NEW YORK (TheStreet) -- Sunstone Hotel Investors (SHO) - Get Report stock is surging by 3.40% to $13.67 on heavy trading volume Monday after the company sold its leasehold interest in DoubleTreeGuestSuites Times Square for $540 million.
The Aliso Viejo, CA-based real estate investment trust, which holds interests in about 30 hotels across the U.S., sold 100% of its membership interest in the hotel for about $1.15 million per room.
Additionally, Sunstone declared a 2015 fourth-quarter dividend of $1.26 per share to common stockholders, which is payable on Jan. 29.
"This transaction unlocks meaningful shareholder value by monetizing an asset with substantial long-term redevelopment opportunities at a price above our internal valuation," CEO John Arabia said in a statement on Friday after the market close.
So far today, 6.27 million shares of Sunstone have traded, vs. its 30-day average of 2.01 million shares.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate SUNSTONE HOTEL INVESTORS INC as a Buy with a ratings score of B-. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SUNSTONE HOTEL INVESTORS INC has improved earnings per share by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SUNSTONE HOTEL INVESTORS INC turned its bottom line around by earning $0.34 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings ($0.59 versus $0.34).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 91.9% when compared to the same quarter one year prior, rising from $31.84 million to $61.10 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $91.61 million or 11.13% when compared to the same quarter last year. In addition, SUNSTONE HOTEL INVESTORS INC has also modestly surpassed the industry average cash flow growth rate of 9.44%.
- You can view the full analysis from the report here: SHO