Sunstone Hotel Investors, Inc.

First-quarter adjusted EBITDAre was $68 million, up 18% year over year, and adjusted FFO per diluted share was $0.27, up nearly 29%. RevPAR increased 14.6% in the quarter, including an 890 basis point benefit from Andaz Miami Beach; total RevPAR rose 13.4%, including an 810 basis point benefit from Andaz. Excluding Andaz, RevPAR grew 5.7%, and comparable portfolio margins expanded by 140 basis points. Management raised full-year 2026 guidance and now expects rooms RevPAR of $236 to $242, total RevPAR of $390 to $400, adjusted EBITDAre of $238 million to $252 million, and FFO per diluted share of $0.88 to $0.96. The company also expects the first quarter to be the strongest margin growth quarter of the year, while still seeing expenses rise 3.25% to 3.5% for the full year.

Bryan Giglia said the quarter was ahead of expectations despite weather-related headwinds, and described demand as broad-based with strong group and better-than-expected transient performance. He emphasized that Andaz Miami Beach, Maui, and San Francisco still have substantial runway, and framed the company’s strategy around capital recycling, selective acquisitions, and buybacks when pricing is attractive. His tone was constructive but measured: he repeatedly noted that the team remains cautious because of broader uncertainty, fuel prices, and other external volatility.

Aaron Reyes highlighted the quarter’s financial outperformance, citing $68 million of adjusted EBITDAre, 18% year-over-year growth, and $0.27 of adjusted FFO per diluted share, nearly 29% higher than last year. He also pointed to a strong balance sheet with no debt maturities before 2028 and net leverage of 3.5x trailing earnings, or 4.6x including preferred equity. Capital allocation remained active, with over $19 million of traded preferred stock repurchased since December at a 21% discount, plus $35 million of common stock and over $14 million of preferred stock repurchased since the start of the year; the updated outlook does not assume further buybacks.

Analysts focused on the remaining growth drivers beyond 2026, transaction-market activity, acquisition criteria, group pacing, and the potential upside from the World Cup. Management said Andaz is still a multiyear story, Maui is recovering, San Francisco and wine country have further upside, and the transaction market is getting healthier with more luxury assets and, later, upper-upscale assets coming to market. On World Cup demand, management was deliberately cautious: some business is on the books, but it is too early to underwrite a meaningful benefit, and any upside would show up as additional compression rather than something embedded in guidance.