Sunstone REIT Pushed To Pursue Sale Or Liquidate Assets

Sunstone's Boston Marriott Long Wharf Hotel

The holder of the second-most Sunstone Hotel Investors stock has urged the company toward a sale or to liquidate assets to preserve value for shareholders.

Tarsadia Capital sent a letter to the REIT on Friday arguing the hotel investor's portfolio is undervalued and has led to persistent poor performance in its stock. Tarsadia, which is the public investment management arm of a family office, owns 3.4% of Sunstone, the largest share after Blackstone.

Tarsadia has called for the sale or liquidation of assets for the REIT after conversations with management and the board about how to navigate the company's future.

"Sunstone’s current trajectory as a subscale lodging REIT is simply not tenable," Tarsadia Capital Head of Research Michael Ching said in the letter. "The Board needs immediate refreshment and must commence a robust strategic alternatives process to unlock value for shareholders."

Tarsadia is also pushing for Sunstone to appoint new directors to the REIT's eight-member board, who would be vetted by Tarsadia.

The company said that Sunstone's portfolio, which consists of 14 properties — including the Boston Marriott Long Wharf, the Four Seasons Napa Valley, the Hilton San Diego Bayfront and the Wailea Beach Resort in Hawaii — is too small to attract public market investors.

The small portfolio also leaves Sunstone in a tight position when exposed to weather events, including storms and wildfires, or even hotel renovations, according to Tarsadia.

Tarsadia also said the portfolio unevenly brings in revenue, with the top seven properties raking in 85% of the earnings.

Continue reading this story with a free account

Log in or register
Sign up for more articles like this
Subscribe to Bisnow's National Newsletters
Related Stories

Data Centers Fuel Busiest Industrial Market Since 2022

Treasury Introduces Rule Blocking Big Investors From Bulk-Buying Homes

'Illegitimate' Or 'Leveling The Playing Field'?: Why Habitability Cases Are Surging In Eviction Court

Walker & Dunlop Execs On Dealmaking Volatility, Data Center Risks, Housing

Developer Pitches Massive Hospitality, Maker Space District South Of Austin

Hines Closes $591M Multifamily DST Offering

Kroger Plans 3 New Store Formats, 110 New Locations In Bid To Boost Sales

CBRE Leans On Data Center Business As Higher Rates Squeeze Capital Markets

Blackstone Writes Down Real Estate Values But Remains Bullish On Data Centers

Debt Flood Shrinks Bank OZK's Real Estate Book Faster Than Planned

The Governor Races And Referendums Where Housing Is On The Ballot

Trump: Data Centers 'Mandated' To Supply Own Electricity, Should Pay 'Dividend' To Communities