Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Investor Presentation (August 2019)
35 slides from Braemar Hotels & Resorts's investor presentation, Aug 15, 2019
Slide 1: Braemar Hotels & Resorts August 2019
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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 . 21 years of hospitality . 19 years of hospitality . 14 years of hospitality experience experience experience . 2 years with the Company . 1
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: 2019 Q2 Hotel Operating Results
2019 Q2 Hotel Operating Results Comparable Hotel Operating Results(1) 2019 Q2 2018 Q2 % Variance ADR $ 290.53 $ 286.50 1.4% Occupancy 80.2% 83.2% (3.7)% RevPAR $ 232.94 $ 238.46 (2.3)% RevPAR (not under renovation)(2) $ 252.39 $ 257.25 (1.9)% Total Hotel Revenue(3) $ 118,412 $ 120,719 (1.9)% Hotel E
Slide 6: 2019 Q2 Highlights and Results
2019 Q2 Highlights and Results Quarter Highlights • Adjusted EBITDAre of $32.8 million during the quarter. • Subsequent to quarter end, the Company announced the planned opening of The Clancy, an Autograph Collection property, in downtown San Francisco. The re-branded property, a conversion of the C
Slide 7: High-Quality Hotels in Leading Urban & Resort Markets
High-Quality Hotels in Leading Urban & Resort Markets Capital Hilton Hotel Yountville The Notary Hotel The Ritz-Carlton Lake Tahoe Marriott Seattle Sofitel Chicago Magnificent Mile Washington D.C. Yountville, CA Philadelphia, PA Lake Tahoe, CA Seattle, WA Chicago, IL Capital Hilton Washington D.C. R
Slide 8: Portfolio Detail
Portfolio Detail • Core portfolio quality unparalleled in the $231 public lodging REIT sector • Geographically diversified portfolio (1) REVPAR located in strong markets Number of TTM TTM TTM TTM Hotel % of (1) (1) (1) (1) Core Location Rooms ADR OCC RevPAR EBITDA Total Bardessono Napa Valley, CA 62
Slide 9: The Notary Hotel Update
The Notary Hotel Update Financial Highlights Investment Cost $ 19.8 million Expected RevPAR uplift $ 25 Officially Opened July 2019 Estimated unlevered IRR 19%(1) NEW SABROSO + SORBO TAPAS RESTAURANT NEW LOBBY (1) 5yr. Underwritten unlevered IRR, assumes exit cap rate of 7.5%, RevPAR uplift of $25,
Slide 10: Courtyard San Francisco "The Clancy" Update
Courtyard San Francisco “The Clancy” Update Financial Highlights Investment Cost $ 28.9 million Expected RevPAR uplift $ 50 Estimated unlevered IRR 22%(1) NEW LOBBY NEW FACADE Construction Timing (Completion) Guestrooms Done Lobby 2/19 - 10/19 Restaurant 2/19 - 10/19 Exterior 4/19 - 11/19 NEW RESTAU
Slide 11: Ritz-Carlton St. Thomas Update
Ritz-Carlton St. Thomas Update • Permanent roof work is completed • Guestroom renovations underway • Target completion October 2019 Reservations open December 1st and after NEW FACADE Island Status Beaches 100% Power 100% Airport 100% Sea Ports 100% Cruise Arrivals 100% NEW POOL Lodging 80% Company
Slide 12: EBITDA Contribution by Brand and Class
EBITDA Contribution by Brand and Class 2019 Q2 TTM Hotel EBITDA by Brand 2019 Q2 TTM Hotel EBITDA by Class 5% 10% 7% 16% 51% 52% 38% 21% Marriott Hilton Independent Hyatt Accor Luxury Upper Upscale Upscale Company Presentation // August 2019 12
Slide 13: Why We Focus on Luxury – Historical Performance
