8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,  D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 16, 2017

Sunstone Hotel Investors, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	001-32319	20-1296886
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

120 Vantis, Suite 350 Aliso Viejo, California	92656
(Address of Principal Executive Offices)	(Zip Code)

(949) 330-4000

(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:

☐	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 2.02.Results of Operations and Financial Condition.

On February 21, 2017,  Sunstone Hotel Investors, Inc. (the “Company”) issued a press release regarding its financial results for the fourth quarter and full year ended December 31, 2016. The press release referred to a supplemental information package that is available on the Company’s website, free of charge, at www.sunstonehotels.com. A copy of the press release and the supplemental information package are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by this reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 5.02.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On February 16, 2017, the Company’s Board of Directors approved base salary adjustments for the named executive officers that will be included in the Company’s proxy statement for its 2017 annual meeting, effective January 1, 2017 as follows:

Named Executive Officers & Title	New Base Salary
Bryan A. Giglia, Executive Vice President  - Chief Financial Officer	$	455,000
Robert C. Springer, Executive Vice President – Chief Investment Officer	$	410,000
David Klein, Senior Vice President & General Counsel	$	335,000

Item 5.03.Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Effective February 17, 2017, the Board of Directors amended Section 2.2 of Article II of the Company’s Bylaws to state that an annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on a date and at the time set by the Board of Directors during the month of April or May in each year. A copy of the amendment is attached hereto as Exhibit 3.2, and is incorporated herein by reference.

Item 8.01.Other Events

Effective February 17, 2017, the Board of Directors amended the Company’s Corporate Governance Guidelines (the “Guidelines”) to establish a policy whereby the Board of Directors will be required to accept a resignation tendered by a nominee who is already serving as a Director if such nominee shall have received more votes against than for his or her election at each of two-consecutive annual meetings of stockholders. The complete text of the Guidelines is set forth on the Company’s investor relations web site.

Item 9.01.  Financial Statements and Exhibits.

(d) The following exhibits are furnished herewith: 

EXHIBIT INDEX

Exhibit No.	Description
3.2	Third Amendment to the Amended and Restated Bylaws of Sunstone Hotel Investors, Inc., effective February 17, 2017.
99.1	Press Release, dated February 21, 2017.
99.2	Supplemental information package for the fourth quarter and full year ended December 31, 2016.

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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 thereunto duly authorized.

	Sunstone Hotel Investors, Inc.
Date: February 21, 2017	By:	/s/ Bryan A. Giglia
		Bryan A. Giglia (Principal Financial Officer and Duly Authorized Officer)

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EX-3.2

Exhibit 3.2

SUNSTONE HOTEL INVESTORS, INC.

THIRD AMENDMENT TO THE AMENDED AND RESTATED BYLAWS

THIS THIRD AMENDMENT, to the Amended and Restated Bylaws (the “Bylaws”) of Sunstone Hotel Investors, Inc., a Maryland corporation (the “Corporation”), was adopted and approved by the Board of Directors of the Corporation on February 17, 2017. In accordance with Article XIV of the Bylaws, this Second Amendment is effective as of February 17, 2017.  

Section 2.2 of Article II of the Bylaws is hereby deleted in its entirety and the following is hereby substituted therefor: 

“An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on a date and at the time set by the Board of Directors during the month of April or May in each year.”

EX-99.1

Exhibit 99.1

For Additional Information:

Bryan Giglia

Sunstone Hotel Investors, Inc.

(949) 382-3036

SUNSTONE HOTEL INVESTORS REPORTS RESULTS FOR FOURTH QUARTER AND FULL YEAR 2016

ALISO VIEJO, CA  – February 21, 2017 – Sunstone Hotel Investors, Inc. (the “Company” or “Sunstone”) (NYSE: SHO) today announced results for the fourth quarter and year ended December 31, 2016.

Fourth Quarter 2016 Operational Results (as compared to Fourth Quarter 2015):

· Net income decreased 85.6% to $34.3 million.

· Income attributable to common stockholders per diluted share decreased 87.5% to $0.14.

· Comparable Portfolio Hotel RevPAR increased 0.4% to $153.33.

· Total Portfolio Hotel RevPAR increased 1.6% to $155.34.

· Comparable Hotel Adjusted EBITDA Margin,  excluding prior year property tax adjustments, net decreased 80 basis points to 28.8%. Excluding the impact related to the end of the ground rent abatement at the Hilton San Diego Bayfront, Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net would have decreased by 30 basis points.

· Adjusted EBITDA decreased 2.4% to $79.1 million.

· Adjusted FFO attributable to common stockholders per diluted share decreased 3.3% to $0.29.

Full Year 2016 Operational Results (as compared to Full Year 2015):

· Net income decreased 60.4% to $140.7 million.

· Income attributable to common stockholders per diluted share decreased 66.0% to $0.55.

· Comparable Portfolio Hotel RevPAR increased 1.3% to $163.75.

· Total Portfolio Hotel RevPAR increased 0.7% to $164.22.

· Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net decreased 30 basis points to 30.5%. Excluding the impact related to the end of the ground rent abatement at the Hilton San Diego Bayfront, Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net would have increased by 20 basis points.

· Adjusted EBITDA decreased 6.1% to $330.0 million.

· Adjusted FFO attributable to common stockholders per diluted share decreased 7.6% to $1.21.

John Arabia,  President and Chief Executive Officer, stated, “During the quarter, transient demand and rates increased relative to the prior year, group attendance was healthy relative to its historic norms, and group spend on banquets and audio visual demonstrated strength. These better-than-anticipated top line results, coupled with energy, overhead and property tax savings, resulted in portfolio and company profits well ahead of our expectations.” Mr. Arabia continued, “Following the recent sale of the Fairmont Newport Beach, as well as other recent capital transactions, we have significant liquidity and are pursuing the acquisition of quality hotels that satisfy our long-term return requirements. At the same time, we expect to continue to capital recycle various assets within our portfolio, including legacy assets that no longer meet our investment criteria or hotels  in which we believe we can harvest at a material premium to our internal valuation.”

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UNAUDITED SELECTED STATISTICAL AND FINANCIAL DATA

($ in millions, except RevPAR, ADR and per share amounts)

	Three Months Ended December 31,								Year Ended December 31,
	2016			2015			Change		2016			2015			Change
Net Income	$	34.3		$	237.6		(85.6)	%	$	140.7		$	355.5		(60.4)	%
Income Attributable to Common Stockholders per Diluted Share	$	0.14		$	1.12		(87.5)	%	$	0.55		$	1.62		(66.0)	%
Total Portfolio Hotel RevPAR	$	155.34		$	152.85		1.6	%	$	164.22		$	163.03		0.7	%
Total Portfolio Hotel RevPAR, excluding the Wailea Beach Resort	$	151.77		$	150.88		0.6	%	$	162.50		$	160.22		1.4	%
Comparable Portfolio Hotel RevPAR	$	153.33		$	152.69		0.4	%	$	163.75		$	161.59		1.3	%
Comparable Portfolio Hotel Occupancy		78.1	%		78.3	%	(20)	bps		82.4	%		82.3	%	10	bps
Comparable Portfolio Hotel ADR	$	196.32		$	195.01		0.7	%	$	198.73		$	196.34		1.2	%
Comparable Portfolio Hotel Adjusted EBITDA Margin		28.8	%		29.6	%	(80)	bps		30.5	%		30.8	%	(30)	bps
Adjusted EBITDA	$	79.1		$	81.1		(2.4)	%	$	330.0		$	351.3		(6.1)	%
Adjusted FFO Attributable to Common Stockholders	$	62.2		$	62.3		(0.2)	%	$	260.8		$	271.7		(4.0)	%
Adjusted FFO Attributable to Common Stockholders per Diluted Share	$	0.29		$	0.30		(3.3)	%	$	1.21		$	1.31		(7.6)	%

Disclosures regarding the non-GAAP financial measures in this release are included on pages 5 through 7. Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included on pages 10 through 14 of this release. Comparable Hotel Adjusted EBITDA Margin excludes prior year property tax adjustments, net. 

The Company’s actual results for the quarter and year ended December 31, 2016 compare to its guidance originally provided as follows: 

Metric	Quarter Ended December 31, 2016 Guidance (1)	Quarter Ended December 31, 2016 Actual Results (unaudited)	Performance Relative to Prior Guidance Midpoint
Net Income ($ millions)	$16  to  $20	$34	+ $16
Total Portfolio Hotel RevPAR Growth	- 2.0%   to   0.0%	1.6%	+ 2.6%
Total Portfolio Hotel RevPAR Growth, excluding Wailea Beach Resort (2)	- 2.5%  to  - 0.5%	0.6%	+ 2.1%
Adjusted EBITDA ($ millions)	$69  to  $73	$79	+ $8
Adjusted FFO Attributable to Common Stockholders ($ millions)	$52  to  $56	$62	+ $8
Adjusted FFO Attributable to Common Stockholders per Diluted Share	$0.24  to  $0.26	$0.29	+ $0.04
Diluted Weighted Average Shares Outstanding	215,800,000	216,600,000	+ 800,000

Metric	Full Year 2016               Guidance (1)	Full Year 2016 Actual Results (unaudited except Net Income)	Performance Relative to Adjusted Prior Guidance Midpoint
Net Income ($ millions)	$123  to  $127	$141	+ $16
Total Portfolio Hotel RevPAR Growth	- 0.5%  to  + 0.5%	0.7%	+ 0.7%
Total Portfolio Hotel RevPAR Growth, excluding Wailea Beach Resort (2)	+ 0.5%  to  + 1.5%	1.4%	+ 0.4%
Adjusted EBITDA ($ millions)	$320  to  $324	$330	+ $8
Adjusted FFO Attributable to Common Stockholders ($ millions)	$250  to  $254	$261	+ $9
Adjusted FFO Attributable to Common Stockholders per Diluted Share	$1.16  to  $1.18	$1.21	+ $0.04
Diluted Weighted Average Shares Outstanding	215,000,000	215,200,000	+ 200,000

(1) Represents guidance presented on November 1, 2016.

(2) Excludes the Wailea Beach Resort due to the hotel’s repositioning during 2016.

Recent Developments

On January 10, 2017, the Company received proceeds of $240.0 million from the private placement of senior unsecured notes. The private placement consisted of $120.0 million of notes bearing interest at a fixed rate of 4.69%, maturing in January 2026, and $120.0 million of notes bearing interest at a fixed rate of 4.79%, maturing in January 2028.

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On January 11, 2017, the Company used proceeds received from its private placement of senior unsecured notes to repay the loan secured by the Marriott Boston Long Wharf, which had a balance of $176.0 million and a fixed rate of 5.58%. The Marriott Boston Long Wharf loan was scheduled to mature in April 2017, and was available to be repaid without penalty in January 2017. Following the repayment of the loan secured by the Marriott Boston Long Wharf in January 2017, the Company currently has  22 unencumbered hotels.

On February 10, 2017, the Company sold the 444-room Fairmont Newport Beach, California for a gross sales price of $125.0 million. The hotel was classified as held for sale as of December 31, 2016, but did not qualify as a discontinued operation as the sale did not represent a strategic shift that had a major impact on the Company’s business plan or its primary markets.

On February 17, 2017, the Company’s Board of Directors authorized an increase to the current share repurchase program to acquire up to $300.0 million of the Company’s common and preferred stock. Future purchases will depend on various factors, including the Company’s capital needs as well as the price of the Company’s common and preferred stock.

Balance Sheet/Liquidity Update

As of December 31, 2016, the Company had $437.5 million of cash and cash equivalents, including restricted cash of $67.9 million. Adjusting for the significant cash transactions that occurred in January 2017, including the $119.8 million payment of the Company’s common and preferred dividends, the funding of $240.0 million in unsecured senior notes and the $176.0 million repayment of the mortgage secured by the Marriott Boston Long Wharf, total pro forma cash including restricted cash as of December 31, 2016 would be $381.7 million.

As of December 31, 2016, the Company had total assets of $3.7 billion, including $3.2 billion of net investments in hotel properties, total consolidated debt of $0.9 billion and stockholders’ equity of $2.5 billion.  

In December 2016, the Company issued 3,564,047 shares of its common stock for gross proceeds of $55.1 million. The shares were issued in connection with an “At the Market” program pursuant to Equity Distribution Agreements (“ATM Agreements”), which the Company entered into during 2014 with Wells Fargo Securities, LLC and Merrill Lynch Pierce, Fenner & Smith Incorporated. Under the ATM Agreements, the Company is authorized to issue common stock having an aggregate offering amount of up to $150.0 million. As of December 31, 2016, the Company had $73.3 million available for sale under the ATM Agreements.

The Company intends to enter into new ATM Agreements during the first quarter of 2017, increasing its authorization to issue common stock to an aggregate offering amount of up to $300.0 million.    

Bryan Giglia, Chief Financial Officer, stated “Our Board recently increased the Company’s share repurchase authorization and ATM authorization in order to provide the Company with the incremental tools to manage the business and to increase our optionality in a volatile environment.  Given our significant cash position and investment capacity, we are well positioned to take advantage of various opportunities.” 

Capital Improvements

The Company invested $42.3 million and $182.2 million into capital improvements of its portfolio during the three months and year ended December 31, 2016, respectively.  During the fourth quarter 2016, the Company incurred total revenue displacement of approximately $1.5 million at the Wailea Beach Resort.  In 2017, the Company expects to invest approximately $125 million to $140 million into its portfolio,  which includes the final payments for the Wailea Beach Resort repositioning completed at the end of 2016.

2017 Outlook 

The Company’s achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in the Company’s filings with the Securities and Exchange Commission. The Company’s guidance does not take into account the impact of any unanticipated developments in its business or changes in its operating environment, nor does it take into account any unannounced hotel acquisitions, dispositions, re-brandings, management changes, transition costs, severance costs associated with restructuring hotel services, early lease termination costs,  prior year property tax assessments or credits, debt repurchases/repayments, perpetual preferred redemptions or unannounced financings during 2017.  

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For the first quarter of 2017, the Company expects: 

Metric	Quarter Ended    March 31, 2017     Guidance (1)
Net Income ($ millions)	$54  to  $57
Total Portfolio Hotel RevPAR Growth	+ 2.5% to + 4.5%
Adjusted EBITDA ($ millions)	$61  to  $64
Adjusted FFO Attributable to Common Stockholders ($ millions)	$43  to  $46
Adjusted FFO Attributable to Common Stockholders per Diluted Share	$0.19  to  $0.21
Diluted Weighted Average Shares Outstanding	219,600,000

For the full year of 2017, the Company expects: 

Metric	Full Year 2017               Guidance (1)
Net Income ($ millions)	$150 to  $174
Total Portfolio Hotel RevPAR Growth	+ 0.5% to + 3.5%
Adjusted EBITDA ($ millions)	$306  to  $330
Adjusted FFO Attributable to Common Stockholders ($ millions)	$239  to  $263
Adjusted FFO Attributable to Common Stockholders per Diluted Share	$1.09  to  $1.19
Diluted Weighted Average Shares Outstanding	219,800,000

(1) See pages 12 and 13 for detailed reconciliations of Net Income to non-GAAP financial measures.

First quarter and full year 2017 guidance are based in part on the following assumptions:

· Full year Total Portfolio Hotel RevPAR guidance is benefiting 150 to 200 basis points from the completed repositioning at the Wailea Beach Resort.

· Full year Hotel Adjusted EBITDA Margin change of approximately - 25 to + 50 basis points.

· Full year corporate overhead expense (excluding deferred stock amortization and one-time expenses related to any acquisition closing costs) of approximately $19.5 million to $20.5 million.

· Full year amortization of deferred stock compensation expense of approximately $8.3  million.

· Full year interest expense of approximately $48.0 million to $48.3 million, including approximately $2.3 million in amortization of deferred financing fees and excluding approximately $1.4 million of capital lease obligation interest.

· Full year total preferred dividends of $12.8 million, which includes the Series E and Series F cumulative redeemable preferred stock.

Dividend Update

On February 17, 2017, the board of directors declared a cash dividend of $0.05 per share of common stock, as well as cash dividends of $0.434375 per share payable to its Series E cumulative redeemable preferred stockholders and $0.403125 per share payable to its Series F cumulative redeemable preferred stockholders. The dividends will be paid on April 17, 2017 to stockholders of record as of March 31, 2017.

The Company expects to continue to pay a regular cash dividend of $0.05 per share of common stock throughout 2017. To the extent that the expected regular quarterly dividends for 2017 do not satisfy the Company’s annual distribution requirements, the Company expects to satisfy the annual distribution requirement by paying a “catch-up” dividend in January 2018. The level of any future quarterly dividends will be determined by the Company’s board of directors after considering long-term operating projections, expected capital requirements, and risks affecting the Company’s business.

Supplemental Disclosures

Contemporaneous with this release, the Company has furnished a Form 8-K with unaudited financial information. This additional information is being provided as a supplement to information prepared in accordance with generally accepted accounting principles. The Company has no obligation to update any of the information provided to conform to actual results or changes in the Company’s portfolio, capital structure or future expectations.

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Earnings Call

The Company will host a conference call to discuss fourth quarter and full year 2016 financial results on February  22, 2017, at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time). A live web cast of the call will be available via the Investor Relations section of the Company’s website.  Alternatively, investors may dial 1-785-830-7990 and reference conference ID 5261810 to listen to the call live. A replay of the web cast will also be archived on the website.

About Sunstone Hotel Investors, Inc.

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust (“REIT”) that as of February 21, 2017 has interests in 27 hotels comprised of 13,225 rooms. Sunstone’s hotels are primarily in the urban and resort upper upscale segment and are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. For further information, please visit Sunstone’s website at www.sunstonehotels.com. 

