Terms

Series

5.70% Series I Cumulative Redeemable Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

5.7%

Rate Type

Fixed

Annual Dividend

$1.43

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

July 16, 2026

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Existing And Future Debt Obligations, Any Capital Stock Expressly Designated As Ranking Senior To The Series I Preferred; Pari Passu With: 6.450% Series F Cumulative Redeemable Preferred Stock, Series G Cumulative Redeemable Preferred Stock, 6.125% Series H Cumulative Redeemable Preferred Stock; Senior To: Common Stock, Any Capital Stock Expressly Designated As Ranking Junior To The Series I Preferred

Regulatory (Basel III) Call

Yes

Tax Classification

Reit Passthrough

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

4,000,000

Prospectus Summary

Sunstone Hotel Investors, Inc. is offering 4,000,000 shares of its 5.70% Series I Cumulative Redeemable Preferred Stock at a liquidation preference of $25.00 per share, with an annual dividend of $1.4250 per share ($0.35625 quarterly) payable on January 15, April 15, July 15, and October 15, commencing October 15, 2021. The stock is callable at $25.00 on or after July 16, 2026, is perpetual with no mandatory redemption date, and is not a depositary share. The Series I Preferred is cumulative, meaning that any unpaid dividends accumulate and must be satisfied in full before the issuer can pay dividends to common stockholders or redeem junior securities. The Series I Preferred ranks senior to Sunstone's common stock and any junior-designated capital stock, and pari passu with the outstanding Series F (6.450%), Series G, and Series H (6.125%) cumulative redeemable preferred stocks. It is expressly subordinated to all existing and future debt obligations of the company. As a holding company, Sunstone's assets consist primarily of interests in Sunstone Hotel Partnership, LLC; creditors of the operating partnership have priority over preferred holders in a wind-down scenario. There is no Tier 1 bank regulatory call, but the issuer may redeem prior to July 16, 2026 in limited circumstances solely to preserve its REIT status under the Internal Revenue Code. Additionally, upon a Change of Control, the issuer has a special optional redemption right exercisable within 120 days, and if not exercised, holders may convert into common stock subject to a cap of 4.1425 shares per preferred share. At the $25.00 offering price, the Series I Preferred yields 5.70% annually. As dividends are paid by a REIT, they generally do not qualify for the preferential 15%/20% qualified dividend income (QDI) rate for individual investors or the dividends-received deduction (DRD) for corporate holders; most distributions will be taxable as ordinary income. Dividends are paid quarterly on the 15th of January, April, July, and October, with the record date not explicitly specified but typically set a short number of business days before the payment date. The dividend stopper provision prohibits Sunstone from paying any dividends on common stock, Series F, G, or H preferred, or repurchasing those securities, unless all accumulated Series I Preferred dividends have been paid current.

Summarized from the SEC prospectus filing.

Distribution History

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Sunstone has not paid all accumulated dividends on the Series I Preferred, it is prohibited from paying dividends on or repurchasing its common stock or any other parity/junior preferred stock (including Series F, G, and H) until all Series I arrearages are current.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 56 (Average)