Overview of Braemar Hotels & Resorts

Braemar Hotels & Resorts is a real estate investment trust (REIT) that invests primarily in high-end, luxury hotels and resorts. The company was formed in 2013 and is based in Maryland. As of the end of 2024, Braemar owned interests in 15 hotel properties across 7 states, Washington D.C., Puerto Rico, and the U.S. Virgin Islands, with a total of 3,807 rooms.

Braemar does not operate the hotels directly, but instead hires third-party management companies to run the properties. The company is advised by Ashford LLC through an advisory agreement and does not have any employees of its own. Ashford Inc., an affiliate of Ashford LLC, provides various other services and products to Braemar’s hotels.

Recent Developments

In July 2024, Braemar entered into a Cooperation Agreement with Blackwells Capital, resolving a proxy contest and related litigation. Key terms included Blackwells withdrawing its director nominations and proposals, agreeing to voting restrictions, and Braemar reimbursing Blackwells’ legal expenses. Braemar also agreed to appoint an additional independent director to its board.

Braemar took several actions to manage its debt in 2024 and early 2025, including:

• Refinancing a $293 million mortgage loan on 4 hotels with a new $363 million loan
• Amending the mortgage loan on the Ritz-Carlton Lake Tahoe, including a $10 million principal paydown
• Selling the Hilton La Jolla Torrey Pines hotel and repaying the $66.6 million mortgage

Financial Performance

Braemar’s net loss attributable to the company decreased from $27.0 million in 2023 to $1.7 million in 2024. Key drivers of this improvement include:

Rooms Revenue

• Decreased 2.7% to $452.4 million, primarily due to the sale of the Hilton La Jolla Torrey Pines
• Occupancy increased 69 basis points, while average daily rate (ADR) increased 0.1%

Food & Beverage Revenue

• Decreased 2.2% to $181.3 million, with decreases at 7 comparable hotels partially offset by increases at several others

Other Revenue

• Increased 6.4% to $94.8 million, driven by higher revenue at 12 comparable hotels

Expenses

• Rooms expense increased 1.0% to $106.5 million
• Food & beverage expense increased 0.9% to $145.9 million
• Other operating expenses decreased 0.9% to $225.9 million, with lower indirect costs and incentive fees

Gain on Disposition

• Recorded an $88.2 million gain on the sale of the Hilton La Jolla Torrey Pines

Liquidity and Capital Resources

As of the end of 2024, Braemar held $135.5 million in cash and cash equivalents, as well as $49.6 million in restricted cash. The company’s net debt to gross assets ratio was 40.8%.

Braemar has several upcoming cash obligations, including:

• Estimated capital expenditures of $75-95 million in 2025
• Debt interest payments of approximately $80 million in 2025

The company expects to meet these obligations through a combination of cash flow from operations, capital markets activities, and asset sales. However, Braemar notes that its ability to access capital markets could be impacted by various factors.

Braemar’s loan agreements contain cash trap provisions that can restrict the company’s access to cash if hotel performance declines. As of the end of 2024, one of Braemar’s mortgage loans was subject to a cash trap.

Equity and Debt Transactions

In 2020-2021, Braemar issued approximately 16.4 million shares of Series E Preferred Stock and 2.0 million shares of Series M Preferred Stock, raising net proceeds of $369.5 million and $47.6 million, respectively.

Braemar also has an active $100 million at-the-market (ATM) equity program, under which it has sold approximately 4.7 million shares of common stock for gross proceeds of $24.0 million as of early 2025.

On the debt side, Braemar completed several refinancings and modifications in 2024 and early 2025, including:

• Refinancing a $293 million mortgage loan with a new $363 million loan
• Amending the Ritz-Carlton Lake Tahoe mortgage, including a $10 million paydown
• Repaying the $66.6 million mortgage on the Hilton La Jolla Torrey Pines after selling the hotel

Analysis and Outlook

Braemar’s financial performance showed improvement in 2024 compared to the prior year, with a significant reduction in net loss. This was driven by a combination of higher occupancy and room rates, as well as cost control measures that led to lower operating expenses.

The company’s liquidity position appears relatively strong, with ample cash on hand to fund upcoming capital needs and debt service. However, Braemar does face some risks, including the potential for future cash flow restrictions due to loan covenants, as well as the broader economic and industry conditions that can impact hotel demand and profitability.

Looking ahead, Braemar’s ability to continue growing and improving its financial results will depend on its success in operating its portfolio of high-end hotels, as well as its capacity to make strategic acquisitions and manage its capital structure effectively. The company’s recent debt refinancing and asset sale activities suggest it is proactively addressing its financial obligations and positioning itself for the future.

Overall, Braemar appears to be making progress in stabilizing its financial performance, though it still faces some near-term challenges. Investors will likely be watching closely to see if the company can build on this momentum and deliver stronger results going forward.