Sunstone’s mission is to create meaningful value for our stockholders by producing superior long-term returns through the ownership of long-term relevant lodging real estate. Our values include transparency, trust, ethical conduct, honest communication and discipline. As demand for lodging generally fluctuates with the overall economy, we seek to own hotels that will maintain a high appeal with travelers over long periods of time and will generate economic earnings materially in excess of recurring capital requirements.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “continue,”  “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will” and other similar terms and phrases, including opinions, references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: volatility in the debt or equity markets affecting our ability to acquire or sell hotel assets; international, national and local economic and business conditions, including the likelihood of a U.S. recession, changes in the European Union or global economic slowdown, as well as any type of flu or disease-related pandemic, affecting the lodging and travel industry; the ability to maintain sufficient liquidity and our access to capital markets; terrorist attacks or civil unrest,  which would affect occupancy rates at our hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of our indebtedness and our ability to meet covenants in our debt and equity agreements; relationships with property managers and franchisors; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations, which influence or determine wages, prices, construction procedures and costs; our ability to identify, successfully compete for and complete acquisitions; the performance of hotels after they are acquired; necessary capital expenditures and our ability to fund them and complete them with minimum disruption; our ability to continue to satisfy complex rules in order for us to qualify as a REIT for federal income tax purposes; and other risks and uncertainties associated with our business described in the Company’s filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All forward-looking information in this release is as of February 21, 2017, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

This release should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies of these reports are available on our website at www.sunstonehotels.com and through the SEC’s Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) at www.sec.gov.

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: earnings before interest expense, taxes, depreciation and amortization, or EBITDA; Adjusted EBITDA (as defined below); funds from operations attributable to common stockholders, or FFO attributable to common stockholders;  Adjusted FFO attributable to common stockholders (as defined below); hotel Adjusted EBITDA; and hotel Adjusted EBITDA margin.  These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. EBITDA,

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Adjusted EBITDA, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders,  hotel Adjusted EBITDA and hotel Adjusted EBITDA margin as calculated by us, may not be comparable to other companies that do not define such terms exactly the same as the Company does. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

EBITDA and Adjusted EBITDA are commonly used measures of performance in many industries. We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because these measures help 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 our asset base (primarily depreciation and amortization) from our operating results. We also believe the use of EBITDA and Adjusted EBITDA facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. In addition, certain covenants included in our indebtedness use EBITDA as a measure of financial compliance. We also use EBITDA and Adjusted EBITDA as measures in determining the value of hotel acquisitions and dispositions.

Historically, we have adjusted EBITDA when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance and that the presentation of Adjusted EBITDA, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance.

We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, amortization of lease intangibles, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition of “FFO applicable to common shares.” This may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do.  

We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance, and may facilitate comparisons of operating performance between periods and our peer companies.

We adjust EBITDA and FFO attributable to common stockholders for the following items, which may occur in any period, and refer to these measures as either Adjusted EBITDA or Adjusted FFO attributable to common stockholders:

· Amortization of favorable and unfavorable contracts:  we exclude the noncash amortization of the favorable management contract asset recorded in conjunction with our acquisition of the Hilton Garden Inn Chicago Downtown/Magnificent Mile, along with the favorable and unfavorable tenant lease contracts, as applicable, recorded in conjunction with our acquisitions of the Boston Park Plaza, the Hilton Garden Inn Chicago Downtown/Magnificent Mile, the Hilton New Orleans St. Charles, the Hyatt Regency San Francisco and the Wailea Beach Resort. We exclude the noncash amortization of favorable and unfavorable contracts because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.

· Ground rent adjustments: we exclude the noncash expense incurred from straight-lining our ground lease obligations as this expense does not reflect the actual rent amounts due to the respective lessors in the current period and is of lesser significance in evaluating our actual performance for the current period.  

· Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.

· Acquisition costs: under GAAP, costs associated with completed acquisitions that meet the Financial Accounting Standard Board’s (“FASB”) definition of a business in accordance with the Business Combinations Topic of the

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Accounting Standards Codification are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company or our hotels.

· Noncontrolling interests: we deduct the noncontrolling partner’s pro rata share of any EBITDA or FFO adjustments related to our consolidated Hilton San Diego Bayfront partnership,  as well as any preferred dividends earned by preferred investors in an entity that owned the Doubletree Guest Suites Times Square, including related administrative fees, prior to the hotel’s sale in December 2015.  

· Cumulative effect of a change in accounting principle:  from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.

· Impairment losses: we exclude the effect of impairment losses because we believe that including them in Adjusted EBITDA and Adjusted FFO attributable to common stockholders is not consistent with reflecting the ongoing performance of our remaining assets.

· Other adjustments: we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: executive severance costs; lawsuit settlement costs; prior year property tax assessments or credits; property-level restructuring, severance and management transition costs; lease terminations; and any gains or losses we have recognized on sales or redemptions of assets other than real estate investments.

In addition, to derive Adjusted EBITDA we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels. We also include an adjustment for the cash ground lease expense recorded on the Hyatt Centric Chicago Magnificent Mile’s building lease. Upon acquisition of this hotel, we determined that the building lease was a capital lease, and, therefore, we include a portion of the capital lease payment each month in interest expense. We include an adjustment for ground lease expense on capital leases in order to more accurately reflect the actual rent due to the hotel’s lessor in the current period, as well as the operating performance of the Hyatt Centric Chicago Magnificent Mile.  We  also exclude the effect of gains and losses on the disposition of depreciable assets because we believe that including them in Adjusted EBITDA is not consistent with reflecting the ongoing performance of our assets. In addition, material gains or losses from the depreciated value of the disposed assets could be less important to investors given that the depreciated asset value often does not reflect its market value.

To derive Adjusted FFO attributable to common stockholders,  we also exclude the noncash gains or losses on our derivatives, as well as any federal and state taxes associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets other than real estate investments. We believe that these items are not reflective of our ongoing finance costs.

In presenting hotel  Adjusted EBITDA and hotel  Adjusted EBITDA margins, the revenue and expense items associated with BuyEfficient prior to its sale in September 2015 and other miscellaneous non-hotel items have been excluded. We believe the calculation of hotel Adjusted EBITDA results in a more accurate presentation of the hotel Adjusted EBITDA margins for our hotels, and that these non-GAAP financial measures are useful to investors in evaluating our property-level operating performance.  

Our 26 comparable hotel portfolio is comprised of our total portfolio with the exception of the Wailea Beach Resort due to its extensive repositioning disruption during the fourth quarter of 2015 as well as all of 2016,  and the Fairmont Newport Beach which was classified as held for sale at December 31, 2016, and subsequently sold in February 2017.  We believe that providing comparable hotel data is useful to us and to investors in evaluating our operating performance because this measure helps us and investors evaluate and compare the results of our operations from period to period by removing the fluctuations caused by any acquisitions or dispositions, as well as by those hotels that we classify as held for sale, those hotels that are undergoing a material renovation or repositioning and those hotels whose room counts have materially changed during either the current or prior year. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

Reconciliations of net income to EBITDA, Adjusted EBITDA, FFO attributable to common stockholders and Adjusted FFO attributable to common stockholders are set forth on pages  10 and 11. Reconciliations and the components of hotel Adjusted EBITDA and hotel  Adjusted EBITDA margin are set forth on page 14. 

7

Sunstone Hotel Investors, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

	December 31,		December 31,
	2016		2015
Assets
Current assets:
Cash and cash equivalents	$	369,537	$	499,067
Restricted cash		67,923		76,180
Accounts receivable, net		39,337		32,024
Inventories		1,225		1,395
Prepaid expenses		10,489		10,879
Assets held for sale, net		79,113		—
Total current assets		567,624		619,545
Investment in hotel properties, net		3,158,219		3,230,852
Deferred financing fees, net		4,002		4,310
Other assets, net		9,389		10,386
Total assets	$	3,739,234	$	3,865,093
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	$	36,110	$	30,193
Accrued payroll and employee benefits		24,896		28,023
Dividends and distributions payable		119,847		265,124
Other current liabilities		39,869		42,174
Current portion of notes payable, net		184,929		85,776
Liabilities of assets held for sale		3,153		—
Total current liabilities		408,804		451,290
Notes payable, less current portion, net		746,374		1,010,819
Capital lease obligations, less current portion		15,574		15,575
Other liabilities		36,650		36,289
Total liabilities		1,207,402		1,513,973
Commitments and contingencies		—		—
Equity:
Stockholders' equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized:
8.0% Series D Cumulative Redeemable Preferred Stock, zero shares issued and outstanding at December 31, 2016, and 4,600,000 shares issued and outstanding at December 31, 2015, stated at liquidation preference of $25.00 per share		—		115,000
6.95% Series E Cumulative Redeemable Preferred Stock, 4,600,000 shares issued and outstanding at December 31, 2016 and zero shares issued and outstanding at December 31, 2015, stated at liquidation preference of $25.00 per share		115,000		—
6.45% Series F Cumulative Redeemable Preferred Stock, 3,000,000 shares issued and outstanding at December 31, 2016 and zero shares issued and outstanding at December 31, 2015, stated at liquidation preference of $25.00 per share		75,000		—
Common stock, $0.01 par value, 500,000,000 shares authorized, 220,073,140 shares issued and outstanding at December 31, 2016 and 207,604,391 shares issued and outstanding at December 31, 2015		2,201		2,076
Additional paid in capital		2,596,620		2,458,889
Retained earnings		786,901		652,704
Cumulative dividends and distributions		(1,092,952)		(927,868)
Total stockholders' equity		2,482,770		2,300,801
Noncontrolling interest in consolidated joint venture		49,062		50,319
Total equity		2,531,832		2,351,120
Total liabilities and equity	$	3,739,234	$	3,865,093

8

Sunstone Hotel Investors, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

	Three Months Ended December 31,				Year Ended December 31,
	2016		2015		2016		2015
	(unaudited)
Revenues
Room	$	195,195	$	207,361	$	824,340	$	874,117
Food and beverage		72,984		74,072		294,415		293,892
Other operating		21,405		19,500		70,585		81,171
Total revenues		289,584		300,933		1,189,340		1,249,180
Operating expenses
Room		51,762		54,293		211,947		224,035
Food and beverage		50,060		51,520		204,102		204,932
Other operating		4,168		5,262		16,684		21,335
Advertising and promotion		14,801		15,640		60,086		61,892
Repairs and maintenance		11,168		11,759		44,307		46,557
Utilities		7,310		7,807		30,424		34,543
Franchise costs		9,245		10,087		36,647		40,096
Property tax, ground lease and insurance		21,038		22,554		82,979		94,967
Other property-level expenses		35,044		32,948		142,742		142,332
Corporate overhead		6,073		6,117		25,991		33,339
Depreciation and amortization		41,847		41,805		163,016		164,716
Total operating expenses		252,516		259,792		1,018,925		1,068,744
Operating income		37,068		41,141		170,415		180,436
Interest and other income		673		535		1,800		3,885
Interest expense		(3,265)		(15,496)		(50,283)		(66,516)
Loss on extinguishment of debt		(25)		(2,962)		(284)		(2,964)
Gain on sale of assets		190		214,535		18,413		226,217
Income before income taxes and discontinued operations		34,641		237,753		140,061		341,058
Income tax benefit (provision)		(343)		(178)		616		(1,434)
Income from continuing operations		34,298		237,575		140,677		339,624
Income from discontinued operations, net of tax		—		—		—		15,895
Net income		34,298		237,575		140,677		355,519
Income from consolidated joint ventures attributable to noncontrolling interests		(1,122)		(1,521)		(6,480)		(8,164)
Preferred stock dividends and redemption charge		(3,208)		(2,300)		(15,964)		(9,200)
Income attributable to common stockholders	$	29,968	$	233,754	$	118,233	$	338,155
Basic and diluted per share amounts:
Income from continuing operations attributable to common stockholders	$	0.14	$	1.12	$	0.55	$	1.54
Income from discontinued operations, net of tax		—		—		—		0.08
Basic and diluted income attributable to common stockholders per common share	$	0.14	$	1.12	$	0.55	$	1.62
Basic and diluted weighted average common shares outstanding		216,163		207,604		214,966		207,350
Distributions declared per common share	$	0.53	$	1.26	$	0.68	$	1.41

9

Sunstone Hotel Investors, Inc.

Reconciliation of Net Income to Non-GAAP Financial Measures

(Unaudited and in thousands)

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

	Three Months Ended December 31,					Year Ended December 31,
	2016		2015				2016		2015
Net income	$	34,298	$	237,575	$		140,677	$	355,519
Operations held for investment:
Depreciation and amortization		41,847		41,805			163,016		164,716
Amortization of lease intangibles		63		707			252		3,791
Interest expense		3,265		15,496			50,283		66,516
Income tax (benefit) provision		343		178			(616)		1,434
Noncontrolling interests:
Income from consolidated joint ventures attributable to noncontrolling interests		(1,122)		(1,521)			(6,480)		(8,164)
Depreciation and amortization		(873)		(866)			(3,480)		(3,432)
Interest expense		(433)		(388)			(1,684)		(1,537)
Discontinued operations:
Income tax provision		—		—			—		105
EBITDA		77,388		292,986			341,968		578,948
Operations held for investment:
Amortization of deferred stock compensation		1,541		1,031			7,157		6,536
Amortization of favorable and unfavorable contracts, net		52		(1,487)			394		(1,623)
Noncash straight-line lease expense		465		496			1,878		1,987
Capital lease obligation interest - cash ground rent		(351)		(351)			(1,404)		(1,404)
Gain on sale of assets, net		(196)		(214,526)			(18,422)		(226,234)
Severance costs associated with sale of BuyEfficient		—		—			—		1,636
Loss on extinguishment of debt		25		2,962			284		2,964
Gain on redemption of note receivable		—		—			—		(939)
Prior year property tax adjustments, net		308		—			(3,971)		(865)
Property-level restructuring, severance and management transition costs		—		62			1,578		1,219
Lease termination costs		—		—			1,000		300
Costs associated with CEO severance		—		—			—		5,257
Noncontrolling interests:
Noncash straight-line lease expense		(112)		(112)			(450)		(450)
Discontinued operations:
Gain on sale of assets		—		—			—		(16,000)
		1,732		(211,925)			(11,956)		(227,616)
Adjusted EBITDA	$	79,120	$	81,061	$		330,012	$	351,332

10

Sunstone Hotel Investors, Inc.

Reconciliation of Net Income to Non-GAAP Financial Measures

(Unaudited and in thousands, except per share amounts)

Reconciliation of Net Income to FFO  Attributable to Common Stockholders and

Adjusted FFO  Attributable to Common Stockholders

	Three Months Ended December 31,					Year Ended December 31,
	2016		2015				2016	2015
Net income	$	34,298	$	237,575	$		140,677	$	355,519
Preferred stock dividends and redemption charge		(3,208)		(2,300)			(15,964)		(9,200)
Operations held for investment:
Real estate depreciation and amortization		41,716		41,653			162,431		163,361
Amortization of lease intangibles		63		707			252		3,791
Gain on sale of assets, net		(196)		(214,526)			(18,422)		(226,234)
Noncontrolling interests:
Income from consolidated joint ventures attributable to noncontrolling interests		(1,122)		(1,521)			(6,480)		(8,164)
Real estate depreciation and amortization		(873)		(866)			(3,480)		(3,432)
Discontinued operations:
Gain on sale of assets		—		—			—		(16,000)
FFO attributable to common stockholders		70,678		60,722			259,014		259,641
Operations held for investment:
Write-off of deferred financing fees		—		—			—		455
Amortization of favorable and unfavorable contracts, net		52		(1,487)			394		(1,623)
Noncash straight-line lease expense		465		496			1,878		1,987
Noncash interest related to gain on derivatives, net		(9,236)		(321)			(1,426)		(309)
Loss on extinguishment of debt		25		2,962			284		2,964
Gain on redemption of note receivable		—		—			—		(939)
Prior year property tax adjustments, net		308		—			(3,971)		(865)
Property-level restructuring, severance and management transition costs		—		62			1,578		1,219
Lease termination costs		—		—			1,000		300
Income tax benefit related to prior years		—		—			(1,596)		—
Preferred stock redemption charge		—		—			4,052		—
Costs associated with CEO severance		—		—			—		5,257
Amortization of deferred stock compensation associated with CEO severance		—		—			—		1,623
Severance costs associated with sale of BuyEfficient		—		—			—		1,636
Income tax provision related to gain on sale of BuyEfficient		—		—			—		720
Noncontrolling interests:
Noncash straight-line lease expense		(112)		(112)			(450)		(450)
Noncash interest related to loss on derivative, net		—		—			—		(3)
Discontinued operations:
Income tax provision		—		—			—		105
		(8,498)		1,600			1,743		12,077
Adjusted FFO attributable to common stockholders	$	62,180	$	62,322	$		260,757	$	271,718
FFO attributable to common stockholders per diluted share	$	0.33	$	0.29	$		1.20	$	1.25
Adjusted FFO attributable to common stockholders per diluted share	$	0.29	$	0.30	$		1.21	$	1.31
Basic weighted average shares outstanding		216,163		207,604			214,966		207,350
Shares associated with unvested restricted stock awards		445		263			242		262
Diluted weighted average shares outstanding		216,608		207,867			215,208		207,612

11

Sunstone Hotel Investors, Inc.

Reconciliation of Net Income to Non-GAAP Financial Measures

Guidance for First Quarter 2017

(Unaudited and in thousands, except per share amounts)

Reconciliation of Net Income to Adjusted EBITDA

	Quarter Ended
	March 31, 2017
	Low		High
Net income	$	53,900	$	57,200
Depreciation and amortization		39,000		39,100
Amortization of lease intangibles		100		100
Interest expense		12,900		12,700
Income tax provision		400		400
Noncontrolling interest		(2,900)		(3,100)
Amortization of deferred stock compensation		2,200		2,200
Amortization of favorable and unfavorable contracts, net		100		100
Noncash straight-line lease expense		(300)		(300)
Capital lease obligation interest - cash ground rent		(400)		(400)
Gain on sale of assets		(44,000)		(44,000)
Adjusted EBITDA	$	61,000	$	64,000

Reconciliation of Net Income to Adjusted FFO  Attributable to Common Stockholders

Net income	$	53,900	$	57,200
Preferred stock dividends		(3,200)		(3,200)
Real estate depreciation and amortization		38,700		38,800
Amortization of lease intangibles		100		100
Noncontrolling interest		(2,500)		(2,700)
Amortization of favorable and unfavorable contracts, net		100		100
Noncash straight-line lease expense		(300)		(300)
Gain on sale of assets		(44,000)		(44,000)
Adjusted FFO attributable to common stockholders	$	42,800	$	46,000
Adjusted FFO attributable to common stockholders per diluted share	$	0.19	$	0.21
Diluted weighted average shares outstanding		219,600		219,600

12

Sunstone Hotel Investors, Inc.

