Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Ashford Hospitality Prime — Investor Day (October 2017)
49 slides from Braemar Hotels & Resorts's investor day presentation, Oct 3, 2017
Slide 1: New York Investor and Analyst Day
October 3, 2017 New York Investor and Analyst Day
Slide 2: Forward Looking Statements and Non-GAAP Measures
Investor and Analyst Day // New York Forward Looking Statements and Non-GAAP Measures 2 In keeping with the SEC's "Safe Harbor" guidelines, certain statements made during this presentation could be considered forward-looking and subject to certain risks and uncertainties that could cause results to
Slide 3: Management Team
Investor and Analyst Day // New York Management Team 3 20 years of hospitality experience 1 year with Ashford 15 years with Morgan Stanley Cornell School of Hotel Administration, BS University of Pennsylvania MBA RICHARD J. STOCKTON Chief Executive Officer & President 17 years of hospita
Slide 4: Ashford App and Social Media
Investor and Analyst Day // New York Ashford App and Social Media 4 Follow Ashford Inc. Chairman and Chief Executive Officer, Monty J. Bennett, on Twitter at www.twitter.com/MBennettAshford or @MBennettAshford The Ashford App is available for free download at Apple's App Store and Google Play Store
Slide 5: Q&A email questions
Investor and Analyst Day // New York Q&A 5 email questions to: questions@ashfordinc.com
Slide 6: Five Guiding Principles
Investor and Analyst Day // New York Five Guiding Principles 6 ENGAGING ETHICAL INNOVATIVE PROFITABLE TENACIOUS
Slide 7: Vision — Richard J. Stockton
i VISION — RICHARD J. STOCKTON
Slide 8: Strategic Overview
Investor and Analyst Day // New York Strategic Overview 8 Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL The Ritz-Carlton St. Thomas St. Thomas, USVI Focused strategy of investing in luxury hotels and resorts Grow organically through strong revenue and cost control initiatives
Slide 9: Recent Developments
Investor and Analyst Day // New York Recent Developments 9 Announced Refined Strategy & Amendment to Advisory Agreement Common Equity & Convertible Preferred Equity Raise Acquisition of Park Hyatt Beaver Creek Increased Quarterly Common Dividend by 33% Acquisition of Hotel Yountville Stockholders Ap
Slide 10: High-Quality Hotels in Leading Urban & Resort Markets
Investor and Analyst Day // New York High-Quality Hotels in Leading Urban & Resort Markets 10 Non-Core Assets Marriott Seattle Seattle, WA Hilton Torrey Pines La Jolla, CA Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL Renaissance Tampa Tampa, FL Sofitel Chicago Magnificent Mil
Slide 11: Portfolio Overview
Investor and Analyst Day // New York • Core portfolio quality unparalleled in the public lodging REIT sector • Geographically diversified portfolio located in strong markets Portfolio Overview 11 (1) As of June 30, 2017 (2) Reconciliations provided in Q2 earnings release filed on 8/2/17 (3) Announce
Slide 12: Why We Focus on Luxury
Investor and Analyst Day // New York Why We Focus on Luxury 12 (1) Total nominal growth from December 1987 to July 2017 Source: STR Greatest long-term RevPAR growth of 229%(1) LUXURY Second greatest long- term RevPAR growth of 150%(1) UPPER-UPSCALE 0 50 100 150 200 250 300 350 D e c -8 7 A u g -8 8
Slide 13: Long-Term Trading Premium
Investor and Analyst Day // New York Long-Term Trading Premium 13 Source: STR, SNL Top Quartile: BEE, PEB, LHO Peers: AHT, CLDT, CHSP, DRH, FCH, HT, HPT, HST, INN, RLJ, SHO The top quartile of lodging REITs (by RevPAR) have consistently had higher quality assets and traded at a premium relative to o
Slide 14: Highly Aligned Management Team
