BHR Braemar Hotels and Resorts Inc

DALLAS, Feb. 26, 2020 /PRNewswire/ -- Braemar Hotels & Resorts Inc. (NYSE: BHR) ("Braemar" or the "Company") today reported financial results and performance measures for the fourth quarter and full year ended December 31, 2019.  The comparable performance measurements for Occupancy, Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), and Hotel EBITDA assume each of the hotel properties in the Company's hotel portfolio as of December 31, 2019 were owned as of the beginning of each of the periods presented.  Unless otherwise stated, all reported results compare the fourth quarter ended December 31, 2019 with the fourth quarter ended December 31, 2018 (see discussion below).  The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

STRATEGIC OVERVIEW

• Focused strategy of investing in luxury hotels and resorts
• Targets conservative leverage levels of 45% Net Debt to Gross Assets
• Highly-aligned management team and advisory structure
• Dividend yield of approximately 8.8%

FINANCIAL AND OPERATING HIGHLIGHTS

• Net income attributable to common stockholders for the quarter was $12.7 million or $0.36 per diluted share. For the full year of 2019, net loss attributable to common stockholders was $9.8 million or $0.32 per diluted share.
• Actual RevPAR for all hotels increased 9.9% to $223.70 during the quarter.
• Comparable RevPAR for all hotels increased 6.2% to $223.70 during the quarter.
• Adjusted funds from operations (AFFO) was $0.27 per diluted share for the quarter, an increase of 93% over the prior-year quarter.
• Adjusted EBITDAre was $25.5 million for the quarter, an increase of 25% over the prior-year quarter.
• During the quarter, the Company sold 19,897 shares of Ashford Inc. (NYSE American: AINC) ("Ashford") common stock to Ashford for net proceeds of approximately $0.6 million. Additionally, during the quarter, the Company distributed its remaining 174,983 shares of Ashford common stock on a pro-rata basis to its common shareholders and unitholders.
• During the quarter, the Company announced it had refinanced its mortgage loan for the 142-room Pier House Resort & Spa in Key West, Florida.
• During the quarter, the Company announced it had entered into a new secured credit facility to replace its previous secured credit facility.
• During the quarter, the Company announced the opening of The Maple Grove Presidential Villa at the Bardessono Hotel & Spa in Yountville, CA.
• During the quarter, the Company announced that it had reopened its 180-room Ritz-Carlton St. Thomas hotel in St. Thomas, USVI on November 22, 2019.
• Capex invested during the quarter was $28.1 million, bringing the total capex invested for the full year to $136.3 million.

UPDATE ON BUSINESS INTERRUPTION INCOME
During the quarter, the Company recognized $2.8 million of business interruption ("BI") income for the Ritz-Carlton St. Thomas related to lost profits for the period of September 2019 through November 2019 due to the impact of Hurricane Irma.  BI income for the full year 2019 totaled $19.3 million and related to lost profits for the period of December 2018 through November 2019.  The Company will continue to work with its insurers on the claims at the Ritz-Carlton St. Thomas.

OPENING OF THE MAPLE GROVE PRESIDENTIAL VILLA
On October 3, 2019, the Company announced the opening of The Maple Grove Presidential Villa at the Bardessono Hotel & Spa in Yountville, California. The spacious Presidential Villa is available in its entirety, offering 3,705 square feet of space including three bedrooms at a published rate of $9,000 per night.  The Presidential Villa is also available as three separate large, one-bedroom suites: the Flint Villa, the Jaspe Villa, and the Quartole Villa. Each separate suite boasts a distinctive great room, stately king bedroom, spa bathroom and courtyard.  

REOPENING OF THE PRESTIGIOUS RITZ-CARLTON ST. THOMAS
On December 2, 2019, the Company announced it had reopened its 180-room Ritz-Carlton St. Thomas hotel in St. Thomas, USVI as planned on November 22, 2019.  The property, which had been operating with minimal operations since being struck by Hurricane Irma in September 2017, underwent approximately $100 million in renovations that were substantially funded by insurance proceeds.  The renovation included guestrooms, guest bathrooms, public space, meeting space, ballroom, lobby, F&B outlets as well as several infrastructure projects.  Additionally, during the renovation, several new amenities were added including expanding the meeting space pre-function area, renovating the lobby, expanding the retail space, repositioning the hotel's signature restaurant - Alloro, renovating the Kid's Club, adding a centralized café and market, constructing a family pool with splash pad, and adding 11 luxury pool cabanas.