Reconciliation of Net Income to Non-GAAP Financial Measures

Guidance for Full Year 2017

(Unaudited and in thousands, except per share amounts)

Reconciliation of Net Income to Adjusted EBITDA

	Year Ended
	December 31, 2017
		Low		High
Net income	$	150,100	$	174,400
Depreciation and amortization		156,000		156,400
Amortization of lease intangibles		300		300
Interest expense		48,300		48,000
Income tax provision		800		800
Noncontrolling interest		(11,500)		(11,900)
Amortization of deferred stock compensation		8,300		8,300
Amortization of favorable and unfavorable contracts, net		200		200
Noncash straight-line lease expense		(1,100)		(1,100)
Capital lease obligation interest - cash ground rent		(1,400)		(1,400)
Gain on sale of assets		(44,000)		(44,000)
Adjusted EBITDA	$	306,000	$	330,000

Reconciliation of Net Income to Adjusted FFO  Attributable to Common Stockholders

Net income	$	150,100	$	174,400
Preferred stock dividends		(12,800)		(12,800)
Real estate depreciation and amortization		155,600		155,800
Amortization of lease intangibles		300		300
Noncontrolling interest		(9,800)		(10,200)
Amortization of favorable and unfavorable contracts, net		200		200
Noncash straight-line lease expense		(1,100)		(1,100)
Gain on sale of assets		(44,000)		(44,000)
Adjusted FFO attributable to common stockholders	$	238,500	$	262,600
Adjusted FFO attributable to common stockholders per diluted share	$	1.09	$	1.19
Diluted weighted average shares outstanding		219,800		219,800

13

Sunstone Hotel Investors, Inc.

Non-GAAP Financial Measures

Comparable Hotel Adjusted EBITDA and Margins

(Unaudited and in thousands)

	ThreeMonths Ended December 31,				Year Ended December 31,
	2016		2015		2016		2015
Comparable Hotel Adjusted EBITDA Margin (1)		28.7%		29.6%		30.8%		30.9%
Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net  (2)		28.8%		29.6%		30.5%		30.8%
Total revenues	$	289,584	$	300,933	$	1,189,340	$	1,249,180
Non-hotel revenues (3)		(5,066)		(1,605)		(5,076)		(7,822)
Total Actual Hotel Revenues		284,518		299,328		1,184,264		1,241,358
Non-comparable hotel revenues (4)		(23,616)		(21,137)		(92,031)		(95,887)
Sold hotel revenues (5)		—		(19,152)		(4,846)		(78,384)
Total Comparable Hotel Revenues	$	260,902	$	259,039	$	1,087,387	$	1,067,087
Net income	$	34,298	$	237,575	$	140,677	$	355,519
Non-hotel revenues (3)		(66)		(1,605)		(76)		(7,822)
Performance guarantee (3)		(5,000)		—		(5,000)		—
Non-hotel operating expenses (6)		304		982		1,244		10,211
Property-level restructuring, severance and management transition costs (7)		—		62		1,578		1,219
Lease termination costs (7)		420		—		1,420		300
Corporate overhead		6,073		6,117		25,991		33,339
Depreciation and amortization		41,847		41,805		163,016		164,716
Interest and other income		(673)		(535)		(1,800)		(3,885)
Interest expense		3,265		15,496		50,283		66,516
Loss on extinguishment of debt		25		2,962		284		2,964
Gain on sale of assets		(190)		(214,535)		(18,413)		(226,217)
Income tax (benefit) provision		343		178		(616)		1,434
Income from discontinued operations, net of tax		—		—		—		(15,895)
Actual Hotel Adjusted EBITDA		80,646		88,502		358,588		382,399
Non-comparable hotel Adjusted EBITDA (4)		(5,847)		(5,601)		(21,949)		(29,591)
Sold hotel Adjusted EBITDA (5)		—		(6,108)		(1,404)		(23,020)
Comparable Hotel Adjusted EBITDA		74,799		76,793		335,235		329,788
Prior year property tax adjustments, net (8)		308		—		(3,971)		(865)
Comparable Hotel Adjusted EBITDA, excluding prior year property tax adjustments, net	$	75,107	$	76,793	$	331,264	$	328,923

* Footnotes on page 15

14

(1) Comparable Hotel Adjusted EBITDA Margin is calculated as Comparable Hotel Adjusted EBITDA divided by Total Comparable Hotel Revenues.

(2) Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net is calculated as Comparable Hotel Adjusted EBITDA, excluding prior year property tax adjustments, net divided by Total Comparable Hotel Revenues.

(3) Non-hotel revenues include a $5.0 million performance guarantee recorded by the Company in the fourth quarter of 2016, and paid by the brand manager of the Wailea Beach Resort in January 2017 to compensate the Company while the hotel was undergoing its extensive repositioning. Non-hotel revenues also include revenues generated by BuyEfficient prior to its sale in September 2015, as well as the amortization of favorable and unfavorable tenant lease contracts recorded in conjunction with the Company's acquisitions of the Boston Park Plaza, the Hilton Garden Inn Chicago Downtown/Magnificent Mile, the Hilton New Orleans St. Charles, the Hyatt Regency San Francisco and the Wailea Beach Resort.

(4) Includes hotel revenues and Adjusted EBITDA generated by the Wailea Beach Resort, which is classified as non-comparable due to its extensive repositioning during the fourth quarter of 2015, as well as all of 2016, and the Fairmont Newport Beach, which the Company classified as held for sale as of December 31, 2016, and subsequently sold in February 2017.

(5) Includes hotel revenues and Adjusted EBITDA generated during the Company's ownership period for the Sheraton Cerritos, sold in May 2016, and the Doubletree Guest Suites Times Square, sold in December 2015. EBITDA for the Doubletree Guest Suites Times Square has been adjusted to exclude the amortization of lease intangibles as well as the noncash straight-line lease expense.

(6) Non-hotel operating expenses represent expenses generated by BuyEfficient prior to its sale in September 2015, as well as the following: the amortization of lease intangibles; the amortization of a favorable management agreement; noncash straight-line lease expense; and capital lease obligation interest - cash ground rent.

(7) Property-level restructuring, severance and management transition costs for the year ended December 31, 2016 includes the following severance costs: Hilton Times Square $0.5 million; Hyatt Regency San Francisco $0.9 million; Marriott Boston Long Wharf $45,000; Renaissance Washington DC $(10,000); and Wailea Beach Resort $0.1 million. Property-level restructuring, severance and management transition costs for the three months ended December 31, 2015 includes the following: Boston Park Plaza $0.1 million; and Hilton New Orleans St. Charles $(16,000). Property-level restructuring, severance and management transition costs for the year ended December 31, 2015 includes the following: Boston Park Plaza $0.7 million; Hilton New Orleans St. Charles $0.1 million; Marriott Philadelphia $20,000; and Renaissance Washington DC $0.4 million. Lease termination costs for the three months and year ended December 31, 2016 includes $0.4 million at the Boston Park Plaza. Lease termination costs for the year ended December 31, 2016 also includes $1.0 million at the Wailea Beach Resort. Lease termination costs for the year ended December 31, 2015 includes $0.3 million at the Boston Park Plaza.

(8) Prior year property tax adjustments, net for the three months ended December 31, 2016 excludes the additional net expense of $0.3 million. For the years ended December 31, 2016 and 2015, prior year property tax adjustments, net excludes the additional net benefit of $4.0 million and $0.9 million, respectively.

15

EX-99.2

Exhibit 99.2

Supplemental Financial Information
February 21, 2017

Supplemental Financial Information For the quarter and year ended December 31, 2016 February 21, 2017

Supplemental Financial Information
February 21, 2017

Table of Contents

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR						3
About Sunstone						4
Forward-Looking Statement						5
Non-GAAP Financial Measures						6
CORPORATE FINANCIAL INFORMATION						9
Condensed Consolidated Balance Sheets Q4 2016 – Q4 2015						10
Consolidated Statements of Operations Q4 and FY 2016/2015						12
Reconciliation of Net Income to EBITDA and Adjusted EBITDA Q4 and FY 2016/2015						13
Reconciliation of Net Income to FFO and Adjusted FFO Attributable to Common Stockholders Q4 and FY 2016/2015						14
Pro Forma Reconciliation of Consolidated Statements of Operations Q4 2016 – Q1 2016,  FY 2016/2015						15
Pro Forma Reconciliation of Net Income to EBITDA and Adjusted EBITDA FY 2016						16
Pro Forma Reconciliation of Net Income to FFO and Adjusted FFO Attributable to Common Stockholders FY 2016						17
Pro Forma Net Income to EBITDA, Adjusted EBITDA, FFO and Adjusted FFO Attributable to Common Stockholders FY 2016 Footnotes						18
EARNINGS GUIDANCE						19
Earnings Guidance for Q1 and FY 2017						20
Reconciliation of Net Income to Adjusted EBITDA and Adjusted FFO Attributable to Common Stockholders Q1 and FY 2017						22
CAPITALIZATION						23
Comparative Capitalization Q4 2016 –  Q4 2015						24
Consolidated Debt Summary Schedule						25
Consolidated Amortization and Pro Forma Debt Maturity Schedule						26
PROPERTY-LEVEL DATA						27
Hotel Information as of December 31, 2016						28

Supplemental Financial Information
February 21, 2017

PROPERTY-LEVEL OPERATING STATISTICS	29
Property-Level Operating Statistics Q4 2016/2015	30
Property-Level Operating Statistics FY 2016/2015	31
OPERATING STATISTICS BY BRAND & GEOGRAPHY	32
Operating Statistics by Brand Q4 and FY 2016/2015	33
Comparable Portfolio Property-Level FY 2016 Adjusted EBITDA Contribution by Brand	34
Operating Statistics by Region Q4 and FY 2016/2015	35
PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS	36
Property-Level Adjusted EBITDA Q4 and FY 2016/2015	37
Property-Level Adjusted EBITDA Q4 and FY 2016/2015 Footnotes	38
Property-Level Adjusted EBITDA Margins Q4 and FY 2016/2015	39
Property-Level Adjusted EBITDA Margins Q4 and FY 2016/2015 Footnotes	40
Property-Level Adjusted EBITDA Reconciliation Q4 2016	41
Property-Level Adjusted EBITDA Reconciliation Q4 2015	42
Property-Level Adjusted EBITDA Reconciliation Q4 2016/2015 Footnotes	43
Property-Level Adjusted EBITDA Reconciliation FY 2016	44
Property-Level Adjusted EBITDA Reconciliation FY 2015	45
Property-Level Adjusted EBITDA Reconciliation FY 2016/2015 Footnotes	46

Supplemental Financial Information
February 21, 2017

CORPORATE PROFILE, FINANCIAL DISCLOSURES,
AND SAFE HARBOR

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR							Page 3

Supplemental Financial Information
February 21, 2017

About Sunstone

Sunstone Hotel Investors, Inc. (NYSE:SHO) is a lodging real estate investment trust (REIT) that, as of February 21, 2017, has interests in 27 hotels held for investment comprised of 13,225 rooms. Sunstone’s hotels are primarily in the urban and resort upper upscale segment and are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt.

Sunstone’s mission is to create meaningful value for our stockholders by producing superior long-term returns through the ownership of long-term relevant lodging real estate. Our values include transparency, trust, ethical conduct, honest communication and discipline. As demand for lodging generally fluctuates with the overall economy, we seek to own hotels that will maintain a high appeal with travelers over long periods of time and will generate economic earnings materially in excess of recurring capital requirements.

Corporate Headquarters
120 Vantis,  Suite 350
Aliso Viejo, CA 92656
(949) 330-4000

Company Contacts
John Arabia
President and Chief Executive Officer 
(949) 382-3008

Bryan Giglia
Executive Vice President and Chief Financial Officer 
(949) 382-3036

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR							Page 4

Supplemental Financial Information
February 21, 2017

Forward-Looking Statement

This presentation contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will” and other similar terms and phrases, including opinions, references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: volatility in the debt or equity markets affecting our ability to acquire or sell hotel assets; international, national and local economic and business conditions, including the likelihood of a U.S. recession, changes in the European Union or global economic slowdown, as well as any type of flu or disease-related pandemic, affecting the lodging and travel industry; the ability to maintain sufficient liquidity and our access to capital markets; terrorist attacks or civil unrest, which would affect occupancy rates at our hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of our indebtedness and our ability to meet covenants in our debt and equity agreements; relationships with property managers and franchisors; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations, which influence or determine wages, prices, construction procedures and costs; our ability to identify, successfully compete for and complete acquisitions; the performance of hotels after they are acquired; necessary capital expenditures and our ability to fund them and complete them with minimum disruption; our ability to continue to satisfy complex rules in order for us to qualify as a REIT for federal income tax purposes; and other risks and uncertainties associated with our business described in the Company’s filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All forward-looking information in this presentation is as of February 21, 2017, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

This presentation should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies of these reports are available on our website at www.sunstonehotels.com and through the SEC’s Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) at www.sec.gov.

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR							Page 5

Supplemental Financial Information
February 21, 2017

Non-GAAP Financial Measures

We present the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: earnings before interest expense, taxes, depreciation and amortization, or EBITDA; Adjusted EBITDA (as defined below); funds from operations attributable to common stockholders, or FFO attributable to common stockholders;  Adjusted FFO attributable to common stockholders (as defined below); hotel Adjusted EBITDA; and hotel  Adjusted EBITDA margin.  These measures should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. EBITDA, Adjusted EBITDA, FFO attributable to common stockholders, Adjusted FFO attributable to common stockholders,  hotel Adjusted EBITDA and hotel Adjusted EBITDA margin as calculated by us, may not be comparable to other companies that do not define such terms exactly the same as the Company does. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

EBITDA and Adjusted EBITDA are commonly used measures of performance in many industries. We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because these measures help 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 our asset base (primarily depreciation and amortization) from our operating results. We also believe the use of EBITDA and Adjusted EBITDA facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital-intensive companies. In addition, certain covenants included in our indebtedness use EBITDA as a measure of financial compliance. We also use EBITDA and Adjusted EBITDA as measures in determining the value of hotel acquisitions and dispositions.

Historically, we have adjusted EBITDA when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance and that the presentation of Adjusted EBITDA, when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance.

We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, amortization of lease intangibles, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition of “FFO applicable to common shares.” This may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently that we do.  

We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance, and may facilitate comparisons of operating performance between periods and our peer companies.

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR							Page 6

Supplemental Financial Information
February 21, 2017

We adjust EBITDA and FFO attributable to common stockholders for the following items, which may occur in any period, and refer to these measures as either Adjusted EBITDA or Adjusted FFO attributable to common stockholders:

· Amortization of favorable and unfavorable contracts:  we exclude the noncash amortization of the favorable management contract asset recorded in conjunction with our acquisition of the Hilton Garden Inn Chicago Downtown/Magnificent Mile, along with the favorable and unfavorable tenant lease contracts, as applicable, recorded in conjunction with our acquisitions of the Boston Park Plaza, the Hilton Garden Inn Chicago Downtown/Magnificent Mile, the Hilton New Orleans St. Charles, the Hyatt Regency San Francisco and the Wailea Beach Resort. We exclude the noncash amortization of favorable and unfavorable contracts because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.

· Ground rent adjustments: we exclude the noncash expense incurred from straight-lining our ground lease obligations as this expense does not reflect the actual rent amounts due to the respective lessors in the current period and is of lesser significance in evaluating our actual performance for the current period.  

· Gains or losses from debt transactions: we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.

· Acquisition costs: under GAAP, costs associated with completed acquisitions that meet the Financial Accounting Standards Board’s definition of a business in accordance with the Business Combinations Topic of the Accounting Standards Codification are expensed in the year incurred. We exclude the effect of these costs because we believe they are not reflective of the ongoing performance of the Company or our hotels.

· Noncontrolling interests: we deduct the noncontrolling partner’s pro rata share of any EBITDA or FFO adjustments related to our consolidated Hilton San Diego Bayfront partnership, as well as any preferred dividends earned by preferred investors in an entity that owned the Doubletree Guest Suites Times Square, including related administrative fees,  prior to the hotel’s sale in December 2015.  

· Cumulative effect of a change in accounting principle:  from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.

· Impairment losses: we exclude the effect of impairment losses because we believe that including them in Adjusted EBITDA and Adjusted FFO attributable to common stockholders is not consistent with reflecting the ongoing performance of our remaining assets.

· Other adjustments: we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: executive severance costs; lawsuit settlement costs; prior year property tax assessments or credits; property-level restructuring, severance and management transition costs; lease terminations; and any gains or losses we have recognized on sales or redemptions of assets other than real estate investments.

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR							Page 7

Supplemental Financial Information
February 21, 2017

In addition, to derive Adjusted EBITDA we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels.  We also include an adjustment for the cash ground lease expense recorded on the Hyatt Centric Chicago Magnificent Mile’s building lease. Upon acquisition of this hotel, we determined that the building lease was a capital lease, and, therefore, we include a portion of the capital lease payment each month in interest expense. We include an adjustment for ground lease expense on capital leases in order to more accurately reflect the actual rent due to the hotel’s lessor in the current period, as well as the operating performance of the Hyatt Centric Chicago Magnificent Mile.  We  also exclude the effect of gains and losses on the disposition of depreciable assets because we believe that including them in Adjusted EBITDA is not consistent with reflecting the ongoing performance of our assets. In addition, material gains or losses from the depreciated value of the disposed assets could be less important to investors given that the depreciated asset value often does not reflect its market value.

