Sunstone Hotel Investors, Inc. Debt Disclosure
7. Debt
Debt Transactions – 2025
Unsecured Debt. In April 2025, the Company exercised its option to extend the maturity of its previous Term Loan 3 from May 2025 to May 2026. Additionally, in April 2025 and July 2025, the Company drew down $27.0 million and $23.0 million, respectively, on its $500.0 million credit facility.
In September 2025, the Company entered into the Amended Credit Agreement, which expanded its unsecured debt borrowing capacity and extended the maturity of its term loans. The Amended Credit Agreement continues to provide for a $500.0 million revolving credit facility and increases the aggregate amount of the Company’s term loan facilities from $675.0 million (on four existing term loans) to $850.0 million (on three new term loans). The following includes the details of the Amended Credit Agreement:
| ● | The maturity of the revolving credit facility was extended from July 25, 2026, with two six-month options to extend, to September 24, 2029, with two six-month options to extend; |
| ● | The new term loan facilities include a $275.0 million term loan, of which $185.0 million was funded in September 2025 and the remaining $90.0 million is available as a one-time delayed draw which was funded in January 2026 (“New Term Loan 1”) (see Note 16), a $275.0 million term loan funded in September 2025 (“New Term Loan 2”), and a $300.0 million term loan funded in September 2025 (“New Term Loan 3”) (together the “New Term Loans”); |
| ● | The Company utilized the $760.0 million in proceeds received from the New Term Loans to consolidate its previous four term loans into the three New Term Loans and to repay the $50.0 million outstanding on its revolving credit facility; |
| ● | The revolving credit facility and the New Term Loans bear interest pursuant to a leverage-based pricing grid ranging from 1.40% to 2.25% and 1.35% to 2.20%, respectively, over the applicable SOFR; |
| ● | New Term Loan 1 has an initial maturity of January 24, 2029, with two twelve-month extension options (subject to customary fees), which would result in an extended maturity of January 24, 2031; |
| ● | New Term Loan 2 has an initial maturity of January 24, 2030, with one twelve-month extension option (subject to customary fees), which would result in an extended maturity of January 24, 2031; |
| ● | New Term Loan 3 has a maturity of January 24, 2031, with no available extension options; and |
| ● | The New Term Loans are available to be prepaid at any time with no prepayment penalty. |
As of December 31, 2025, the Company had no amount outstanding on its credit facility, with $500.0 million of capacity available for borrowing under the facility. The Company’s ability to draw on the credit facility is subject to the Company’s compliance with various financial covenants.
Debt Transactions – 2024
Secured Debt. The mortgage secured by the JW Marriott New Orleans was repaid on December 11, 2024, using proceeds received from the Company’s Term Loan 4.
Unsecured Debt. On November 7, 2024, the Company entered into delayed-draw Term Loan 4 and drew a total of $100.0 million in December 2024. Term Loan 4’s variable interest rate was based on a pricing grid with a range of 1.35% to 2.20%, depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. Term Loan 4 had an initial term of one year with two six-month extension options at the Company’s election, resulting in an extended maturity of November 7, 2026; however, in conjunction with the Amended Credit Agreement in September 2025, Term Loan 4 was consolidated into the New Term Loans.
Debt consisted of the following (in thousands):
Balance Outstanding as of | |||||||||||||
December 31, 2025 | December 31, | December 31, | |||||||||||
Rate Type | Interest Rate | Maturity Date | 2025 | 2024 | |||||||||
Unsecured Corporate Credit Facilities (1) | |||||||||||||
Term Loan 1 | Fixed | (2) | 4.68 | % | January 24, 2029 | $ | 185,000 | $ | 175,000 | ||||
Term Loan 2 | Fixed | (3) | 5.34 | % | January 24, 2030 | 275,000 | 175,000 | ||||||
Term Loan 3 | Floating | (4) | 5.14 | % | January 24, 2031 | 300,000 | 225,000 | ||||||
Term Loan 4 | N/A | (5) | N/A | N/A | — | 100,000 | |||||||
Total unsecured corporate credit facilities | $ | 760,000 | $ | 675,000 | |||||||||
Unsecured Senior Notes | |||||||||||||
Series A | Fixed | 4.69 | % | January 10, 2026 | $ | 65,000 | $ | 65,000 | |||||
Series B | Fixed | 4.79 | % | January 10, 2028 | 105,000 | 105,000 | |||||||
Total unsecured senior notes | $ | 170,000 | $ | 170,000 | |||||||||
Total debt | $ | 930,000 | $ | 845,000 | |||||||||
Unamortized deferred financing costs | (11,914) | (3,953) | |||||||||||
Debt, net of unamortized deferred financing costs | $ | 918,086 | $ | 841,047 | |||||||||
