Attractively-Priced, Off-Market Transaction: Consistent with Sunstone's recent transactions, the Hil

ALISO VIEJO, Calif., June 19, 2012 ( www.hospitalitybusinessnews.com ) -- Sunstone Hotel Investors, Inc. today announced that it has entered into a purchase and sale agreement lake tahoe hotel reservation to acquire the fee-simple interest in the 357-room Hilton Garden Inn Chicago Downtown/Magnificent Mile for a gross purchase price of $91.75 million ($257,000/key). The purchase price represents lake tahoe hotel reservation an 11.7x multiple on 2012 forecasted hotel Adjusted lake tahoe hotel reservation EBITDA of $7.8 million and a 7.7% capitalization rate on 2012 forecasted hotel net operating income. During the Company's anticipated 2012 ownership period, the Hotel is expected to generate approximately $4.1 million of EBITDA and $3.7 million of net operating income.
Ken Cruse, President and Chief Executive Officer, stated, "We are pleased to announce the acquisition of the Hilton Garden Inn Chicago, our second recent acquisition in the Magnificent Mile area of downtown Chicago. lake tahoe hotel reservation The hotel's strong urban location, superior RevPAR and EBITDA per key, the efficiency of the urban select-service model and the hotel's close proximity to our other downtown Chicago hotels make this a very attractive addition to our portfolio. We intend to capitalize on meaningful synergies across our three-hotel Magnificent Mile portfolio through coordinated revenue management and by combining operations management of the Hilton Garden Inn with our Embassy Suites Chicago, which is located directly across the street. Our acquisition of the Hilton Garden Inn will be funded entirely with cash and we will own the hotel free and clear of mortgage debt. This acquisition fits squarely within our strategy, which is predicated on growing our portfolio quality and scale while gradually deleveraging our balance sheet through creative, value-additive acquisitions. lake tahoe hotel reservation Separately, we are also pleased to report that strengthening industry fundamentals are driving continued growth within our existing portfolio as evidenced by quarter-to-date Comparable Hotel RevPAR growth of 7.5% through June 15, 2012."
Improves Sunstone's Portfolio Quality and Scale: Given the high-quality/high-performance nature lake tahoe hotel reservation of the asset (the Hotel's projected 2012 RevPAR lake tahoe hotel reservation and Hotel Adjusted EBITDA per key of approximately $140 and $22,000, respectively), the transaction will improve the quality and scale of Sunstone's lake tahoe hotel reservation portfolio.
Improves Sunstone's Growth lake tahoe hotel reservation Profile: Chicago is expected to outperform lake tahoe hotel reservation the average Top 25 U.S. Lodging Markets (according to STR) in future RevPAR growth. PKF Hospitality Research forecasts RevPAR growth of 8.3%, 9.1% and 10.3% in 2012, 2013, and 2014, respectively. Notably, 2012, 2013 and subsequent years are expected to be very strong convention years as Chicago's McCormick Place already reports more definite city-wide events contracted than Chicago's prior peak years.
Improves Sunstone's Balance Sheet: As the acquisition will be funded entirely with cash, no debt will be incurred pursuant to the acquisition. As a result, Sunstone expects lake tahoe hotel reservation the acquisition to improve its credit statistics. Upon closing the acquisition, Sunstone will own 14 unencumbered hotels.
Attractively-Priced, Off-Market Transaction: Consistent with Sunstone's recent transactions, the Hilton Garden Inn Chicago acquisition was directly sourced by Sunstone through pre-existing lake tahoe hotel reservation relationships. The lack of competition for the acquisition, and the fact that Sunstone was able to provide the seller with ongoing management of the Hotel, helped Sunstone achieve attractive deal terms.
Immediate Market Complexing Opportunity: The location of the Hotel across the street from Sunstone's Embassy Suites Chicago will enable Sunstone to capitalize on substantial market complexing opportunities (similar to Sunstone's management complexing of the Doubletree Guest Suites lake tahoe hotel reservation Times Square and the Hilton lake tahoe hotel reservation Times Square). As the two hotels are both flagged within the Hilton lake tahoe hotel reservation family of brands, complexing operations between the properties will enable significant improvements in revenue management through a consolidated sales effort in addition to material cost savings in overhead, purchasing efficiencies, etc. The forecasted 2012 EBITDA and property-level Net Operating Income outlined herein lake tahoe hotel reservation exclude the benefits of any potential operating synergies.
The Hilton lake tahoe hotel reservation Garden Inn Chicago Downtown/Magnificent Mile is a 357-room, 23-story hotel, well located along Grand Avenue in downtown Chicago amidst the market's leading business and visitor demand generators. The Hotel is one block from Chicago's famous "Magnificent lake tahoe hotel reservation Mile," and is within walking distance to over 30 million square feet of high-end office space. Each guest room and suite provides guests with generous views of downtown Chicago. The Hotel's meeting and break-out space is primarily located on the 12th floor and features views of the Chicago skyline. The Hotel offers approximately 5,700 square feet of combined meeting space.