Sunstone Hotel Investors, Inc. (SHO)

Q4 2010 Earnings Conference Call

December 20, 2010 9:00 am ET

Executives

Robert A. Alter – Executive Vice President

Kenneth E. Cruse – President and CEO

Bryan Giglia – SVP, Finance

Marc A. Hoffman – EVP and COO

Lew Wolf – Co-Chairman of the Board

Lindsay Monge – SVP, Treasurer and Secretary

Guy Lindsey – Senior Vice President – Design & Construction

Analysts

Jeff Donnelly – Wells Fargo

Joe Greff – JPMorgan

Eli Hackel - Goldman Sachs

Shaun Kelley – Bank of America Merrill Lynch

David Loeb – Robert W. Baird

Dennis Forst – KeyBanc Capital Markets

Brian Maher - Citadel Securities

Lou Taylor [ph] – Halston [ph]

Rod Petrik - Stifel Nicolaus

Chris Woronka – Deutsche Bank

Josh Attie – Citigroup

Larry Raymond – Big 5 Asset Management

Presentation

Operator

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Good morning, ladies and gentlemen, and welcome to the Sunstone Hotel Investors Senior Leadership Restructuring call. (Operator Instructions). As a reminder, this conference is being recorded today, Monday December 20, 2010.

I would now like to turn the conference over to Bob Alter, Executive Chairman of Sunstone Hotel Investors. Please go ahead.

Bob

Alter

Good morning, everyone and thank you for joining us today on this important announcement for Sunstone Hotel Investors. We felt it was important to have brief call today to answer any questions you may have regarding the Senior Leadership Restructuring we announced on Friday.

As you saw in Friday’s release, Ken Cruse has been named President and I along with other members of Sunstone Board of Directors believe that Ken possesses the right combination of judgment, discipline and integrity to lead Sunstones next growth phase. Ken, along with Marc Hoffman, our Chief Operating Officer and the members of Sunstones leadership team have been actively involved in all facets of Sunstone's business and have played integral roles in each of our major transactions over the last six years since Sunstone's IPO in 2004.

I intend to mentor Ken and help the team guide the day-to-day execution of the company's business plan, which is aimed at growing the portfolio and enhancing shareholder value.

As noted in Friday’s release, effective immediately Art Buser will no longer be President and Chief Executive Officer or member of the company's board of directors. The board and Art reached a mutual agreement on the separation. It has been speculated in a few of the analyst reports that the primary area of disagreement was acquisition pace. That is incorrect and there were multiple directors that took exception over a broad range of factors relating to Art's rule, style and conduct.

As I mentioned the board believes Sunstone is well positioned with its new leadership role to execute the company's growth strategy.

Before I turn the call over to Ken, I just want to say I'm very disappointed that it did not work out with Art Buser and the company wishes him well in his future. I'd like to say that I'm very happy to be back involved with this group of leaders at Sunstone, a company I funded in 1995 and a company whose growth I oversaw through 2007. Today Sunstone has a high quality portfolio, a solid balance sheet and a best in class team that has successfully navigated through the recent downturn and has positioned the company well for growth during the current recovery.

With that, let me turn it over to Ken.

Ken Cruse

Thanks a lot, Bob and thank you everyone on the call for joining us today. I'll be very brief. I'd like to thank the board of directors for providing me with this opportunity to expand my leadership role with Sunstone. It's an honor to be part of this talented and dedicated team.

As Bob indicated, this is an exciting time for Sunstone. Industry fundamentals are attractive and we have a solid platform for growth. We own 31 well-located hotels. We hold approximately 270 million in unrestricted cash. We have minimal debt maturities over the next five years and we have an undrawn $150 million credit facility.

While we have made good progress in a number of areas, we are not satisfied with where Sunstone is today. We can and will do a better job of smart, disciplined, value creation and as a result, we intend to make Sunstone a larger, stronger and more profitable company.

Sunstone has a great team with talented individuals overseeing all of the company's disciplines and we now have the right team in place to execute on the company's next growth phase.

Marc Hoffman, our Chief Operating Officer and the members of Sunstones leadership team, including Bryan Giglia, SVP of Acquisitions and Finance, Lindsey Monge, SVP, Treasurer and Secretary, Guy Lindsey, SVP and Head of Design and Construction and David Sloan, our Head of Legal, have been actively involved in all facets of Sunstones business and have played integral roles in each of our major transactions in the six years since our IPO.

As a team, our focus will remain on maximizing stockholder value through a comprehensive cycle appropriative approach to portfolio management. Our fundamental values, discipline and goals have not changed. Our strategy is well established and proven.

First, we intend to meaningfully increase the size and quality of our portfolio over the next several years through smart acquisitions. We will not be reckless. We have learned from the past and we will maintain the high level of discipline we have developed over the last several years.

Second, we will optimize the performance of our portfolio through aggressive asset management and by partnering with our operators.

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