EX-99.2 3 sho-20220803xex99d2.htm EX-99.2

Exhibit 99.2

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Supplemental Financial Information

For the quarter ended June 30, 2022

August 3, 2022

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Supplemental Financial Information
August 3, 2022

CORPORATE PROFILE AND DISCLOSURES
REGARDING NON-GAAP FINANCIAL MEASURES

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

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Supplemental Financial Information
August 3, 2022

About Sunstone

Sunstone Hotel Investors, Inc. (the “Company,” “we,” and “our”) (NYSE: SHO) is a lodging real estate investment trust (“REIT”) that as of August 3, 2022 owns 15 hotels comprised of 7,735 rooms, the majority of which are operated under nationally recognized brands. Sunstone’s strategy is to create long-term stakeholder value through the acquisition, active ownership and disposition of hotels considered to be Long-Term Relevant Real Estate®.

This presentation contains unaudited information, and should be read together with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies of these reports are available on our website at www.sunstonehotels.com and through the SEC’s Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) at www.sec.gov.

Corporate Headquarters
200 Spectrum Center Drive, 21st Floor
Irvine, CA 92618
(949) 330-4000

Company Contacts
Bryan Giglia
Chief Executive Officer
(949) 382-3036

Aaron Reyes
Chief Financial Officer
(949) 382-3018

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

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Supplemental Financial Information
August 3, 2022

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: earnings before interest expense, taxes, depreciation and amortization for real estate, or EBITDAre; Adjusted EBITDAre, excluding noncontrolling interest (as defined below); funds from operations attributable to common stockholders, or FFO attributable to common stockholders; Adjusted FFO attributable to common stockholders (as defined below); hotel Adjusted EBITDAre; and hotel Adjusted EBITDAre margins. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same as the Company. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

We present EBITDAre in accordance with guidelines established by the National Association of Real Estate Investment Trusts (“NAREIT”), as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” We believe EBITDAre is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates.

We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance, and that the presentation of Adjusted EBITDAre, excluding noncontrolling interest, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance. In addition, we use both EBITDAre and Adjusted EBITDAre, excluding noncontrolling interest as measures in determining the value of hotel acquisitions and dispositions.

We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to NAREIT’s definition of “FFO applicable to common shares.” Our presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently that we do.

We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance, and may facilitate comparisons of operating performance between periods and our peer companies.

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

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Supplemental Financial Information
August 3, 2022

We adjust EBITDAre and FFO attributable to common stockholders for the following items, which may occur in any period, and refer to these measures as either Adjusted EBITDAre, excluding noncontrolling interest or Adjusted FFO attributable to common stockholders:

Amortization of deferred stock compensation: we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels.
Amortization of contract intangibles: we exclude the noncash amortization of any favorable or unfavorable contract intangibles recorded in conjunction with our hotel acquisitions. We exclude the noncash amortization of contract intangibles because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.
Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.
Acquisition costs: under GAAP, costs associated with acquisitions that meet the definition of a business are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company or our hotels.
Cumulative effect of a change in accounting principle: from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.
Other adjustments: we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: lawsuit settlement costs; prior year property tax assessments or credits; the write-off of development costs associated with abandoned projects; property-level restructuring, severance and management transition costs; debt resolution costs; lease terminations; property insurance proceeds or uninsured losses; and other nonrecurring identified adjustments.

In addition, to derive Adjusted EBITDAre, excluding noncontrolling interest we exclude the noncontrolling partner’s pro rata share of the net (income) loss allocated to the Hilton San Diego Bayfront partnership, as well as the noncontrolling partner’s pro rata share of any EBITDAre and Adjusted EBITDAre components (prior to our acquisition of the noncontrolling partner’s equity interest in the partnership in June 2022). We also exclude the amortization of our right-of-use assets and related lease obligations as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. Additionally, we include an adjustment for the cash finance lease expense recorded on the building lease at the Hyatt Centric Chicago Magnificent Mile (prior to the hotel’s sale in February 2022). We determined that the building lease is a finance lease, and, therefore, we include a portion of the lease payment each month in interest expense. We adjust EBITDAre for the finance lease in order to more accurately reflect the actual rent due to the hotel’s lessor in the current period, as well as the operating performance of the hotel. We also exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDAre, excluding noncontrolling interest is not consistent with reflecting the ongoing performance of our assets.

