BRAEMAR HOTELS & RESORTS REPORTS SECOND QUARTER 2023 RESULTS

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Braemar Hotels & Resorts Inc. reported financial results for Q2 2023. Comparable RevPAR decreased by 4.2% to $309, Comparable ADR decreased by 5.2% to $436, and Comparable Occupancy increased by 1.0% to 70.9%. Net loss was $(13.0) million or $(0.20) per diluted share. Adjusted funds from operations (AFFO) was $0.20 per diluted share. Adjusted EBITDAre was $46.3 million. Comparable Hotel EBITDA was $53.7 million. The company ended the quarter with $128.0 million in cash and cash equivalents and $63.4 million in restricted cash. Net debt to gross assets was 37.3% at the end of the quarter. Capex invested during the quarter was $17.5 million.

DALLAS, Aug. 1, 2023 /PRNewswire/ -- Braemar Hotels & Resorts Inc. (NYSE: BHR) ("Braemar" or the "Company") today reported financial results and performance measures for the second quarter ended June 30, 2023. The comparable performance measurements for Occupancy, Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), and Hotel EBITDA assume each of the hotel properties in the Company's hotel portfolio as of June 30, 2023, was owned as of the beginning of each of the periods presented. Unless otherwise stated, all reported results compare the second quarter ended June 30, 2023 with the second quarter ended June 30, 2022 (see discussion below). The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

SECOND QUARTER 2023 FINANCIAL HIGHLIGHTS

• Comparable RevPAR for all hotels decreased 4.2% over the prior year quarter to $309. Comparable ADR decreased 5.2% over the prior year quarter to $436 and Comparable Occupancy increased 1.0% over the prior year quarter to 70.9%.
• Net loss attributable to common stockholders for the quarter was $(13.0) million or $(0.20) per diluted share.
• Adjusted funds from operations (AFFO) was $0.20 per diluted share for the quarter.
• Adjusted EBITDAre was $46.3 million for the quarter.
• Comparable Hotel EBITDA was $53.7 million for the quarter.
• The Company ended the quarter with cash and cash equivalents of $128.0 million and restricted cash of $63.4 million. The vast majority of the restricted cash is comprised of lender and manager-held reserves. At the end of the quarter, there was also $15.4 million in due from third-party hotel managers, which is primarily the Company's cash held by one of its property managers and is also available to fund hotel operating costs.
• Net debt to gross assets was 37.3% at the end of the second quarter.
• Capex invested during the quarter was $17.5 million.

RECENT OPERATING HIGHLIGHTS

• During the quarter, the Company finalized an extension of its $435 million mortgage loan secured by four properties: The Notary Hotel, The Clancy, Sofitel Chicago Magnificent Mile, and Marriott Seattle Waterfront. The loan was paid down by $142 million and has a current balance of $293.2 million.
• Subsequent to quarter end, the Company entered into a new $200 million corporate financing that includes a $150 million term loan and a $50 million credit facility.
• Subsequent to quarter end, the Company announced the planned conversion of its Mr. C Beverly Hills Hotel to Hilton's LXR brand under the new name, Cameo Beverly Hills.

MR. C BRAND CONVERSION

Subsequent to quarter end, the Company announced the rebranding and planned conversion of its Mr. C Beverly Hills ("Mr. C") in Los Angeles, California to the Cameo Beverly Hills. Beginning August 4, 2023, Cameo Beverly Hills will be available for booking on Hilton's website at hilton.com and join Hilton Honors, Hilton's award-winning guest loyalty program. Following an extensive renovation, which is expected to be completed by the end of 2025, the hotel will join LXR Hotels & Resorts ("LXR"). One of Hilton's iconic luxury brands, LXR is a collection of unique, independent luxury properties around the world that focuses on individualized service and one-of-a-kind stays.

The conversion of the hotel, which was built in 1965, will reflect its unique history and distinctive location in the heart of West Los Angeles near iconic amenities and high-end shopping on Rodeo Drive. The Company is planning an approximately $25 million renovation to further elevate this distinctive hotel that will enable a revitalized luxury guest experience when it is completed. Added amenities and enhanced design elements will include upgrades to the guestrooms, guest bathrooms, restaurant, lobby, pool, fitness area, and meeting spaces. Remington will continue to manage the property after the conversion under a management agreement.

CAPITAL STRUCTURE

As of June 30, 2023, the Company had total assets of $2.3 billion and $1.1 billion of loans of which $49 million related to its joint venture partner's share of the mortgage loan on the Capital Hilton and Hilton La Jolla Torrey Pines. The Company's total combined loans had a blended average interest rate of 7.0%, taking into account in-the-money interest rate caps. Based on the current level of LIBOR and SOFR, and the Company's corresponding interest rate caps, approximately 79% of the Company's consolidated debt is effectively fixed and approximately 21% is effectively floating.

During the quarter, the Company finalized an extension of its $435 million mortgage loan secured by four properties: The Notary Hotel, The Clancy, Sofitel Chicago Magnificent Mile, and Marriott Seattle Waterfront. The loan was extended until June 2024. In conjunction with the extension, the Company paid down $142 million of the loan utilizing corporate cash on hand, which reduced the loan balance to approximately $293 million. As part of the extension the Company also purchased an interest rate cap through June 2024 with a strike rate of 4.69%.

