COMPANY PRESENTATION SEPTEMBER 2016

Forward-Looking Statements COMPANY PRESENTATION

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 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; potential 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 September 2016, 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.

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Table of Contents COMPANY PRESENTATION

Hotel Portfolio

Sunstone Strategy

Value Creation

412-room Hilton Garden Inn Chicago Downtown / Magnificent Mile SUNSTONE HOTEL INVESTORS, INC. / 3

Hotel Portfolio Our Properties

COMPANY PRESENTATION

33.2% We own 28 institutional-quality hotels (13,648 rooms) Northeast: • Boston (15.4%) • NYC (3.9%) • DC/Baltimore (11.2%) • Philadelphia (1.5%) • Westchester (1.1%)

Midwest: 7.4% • Chicago (7.4%)

West: 45.2% • San Diego (17.8%) • Wailea (6.0%) • Los Angeles (5.6%) • San Francisco (7.8%) • Orange County (5.0%) • Portland (2.4%) • Park City (0.6%)

South: 14.2% • New Orleans (5.5%) • Orlando (5.8%) • Houston (2.9%)

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Note: Percent distribution based on 2015 hotel adjusted EBITDA data as provided in supplemental financial information reported on Form 8-K, furnished 02/22/2016 and is shown pro forma for asset sold subsequent to year end.

Sunstone Strategy Strategic Pillars

COMPANY PRESENTATION

Our long-term strategy has remained simple and consistent, create shareholder value by investing in high-quality hotel real estate at an anticipated return premium to our cost of capital. We are able to realize that return through: Disciplined Capital Allocation Aggressive Asset Management Focused Cost of Capital Management Superior Corporate Governance 412-room Marriott Boston Long Wharf SUNSTONE HOTEL INVESTORS, INC. / 5

Disciplined Capital Allocation Key Developments Over the Last Year

COMPANY PRESENTATION

Two asset dispositions resulting in lower leverage and a substantial return of capital to shareholders. Doubletree Guest Suites Times Square, New York, NY Gross Sale Price

$540 million

Gross Sale per Key

$1,154,000

EBITDA Multiple on Sale

25.4x

Cap Rate

3.4%

Gain on Sale

$215 million

Debt Repaid

$175 million

Sheraton Cerritos, Cerritos, CA Gross Sale Price

$42 million

Gross Sale per Key

$206,900

EBITDA Multiple on Sale

10.5x

Cap Rate

8.2%

Gain on Sale

$18 million

Debt Repaid

N/A

SUNSTONE HOTEL INVESTORS, INC. / 6 Note: Multiple and cap rate based on 2015 actual or estimated EBITDA and NOI.

Aggressive Asset Management Operational Strategies

COMPANY PRESENTATION

Highly focused and balanced Asset Management initiatives to drive revenues and profits from our assets while increasing shareholder value. Asset Managers contribution in sales strategy, revenue management, and cost controls Strong relationships with our hotel brands and operators Energy initiatives including comprehensive audits and implementation of energy investments Focus on asset highest and best use including high end tenants to drive incremental revenue F&B outperformance through operational best practices and disciplined capital investments SUNSTONE HOTEL INVESTORS, INC. / 7

Boston Park Plaza Acquisition Summary

COMPANY PRESENTATION

Acquisition Rationale

Property Overview Location

Back Bay, Boston, MA

Brand

•

Opportunity to acquire a desirable independent hotel on fee-simple basis in the high barrier-to-entry Boston lodging market.

•

Attractive valuation at substantial discount to replacement cost with significant in-place cash flow generation.

•

Meaningful value creation opportunities possible through renovation and repositioning.

•

Situated in highly desirable Back Bay submarket and proximate to multiple demand generators including key business, convention, tourism and retail destinations.

•

Significant strategic optionality resulting from lack of brand or management encumbrances.

•

Ability to execute acquisition on a taxefficient basis using like-kind exchange proceeds from prior completed asset sales.

•

Further increases portfolio quality and enhances brand and geographic distribution.

Independent

Chain Scale

Upper Upscale

Service Level

Full Service

Number of Rooms

1,060

Square Feet of Meeting Space

50,000

Square Feet of Retail Space

50,000

Ownership Type

Fee Simple

Acquisition Overview Date Closed Purchase Price Purchase Price per Key

July 2013 $250 million $237,400

Multiple on 2013E EBITDA at Acquisition

12.5x

Cap. Rate on 2013E NOI at Acquisition

6.6%

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Boston Park Plaza Renovation and Reposition Overview

COMPANY PRESENTATION

GRAND DAME IS BACK “The historic Boston Park Plaza is reborn with a $100 million top-to-bottom makeover” Renovation and Reposition Overview

