Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Investor Presentation (May 2019)
34 slides from Braemar Hotels & Resorts's investor presentation, May 15, 2019
Slide 1: Braemar Hotels & Resorts
BRAEMAR 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 . . 21 years of hospitality . 19 years of hospitality 14 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: 2019 Q1 Hotel Operating Results
2019 Q1 Hotel Operating Results Comparable Hotel Operating Results(1) 2019 Q1 2018 Q1 % Variance ADR $ 321.54 $ 303.56 5.9% Occupancy 75.5% 77.7% (2.8)% RevPAR $ 242.75 $ 235.74 3.0% RevPAR (not under renovation)(2) $ 263.13 $ 256.42 2.6% Total Hotel Revenue(3) $ 130,697 $ 127,305 2.7% Hotel EBITDA(
Slide 6: 2019 Q1 Highlights and Results
2019 Q1 Highlights and Results Quarter Highlights • During the quarter, the Company entered into a $50 million Enhanced Return Funding Program agreement with Ashford Inc. • During the quarter, the Company completed the acquisition of the 170-room Ritz-Carlton Lake Tahoe in Truckee, California. • Dur
Slide 7: Recent Developments
Recent Developments January 2019 Q1 2019 Update We recently acquired the 170-room Ritz-Carlton Lake RevPAR(2): $381 Hotel EBITDA(2): $9.6M Tahoe, in Truckee, California for $120 million Quarterly RevPAR Quarterly Hotel EBITDA growth(3): 32.8% growth(3): 42.0% RevPAR(1): $371 Meets Defined Strategy .
Slide 8: High-Quality Hotels in Leading Urban & Resort Markets
High-Quality Hotels in Leading Urban & Resort Markets CourtyardCapital Philadelphia Hilton Hotel Yountville The Ritz-Carlton Lake Tahoe Marriott Seattle Sofitel Chicago Magnificent Mile “TheWashington Notary Hotel” D.C. Yountville, CA Lake Tahoe, CA Seattle, WA Chicago, IL Philadelphia, PA Capital H
Slide 9: Portfolio Detail
Portfolio Detail • Core portfolio quality unparalleled in the $244 $233 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 10: Courtyard Philadelphia (The Notary Hotel) Update
Courtyard Philadelphia (The Notary Hotel) Update Financial Highlights Investment Cost $ 19.8 million Expected RevPAR uplift $ 25 Estimated unlevered IRR 19%(1) Construction Timing (Completion) Guestrooms 10/18 - 6/19 Lobby 12/18 - 4/19 Restaurant 1/19 - 6/19 NEW LOBBY NEW SABROSO TAPAS RESTAURANT NE
Slide 11: Autograph Conversions – Courtyard San Francisco Update
Autograph Conversions – Courtyard San Francisco 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
Slide 12: Ritz-Carlton St. Thomas Update
Ritz-Carlton St. Thomas Update • Permanent roof work is completed • Guestroom renovations underway • Target completion October 2019 NEW FACADE Island Status Beaches 100% Power 100% Airport 100% Sea Ports 100% Cruise Arrivals 100% NEW POOL Lodging 65% Company Presentation // May 2019 12
Slide 13: EBITDA Contribution by Brand and Class
EBITDA Contribution by Brand and Class 2019 Q1 TTM Hotel EBITDA by Brand 2019 Q1 TTM Hotel EBITDA by Class 5% 6% 18% 16% 51% 53% 20% 31% Marriott Hilton Independent Hyatt Accor Luxury Upper Upscale Upscale Company Presentation // May 2019 13
Slide 14: 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 15: 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 (0.7) 1.3 0.6 U.S.
Slide 16: 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 $436.54 New York, NY 62 15,474 Utah Area $415.86 Los Angeles/Long Beach, CA 62 12,723
Slide 17: 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 // May 2019 (1) Based on internal analysis as of 12/31/2018 17 Note: Fundamentals includes forecasts for RevPAR, empl
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 2.0 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 Fwd.