Investor and Analyst Day // New York 19.2% 15.9% 7.6% 6.1% 3.6% 3.5% 2.5% 2.3% 2.0% 1.7% 1.6% 1.1% 0.8% 0.5% 0.4% 0.3% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% AHT AHP HT APLE CLDT REIT Avg CHSP RLJ PEB INN HST DRH SHO XHR LHO PK Highly Aligned Management Team 14 Manag
Slide 15: Internal Growth – Non-Core Asset Strategy
Investor and Analyst Day // New York Internal Growth – Non-Core Asset Strategy 15 COURTYARD PHILADELPHIA DOWNTOWN Reposition Accretive Disposition Redeploy Maximize Value for Shareholders MARRIOTT PLANO LEGACY RENAISSANCE TAMPA COURTYARD SAN FRANCISCO DOWNTOWN • Under contract (1) • Sales price of ~
Slide 16: External Growth – Luxury Markets
Investor and Analyst Day // New York External Growth – Luxury Markets 16 TOP 15 LUXURY MARKETS BY ROOMS(1) (1) Based on information provided by STR for luxury class as of May 2017 Market Hotels Rooms Las Vegas 18 26,273 New York 71 17,288 Miami 51 13,132 Los Angeles 53 11,340 Hawaii 28 8,398 San Fra
Slide 17: Target Market Analysis
Investor and Analyst Day // New York 0 5 10 15 20 25 30 35 40 45 50 Fundamentals Market Size Pricing Target Market Analysis(1) 17 (1) Based on internal analysis Market Size Fundamentals Pricing Desirability
Slide 18: Acquisition Rationale – Hotel Yountville
Investor and Analyst Day // New York Acquisition Rationale – Hotel Yountville 18 Expected Savings by Department ROOMS OTHER DEPARTMENT SALES & MARKETING EXPENSES • Acquired 80-room Hotel Yountville in May 2017 • Announced TTM NOI cap rate at time of acquisition: 6.2% F&B ADMINISTRATIVE & GENERAL EXP
Slide 19: Acquisition Rationale – Park Hyatt Beaver Creek
Investor and Analyst Day // New York Acquisition Rationale – Park Hyatt Beaver Creek 19 Purchased 190-room Park Hyatt Beaver Creek for $145.5 MM in April 2017 Immediately commenced PIP that found initial $230k in savings Developing value-add program, including addition of upscale membership sk
Slide 20: Valuation Opportunity
Investor and Analyst Day // New York AHP SHO DRH CHSP LHO PEB Valuation Opportunity 20 (1) As reported by company earnings releases (2) Pro forma for acquisitions of Park Hyatt Beaver Creek and Hotel Yountville TEV / 2018E EBITDA MULTIPLE(3),(4) PRICE / 2018E AFFO / SHARE MULTIPLE(3),(4) TTM CAP RAT
Slide 21: Valuation Disconnect: Implied Equity Market Cap
Investor and Analyst Day // New York $356 $634 $748 $861 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Current Market Cap Low End - Implied Equity Market Cap Avg - Implied Equity Market Cap High End - Implied Equity Market Cap ASHFORD PRIME PORTFOLIO (millions) Low-End High-End TTM NOI(5) $
Slide 22: Hurricane Irma Update
Investor and Analyst Day // New York Hurricane Irma Update 22 Accepting reservations and has resumed limited operations PIER HOUSE RESORT Working with insurers to assess the damage and will be examining the implementation of a planned renovation program THE RITZ-CARLTON ST. THOMAS Online reservation
Slide 23: Asset Management – Jeremy J. Welter
Asset Management – JEREMY J. WELTER
Slide 24: What We Do
Investor and Analyst Day // New York What We Do 24 • We optimize the performance, strategic positioning, and value of our hotels • Ashford’s Asset Management Group houses specialists across multiple disciplines • Deployment structure allows for more focused asset management Disciplines REVENUE OPTIM
Slide 25: Asset Management Overview
Investor and Analyst Day // New York Asset Management Overview 25 TEAM • 1 - EVP • 10 - Asset managers • 2 - Revenue optimization • 3 - Risk & Insurance • 4 - Capex specialists • 2 - Legal • 1 - Property tax specialist • 4 - Analysts MEETINGS WITH PROPERTY MANAGEMENT • Asset manager has a weekly mee
Slide 26: Asset Management Overview (cont.)
