Buser moves closer to Sunstone CEO role

SAN CLEMENTE, CA—It’s been quite the post-hire “honeymoon” period for Sunstone Hotel Investors, Inc.’s freshly named president and future CEO, Art Buser, who may have redefined the phrase “hit the ground running” when he took over his new role here two months ago. Since that time the former Los Angeles-based, managing director at Jones Lang LaSalle Hotels visited all 45 of Sunstone’s hotels in what amounted to his first 45 days on the job while the economy and downturning lodging market continued to make life difficult for public hotel firms like Sunstone. Add to that Buser’s planned relocation from his home in Santa Monica, CA, south to Sunstone’s Orange County, CA, environs, and life has been coming at him rather fast. “I’ve been enjoying my honeymoon period at Sunstone. [Sunstone Chairman and CEO Robert Alter] has given me a long time to get my arms around things,” Buser joked. “The honeymoon ended when I signed the contract. I saw all 45 of our properties in the first 45 days. I’ve really dived in deep already. I think Bob had me at six airports in one day once. But I’m still standing.” That’s welcome news to Alter, who said that Buser is also being groomed to take over his CEO role sometime between Jan. 1 and July 1, 2009 in addition to the already commanded president’s role. It’s welcome news because Sunstone lost its previous president and CEO, Steven Goldman, in March of this year when he left to become president of global real estate and development for Hilton Hotels Corp. Goldman was only on the job at Sunstone a little more than a year at the time of his resignation. Previous to that resignation, in June of 2007, Sunstone lost its president at that time, Jon Kline, who went on to form his own investment firm, Clearview Hotel Capital, LLC. “In terms of when the board of directors will feel comfortable with Art taking over the CEO role, it’s hard to specifically know when right now. But I am sure it will occur in that given time frame,” Alter explained. “When he transitions to that role he will have learned everything he will need under his belt for the CEO role. Now, I’m happy for that to have occurred yesterday, but in reality it will take a little time to get his arms around Sunstone, especially in this challenging market.” Alter further noted that in the meantime, Buser and he are sharing many of the firm’s leadership responsibilities as Buser takes on more. But once Buser takes over as CEO, Alter will remain as the executive chairman and be able to pursue some additional goals he has eyed. “I’ve been involved in the leadership role for some time here, but it was always my choice when Sunstone went public in 2004 to get ready to make the transition to the next step and bring in someone to run the company and for me to go back to being an entrepreneur while working on philanthropy and educational programs and projects of my own,” Alter said. “That’s always been my plan. It’s just been sidetracked for a year or so with [Goldman] going to Hilton.” With regard to the turn of events surrounding Goldman’s departure, Alter commented, “It was a unique situation. I had thought we’d found the right guy and obviously he is a very good guy, otherwise how could he have gotten such a good job with Blackstone and Hilton? He saw an opportunity to work for Blackstone and I wish him well. It was a setback for me, but in some respects we were fortunate to be able to get Art now, who brings some other backgrounds to the table that we didn’t have with the operational side of things. Art spent a large part of his career in the operations side of the hotel business, which adds a lot of that depth that Steve didn’t have, so I’m very pleased.” Alter elaborated on the reasons for the selection of Buser—who had been serving as Jones Lang LaSalle Hotels’ head of global hotel capital markets when he left in July—by noting, first, that an exhaustive search was carried out for the new president and CEO. “We wanted someone with transaction experience and operational experience and Art brings a big background in both,” he said. “He has the background to be able to do what it takes to increase our shareholders’ value and manage our diverse portfolio.” Prior to his 11 years at Jones Lang LaSalle, Buser held various management positions in acquisitions and asset management at the Yarmouth Group. Previously, he held operations and financial analysis posts at Hilton Hotels. With such a diverse and well-rounded resume, Buser admitted his current and future role at Sunstone is a culmination of sorts. “This is certainly the fulfillment of a lifetime ambition I’ve had,” he said. “When you spend nearly 12 years at one company, one never really leaves the company. It’s really about going in a new direction. And this was just too great of an opportunity to pass up. I had a fulfilling career at Jones Lang LaSalle Hotels. But this was really an opportunity of a lifetime. I was very much ready for something like this.” One of Buser’s former colleagues at Jones Lang LaSalle Hotels, Art Adler, the firm’s managing director and CEO of the Americas, agreed, saying, “I think it’s a terrific opportunity for [Buser]. We do wish him well. Hopefully, he’ll be a major client of ours. I’ve had a terrific long-standing relationship with Art. [This move] says a lot about our firm and the kind of people we have on board here. It’s also a testament to Art’s experience. He’s been involved in asset management and operations throughout his career and he’s also a smart and savvy real estate guy with a great understanding of the capital markets.” In terms of the transition Buser is facing in bringing those skills with him to a public REIT that acquires hotels versus Jones Lang LaSalle Hotels, which instead arranges the acquisition, disposition and financing of hotels, he said the similarities and his inside knowledge of hotel real estate will only help him and Sunstone. “This position is more outward facing than inward facing in terms of governance compared with Jones Lang LaSalle Hotels,” he said. “But while there, every week we’d assess hotels and see their value and the opportunity behind them, whether that was selling, holding or renovating. That part is identical at Sunstone. Interacting with the investment community is new to me, but I’ve dealt with some of the players on the investment analysis side. In the end, there’s a lot more sameness than differences here.” When asked what he would like to change or improve upon at Sunstone and its 45 hotels after now reviewing them all, Buser explained Sunstone is already pursuing the right strategy in many ways with capital expenditure investments at properties being completed here in the market downturn. He also mentioned that Sunstone is correct in its current strategy of opportunistic investment considering it is a rather inhospitable time to acquire hotels now. Of course, he said, there are always exceptions, which were recently exemplified by Sunstone’s $30.4-million purchase of the land underlying the Renaissance Orlando Resort at SeaWorld in Orlando, FL, that Sunstone already had an 85% ownership stake within. “It may sound boring, but it’s really now all about what we can control and what we can control is being smart with our cap ex and working with our operating partners. So there will be some more of the same for us,” Buser said. “I really like the diversity of our portfolio and its diversity of geography and brands. We’re in urban settings, which are now outperforming. And above all, there’s really a Super Bowl-quality level of people here. I’ve worked with all the REITs buying and selling through the years and they’re all skilled, but with the quality I see here, Sunstone is as good as any of them. The only question now is the president, but everything else is certainly best in class.”