Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Investor Presentation (January 2019)
33 slides from Braemar Hotels & Resorts's investor presentation, Jan 23, 2019
Slide 1: Braemar Hotels & Resorts January 2019
Ne BRAEMAR January 2019 HOTELS & RESORTS
Slide 2: Forward Looking Statements and Non-GAAP Measures
Forward Looking Statements and Non-GAAP Measures 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 differ materially from those projected
Slide 3: Management Team
Management Team RICHARD J. STOCKTON Chief Executive Officer & DERIC S. EUBANKS, CFA JEREMY J. WELTER President Chief Financial Officer Chief Operating Officer . . 20 years of hospitality . 18 years of hospitality 13 years of hospitality experience experience experience . . 2 years with the Company .
Slide 4: Strategic Overview
Strategic Overview Focused strategy of investing in luxury hotels and resorts Bardessono Hotel & Spa Grow organically through strong revenue and cost Yountville, CA control initiatives Grow externally through accretive acquisitions of high quality assets Pier House Resort Key West, FL Targets conser
Slide 5: 2018 Q3 Hotel Operating Results
2018 Q3 Hotel Operating Results Comparable Hotel Operating Results(1) 2018 Q3 2017 Q3 % Variance ADR $ 272.57 $ 271.43 0.42% Occupancy 85.86% 84.68% 1.39% RevPAR $ 234.04 $ 229.86 1.82% RevPAR (not under renovation) $ 240.05 $ 232.30 3.34% Total Hotel Revenue(2) $ 108,466 $ 107,592 0.81% Hotel EBITD
Slide 6: 2018 Q3 Company Results
2018 Q3 Company Results Earnings Results • Net loss attributable to common stockholders for the quarter was $3.6 million or $0.12 per diluted share • Actual RevPAR for all hotels increased 9.9% to $234.17 during the quarter • Actual RevPAR for all hotels not under renovation increased 15.1% to $240.
Slide 7: Recent Developments: Enhanced Return Funding Program
Recent Developments Enhanced Return Funding Program Implemented(1) Reduces equity . $50 million ERFP commitment from AINC requirement on new acquisitions by 18% with ability to upsize to $100 million by mutual consent $50M ERFP Allocation(2) . Initial 2-year term with 1-year renewals . ERFP programm
Slide 8: Recent Developments January 2019
Recent Developments January 2019 We recently acquired the 170-room Ritz-Carlton Lake Raised $40.0 million of perpetual preferred stock. Tahoe, in Truckee, California for $103.3 million(1) Dividends accrue at a rate of 8.25% per annum. 754.2 817.6 124.1 40.0 124.1 11.5% Preferred ($ Millions)in($ 443
Slide 9: High-Quality Hotels in Leading Urban & Resort Markets
High-Quality Hotels in Leading Urban & Resort Markets Courtyard Philadelphia Philadelphia, PA Capital Hilton Hotel Yountville The Ritz-Carlton Lake Tahoe Marriott Seattle Sofitel Chicago Magnificent Mile Washington D.C. Yountville, CA Lake Tahoe, CA Seattle, WA Chicago, IL Capital Hilton Washington
Slide 10: Portfolio Detail
Portfolio Detail • Core portfolio quality unparalleled in the $234 $224 public lodging REIT sector • Geographically diversified portfolio CORE REVPAR(1) OVERALL REVPAR(1) located in strong markets Number of TTM TTM TTM TTM Hotel % of (1) (1) (1) (1) Core Location Rooms ADR OCC RevPAR EBITDA Total Ba
Slide 11: Near Term Potential Performance Catalysts
Near Term Potential Performance Catalysts Year Over Year RevPAR Potential Comparisons(1) 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 Bardessono Wildfires Rebound Hotel Yountville Wildfires Rebound Park Hyatt Beaver Creek Low Snowfall Rebound Sofitel Chicago New Rooms/New Mgmt. Pier House Irma Rebound Ri
