Sunstone Hotel
Investors, Inc. announced today that it has agreed to acquire the
remaining 75% majority interest in the 807-room Renaissance Washington,
D.C. hotel. Sunstone had previously agreed to acquire the initial 25% of
the hotel as part of the six-hotel Renaissance acquisition announced on
April 27, 2005. The hotel is located at the intersection of 9th and K
Streets on Mt. Vernon Square, midway between the White House and the
Capitol. It is the closest hotel to the new 2.3 million square foot
Washington Convention Center, and the hotel is also the closest hotel to
the MCI Center. The hotel recently received a full renovation of its
guestrooms, common areas, and meeting space totaling 66,000 square feet. The all-in purchase price for 100% ownership of the hotel is approximately
$160 million, which includes the previously announced 25% interest,
closing costs, the assumption of a $56 million fixed-rate note bearing
interest at 7.5% per annum with a maturity date of April 2008, and the
repayment of a capital improvement loan previously funded by Marriott
International. The all-in purchase price equates to approximately $200,000
per key. The hotel has been, and will continue to be, operated by Marriott
International under the Renaissance Hotels & Resorts brand name. The
transaction is expected to close simultaneously with Sunstone’s
contemplated acquisition of the six-hotel Renaissance portfolio in June
2005.

In a separate transaction, Sunstone Hotel Investors, Inc. has agreed to
purchase the 203-room Sheraton Hotel located in Cerritos, California for
an all-in purchase price of $26.8 million, or $132,000 per room. The hotel
is currently managed by Sheraton, however, after the closing of the
acquisition, the hotel will be operated under a franchise agreement with
Sheraton and managed by Sunstone Hotel Properties, Inc., a division of
Interstate Hotels and Resorts. The hotel was initially sourced by
Interstate and is being acquired in a non-marketed transaction. The all-in
purchase price includes transaction closing costs, the assumption of a
$9.1 million fixed-rate note bearing interest at 8.875% per annum with a
maturity date of December 2009, and $1.25 million of capital expenditures.
The acquisition is expected to close in June 2005.
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