<PAGE> 1
RULE 424(b)(3)
SEC FILE NO.: 333-41683
SUNSTONE HOTEL INVESTORS, INC.
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SUPPLEMENT NO. 1 DATED JANUARY 23, 1998
TO PROSPECTUS DATED DECEMBER 17, 1997
This Supplement No. 1 is a part of and should be read in connection
with the prospectus of Sunstone Hotel Investors, Inc., a Maryland corporation,
dated December 17, 1997 (the "Prospectus"). Capitalized terms used but not
defined in this Supplement No. 1 have the meanings given to them in the
Prospectus. This Supplement No. 1 hereby adds the following language to the end
of the Selling Stockholders section on page 14 of the Prospectus:
Of the 235,207 shares of Common Stock listed in the Selling
Stockholder table in the row entitled "Others," 4,000 shares are registered for
resale under this Prospectus by the Yampa Valley Community Foundation upon the
redemption by such foundation of 4,000 Units. The 4,000 Units were donated to
the foundation by Mr. C. Robert Enever, a director of the Company since
September 1994. Yampa Valley Community Foundation is a Selling Stockholder for
purposes of this Prospectus.
Upon the redemption of the 274,488 Units held by Flagstaff Hotel
Assets Inc. ("Flagstaff") and the 431,859 Units held by Tucson Desert Assets
Inc. ("Tucson") in exchange for an equal number of shares of Common Stock,
Flagstaff and Tucson may distribute such shares of Common Stock to each of their
stockholders. Flagstaff and Tucson have each represented to the Company that the
stockholders of Flagstaff and Tucson, and the number of shares of Common Stock
which each such stockholder is entitled to receive, are as set forth in the
tables below. The number of shares which may be distributed to each stockholder
of Flagstaff and Tucson are registered for resale pursuant to this Prospectus,
and each such stockholder is a Selling Stockholder for purposes of this
Prospectus.
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<TABLE>
<CAPTION>
Number of Shares
Registered for Sale Percent of
Stockholders of Flagstaff Hereby Outstanding Shares
------------------------- ------------------- ------------------
<S> <C> <C>
Charles E. Faust 54,897 *
Leon Volkert 54,898 *
Lauren B. Koonin 54,898 *
C. Wayne Thompson 54,898 *
Ronda Thompson 18,299 *
Julie Bushur 18,299 *
Jennifer Thompson 18,299 *
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TOTAL 274,488
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</TABLE>
<TABLE>
<CAPTION>
Number of Shares
Registered for Sale Percent of
Stockholders of Tucson Hereby Outstanding Shares
---------------------- ------------------- ------------------
<S> <C> <C>
Charles E. Faust 86,372 *
Leon Volkert 86,372 *
Lauren B. Koonin 86,371 *
S. Ronald Thompson 86,372 *
C. Wayne Thompson 86,372 *
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TOTAL 431,859
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</TABLE>
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* Less than 1% as of January 23, 1998
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