Slide 12: Upbranding Status Update – Autograph Conversions
Upbranding Status Update – Autograph Conversions Courtyard San Francisco • Investment cost: $28.9 million • Expected RevPAR uplift: $50 • Estimated unlevered IRR: 22% Construction Timing (Completion) Guestrooms 9/18 - 12/18 Restaurant 2/19 - 10/19 Lobby 2/19 - 10/19 Exterior 4/19 - 11/19 SAN FRANCIS
Slide 13: Ritz-Carlton St. Thomas Update
Ritz-Carlton St. Thomas Update • Launched central reservations on June 29 as St. Thomas Great Bay Resort to allow transient room nights to be booked directly on Marriott.com and OTA channels • Permanent roof work is underway • Guestroom model rooms were completed and reviewed with brand on Jul 10 NE
Slide 14: EBITDA Contribution by Brand and Class
EBITDA Contribution by Brand and Class Q3 2018 TTM Hotel EBITDA by Brand Q3 2018 TTM EBITDA by Class 5% 7% 20% 16% 47% 51% 21% 33% Marriott Hilton Independent Hyatt Accor Luxury Upper Upscale Upscale Company Presentation // January 2019 14
Slide 15: Why We Focus on Luxury
Why We Focus on Luxury LUXURY UPPER UPSCALE Greatest long-term Second greatest long- RevPAR growth of term RevPAR growth of 4.0%(1) 3.1%(1) 350 300 250 200 150 RevPAR(Indexed) 100 50 Jul-95 Jul-89 Jul-92 Jul-98 Jul-01 Jul-04 Jul-07 Jul-10 Jul-13 Jul-16 Apr-17 Apr-90 Apr-93 Apr-96 Apr-99 Apr-02 Apr-0
Slide 16: External Growth – Luxury Markets
External Growth – Luxury Markets ~260,000 total luxury hotel rooms in U.S.(1) TOP 15 LUXURY MARKETS BY ROOMS(1) TOP 15 LUXURY MARKETS BY REVPAR(2) Market Hotels Rooms Market RevPAR Las Vegas, NV 20 29,402 Hawaii $445 New York, NY 73 15,641 New York, NY $376 Los Angeles/Long Beach, CA 62 12,582 Utah
Slide 17: Target Market Analysis
Target Market Analysis(1) Market Size Fundamentals Pricing Desirability 60 50 40 30 20 10 0 Fundamentals Market Size Pricing Source: STR (1) Based on internal analysis as of 6/30/2018 Company Presentation // January 2019 17
Slide 18: Long-Term Trading Premium
Long-Term Trading Premium(1) The top quartile of lodging REITs (by RevPAR) have consistently had higher quality assets and 2.4 traded at a premium relative to other peers over PREMIUM EBITDA TRADING MULTIPLE a long-term 10 year period (TURNS) 25.0x 23.0x 21.0x 19.0x 17.0x 15.0x 13.0x 11.0x 9.0x 7.0x
Slide 19: Asset Management Overview
Asset Management Overview Senior Oversight 1 – Chief Operating Officer 8 – Asset managers 2 – Legal 1 – Director of Underwriting 2 – Revenue Optimization 1 – Analyst 1 – Analyst 4 – Capex specialists Acquisition Revenue Underwriting Optimization Risk Expense Management Control 3 – Risk & Insurance 1
Slide 20: Past Operating Performance Relative to Peers
Past Operating Performance Relative to Peers • Braemar has outperformed its REIT peers each of the past 3 years (Braemar results in green or red; REIT averages in black) RevPAR Growth 2015 2016 2017 2018 Q3 YTD 7.3% 2.4% -2.5%(1) -2.8%(2) 4.9% 1.5% 0.4% 2.2% Comparable Hotel EBITDA Growth 2015 2016
Slide 21: Case Study – Pier House Resort
Case Study – Pier House Resort • Braemar purchased the asset in early 2014 for $92.7 million • Remington had recently taken over property management & has a proven ability to deliver superior results • Initial yield on cost was 7.4%, current yield on cost is 11.4%* 2016 Quarterly NOI and NOI Yield $
Slide 22: Case Study – Bardessono Hotel & Spa