To derive Adjusted FFO attributable to common stockholders, we also exclude the noncash gains or losses on our derivatives, as well as any federal and state taxes associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets other than real estate investments. We believe that these items are not reflective of our ongoing finance costs.

Reconciliations of net income to EBITDA and Adjusted EBITDA are set forth on page  13 of this supplemental package.  Reconciliations of net income to FFO attributable to common stockholders and Adjusted FFO attributable to common stockholders are set forth on page  14 of this supplemental package.

Our 26  comparable hotel portfolio is comprised of our total portfolio with the exception of the Wailea Beach Resort due to its extensive repositioning disruption during the fourth quarter of 2015 as well as all of 2016, and the Fairmont Newport Beach, which was classified as held for sale as of December 31, 2016 and subsequently sold in February 2017. We believe that providing comparable hotel data is useful to us and to investors in evaluating our operating performance because this measure helps us and investors evaluate and compare the results of our operations from period to period by removing the fluctuations caused by any acquisitions or dispositions, as well as by those hotels that we classify as held for sale, those hotels that are undergoing a material renovation or repositioning and those hotels whose room counts have materially changed during either the current or prior year. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. 

CORPORATE PROFILE, FINANCIAL DISCLOSURES, AND SAFE HARBOR							Page 8

Supplemental Financial Information
February 21, 2017

CORPORATE FINANCIAL INFORMATION

CORPORATE FINANCIAL INFORMATION							Page 9

Supplemental Financial Information
February 21, 2017

Condensed Consolidated Balance Sheets
Q4 2016 – Q4 2015 

(In thousands)	December 31, 2016 (1)		September 30, 2016 (2)		June 30, 2016 (3)		March 31, 2016 (4)		December 31, 2015 (5)
Assets
Investment in hotel properties:
Land	$	531,660	$	542,660	$	542,660	$	542,660	$	542,660
Buildings & improvements		3,135,806		3,168,291		3,118,115		3,130,034		3,109,562
Furniture, fixtures, & equipment		512,372		510,347		492,275		491,464		480,832
Other		115,485		164,893		190,358		168,171		144,305
		4,295,323		4,386,191		4,343,408		4,332,329		4,277,359
Less accumulated depreciation & amortization		(1,137,104)		(1,151,377)		(1,111,739)		(1,088,354)		(1,048,349)
		3,158,219		3,234,814		3,231,669		3,243,975		3,229,010
Other noncurrent assets, net		13,391		11,684		12,300		12,388		14,696
Current assets:
Cash and cash equivalents		369,537		367,117		354,682		396,669		499,067
Restricted cash		67,923		67,248		62,335		68,313		76,180
Other current assets, net		51,051		58,598		56,154		60,445		44,298
Assets held for sale, net		79,113		—		—		—		—
Total assets	$	3,739,234	$	3,739,461	$	3,717,140	$	3,781,790	$	3,863,251

*Footnotes on following page.

CORPORATE FINANCIAL INFORMATION							Page 10

Supplemental Financial Information
February 21, 2017

Condensed Consolidated Balance Sheets
Q4 2016 – Q4 2015 (cont.)

(In thousands)	December 31, 2016 (1)		September 30, 2016 (2)		June 30, 2016 (3)		March 31, 2016 (4)		December 31, 2015 (5)
Liabilities
Current liabilities:
Current portion of notes payable, net	$	184,929	$	251,276	$	251,719	$	149,021	$	85,776
Other current liabilities		220,722		117,911		114,258		117,442		365,217
Liabilities of assets held for sale		3,153		—		—		—		—
Total current liabilities		408,804		369,187		365,977		266,463		450,993
Notes payable, less current portion, net		746,374		748,767		751,096		929,390		1,010,819
Capital lease obligations, less current portion		15,574		15,574		15,575		15,575		15,575
Other liabilities		36,650		42,677		44,945		41,052		34,744
Total liabilities		1,207,402		1,176,205		1,177,593		1,252,480		1,512,131
Equity
Stockholders' equity:
8.0% Series D cumulative redeemable preferred stock		—		—		—		115,000		115,000
6.95% Series E cumulative redeemable preferred stock		115,000		115,000		115,000		115,000		—
6.45% Series F cumulative redeemable preferred stock		75,000		75,000		75,000		—		—
Common stock, $0.01 par value, 500,000,000 shares authorized		2,201		2,165		2,166		2,165		2,076
Additional paid in capital (6)		2,596,620		2,540,782		2,539,278		2,535,141		2,458,889
Retained earnings (6)		786,901		753,725		716,351		652,270		652,704
Cumulative dividends and distributions		(1,092,952)		(973,105)		(959,072)		(941,460)		(927,868)
Total stockholders' equity		2,482,770		2,513,567		2,488,723		2,478,116		2,300,801
Noncontrolling interest in consolidated joint venture		49,062		49,689		50,824		51,194		50,319
Total equity		2,531,832		2,563,256		2,539,547		2,529,310		2,351,120
Total liabilities and equity	$	3,739,234	$	3,739,461	$	3,717,140	$	3,781,790	$	3,863,251

(1) As presented on Form 10-K to be filed in February 2017.

(2) As presented on Form 10-Q filed November 2,  2016.

(3) As presented on Form 10-Q filed August 8,  2016.

(4) As presented on Form 10-Q filed May 3, 2016.

(5) As presented on Form 10-K filed February 23, 2016.

(6) Reflects the adoption of Accounting Standards Update No. 2016-09.

CORPORATE FINANCIAL INFORMATION							Page 11

Supplemental Financial Information
February 21, 2017

Consolidated Statements of Operations
Q4 and FY 2016/2015

		Three Months Ended December 31,				Year Ended December 31,
(In thousands, except per share data)		2016		2015		2016		2015
Revenues
Room	$	195,195	$	207,361	$	824,340	$	874,117
Food and beverage		72,984		74,072		294,415		293,892
Other operating		21,405		19,500		70,585		81,171
Total revenues		289,584		300,933		1,189,340		1,249,180
Operating expenses
Room		51,762		54,293		211,947		224,035
Food and beverage		50,060		51,520		204,102		204,932
Other operating		4,168		5,262		16,684		21,335
Advertising and promotion		14,801		15,640		60,086		61,892
Repairs and maintenance		11,168		11,759		44,307		46,557
Utilities		7,310		7,807		30,424		34,543
Franchise costs		9,245		10,087		36,647		40,096
Property tax, ground lease and insurance		21,038		22,554		82,979		94,967
Other property-level expenses		35,044		32,948		142,742		142,332
Corporate overhead		6,073		6,117		25,991		33,339
Depreciation and amortization		41,847		41,805		163,016		164,716
Total operating expenses		252,516		259,792		1,018,925		1,068,744
Operating income		37,068		41,141		170,415		180,436
Interest and other income		673		535		1,800		3,885
Interest expense		(3,265)		(15,496)		(50,283)		(66,516)
Loss on extinguishment of debt		(25)		(2,962)		(284)		(2,964)
Gain on sale of assets		190		214,535		18,413		226,217
Income before income taxes and discontinued operations		34,641		237,753		140,061		341,058
Income tax benefit (provision)		(343)		(178)		616		(1,434)
Income from continuing operations		34,298		237,575		140,677		339,624
Income from discontinued operations, net of tax		—		—		—		15,895
Net income		34,298		237,575		140,677		355,519
Income from consolidated joint ventures attributable to noncontrolling interests		(1,122)		(1,521)		(6,480)		(8,164)
Preferred stock dividends and redemption charge		(3,208)		(2,300)		(15,964)		(9,200)
Income attributable to common stockholders	$	29,968	$	233,754	$	118,233	$	338,155
Basic and diluted per share amounts:
Income from continuing operations attributable to common stockholders	$	0.14	$	1.12	$	0.55	$	1.54
Income from discontinued operations, net of tax		—		—		—		0.08
Basic and diluted income attributable to common stockholders per common share	$	0.14	$	1.12	$	0.55	$	1.62
Basic and diluted weighted average common shares outstanding		216,163		207,604		214,966		207,350
Distributions declared per common share	$	0.53	$	1.26	$	0.68	$	1.41

CORPORATE FINANCIAL INFORMATION							Page 12

Supplemental Financial Information
February 21, 2017

Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Q4 and FY 2016/2015

	Three Months Ended December 31,				Year Ended December 31,
(In thousands)		2016		2015		2016		2015
Net income	$	34,298	$	237,575	$	140,677	$	355,519
Operations held for investment:
Depreciation and amortization		41,847		41,805		163,016		164,716
Amortization of lease intangibles		63		707		252		3,791
Interest expense		3,265		15,496		50,283		66,516
Income tax (benefit) provision		343		178		(616)		1,434
Noncontrolling interests:
Income from consolidated joint ventures attributable to noncontrolling interests		(1,122)		(1,521)		(6,480)		(8,164)
Depreciation and amortization		(873)		(866)		(3,480)		(3,432)
Interest expense		(433)		(388)		(1,684)		(1,537)
Discontinued operations:
Income tax provision		—		—		—		105
EBITDA		77,388		292,986		341,968		578,948
Operations held for investment:
Amortization of deferred stock compensation		1,541		1,031		7,157		6,536
Amortization of favorable and unfavorable contracts, net		52		(1,487)		394		(1,623)
Noncash straight-line lease expense		465		496		1,878		1,987
Capital lease obligation interest - cash ground rent		(351)		(351)		(1,404)		(1,404)
Gain on sale of assets, net		(196)		(214,526)		(18,422)		(226,234)
Severance costs associated with sale of BuyEfficient		—		—		—		1,636
Loss on extinguishment of debt		25		2,962		284		2,964
Gain on redemption of note receivable		—		—		—		(939)
Prior year property tax adjustments, net		308		—		(3,971)		(865)
Property-level restructuring, severance and management transition costs		—		62		1,578		1,219
Lease termination costs		—		—		1,000		300
Costs associated with CEO severance		—		—		—		5,257
Noncontrolling interests:
Noncash straight-line lease expense		(112)		(112)		(450)		(450)
Discontinued operations:
Gain on sale of assets		—		—		—		(16,000)
		1,732		(211,925)		(11,956)		(227,616)
Adjusted EBITDA	$	79,120	$	81,061	$	330,012	$	351,332

CORPORATE FINANCIAL INFORMATION							Page 13

Supplemental Financial Information
February 21, 2017

Reconciliation of Net Income to FFO and Adjusted FFO  Attributable to Common Stockholders
Q4 and FY  2016/2015

	Three Months Ended December 31,					Year Ended December 31,
(In thousands, except per share data)		2016		2015		2016		2015
Net income	$	34,298	$	237,575	$	140,677	$	355,519
Preferred stock dividends and redemption charge		(3,208)		(2,300)		(15,964)		(9,200)
Operations held for investment:
Real estate depreciation and amortization		41,716		41,653		162,431		163,361
Amortization of lease intangibles		63		707		252		3,791
Gain on sale of assets, net		(196)		(214,526)		(18,422)		(226,234)
Noncontrolling interests:
Income from consolidated joint ventures attributable to noncontrolling interests		(1,122)		(1,521)		(6,480)		(8,164)
Real estate depreciation and amortization		(873)		(866)		(3,480)		(3,432)
Discontinued operations:
Gain on sale of assets		—		—		—		(16,000)
FFO attributable to common stockholders		70,678		60,722		259,014		259,641
Operations held for investment:
Write-off of deferred financing fees		—		—		—		455
Amortization of favorable and unfavorable contracts, net		52		(1,487)		394		(1,623)
Noncash straight-line lease expense		465		496		1,878		1,987
Noncash interest related to gain on derivatives, net		(9,236)		(321)		(1,426)		(309)
Loss on extinguishment of debt		25		2,962		284		2,964
Gain on redemption of note receivable		—		—		—		(939)
Prior year property tax adjustments, net		308		—		(3,971)		(865)
Property-level restructuring, severance and management transition costs		—		62		1,578		1,219
Lease termination costs		—		—		1,000		300
Income tax benefit related to prior years		—		—		(1,596)		—
Preferred stock redemption charge		—		—		4,052		—
Costs associated with CEO severance		—		—		—		5,257
Amortization of deferred stock compensation associated with CEO severance		—		—		—		1,623
Severance costs associated with sale of BuyEfficient		—		—		—		1,636
Income tax provision related to gain on sale of BuyEfficient		—		—		—		720
Noncontrolling interests:
Noncash straight-line lease expense		(112)		(112)		(450)		(450)
Noncash interest related to loss on derivative, net		—		—		—		(3)
Discontinued operations:
Income tax provision		—		—		—		105
		(8,498)		1,600		1,743		12,077
Adjusted FFO attributable to common stockholders	$	62,180	$	62,322	$	260,757	$	271,718
FFO attributable to common stockholders per diluted share	$	0.33	$	0.29	$	1.20	$	1.25
Adjusted FFO attributable to common stockholders per diluted share	$	0.29	$	0.30	$	1.21	$	1.31
Basic weighted average shares outstanding		216,163		207,604		214,966		207,350
Shares associated with unvested restricted stock awards		445		263		242		262
Diluted weighted average shares outstanding		216,608		207,867		215,208		207,612

CORPORATE FINANCIAL INFORMATION							Page 14

Supplemental Financial Information
February 21, 2017

Pro Forma Consolidated Statements of Operations
Q4 2016 – Q1 2016,  FY 2016/2015 

	Year Ended (1)		Three Months Ended (1)								Year Ended (1)
(Unaudited and in thousands)		Dec. 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
		2016		2016		2016		2016		2016		2015
Revenues
Room	$	800,894	$	190,739	$	212,099	$	218,123	$	179,933	$	791,374
Food and beverage		283,449		70,686		66,838		77,906		68,019		275,792
Other operating		67,855		20,786		15,994		15,983		15,092		66,029
Total revenues		1,152,198		282,211		294,931		312,012		263,044		1,133,195
Operating Expenses
Room		205,348		50,384		53,050		52,815		49,099		200,759
Food and beverage		196,121		48,302		47,504		50,675		49,640		190,413
Other expenses		400,539		100,106		100,923		100,273		99,237		391,237
Corporate overhead		25,991		6,073		6,392		6,809		6,717		33,339
Depreciation and amortization		158,239		40,788		39,363		39,469		38,619		152,077
Total operating expenses		986,238		245,653		247,232		250,041		243,312		967,825
Operating Income		165,960		36,558		47,699		61,971		19,732		165,370
Interest and other income		1,800		673		283		355		489		2,327
Interest expense		(50,283)		(3,265)		(11,136)		(15,872)		(20,010)		(59,966)
Loss on extinguishment of debt		(284)		(25)		—		(154)		(105)		(28)
Gain on sale of asset		190		190		—		—		—		—
Income before income taxes		117,383		34,131		36,846		46,300		106		107,703
Income tax benefit (provision)		616		(343)		1,434		(238)		(237)		(714)
Income (loss) from continuing operations	$	117,999	$	33,788	$	38,280	$	46,062	$	(131)	$	106,989
Adjusted EBITDA (2)	$	320,780	$	77,551	$	85,713	$	98,451	$	59,065	$	316,787

(1) Includes the Company's ownership results for 27 of the 28 hotels owned by the Company as of December 31, 2016. Excludes the Company's ownership results for the Fairmont Newport Beach due to its sale in February 2017. It also excludes the Company's ownership results for the Sheraton Cerritos, the Doubletree Guest Suites Times Square and BuyEfficient due to their sales in May 2016, December 2015 and September 2015, respectively.

(2) The Adjusted EBITDA reconciliation for the year ended December 31, 2016 can be found on page 16 of this supplemental package. The Adjusted EBITDA reconciliation for the year ended December 31, 2015 can be found on page 32 in the supplemental package furnished on Form 8-K to the SEC on August 8, 2016 adjusted to exclude the Fairmont Newport Beach's EBITDA contribution of $7,954,000.