Why We Focus on Luxury – Historical Performance LUXURY UPPER UPSCALE Greatest long-term Second greatest long- RevPAR growth of term RevPAR growth of 3.9%(1) 3.1%(1) 350 300 250 200 150 RevPAR (Indexed) RevPAR 100 50 Jul-10 Jul-89 Jul-92 Jul-95 Jul-98 Jul-01 Jul-04 Jul-07 Jul-13 Jul-16 Apr-96 Apr-90
Slide 14: Outlook - 2020
Outlook - 2020 Luxury and Upper Upscale are expected to outperform other chain scales in 2020 Chain Scale Occupancy ADR RevPAR Luxury (0.2)% 3.2% 3.0% Upper Upscale (0.4)% 3.4% 3.0% Upscale (0.5)% 1.9% 1.4% Upper Midscale (0.2)% 1.7% 1.5% Midscale (0.1)% 1.0% 0.9% Economy 0.5 % 1.0% 1.5% Independent
Slide 15: External Growth – Luxury Markets
External Growth – Luxury Markets ~280,000 total luxury hotel rooms in U.S.(1) TOP 15 LUXURY MARKETS BY ROOMS(1) TOP 15 LUXURY MARKETS BY REVPAR(1)(2) Market Hotels Rooms Market RevPAR Las Vegas, NV 23 37,510 Hawaii $456.75 New York, NY 61 15,238 Utah Area $426.16 Los Angeles/Long Beach, CA 63 12,936
Slide 16: Target Market Analysis
Target Market Analysis(1) Market Size Fundamentals Pricing Desirability 300 250 200 150 100 50 0 Fundamentals Market Size Pricing Source: STR, RCA, and Bloomberg Company Presentation // August 2019 (1) Based on internal analysis as of 3/31/2019 16 Note: Fundamentals includes forecasts for RevPAR, em
Slide 17: Long-Term Trading Premium
Long-Term Trading Premium(1) The top quartile of lodging REITs (by RevPAR) have consistently had higher quality assets and 2.0 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 18: Asset Management Overview
Asset Management Overview(1) Senior Oversight 1 – Chief Operating Officer 9 – Asset managers 2 – Legal 1 – Director of Underwriting 3 – Revenue Optimization 2 – Analyst 1 – Analyst 4 – Capex specialists Acquisition Revenue Underwriting Optimization Risk Expense Management Control 1 – Risk & Insuranc
Slide 19: Past Operating Performance Relative to Peers
Past Operating Performance Relative to Peers • Braemar has outperformed its REIT peers each of the past 4 years (Braemar results in green or red; REIT averages in black) RevPAR Growth 2015 2016 2017 2018 7.3% 2.4% -2.5%(1) -1.6%(2) 4.9% 1.5% 0.4% 2.4% Comparable Hotel EBITDA Growth 2015 2016 2017 20
Slide 20: 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%, yield on cost at June 30, 2019 was 11.2%(1) Historical RevPAR Quar
Slide 21: 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%, yield on cost at June 30, 2019 was 7.3%(1) Quarterly NOI and NOI Yield Historical RevPAR $630 $6,000 9.0% 8.0% $610 $5,000 $1,356 $590
Slide 22: Conservative Capital Structure
Conservative Capital Structure TARGET LEVERAGE OVERVIEW Floating-rate debt Non-recourse debt typically provides a 45% lowers risk profile of natural hedge to the overall platform hotel cash flows Gross Assets Intended to maximize flexibility in Long-standing lender Net Debt all economic relationship
Slide 23: Cash Management Strategy
Cash Management Strategy NET WORKING CAPITAL(1) Cash & Cash Equivalents $73.9 CASH TO GROSS DEBT Restricted Cash $68.0 10% TARGET Accounts Receivable, net $17.7 Prepaid Expenses $7.9 Due from Third-Party Hotel Managers, net $8.7 Investment in Ashford Inc.(2) $6.2 Total Current Assets $182.4 Accounts
Slide 24: Debt Maturities