| (1) | The variable interest rates on the Company’s unsecured corporate credit facilities are based on a pricing grid depending on the Company’s leverage ratios plus SOFR. |
| (2) | New Term Loan 1 is currently subject to one interest rate swap derivative (see Note 5). New Term Loan 1 has an initial maturity of January 24, 2029 with two twelve-month options to extend at the Company’s election, which would result in an extended maturity of January 24, 2031, upon payment of applicable fees and the satisfaction of certain customary conditions. The effective interest rates on the loan were 4.68% and 5.27% at December 31, 2025 and 2024, respectively. |
| (3) | New Term Loan 2 is subject to three interest rate swap derivatives (see Note 5). New Term Loan 2 has an initial maturity of January 24, 2030 with one twelve-month option to extend at the Company’s election, which would result in an extended maturity of January 24, 2031, upon the payment of applicable fees and satisfaction of certain customary conditions. The effective interest rates on the loan were 5.34% and 6.02% at December 31, 2025 and 2024, respectively. |
| (4) | New Term Loan 3 is subject to one interest rate swap derivative (see Note 5) covering a partial balance of $25.0 million. The effective interest rates on the loan were 5.14% and 5.83% at December 31, 2025 and 2024, respectively. |
| (5) | Term Loan 4 was consolidated into the New Term Loans in conjunction with the Company’s Amended Credit Agreement. The effective interest rate on the loan was 5.93% at December 31, 2024. |
Aggregate future principal maturities of debt at December 31, 2025, were as follows (in thousands):
2026 | | $ | 65,000 | |
2027 |
| — | ||
2028 |
| 105,000 | ||
2029 |
| — | ||
2030 |
| — | ||
Thereafter |
| 760,000 | (1) | |
Total | $ | 930,000 |
| (1) | Includes New Term Loan 1 and New Term Loan 2 assuming the Company has exercised its options to extend the maturity of the loans from January 24, 2029 and January 24, 2030, respectively, to January 24, 2031, upon the payment of applicable fees and satisfaction of certain customary conditions. |
Deferred Financing Costs and (Loss) Gain on Extinguishment of Debt
Deferred financing costs and (loss) gain on extinguishment of debt were as follows (in thousands):
2025 (1) | 2024 (2) | 2023 (3) | ||||||||
Payments of deferred financing costs | $ | 17,981 | $ | 1,105 | $ | 2,332 | ||||
(Loss) gain on extinguishment of debt | $ | (180) | $ | 59 | $ | 9,938 | ||||
| (1) | In connection with the Amended Credit Agreement, the Company paid a total of $18.0 million in deferred financing costs, of which $7.7 million was allocated to the revolving credit facility and the delayed draw portion of New Term Loan 1 and included in prepaid expenses and other assets on the Company’s consolidated balance sheet as of December 31, 2025, and $10.3 million was allocated to the funded New Terms Loans and included in debt, net of unamortized deferred financing costs on the Company’s consolidated balance sheet as of December 31, 2025. In addition, the Company recorded a $0.2 million loss on extinguishment of debt related to the accelerated amortization of deferred financing costs. |
| (2) | During 2024, the Company paid a total of $1.1 million in deferred financing costs related to Term Loan 4. In addition, the Company recognized a gain of $0.1 million associated with the assignment-in-lieu of a hotel to the hotel’s mortgage holder in 2020 due to reassessments of the remaining potential employee-related obligations and the release of the remaining potential employee-related obligations in conjunction with the termination of the escrow agreement during the second quarter of 2024. |
| (3) | During 2023, the Company paid a total of $2.3 million in deferred financing costs related to Term Loan 3. In addition, the Company recognized a gain of $9.9 million associated with the assignment-in-lieu of a hotel to the hotel’s mortgage holder in 2020, comprising $9.8 million from the relief of a majority of the potential employee-related obligations, with the funds released to the Company from escrow, and $0.1 million due to reassessments of the remaining potential employee-related obligations held in escrow. |
Interest Expense
Total interest incurred and expensed on the Company’s debt was as follows (in thousands):
| 2025 | | 2024 | | 2023 |
| ||||
Interest expense on debt | $ | 49,691 | $ | 49,003 | $ | 48,727 | ||||
Noncash interest on derivatives, net |
| 878 |
| (540) |
| 252 | ||||
Amortization of deferred financing costs |
| 3,797 |
| 3,047 |
| 2,700 | ||||
Capitalized interest |
| (1,401) |
| (1,385) |
| — | ||||
Total interest expense | $ | 52,965 | $ | 50,125 | $ | 51,679 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 23, 2023 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.