Sunstone Hotel Investors, Inc.

I would like to remind everyone that this call contains forward-looking statements that are subject to risks and uncertainties, including those described in our filings with the SEC, which could cause actual results to differ materially from those projected. We caution you to consider these factors in evaluating our forward-looking statements. We also note that the commentary on this call will contain non-GAAP financial information, including adjusted EBITDA RE, adjusted FFO, and hotel adjusted EVA.RE. We are providing this information as a supplement to information prepared in accordance with generally accepted accounting principles. Additional details on our quarterly results have been provided in our earnings release and supplemental, which are available in the investor relations section of our website. With us on the call today are Brian Julia, Chief Executive Officer, and Robert Springer, President and Chief Investment Officer. Brian will start us off by providing some commentary on recent developments in our first quarter operations. Afterward, Robert will discuss our capital investment activity. And finally, I will review our first quarter earnings results and provide the details of our updated outlook for 2025. After our remarks, the team will be available to answer your questions. With that, I would like to turn the call over to Brian. Please go ahead.

Thank you, Aaron, and good morning everyone. It was an eventful quarter that began with stronger than expected performance in January and February, driven by the Super Bowl in New Orleans and the inauguration in DC, and then was partially offset by a pullback in government and leisure demand in select markets in March as the macroeconomic outlook became more mixed. Our first quarter EBITDA and FFO came in just above our expectations as better out-of-room spend, solid cost controls by our operators, and savings at the corporate office offset softer room revenue growth. I'll provide some additional details on our first quarter operations shortly But first, I am happy to announce the next chapter of the Sunstone growth story with the debut of the Andaz Miami Beach, which began welcoming guests on May 3rd. While the road to opening was met with numerous permitting and approval delays, the doors are now open and guests can experience an exceptional Miami Beach resort. I was on property last week and the finished product looks great, and is well positioned to deliver on our underwriting and provide earnings growth for the next several years. This is a significant component of our layered approach to growth, which will add to the success we have experienced with the conversions of the Westin DC downtown and the Marriott Long Beach downtown, the acquisition of the Hyatt Regency San Antonio Riverwalk, and the capital we have deployed into the purchase of our common stock. We expect to continue our balanced and nimble approach to capital allocation and to utilize our strong balance sheet and future asset recycling to drive growth in FFO and NAV per share. Now, shifting back to our quarterly results, we were pleased with how the portfolio performed relative to our expectations despite the incremental volatility we began to see later in the quarter. The inauguration drove outsized growth in Washington, D.C., with our recently renovated hotel generating a 24% increase in rev par during the quarter. Additionally, in New Orleans, our two hotels grew rev par by a combined 25% on strong performance from the Super Bowl, even with the cancellation headwinds from a rare snowstorm that hit the area in January and negatively impacted what was slated to be a high demand period in the city. Outside of this event-driven business, we saw sustained strength in group demand and continued growth in business travel. In San Francisco, we generated RevPar growth of 9% As the result of a better citywide calendar and increased levels of commercial activity in the downtown area. Our performance in San Francisco is encouraging as we have meaningful opportunity for additional earnings recovery there as growth in the city has lagged other major markets, but has an increasingly positive outlook for the coming years. After having a great 2024, Trends in Boston remained strong into the first quarter with solid performance at our well-located Marriott Long Wharf. The better than expected performance in most of our urban and convention markets was partially offset by more subdued market-wide transient demand in San Diego. While first quarter results in San Diego were less robust, the outlook for the remainder of the year is more encouraging. with solid growth expected in the second quarter, followed by the recapture of lost business from the labor activity that occurred in the third and fourth quarters of last year. Overall group and business transient demand was strong in the first quarter. Despite some pockets of softness primarily related to government business, good first quarter production and positive group pace across the portfolio would point to stability in these trends for the remainder of the year. On the transient side, we were encouraged by growth in midweek demand. This is an indicator that corporate America continues to travel, a trend that is supported by increased return to office and the greater levels of activity we are seeing in the business districts of our urban markets. Within our resort portfolio, We saw softer than expected performance in Waialea as all inventory comes back online on the west side and the island continues to recover from the fires. Our Waialea Beach Resort's premier location as the closest property to the water on what is arguably the best strip of beachfront land in the country gives us confidence that we will navigate through this short-term choppiness and return to growth in the coming quarters. This period of transition as the Kaanapali sub market reopens will be a long term positive for the island as it will ultimately bring the return of more guests and drive additional airlift into Maui. Our updated outlook assumes that we face a softer demand environment in Waialea for the next couple orders as Kaanapali returns to normalized operating levels. Group production at Waialea for all future periods was up nearly 20% in the first quarter relative to the prior year and gives us reason to be optimistic that sunnier days lay ahead for our resort. As we have shared with you before, investing in our portfolio remains a key component of the Sunstone story. We saw the benefits of this in the first quarter with our recently renovated and converted Marriott Long Beach downtown which posted a solid 145% increase in Rev Park. While we expect to continue to benefit from outsized growth in Long Beach for the coming quarters, we will now also see the contribution from the Ondas Miami Beach in the second half of the year, which will deliver our next layer of growth that will extend into 2026 and beyond. The growth generated from these conversions is not limited to the immediate year following completion. Inauguration aside, we continue to see the Westin DC downtown establish itself as a premier group and business transient hotel, driving incremental cash flow as it approaches its third year following renovation, despite a near term slowdown in government demand. While we were encouraged by many of the trends, we saw in the early months of the year operating fundamentals moderated as the quarter progressed, driven primarily by increasing macroeconomic uncertainty and declining business and consumer confidence. While this has led to lowered expectations in a few markets for the middle part of the year, we are seeing more stable trends in other areas and steady booking volumes across most of the portfolio for the latter part of the year. Given the increased volatility, the uncertainty regarding economic policy changes, and the greater variability in the range of possible economic outcomes for the year, our forward visibility has become more limited. As a result of these factors, we are adjusting our full year outlook to better align with current trends. The updated outlook that Aaron will discuss shortly is based on information available to us today, but is subject to change, both negatively or positively, based on how future macroeconomic developments impact lodging demand. Our current outlook reflects the revised opening date for the ONDAWS, and assumes continued weakness in government-related business, no meaningful change to the imbalance of international travel, and a more subdued demand environment in Waialea for the coming quarters before resuming growth later this year. Given the lack of visibility and overall economic volatility, we are extrapolating these trends forward, which could prove to be a conservative approach if the environment stabilizes sooner than expected. That said, our capital recycling and investment efforts are still delivering sector leading growth. This is a direct result of our layered approach to recycling capital, investing in our portfolio and returning capital to our shareholders. As you saw in our earnings released this morning, we repurchased $21 million of stock at a blended repurchase price of $8.90 per share. Repurchasing our shares at these levels equates to a highly compelling multiple on our earnings and results in significant value creation. Given our strong balance sheet and the earnings contribution we anticipate from our recent investments, we are well positioned to generate incremental shareholder value by opportunistically repurchasing our shares. Given the current discount to NAV, we will look to recycle additional capital into share repurchase, potentially through additional asset sales. To sum things up, despite a more volatile operating environment than we expected at the start of the year, we continue to execute on our strategic objectives in the first quarter. We are advancing the page in the Sunstone growth story with the opening of the Ondas Miami Beach and the continued growth from our other recent investments in Long Beach and Washington, DC. We will further advance our capital recycling strategy by utilizing our available balance sheet capacity and future asset sales to thoughtfully grow our FFO and NAV per share as we move further into the year. And with that, I'd like to turn the call over to Robert to give some additional thoughts on our capital investments. Robert, please go ahead.