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

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Supplemental Financial Information
August 3, 2022

To derive Adjusted FFO attributable to common stockholders, we also exclude the noncash interest on our derivatives and finance lease obligation as we believe that these items are not reflective of our ongoing finance costs. Additionally, we exclude the noncontrolling partner’s pro rata share of any FFO adjustments related to our consolidated Hilton San Diego Bayfront partnership components (prior to our acquisition of the noncontrolling partner’s equity interest in the partnership in June 2022). We also exclude the real estate amortization of our right-of-use assets and related lease obligations, which includes the amortization of both our finance and operating lease intangibles (with the exception of our corporate operating lease), as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels. In addition, we exclude preferred stock redemption charges, changes to deferred tax assets, liabilities or valuation allowances, and income tax benefits or provisions associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets other than real estate investments.

In presenting hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins, miscellaneous non-hotel items have been excluded. We believe the calculation of hotel Adjusted EBITDAre results in a more accurate presentation of the hotel Adjusted EBITDAre margins for our hotels, and that these non-GAAP financial measures are useful to investors in evaluating our property-level operating performance.

Reconciliations of net income (loss) to EBITDAre, Adjusted EBITDAre, excluding noncontrolling interest, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders, hotel Adjusted EBITDAre and hotel Adjusted EBITDAre margins are set forth in the following pages of this supplemental package. Beginning with the quarter ended March 31, 2022, the Company’s calculation of Adjusted FFO attributable to common stockholders excludes the noncash amortization expense associated with deferred stock compensation. Adjusted FFO attributable to common stockholders for the prior periods presented in this supplemental package have also been adjusted to exclude this expense.

The Total Portfolio consists of all 15 hotels owned by the Company as of June 30, 2022. The Total Portfolio includes both prior ownership results and the Company’s ownership results for The Confidante Miami Beach, acquired by the Company in June 2022. The Company obtained prior ownership information from the hotel’s previous owner during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition. Total Portfolio operating statistics for the second quarter and first six months of 2021 include both prior ownership results and the Company’s ownership results for the Montage Healdsburg, acquired in April 2021. The Company obtained prior ownership information from the previous owner of the Montage Healdsburg during the due diligence period before acquiring the hotel. The Company performed a limited review of the information as part of its analysis of the acquisition.

The Comparable Portfolio includes the same 12 hotels owned by the Company during the second quarters and first six months of 2022, 2021 and 2019 plus both prior ownership results and the Company’s ownership results for The Confidante Miami Beach, acquired by the Company in June 2022.

CORPORATE PROFILE AND DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

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Supplemental Financial Information
August 3, 2022

PRO FORMA CORPORATE FINANCIAL INFORMATION

PRO FORMA CORPORATE FINANCIAL INFORMATION

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August 3, 2022

Pro Forma Consolidated Statements of Operations

Q2 2022 – Q3 2021, Trailing 12 Months

Quarter Ended (1)

Trailing 12 Months

(Unaudited and in thousands, except per share data)

June 30,

March 31,

December 31,

September 30,

Ended

2022

    

2022

    

2021

    

2021

    

June 30, 2022 (1)

Revenues

Room

$

167,194

$

115,515

$

109,660

$

105,973

$

498,342

Food and beverage

74,307

42,911

37,133

27,739

182,090

Other operating

18,711

24,360

20,838

20,904

84,813

Total revenues

260,212

182,786

167,631

154,616

765,245

Operating Expenses

Room

38,626

30,425

29,615

28,216

126,882

Food and beverage

48,304

34,233

31,334

25,975

139,846

Other expenses

87,269

75,023

69,235

65,033

296,560

Corporate overhead

8,717

10,714

8,203

15,422

43,056

Depreciation and amortization

31,720

31,711

30,766

30,196

124,393

Impairment losses

1,671

1,014

2,685

Total operating expenses

214,636

182,106

170,824

165,856

733,422

Interest and other income

116

4,380

13

2

4,511

Interest expense

(5,938)

(4,964)

(6,440)

(7,019)

