Sunstone board OKs repurchase of preferreds, exchangeables, declares dividends on preferreds

By Jennifer Chiou

New York, Dec. 11 - Sunstone Hotel Investors, Inc. said that its board authorized the repurchase of up to $200 million of its series A and series C preferred stock, Sunshine Hotel Partnership, LLC's exchangeable notes as well as Sunstone's common stock.

The board also approved the repayment of secured debt.

The company added that it intends to fund any repurchases or repayments with proceeds from the sale of non-core hotels and/or proceeds from new long-term mortgage debt.

Other than on a temporary basis, Sunstone said it does not intend to use its existing cash to fund any repurchases or repayments.

Transactions will be made through the open market or in privately negotiated transactions from time to time.

Sunstone added that the repurchase and repayment program will expire on Dec. 31, 2009, noting that this replaces the company's prior repurchase program, under which it purchased about $183 million of common stock.

"While retaining significant liquidity during these uncertain economic times remains our principal focus, selectively repurchasing our securities at a discount to face value using capital sourced through non-core asset sales or new secured debt would be consistent with our cycle-driven strategy," Ken Cruse, chief financial officer, said in a news release.

"We believe any such repurchases of our capital at current pricing levels would create significant value for our stockholders without diminishing the company's strong liquidity position."

The company also declared a dividend of $0.50 per share payable to its series A cumulative redeemable preferred stockholders and a dividend of $0.393 per share payable to its series C cumulative redeemable preferred stockholders.

The dividend will be paid on Jan. 15.

Based in San Clemente, Calif., Sunstone is a lodging real estate investment trust that has interests in 44 hotels.

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