Thanks, Brian. We are very pleased to have the Ondas Miami Beach open and expect the resort will be a fitting addition to Mid-Beach, which is defining itself as the more elevated and sought after destination of Miami Beach. In addition to the amenities that are available today, over the coming months, we will introduce Olazul, a members-only beach club which will operate from a historic home in the resort's backyard. Later, the resort will also debut The Bazaar by Jose Andres, which we expect will further increase the appeal of the property and serve as a dining destination for local residents and guests from nearby hotels. Elsewhere across the portfolio, we have recently completed a rooms renovation and lobby refresh at the Wailea Beach Resort, and are in the process of creating two additional residential-style oceanfront villa units following the positive reception we received from those that came online at the end of last year. In San Antonio, we will begin renovating the meeting space in the third quarter. We expect to move efficiently through this project and be complete by the end of the year. Part of what appealed to us in acquiring this hotel is the opportunity to reprogram the lower lobby level to take advantage of the new development activity happening next door at the Alamo Visitor Center and Museum. We are still in the planning stages of this effort, but look forward to updating you as we progress. In San Diego, we are in the final planning stages for a renovation of the meeting space at our Hilton Bayfront and expect to be in a position to begin work late in the year. We will complete the meeting space update in phases, resulting in minimal disruption which is included in our outlook. Corporate meetings are the core business of this very productive hotel, and by upgrading the space, we will enhance its ability to attract the best groups in the market. As we shared with you last quarter, we expect our capital investment activities for this year will be in the range of $80 to $100 million. While there is still too much uncertainty to accurately assess the impact of the recent tariff announcements on our future capital projects, The largest components of our spend for this year relate to projects that were already underway at the start of the year and for which materials had largely been procured. While this certainly does not mean we are not at risk for cost inflation in certain areas, based on what we know today, we expect to be able to complete our planned activities for this year within our prior estimated range. Now turning to the transaction market. As we moved into 2025, we had higher hopes that the setup for the year would support a more robust transaction market. However, the uncertainty that has permeated the environment since that time makes finding and getting deals done much more challenging. As Brian noted, recycling capital is a primary component of our strategy, and so, despite the recent volatility, we continue to seek out opportunities to drive growth and create value through a creative transaction activity. We hope to have more to share with you on this front as the year progresses. With that, I'll turn it over to Aaron. Please go ahead.