(24,361)

Gain (loss) on extinguishment of debt, net

21

(213)

(292)

61

(423)

Gain (loss) before income taxes

39,775

(117)

(9,912)

(18,196)

11,550

Income tax provision, net

(28)

(136)

(18)

(25)

(207)

Net income (loss)

$

39,747

$

(253)

$

(9,930)

$

(18,221)

$

11,343

Total Portfolio Hotel Adjusted EBITDAre (2)

$

87,308

$

42,687

$

38,050

$

35,766

$

203,811

Pro Forma Adjusted EBITDAre (3)

$

80,031

$

37,103

$

34,287

$

33,090

$

184,511

Pro Forma Adjusted FFO attributable to common stockholders (4)

$

69,051

$

26,183

$

23,074

$

21,876

$

140,184

Pro Forma Adjusted FFO attributable to common stockholders per diluted share (4)

$

0.33

$

0.12

$

0.11

$

0.10

$

0.66

*Footnotes on page 11

PRO FORMA CORPORATE FINANCIAL INFORMATION

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Supplemental Financial Information
August 3, 2022

Pro Forma Consolidated Statements of Operations

Q4 2021 – Q1 2021, FY 2021

Quarter Ended (1)

Year Ended (1)

(Unaudited and in thousands, except per share data)

December 31,

September 30,

June 30,

March 31,

December 31,

2021

    

2021

    

2021

    

2021

    

2021

Revenues

Room

$

109,660

$

105,973

$

82,045

$

36,080

$

333,758

Food and beverage

37,133

27,739

17,020

6,659

88,551

Other operating

20,838

20,904

17,162

11,808

70,712

Total revenues

167,631

154,616

116,227

54,547

493,021

Operating Expenses

Room

29,615

28,216

21,668

11,591

91,090

Food and beverage

31,334

25,975

17,160

7,430

81,899

Other expenses

69,235

65,033

51,374

38,142

223,784

Corporate overhead

8,203

15,422

9,467

7,177

40,269

Depreciation and amortization

30,766

30,196

30,285

28,183

119,430

Impairment losses

1,671

1,014

2,685

Total operating expenses

170,824

165,856

129,954

92,523

559,157

Interest and other income (loss)

13

2

21

(379)

(343)

Interest expense

(6,440)

(7,019)

(7,100)

(6,693)

(27,252)

(Loss) gain on extinguishment of debt, net

(292)

61

88

222

79

Loss before income taxes

(9,912)

(18,196)

(20,718)

(44,826)

(93,652)

Income tax provision, net

(18)

(25)

(23)

(43)

(109)

Net loss

$

(9,930)

$

(18,221)

$

(20,741)

$

(44,869)

$

(93,761)

Total Portfolio Hotel Adjusted EBITDAre (2)

$

38,050

$

35,766

$

21,533

$

(7,911)

$

87,438

Pro Forma Adjusted EBITDAre (3)

$

34,287

$

33,090

$

19,886

$

(8,513)

$

78,750

Pro Forma Adjusted FFO attributable to common stockholders (4)

$

23,074

$

21,876

$

8,366

$

(19,515)

$

33,801

Pro Forma Adjusted FFO attributable to common stockholders per diluted share (4)

$

0.11

$

0.10

$

0.04

$

(0.09)

$

0.16

*Footnotes on page 11

PRO FORMA CORPORATE FINANCIAL INFORMATION

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August 3, 2022

Pro Forma Consolidated Statements of Operations

Q4 2019 – Q1 2019, FY 2019

Quarter Ended (1)

Year Ended (1)

(Unaudited and in thousands, except per share data)

December 31,

September 30,

June 30,

March 31,

December 31,

2019

    

2019

    

2019

    

2019

    

2019

Revenues

Room

$

140,388

$

145,477

$

154,320

$

140,689

$

580,874

Food and beverage

59,112

53,525

67,089

63,338

243,064

Other operating

17,415

17,523

16,271

15,124

66,333

Total revenues

216,915

216,525

237,680

219,151

890,271

Operating Expenses

Room

36,422

37,604

37,604

35,979

147,609

Food and beverage

40,345

38,763

42,286

41,704

163,098

Other expenses

73,100

71,415

73,549

73,328

291,392

Corporate overhead

7,275

7,395

8,078

7,516

30,264

Depreciation and amortization

28,231

28,315

27,684

27,541

111,771

Total operating expenses

185,373

183,492

189,201

186,068

744,134

Interest and other income

3,060

3,762

4,811

4,924

16,557

Interest expense

(6,880)

