SAN CLEMENTE, CA-Sunstone Hotel Investors Inc., owners of 54 hotels comprising 13,183 rooms in 17 states, has filed with the SEC for an initial public offering of 21.1 million shares at $18 to $20 per share and plans to trade as a real estate investment trust under the symbol SHO on the New York Stock Exchange. The company operates primarily upscale hotels under brand names franchised or licensed from others, such as Marriott, Hilton, InterContinental, Hyatt, Starwood, Carlson and Wyndham.The offering would raise approximately $440 million at the offering price quoted in the company’s prospectus, which says it would use nearly $80 million of the proceeds to pay off debt. The underwriting group for the IPO includes Citigroup Global Markets, Merrill Lynch, Morgan Stanley, Deutsche Bank, Bear Stearns, UBS, AG Edwards & Sons and Calyon Securities.The switch to REIT status would be a return to the public markets for Sunstone, whose predecessor companies were formed in 1984 and completed an initial public offering in 1995. In November 1999, Sunstone Hotel Investors LLC purchased the REIT, taking it private. Since then, Sunstone has acquired $797.2 million of hotels and sold $380.3 million, focusing on increasing the percentage of its business that is generated by upscale hotels. Also, since November 1999, the company increased its room count by 25.3% to the current 13,183.Although Sunstone has historically managed most of its own properties, it says it will hire Interstate Hotels & Resorts Inc. to manage 49 of its 54 hotels, an arrangement that it says will achieve operational efficiencies in addition to allowing it to comply with the rules governing lodging industry REITs. In its IPO filing, Sunstone says it believes its own business and the lodging industry in general are “in the early phases of recovery after the dramatic negative effects of the economic slowdown and the terrorist attacks of Sept. 11, 2001,” citing consistent quarterly increases in revenue per available room, or RevPAR.

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