DEFA14A: Braemar Hotels & Resorts Urges Shareholders to Disregard Blackwells' Proxy Card Amid Takeover Concerns

Braemar Hotels & Resorts is urging shareholders to reject activist investor Blackwells Capital's proxy bid, alleging an attempt to seize control at an undervalued price.

Summary

• Braemar Hotels & Resorts is advising shareholders to disregard proxy materials from Blackwells Capital, an investor holding less than 1% of Braemar's voting stock.
• Braemar alleges Blackwells is attempting to take control of the company at a price below its intrinsic value and has made false statements and omissions.
• Braemar has filed a lawsuit against Blackwells to prevent the proxy solicitation.
• The company highlights its strong performance, including leading the publicly traded lodging REIT industry with a RevPAR of approximately $307 in 2023, compared to a peer average of $196.
• Braemar also cites a 79% RevPAR growth since 2014, outperforming the peer average of 28%.
• The company has refinanced or extended nearly all of its 2024 debt maturities, totaling approximately $300 million.
• Braemar's portfolio delivered a hotel EBITDA per key of approximately $49,200 in fiscal year 2023, exceeding the peer average of $35,700.
• Since 2013, Braemar has acquired 11 hotels with an average yield on cost of 8.5% on a trailing 12-month basis as of December 31, 2023.
• The Board of Directors consists of eight individuals, six of whom are independent, with expertise in REIT and lodging industry, real estate investment, management, finance, legal and governance.
• Shareholders are advised to wait for Braemar's proxy materials, including the GOLD proxy card.

Sentiment

Score: 6

Explanation: The document conveys a mixed sentiment. While highlighting strong financial performance and strategic execution, the ongoing proxy fight and legal action against Blackwells Capital introduce uncertainty and potential risks.

Positives

• Braemar's RevPAR significantly outperformed its peers in 2023.
• The company has demonstrated strong RevPAR growth since 2014.
• Braemar has successfully refinanced or extended a substantial portion of its 2024 debt maturities.
• The company's hotel EBITDA per key exceeded the peer average in 2023.
• Braemar's acquisitions have delivered attractive yields.

Negatives

• Braemar is engaged in a proxy fight, indicating potential internal conflict.
• Blackwells Capital believes that Braemar is undervalued.
• Braemar has filed a lawsuit against Blackwells Capital.

Risks

• The outcome of the proxy fight with Blackwells Capital is uncertain.
• Braemar's ability to prevail in the lawsuit against Blackwells is not guaranteed.
• The company's forward-looking statements are subject to various risks and uncertainties, including economic conditions and market trends.
• Failure to repay, refinance or restructure debt could negatively impact the company.

Future Outlook

The company expresses excitement about significant growth opportunities and remains committed to maximizing value for shareholders through investments in premium-branded and high-quality independent luxury hotels and resorts.

Management Comments

• We remain fully committed to maximizing value for you and are excited about the Company's significant growth opportunities as we continue to invest in premium-branded and high-quality independent luxury hotels and resorts.
• Your Board has unanimously determined that Blackwells proxy campaign is invalid and recommends that you discard any white proxy card you receive from Blackwells.
• The Braemar Board strongly recommends that you disregard the white proxy card sent to you by Blackwells and to wait for the Company's proxy materials, including the GOLD proxy card, which will be sent to you in the near term.

Industry Context

The document positions Braemar as a leader in the lodging REIT industry, highlighting its superior RevPAR and EBITDA per key compared to its peers. The proxy fight reflects a broader trend of activist investors targeting undervalued companies in the real estate sector.

Comparison to Industry Standards

• Braemar's RevPAR of $307 in 2023 significantly exceeds the full-service lodging REIT peer average of $196.
• Braemar's RevPAR growth of 79% since 2014 outperforms the full-service lodging REIT peer average growth of 28%.
• Braemar's hotel EBITDA per key of $49,200 in 2023 is higher than the peer average of $35,700.
• The peer group includes companies such as HST, RHP, PEB, SHO, XHR, DRH and PK.

Legal Proceedings

• Braemar has filed a lawsuit against Blackwells Capital to prevent the proxy solicitation.

Stakeholder Impact

• The proxy fight and potential takeover attempt could significantly impact shareholders.
• The company's performance and strategic decisions affect employees, customers, and other stakeholders.

Next Steps

• Shareholders are advised to wait for Braemar's proxy materials, including the GOLD proxy card.
• The company will hold its 2024 Annual Meeting on May 15, 2024.

Key Dates

Keywords

proxy fight, Blackwells Capital, RevPAR, EBITDA, debt refinancing, hotel REIT, Braemar Hotels & Resorts, proxy solicitation, takeover attempt