8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 26, 2006

Sunstone Hotel Investors, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland	001-32319	20-1296886
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

903 Calle Amanecer, Suite 100 San Clemente, California	92673
(Address of Principal Executive Office)	(Zip Code)

(949) 369-4000

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 8.01. OTHER EVENTS

This Form 8-K/A amends and restates in its entirety the Form 8-K filed by Sunstone Hotel Investors, Inc. on January 27, 2006.

On January 26, 2006, Sunstone Hotel Investors, Inc., a Maryland corporation (the “Company”) entered into a definitive Purchase and Sale Agreement to acquire the Hilton Times Square located on 42^nd Street for a purchase price of approximately $242.5 million. Sunstone will finance the acquisition through the assumption of $81.0 million of debt due in 2010 with a rate of 5.9% per annum, additional debt proceeds generated from the pending refinancing of two assets and through an anticipated equity offering. The attached Exhibit 99.1 contains excerpts from the press release announcing the acquisition, and Exhibit 99.1 is incorporated by reference herein. Exhibit 99.1 contains a discussion and reconciliation of projected EBITDA for 2006 for the acquisition. We believe EBITDA is useful to an investor in evaluating our operating performance because it helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense and preferred stock dividends) and our asset base (primarily depreciation and amortization) from our operating results. We also use EBITDA as a measure in determining the value of hotel acquisitions and dispositions.

Exhibit No.	Description
99.1	Excerpts from Press Release dated January 26, 2006

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Sunstone Hotel Investors, Inc.
Date: January 27, 2006	By:	/s/ JON D. KLINE
		Jon D. Kline
		Executive Vice President and
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Excerpts from Press Release dated January 26, 2006

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EX-99.1

Exhibit 99.1

Sunstone Hotel Investors, Inc. Announces the Acquisition of the 444-Room Hilton Times Square

SAN CLEMENTE, Calif., Jan. 26 /PRNewswire-FirstCall/ — Sunstone Hotel Investors, Inc. (NYSE: SHO) announced today that it has signed a purchase and sale agreement to acquire the Hilton Times Square located in New York City on 42nd Street a half block west of Times Square for a purchase price of approximately $242.5 million, or a 12.8x multiple on projected 2006 EBITDA (see reconciliation of EBITDA to net income below). The hotel is currently managed by Hilton Hotels. The acquisition, which is expected to close during the first quarter 2006, remains subject to certain closing conditions.

Sunstone will finance the acquisition through the assumption of $81.0 million of debt due in 2010 with a rate of 5.9% per annum, additional debt proceeds generated from the pending refinancing of two assets and through an anticipated equity offering.

***

About the Hilton Times Square

The Hilton Times Square hotel is part of a mixed-use complex developed by Forest City Ratner. The hotel, which opened in 2002, is surrounded by Broadway theatres, fashion houses, nightclubs, shopping, fine New York restaurants and a number of corporate headquarters. Soaring 44 stories above Manhattan Island, occupying the 21st thru 44th floors of a mixed-use entertainment/retail complex, the Hilton Times Square hotel offers oversized guest rooms (330 sq. ft standard room) with spectacular panoramic views.

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. is a Southern California-based lodging real estate investment trust (REIT). Assuming the close of this acquisition, Sunstone will own 62 hotels with an aggregate of 18,061 rooms primarily in the upper-upscale and upscale segments operated under franchises from nationally recognized brands such as Marriott, Hyatt, Hilton, InterContinental and Fairmont.

This news release contains forward-looking statements within the meaning of federal securities laws and regulations, including references to 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. Forward-looking statements in this news release are subject to various risks and uncertainties concerning specific factors described in Sunstone Hotel Investors, Inc.’s Form 10-K for the fiscal year ended December 31, 2004, the Form 10-Q for the quarters ended March 31, June 30 and September 30, 2005 and other SEC filings. Such information contained herein represents management’s best judgment as of the date hereof based on information currently available. Sunstone Hotel Investors, Inc. does not intend to update this information and disclaims any legal obligation to the contrary. Historical information is not necessarily indicative of future performance.

Reconciliation of Net Income to EBITDA - Full Year 2006 Forecast

	(in millions)
Net Income	$	10.1
Depreciation expense (1)		4.0
Interest expense		4.8
EBITDA	$	18.9

(1) Depreciation expense is a preliminary estimate based on the purchase price. The Company expects to obtain a purchase price allocation from an independent third party which may cause this estimate to change.

For Additional Information:

Bryan Giglia

Director of Finance

Sunstone Hotel Investors, Inc.

(949) 369-4236

Amy Cozamanis

Investor/Analyst Information

Financial Relations Board

(310) 854-8314

Laurie Berman

General Information

Financial Relations Board

(310) 854-8315

SOURCE Sunstone Hotel Investors, Inc.

01/26/2006

Web site: http://www.sunstonehotels.com

(SHO) 01/26/2006 16:10 EST http://www.prnewswire.com