Sunstone Hotel Investors, Inc. Announces Contracts to Acquire 75% Interest in Renaissance Washington, D.C. and Sheraton Cerritos, California

SAN CLEMENTE, Calif., Sunstone Hotel Investors, Inc. (NYSE:SHO) announced today that it has agreed to acquire the remaining 75% majority interest in the 807-room Renaissance Washington, D.C. hotel. Sunstone had previously agreed to acquire the initial 25% of the hotel as part of the six-hotel Renaissance acquisition announced on April 27, 2005. The hotel is located at the intersection of 9th and K Streets on Mt. Vernon Square, midway between the White House and the Capitol. It is the closest hotel to the new 2.3 million square foot Washington Convention Center, and the hotel is also the closest hotel to the MCI Center. The hotel recently received a full renovation of its guestrooms, common areas, and meeting space totaling 66,000 square feet.

The all-in purchase price for 100% ownership of the hotel is approximately $160 million, which includes the previously announced 25% interest, closing costs, the assumption of a $56 million fixed-rate note bearing interest at 7.5% per annum with a maturity date of April 2008, and the repayment of a capital improvement loan previously funded by Marriott International. The all-in purchase price equates to approximately $200,000 per key. The hotel has been, and will continue to be, operated by Marriott International under the Renaissance Hotels & Resorts brand name. The transaction is expected to close simultaneously with Sunstone's contemplated acquisition of the six-hotel Renaissance portfolio in June 2005.

In a separate transaction, Sunstone Hotel Investors, Inc. has agreed to purchase the 203-room Sheraton Hotel located in Cerritos, California for an all-in purchase price of $26.8 million, or $132,000 per room. The hotel is currently managed by Sheraton, however, after the closing of the acquisition, the hotel will be operated under a franchise agreement with Sheraton and managed by Sunstone Hotel Properties, Inc., a division of Interstate Hotels and Resorts. The hotel was initially sourced by Interstate and is being acquired in a non-marketed transaction. The all-in purchase price includes transaction closing costs, the assumption of a $9.1 million fixed-rate note bearing interest at 8.875% per annum with a maturity date of December 2009, and $1.25 million of capital expenditures. The acquisition is expected to close in June 2005.

About Sunstone Hotel Investors, Inc. | Sunstone Hotel Investors, Inc. is a Southern California-based hotel real estate investment trust (REIT). The Company, following its pending acquisitions, will own 60 hotels with an aggregate of 16,686 rooms primarily in the upper-upscale and upscale segments operated under nationally-recognized franchises, such as Marriott, Hilton, InterContinental and Hyatt.

This press release 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," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will," "continue" and other similar terms and phrases, including 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 which 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: national and local economic and business conditions, including the potential for additional terrorist attacks, that will 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 agreements; relationships with property managers; 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; the closing of any hotels currently pending closing; the performance of the acquired properties after they are acquired; necessary expenditures on the acquired projects; and 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 SEC. 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 information in this release is as of May 26, 2005, 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.