Investor and Analyst Day // New York 26 Asset Management Overview (cont.) BRAND NEGOTIATIONS • Branding decisions, negotiations, and extensions • Brand related PIPs and capital directives • Asset management team members serve on brand owner advisory committees • Respond to all brand development prop
Slide 27: Past Operating Performance Relative to Peers
Investor and Analyst Day // New York Past Operating Performance Relative to Peers 27 RevPAR Growth 2.4% 4.3% 2.4% 1.7% 1.3% 0.4% Hotel EBITDA Growth 3.7% 5.0% 2.2% 2.5% 0.2% -1.6% 0.4% -0.6% 2.9% -2.9% 2016 2.5% 0.8% 2.1% -5.2% 2016 Q3 2016 Q4 2017 Q1 2017 Q2 Peers: CHSP, PEB, DRH, LHO, SHO • Prime
Slide 28: Case Study – The Ritz-Carlton St. Thomas
Investor and Analyst Day // New York Case Study – The Ritz-Carlton St. Thomas 28 MAKE CHART RATHER THAN TABLE; INCLUDE EBITDA FLOWTHROUGH 2016 (1st Full Year of Ownership) 450 83% RPI INCREASE (BPS) HOTEL EBITDA FLOW-THROUGH Ritz Carlton St. Thomas Quarterly Performance 2016 Q1 2016 Q2 2016 Q3 2016
Slide 29: Case Study – Hilton La Jolla Torrey Pines
Investor and Analyst Day // New York Case Study – Hilton La Jolla Torrey Pines 29 ADD CASE STUDY ON TORREY PINES LEASE EXTENSION, RESORT FEE REVENUE, PROFITABILITY, AND IMPLEMENTED REVENUE STRATEGIES • In June 2017 announced ground lease extension up to 2087 • Began charging $22 resort fee to all gu
Slide 30: Case Study – Pier House Resort
Investor and Analyst Day // New York Case Study – Pier House Resort 30 Ashford Prime acquired in early 2014 2015 2.5% 255 86% RPI GROWTH HOTEL EBITDA MARGIN INCREASE (BPS) HOTEL EBITDA FLOW-THROUGH 2016 4.9% 170 206% RPI GROWTH HOTEL EBITDA MARGIN INCREASE (BPS) HOTEL EBITDA FLOW- THROUGH Pier House
Slide 31: Case Study – Bardessono Hotel & Spa
Investor and Analyst Day // New York Case Study – Bardessono Hotel & Spa 31 • Acquired in July 2015 and installed affiliated property manager Remington • Proven ability to outperform 2016 (First Full Year of Ownership) 10% 518 242% REVPAR GROWTH HOTEL EBITDA MARGIN INCREASE (BPS) HOTEL EBITDA FLOW-
Slide 32: Opportunity – Bardessono Resort and Spa
Investor and Analyst Day // New York Opportunity – Bardessono Resort and Spa 32 Received approval to construct luxury villa consisting of 3 large keys, hospitality suite and private auto court Favorable ground lease amendment to capture adjacent parcel Unsatisfied demand for large luxury rooms
Slide 33: Opportunity – Marriott Seattle Waterfront
Investor and Analyst Day // New York Opportunity – Marriott Seattle Waterfront 33 Lobby renovation, including new front desk, and expanded market to replace lost gift shop Addition of M Club and 3 guest rooms in former concierge lounge Expanded market provides revenue generation at product cos
Slide 34: Insurance and Risk Management
Investor and Analyst Day // New York Insurance and Risk Management(1) 34 (1) Includes property, earthquake/flood, pollution, crime, and general liability/umbrella insurance (2) Comparison of TTM insurance expenses at acquisition, grown at 3% annually, to TTM July 2017 insurance expenses (3) Projecte
Slide 35: Case Study – Pure Rooms
Investor and Analyst Day // New York 35 Case Study – Pure Rooms • 2 Ashford Prime hotels have seen strong returns from adding PURE rooms IRR 148% COURTYARD SAN FRANCISCO DOWNTOWN(1) 32% CAPITAL HILTON (1) Utilizes June-August 2017 results due to reporting inaccuracies in prior months 40% TOTAL PORTF