(9,074)

(11,634)

(10,149)

(37,737)

Income before income taxes

27,722

27,721

41,656

27,858

124,957

Income tax (provision) benefit, net

(1,034)

749

(2,676)

3,112

151

Net income

$

26,688

$

28,470

$

38,980

$

30,970

$

125,108

Comparable Portfolio Hotel Adjusted EBITDAre (5)

$

67,146

$

68,778

$

84,305

$

68,415

$

288,644

Pro Forma Adjusted EBITDAre (3)

$

64,653

$

66,936

$

82,652

$

67,767

$

282,008

Pro Forma Adjusted FFO attributable to common stockholders (4)

$

53,324

$

56,618

$

71,082

$

55,805

$

236,829

Pro Forma Adjusted FFO attributable to common stockholders per diluted share (4)

$

0.25

$

0.27

$

0.34

$

0.27

$

1.13

*Footnotes on page 11

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Supplemental Financial Information
August 3, 2022

Pro Forma Consolidated Statements of Operations

Footnotes

(1)Excludes results for the Renaissance Westchester, the Embassy Suites La Jolla and the Hyatt Centric Chicago Magnificent Mile due to their sales in October 2021, December 2021 and February 2022, respectively, along with the Embassy Suites Chicago and the Hilton Garden Inn Chicago Downtown/Magnificent Mile due to their sale in March 2022. Includes prior ownership results for The Confidante Miami Beach acquired by the Company in June 2022, adjusted for the Company's pro forma depreciation expense. Pro Forma Consolidated Statements of Operations for each of the quarters and the year ended December 31, 2019 also excludes results for the Courtyard by Marriott Los Angeles, the Renaissance Harborplace and the Renaissance Los Angeles Airport due to their sales in October 2019, July 2020 and December 2020, respectively, as well as results for the Hilton Times Square due to the assignment-in-lieu agreement executed in December 2020 between the Company and the hotel’s mortgage holder which transferred the Company’s leasehold interest in the hotel to the mortgage holder, and the elimination of interest expense on the mortgage loan secured by the Renaissance Washington DC due to its repayment in December 2020.
(2)Total Portfolio Hotel Adjusted EBITDAre reconciliations for the second quarters of 2022 and 2021 can be found later in this presentation. Additional details can be found in our earnings release, furnished in Exhibit 99.1 to our 8-K filed on August 3, 2022.
(3)Pro Forma Adjusted EBITDAre reconciliations for each of the quarters, years and the Trailing 12 Months included in this presentation can be found in the following pages and reflect the elimination of noncontrolling interest due to the Company's acquisition of the outside 25% ownership interest in the joint venture that owned the Hilton San Diego Bayfront in June 2022.
(4)Pro Forma Adjusted FFO attributable to common stockholders and Pro Forma Adjusted FFO attributable to common stockholders per diluted share reconciliations for each of the quarters, years and the Trailing 12 Months included in this presentation can be found in the following pages and reflect the elimination of noncontrolling interest due to the Company's acquisition of the outside 25% ownership interest in the joint venture that owned the Hilton San Diego Bayfront in June 2022.
(5)Comparable Portfolio Hotel Adjusted EBITDAre reconciliation for the second quarter of 2019 can be found later in this presentation.

