8-K: Braemar Hotels Reports Q3 RevPAR Growth, Advances Asset Sales

Braemar Hotels & Resorts reported a 1.4% comparable RevPAR increase and 15.1% comparable hotel EBITDA growth in Q3 2025, driven by strong resort performance despite urban hotel softness and ongoing renovations.

Summary

• Comparable RevPAR increased by 1.4% to $257 in Q3 2025 compared to the prior year quarter, marking the fourth consecutive quarter of growth.
• Comparable Total Hotel Revenue grew by 3.9% and Comparable Hotel EBITDA increased by 15.1% to $21.4 million.
• The resort portfolio showed strong performance with Comparable RevPAR up 5.5% to $361 and combined Comparable Hotel EBITDA up 58% to $13.1 million.
• Urban hotels experienced a 3.9% decrease in Comparable RevPAR due to extensive renovations at Cameo Beverly Hills and citywide occupancy declines in Philadelphia.
• Excluding hotels under renovation (Cameo Beverly Hills, Park Hyatt Beaver Creek, Hotel Yountville), RevPAR growth was 3.4%.
• A net loss attributable to common stockholders of $(8.2) million or $(0.12) per diluted share was reported for the quarter.
• Adjusted Funds From Operations (AFFO) per diluted share was negative $(0.19).
• Adjusted EBITDAre for the quarter was $16.4 million.
• The company sold the Marriott Seattle Waterfront for $145 million ($393,000 per key) in August 2025.
• A definitive agreement was entered into to sell The Clancy in San Francisco for $115 million (approximately $280,000 per key), expected to close in November 2025.
• Approximately $125 million of non-traded preferred stock has been redeemed, representing about 27% of the original capital raise.
• The company initiated a sale process for Braemar in August 2025, engaging Robert W. Baird & Co. Inc. as financial advisor.
• The common stock dividend was maintained at $0.05 per share, or $0.20 per diluted share on an annualized basis, yielding approximately 8.0%.
• Total assets stood at $2.0 billion, with $1.2 billion in loans and a blended average interest rate of 6.9% (considering interest rate caps).
• Approximately 13% of debt is effectively fixed, and 87% is effectively floating.
• Net debt to gross assets was approximately 43.2% at quarter end.
• Cash and cash equivalents were $116.3 million, plus $47.7 million in restricted cash and $23.1 million due from third-party hotel managers.
• Capital expenditures for 2025 are anticipated to be between $75 million and $85 million.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While there was a net loss and negative AFFO, management emphasized strong operational growth in key segments (resorts), successful strategic asset sales for deleveraging, and addressing debt maturities. The ongoing sale process for the company adds a layer of potential upside, and the overall tone regarding future performance and renovations is optimistic.

Positives

• Achieved 1.4% growth in comparable RevPAR, marking the fourth consecutive quarter of growth.
• Total comparable hotel EBITDA grew significantly by 15.1% to $21.4 million.
• Resort portfolio demonstrated strong performance with 5.5% comparable RevPAR growth and 58% comparable hotel EBITDA growth.
• Four Seasons Resort Scottsdale at Troon North delivered impressive comparable RevPAR growth of approximately 25% and GOP growth of 231.6%.
• The Ritz-Carlton Lake Tahoe saw total revenue up roughly 32% year over year, driven by strong group demand and recent renovations.
• Ritz-Carlton Reserve, Dorado Beach, achieved approximately 20% growth in comparable RevPAR and 353.3% group room revenue growth.
• Successfully addressed the final 2025 debt maturity earlier in the year through refinancing across five hotels.
• Sold the Marriott Seattle Waterfront for $145 million, aligning with strategic deleveraging and focus on luxury assets.
• Entered into a definitive agreement to sell The Clancy for $115 million, further refining the portfolio.
• Redeemed approximately $125 million of non-traded preferred stock, improving cash flow per share.
• Group room revenue pace for full year 2025 is up 9.1% compared to the prior year, with Q4 pacing ahead 1.7%.
• Portfolio GOP margin expanded by 160 basis points compared to the prior year period.
• Completed several capital expenditure projects, including a new gelato shop/cafe at Four Seasons Scottsdale and luxury beachside cabanas at The Ritz-Carlton, St. Thomas, creating new revenue streams.

