UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13G

Under the Securities Exchange Act of 1934 *

SUNSTONE HOTEL INVESTORS, INC.

(Name of Issuer)

(Title of Class of Securities)

(CUSIP Number)

(Date of Event Which Requires Filing of this Statement)

Check the appropriate box to designate the rule pursuant to which this Schedule is filed:

o Rule 13d-1(b)
þ Rule 13d-1(c)
o Rule 13d-1(d)

*     The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications:

Janice V. Sharry, Esq.
Haynes and Boone, LLP
2323 Victory Avenue, Suite 700
Dallas, Texas 75219
(214) 651-5562

 

 

CUSIP No.		867892101

CUSIP No.		867892101

CUSIP No.		867892101

Item 1.

	(a)		Name of Issuer
			SUNSTONE HOTEL INVESTORS, INC.
	(b)		Address of Issuer’s Principal Executive Offices
			903 Calle Amanecer, Suite 100, San Clemente, California 92673

Item 2.

(a)

Name of Person Filing

                This statement is jointly filed by and on behalf of each of MSD Capital, L.P., MSD SBI, L.P and MSD RE Investments, L.P. — Public. MSD SBI and MSD RE Investments are the record and direct beneficial owners of the securities covered by this statement. MSD Capital is the general partner of each of MSD SBI and MSD RE Investments and may be deemed to indirectly beneficially own the securities owned by MSD SBI and MSD RE Investments. MSD Capital Management LLC is the general partner of MSD Capital. Each reporting person declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, the beneficial owner of any securities covered by this statement.

(b)

Address of Principal Business Office or, if none, Residence

                The address of the principal business office of each reporting person is 645 Fifth Avenue, 21st Floor, New York, New York 10022

	(c)		Citizenship
			See Item 4 on the cover page(s) hereto.
	(d)		Title of Class of Securities
			Common Stock
	(e)		CUSIP Number
			867892101

Item 3. If this statement is filed pursuant to §§240.13d-1(b) or 240.13d-2(b) or (c), check whether the person filing is:

	(a)		o      A Broker or dealer registered under Section 15 of the Act (15 U.S.C. 78o).
	(b)		o      A Bank as defined in Section 3(a)(6) of the Act (15 U.S.C. 78c).
	(c)		o      An insurance company as defined in Section 3(a)(19) of the Act (15 U.S.C. 78c).
	(d)		o      An investment company registered under Section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8).

	(e)		o      An investment adviser in accordance with §240.13d-1(b)(1)(ii)(E);
	(f)		o      An employee benefit plan or endowment fund in accordance with §240.13d- 1(b)(1)(ii)(F);
	(g)		o      A parent holding company or control person in accordance with §240.13d- 1(b)(1)(ii)(G);
	(h)		o      A savings associations as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813);
	(i)		o      A church plan that is excluded from the definition of an investment company under Section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3);
	(j)		o      A group, in accordance with §240.13d-1(b)(1)(ii)(J).

Item 4. Ownership.

	(a)		Amount beneficially owned:
			See Item 9 on the cover page(s) hereto.
	(b)		Percent of class:
			See Item 11 on the cover page(s) hereto.
	(c)		Number of shares as to which such person has:

	(i)		Sole power to vote or to direct the vote:
			See Item 5 on the cover page(s) hereto.
	(ii)		Shared power to vote or to direct the vote:
			See Item 6 on the cover page(s) hereto.
	(iii)		Sole power to dispose or to direct the disposition of:
			See Item 7 on the cover page(s) hereto.
	(iv)		Shared power to dispose or to direct the disposition of:
			See Item 8 on the cover page(s) hereto.

Item 5. Ownership of 5% or Less of a Class.

               If this statement is being filed to report the fact that as of the date hereof the reporting person has ceased to be the beneficial owner of more than five percent of the class of securities, check the following o.

Item 6.		Ownership of More than 5 Percent on Behalf of Another Person

               Not Applicable

Item 7.

Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on by the Parent Holding Company or Control Person.

               Not Applicable

Item 8. Identification and Classification of Members of the Group

               Not Applicable

Item 9. Notice of Dissolution of Group

               Not Applicable

Item 10. Certifications

     (a)      Not Applicable

     (b)      By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.

SIGNATURE

          After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: January 26, 2009	MSD CAPITAL, L.P.

		By:		MSD Capital Management LLC
		Its:		General Partner
		By: Name:		/s/ Marc R. Lisker   Marc R. Lisker
		Title:		Manager and General Counsel
		MSD SBI, L.P.
		By:		MSD Capital, L.P.
		Its:		General Partner
		By:		MSD Capital Management LLC
		Its:		General Partner
		By:		/s/ Marc R. Lisker
		Name:		Marc R. Lisker
		Title:		Manager and General Counsel
		MSD RE INVESTMENTS, L.P. - PUBLIC
		By:		MSD Capital, L.P.
		Its:		General Partner
		By:		MSD Capital Management LLC
		Its:		General Partner
		By:		/s/ Marc R. Lisker
		Name:		Marc R. Lisker
		Title:		Manager and General Counsel

EXHIBIT INDEX

Exhibit		Description of Exhibit
99.1		Joint Filing Agreement (furnished herewith)