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Sunstone Selling Stock to Fund Century Plaza Hotel Buy

Sunstone Hotel Investors Inc. said Wednesday it will sell about $194 million worth of stock to help fund its $293 million purchase of the Century Plaza Hotel & Spa in Century City.


The San Clemente-based real estate investment trust plans to sell 6.7 million shares, including about 6 million that the company is making available and 706,446 shares being sold by shareholders, according to a filing with the Securities and Exchange Commission.


Sunstone’s share of the stock sale is $151 million, based on a $25.15 offering price. The lead underwriters for the offering, Citigroup and Merrill Lynch & Co., could buy an additional 1 million shares.


Sunstone will contribute its part of the net proceeds to its operating partnership in exchange for 6 million membership units. The operating partnership will use the funds to finance a portion of the purchase price of the Century Plaza Hotel. Sunstone will not receive any proceeds from the stockholders’ portion of the offering, the company said.


On Aug. 25, Sunstone said it would acquire the Century Plaza for $293 million, or $403,000 for each of its 728 rooms, a record-setting amount for a California hotel. The company is set to spend $22.5 million to remodel and renovate the Century Plaza’s guest rooms, common space and the addition of a Regency level and a Hyatt Regency Club. Chicago-based Global Hyatt Corp. will manage the property, which will be renamed the Hyatt Regency Century Plaza.


Sunstone will own 61 hotels when the deal closes in the fourth quarter.



*Pat Maio from the Orange County Business Journal contributed to this story.

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