Slide 19: 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 3 – Analyst 1 – Analyst 4 – Capex specialists Acquisition Revenue Underwriting Optimization Risk Expense Management Control 1 – Risk & Insuranc
Slide 20: 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 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%, yield on cost at March 31, 2019 was 10.8%(1) Historical RevPAR Qua
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%, yield on cost at March 31, 2019 was 7.6%(1) Historical RevPAR Quarterly NOI and NOI Yield $630 $6,000 9.0% $610 8.0% $5,000 $590 $1,35
Slide 23: 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 24: Cash Management Strategy
Cash Management Strategy NET WORKING CAPITAL(1) Cash & Cash Equivalents $69.1 CASH TO GROSS DEBT Restricted Cash $84.5 10-15% TARGET Accounts Receivable, net $21.5 Prepaid Expenses $6.9 Due from Third-Party Hotel Managers, net $12.2 Investment in Ashford Inc.(2) $10.6 Total Current Assets $204.8 $38
Slide 25: Debt Maturities
Debt Maturities Courtyard Philadelphia OVERVIEW Philadelphia, PA 2020 1.8x 4.8% NEXT HARD DEBT FCCR(1)(2) WEIGHTED AVG. MATURITY INTEREST RATE(1)(2) Laddered debt maturities(1)(2) 800 700 600 500 400 $684.0 300 (In millions)(In 200 100 $158.5 $112.0 $0.0 $100.0 0 2019 2020 2021 2022 2023 Thereafter
Slide 26: Peer Operating Performance Analysis
Peer Operating Performance Analysis Comparable Hotel EBITDA Per Room (Q1 2019) $12,000 $10,872 $10,000 $8,000 $6,867 $6,278 $5,905 $6,000 $4,527 $4,000 $2,000 $- BHR PEB SHO CHSP DRH EBITDA Margin 30.9% 27.6% 26.3% 27.8% 22.9% BHR PEB SHO CHSP DRH Company Presentation // May 2019 Source: company fil
Slide 27: Valuation
Valuation 2018 Comparable RevPAR(1) Stock Price Performance 2019 - YTD 160 BHR $226 150 140 PEB $205 130 120 CHSP 110 $195 100 90 SHO $192 80 1/1/2019 2/1/2019 3/1/2019 4/1/2019 5/1/2019 DRH BHR SHO DRH PEB CHSP $187 TTM CAP RATE(2) TEV / 2019E EBITDA MULTIPLE(2),(3) PRICE / 2019E AFFO / SHARE MULTI
Slide 28: Highly Aligned Management Team
Highly Aligned Management Team 14.3% Management has significant personal wealth invested in the Company 3.7x Insider ownership 3.7x higher than REIT industry average $71M Total dollar value of insider ownership (as of 5/8/2019) 20.0% 18.0% 17.2% 16.0% 14.3% Highly-aligned management team is among 14
Slide 29: 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 30: Appendix
Appendix
Slide 31: Portfolio Performance
Portfolio Performance RevPAR TTM RevPAR TTM Hotel EBITDA Core 2019 Q1 Growth YoY 2019 Q1 Growth YoY Per Room(1) Bardessono -4.6% 3.2% $95.4 Hotel Yountville -10.6% 3.6% $70.9 Ritz-Carlton St. Thomas 28.8% -34.6% $63.4 Pier House 10.2% 9.9% $78.8 Park Hyatt Beaver Creek -2.0% -2.2% $46.4 Marriott Sea
Slide 32: 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 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2019 Net income (loss) $ (1,322) $ (13,913) $ (626) $ 12,854 $ (3,0
Slide 33: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2019 Net income (loss) $ 16,470 $ 6,525 $ 14,567 $ 38,623 $ 76,185 Non-prop
Slide 34: Reconciliation of Net Income to Hotel EBITDA for Selected Assets
Reconciliation of Net Income to Hotel EBITDA for Selected Assets Twelve Months Ended March 31, 2019 Bardessono Hotel Key West Pier Lake Tahoe Ritz- & Spa House Resort Carlton Net income (loss) $ 338 $ 9,452 $ 2,697 Non-property adjustments — 60 — Interest income — — — Interest expense 1,912 — 525 Am
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