Real Estate Central

SAN CLEMENTE, Calif., June 2 /PRNewswire-FirstCall/ — Sunstone Hotel
Investors, Inc. (NYSE: SHO) announced today that it will commence a
modified “Dutch Auction” tender offer to purchase up to 6.2 million shares
of its common stock (representing up to approximately 11% of its
outstanding common shares and approximately 10% when considered together
with the shares issuable upon conversion of the Company’s Series C
Cumulative Convertible Redeemable Preferred Stock (the “Series C
Preferred”)) at a price not less than $18.65 and not greater than

1.15
per share. The closing price of the shares on May 30, 2008, the last
trading day preceding this announcement, was $19.25. The tender offer will
commence on June 2, 2008 and is expected to expire, unless extended, at
12:00 midnight, Eastern Daylight Savings time, on June 27, 2008.

The Offer also constitutes an offer to purchase the Series C Preferred,
as required pursuant to the terms of the purchase agreement relating to
such Series C Preferred. The Series C Preferred is held by one investor and
is currently convertible at the rate of one share of Common Stock for each
share of Series C Preferred. Any shares of Series C Preferred purchased in
the Offer will be purchased based on the shares of Common Stock underlying
such Series C Preferred at the same Purchase Price per share as paid for
any other Common Stock purchased in the Offer. References herein to
“shares” are to shares of Common Stock and, with respect to the Series C
Preferred Stock, shall include the shares of Common Stock underlying such
Series C Preferred.

Ken Cruse, Chief Financial Officer, stated “We believe that the
repurchase of shares is consistent with our long-term goal of maximizing
stockholder value. We feel that we have enhanced our balance sheet and
improved our liquidity position through the sale of the Hyatt Regency
Century Plaza, and through this offer, we intend to use a portion of the
sale proceeds to repurchase shares at what we believe to be a meaningful
discount to warranted value. Our management and board of directors have
evaluated our operations, strategy and expectations for the future and
believe that the offer is a prudent use of our financial resources given
our business profile, our assets and recent market prices for our common
stock.”

JP Morgan Securities Inc. is acting as the dealer manager for the
tender offer. D.F. King & Co, Inc. will act as information agent for the
offer and American Stock Transfer & Trust Company will act as depositary.

The modified “Dutch Auction” tender offer will allow stockholders to
indicate how many shares and at what price within the Company’s specified
range they wish to tender. Based on the number of shares tendered and the
prices specified by the tendering stockholders, the Company will determine
the lowest price per share within the range that will enable it to purchase
6.2 million shares, or the amount of shares actually tendered, if lower
than 6.2 million. All shares accepted in the tender offer will be purchased
at the same price per share. The Company will not purchase shares below a
price stipulated by a stockholder. Specific instructions and a complete
explanation of the terms and conditions of the tender offer are contained
in the Offer to Purchase and related materials that will be mailed to
stockholders of record on or around June 2, 2008.

None of the Company’s management, its Board of Directors, the dealer
manager, the information agent or the depositary is making any
recommendation to stockholders as to whether to tender or refrain from
tendering their shares into the tender offer. Stockholders must decide how
many shares they will tender, if any, and the price within the stated range
at which they will offer their shares for purchase by the Company.

The tender offer is not conditioned upon receipt of financing or on any
minimum number of shares being tendered. The tender offer is subject to
other conditions, as described in the offer to purchase.

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. is a lodging real estate investment
trust (”REIT”) that, as of the date hereof, has interests in 45 hotels
comprised of 15,354 rooms primarily in the upper-upscale segment operated
under nationally recognized brands, such as Marriott, Hilton, Hyatt,
Fairmont and Starwood. For further information, please visit the Company’s
website at http://www.sunstonehotels.com.

This press release contains forward-looking statements within the
meaning of federal securities laws and regulations. These forward looking
statements are identified by their use of terms and phrases such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “predict,” “project,” “should,” “will” and other
similar terms and phrases, including references to assumptions and
forecasts of future results. Forward- looking statements are not guarantees
of future performance and involve known and unknown risks, uncertainties
and other factors which may cause the actual results to differ materially
from those anticipated at the time the forward- looking statements are
made. These risks include, but are not limited to: volatility in the debt
or equity markets affecting our ability to acquire or sell hotel assets;
national and local economic and business conditions, including the
possibility of a U.S. recession; potential terrorist attacks, which would
affect occupancy rates at our hotels and the demand for hotel products and
services; operating risks associated with the hotel business; risks
associated with the level of our indebtedness and our ability to meet
covenants in our debt agreements; relationships with property managers and
franchisors; our ability to maintain our properties in a first-class
manner, including meeting capital expenditure requirements; our ability to
compete effectively in areas such as access, location, quality of
accommodations and room rate structures; changes in travel patterns, taxes
and government regulations, which influence or determine wages, prices,
construction procedures and costs; our ability to identify, successfully
compete for and complete acquisitions; the performance of acquired
properties after they are acquired; necessary capital expenditures and our
ability to fund them and complete them with minimum disruption; our ability
to continue to satisfy complex rules in order for us to qualify as a REIT
for federal income tax purposes; and other risks and uncertainties
associated with our business described in the Company’s filings with the
SEC. Although the Company believes the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can
give no assurance that the expectations will be attained or that any
deviation will not be material. All forward-looking information in this
release is as of June 2, 2008, and the Company undertakes no obligation to
update any forward-looking statement to conform the statement to actual
results or changes in the Company’s expectations.

This press release is for informational purposes only and is not an
offer to buy or the solicitation of an offer to sell any shares of Sunstone
common stock. The solicitation of offers to buy shares of the Company’s
common stock will only be made pursuant to the offer to purchase, the
letter of transmittal and related documents that the Company will file with
the Securities and Exchange Commission on Monday, June 2, 2008 and will be
mailed to stockholders promptly. Stockholders should read those materials
carefully because they will contain important information, including the
various terms of, and conditions to, the tender offer. Stockholders will be
able to obtain the offer to purchase, the letter of transmittal and related
documents without charge from the Securities and Exchange Commission’s
website at http://www.sec.gov; and from the information agent, D.F. King & Co.,
Inc. at (212) 269-5550 (bankers and brokers) or (800) 735-3107 (all
others).



Bryan Giglia
Vice President - Corporate Finance
Sunstone Hotel Investors, Inc.
(949) 369-4236


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Source: Real Estate Newswire