Sunstone says buybacks attractive

LOS ANGELES (Reuters) - Hotel owner Sunstone Hotel Investors Inc SHO.N aims to sell some properties from the bottom one-third of its portfolio this year, and the board is discussing buying back shares, Chief Executive Steven Goldman said on Wednesday.

"I think we will look to sell some additional assets this year," Goldman told the Reuters Travel and Leisure Summit in Los Angeles. "Our bias is probably more towards selling (rather than buying)."

With the U.S. travel market bracing for a slowdown and credit markets tighter, the prices for hotels have been under pressure.

Michael Depatie, CEO of boutique hotel operator Kimpton, told the Reuters Summit that the prices for hotel assets have fallen 15 percent to 20 percent, but noted that owners are reluctant to sell with demand still solid.

"I don't see bargains, because I don't see sellers marking things to today's (market)," said Sunstone's Goldman. "I don't see blood in the streets."

Sunstone, a real estate investment trust that owns more than 40 upscale hotels, is looking to use the proceeds from hotel disposals to either boost cash reserves, repay debt, buy back shares, or reinvest in the business, Goldman said.

Right now, Sunstone isn't authorized to repurchase shares after the previous authorization ran out at the end of 2007, he said.

The board of directors recently talked about stock buybacks, and the company will likely discuss the matter when it reports quarterly results, he said, declining to comment specifically on whether the board would authorize a new buyback.

"I think it's good business to always have an authorization," he said. "Buying back shares is an attractive proposition right now."

Sunstone's shares have fallen about 45 percent since hitting a 12-month high of $30.67 in July. The shares were up 2.7 percent at $17.04 in afternoon trading on the New York Stock Exchange.

(For summit blog: summitnotebook.reuters.com/)

(Additional reporting by Chris Reiter)

(Reporting by Peter Henderson and Pat Fitzgibbons, editing by Jeffrey Benkoe)