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. stating that the estimated liquidation value of its Series E and Series M Preferred Stock was $25.00 per share as of December 31, 2024.

Summary

• Braemar Hotels & Resorts engaged Robert A. Stanger & Co., Inc. to provide an opinion on the liquidation value of its Series E and Series M Preferred Stock as of December 31, 2024.
• Stanger concluded that the estimated liquidation value for both series was $25.00 per share, matching the per share liquidation preference.
• Stanger used several valuation approaches, including market capitalization, analyst target prices, direct capitalization analysis, and third-party appraisals.
• All valuation approaches indicated that the preferred stock coverage ratio was adequate as of the Valuation Date.
• The company provides funds to Ashford Inc. in connection with the formation, registration and operations of Ashford Securities LLC.

Sentiment

Score: 7

Explanation: The document is neutral to slightly positive. It provides information about the liquidation value of preferred stock, which is generally a positive sign for investors in those securities. The engagement of a reputable firm like Stanger adds credibility.

Positives

• The estimated liquidation value of the Series E and Series M Preferred Stock was confirmed to be $25.00 per share, aligning with the liquidation preference.
• Multiple valuation methodologies supported the conclusion regarding the liquidation value.
• The preferred stock coverage ratio was adequate as of the Valuation Date.

Negatives

• The estimated liquidation value is based on estimates and assumptions that may not be accurate or complete.
• Different parties could derive different estimated liquidation values per share.
• The estimated liquidation value is not audited and does not represent a determination of fair value based on GAAP.
• The company did not make any adjustments to the valuation for the impact of other transactions occurring subsequent to December 31, 2024.

Risks

• Changes in the value of individual assets in the company's real estate portfolio or changes in valuation assumptions could significantly impact the liquidation values of the Series E Preferred Stock and/or the Series M Preferred Stock.
• The valuation methodologies used to assess the estimated liquidation value per share are based upon a number of estimates and assumptions that may not be accurate or complete.

Future Outlook

The document does not contain specific forward-looking statements beyond the valuation as of December 31, 2024.

Industry Context

This announcement is relevant to the real estate investment trust (REIT) industry, particularly those with complex capital structures involving preferred stock. It reflects the need for transparency and compliance with regulatory requirements regarding customer account statements.

Comparison to Industry Standards

• It is common practice for REITs with non-traded preferred stock to obtain third-party valuations to assist broker-dealers in complying with FINRA Rule 2331(c)(1)(B).
• The valuation methodologies used by Stanger (market capitalization, analyst target prices, direct capitalization analysis, and third-party appraisals) are standard approaches in the real estate valuation industry.
• Comparable companies that also issue preferred stock and obtain similar valuations include other hotel REITs and diversified REITs with complex capital structures.

Related Party Transactions

• The company provides funds to Ashford Inc. in connection with the formation, registration and operations of Ashford Securities LLC.

Stakeholder Impact

• Shareholders of Series E and Series M Preferred Stock are provided with an updated liquidation value, aiding in their investment decisions.
• Broker-dealers are assisted in complying with FINRA Rule 2331(c)(1)(B) regarding customer account statements.

Key Dates

Keywords

liquidation value, preferred stock, Braemar Hotels & Resorts, Robert A. Stanger & Co., valuation, Series E, Series M, hotel, real estate