Negatives

• Reported a net loss attributable to common stockholders of $(8.2) million or $(0.12) per diluted share.
• Adjusted Funds From Operations (AFFO) per diluted share was negative $(0.19).
• Urban hotels experienced a 3.9% decrease in Comparable RevPAR due to renovations and citywide occupancy declines.
• Extensive renovations at Cameo Beverly Hills, Park Hyatt Beaver Creek, and Hotel Yountville significantly impacted overall portfolio results.

Risks

• Forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks which could cause actual results to differ materially from those anticipated.
• There is no deadline or definitive timetable set for completion of the sale process for Braemar, and there can be no assurance that this process will result in a sale of the company.

Future Outlook

The company's booking pace continues to be strong, and the portfolio is believed to be well-positioned to outperform. Management expects to continue redeeming non-traded preferred shares to deleverage and improve cash flow. Ongoing renovations are anticipated to drive strong performance going forward, and the company remains optimistic about future opportunities.

Management Comments

• Richard Stockton: "Im excited to report that our portfolio achieved 1.4% growth in comparable RevPAR in the third quarter and total comparable hotel EBITDA growth of 15.1%. Importantly, our resorts continue to show strong growth with comparable RevPAR growth of 5.5% for the quarter."
• Richard Stockton: "This marks our fourth consecutive quarter of RevPAR growth, which I believe reflects an important inflection point in our performance."
• Richard Stockton: "We are strategically refining our portfolio with one clear objective: to maximize its value for our shareholders and this divestiture will help us to ensure that a future sale of the company results in the best possible outcome for our investors."
• Deric Eubanks: "Its important to remember that the third quarter is the weakest quarter for our portfolio from a seasonality perspective."
• Chris Nixon: "Despite temporary headwinds from ongoing renovations at several properties, our portfolio continued to demonstrate resilience during the third quarter."
• Chris Nixon: "We remain confident in our ability to sustain operating momentum and deliver strong results in the periods ahead."
• Chris Nixon: "Our momentum reflects the strength and resilience of our diversified portfolio and the strategic positioning weve built over time."

Industry Context

The luxury resort segment continues to show strong growth and resilience, outperforming urban markets which are experiencing some softness and citywide occupancy declines. The company's focus on luxury assets and strategic renovations aligns with a trend towards enhancing high-end guest experiences and capitalizing on strong demand in premier destinations, while divesting from less strategic urban assets.

Comparison to Industry Standards

• NA

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for increased value through the strategic sale process and portfolio refinement; continued common stock dividend; improved cash flow per share from preferred stock redemption.
• Employees: Potential impact from asset sales (Marriott Seattle Waterfront, The Clancy) and ongoing renovations, though not explicitly detailed.
• Customers/Guests: Enhanced guest experience and new revenue streams from property renovations and amenity additions (e.g., gelato shop, cabanas, arcade).
• Creditors: Deleveraging efforts through asset sales and refinancing of debt maturities improve credit profile.
• Preferred Stockholders: Ongoing redemption of non-traded preferred stock provides liquidity and return of capital.

Next Steps

• Completion of the sale of The Clancy in San Francisco, expected in November 2025.
• Continued redemption of non-traded preferred stock to deleverage the platform and improve cash flow per share.
• Completion of guestroom renovations at Hotel Yountville and Park Hyatt Beaver Creek later in 2025.
• Completion of the renovation of Cameo Beverly Hills to support its strategic conversion to Hiltons LXR luxury portfolio later in 2025.
• Commencement of the renovation of the pool deck and fitness center at Bardessono Hotel & Spa later in 2025.
• Ongoing execution of the strategic sale process for Braemar Hotels & Resorts, with updates only if the Board approves a specific transaction.

Key Dates

Recommendation

The company is undergoing a strategic sale process, which introduces significant uncertainty but also potential upside. Operational results show positive trends in the luxury resort segment and overall RevPAR growth, but are offset by a net loss and negative AFFO. Strategic asset sales and debt management are positive steps for deleveraging. Given the ongoing sale process and mixed financial performance, a 'hold' recommendation is appropriate, allowing investors to monitor the outcome of the strategic review while acknowledging the positive operational and strategic shifts.

Keywords

Luxury Hotels, Resorts, Hotel REIT, RevPAR, EBITDA, Asset Sales, Deleveraging, Renovations, Preferred Stock Redemption, Corporate Sale Process, Hospitality, Real Estate Investment Trust