Debt Maturities The Notary Hotel OVERVIEW Philadelphia, PA 2020 1.6x 4.7% NEXT HARD DEBT FCCR(1) WEIGHTED AVG. MATURITY INTEREST RATE(1) Laddered debt maturities(1)(2) 800 700 600 500 400 $726.5 300 (In millions)(In 200 100 $0.0 $158.5 $70.0 $100.0 0 2019 2020 2021 2022 2023 Thereafter Fixed-Rate Fl
Slide 25: Peer Operating Performance Analysis
Peer Operating Performance Analysis Comparable Hotel EBITDA Per Room (Q2 2019 TTM) 45,000 40,000 38,556 36,557 35,000 31,689 30,158 30,000 27,283 25,000 20,000 15,000 10,000 5,000 - BHR PEB SHO CHSP DRH Comparable Hotel EBITDA Margin 30% 33% 31% 32% 30% Company Presentation // August 2019 Source: co
Slide 26: Valuation
Valuation (1) Stock Price Performance 2019 - YTD 2018 Comparable RevPAR 160 BHR $226 150 140 PEB $205 130 120 CHSP $195 110 100 SHO $192 90 80 DRH $187 BHR SHO DRH PEB CHSP TTM CAP RATE(2) TEV / 2019E EBITDA MULTIPLE(2),(3) PRICE / 2019E AFFO / SHARE MULTIPLE(2),(3) 9.0% 8.6% 13.5x 13.2x 12.0x 11.3x
Slide 27: Highly Aligned Management Team
Highly Aligned Management Team 14.2% Management has significant personal wealth invested in the Company 3.6x Insider ownership 3.6x higher than REIT industry average $44M Total dollar value of insider ownership (as of 8/5/2019) 20.0% 18.0% 17.3% 16.0% Highly-aligned management team is among 14.2% 14
Slide 28: Key Takeaways
Key Takeaways Highest Quality Portfolio Amongst All Lodging REITs…In The Segment With Greatest Expected Growth Trajectory Bardessono Hotel & Spa Growing Organically: Rigorous Asset Management Yountville, CA While Mining Portfolio for Investment Opportunities Growing Externally: Redeploying Capital i
Slide 29: Appendix
Appendix
Slide 30: Portfolio Performance
Portfolio Performance RevPAR TTM RevPAR TTM Hotel EBITDA Core 2019 Q2 Growth YoY 2019 Q2 Growth YoY Per Room(1) Bardessono -5.6% 2.1% $94.0 Hotel Yountville -7.5% -0.3% $71.0 Ritz-Carlton St. Thomas * * $63.6 Pier House 6.5% 12.8% $82.3 Park Hyatt Beaver Creek -21.9% -4.5% $52.7 Marriott Seattle Wat
Slide 31: Reconciliation of Net Income (Loss) to Cash Available for Distribution
Reconciliation of Net Income (Loss) to Cash Available for Distribution In thousands Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2019 Net income (loss) $ (5,623) $ (1,322) $ (13,913) $
Slide 32: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA In thousands except per room data Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2019 Net income (loss) $ 12,770 $ 16,470 $
Slide 33: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA In thousands Three Months Ended June 30, 2018 Net income (loss) $ 38,623 Non-property adjustments (15,423) Interest income (39) Interest expense 4,335 Amortization of loan cost 277 Depreciation and amortization 14,811 Income tax expense
Slide 34: Reconciliation of Net Income to Hotel EBITDA by Property
Reconciliation of Net Income to Hotel EBITDA by Property In thousands TTM Ended June 30, 2019 P a r k S a n S t . B a r de sson K e y We st H ot e l H y a t t Fr a nc i sc o S a r a sot a Lake Tahoe S e a t t l e Thoma s Ta mpa B r a e ma r o H ot e l & Pier House Yount v i l l B e a v e r The Notar
Slide 35: Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
Reconciliation of net income (loss) to EBITDA and Adjusted EBITDA In thousands Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2019 Net income (loss) $ (5,623) $ (1,322) $ (13,913) $ (626
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