CAPITAL STRUCTURE
At December 31, 2019, the Company had total assets of $1.8 billion and $1.1 billion of mortgage loans of which $49 million related to its joint venture partner's share of the mortgage loan on the Capital Hilton and Hilton La Jolla Torrey Pines.  The Company's total combined mortgage loans had a blended average interest rate of 4.0%. 

On October 2, 2019, the Company announced that it entered into a stock purchase agreement with Ashford under which Ashford purchased 19,897 shares of its common stock for $30 per share, resulting in total proceeds of approximately $0.6 million to the Company. The purchase price reflected a premium of approximately 20% based on the closing price of Ashford common stock on October 1, 2019.  Due to the parameters of the private letter ruling from the Internal Revenue Service received by the Company, Ashford was only able to acquire the shares held by the Company's taxable REIT subsidiary.  Additionally, on November 5, 2019, the Company distributed its remaining 174,983 shares of Ashford common stock to its common shareholders and unitholders through a pro-rata, taxable dividend.

On October 3, 2019, the Company announced that it had refinanced its mortgage loan for the 142-room Pier House Resort & Spa in Key West, Florida, which had an existing outstanding balance of $70 million, a floating interest rate of LIBOR + 2.25%, and a final maturity date in March 2020.  The new, non-recourse loan totals $80 million and has a five-year term. The loan is interest only and provides for a floating interest rate of LIBOR + 1.85%.  The Company's next hard maturity is not until April 2022.

On October 28, 2019, the Company announced that it had entered into a new $75 million secured credit facility, which replaced the Company's previous credit facility that was scheduled to mature in November 2019.  The new credit facility provides for a three-year revolving line of credit and bears interest at a range of LIBOR + 2.25%-3.50%, depending on the leverage level of the Company.  There are two, one-year extension options, subject to the satisfaction of certain conditions.  The new credit facility includes the opportunity to expand the borrowing capacity by up to $175 million to an aggregate size of $250 million.

On December 4, 2019, the Company entered into separate equity distribution agreements with B. Riley FBR, Inc. and Janney Montgomery Scott LLC, relating to our shares of 5.50% Series B Cumulative Convertible Preferred Stock, (the "Series B Preferred Stock"). As part of this "at-the-market" ("ATM") equity offering program, the Company may offer and sell, from time to time, up to an aggregate of $40 million of its Series B Preferred Stock.  Since the inception of the ATM program, the Company has sold $1.25 million of its Series B Preferred Stock at an average price of $19.02 and expects to use the proceeds for general corporate purposes.

Also during the quarter, the Company filed a registration statement for the issuance of up to $700 million of Series E or Series M non-traded perpetual preferred stock that the Company expects will permit it to issue securities through the financial advisor and registered investment advisor networks over the next 3 years, market conditions permitting. The Company is currently targeting to raise $350 million over that period, and has registered a larger amount to allow for a dividend reinvestment program, as well as the potential for a more favorable reception to the offering concurrent with a more attractive hotel investment market. That registration statement is now effective. Ashford Securities, a division of Ashford Inc., has been established and licensed by FINRA as a broker-dealer, in order to act as dealer-manager on behalf of the Company in respect of the Series E and Series M non-traded preferred stock.  The Company expects to use any proceeds from the sale of the Series E or Series M non-traded perpetual preferred stock for general corporate purposes and to enable the Company to continue to grow at a time when the retail capital markets are strong and the traditional equity markets are less favorable.

PORTFOLIO REVPAR
As of December 31, 2019, the portfolio consisted of thirteen hotels.  During the fourth quarter of 2019, eleven of the Company's hotels were not under renovation.  The Company believes reporting its operating metrics for its hotels on a comparable total basis (all 13 hotels) and comparable not under renovation basis (11 hotels) is a measure that reflects a meaningful and focused comparison of the operating results in its portfolio.  Details of each category are provided in the tables attached to this release.