CORPORATE FINANCIAL INFORMATION							Page 15

Supplemental Financial Information
February 21, 2017

Pro Forma Reconciliation of Net Income to EBITDA and Adjusted EBITDA
FY 2016 

	Year Ended December 31, 2016
			Disposition:		Held for Sale:
			Sheraton		Fairmont		Pro
(In thousands, except per share amounts)	Actual (1)		Cerritos (2)		Newport Beach (3)		Forma (4)
Net income	$	140,677	$	(19,099)	$	(3,579)	$	117,999
Operations held for investment:
Depreciation and amortization		163,016		(528)		(4,249)		158,239
Amortization of lease intangibles		252		—		—		252
Interest expense		50,283		—		—		50,283
Income tax benefit		(616)		—		—		(616)
Noncontrolling interest:
Income from consolidated joint venture attributable to noncontrolling interest		(6,480)		—		—		(6,480)
Depreciation and amortization		(3,480)		—		—		(3,480)
Interest expense		(1,684)		—		—		(1,684)
EBITDA		341,968		(19,627)		(7,828)		314,513
Operations held for investment:
Amortization of deferred stock compensation		7,157		—		—		7,157
Amortization of favorable and unfavorable contracts, net		394		—		—		394
Noncash straight-line lease expense		1,878		—		—		1,878
Capital lease obligation interest - cash ground rent		(1,404)		—		—		(1,404)
Gain on sale of assets, net		(18,422)		18,223		—		(199)
Loss on extinguishment of debt		284		—		—		284
Prior year property tax adjustments, net		(3,971)		—		—		(3,971)
Property-level restructuring, severance and management transition costs		1,578		—		—		1,578
Lease termination costs		1,000		—		—		1,000
Noncontrolling interest:
Noncash straight-line lease expense		(450)		—		—		(450)
		(11,956)		18,223		—		6,267
Adjusted EBITDA	$	330,012	$	(1,404)	$	(7,828)	$	320,780

*Footnotes on page 18

CORPORATE FINANCIAL INFORMATION							Page 16

Supplemental Financial Information
February 21, 2017

Pro Forma Reconciliation of Net Income to FFO and Adjusted FFO Attributable to Common Stockholders
FY 2016 

	Year Ended December 31, 2016
			Disposition:		Held for Sale:
			Sheraton		Fairmont		Pro
(In thousands, except per share amounts)	Actual (1)		Cerritos (2)		Newport Beach (3)		Forma (4)
Net income	$	140,677	$	(19,099)	$	(3,579)	$	117,999
Preferred stock dividends and redemption charge		(15,964)		—		—		(15,964)
Operations held for investment:
Real estate depreciation and amortization		162,431		(528)		(4,249)		157,654
Amortization of lease intangibles		252		—		—		252
Gain on sale of assets, net		(18,422)		18,223		—		(199)
Noncontrolling interest:
Income from consolidated joint venture attributable to noncontrolling interest		(6,480)		—		—		(6,480)
Real estate depreciation and amortization		(3,480)		—		—		(3,480)
FFO attributable to common stockholders		259,014		(1,404)		(7,828)		249,782
Operations held for investment:
Amortization of favorable and unfavorable contracts, net		394		—		—		394
Noncash straight-line lease expense		1,878		—		—		1,878
Noncash interest related to gain on derivatives, net		(1,426)		—		—		(1,426)
Loss on extinguishment of debt		284		—		—		284
Prior year property tax adjustments, net		(3,971)		—		—		(3,971)
Property-level restructuring, severance and management transition costs		1,578		—		—		1,578
Lease termination costs		1,000		—		—		1,000
Income tax benefit related to prior years		(1,596)		—		—		(1,596)
Preferred stock redemption charge		4,052		—		—		4,052
Noncontrolling interest:
Noncash straight-line lease expense		(450)		—		—		(450)
		1,743		—		—		1,743
Adjusted FFO attributable to common stockholders	$	260,757	$	(1,404)	$	(7,828)	$	251,525
FFO attributable to common stockholders per diluted share	$	1.20					$	1.16
Adjusted FFO attributable to common stockholders per diluted share	$	1.21					$	1.17
Basic weighted average shares outstanding		214,966						214,966
Shares associated with unvested restricted stock awards		242						242
Diluted weighted average shares outstanding		215,208						215,208

*Footnotes on page 18

CORPORATE FINANCIAL INFORMATION							Page 17

Supplemental Financial Information
February 21, 2017

Pro Forma Reconciliation of Net Income to EBITDA, Adjusted EBITDA, FFO and

Adjusted FFO Attributable to Common Stockholders
FY 2016 Footnotes

(1) Actual represents the Company's ownership results for the 28 hotels owned by the Company as of December 31, 2016.

(2) Disposition: Sheraton Cerritos represents the Company's ownership results from the Sheraton Cerritos that was sold on May 10, 2016.

(3) Held for Sale: Fairmont Newport Beach represents the Company's ownership results from the Fairmont Newport Beach that was classified as held for sale at December 31, 2016, and subsequently sold in February 2017.

(4) Pro Forma represents the Company's ownership results for the pro forma 27 hotel portfolio.

CORPORATE FINANCIAL INFORMATION							Page 18

Supplemental Financial Information
February 21, 2017

EARNINGS GUIDANCE

EARNINGS GUIDANCE							Page 19

Supplemental Financial Information
February 21, 2017

Earnings Guidance for Q1 and FY 2017

The Company is providing guidance at this time, but does not undertake to make updates for any unanticipated developments in its business or changes in the operating environment. Achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in the Company’s filings with the Securities and Exchange Commission. The Company’s guidance does not take into account the impact of any unanticipated developments in its business or changes in its operating environment, nor does it take into account any unannounced hotel acquisitions, dispositions, re-brandings, management changes, transition costs, severance costs associated with restructuring hotel services, early lease termination costs,  prior year property tax assessments or credits, debt repurchases/repayments, perpetual preferred redemptions or unannounced financings during 2017.  

For the first quarter of 2017, the Company expects:

Metric	Quarter Ended March 31, 2017 Guidance (1)
Net Income ($ millions)	$54  to  $57
Total Portfolio Hotel RevPAR Growth	+ 2.5% to + 4.5%
Adjusted EBITDA ($ millions)	$61  to  $64
Adjusted FFO Attributable to Common Stockholders ($ millions)	$43  to  $46
Adjusted FFO Attributable to Common Stockholders per Diluted Share	$0.19  to  $0.21
Diluted Weighted Average Shares Outstanding	219,600,000

For the full year of 2017, the Company expects: 

Metric	Full Year 2017               Guidance (1)
Net Income ($ millions)	$150 to  $174
Total Portfolio Hotel RevPAR Growth	+ 0.5% to + 3.5%
Adjusted EBITDA ($ millions)	$306  to  $330
Adjusted FFO Attributable to Common Stockholders ($ millions)	$239  to  $263
Adjusted FFO Attributable to Common Stockholders per Diluted Share	$1.09  to  $1.19
Diluted Weighted Average Shares Outstanding	219,800,000

(1) See page 22 for a detailed reconciliation.

EARNINGS GUIDANCE							Page 20

Supplemental Financial Information
February 21, 2017

Earnings Guidance for Q1 and FY 2017

First quarter and full year 2017 guidance are based in part on the following assumptions:

· Full year Total Portfolio Hotel RevPAR guidance is benefiting 150 to 200 basis points from the completed repositioning at the Wailea Beach Resort.

· Full year Hotel Adjusted EBITDA Margin change of approximately -25 to +50 basis points.

· Full year corporate overhead expense (excluding deferred stock amortization and one-time expenses related to any acquisition closing costs) of approximately $19.5 million to $20.5 million.

· Full year amortization of deferred stock compensation expense of approximately $8.3  million.

· Full year interest expense of approximately $48.0 million to $48.3 million, including approximately $2.3 million in amortization of deferred financing fees and excluding approximately $1.4 million of capital lease obligation interest.

· Full year total preferred dividends of $12.8 million, which includes the Series E and Series F cumulative redeemable preferred stock.

EARNINGS GUIDANCE							Page 21

Supplemental Financial Information
February 21, 2017

Reconciliation of Net Income to Adjusted EBITDA and Adjusted FFO  Attributable to Common Stockholders
Q1 and FY 2017

Reconciliation of Net Income to Adjusted EBITDA

		Quarter Ended				Year Ended
		March 31, 2017				December 31, 2017
(In thousands, except per share data)		Low		High		Low		High
Net income	$	53,900	$	57,200	$	150,100	$	174,400
Depreciation and amortization		39,000		39,100		156,000		156,400
Amortization of lease intangibles		100		100		300		300
Interest expense		12,900		12,700		48,300		48,000
Income tax provision		400		400		800		800
Noncontrolling interest		(2,900)		(3,100)		(11,500)		(11,900)
Amortization of deferred stock compensation		2,200		2,200		8,300		8,300
Amortization of favorable and unfavorable contracts, net		100		100		200		200
Noncash straight-line lease expense		(300)		(300)		(1,100)		(1,100)
Capital lease obligation interest - cash ground rent		(400)		(400)		(1,400)		(1,400)
Gain on sale of assets		(44,000)		(44,000)		(44,000)		(44,000)
Adjusted EBITDA	$	61,000	$	64,000	$	306,000	$	330,000

Reconciliation of Net Income to Adjusted FFO  Attributable to Common Stockholders

Net income	$	53,900	$	57,200	$	150,100	$	174,400
Preferred stock dividends		(3,200)		(3,200)		(12,800)		(12,800)
Real estate depreciation and amortization		38,700		38,800		155,600		155,800
Amortization of lease intangibles		100		100		300		300
Noncontrolling interest		(2,500)		(2,700)		(9,800)		(10,200)
Amortization of favorable and unfavorable contracts, net		100		100		200		200
Noncash straight-line lease expense		(300)		(300)		(1,100)		(1,100)
Gain on sale of assets		(44,000)		(44,000)		(44,000)		(44,000)
Adjusted FFO attributable to common stockholders	$	42,800	$	46,000	$	238,500	$	262,600
Adjusted FFO attributable to common stockholders per diluted share	$	0.19	$	0.21	$	1.09	$	1.19
Diluted weighted average shares outstanding		219,600		219,600		219,800		219,800

EARNINGS GUIDANCE							Page 22

Supplemental Financial Information
February 21, 2017

CAPITALIZATION

CAPITALIZATION							Page 23

Supplemental Financial Information
February 21, 2017

Comparative Capitalization
Q4 2016 –  Q4 2015

		Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
(In thousands, except per share data)		2016			2016			2016			2016			2015
Common Share Price & Dividends
At the end of the quarter	$	15.25		$	12.79		$	12.07		$	14.00		$	12.49
High during quarter ended	$	15.91		$	13.89		$	13.85		$	14.00		$	14.99
Low during quarter ended	$	12.20		$	12.03		$	11.37		$	10.13		$	12.49
Common dividends per share (1)	$	0.53		$	0.05		$	0.05		$	0.05		$	1.26
Common Shares & Units
Common shares outstanding		220,073			216,509			216,576			216,517			208,591
Units outstanding		—			—			—			—			—
Total common shares and units outstanding		220,073			216,509			216,576			216,517			208,591
Capitalization
Market value of common equity	$	3,356,115		$	2,769,151		$	2,614,067		$	3,031,238		$	2,605,298
Liquidation value of preferred equity - Series D (2)		—			—			—			115,000			115,000
Liquidation value of preferred equity - Series E		115,000			115,000			115,000			115,000			—
Liquidation value of preferred equity - Series F		75,000			75,000			75,000			—			—
Consolidated debt (3) (4)		999,944			1,004,975			1,008,034			1,083,922			1,087,265
Consolidated total capitalization		4,546,059			3,964,126			3,812,101			4,345,160			3,807,563
Noncontrolling interest in consolidated debt (4)		(55,585)			(55,781)			(55,974)			(56,164)			(56,352)
Pro rata total capitalization	$	4,490,474		$	3,908,345		$	3,756,127		$	4,288,996		$	3,751,211
Consolidated debt to total capitalization		22.0	%		25.4	%		26.4	%		24.9	%		28.6	%
Pro rata debt to pro rata total capitalization		21.0	%		24.3	%		25.3	%		24.0	%		27.5	%
Consolidated debt and preferred equity to total capitalization		26.2	%		30.1	%		31.4	%		30.2	%		31.6	%
Pro rata debt and preferred equity to total capitalization		25.3	%		29.1	%		30.4	%		29.3	%		30.5	%

(1) Fourth quarter 2015 dividends were paid in a combination of cash and shares of the Company's common stock, pursuant to elections by individual stockholders.

(2) In April 2016, the Company redeemed all 4,600,000 shares of its Series D preferred stock at a price equal to the liquidation value of $115.0 million.

(3) Fourth quarter 2015 includes the effects of the Company's $100.0 million draw of the total available funds provided by an unsecured term loan on January 29, 2016, as well as the use of these funds, along with cash on hand, on February 1, 2016 to repay the loan secured by the Boston Park Plaza, which balance was $114.2 million on December 31, 2015. Fourth quarter 2016 includes the effects of the Company's $240.0 million private placement of two series of senior unsecured corporate-level notes funded on January 10, 2017, as well as the partial use of these funds, on January 11, 2017 to repay the $176.0 million loan secured by the Marriott Boston Long Wharf.

(4) Represents the outstanding debt principal balance and excludes the effects of the adoption of Accounting Standards Update No. 2015-03 to present debt issuance costs as a deduction from the corresponding debt liability.

CAPITALIZATION							Page 24

Supplemental Financial Information
February 21, 2017

Consolidated Debt Summary Schedule

(In thousands)		Interest Rate /	Maturity		December 31, 2016			Subsequent		Pro Forma			Balance At
Debt	Collateral	Spread	Date		Balance			Events (1)		Balance			Maturity
Fixed Rate Debt
Secured Mortgage Debt	Marriott Boston Long Wharf	5.58%	04/11/2017	$	176,000		$	(176,000)	$	—		$	—
Secured Mortgage Debt	Hilton Times Square	4.97%	11/01/2020		83,311			—		83,311			76,145
Secured Mortgage Debt	Renaissance Washington DC	5.95%	05/01/2021		119,444			—		119,444			106,855
Term Loan Facility	Unsecured	3.39%	09/03/2022		85,000			—		85,000			85,000
Term Loan Facility	Unsecured	3.65%	01/31/2023		100,000			—		100,000			100,000
Secured Mortgage Debt	JW Marriott New Orleans	4.15%	12/11/2024		86,963			—		86,963			72,071
Secured Mortgage Debt	Embassy Suites La Jolla	4.12%	01/06/2025		62,886			—		62,886			51,987
Series A Senior Notes	Unsecured	4.69%	01/10/2026		—			120,000		120,000			120,000
Series B Senior Notes	Unsecured	4.79%	01/10/2028		—			120,000		120,000			120,000
Total Fixed Rate Debt					713,604			64,000		777,604			732,058
Secured Mortgage Debt	Hilton San Diego Bayfront	L + 2.25%	08/08/2019		222,340			—		222,340			213,513
Credit Facility	Unsecured	L + 1.55% - 2.30%	04/02/2019		—			—		—			—
Total Variable Rate Debt					222,340			—		222,340			213,513
TOTAL CONSOLIDATED DEBT				$	935,944		$	64,000	$	999,944		$	945,571
Preferred Stock
Series E cumulative redeemable preferred		6.95%	perpetual	$	115,000		$	—	$	115,000
Series F cumulative redeemable preferred		6.45%	perpetual		75,000			—		75,000
Total Preferred Stock				$	190,000		$	—	$	190,000
Debt Statistics
% Fixed Rate Debt					76.2	%				77.8	%
% Floating Rate Debt					23.8	%				22.2	%
Average Interest Rate (2)					4.29	%				4.17	%
Weighted Average Maturity of Debt					4.0 years					6.0 years

(1) Subsequent Events reflect the Company's private placement of $120.0 million in Series A Senior Notes and $120.0 million in Series B Senior Notes on January 10, 2017. The Company used a portion of the proceeds received from these unsecured notes to repay the $176.0 million mortgage secured by the Marriott Boston Long Wharf on January 11, 2017.

(2) Average Interest Rate on the variable-rate debt obligation is calculated based on the variable rate at December 31, 2016, and includes the effect of the Company's interest rate derivative agreement.

CAPITALIZATION							Page 25

Supplemental Financial Information
February 21, 2017

Consolidated Amortization and Pro Forma Debt Maturity Schedule

(1) Pro Forma reflects the Company's private placement of $120.0 million in Series A Senior Notes and $120.0 million in Series B Senior Notes on January 10, 2017. The Company used a portion of the proceeds received from these unsecured notes to repay the $176.0 million mortgage secured by the Marriott Boston Long Wharf on January 11, 2017.

(2) Percent of Current Total Capitalization is calculated by dividing the sum of scheduled principal amortization and maturity payments by the December 31, 2016 consolidated total capitalization as presented on page 24.

CAPITALIZATION							Page 26

Supplemental Financial Information
February 21, 2017

PROPERTY-LEVEL DATA

PROPERTY-LEVEL DATA							Page 27

Supplemental Financial Information
February 21, 2017

Hotel Information as of December 31, 2016

Hotel		Location	Brand	Number of Rooms	% of Total Rooms	Ownership Interest	Interest	Leasehold Maturity(1)	Year Acquired
1	Hilton San Diego Bayfront	California	Hilton	1,190	8.71%	75%	Leasehold	2071	2011
2	Boston Park Plaza	Massachusetts	Independent	1,060	7.76%	100%	Fee Simple		2013
3	Renaissance Washington DC	Washington DC	Marriott	807	5.91%	100%	Fee Simple		2005
4	Hyatt Regency San Francisco	California	Hyatt	804	5.88%	100%	Fee Simple		2013
5	Renaissance Orlando at SeaWorld® (2)	Florida	Marriott	781	5.71%	85%	Fee Simple		2005
6	Renaissance Harborplace	Maryland	Marriott	622	4.55%	100%	Fee Simple		2005
7	Wailea Beach Resort	Hawaii	Marriott	543	3.97%	100%	Fee Simple		2014
8	Renaissance Los Angeles Airport	California	Marriott	501	3.67%	100%	Fee Simple		2007
9	JW Marriott New Orleans (3)	Louisiana	Marriott	501	3.67%	100%	Leasehold	2081	2011
10	Hilton North Houston	Texas	Hilton	480	3.51%	100%	Fee Simple		2002
11	Hilton Times Square	New York	Hilton	478	3.50%	100%	Leasehold	2091	2006
12	Marriott Quincy	Massachusetts	Marriott	464	3.40%	100%	Fee Simple		2007
13	Fairmont Newport Beach (4)	California	Fairmont	444	3.25%	100%	Fee Simple		2005
14	Hyatt Centric Chicago Magnificent Mile	Illinois	Hyatt	419	3.07%	100%	Leasehold	2097	2012
15	Marriott Boston Long Wharf	Massachusetts	Marriott	412	3.01%	100%	Fee Simple		2007
16	Hyatt Regency Newport Beach	California	Hyatt	407	2.98%	100%	Leasehold	2048	2002
17	Marriott Tysons Corner	Virginia	Marriott	396	2.90%	100%	Fee Simple		2002
18	Marriott Houston	Texas	Marriott	390	2.85%	100%	Fee Simple		2002
19	Renaissance Long Beach	California	Marriott	374	2.74%	100%	Fee Simple		2005
20	Embassy Suites Chicago	Illinois	Hilton	368	2.69%	100%	Fee Simple		2002
21	Hilton Garden Inn Chicago Downtown/Magnificent Mile	Illinois	Hilton	361	2.64%	100%	Fee Simple		2012
22	Renaissance Westchester	New York	Marriott	348	2.55%	100%	Fee Simple		2010
23	Embassy Suites La Jolla	California	Hilton	340	2.49%	100%	Fee Simple		2006
24	Marriott Philadelphia	Pennsylvania	Marriott	289	2.11%	100%	Fee Simple		2002
25	Hilton New Orleans St. Charles	Louisiana	Hilton	252	1.84%	100%	Fee Simple		2013
26	Marriott Portland	Oregon	Marriott	249	1.82%	100%	Fee Simple		2000
27	Marriott Park City	Utah	Marriott	199	1.46%	100%	Fee Simple		1999
28	Courtyard by Marriott Los Angeles	California	Marriott	187	1.37%	100%	Leasehold	2096	1999
	Total portfolio			13,666	100%

(1) Assumes the full exercise of all lease extensions.