Main Lobby Before

Main Lobby After

Front Desk Before

Front Desk After

• Comprehensive renovation designed to reposition the hotel and redefine its long-term earnings potential. • Full guestroom renovation and conversion of select room size formats to maximize rate capture and enhance position of asset among competitive set. • Full revitalization of lobby, meeting spaces and common areas. • Retail tenant mix upgraded and service offerings enhanced to better align with repositioned asset profile. • Numerous asset management initiatives implemented to drive operational efficiencies, cost reductions and incremental profit. • Renovation completed in the second quarter of 2016 with the hotel subsequently being awarded a coveted AAA Four Diamond Rating in September 2016. SUNSTONE HOTEL INVESTORS, INC. / 9

Boston Park Plaza Performance Exceeding Initial Expectations

COMPANY PRESENTATION

Hotel Outperforming Expectations

Strega Restaurant

• Repositioned property has been well received. New room product and reinvigorated meeting spaces are attracting a desirable and high quality mix of business. • Property outperforming initial underwriting and has generated cumulative EBITDA above budget since acquisition with expected continued outperformance in 2016. Actual and Forecast RevPAR and EBITDA 26,000

$170

Library

24,000

$160

22,000

$150

20,000

Guestroom

$140 18,000

16,000

$130 2013A

2014A

EBITDA ($000s) - Actual / Forecast (L)

2015A

RevPAR - Actual / Forecast (R)

2016F

2016F Excl. Displacement

EBITDA ($000s) - Underwritten (L) SUNSTONE HOTEL INVESTORS, INC. / 10

Note: Assumes $3.0 million of revenue and $2.15 million of EBITDA lost due to displacement in 2016.

Boston Park Plaza Fully Reinvigorated Asset

COMPANY PRESENTATION

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Wailea Beach Resort & Spa Acquisition Summary

COMPANY PRESENTATION

Property Overview Location Number of Rooms

Acquisition Overview Wailea, Maui, HI 547

Date Closed Purchase Price

July 2014 $326 million

Square Feet of Meeting Space

47,500

Purchase Price per Key

Total Property Size

22 acres

Multiple on 2014E EBITDA at Acquisition

16.9x

Cap. Rate on 2014E NOI at Acquisition

5.2%

Ownership Type

Fee Simple

$598,300

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Wailea Beach Resort & Spa Wailea is Maui’s Premier Resort Destination

COMPANY PRESENTATION

With its exceptional weather, pristine beachfront location, high-end amenities and the greatest collection of luxury resorts on the island, Wailea is Maui’s most sought after vacation destination. Hotels in Wailea generated an average RevPAR of $450, nearly six times that of the national average.

Andaz Maui at Wailea Resort

Wailea Beach Resort & Spa

Grand Wailea Resort

Four Seasons Resort Maui

Fairmont Kea Lani

297 Rooms

547 Rooms

780 Rooms

305 Rooms

450 Rooms

50,000 SF of Meeting Space

47,500 SF of Meeting Space

100,000 SF of Meeting Space

45,000 SF of Meeting Space

60,000 SF of Meeting Space SUNSTONE HOTEL INVESTORS, INC. / 13

Note: Reflects running 12-month RevPAR as of July 2016 per STR.

Wailea Beach Resort & Spa Compelling Strategic Opportunity

COMPANY PRESENTATION

Substantial Opportunity to Grow RevPAR (1)

Acquisition Rationale and Value Creation Opportunity

• Opportunity to acquire irreplaceable, long-term relevant ocean-front real estate on a fee-simple basis.

4 $375

• Ability to enter the desirable and high-barrier-to-entry Maui lodging market which is one of the most sought-after vacation destinations in the world. • Further enhances the quality and geographic distribution of the overall portfolio while further minimizing ground lease exposure.

. . . And postrenovation, the hotel will offer a guest experience that more closely resembles that of its Wailea peers, and should garner a more competitive RevPAR index

$325

• Achieves increased scale for the Company in a deleveraging manner. • Ability to generate meaningful upside from renovation and repositioning of the property. • Undermanaged asset operating below less desirable properties in Kaanapli with substantial ability to increase post-renovation RevPAR levels closer to that of more competitive and higher quality Wailea hotels.

$275

$225

• Capitalize on strong relationship with Marriott to obtain cash flow guarantee from brand during renovation. • Substantial opportunities to implement operational efficiencies and more aggressive asset management to drive incremental cash flow.

The hotel should command a RevPAR premium relative to the Kaanapali market due to its more desirable location . . .

$175 Wailea Beach Resort

Premium Kaanapali Hotels

Wailea Beach Other Resort Wailea Hotels Opportunity SUNSTONE HOTEL INVESTORS, INC. / 14

(1) Chart data reflects running 12-month RevPAR as of July 2016 per STR.