Case Study – Bardessono Hotel & Spa • Purchased for $85 million unencumbered by management. Installed Remington as property manager. • Initial TTM cap rate was 4.6%, current yield on cost is 7.2%* Despite California wildfire negative Quarterly NOI and NOI Yield impact in Q4, property continues to gr
Slide 23: Conservative Capital Structure
Conservative Capital Structure TARGET LEVERAGE OVERVIEW Floating-rate debt Non-recourse debt provides a natural 45% lowers risk profile of hedge to hotel cash the platform flows Gross Assets Maximizes flexibility Long-standing lender in all economic relationships Net Debt environments Company Presen
Slide 24: Cash Management Strategy
Cash Management Strategy NET WORKING CAPITAL(1) Cash & Cash Equivalents $158.5 10-15% 17% $4.98 Restricted Cash $73.6 Accounts Receivable, net $22.5 CASH TO GROSS Prepaid Expenses $5.7 CASH TO GROSS DEBT TARGET NWC / SHARE (2) DEBT(1) Investment in Ashford Inc. $10.1 Total Current Assets $270.5 Acco
Slide 25: Debt Maturities
Debt Maturities Courtyard Philadelphia OVERVIEW Philadelphia, PA 2020 2.1x 4.8% NEXT HARD DEBT FCCR(1) WEIGHTED AVG. MATURITY INTEREST RATE(1) Laddered debt maturities(1) $600 $500 $400 $300 $535.0 (In millions)(In $200 $100 $187.8 $158.5 $112.0 $0 2018 2019 2020 2021 2022 Thereafter Fixed-Rate Floa
Slide 26: Peer Operating Performance Analysis
Peer Operating Performance Analysis Comparable Hotel EBITDAPAR & Comparable Hotel EBITDA Margins Q3 YTD 2018 $140 40% 35.1% 35% $120 $116 32.8% $109 32.5% 30.5% 31.1% 30% $100 $86 $86 25% $80 $77 20% $60 15% $40 10% $20 5% $- 0% BHR PEB SHO CHSP DRH Q3 2018 YTD EBITDAPAR (LHS) Q3 YTD 2018 EBITDA Mar
Slide 27: Valuation
Valuation 2017 Comparable RevPAR(1) BHR $219 Valuation PEB $206 90 1.2 4.2 CHSP $187 Discount to Discount to Discount to average peer average peer average peer trading cap trading EBITDA trading AFFO DRH $184 rate (bps) multiple (turns) multiple (turns) SHO $175 TTM CAP RATE(2) TEV / 2019E EBITDA MU
Slide 28: Intrinsic Value
Intrinsic Value(1),(2) Current Equity Implied Equity Implied Equity Valuation Market Cap(3) Market Cap(4) Value Upside Disconnect $339M $521M $182M BRAEMAR PORTFOLIO 54% Increase $609 (In millions $) Low-End High-End $521 TTM NOI(5),(7) $111.9 $111.9 $434 Cap Rate(6) 8.5% 7.5% $339 Implied Value 1
Slide 29: Highly Aligned Management Team
Highly Aligned Management Team 14% Management has significant personal wealth invested in the Company 3.7x Insider ownership 3.7x higher than REIT industry average $49M Total dollar value of insider ownership (as of 1/4/2019) 20.0% 18.0% 17.3% 16.0% 14.4% Highly-aligned management team is among 14.0
Slide 30: Key Takeaways
Key Takeaways Highest Quality Portfolio Amongst All Lodging REITs…In The Segment With Greatest Growth Trajectory Bardessono Hotel & Spa Growing Organically: Rigorous Asset Management Yountville, CA While Mining Portfolio for Investment Opportunities Growing Externally: Redeploying Capital into Accre
Slide 31: Appendix
Appendix
Slide 32: Reconciliation of Net Income (Loss) to Hotel NOI
Reconciliation of Net Income (Loss) to Hotel NOI Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2018 Net income (loss) $ 14,567 $ 38,623 $ 16,761 $ 35,206 $ 105,157 Non-property adj
Slide 33: Reconciliation of Net Income (Loss) to Cash Available for Distribution
Reconciliation of Net Income (Loss) to Cash Available for Distribution Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2018 Net income (loss) $ (626) $ 12,854 $ 4,270 $ 28,444 $ 44,9
Braemar Hotels & Resorts — Investor Presentation (January 2019) on 6ix