Subsequent to quarter end, the Company completed a $200 million corporate financing. The financing includes a $150 million term loan and $50 million credit facility. The corporate financing is secured by The Ritz-Carlton Sarasota, Hotel Yountville, and Bardessono Hotel and Spa.

DIVIDENDS

On July 11, 2023, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.05 per diluted share for the Company's common stock for the third quarter ending September 30, 2023. The dividend, which equates to an annual rate of $0.20 per share, will be paid on October 16, 2023, to stockholders of record as of September 29, 2023. The Board of Directors will review its dividend policy on a quarter-to-quarter basis, with a view to increasing it as financial performance continues to improve. The adoption of a dividend policy does not commit the Board of Directors to declare future dividends or the amount thereof.

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS

The Company believes year-over-year Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin comparisons are more meaningful to gauge the performance of the Company's hotels than sequential quarter-over-quarter comparisons. To help investors better understand the substantial seasonality in the Company's portfolio, the Company provides quarterly detail on its Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin for the current and certain prior-year periods based upon the number of hotels in the Company's portfolio as of the end of the current period. As the Company's portfolio mix changes from time to time, so will the seasonality for Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin.

"Braemar's urban hotels delivered solid second quarter operating performance," noted Richard J. Stockton, Braemar's President and Chief Executive Officer. "We remain extremely pleased with the continued momentum of these hotels which has been driven by strong corporate and group demand. Further, despite challenging year-over-year comparisons, our resorts continued to perform well with strong margins. We also continue to make solid progress addressing loan maturities and look forward to making additional announcements related to our liability management program," he added. "We couldn't be more excited about the conversion of our Mr. C Beverly Hills to Hilton's LXR brand and expect the strength of Hilton's reservation system to have a significant positive impact on the demand at that property. Looking ahead to the second half of 2023, we believe our portfolio is well-positioned for continued strong performance."

INVESTOR CONFERENCE CALL AND SIMULCAST

Braemar will conduct a conference call on Wednesday, August 2, 2023, at 12:00 p.m. ET. The number to call for this interactive teleconference is (201) 389-0920. A replay of the conference call will be available through Wednesday, August 9, 2023, by dialing (412) 317-6671 and entering the confirmation number, 13739430.

The Company will also provide an online simulcast and rebroadcast of its second quarter 2023 earnings release conference call. The live broadcast of Braemar's quarterly conference call will be available online at the Company's website, www.bhrreit.com, on Wednesday, August 2, 2023, beginning at 12:00 p.m. ET. The online replay will follow shortly after the call and continue for approximately one year.

We use certain non-GAAP measures, in addition to the required GAAP presentations, as we believe these measures improve the understanding of our operational results and make comparisons of operating results among peer real estate investment trusts more meaningful. Non-GAAP financial measures, which should not be relied upon as a substitute for GAAP measures, used in this press release are FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA. Please refer to our most recently filed Annual Report on Form 10-K for a more detailed description of how these non-GAAP measures are calculated. The reconciliations of non-GAAP measures to the closest GAAP measures are provided below and provide further details of our results for the period being reported. Effective beginning with the third quarter of 2022 we will no longer include the effect of the Series B Cumulative Convertible Preferred Stock and convertible notes on an "as-converted" basis in AFFO. For comparative purposes the change has been applied retrospectively.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities. Securities will be offered only by means of a registration statement and prospectus which can be found at www.sec.gov.

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Braemar Hotels & Resorts is a real estate investment trust (REIT) focused on investing in luxury hotels and resorts.

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release include, among others, statements about the Company's strategy and future plans. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Braemar's control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: our ability to repay, refinance or restructure our debt and the debt of certain of our subsidiaries; anticipated or expected purchases or sales of assets; our projected operating results; completion of any pending transactions; risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board's decision whether to pay further dividends at levels previously disclosed or to use available cash to pay dividends; our understanding of our competition; market trends; projected capital expenditures; the impact of technology on our operations and business; general volatility of the capital markets and the market price of our common stock and preferred stock; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the markets in which we operate, interest rates or the general economy; and the degree and nature of our competition. These and other risk factors are more fully discussed in Braemar's filings with the Securities and Exchange Commission.

The forward-looking statements included in this press release are only made as of the date of this press release. Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Investors should not place undue reliance on these forward-looking statements. The Company can give no assurance that these forward-looking statements will be attained or that any deviation will not occur. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations, or otherwise, except to the extent required by law.

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SOURCE Braemar Hotels & Resorts Inc.

FAQ

What is the ticker symbol for Braemar Hotels & Resorts Inc.?

The ticker symbol for Braemar Hotels & Resorts Inc. is BHR.

What were the financial highlights for Q2 2023?

Comparable RevPAR decreased by 4.2% to $309, Comparable ADR decreased by 5.2% to $436, and Comparable Occupancy increased by 1.0% to 70.9%. Net loss was $(13.0) million or $(0.20) per diluted share. Adjusted funds from operations (AFFO) was $0.20 per diluted share. Adjusted EBITDAre was $46.3 million. Comparable Hotel EBITDA was $53.7 million.

What was the cash and cash equivalents at the end of the quarter?

The company ended the quarter with $128.0 million in cash and cash equivalents.

What was the net debt to gross assets ratio at the end of the quarter?

The net debt to gross assets ratio was 37.3% at the end of the second quarter.

How much was invested in capex during the quarter?

$17.5 million was invested in capex during the quarter.