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Supplemental Financial Information
August 3, 2022

Pro Forma Reconciliation of Net Income (Loss) to EBITDAre and Adjusted EBITDAre

Q2 2022 – Q3 2021, Trailing 12 Months

Quarter Ended

Trailing 12 Months

June 30,

March 31,

December 31,

September 30,

Ended

(In thousands)

2022

2022

2021

2021

June 30, 2022

Net income (loss)

$

37,692

$

15,123

$

138,324

$

(22,124)

$

169,015

Operations held for investment:

Depreciation and amortization

30,893

31,360

32,598

32,585

127,436

Interest expense

5,938

5,081

7,201

7,983

26,203

Income tax provision, net

28

136

18

25

207

(Gain) loss on sale of assets, net

(22,946)

(152,524)

12

(175,458)

Impairment losses

1,671

1,014

2,685

EBITDAre

74,551

28,754

27,288

19,495

150,088

Operations held for investment:

Amortization of deferred stock compensation

2,853

3,578

2,212

3,165

11,808

Amortization of right-of-use assets and obligations

(354)

(346)

(340)

(335)

(1,375)

Amortization of contract intangibles, net

(18)

(6)

(24)

Finance lease obligation interest - cash ground rent

(117)

(351)

(351)

(819)

Property-level severance

(284)

(284)

Property-level severance related to sold hotels

4,562

4,562

(Gain) loss on extinguishment of debt, net

(21)

213

428

(61)

559

Prior year property tax adjustments, net

605

605

Lawsuit settlement cost

21

691

712

CEO transition costs

815

7,976

8,791

Hurricane-related losses net of (insurance proceeds)

138

(2,893)

2,612

1,621

1,478

Noncontrolling interest:

Income from consolidated joint venture attributable to noncontrolling interest

(2,343)

(1,134)

(335)

(933)

(4,745)

Depreciation and amortization

(666)

(790)

(791)

(791)

(3,038)

Interest expense

(206)

(168)

(160)

(181)

(715)

Amortization of right-of-use asset and obligation

60

72

73

72

277

Lawsuit settlement cost

(5)

(173)

(178)

Adjustments to EBITDAre, net

(557)

(1,591)

3,895

15,867

17,614

Adjusted EBITDAre, excluding noncontrolling interest

73,994

27,163

31,183

35,362

167,702

Sold hotel Adjusted EBITDAre (1)

2,172

(1,434)

(4,742)

(4,004)

Acquisition hotel Adjusted EBITDAre (2)

6,037

7,768

4,538

2,470

20,813

Pro Forma Adjusted EBITDAre

$

80,031

$

37,103

$

34,287

$

33,090

$

184,511

*Footnotes on page 14

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Supplemental Financial Information
August 3, 2022

Pro Forma Reconciliation of Net Income (Loss) to FFO and Adjusted FFO Attributable to Common Stockholders

Q2 2022 – Q3 2021, Trailing 12 Months

Quarter Ended

Trailing 12 Months

June 30,

March 31,

December 31,

September 30,

Ended

(In thousands, except per share data)

2022

2022

2021

2021

June 30, 2022

Net income (loss)

$

37,692

$

15,123

$

138,324

$

(22,124)

$

169,015

Preferred stock dividends and redemption charges

(3,773)

(3,773)

(3,349)

(6,287)

(17,182)

Operations held for investment:

Real estate depreciation and amortization

30,456

31,027

31,976

31,959

125,418

(Gain) loss on sale of assets, net

(22,946)

(152,524)

12

(175,458)

Impairment losses

1,671

1,014

2,685

Noncontrolling interest:

Income from consolidated joint venture attributable to noncontrolling interest

(2,343)

(1,134)

(335)

(933)

(4,745)

Real estate depreciation and amortization

(666)

(790)

(791)

(791)

(3,038)

FFO attributable to common stockholders

61,366

17,507

14,972

2,850

96,695

Operations held for investment:

Amortization of deferred stock compensation

2,853

3,578

2,212

3,165

11,808

Real estate amortization of right-of-use assets and obligations

(294)

(286)

87

87

(406)

Amortization of contract intangibles, net

143

60

203

Noncash interest on derivatives, net

(1,023)

(1,842)

(1,211)

(616)

(4,692)

Property-level severance

(284)

(284)

Property-level severance related to sold hotels

4,562

4,562

(Gain) loss on extinguishment of debt, net

(21)

213

428

(61)

559

Prior year property tax adjustments, net

605

605

Lawsuit settlement cost

21

691

712

Preferred stock redemption charges

2,624

2,624

CEO transition costs

815

7,976

8,791

Hurricane-related losses net of (insurance proceeds)

138

(2,893)

2,612

1,621

1,478

Noncontrolling interest:

Real estate amortization of right-of-use asset and obligation

60

72

73

72

277

Noncash interest on derivatives, net

(2)

2

1

(20)

(19)

Lawsuit settlement cost

(5)

(173)

(178)

Adjustments to FFO attributable to common stockholders, net

1,854

(1,096)

4,749

20,533

26,040

Adjusted FFO attributable to common stockholders

63,220

16,411

19,721

23,383

122,735

Sold hotel Adjusted FFO (1)

2,172

(1,024)

(4,129)

(2,981)

Acquisition hotel Adjusted FFO (2)

5,831

7,600

4,377

2,309

20,117

Equity transactions (3)

313

313

Pro Forma Adjusted FFO attributable to common stockholders

$

69,051

$

26,183

$

23,074

$

21,876

$

140,184

Pro Forma Adjusted FFO attributable to common stockholders per diluted share

$

0.33

$

0.12

$

0.11

$

0.10

$

0.66

Basic weighted average shares outstanding

213,183

217,271

217,870

217,709

216,508

Shares associated with unvested restricted stock awards

354

305

445

296

350

Diluted weighted average shares outstanding

213,537

217,576

218,315

218,005

216,858

Equity transactions (3)

(2,038)

(6,374)

(7,115)

(7,115)

(5,661)

Pro Forma diluted weighted average shares outstanding

211,499

211,202

211,200

210,890

211,198

*Footnotes on page 14

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 13


Text

Description automatically generated with low confidence

Supplemental Financial Information
August 3, 2022

Pro Forma Reconciliation of Net Income (Loss) to EBITDAre, Adjusted EBITDAre,

FFO and Adjusted FFO Attributable to Common Stockholders

Q2 2022 – Q3 2021, Trailing 12 Months Footnotes

(1)Sold Hotel Adjusted EBITDAre and Adjusted FFO include results for the Renaissance Westchester, the Embassy Suites La Jolla and the Hyatt Centric Chicago Magnificent Mile sold in October 2021, December 2021 and February 2022, respectively, along with the Embassy Suites Chicago and the Hilton Garden Inn Chicago Downtown/Magnificent Mile sold in March 2022.
(2)Acquisition hotel Adjusted EBITDAre and Adjusted FFO include prior ownership results for The Confidante Miami Beach acquired by the Company in June 2022, along with the elimination of noncontrolling interest due to the Company's acquisition of the outside 25% ownership interest in the joint venture that owned the Hilton San Diego Bayfront in June 2022.
(3)Equity Transactions represent the reduction in preferred stock dividends due to the redemption of the 6.45% Series F Cumulative Redeemable Preferred Stock in August 2021, offset by the issuance of the 5.70% Series I Cumulative Redeemable Preferred Stock in July 2021. It also includes the repurchases of 3,879,025 and 3,235,958 shares of common stock in the first and second quarters of 2022, respectively.

PRO FORMA CORPORATE FINANCIAL INFORMATION

Page 14


Text

Description automatically generated with low confidence

Supplemental Financial Information
August 3, 2022

Pro Forma Reconciliation of Net Income (Loss) to EBITDAre and Adjusted EBITDAre

Q4 2021 – Q1 2021, FY 2021

Quarter Ended

Year Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands)

2021

2021

2021

2021

2021

Net income (loss)

$

138,324

$

(22,124)

$

(27,918)

$

(55,287)

$

32,995

Operations held for investment:

Depreciation and amortization

32,598

32,585

32,729

30,770

128,682

Interest expense

7,201

7,983

8,065

7,649

30,898

Income tax provision, net

18

25

23

43

109

(Gain) loss on sale of assets, net

(152,524)

12

70

(152,442)

Impairment losses

1,671

1,014

2,685

EBITDAre

27,288

19,495

12,899

(16,755)

42,927

Operations held for investment:

Amortization of deferred stock compensation

2,212

3,165

4,659

2,752

12,788

Amortization of right-of-use assets and obligations

(340)

(335)

(338)

(331)

(1,344)

Finance lease obligation interest - cash ground rent

(351)

(351)

(351)

(351)

(1,404)

Property-level severance

(284)

(284)

Property-level severance related to sold hotels

4,562

4,562

Loss (gain) on extinguishment of debt, net

428