Board Unanimously Rejected Recent Director
Nomination Notice from Blackwells Due to False Statements and
Material Omissions in Violation of SEC Rules and the Company's
Bylaws
Files Complaint to Prevent Blackwells from
Launching an Illegal Proxy Solicitation and Spreading Confusion and
Misinformation Among Braemar's Shareholders
Complaint Details Blackwells' Plan to Take
Control of the Board – in Spite of Having Invested Only
$20,000 in Braemar – in Order to Sell
the Company Below its Intrinsic Value to Blackwells and its
Affiliates
Braemar Remains Committed to Acting in the
Best Interests of All Shareholders to Maximize Value
DALLAS, March 25,
2024 /PRNewswire/ -- Braemar Hotels & Resorts
Inc. (NYSE: BHR) ("Braemar" or the "Company") today announced that
on March 10, 2024, it received a
notice (the "Nomination Notice") from activist investor Blackwells
Capital LLC ("Blackwells") seeking to nominate four individuals for
election to the Company's eight-person Board of Directors (the
"Board") at the 2024 Annual Meeting of Stockholders (the "Annual
Meeting"). The Board has unanimously determined that the Blackwells
Nomination Notice is invalid due to numerous deficiencies, most
notably a failure to disclose the fund's true objectives – which
Braemar believes include an underhanded attempt to effectuate a
takeover of the Company without paying an adequate price.
Braemar also announced that it has filed a complaint in the U.S.
District Court for the Northern District of Texas (the "Court") in order to prevent
Blackwells from moving forward with its illegal proxy contest and
continuing its pattern of unlawful actions against the Company and
its shareholders. Notably, according to its own disclosures,
Blackwells owned only approximately 10,100 shares of Braemar's
common stock at the time of submitting its Nomination Notice to
replace half the Board. This level of ownership is equal to
approximately 0.015% of the shares outstanding, or an approximately
$20,000 investment.
Monty J. Bennett, Founder & Chairman of Braemar,
stated: "Our first priority is protecting the rights of all our
shareholders – which is why we are taking the steps announced
today. We are always open to engaging with shareholders and
exploring opportunities to maximize value. However, Blackwells has
not only disregarded Braemar's bylaws, it has launched a proxy
contest for effective control of the Company's Board while masking
its real intentions and owning only a de minimis number of shares.
We are hopeful that by exposing the behavior of this "all hat, no
cattle" activist fund for what it is and by seeking relief from the
Court, we can prevent the damage and distraction that would
accompany Blackwells' waging of an illegal proxy contest. In the
meantime, our focus continues to be on driving strong results
across our portfolio to enhance shareholder value."
In the complaint, Braemar details numerous concerning facts and
apparent issues pertaining to Blackwells' purported nominations,
including but not limited to:
- The Nomination Notice misrepresented Blackwells' ongoing
interest in acquiring Braemar at a price significantly below its
intrinsic value.
- On December 1, 2023, Blackwells
submitted a proposal to the Board claiming an interest in "buying"
Braemar. However, instead of engaging with the Board in a normal
manner, Blackwells refused to provide the Company with the basic
information needed to assess the viability of its bid, including
any evidence of its ability to secure equity or debt financing.
Then instead of answering the Company's standard informational
requests, Blackwells responded with litigation threats.
- Although its preliminary proxy statement filed on March 22, 2024 asserts that Blackwells has
"withdrawn" any interest it had in acquiring the Company, the facts
contradict this. Most tellingly, Blackwells submitted as an exhibit
to its Nomination Notice a 90-page investor presentation dated
March 2024 focused entirely on taking
Braemar "private" and using a proxy campaign as a cudgel to "open
discussions" with the Company about an acquisition.
- Of note, Blackwells has publicly used similar tactics with
other target companies in the past. And in some cases, Blackwells
was able to successfully extract multi-million-dollar settlement
payments, known as "greenmail," from these companies.1
Braemar has not dismissed this as a possible motive for Blackwells'
nefarious actions.
- The Nomination Notice violated Braemar's Advance Notice
Requirements.
- Blackwells failed to comply with multiple Advance Notice
Requirements, including by failing to disclose full information
with respect to what other people or groups in which it was acting
in concert in connection with a potential acquisition of
Braemar.
- Blackwells waited until the last day of the nomination
window to deliver the Nomination Notice.
