The board of Sunstone Hotel Investors Inc. (NYSE: SHO) has received a letter from shareholder Tarsadia Capital LLC urging the hospitality firm to pursue a sale or liquidation of assets.
Tarsadia, an asset manager that owns 3.4% of Sunstone, sent the letter on Friday stating the firm’s take on how to resolve the Aliso Viejo-based “company’s persistent undervaluation in the public markets.”
“Sunstone’s current trajectory as a subscale lodging REIT is simply not tenable,” Managing Director Michael Ching said in a statement. “The Board needs immediate refreshment and must commence a robust strategic alternatives process to unlock value for shareholders.”
The letter encourages Sunstone to act based on the recent performance of the lodging real estate investment trust (REIT) industry and the company’s own “shrinking portfolio” of hotel properties in the last 20 years.
“We believe Sunstone’s portfolio of 14 hotel properties, down from 60 properties in 2005, is subscale and undervalued by public market investors. These factors—and the significant negative sentiment pressuring the Lodging REIT sector—have led to the persistent poor performance of the Company’s stock,” the letter said.
Sunstone’s top seven properties include Hilton San Diego, Wailea Marriott and Westin Washington DC. The REIT recently sold the 252-room Hilton New Orleans St. Charles for a gross sale price of $47 million, or approximately $187,000 per key in June.
Sunstone stock was up 3.8% to $9.77 with a market cap of $1.85 billion during midday trading.
Tarsadia Capital is part of Newport Beach-based The Tarsadia Group; see the Business Journal’s Sept. 15 edition for more information on the company.
The post Sunstone Shareholder Urges Hospitality Firm to Sell appeared first on Orange County Business Journal.