Slide 36: Case Study – Portfolio RPI Growth
Investor and Analyst Day // New York 36 Case Study – Portfolio RPI Growth • Prime has grown RPI in 2 of the last 3 years relative to its competitors and on pace to maintain cumulative RPI growth since spinoff Unprecedented RevPAR Index Growth RPI YoY % Change 2014 2015 2016 TTM July 2017 90BPS 250BP
Slide 37: Balance Sheet – Deric S. Eubanks
Balance Sheet – DERIC S. EUBANKS
Slide 38: Conservative Capital Structure
Investor and Analyst Day // New York Conservative Capital Structure 38 45% TARGET LEVERAGE Net Debt Gross Assets (1) As of June 30, 2017 Current leverage at 45%(1) OVERVIEW Conservative capital structure Floating-rate debt provides a natural hedge to hotel cash flows Appropriate use of leverage to m
Slide 39: Non-Recourse Debt
Investor and Analyst Day // New York Non-Recourse Debt 39 (1) As of June 30, 2017 (2) Investment in Ashford Inc. at market value as of September 27, 2017 TOTAL ENTERPRISE VALUE(1) 100% NON-RECOURSE DEBT 100% PROPERTY LEVEL, MORTGAGE DEBT 0% CORPORATE LEVEL DEBT Non-recourse debt lowers risk profile
Slide 40: Cash Target
Investor and Analyst Day // New York Cash Target 40 (1) As of June 30, 2017 (2) At market value as of September 27, 2017 NET WORKING CAPITAL(1) 10-15% CASH TO GROSS DEBT TARGET 14% CURRENT CASH TO GROSS DEBT Ability to execute opportunistic investments BENEFITS Hedge against economic uncertainty Hil
Slide 41: Debt Maturities
Investor and Analyst Day // New York $80.0 $112.0 $191.4 $523.5 0 100 200 300 400 500 600 2017 2018 2019 2020 2021 Thereafter Fixed-Rate Floating-Rate Laddered debt maturities Active management of refinancings Debt Maturities 41 (2) 2019 NEXT HARD DEBT MATURITY 2x FCCR 4% WEIGHTED AVG INTEREST RATE
Slide 42: Value-Add Refinancings
Investor and Analyst Day // New York Value-Add Refinancings Long-Term Interest Rate Improvement Cash Flow 42 (1) As of June 30, 2017 (2) GAAP reconciliation in appendix $12M 3-PACK REFI - JAN 2017 $42M CAD(1),(2) 4.0% JUNE 2017(4) Expected Cash Flow Savings $1M BARDESSONO REFI - AUG 2017 Expected Ca
Slide 43: Q&A
Q&A
Slide 44: Asset Management Panel
Asset Management Panel
Slide 45: Asset Management Panel
Investor and Analyst Day // New York Asset Management Panel 45 Steve Zunker Senior Vice President of Asset Management Eric Batis Vice President of Asset Management Elizabeth Lloyd Vice President of Asset Management Sloan Dean Senior Vice President of Revenue Optimiziation & Underwriting
Slide 46: Appendix
Appendix
Slide 47: Reconciliation of Net Income (Loss) to Hotel NOI
Investor and Analyst Day // New York Reconciliation of Net Income (Loss) to Hotel NOI 47 Three Months Ended June 30, 2017 Three Months Ended March 31, 2017 Three Months Ended December 31, 2016 Three Months Ended September 30, 2016 TTM Ended June 30, 2017 Net income (loss) 21,607$ 14,951$ 12,615$ 42,
Slide 48: Reconciliation of Net Income (Loss) to Cash Available for Distribution
Investor and Analyst Day // New York Reconciliation of Net Income (Loss) to Cash Available for Distribution 48 Three Months Ended June 30, 2017 Three Months Ended March 31, 2017 Three Months Ended December 31, 2016 Three Months Ended September 30, 2016 TTM Ended June 30, 2017 Net income (loss) 386$
Slide 49: New York Investor and Analyst Day
October 3, 2017 New York Investor and Analyst Day
Ashford Hospitality Prime — Investor Day (October 2017) on 6ix