the hotels, which Sunstone still owns.
While Sunstone had to sell the unit, the move could afford the company some operational efficiencies by outsourcing management duties for its hotels.
Locally, Interstate Hotels owns and operates the 289-room Hilton Irvine/Orange County Airport. In all, the company manages more than 300 properties with 70,000 rooms in 40 states.
Sunstone, which owns the Hyatt Regency Newport Beach, formerly the Hyatt Newporter, is completing a major overhaul of that property. (See story, page 6.)
,Sandi Cain
