Sunstone Hotel Investors has sold the 252-room Hilton New Orleans St. Charles for a gross sale price of $47 million, or approximately $187,000 per key. Certares Management bought the property, according to Nola.com. Other terms and conditions are not disclosed.
The sale price represents a 10.1x multiple on 2024 hotel adjusted EBITDA and an 8.7 percent cap rate on 2024 hotel net operating income. The company anticipates that the Hotel will require a cyclical renovation to maintain its competitive position and sustain its current level of earnings. Inclusive of the company's estimate of required near-term capital expenditures, the gross sale price represents a 13.4x multiple on hotel adjusted EBITDA and a 6.6 percent cap rate on hotel net operating income for 2024. The company will provide additional details on the sale including the impact to its previously provided 2025 outlook as part of its second quarter earnings release.
In anticipation of the sale of the hotel, the company took advantage of market conditions to fully recycle the proceeds from the disposition into additional share repurchases. Year to date as of June 6, the company has repurchased 6.8 million shares of its common stock at an average purchase price of $8.84 per share for a total repurchase amount before expenses of $60 million. Since the beginning of 2022, the company has deployed $252 million and repurchased 25.8 million shares of its common stock, representing nearly 12 percent of shares outstanding at the start of the period, at an average price of $9.77 per share. The implied cash flow multiple and discount to NAV achieved by the repurchase activity represent an accretive allocation of capital and significant value creation for the company's shareholders.
"We are pleased to announce the disposition of the Hilton New Orleans St. Charles," CEO Bryan Giglia said in a statement. "We were able to divest the hotel at attractive pricing, eliminate near-term defensive capital expenditures and recycle the proceeds into a higher yielding investment through the repurchase of our stock at a compelling discount. New Orleans remains an attractive lodging market for group events and leisure travel, and we will continue to benefit from exposure to the city through our ownership of the well-located JW Marriott. While we maintain capacity to grow the portfolio and are evaluating hotel investment opportunities, the value we can realize through the repurchase of our stock near current levels will generally represent a more accretive allocation of capital for our shareholders. Knowing that the environment is uncertain and can change quickly, the team remains nimble and ready to pivot between capital allocation opportunities as the landscape evolves from here."