The transaction is expected to complete in late July or early August. Credit: Sundry Photography / Shutterstock.com.

Sunstone Hotel Investors has signed a definitive deal to offload the 821-room Hyatt Regency San Francisco to Blackstone Real Estate-affiliated funds.

The sale consideration is $279m, equal to $340,000 per room.

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For the trailing 12-month period ended 31 May 2026, the agreed price equates to 21.4× hotel adjusted earnings before interest, taxes, depreciation and amortisation for real estate (EBITDAre) and a 3.5% cap rate on hotel net operating income.

To prepare for the sale, the company allocated around $70m of its proceeds in 2026 to repurchase common and preferred stock at a discount.

This included the buyback of 4.4 million common shares at an average of $9.24 each, for a total of $40.5m before expenses.

It also bought back 1.4 million combined shares of its Series H and Series I cumulative redeemable preferred stock at an average of $20.37 per share, amounting to $27.8m before expenses.

Sunstone said it is reviewing further options for the remaining sale proceeds to achieve the best risk-adjusted return for shareholders.

The transaction is expected to complete in late July or early August.

The company said more information on the disposal, including the expected effect on its full-year outlook, will be provided with its quarterly earnings release in early August.

Sunstone Hotel Investors CEO Bryan Giglia said: “The sale is consistent with our strategy of more actively managing the portfolio to capitalise on higher private market values and recycle the proceeds into more accretive options on a risk-adjusted basis.

“While we have already generated value by deploying a portion of the proceeds, the remaining liquidity increases our flexibility and facilitates our ability to reinvest in a manner that will provide our investors with superior returns and greater per-share NAV [net asset value] growth.

“The board and management remain committed to maximising value for shareholders and pursuing any alternative that would reasonably be expected to result in value creation.”