Sunstone Hotel Investors: Still A Hold Despite Raised Guidance

Sunstone Hotel Investors delivered strong Q2 2026 results, beating expectations and raising full-year guidance for the second consecutive quarter. SHO improved its balance sheet, reducing net debt plus preferred equity to EBITDA to 3.6x, and enhanced liquidity with $930 million available. Portfolio concentration risk has increased, with Andaz Miami Beach now a larger earnings driver after the Hyatt Regency San Francisco sale. I maintain a 'Hold' rating due to single-asset risk and a narrowing valuation discount, despite ongoing capital returns and operational outperformance.