- As a result, the period during which any defects in the
Nomination Notice could have been cured had already passed before
the Board had even had sufficient time to review the Nomination
Notice.
Braemar is Executing its Strategy to Maximize Shareholder
Value
- Braemar's iconic portfolio of resorts and urban hotels
delivered the highest revenue per available room ("RevPAR") in the
publicly traded lodging REIT industry during fiscal year 2023,
generating RevPAR of approximately $307, compared to the full-service lodging REIT
peer average of approximately $196.2 Since its founding in 2014
through fiscal year 2023,3 Braemar also delivered RevPAR
growth of approximately 79%, outperforming the full-service lodging
REIT peer average growth of approximately 28%.4
- The Company continues to strengthen its balance sheet and has
recently announced the successful refinancing or extension of
nearly all of its 2024 debt maturities totaling approximately
$300 million, including the recent
refinancing of the Capital Hilton in Washington, D.C., and loan extensions for
properties like Pier House Resort & Spa, Ritz-Carlton St.
Thomas, Ritz-Carlton Lake Tahoe and Hilton La Jolla Torrey
Pines.
- Braemar's portfolio delivered robust results in fiscal year
2023, delivering a hotel EBITDA per key of approximately
$49,200 ahead of the peer average of
approximately $35,700.2
The Company's resort properties continue to outpace 2019 results
and its urban properties continue to recover.
- The Company has a successful track record of growing its asset
base by executing a disciplined, value-accretive capital allocation
approach. Since 2013, Braemar has acquired 11 hotels that have
delivered an attractive average yield on cost of 8.5% on a trailing
12-month basis as of December 31,
2023. The recent acquisitions of the Ritz-Carlton Reserve
Dorado Beach and the Four Seasons Resort Scottsdale at Troon North
continue to surpass expectations, which reported strong RevPAR
growth of 9% and 5%, respectively, during the fourth quarter of
2023.
Notes:
(1) See, for example, Cooperation
Agreement and Release dated as of June 4,
2023 by and among Global Net Lease, Inc., The Necessity
Retail REIT, Inc., AR Global Investments, LLC, Blackwells Capital
LLC, Jason Aintabi and the other
parties thereto, filed as Exhibit 10.1 to the Current Report on
Form 8-K of Global Net Lease, Inc. dated June 5, 2023.
(2) Peer average includes HST, RHP, PEB, SHO, XHR, DRH and
PK.
(3) 2014 was the first full year following the Company's spin-off
from Ashford Hospitality Trust, Inc.
(4) Peer average includes HST, RHP, PEB, SHO and DRH.
Braemar Hotels & Resorts is a real estate investment trust
(REIT) focused on investing in luxury hotels and resorts.
Forward-Looking Statements
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 Private
Securities Litigation Reform Act of 1995. Forward-looking
statements in this press release include, among others, statements
about the Company's strategy and future plans. These
forward-looking statements are subject to risks and uncertainties.
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: our ability to prevail in the complaint filed against
Blackwells Capital, LLC; our ability to repay, refinance or
restructure our debt and the debt of certain of our subsidiaries;
anticipated or expected purchases or sales of assets; our projected
operating results; completion of any pending transactions; risks
associated with our ability to effectuate our dividend policy,
including factors such as operating results and the economic
outlook influencing our board's decision whether to pay further
dividends at levels previously disclosed or to use available cash
to pay dividends; our understanding of our competition; market
trends; projected capital expenditures; the impact of technology on
our operations and business; general volatility of the capital
markets and the market price of our common stock and preferred
stock; availability, terms and deployment of capital; availability
of qualified personnel; changes in our industry and the markets in
which we operate, interest rates or the general economy; 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. Such
forward-looking statements are based on our beliefs, assumptions,
and expectations of our future performance taking into account all
information currently known to us. These beliefs, assumptions, and
expectations can change as a result of many potential events or
factors, not all of which are known to us. If a change occurs, our
business, financial condition, liquidity, results of operations,
plans, and other objectives may vary materially from those
expressed in our forward-looking statements. You should carefully
consider this risk when you make an investment decision concerning
our securities. Investors should not place undue reliance on these
forward-looking statements. 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, except to the extent required by
law.
View original
content:https://www.prnewswire.com/news-releases/braemar-hotels--resorts-announces-rejection-of-materially-deficient-director-nomination-notice-from-blackwells-capital-302098106.html
SOURCE Braemar Hotels & Resorts, Inc.