• Comparable RevPAR increased 6.2% to $223.70 for all hotels on a 4.5% increase in ADR and a 1.7% increase in occupancy.
• Comparable RevPAR increased 4.8% to $219.11 for all hotels not under renovation on a 2.1% increase in ADR and a 2.7% increase in occupancy.

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS
The Company believes year-over-year Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin comparisons are more meaningful to gauge the performance of the Company's hotels than sequential quarter-over-quarter comparisons.  To help investors better understand the substantial seasonality in the Company's portfolio, the Company provides quarterly detail on its Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin for the current and certain prior-year periods based upon the number of hotels in the Company's portfolio as of the end of the current period.  As the Company's portfolio mix changes from time to time so will the seasonality for Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin.  The details of the quarterly calculations for the previous four quarters for the thirteen hotels are provided in the table attached to this release.

COMMON STOCK DIVIDEND 
On December 5, 2019, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.16 per diluted share for the Company's common stock for the fourth quarter ending December 31, 2019. The dividend, which equates to an annual rate of $0.64 per share, was paid on January 15, 2020, to shareholders of record as of December 31, 2019.

"We continue to diligently execute on our strategic objectives focusing on the luxury hotel segment," said Richard J. Stockton, Braemar's President and Chief Executive Officer. "Throughout 2019, we consistently made progress on our portfolio repositioning, capital investment, and the asset management front.  We recently completed the renovation of the Ritz-Carlton St. Thomas, which reopened in November, and also completed The Maple Grove Presidential Villa at the Bardessono.  We remain excited that the renovation and rebranding of the Courtyard Downtown San Francisco to The Clancy, an Autograph Collection Hotel, will be completed this May. Additionally, with our recent refinancing activity, we have pushed out our debt maturities while also lowering our cost of debt.  We will continue to look for opportunities to maximize value for our shareholders and remain focused on delivering solid operational performance. Heading into 2020, we believe our portfolio is well-positioned and has unique aspects that are expected to result in opportunities for RevPAR outperformance."  

INVESTOR CONFERENCE CALL AND SIMULCAST
Braemar will conduct a conference call on Thursday, February 27, 2020 at 11:00 a.m. ET. The number to call for this interactive teleconference is (201) 493-6725. A replay of the conference call will be available through Thursday, March 5, 2020, by dialing (412) 317-6671 and entering the confirmation number, 13697612.

The Company will also provide an online simulcast and rebroadcast of its fourth quarter 2019 earnings release conference call.  The live broadcast of Braemar's quarterly conference call will be available online at the Company's web site, www.bhrreit.com on Thursday, February 27, 2020, beginning at 11:00 a.m. ET.  The online replay will follow shortly after the call and continue for approximately one year.

We use certain non-GAAP measures, in addition to the required GAAP presentations, as we believe these measures improve the understanding of our operational results and make comparisons of operating results among peer real estate investment trusts more meaningful. Non-GAAP financial measures, which should not be relied upon as a substitute for GAAP measures, used in this press release are FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA.  Please refer to our most recently filed Annual Report on Form 10-K for a more detailed description of how these non-GAAP measures are calculated.  The reconciliations of non-GAAP measures to the closest GAAP measures are provided below and provide further details of our results for the period being reported.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities.  Securities will be offered only by means of a registration statement and prospectus which can be found at www.sec.gov.

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Braemar Hotels & Resorts is a real estate investment trust (REIT) focused on investing in luxury hotels and resorts.

Ashford has created an Ashford App for the hospitality REIT investor community.  The Ashford App is available for free download at Apple's App Store and the Google Play Store by searching "Ashford."

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the federal securities regulations.  Forward-looking statements in this press release may include, among others, statements about the implied share price for the Company's common stock.  When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements.  Such statements are subject to numerous assumptions and uncertainties, many of which are outside Braemar's control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation:  general conditions of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy; our ability to successfully complete and integrate acquisitions, and manage our planned growth, and the degree and nature of our competition.  These and other risk factors are more fully discussed in Braemar's filings with the Securities and Exchange Commission. 

The forward-looking statements included in this press release are only made as of the date of this press release.  The Company can give no assurance that these forward-looking statements will be attained or that any deviation will not occur.  We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.