(2) Financial statements reflect a 100% economic interest in the Renaissance Orlando at SeaWorld®, of which the Company owns 85% of a joint venture that owns the leasehold interest in the hotel. Pursuant to certain partnership loans, the Company recognizes, and expects to continue to recognize, 100% of all economics from the property for the foreseeable future. In addition, the Company owns 100% of the fee interest in a wholly owned entity held outside the partnership.

(3) Hotel is subject to a ground lease that expires in 2081. In addition, it is also subject to a municipal air rights lease that matures in 2044 that applies only to certain balcony space and is not integral to the hotel operation.

(4) Hotel sold in February 2017.

PROPERTY-LEVEL DATA							Page 28

Supplemental Financial Information
February 21, 2017

PROPERTY-LEVEL OPERATING STATISTICS

PROPERTY-LEVEL OPERATING STATISTICS							Page 29

Supplemental Financial Information
February 21, 2017

Property-Level Operating Statistics

Q4 2016/2015

	Hotels sorted by number of rooms		ADR				Occupancy			RevPAR
			For the Three Months Ended December 31,				For the Three Months Ended December 31,			For the Three Months Ended December 31,
			2016	2015		Variance	2016	2015	Variance	2016		2015		Variance
1	Hilton San Diego Bayfront	$	218.30	$	216.26	0.9%	81.6%	80.3%	1.6%	$	178.13	$	173.66	2.6%
2	Boston Park Plaza	$	209.43	$	202.57	3.4%	76.1%	74.1%	2.7%	$	159.38	$	150.10	6.2%
3	Renaissance Washington DC	$	217.04	$	213.75	1.5%	79.3%	70.6%	12.3%	$	172.11	$	150.91	14.1%
4	Hyatt Regency San Francisco	$	281.17	$	283.64	-0.9%	87.0%	87.7%	-0.8%	$	244.62	$	248.75	-1.7%
5	Renaissance Orlando at SeaWorld ®	$	153.92	$	150.10	2.5%	75.5%	71.6%	5.4%	$	116.21	$	107.47	8.1%
6	Renaissance Harborplace	$	170.98	$	173.74	-1.6%	63.6%	67.2%	-5.4%	$	108.74	$	116.75	-6.9%
7	Renaissance Los Angeles Airport	$	150.09	$	141.97	5.7%	81.1%	84.6%	-4.1%	$	121.72	$	120.11	1.3%
8	JW Marriott New Orleans	$	192.29	$	195.22	-1.5%	82.1%	77.2%	6.3%	$	157.87	$	150.71	4.8%
9	Hilton North Houston	$	96.30	$	113.17	-14.9%	64.1%	80.0%	-19.9%	$	61.73	$	90.54	-31.8%
10	Hilton Times Square	$	339.99	$	348.63	-2.5%	99.5%	99.5%	0.0%	$	338.29	$	346.89	-2.5%
11	Marriott Quincy	$	157.61	$	158.80	-0.7%	73.7%	73.1%	0.8%	$	116.16	$	116.08	0.1%
12	Hyatt Centric Chicago Magnificent Mile	$	203.21	$	194.48	4.5%	84.1%	85.3%	-1.4%	$	170.90	$	165.89	3.0%
13	Marriott Boston Long Wharf	$	300.09	$	312.57	-4.0%	80.9%	82.2%	-1.6%	$	242.77	$	256.93	-5.5%
14	Hyatt Regency Newport Beach	$	154.92	$	152.95	1.3%	78.3%	75.8%	3.3%	$	121.30	$	115.94	4.6%
15	Marriott Tysons Corner	$	139.88	$	142.92	-2.1%	80.6%	72.1%	11.8%	$	112.74	$	103.05	9.4%
16	Marriott Houston	$	89.63	$	110.87	-19.2%	67.3%	81.5%	-17.4%	$	60.32	$	90.36	-33.2%
17	Renaissance Long Beach	$	160.71	$	159.20	0.9%	73.2%	73.2%	0.0%	$	117.64	$	116.53	0.9%
18	Embassy Suites Chicago	$	204.66	$	199.78	2.4%	87.7%	89.9%	-2.4%	$	179.49	$	179.60	-0.1%
19	Hilton Garden Inn Chicago Downtown/Magnificent Mile	$	192.17	$	183.07	5.0%	79.5%	77.2%	3.0%	$	152.78	$	141.33	8.1%
20	Renaissance Westchester	$	152.73	$	148.62	2.8%	72.6%	81.5%	-10.9%	$	110.88	$	121.13	-8.5%
21	Embassy Suites La Jolla	$	176.31	$	165.74	6.4%	78.6%	80.3%	-2.1%	$	138.58	$	133.09	4.1%
22	Marriott Philadelphia	$	160.70	$	166.52	-3.5%	70.3%	66.7%	5.4%	$	112.97	$	111.07	1.7%
23	Hilton New Orleans St. Charles	$	169.58	$	177.45	-4.4%	75.6%	83.7%	-9.7%	$	128.20	$	148.53	-13.7%
24	Marriott Portland	$	177.02	$	181.67	-2.6%	78.8%	86.0%	-8.4%	$	139.49	$	156.24	-10.7%
25	Marriott Park City	$	158.57	$	151.35	4.8%	51.1%	42.1%	21.4%	$	81.03	$	63.72	27.2%
26	Courtyard by Marriott Los Angeles	$	158.66	$	159.77	-0.7%	94.4%	94.3%	0.1%	$	149.78	$	150.66	-0.6%
	Comparable Portfolio (2)	$	196.32	$	195.01	0.7%	78.1%	78.3%	-0.3%	$	153.33	$	152.69	0.4%
	Add: Non-Comparable Hotels (3)
	Wailea Beach Resort (1)	$	322.76	$	266.09	21.3%	73.8%	74.9%	-1.5%	$	238.20	$	199.30	19.5%
	Fairmont Newport Beach	$	149.39	$	150.98	-1.1%	73.0%	68.8%	6.1%	$	109.05	$	103.87	5.0%
	28 Hotel Portfolio (4)	$	199.66	$	196.46	1.6%	77.8%	77.8%	0.0%	$	155.34	$	152.85	1.6%

(1) Operating statistics for both the fourth quarters of 2016 and 2015 are impacted by a  major repositioning at the Wailea Beach Resort.

(2) Comparable Portfolio includes 26 of the 28 hotels owned by the Company as of December 31, 2016. The Comparable Portfolio excludes the Wailea Beach Resort due to its extensive repositioning during the fourth quarter of 2015 as well as all of 2016, and the Fairmont Newport Beach due to its sale in February 2017.

(3) Non-Comparable Hotels  include the results generated by the Wailea Beach Resort and the Fairmont Newport Beach. 

(4) 28 Hotel Portfolio includes all 28 hotels owned by the Company as of December 31, 2016.

PROPERTY-LEVEL OPERATING STATISTICS							Page 30

Supplemental Financial Information
February 21, 2017

Property-Level Operating Statistics

FY 2016/2015

	Hotels sorted by number of rooms	ADR					Occupancy			RevPAR
		For the Year Ended December 31,					For the Year Ended December 31,			For the Year Ended December 31,
		2016		2015		Variance	2016	2015	Variance	2016		2015		Variance
1	Hilton San Diego Bayfront	$	231.63	$	227.17	2.0%	87.3%	86.6%	0.8%	$	202.21	$	196.73	2.8%
2	Boston Park Plaza (1)	$	202.71	$	194.88	4.0%	77.6%	79.3%	-2.1%	$	157.30	$	154.54	1.8%
3	Renaissance Washington DC	$	219.18	$	213.48	2.7%	81.7%	78.3%	4.3%	$	179.07	$	167.15	7.1%
4	Hyatt Regency San Francisco	$	299.18	$	284.58	5.1%	90.1%	89.9%	0.2%	$	269.56	$	255.84	5.4%
5	Renaissance Orlando at SeaWorld ®	$	157.88	$	147.24	7.2%	80.1%	75.7%	5.8%	$	126.46	$	111.46	13.5%
6	Renaissance Harborplace	$	171.89	$	170.05	1.1%	73.9%	70.1%	5.4%	$	127.03	$	119.21	6.6%
7	Renaissance Los Angeles Airport	$	157.46	$	146.69	7.3%	88.1%	88.1%	0.0%	$	138.72	$	129.23	7.3%
8	JW Marriott New Orleans	$	192.10	$	193.87	-0.9%	83.0%	83.0%	0.0%	$	159.44	$	160.91	-0.9%
9	Hilton North Houston	$	104.58	$	115.49	-9.4%	75.8%	83.5%	-9.2%	$	79.27	$	96.43	-17.8%
10	Hilton Times Square	$	290.46	$	304.71	-4.7%	99.3%	99.5%	-0.2%	$	288.43	$	303.19	-4.9%
11	Marriott Quincy	$	161.27	$	160.73	0.3%	78.6%	76.4%	2.9%	$	126.76	$	122.80	3.2%
12	Hyatt Centric Chicago Magnificent Mile	$	202.62	$	203.12	-0.2%	80.8%	83.2%	-2.9%	$	163.72	$	169.00	-3.1%
13	Marriott Boston Long Wharf	$	314.50	$	323.45	-2.8%	85.6%	85.9%	-0.3%	$	269.21	$	277.84	-3.1%
14	Hyatt Regency Newport Beach	$	172.19	$	167.75	2.6%	82.5%	83.6%	-1.3%	$	142.06	$	140.24	1.3%
15	Marriott Tysons Corner	$	144.42	$	147.13	-1.8%	81.6%	77.9%	4.7%	$	117.85	$	114.61	2.8%
16	Marriott Houston	$	101.76	$	119.78	-15.0%	80.2%	82.2%	-2.4%	$	81.61	$	98.46	-17.1%
17	Renaissance Long Beach	$	180.17	$	164.84	9.3%	78.7%	79.1%	-0.5%	$	141.79	$	130.39	8.7%
18	Embassy Suites Chicago	$	204.85	$	211.21	-3.0%	87.7%	90.3%	-2.9%	$	179.65	$	190.72	-5.8%
19	Hilton Garden Inn Chicago Downtown/Magnificent Mile	$	185.91	$	189.63	-2.0%	79.8%	82.5%	-3.3%	$	148.36	$	156.44	-5.2%
20	Renaissance Westchester	$	153.46	$	145.49	5.5%	76.4%	80.9%	-5.6%	$	117.24	$	117.70	-0.4%
21	Embassy Suites La Jolla	$	186.68	$	179.40	4.1%	84.3%	85.2%	-1.1%	$	157.37	$	152.85	3.0%
22	Marriott Philadelphia	$	167.06	$	172.51	-3.2%	72.3%	70.8%	2.1%	$	120.78	$	122.14	-1.1%
23	Hilton New Orleans St. Charles	$	170.62	$	174.76	-2.4%	81.9%	83.8%	-2.3%	$	139.74	$	146.45	-4.6%
24	Marriott Portland	$	191.28	$	195.33	-2.1%	86.5%	87.0%	-0.6%	$	165.46	$	169.94	-2.6%
25	Marriott Park City	$	168.76	$	169.16	-0.2%	65.1%	58.5%	11.3%	$	109.86	$	98.96	11.0%
26	Courtyard by Marriott Los Angeles	$	175.92	$	163.91	7.3%	96.7%	95.3%	1.5%	$	170.11	$	156.21	8.9%
	Comparable Portfolio (2)	$	198.73	$	196.34	1.2%	82.4%	82.3%	0.1%	$	163.75	$	161.59	1.3%
	Add: Non-Comparable Hotels (3)
	Wailea Beach Resort (1)	$	282.96	$	274.39	3.1%	73.8%	83.0%	-11.1%	$	208.82	$	227.74	-8.3%
	Fairmont Newport Beach	$	158.71	$	158.65	0.0%	77.9%	77.0%	1.2%	$	123.64	$	122.16	1.2%
	28 Hotel Portfolio (4)	$	200.51	$	198.33	1.1%	81.9%	82.2%	-0.4%	$	164.22	$	163.03	0.7%

(1) Operating statistics for both 2016 and 2015 are impacted by major repositionings at the Boston Park Plaza and the Wailea Beach Resort.

(2) Comparable Portfolio includes 26 of the 28 hotels owned by the Company as of December 31, 2016. The Comparable Portfolio excludes the Wailea Beach Resort due to its extensive repositioning during the fourth quarter of 2015 as well as all of 2016, and the Fairmont Newport Beach due to its sale in February 2017.

(3) Non-Comparable Hotels  include the results generated by the Wailea Beach Resort and the Fairmont Newport Beach.  

(4) 28 Hotel Portfolio includes all 28 hotels owned by the Company as of December 31, 2016.

PROPERTY-LEVEL OPERATING STATISTICS							Page 31

Supplemental Financial Information
February 21, 2017

OPERATING STATISTICS BY BRAND & GEOGRAPHY

OPERATING STATISTICS BY BRAND & GEOGRAPHY							Page 32

Supplemental Financial Information
February 21, 2017

Operating Statistics by Brand
Q4 and FY 2016/2015

		For the Three Months Ended December 31,
		2016					2015
	# of Hotels	Occ	ADR		RevPAR		Occ	ADR		RevPAR		RevPAR Change
Marriott (1)	15	75.2%	$	174.06	$	130.89	74.6%	$	174.24	$	129.98	0.7%
Hilton (2)	7	81.3%	$	214.03	$	174.01	83.8%	$	210.84	$	176.68	-1.5%
Hyatt	3	84.1%	$	231.78	$	194.93	84.1%	$	230.97	$	194.25	0.4%
Other (3)	1	76.1%	$	209.43	$	159.38	74.1%	$	202.57	$	150.10	6.2%
Comparable Portfolio (4)	26	78.1%	$	196.32	$	153.33	78.3%	$	195.01	$	152.69	0.4%
28 Hotel Portfolio (5)	28	77.8%	$	199.66	$	155.34	77.8%	$	196.46	$	152.85	1.6%
		For the Year Ended December 31,
		2016					2015
	# of Hotels	Occ	ADR		RevPAR		Occ	ADR		RevPAR		RevPAR Change
Marriott (1)	15	80.5%		179.71	$	144.67	78.9%		177.36	$	139.94	3.4%
Hilton (2)	7	85.9%		209.32	$	179.81	87.5%		210.41	$	184.11	-2.3%
Hyatt	3	85.8%		245.31	$	210.48	86.6%		236.31	$	204.64	2.8%
Other (3)	1	77.6%		202.71	$	157.30	79.3%		194.88	$	154.54	1.8%
Comparable Portfolio (4)	26	82.4%		198.73	$	163.75	82.3%		196.34	$	161.59	1.3%
28 Hotel Portfolio (5)	28	81.9%		200.51	$	164.22	82.2%		198.33	$	163.03	0.7%

(1) Marriott excludes the Wailea Beach Resort due to its extensive renovation during the fourth quarter of 2015 as well as all of 2016.

(2) Hilton excludes the Doubletree Guest Suites Times Square sold in December 2015.

(3) Other includes the Boston Park Plaza. Other excludes the Sheraton Cerritos sold in May 2016, and the Fairmont Newport Beach sold in February 2017.

(4) Comparable Portfolio includes 26 of the 28 hotels owned by the Company as of December 31, 2016. The Comparable Portfolio excludes the Wailea Beach Resort and the Fairmont Newport Beach.

(5) 28 Hotel Portfolio includes all 28 hotels owned by the Company as of December 31, 2016.

OPERATING STATISTICS BY BRAND & GEOGRAPHY							Page 33

Supplemental Financial Information
February 21, 2017

Comparable Portfolio Property-Level FY 2016 Adjusted EBITDA Contribution by Brand

Note: Includes 26 hotel Comparable Portfolio

OPERATING STATISTICS BY BRAND & GEOGRAPHY							Page 34

Supplemental Financial Information
February 21, 2017

Operating Statistics by Region
Q4 and FY 2016/2015

		For the Three Months Ended December 31,
		2016					2015
	# of Hotels	Occ		ADR		RevPAR	Occ		ADR			RevPAR		RevPAR Change
California (1)	7	81.8%	$	205.00	$	167.69	81.9%	$	197.89		$	162.07		3.5%
Other West (2)	4	65.9%	$	119.83	$	78.97	75.8%	$	130.32		$	98.78		-20.1%
Midwest	3	83.8%	$	200.40	$	167.94	84.2%	$	193.00		$	162.51		3.3%
East (3)	12	77.4%	$	203.47	$	157.49	75.5%	$	203.98		$	154.00		2.3%
Comparable Portfolio (4)	26	78.1%	$	196.32	$	153.33	78.3%	$	195.01		$	152.69		0.4%
28 Hotel Portfolio (5)	28	77.8%	$	199.66	$	155.34	77.8%	$	196.46		$	152.85		1.6%
		For the Year Ended December 31,
		2016					2015
	# of Hotels	Occ		ADR		RevPAR	Occ		ADR			RevPAR	RevPAR Change
California (1)	7	86.8%	$	218.95	$	190.05	86.7%	$	209.66	$		181.78	4.6%
Other West (2)	4	77.5%	$	130.13	$	100.85	80.0%	$	139.13	$		111.30	-9.4%
Midwest	3	82.7%	$	198.31	$	164.00	85.3%	$	201.76	$		172.10	-4.7%
East (3)	12	80.8%	$	199.45	$	161.16	79.6%	$	198.53	$		158.03	2.0%
Comparable Portfolio (4)	26	82.4%	$	198.73	$	163.75	82.3%	$	196.34	$		161.59	1.3%
28 Hotel Portfolio (5)	28	81.9%	$	200.51	$	164.22	82.2%	$	198.33	$		163.03	0.7%

(1) California excludes the Sheraton Cerritos sold in May 2016, and the Fairmont Newport Beach sold in February 2017.

