8-K: Braemar Hotels & Resorts Reports Solid Q4 2023 Results, Urban Hotels Show Strong Recovery

Braemar Hotels & Resorts reported solid fourth-quarter 2023 results, highlighted by the continued recovery of its urban properties and strong performance from recent acquisitions.

Summary

• Braemar Hotels & Resorts reported a fourth-quarter Comparable Hotel EBITDA of $45.1 million.
• The company's resort properties continue to outperform 2019 results, while urban properties are showing strong recovery.
• Fourth-quarter RevPAR for all hotels decreased by 4.4% year-over-year to $288, but January RevPAR showed a 2.9% increase.
• The luxury resort portfolio generated $34 million in Hotel EBITDA during the quarter.
• Urban assets generated $11 million in Comparable Hotel EBITDA, with continued growth expected.
• The Ritz-Carlton Reserve Dorado Beach achieved a RevPAR of $1,551 with 58% occupancy and an ADR of $2,679, reflecting an 8.9% increase year-over-year.
• The Ritz-Carlton Reserve Dorado Beach achieved a 9.8% yield on cost for the full year 2023, while the Four Seasons Scottsdale achieved a 7.3% yield on cost.
• The company refinanced the Capital Hilton with a new $110.6 million mortgage loan and extended loans for several other properties.
• Approximately $300 million of the $330 million in debt maturing in 2024 has been extended or refinanced.
• The company plans to repay the remaining $30 million loan associated with the Cameo Beverly Hills with cash on hand.
• Net loss attributable to common stockholders was $(31.1) million or $(0.47) per diluted share for the quarter and $(74.0) million or $(1.13) per diluted share for the full year.
• AFFO per diluted share was $0.04 for the quarter and $0.61 for the full year.
• Adjusted EBITDAre was $37.4 million for the quarter and $176.7 million for the full year.
• The company had total assets of $2.2 billion and $1.2 billion in loans at quarter end.
• Approximately 74% of the company's debt is effectively fixed, and 26% is effectively floating.
• The company declared a quarterly common stock dividend of $0.05 per share, or $0.20 per diluted share on an annualized basis.
• The company anticipates spending between $90 $100 million on capital expenditures in 2024.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the strong performance of recent acquisitions, the recovery of urban hotels, and successful debt refinancing. However, the net loss and consideration of asset sales temper the overall optimism.

Positives

• The company's urban hotels are showing strong signs of recovery and are expected to be a primary driver of growth.
• Recent acquisitions, The Ritz-Carlton Reserve Dorado Beach and the Four Seasons Scottsdale, are performing exceptionally well and exceeding expectations.
• The company has successfully refinanced or extended a significant portion of its 2024 debt maturities, improving financial stability.
• The company's luxury resort portfolio continues to deliver strong performance.
• The company has a solid liquidity position.
• The company is actively managing its assets to optimize revenue and profitability.
• The company is seeing strong group booking activity.

Negatives

• The company reported a net loss attributable to common stockholders for both the quarter and the full year.
• Fourth-quarter RevPAR for the overall portfolio decreased by 4.4% year-over-year.
• The company is considering selling assets to raise capital.
• The Hilton La Jolla Torrey Pines loan is under a six-month forbearance agreement.

Risks

• The company is exposed to fluctuations in interest rates, with 26% of its debt effectively floating.
• The company is considering selling assets, which could impact its portfolio.
• The company's dividend policy is reviewed on a quarter-to-quarter basis and is subject to change.
• The company is subject to the risks associated with the hotel industry, including economic downturns and changes in travel demand.
• The company is exposed to the risk of not being able to refinance debt on favorable terms.

Future Outlook

The company is optimistic about the future, citing a well-positioned portfolio, solid balance sheet, and continued recovery in urban markets. They expect continued growth in the coming quarters and are launching new initiatives to further enhance the portfolio.

Management Comments

• We continue to be pleased with the continued momentum of our urban hotels.
• Our two most recent acquisitions are each performing well and continue to exceed our original underwriting.
• We have refinanced or extended almost all of our 2024 debt maturities.
• We believe Braemar is on firm footing to perform well in both the near term and the long term.
• We are also hopeful that the hotel financing environment will continue to improve as we’ve seen both rates and spreads decrease over the past few months.
• We are optimistic about the future for this portfolio.

Industry Context

The announcement reflects the ongoing recovery in the hospitality sector, particularly in urban markets, and highlights the importance of strategic acquisitions and asset management in driving performance. The company's focus on luxury properties aligns with a broader trend in the industry towards high-end experiences.

Comparison to Industry Standards

• Braemar's portfolio RevPAR is higher than the national average for the Luxury chain scale, indicating a strong position in the high-end market.
• The company's focus on luxury resorts is similar to competitors like Host Hotels & Resorts and Park Hotels & Resorts, which also have significant holdings in the luxury segment.
• The company's recent acquisitions, such as The Ritz-Carlton Reserve Dorado Beach and the Four Seasons Scottsdale, are performing well, comparable to other high-end resort properties in similar markets.
• The company's efforts to refinance and extend debt maturities are in line with industry trends as companies seek to manage their balance sheets in a changing interest rate environment.

Stakeholder Impact

• Shareholders will be impacted by the company's financial performance and dividend policy.
• Employees will be impacted by the company's operational performance and capital expenditure plans.
• Customers will be impacted by the company's efforts to enhance its properties and services.
• Creditors will be impacted by the company's debt management and refinancing activities.
• Suppliers will be impacted by the company's capital expenditure plans and operational needs.

Next Steps

• The company plans to fully repay the $30 million loan associated with the Cameo Beverly Hills with cash on hand.
• The company will continue to monitor the hotel financing environment.
• The company will continue to implement new initiatives to enhance the portfolio.
• The company will continue to evaluate opportunities for asset sales.
• The company will complete the remaining renovations at the Capital Hilton in the first quarter of 2024.

Key Dates

Keywords

Hotel, Resort, EBITDA, RevPAR, Refinancing, Debt, Acquisition, Luxury, Urban, Capital Expenditures