DALLAS, May 6, 2024
/PRNewswire/ -- Braemar Hotels & Resorts Inc. (NYSE: BHR)
("Braemar" or the "Company"), reflecting its commitment to creating
long-term value for shareholders, today announced notable capital
market activities and strategic updates, including:
- The sale of Hilton Torrey Pines for $165
million, while evaluating the sale of two other hotels,
- The repayment of its remaining 2024 debt maturities,
- A $50 million preferred share
redemption program, and
- A $50 million common share
buyback authorization
The Company announced today that it has signed a definitive
agreement to sell the 394-room Hilton La Jolla Torrey Pines located
in La Jolla, California for
$165 million. Including
anticipated capital expenditures of $40
million, the sale price represents a 7.2% capitalization
rate on net operating income for the trailing twelve months ended
March 31, 2024. The transaction
is expected to be completed by August
2024, but closing is subject to several customary
conditions, including approval from the City of San Diego, the ground lessor. The
Company provides no assurances that the sale will be completed on
these terms or at all. Additionally, the Company is
evaluating the sale of two more hotels, subject to market
conditions, to be completed in 2024 and 2025, respectively.
The Company also announced today that, by utilizing cash on
hand, it has fully repaid the outstanding $30 million loan associated with the 143-room
Cameo Beverly Hills hotel located in Los
Angeles, California. Over the past several months, the
Company has diligently worked through its refinancing program and,
subject to the pending sale of Hilton La Jolla Torrey Pines,
Braemar has refinanced or paid off all of its 2024 debt
maturities.
Additionally, the Company announced plans to redeem $50 million of its non-traded preferred and/or
public preferred stock this year, utilizing proceeds from the sale
of the Hilton Torrey Pines. Any redeemed preferred stock will
no longer be outstanding, and dividends will no longer accrue on
such securities. The redemption announced today reflects the
Company's ongoing efforts to enhance the efficiency of its funding
and capital structure.
The Company also announced today that its Board of Directors has
authorized a new stock repurchase program of up to $50 million. The Company intends to begin share
repurchases as soon as practicable and may repurchase shares
through open market transactions, privately negotiated transactions
or other means. The timing and amount of any transactions will be
subject to the discretion of the Company based upon market
conditions, and the program may be suspended or terminated at any
time by the Company at its discretion without prior notice.
"Today's announcements reflect our commitment to reduce the
Company's dividend and interest expense, enhance our capital
structure and financial flexibility, as well as create value for
our shareholders," said Richard J.
Stockton, Braemar's President and Chief Executive Officer.
"The planned sale of the Hilton La Jolla Torrey Pines at an
attractive cap rate, demonstrates the high-quality nature of the
Braemar portfolio. We continue to be excited about the future
prospects for Braemar."
Braemar Hotels & Resorts is a real estate investment trust
(REIT) focused on investing in luxury hotels and resorts.
Braemar Hotels &
Resorts Inc.
|
Hilton Torrey
Pines
|
Reconciliation of
Hotel Net Income to Hotel EBITDA and Hotel Net Operating
Income
|
(Unaudited, in
millions)
|
|
|
|
|
|
12 Months
Ending
|
|
|
March 31,
2024
|
Net income
(loss)
|
|
$
0.3
|
Interest
expense
|
|
11.5
|
Amortization of loan
cost
|
|
0.5
|
Depreciation and
amortization
|
|
4.2
|
Non-hotel EBITDA
ownership expense
|
|
0.5
|
Income tax
expense
|
|
0.2
|
Hotel EBITDA
|
|
$
17.2
|
Capital
reserve
|
|
(2.5)
|
Hotel Net Operating
Income
|
|
$
14.7
|
|
|
|
All information in this table is based upon unaudited operating
financial data for the twelve month period ended March 31, 2024. This data has not been audited or
reviewed by the Company's independent registered public accounting
firm. The financial information presented could change.
EBITDA is defined as net income (loss), computed in
accordance with generally accepted accounting principles ("GAAP"),
before interest, taxes, depreciation and amortization. Hotel EBITDA
multiple is defined as the purchase price divided by the trailing
12 month EBITDA. A capitalization rate is determined by dividing
the property's annual net operating income by the purchase price.
Net operating income is the property's hotel EBITDA minus a capital
expense reserve of 5% of gross revenues.
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 complete the shareholder value creation
plan on a timely basis, if at all; 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.
Additional Information and Where to Find it
The Company has filed a revised Preliminary Proxy Statement on
Schedule 14A with the Securities and Exchange Commission (the
"SEC") on April 25, 2024 (the
"Preliminary Proxy Statement") and intends to file a definitive
proxy statement and other relevant materials with respect to the
Company's solicitation of proxies for the annual meeting of
stockholders expected to be held on July 30,
2024 (the "Annual Meeting"). INVESTORS AND
STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE PRELIMINARY PROXY
STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND THE
DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) AND ANY OTHER RELEVANT MATERIALS FILED WITH THE SEC WHEN
THEY BECOME AVAILABLE CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT ANY SOLICITATION. The
Preliminary Proxy Statement (and the definitive proxy statement and
other relevant materials when they become available), and any other
documents filed by the Company with the SEC, may be obtained free
of charge at the SEC's website at www.sec.gov. In addition,
investors and security holders may obtain free copies of the
documents filed with the SEC at the Company's website,
http://www.bhrreit.com, under the "Investor" link, or by requesting
them in writing or by telephone from us at 14185 Dallas Parkway,
Suite 1200, Dallas, Texas 75254,
Attn: Investor Relations or (972) 490-9600.
Participants
The Company and its directors and executive officers will be
participants in the solicitation of proxies with respect to a
solicitation by the Company. Information about those
executive officers and directors of the Company and their ownership
of the Company's common stock is set forth in the Preliminary Proxy
Statement. Investors and security holders may obtain
additional information regarding direct and indirect interests of
the Company and its executive officers and directors in the matters
to be voted upon at the Annual Meeting by reading the Preliminary
Proxy Statement. These documents are or will be available
free of charge at the SEC's website at www.sec.gov.
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SOURCE Braemar Hotels & Resorts, Inc.