(2) Other West excludes the Wailea Beach Resort due to its extensive renovation during the fourth quarter of 2015 as well as all of 2016.

(3) East excludes the Doubletree Guest Suites Times Square sold in December 2015.

(4) Comparable Portfolio includes 26 of the 28 hotels owned by the Company as of December 31, 2016. The Comparable Portfolio excludes the Wailea Beach Resort and the Fairmont Newport Beach.

(5) 28 Hotel Portfolio includes all 28 hotels owned by the Company as of December 31, 2016.

OPERATING STATISTICS BY BRAND & GEOGRAPHY							Page 35

Supplemental Financial Information
February 21, 2017

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 36

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA
Q4 and FY 2016/2015

	Hotels sorted by number of rooms		For the Three Months Ended December 31,					For the Year Ended December 31,
	(In thousands)		2016		2015			2016		2015
			Hotel Adjusted EBITDA (2)		Hotel Adjusted EBITDA (2)	% Change		Hotel Adjusted EBITDA (2)		Hotel Adjusted EBITDA (2)	% Change
1	Hilton San Diego Bayfront (1) (3)	$	10,229	$	11,506	-11%	$	48,638	$	54,278	-10%
2	Boston Park Plaza (3) (4)		6,224		5,961	4%		22,132		22,040	0%
3	Renaissance Washington DC (3)		5,891		4,624	27%		24,756		21,792	14%
4	Hyatt Regency San Francisco		6,033		6,187	-2%		30,244		28,010	8%
5	Renaissance Orlando at SeaWorld ® (1)		4,842		5,336	-9%		25,175		20,713	22%
6	Renaissance Harborplace (4)		2,407		2,946	-18%		12,266		11,515	7%
7	Renaissance Los Angeles Airport		1,758		1,888	-7%		9,041		8,138	11%
8	JW Marriott New Orleans		3,653		3,164	15%		14,300		13,475	6%
9	Hilton North Houston (4)		384		1,403	-73%		3,714		5,726	-35%
10	Hilton Times Square		4,819		5,091	-5%		11,628		14,070	-17%
11	Marriott Quincy (4)		2,520		2,125	19%		9,826		9,603	2%
12	Hyatt Centric Chicago Magnificent Mile (3) (4)		2,422		1,654	46%		10,449		7,312	43%
13	Marriott Boston Long Wharf		4,884		5,390	-9%		22,965		23,747	-3%
14	Hyatt Regency Newport Beach		1,638		1,805	-9%		9,847		10,141	-3%
15	Marriott Tysons Corner		1,964		1,702	15%		7,608		7,047	8%
16	Marriott Houston (4)		252		1,028	-75%		3,161		4,873	-35%
17	Renaissance Long Beach		1,296		1,690	-23%		8,258		7,554	9%
18	Embassy Suites Chicago (3) (4)		3,299		2,788	18%		12,632		11,561	9%
19	Hilton Garden Inn Chicago Downtown/Magnificent Mile (3) (4)		2,406		1,527	58%		8,910		7,643	17%
20	Renaissance Westchester		863		1,158	-25%		3,484		4,129	-16%
21	Embassy Suites La Jolla (4)		2,021		2,001	1%		9,792		9,664	1%
22	Marriott Philadelphia (3)		1,002		1,241	-19%		4,872		5,356	-9%
23	Hilton New Orleans St. Charles		1,242		1,761	-29%		5,643		6,311	-11%
24	Marriott Portland		1,667		1,949	-14%		8,282		8,542	-3%
25	Marriott Park City		108		(76)	242%		2,618		2,197	19%
26	Courtyard by Marriott Los Angeles		975		944	3%		4,994		4,351	15%
	Comparable Portfolio (5)		74,799		76,793	-3%		335,235		329,788	2%
	Add: Non-Comparable Hotels (6)
	Wailea Beach Resort (3) (4)		4,278		4,111	4%		14,121		21,637	-35%
	Fairmont Newport Beach (3) (4)		1,569		1,490	5%		7,828		7,954	-2%
	28 Hotel Portfolio (7)	$	80,646	$	82,394	-2%	$	357,184	$	359,379	-1%

*Footnotes on page 38

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 37

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA
Q4 and FY 2016/2015 Footnotes

(1) Reflects 100% of the operating results for the Hilton San Diego Bayfront and Renaissance Orlando at SeaWorld®.

(2) Reconciliations to Net Income (Loss) provided on pages 41, 42, 44 and 45.

(3) Hotel Adjusted EBITDA for the fourth quarter 2016 is impacted by a  major repositioning at the Wailea Beach Resort, as well as by a total of $(0.3) million in non-current year property tax (assessments) credits, net of appeal fees, received at the following hotels: Fairmont Newport Beach $7,000; Marriott Philadelphia $(0.3) million; and Renaissance Washington DC $(35,000). Hotel Adjusted EBITDA for the full year 2016 is impacted by major repositionings at the Boston Park Plaza and the Wailea Beach Resort, as well as by a total of $4.0 million in non-current year property tax credits (assessments), net of appeal fees, received at the following hotels:  Boston Park Plaza $(3,000); Embassy Suites Chicago $0.6 million; Fairmont Newport Beach $33,000; Hilton Garden Inn Chicago Downtown/Magnificent Mile $0.9 million; Hilton San Diego Bayfront $(0.1) million; Hyatt Centric Chicago Magnificent Mile $2.4 million; Marriott Philadelphia $(0.3) million; and Renaissance Washington DC $0.3 million.

(4) Hotel Adjusted EBITDA for the fourth quarter of 2015 is impacted by a major repositioning at the Wailea Beach Resort. Hotel Adjusted EBITDA for the full year 2015 is impacted by major repositionings at the Boston Park Plaza and the Wailea Beach Resort, as well as by a total of $0.9 million in non-current year property tax credits (assessments), net of appeal fees, received at the following hotels: Embassy Suites Chicago $(35,000); Embassy Suites La Jolla $11,000; Fairmont Newport Beach $27,000; Hilton Garden Inn Chicago Downtown/Magnificent Mile $(42,000); Hilton North Houston $0.1 million; Hyatt Centric Chicago Magnificent Mile $0.6 million; Marriott Houston $0.1 million; Marriott Quincy $34,000; and Renaissance Harborplace $0.1 million.

(5) Comparable Portfolio includes 26 of the 28 hotels owned by the Company as of December 31, 2016. The Comparable Portfolio excludes the Wailea Beach Resort due to its extensive repositioning during the fourth quarter of 2015 as well as all of 2016, and the Fairmont Newport Beach due to its sale in February 2017.

(6) Non-Comparable Hotels include the results generated by the Wailea Beach Resort and the Fairmont Newport Beach.

(7) 28 Hotel Portfolio includes all 28 hotels owned by the Company as of December 31, 2016.

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 38

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA Margins
Q4 and FY 2016/2015

	Hotels sorted by number of rooms	For the Three Months Ended December 31,			For the Year Ended December 31,
		2016	2015	Change in	2016	2015	Change in
		Hotel Adjusted EBITDA Margin	Hotel Adjusted EBITDA Margin	bps	Hotel Adjusted EBITDA Margin	Hotel Adjusted EBITDA Margin	bps
1	Hilton San Diego Bayfront (1) (2)	30.0%	36.2%	(620) bps	33.6%	38.1%	(450) bps
2	Boston Park Plaza (2) (3)	28.1%	28.7%	(60) bps	26.6%	28.5%	(190) bps
3	Renaissance Washington DC (2)	28.4%	24.9%	350 bps	29.5%	27.5%	200 bps
4	Hyatt Regency San Francisco	21.7%	23.2%	(150) bps	27.0%	26.5%	50 bps
5	Renaissance Orlando at SeaWorld ® (1)	30.3%	30.7%	(40) bps	33.1%	30.2%	290 bps
6	Renaissance Harborplace (3)	23.7%	27.2%	(350) bps	27.0%	26.9%	10 bps
7	Renaissance Los Angeles Airport	24.3%	26.0%	(170) bps	27.7%	26.3%	140 bps
8	JW Marriott New Orleans	38.4%	35.4%	300 bps	37.6%	35.1%	250 bps
9	Hilton North Houston (3)	8.9%	23.9%	(1,500) bps	17.8%	23.5%	(570) bps
10	Hilton Times Square	30.5%	31.4%	(90) bps	22.0%	25.0%	(300) bps
11	Marriott Quincy (3)	32.4%	27.5%	490 bps	30.9%	30.6%	30 bps
12	Hyatt Centric Chicago Magnificent Mile (2) (3)	26.4%	18.4%	800 bps	30.3%	20.4%	990 bps
13	Marriott Boston Long Wharf	37.1%	39.3%	(220) bps	40.0%	40.9%	(90) bps
14	Hyatt Regency Newport Beach	20.4%	22.0%	(160) bps	25.6%	26.5%	(90) bps
15	Marriott Tysons Corner	33.2%	31.7%	150 bps	33.2%	31.8%	140 bps
16	Marriott Houston (3)	8.7%	25.1%	(1,640) bps	21.2%	27.5%	(630) bps
17	Renaissance Long Beach	21.9%	28.7%	(680) bps	30.2%	29.7%	50 bps
18	Embassy Suites Chicago (2) (3)	46.9%	39.8%	710 bps	44.7%	38.9%	580 bps
19	Hilton Garden Inn Chicago Downtown/Magnificent Mile (2) (3)	43.1%	29.3%	1,380 bps	41.0%	33.7%	730 bps
20	Renaissance Westchester	15.6%	19.3%	(370) bps	15.8%	18.1%	(230) bps
21	Embassy Suites La Jolla (3)	38.9%	39.6%	(70) bps	42.3%	43.1%	(80) bps
22	Marriott Philadelphia (2)	21.9%	27.2%	(530) bps	26.7%	28.8%	(210) bps
23	Hilton New Orleans St. Charles	37.3%	45.2%	(790) bps	39.1%	41.4%	(230) bps
24	Marriott Portland	43.5%	46.0%	(250) bps	47.1%	47.1%	- bps
25	Marriott Park City	5.2%	-4.6%	980 bps	23.9%	22.1%	180 bps
26	Courtyard by Marriott Los Angeles	31.9%	31.0%	90 bps	36.5%	34.5%	200 bps
	Comparable Portfolio (4)	28.7%	29.6%	(90) bps	30.8%	30.9%	(10) bps
	Add: Non-Comparable Hotels (5)
	Wailea Beach Resort (2) (3)	26.3%	29.0%	(270) bps	23.6%	33.8%	(1,020) bps
	Fairmont Newport Beach (2) (3)	21.3%	21.4%	(10) bps	24.2%	25.0%	(80) bps
	28 Hotel Portfolio (6)	28.3%	29.4%	(110) bps	30.5%	31.1%	(60) bps
	Comparable Portfolio, excluding prior year property tax adjustments, net (7)	28.8%	29.6%	(80) bps	30.5%	30.8%	(30) bps
	28 Hotel Portfolio, excluding prior year property tax adjustments, net (8)	28.5%	29.4%	(90) bps	30.1%	31.0%	(90) bps

*Footnotes on page 40

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 39

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA Margins
Q4 and FY 2016/2015 Footnotes

(1) Reflects 100% of the operating results for the Hilton San Diego Bayfront and Renaissance Orlando at SeaWorld®.

(2) Hotel Adjusted EBITDA Margins for the fourth quarter 2016 are impacted by a  major repositioning at the Wailea Beach Resort, as well as by a total of $(0.3) million in non-current year property tax (assessments) credits, net of appeal fees, received at the following hotels: Fairmont Newport Beach $7,000; Marriott Philadelphia $(0.3) million; and Renaissance Washington DC $(35,000). Hotel Adjusted EBITDA Margins for the full year 2016 are impacted by major repositionings at the Boston Park Plaza and the Wailea Beach Resort, as well as by a total of $4.0 million in non-current year property tax credits (assessments), net of appeal fees, received at the following hotels:  Boston Park Plaza $(3,000); Embassy Suites Chicago $0.6 million; Fairmont Newport Beach $33,000; Hilton Garden Inn Chicago Downtown/Magnificent Mile $0.9 million; Hilton San Diego Bayfront $(0.1) million; Hyatt Centric Chicago Magnificent Mile $2.4 million; Marriott Philadelphia $(0.3) million; and Renaissance Washington DC $0.3 million.

(3) Hotel Adjusted EBITDA Margins for the fourth quarter of 2015 are impacted by a major repositioning at the Wailea Beach Resort. Hotel Adjusted EBITDA Margins for the full year 2015 are impacted by major repositionings at the Boston Park Plaza and the Wailea Beach Resort, as well as by a total of $0.9 million in non-current year property tax credits (assessments), net of appeal fees, received at the following hotels: Embassy Suites Chicago $(35,000); Embassy Suites La Jolla $11,000; Fairmont Newport Beach $27,000; Hilton Garden Inn Chicago Downtown/Magnificent Mile $(42,000); Hilton North Houston $0.1 million; Hyatt Centric Chicago Magnificent Mile $0.6 million; Marriott Houston $0.1 million; Marriott Quincy $34,000; and Renaissance Harborplace $0.1 million.

(4) Comparable Portfolio includes 26 of the 28 hotels owned by the Company as of December 31, 2016. The Comparable Portfolio excludes the Wailea Beach Resort due to its extensive repositioning during the fourth quarter of 2015 as well as all of 2016, and the Fairmont Newport Beach due to its sale in February 2017.

(5) Non-Comparable Hotels include the results generated by the Wailea Beach Resort and the Fairmont Newport Beach.

(6) 28 Hotel Portfolio includes all 28 hotels owned by the Company as of December 31, 2016.

(7) Comparable Portfolio, excluding prior year property tax adjustments, net represents the 26 Hotel Comparable Portfolio adjusted to exclude the prior year property tax related items noted in Footnotes 2 and 3 above.

(8) 28 Hotel Portfolio, excluding prior year property tax adjustments, net represents the 28 Hotel Portfolio adjusted to exclude the prior year property tax related items noted in Footnotes 2 and 3 above.

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 40

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA Reconciliation Q4 2016

	Hotels sorted by number of rooms			For the Three Months Ended December 31, 2016
	(In thousands)						Plus:		Plus:		Plus:		Equals:		Hotel
		Total			Net Income /		Other						Hotel		Adjusted EBITDA
		Revenues			(Loss)		Adjustments (2)		Depreciation		Interest Expense		Adjusted EBITDA		Margins
1	Hilton San Diego Bayfront (1)	$	34,051		$	4,556	$	451	$	3,493	$	1,729	$	10,229	30.0%
2	Boston Park Plaza		22,154			713		420		5,091		—		6,224	28.1%
3	Renaissance Washington DC (3)		20,752			1,595		—		2,493		1,803		5,891	28.4%
4	Hyatt Regency San Francisco		27,800			2,646		—		3,387		—		6,033	21.7%
5	Renaissance Orlando at SeaWorld ® (1)		15,993			2,604		—		2,238		—		4,842	30.3%
6	Renaissance Harborplace		10,154			848		—		1,559		—		2,407	23.7%
7	Renaissance Los Angeles Airport		7,235			1,035		—		723		—		1,758	24.3%
8	JW Marriott New Orleans		9,511			1,133		1		1,580		939		3,653	38.4%
9	Hilton North Houston		4,331			(438)		—		822		—		384	8.9%
10	Hilton Times Square		15,820			981		76		2,536		1,226		4,819	30.5%
11	Marriott Quincy		7,774			1,393		—		1,127		—		2,520	32.4%
12	Hyatt Centric Chicago Magnificent Mile		9,170			991		—		1,431		—		2,422	26.4%
13	Marriott Boston Long Wharf		13,150			330		—		2,040		2,514		4,884	37.1%
14	Hyatt Regency Newport Beach		8,040			764		—		874		—		1,638	20.4%
15	Marriott Tysons Corner		5,910			1,196		—		768		—		1,964	33.2%
16	Marriott Houston		2,908			(319)		—		571		—		252	8.7%
17	Renaissance Long Beach		5,917			505		—		791		—		1,296	21.9%
18	Embassy Suites Chicago		7,038			1,470		—		898		931		3,299	46.9%
19	Hilton Garden Inn Chicago Downtown/Magnificent Mile		5,579			1,641		—		765		—		2,406	43.1%
20	Renaissance Westchester		5,520			(212)		—		1,075		—		863	15.6%
21	Embassy Suites La Jolla		5,200			444		—		903		674		2,021	38.9%
22	Marriott Philadelphia (3)		4,585			374		—		628		—		1,002	21.9%
23	Hilton New Orleans St. Charles		3,328			634		—		608		—		1,242	37.3%
24	Marriott Portland		3,835			1,275		—		392		—		1,667	43.5%
25	Marriott Park City		2,093			(404)		—		512		—		108	5.2%
26	Courtyard by Marriott Los Angeles		3,054			687		—		288		—		975	31.9%
	Comparable Portfolio (4)		260,902			26,442	$	948		37,593		9,816		74,799	28.7%
	Add: Non-Comparable Hotels (5)
	Wailea Beach Resort (3)		16,243			1,215		—		3,063		—		4,278	26.3%
	Fairmont Newport Beach (3)		7,373			510		—		1,059		—		1,569	21.3%
	Actual Portfolio (6)	$	284,518		$	28,167	$	948	$	41,715	$	9,816	$	80,646	28.3%

