8-K: Braemar Hotels & Resorts Engages Stanger for Liquidation Value Opinion on Series E and M Preferred Stock

Braemar Hotels & Resorts obtained an opinion from Robert A. Stanger & Co., Inc. that the liquidation value of its Series E and M Preferred Stock was $25.00 per share as of December 31, 2023.

Summary

• Braemar Hotels & Resorts engaged Robert A. Stanger & Co., Inc. to assess the liquidation value of its Series E and Series M Preferred Stock as of December 31, 2023.
• Stanger concluded that the estimated liquidation value for both Series E and Series M Preferred Stock was $25.00 per share, which matches their liquidation preference.
• The valuation was based on several approaches including market capitalization, analyst target prices, direct capitalization analysis, and third-party appraisals.
• Stanger's analysis indicated that the company's equity value exceeded the total liquidation preference for all outstanding preferred securities.
• The liquidation value is the amount a holder would receive per share in the event of the company's liquidation.
• The valuation is not an audited fair value determination under GAAP and does not represent the trading value of the shares.

Sentiment

Score: 7

Explanation: The document provides a positive confirmation of the liquidation value of the preferred stock, aligning with expectations. However, it also highlights risks associated with real estate valuations and the limitations of the assessment.

Positives

• The liquidation value of the Series E and M Preferred Stock was confirmed to be at the expected liquidation preference of $25.00 per share.
• Multiple valuation methods were used to support the liquidation value assessment.
• The company's equity value was found to be sufficient to cover the liquidation preference of all outstanding preferred securities.

Negatives

• The liquidation value is an estimate and not an audited fair value determination under GAAP.
• The valuation does not represent the trading value of the shares on a national securities exchange.
• Changes in the value of individual real estate assets could significantly impact the liquidation values.

Risks

• The liquidation value is based on estimates and assumptions that may not be accurate or complete.
• Different valuation methodologies could result in significantly different liquidation values.
• The high concentration of assets in real estate makes the company vulnerable to changes in real estate values.
• The company did not adjust the valuation for transactions occurring after December 31, 2023.

Future Outlook

The document does not contain any specific forward-looking statements or guidance beyond the liquidation value assessment.

Industry Context

This announcement is specific to the valuation of Braemar Hotels & Resorts' preferred stock and does not directly relate to broader industry trends, but it does highlight the importance of asset valuation in the real estate sector.

Comparison to Industry Standards

• The valuation methodologies used by Stanger, such as market capitalization, analyst target prices, direct capitalization, and third-party appraisals, are standard practices in the real estate and finance industries.
• Comparable companies in the hotel REIT sector also use similar valuation techniques when assessing the value of their assets and securities.
• The use of multiple valuation approaches is a common practice to ensure a robust and reliable valuation.

Related Party Transactions

• Stanger has provided valuation services to Braemar Hotels & Resorts previously and has also provided consulting services to Ashford Securities LLC, a subsidiary of Ashford Inc.

Stakeholder Impact

• The liquidation value assessment provides information to holders of the Series E and M Preferred Stock regarding their potential recovery in a liquidation scenario.
• The assessment also provides information to broker-dealers to comply with their obligations under FINRA Rule 2331(c)(1)(B).

Key Dates

Keywords

liquidation value, preferred stock, valuation, real estate, Braemar Hotels & Resorts, Stanger, Series E Preferred Stock, Series M Preferred Stock