San Clemente-based Sunstone Hotel Investors Inc. said Friday it is seeing some recovery at its hotels in an early glimpse at its first-quarter results.
The company projected first-quarter funds from operations—a measure of profitability for hotel and other real estate owners—to be ahead of Wall Street expectations.
Sunstone said it could see $3.9 million in funds from operations, topping the $1.9 million expected on average by analysts.
The company is set to report final first-quarter results on May 10.
Profits are being helped by a rise in revenue per available room, or sales from rooms available to guests, which rose 3% in March, according to the company.
“The indications that a cyclical recovery is taking shape increased during the first quarter, especially in leading indicator markets such as New York and Boston,” Chief Executive Art Buser said.
Even so, the company said first-quarter revenue per available room is expected to be $94.68, down 6.5% from a year earlier.
The company owns all or part of about 30 hotels after handing back several in the past year or so to lenders.
Sunstone said Friday it is paying $83 million to keep three hotels that were financed by Springfield, Mass.-based Massachusetts Mutual Life Insurance Co.
The company last year stopped making payments on debt covering the three hotels and eight others backed by Massachusetts Life.
The move frees the three hotels from the loan pool, Sunstone said. It plans to give back the remaining eight to the lender, it said.
In October, Sunstone sold $170 million worth of stock, which generated $159 million for the company after expenses. It said it planned to use the proceeds for acquisitions.