Wailea Beach Resort & Spa Fully Reimagined Destination

COMPANY PRESENTATION

Renovation Scope and Overview

• Complete renovation of the property encompassing resort grounds, common areas, guestrooms, meeting spaces, food & beverage outlets, systems and infrastructure, swimming pools and other guest amenities. • Substantial upgrade of the facility and guest experience intended to reposition the hotel within its competitive set and attract a higher-paying consumer. • Addition of numerous high-quality resort amenities including an unmatched kid’s pool and waterslide and one-of-a-kind food and beverage outlets designed to create a well-defined and cohesive destination resort. • Expansion of the number of room types in order to better capture premium room demand. Added four additional keys as part of renovation plan to further unlock property value. • Optimized resort staffing and sales efforts. Renegotiated in-place vendor contracts and restructured resort fee to drive incremental cash flow and profitability. • Longer-term opportunity for further development of several unused and underutilized spaces to capture incremental value in addition to current repositioning program. Ohi Pool

Guestroom

Aulani Ballroom

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Wailea Beach Resort & Spa Significant Property and Guest Experience Improvements

COMPANY PRESENTATION

Kid’s Pool Pre Renovation

Kid’s Pool Post Renovation (Q4 2016)

Kapa Bar & Grill Pre Renovation

Kapa Bar & Grill Post Renovation

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Hyatt Regency San Francisco Acquisition Summary

COMPANY PRESENTATION

Property Overview Location

San Francisco, CA

Number of Rooms

804

Square Feet of Meeting Space Ownership Type

67,000 Fee Simple

Acquisition Overview Date Closed

December 2013

Purchase Price

$263 million

Purchase Price per Key

$327,300

Multiple on 2014E EBITDA at Acquisition

14.2x

Cap. Rate on 2014E NOI at Acquisition

6.0%

Acquisition Rationale

•

Opportunity to acquire a high quality hotel property situated in a prime, fee-simple location in San Francisco's financial district.

•

Hotel located next to numerous corporate and leisure demand generators with additional uplift expected from the construction of 3 million square feet of new office space in immediate vicinity.

•

Substantial upside opportunities available through renovation, streamlining of F&B offerings and more intensive asset management.

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Hyatt Regency San Francisco Sustained EBITDA Growth and Outperformance

COMPANY PRESENTATION

Constructive Market Fundamentals

Guestroom

• Hotel has captured outsized market share growth since acquisition benefitting from recent capital investment and healthy market fundamentals. • Given the hotel’s prime location and abundant meeting space, the asset is well positioned to benefit from additional commercial development in the immediate vicinity and a lack of competitive new hotel supply. Actual and Forecast RevPAR and EBITDA 35,000

$300

30,000

$275

25,000

$250

Meeting Space

The Market 20,000

$225

15,000

$200 2013A EBITDA ($000s) - Actual / Forecast (L)

2014A

2015A RevPAR - Actual / Forecast (R)

2016F EBITDA ($000s) - Underwritten (L) SUNSTONE HOTEL INVESTORS, INC. / 18

Hyatt Regency San Francisco Irreplaceable Asset in Prime Location

COMPANY PRESENTATION

SUNSTONE HOTEL INVESTORS, INC. / 19

Focused Cost of Capital Management Leverage Overview

COMPANY PRESENTATION

Transformed what was once one of the highest levered balance sheets into one of the strongest in the sector. Deleveraging was completed in a shareholder friendly way. Net Debt & Preferred to T12 EBITDA (As Reported)(1) 9.0x 8.0x 7.0x

8.12x

7.25x

6.0x

6.29x

5.0x 5.07x 4.0x 3.89x 3.0x 2.52x

2.0x 1.0x 0.0x 2010

2011

2012

2013

(1) Data presented is pro-rata share of 75% for the Hilton San Diego Bayfront. (2) Cash and Cash Equivalents exclude the cash paid in January 2016 catch up dividend. (3) Leverage (Net Debt plus Preferred to EBITDA). Data as provided in supplemental financial information reported on Form 8-K, furnished February 17, 2011, February 21, 2012, February 19, 2013, February 20, 2014, February 17,2015, and February 22, 2016.

2014

(2)

2015

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Superior Corporate Governance Corporate Governance

COMPANY PRESENTATION

Our priority is to maximize shareholder value. Our board structure, corporate charter and culture of transparency place us at the top of the REIT space in terms of Corporate Governance.

a a a a a a a

Ranked 3rd highest in corporate governance by Green Street Advisors • Out of 82 REITs in their coverage universe

ISS Quick Score of 2 • 1 = most shareholder friendly, 10 = least shareholder friendly

First in our space to opt-out of MUTA provision Adopted 50% threshold to amend bylaws Adopted limitations on Rights Plans Best-in-class disclosures with quarterly supplemental Culture of transparency SUNSTONE HOTEL INVESTORS, INC. / 21