*Footnotes on page 43

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 41

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA Reconciliation Q4 2015

	Hotels sorted by number of rooms		For the Three Months Ended December 31, 2015
	(In thousands)					Plus:		Plus:		Plus:		Equals:		Hotel
		Total		Net Income /		Other						Hotel		Adjusted EBITDA
		Revenues		(Loss)		Adjustments(7)		Depreciation		Interest Expense		Adjusted EBITDA		Margins
1	Hilton San Diego Bayfront (1)	$	31,781	$	6,038	$	451	$	3,466	$	1,551	$	11,506	36.2%
2	Boston Park Plaza		20,784		(95)		78		4,677		1,301		5,961	28.7%
3	Renaissance Washington DC		18,564		323		—		2,460		1,841		4,624	24.9%
4	Hyatt Regency San Francisco		26,713		2,986		—		3,201		—		6,187	23.2%
5	Renaissance Orlando at SeaWorld ® (1)		17,396		2,105		—		2,185		1,046		5,336	30.7%
6	Renaissance Harborplace		10,833		868		—		1,692		386		2,946	27.2%
7	Renaissance Los Angeles Airport		7,273		1,184		—		704		—		1,888	26.0%
8	JW Marriott New Orleans		8,928		693		2		1,514		955		3,164	35.4%
9	Hilton North Houston		5,865		193		—		859		351		1,403	23.9%
10	Hilton Times Square		16,232		1,245		81		2,531		1,234		5,091	31.4%
11	Marriott Quincy		7,733		997		—		1,128		—		2,125	27.5%
12	Hyatt Centric Chicago Magnificent Mile		8,989		227		—		1,427		—		1,654	18.4%
13	Marriott Boston Long Wharf		13,715		790		—		2,087		2,513		5,390	39.3%
14	Hyatt Regency Newport Beach		8,186		936		—		869		—		1,805	22.0%
15	Marriott Tysons Corner		5,372		910		—		792		—		1,702	31.7%
16	Marriott Houston		4,099		427		—		601		—		1,028	25.1%
17	Renaissance Long Beach		5,895		938		—		752		—		1,690	28.7%
18	Embassy Suites Chicago		7,004		892		—		920		976		2,788	39.8%
19	Hilton Garden Inn Chicago Downtown/Magnificent Mile		5,209		779		—		748		—		1,527	29.3%
20	Renaissance Westchester		6,010		306		—		852		—		1,158	19.3%
21	Embassy Suites La Jolla		5,049		428		—		887		686		2,001	39.6%
22	Marriott Philadelphia		4,570		758		—		483		—		1,241	27.2%
23	Hilton New Orleans St. Charles		3,896		1,142		(16)		635		—		1,761	45.2%
24	Marriott Portland		4,240		1,557		—		392		—		1,949	46.0%
25	Marriott Park City		1,654		(520)		—		444		—		(76)	-4.6%
26	Courtyard by Marriott Los Angeles		3,049		649		—		295		—		944	31.0%
	Comparable Portfolio (4)		259,039		26,756		596		36,601		12,840		76,793	29.6%
	Add: Non-Comparable Hotels (5)
	Wailea Beach Resort (3)		14,168		1,637		—		2,474		—		4,111	29.0%
	Fairmont Newport Beach		6,969		396		—		1,094		—		1,490	21.4%
	Add: Sold Hotels (8)
	Doubletree Guest Suites Times Square (1)		15,653		1,915		669		1,079		1,453		5,116	32.7%
	Sheraton Cerritos		3,499		590		—		402		—		992	28.4%
	Actual Portfolio (6)	$	299,328	$	31,294	$	1,265	$	41,650	$	14,293	$	88,502	29.6%

*Footnotes on page 43

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 42

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA Reconciliation
Q4 2016/2015 Footnotes

(1) Includes 100% of the operating results for the Doubletree Guest Suites Times Square, Hilton San Diego Bayfront and Renaissance Orlando at SeaWorld®.

(2) Other Adjustments for the fourth quarter of 2016 include: $0.4 million in lease termination costs at the Boston Park Plaza; a total of $0.1 million in amortization of lease intangibles at the Hilton Times Square and JW Marriott New Orleans; and a total of $0.5 million in noncash straight-line lease expense at the Hilton San Diego Bayfront, Hilton Times Square and JW Marriott New Orleans.

(3) Hotel Adjusted EBITDA for the fourth quarter of 2016 is impacted by a major repositioning at the Wailea Beach Resort, and by a total of $(0.3) million in non-current year property tax (assessments) credits, net of appeal fees, received at the following hotels: Fairmont Newport Beach $7,000; Marriott Philadelphia $(0.3) million; and Renaissance Washington DC $(35,000). Hotel Adjusted EBITDA for the fourth quarter of 2015 is impacted by a major repositioning at the Wailea Beach Resort.

(4) Comparable Portfolio includes 26 of the 28 hotels owned by the Company as of December 31, 2016. The Comparable Portfolio excludes the Wailea Beach Resort due to its extensive repositioning during the fourth quarter of 2015 as well as all of 2016, and the Fairmont Newport Beach due to its sale in February 2017.

(5) Non-Comparable Hotels include the results generated by the Wailea Beach Resort and the Fairmont Newport Beach.

(6) Actual Portfolio for the fourth quarter of 2016 includes all 28 hotels owned by the Company as of December 31, 2016. Actual Portfolio for the fourth quarter of 2015 includes all 29 hotels owned by the Company as of December 31, 2015, as well as results from the Doubletree Guest Suites Times Square before its sale in December 2015.

(7) Other Adjustments for the fourth quarter of 2015 include a total of $0.1 million in property-level restructuring, severance and management transition costs at the following hotels: the Boston Park Plaza $0.1 million; and the Hilton New Orleans St. Charles $(16,000). In addition, Other Adjustments for the fourth quarter of 2015 include: a total of $0.7 million in amortization of lease intangibles at the Doubletree Guest Suites Times Square, Hilton Times Square and  JW Marriott New Orleans; and a total of $0.5 million in noncash straight-line lease expense at the Doubletree Guest Suites Times Square, Hilton San Diego Bayfront, Hilton Times Square and JW Marriott New Orleans.

(8) Sold Hotels for the fourth quarter of 2015 include the Sheraton Cerritos, sold in May 2016, and the Doubletree Guest Suites Times Square, sold in December 2015.

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 43

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA Reconciliation FY 2016

	Hotels sorted by number of rooms		For the Year Ended December 31, 2016
	(In thousands)					Plus:		Plus:		Plus:		Equals:		Hotel
		Total		Net Income /		Other						Hotel		Adjusted EBITDA
		Revenues		(Loss)		Adjustments (2)		Depreciation		Interest Expense		Adjusted EBITDA		Margins
1	Hilton San Diego Bayfront (1) (3)	$	144,897	$	26,181	$	1,801	$	13,921	$	6,735	$	48,638	33.6%
2	Boston Park Plaza (3)		83,212		3,630		420		17,645		437		22,132	26.6%
3	Renaissance Washington DC (3)		83,927		7,510		(10)		9,986		7,270		24,756	29.5%
4	Hyatt Regency San Francisco		112,060		15,498		914		13,832		—		30,244	27.0%
5	Renaissance Orlando at SeaWorld ® (1)		75,973		14,580		—		8,885		1,710		25,175	33.1%
6	Renaissance Harborplace		45,481		5,965		—		6,301		—		12,266	27.0%
7	Renaissance Los Angeles Airport		32,635		6,186		—		2,855		—		9,041	27.7%
8	JW Marriott New Orleans		38,062		4,328		(1)		6,215		3,758		14,300	37.6%
9	Hilton North Houston		20,923		363		—		3,351		—		3,714	17.8%
10	Hilton Times Square		52,755		(4,111)		858		10,027		4,854		11,628	22.0%
11	Marriott Quincy		31,819		5,324		—		4,502		—		9,826	30.9%
12	Hyatt Centric Chicago Magnificent Mile (3)		34,432		4,726		—		5,723		—		10,449	30.3%
13	Marriott Boston Long Wharf		57,370		4,667		45		8,253		10,000		22,965	40.0%
14	Hyatt Regency Newport Beach		38,483		6,241		—		3,606		—		9,847	25.6%
15	Marriott Tysons Corner		22,898		4,497		—		3,111		—		7,608	33.2%
16	Marriott Houston		14,941		791		—		2,370		—		3,161	21.2%
17	Renaissance Long Beach		27,386		5,145		—		3,113		—		8,258	30.2%
18	Embassy Suites Chicago (3)		28,250		5,226		—		3,605		3,801		12,632	44.7%
19	Hilton Garden Inn Chicago Downtown/Magnificent Mile (3)		21,708		5,881		—		3,029		—		8,910	41.0%
20	Renaissance Westchester		22,118		(155)		—		3,639		—		3,484	15.8%
21	Embassy Suites La Jolla		23,143		3,482		—		3,610		2,700		9,792	42.3%
22	Marriott Philadelphia (3)		18,216		2,503		—		2,369		—		4,872	26.7%
23	Hilton New Orleans St. Charles		14,450		3,177		—		2,466		—		5,643	39.1%
24	Marriott Portland		17,596		6,707		—		1,575		—		8,282	47.1%
25	Marriott Park City		10,974		632		—		1,986		—		2,618	23.9%
26	Courtyard by Marriott Los Angeles		13,678		3,836		—		1,158		—		4,994	36.5%
	Comparable Portfolio (4)		1,087,387		142,810		4,027		147,133		41,265		335,235	30.8%
	Add: Non-Comparable Hotels (5)
	Wailea Beach Resort (3)		59,735		2,500		1,101		10,520		—		14,121	23.6%
	Fairmont Newport Beach (3)		32,296		3,579		—		4,249		—		7,828	24.2%
	Add: Sold Hotel (6)
	Sheraton Cerritos		4,846		876		—		528		—		1,404	29.0%
	Actual Portfolio (7)	$	1,184,264	$	149,765	$	5,128	$	162,430	$	41,265	$	358,588	30.3%

*Footnotes on page 46

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 44

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA Reconciliation FY 2015

	Hotels sorted by number of rooms		For the Year Ended December 31, 2015
	(In thousands)					Plus:		Plus:		Plus:		Equals:		Hotel
		Total		Net Income /		Other						Hotel		Adjusted EBITDA
		Revenues		(Loss)		Adjustments(8)		Depreciation		Interest Expense		Adjusted EBITDA		Margins
1	Hilton San Diego Bayfront (1)	$	142,534	$	32,602	$	1,801	$	13,728	$	6,147	$	54,278	38.1%
2	Boston Park Plaza (3)		77,246		538		1,061		15,242		5,199		22,040	28.5%
3	Renaissance Washington DC		79,262		4,229		366		9,783		7,414		21,792	27.5%
4	Hyatt Regency San Francisco		105,723		15,458		—		12,552		—		28,010	26.5%
5	Renaissance Orlando at SeaWorld ® (1)		68,686		7,678		—		8,836		4,199		20,713	30.2%
6	Renaissance Harborplace (3)		42,847		908		—		6,759		3,848		11,515	26.9%
7	Renaissance Los Angeles Airport		30,901		5,382		—		2,756		—		8,138	26.3%
8	JW Marriott New Orleans		38,359		4,014		(1)		5,648		3,814		13,475	35.1%
9	Hilton North Houston (3)		24,327		484		—		3,530		1,712		5,726	23.5%
10	Hilton Times Square		56,169		(1,284)		332		10,113		4,909		14,070	25.0%
11	Marriott Quincy (3)		31,428		5,127		—		4,476		—		9,603	30.6%
12	Hyatt Centric Chicago Magnificent Mile (3)		35,801		1,553		—		5,759		—		7,312	20.4%
13	Marriott Boston Long Wharf		58,086		5,423		—		8,352		9,972		23,747	40.9%
14	Hyatt Regency Newport Beach		38,318		6,677		—		3,464		—		10,141	26.5%
15	Marriott Tysons Corner		22,139		3,132		—		3,184		731		7,047	31.8%
16	Marriott Houston (3)		17,707		2,132		—		2,366		375		4,873	27.5%
17	Renaissance Long Beach		25,475		4,509		—		3,045		—		7,554	29.7%
18	Embassy Suites Chicago (3)		29,698		3,977		—		3,676		3,908		11,561	38.9%
19	Hilton Garden Inn Chicago Downtown/Magnificent Mile (3)		22,669		4,686		—		2,957		—		7,643	33.7%
20	Renaissance Westchester		22,801		788		—		3,341		—		4,129	18.1%
21	Embassy Suites La Jolla (3)		22,399		3,440		—		3,485		2,739		9,664	43.1%
22	Marriott Philadelphia		18,588		2,967		20		1,923		446		5,356	28.8%
23	Hilton New Orleans St. Charles		15,254		4,228		72		2,011		—		6,311	41.4%
24	Marriott Portland		18,127		6,921		—		1,621		—		8,542	47.1%
25	Marriott Park City		9,935		186		—		1,765		246		2,197	22.1%
26	Courtyard by Marriott Los Angeles		12,608		3,150		—		1,201		—		4,351	34.5%
	Comparable Portfolio (4)		1,067,087		128,905		3,651		141,573		55,659		329,788	30.9%
	Add: Non-Comparable Hotels (5)
	Wailea Beach Resort (3)		64,016		11,763		—		9,874		—		21,637	33.8%
	Fairmont Newport Beach (3)		31,871		3,543		—		4,411		—		7,954	25.0%
	Add: Sold Hotels (6)
	Doubletree Guest Suites Times Square (1)		64,571		2,974		3,646		5,868		6,550		19,038	29.5%
	Sheraton Cerritos		13,813		2,351		—		1,631		—		3,982	28.8%
	Actual Portfolio (7)	$	1,241,358	$	149,536	$	7,297	$	163,357	$	62,209	$	382,399	30.8%

*Footnotes on page 46

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 45

Supplemental Financial Information
February 21, 2017

Property-Level Adjusted EBITDA Reconciliation
FY 2016/2015 Footnotes

(1) Includes 100% of the operating results for the Doubletree Guest Suites Times Square, Hilton San Diego Bayfront and Renaissance Orlando at SeaWorld®.

(2) Other Adjustments for 2016 include a total of $1.6 million in property-level restructuring, severance and management transition costs at the following hotels: Hilton Times Square $0.5 million; Hyatt Regency San Francisco $0.9 million; Marriott Boston Long Wharf $45,000; Renaissance Washington DC $(10,000); and Wailea Beach Resort $0.1 million. In addition, Other Adjustments for the year ended December 31, 2016 include: a total of $1.4 million in lease termination costs at the Wailea Beach Resort ($1.0 million) and the Boston Park Plaza ($0.4 million); a total of $0.3 million in amortization of lease intangibles at the Hilton Times Square and JW Marriott New Orleans; and a total of $1.9 million in noncash straight-line lease expense at the Hilton San Diego Bayfront, Hilton Times Square and JW Marriott New Orleans.

(3) Hotel Adjusted EBITDA for 2016 is impacted by major repositionings at the Boston Park Plaza and the Wailea Beach Resort, as well as by a total of $4.0 million in non-current year property tax credits (assessments), net of appeal fees, received at the following hotels:  Boston Park Plaza $(3,000); Embassy Suites Chicago $0.6 million; Fairmont Newport Beach $33,000; Hilton Garden Inn Chicago Downtown/Magnificent Mile $0.9 million; Hilton San Diego Bayfront $(0.1) million; Hyatt Centric Chicago Magnificent Mile $2.4 million; Marriott Philadelphia $(0.3) million; and Renaissance Washington DC $0.3 million. Hotel Adjusted EBITDA for 2015 is impacted by major repositionings at the Boston Park Plaza and the Wailea Beach Resort, as well as by a total of $0.9 million in non-current year property tax credits (assessments), net of appeal fees, received at the following hotels: Embassy Suites Chicago $(35,000); Embassy Suites La Jolla $11,000; Fairmont Newport Beach $27,000; Hilton Garden Inn Chicago Downtown/Magnificent Mile $(42,000); Hilton North Houston $0.1 million; Hyatt Centric Chicago Magnificent Mile $0.6 million; Marriott Houston $0.1 million; Marriott Quincy $34,000; and Renaissance Harborplace $0.1 million.

(4) Comparable Portfolio includes 26 of the 28 hotels owned by the Company as of December 31, 2016. The Comparable Portfolio excludes the Wailea Beach Resort due to its extensive repositioning during the fourth quarter of 2015 as well as all of 2016, and the Fairmont Newport Beach due to its sale in February 2017.

(5) Non-Comparable Hotels include the results generated by the Wailea Beach Resort and the Fairmont Newport Beach.

(6) Sold Hotel for both 2016 and 2015 includes the Sheraton Cerritos, which was sold in May 2016. Sold Hotels for 2015 also includes the Doubletree Guest Suites Times Square, which was sold in December 2015.

(7) Actual Portfolio for 2016 includes all 28 hotels owned by the Company as of December 31, 2016, as well as results from the Sheraton Cerritos before its sale in May 2016. Actual Portfolio for 2015 includes all 29 hotels owned by the Company as of December 31, 2015, as well as results from the Doubletree Guest Suites Times Square before its sale in December 2015.

(8) Other Adjustments for 2015 include a total of $1.2 million in  property-level restructuring, severance and management transition costs at the following hotels: Boston Park Plaza $0.7 million;  Hilton New Orleans St. Charles $0.1 million; Marriott Philadelphia $20,000; and Renaissance Washington DC $0.4 million. In addition, Other Adjustments for the year ended December 31, 2015 include: lease termination costs of $0.3 million at the Boston Park Plaza; a total of $3.8 million in amortization of lease intangibles at the Doubletree Guest Suites Times Square, Hilton Times Square and JW Marriott New Orleans; and a total of $2.0 million in noncash straight-line lease expense at the Doubletree Guest Suites Times Square, Hilton San Diego Bayfront, Hilton Times Square and JW Marriott New Orleans.

PROPERTY-LEVEL ADJUSTED EBITDA & ADJUSTED EBITDA MARGINS							Page 46