SCHEDULE: Braemar Hotels Appoints Shareholder, Discloses $480M Fee

Braemar Hotels & Resorts Inc. appointed shareholder activist Bob Ghassemieh to its board, while also revealing a significant $480 million termination fee tied to its advisory agreement with Ashford Inc. amidst a potential sale process.

Summary

• A group of reporting persons, including the Ghassemieh family, entered into a Cooperation Agreement with Braemar Hotels & Resorts Inc. and its affiliates on August 25, 2025.
• As part of the agreement, Bob Ghassemieh was appointed to the Issuer's Board of Directors and will be nominated for election at the 2025 and 2026 annual meetings.
• The reporting persons withdrew their previous director nomination notice for the 2025 Annual Meeting.
• The reporting persons are subject to standstill restrictions and must vote their shares in line with Board recommendations, with exceptions for extraordinary transactions, until the later of the 2026 Annual Meeting or three months after Mr. Ghassemieh leaves the Board.
• The Issuer announced on August 26, 2025, that it is initiating a process for the sale of the company.
• The Issuer and Ashford Inc., its external advisor, agreed to a $480 million termination fee payable to Ashford Inc. if a change of control of the Issuer results in the termination of the Advisory Agreement.
• The reporting persons collectively beneficially own 5,153,591 shares, representing approximately 7.3% of the outstanding shares.
• Samuel J. Jagger ceased to be a reporting person following the termination of the Group Agreement.

Sentiment

Score: 3

Explanation: While the appointment of a shareholder representative to the board and the withdrawal of director nominations are positive for corporate governance, the disclosure of a massive $480 million termination fee to Ashford Inc. significantly overshadows these positives. This fee represents a substantial liability that could severely impact shareholder value in a sale scenario, leading to a negative overall sentiment.

Positives

• Appointment of Bob Ghassemieh, a representative of a significant shareholder group, to the Board of Directors, potentially enhancing shareholder representation.
• Withdrawal of director nominations by the reporting persons, which could reduce proxy contest expenses and provide board stability.
• The company is initiating a process for a potential sale, which could unlock shareholder value.

Negatives

• Disclosure of a substantial $480 million termination fee payable to Ashford Inc. upon a change of control that terminates the Advisory Agreement, which could significantly reduce the net proceeds from a sale for shareholders.
• The reporting persons were reportedly unaware of the sale process and the termination fee agreement when they entered into the Cooperation Agreement, raising questions about transparency.

Risks

• High Termination Fee: A $480 million termination fee to Ashford Inc. could significantly diminish the value realized by shareholders in a change of control transaction.
• Shareholder Alignment: Potential for misalignment between the interests of the external advisor (Ashford Inc.) and common shareholders due to the large termination fee.
• Sale Process Uncertainty: The initiation of a sale process does not guarantee a successful transaction or one at an attractive valuation.
• Standstill Restrictions: Reporting persons are subject to standstill restrictions and voting agreements, limiting their ability to challenge management or the board during the restricted period.

Future Outlook

The Issuer is initiating a process for the sale of the company. Bob Ghassemieh will be nominated for election to the Board at the 2025 and 2026 annual meetings.

Management Comments

• Mr. Ghassemieh looks forward to representing the best interests of all stockholders upon joining the Board.
• The Reporting Persons were not aware of these developments involving the Issuer and Ashford when they entered into the Cooperation Agreement.

Industry Context

This filing highlights ongoing shareholder activism within the hotel REIT sector, where external management agreements and their associated fees can be a point of contention. The initiation of a sale process suggests potential consolidation or strategic shifts within the hospitality industry, while the substantial termination fee underscores the complex financial arrangements often present in externally managed structures.

Management Changes

Corporate Governance

Related Party Transactions

• The $480 million termination fee agreed upon with Ashford Inc., the external advisor, in the context of a change of control. This fee is tied to the Fifth Amended and Restated Advisory Agreement, dated April 13, 2018.

Stakeholder Impact

• Shareholders: Potential for increased value from a sale process, but significantly diluted by the $480 million termination fee. Enhanced representation on the board through Bob Ghassemieh.
• Management/Board: Increased scrutiny and potential for strategic shifts due to the new board member and the sale process.
• Ashford Inc.: Stands to receive a substantial $480 million termination fee if a change of control occurs and the advisory agreement is terminated, creating a strong incentive for them in any sale process.

Next Steps

• Issuer to proceed with the process for the sale of the company.
• Bob Ghassemieh to serve on the Board of Directors.
• Bob Ghassemieh to be nominated for election at the 2025 and 2026 Annual Meetings.
• Reporting Persons to adhere to standstill restrictions and voting agreements.

Key Dates

Recommendation

The disclosure of a $480 million termination fee payable to Ashford Inc. in the event of a change of control is a severe negative for common shareholders. This fee represents a significant portion of the company's potential sale value, effectively transferring substantial value from shareholders to the external advisor. While a sale process is initiated and a shareholder representative is appointed to the board, the massive termination fee creates a substantial overhang and significantly reduces the upside for existing shareholders in any acquisition scenario. The lack of awareness by the activist group regarding this fee prior to their cooperation agreement further highlights potential governance issues and information asymmetry. Investors should consider exiting their positions to avoid the potential dilution of value from this fee.

Keywords

Braemar Hotels & Resorts, BHR, Schedule 13D, Shareholder Activism, Corporate Governance, Board Appointment, Cooperation Agreement, Ashford Inc., Advisory Agreement, Termination Fee, Hotel REIT, Real Estate Investment Trust, Strategic Review, Company Sale, Proxy Contest, Shareholder Value