Apple and Sunstone REITs Buy Hotels, But is Sunstone Prepping to Sell?

Although there were several reports of real estate investment trusts, or REITs, being crushed by Wall Street on Monday, the carnage hasn't stopped California-based Sunstone Hotel Investors or Apple REIT Cos. from expanding their hotel holdings.

Apple, based in Richmond, Va., bought three hotels in Charlotte, Valencia, Calif. and Allen, Texas for $41 million, or the equivalent of $115,352 per room. This comes after it bought the Hilton Garden Inn in Tucson for $18.4 million earlier this month.

Sunstone, meanwhile, has taken the unusual step of buying the 32.6 acres of land leased underneath its Renaissance Orlando Resort at SeaWorld, leading to speculation that it may be preparing to sell the whole package. Bryan Giglia, vice president of corporate finance, told GlobeSt.com that the purchase was done simply to "take advantage of falling prices."

Perhaps it is, but Sunstone also poured money into renovation and rebranding the 726-room Hyatt Regency Century Plaza in Los Angeles before selling it off for $366.5 million last May. It was an odd decision, considering that in their second-quarter report, the company said it had a "strategic plan to dispose of non-core hotel assets." Wait a minute -- shouldn't a major Los Angeles hotel be considered a core asset?

Giglia said the Hyatt Regency was a "previously underperforming hotel," but that Orlando continues to sell. Giglia also wouldn't comment on whether the Renaissance Orlando Resort is heading to the block.

It could all simply be speculation. It's not a misstep to buy rather than lease. It's even more evident when reading Sunstone's (above-mentioned) second quarter filing to find that for the first six months of this year, the company owed $4.2 million in ground lease agreements, a rise from $3.8 million the year before.