Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Investor Presentation (September 2018)
30 slides from Braemar Hotels & Resorts's investor presentation, Sep 20, 2018
Slide 1: Braemar Hotels & Resorts September 2018
BRAEMAR September 2018 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 . . 1 year 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 Q2 Hotel Operating Results
2018 Q2 Hotel Operating Results Comparable Hotel Operating Results(1) 2018 Q2 2017 Q2 % Variance ADR $ 283.72 $ 287.74 (1.40)% Occupancy 85.09% 84.87% 0.26% RevPAR $ 241.41 $ 244.20 (1.14)% RevPAR (not under renovation) $ 247.65 $ 237.01 4.49% Total Hotel Revenue(2) $ 114,566 $ 119,196 (3.88)% Hotel
Slide 6: 2018 Q2 Company Results
2018 Q2 Company Results Earnings Results • Net income attributable to common stockholders for the quarter was $9.8 million or $0.29 per diluted share • Adjusted funds from operations (AFFO) was $0.56 per diluted share for the quarter as compared with $0.50 per diluted share from the prior year quart
Slide 7: High-Quality Hotels in Leading Urban & Resort Markets
High-Quality Hotels in Leading Urban & Resort Markets Courtyard Philadelphia Philadelphia, PA Capital Hilton Marriott Seattle Washington D.C. Hotel Yountville Sofitel Chicago Magnificent Mile Seattle, WA Yountville, CA Chicago, IL Capital Hilton Washington D.C. Renaissance Tampa Tampa, FL Bardessono
Slide 8: Portfolio Detail
Portfolio Detail • Core portfolio quality unparalleled in the $236 $223 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 9: Recent Developments
Recent Developments We recently completed the sale of the 293- We recently completed the acquisition of room Renaissance Tampa in Tampa, the 266-room Ritz-Carlton Florida for $68 million Sarasota in Sarasota, Florida for $171 million Meets Defined Strategy . Luxury chain scale segment TTM Cap Rate:
Slide 10: Upbranding Status Update
Upbranding Status Update Courtyard San Francisco • Investment cost: $30 million • Expected RevPAR uplift: $50 Estimated unlevered IRR: 20% Construction Timing (Completion) Guestrooms 12/18 Restaurant 10/19 Lobby 10/19 Exterior 11/19 SAN FRANCISCO Courtyard Philadelphia • Investment cost: $23 million
Slide 11: 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 12: EBITDA Contribution by Brand and Class
EBITDA Contribution by Brand and Class Q2 2018 TTM Hotel EBITDA by Brand Q2 2018 TTM EBITDA by Class 4% 7% 20% 17% 46% 50% 22% 34% Marriott Hilton Independent Hyatt Accor Luxury Upper Upscale Upscale Company Presentation // September 2018 12
Slide 13: 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-89 Jul-92 Jul-95 Jul-98 Jul-01 Jul-04 Jul-07 Jul-10 Jul-13 Jul-16 Apr-90 Apr-93 Apr-96 Apr-99 Apr-02 Apr-05 Apr-0
Slide 14: 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 15: Target Market Analysis
Target Market Analysis(1) Market Size Fundamentals Pricing Desirability 60 50 40 30 20 10 0 Fundamentals Market Size Pricing Company Presentation // September 2018 15 (1) Based on internal analysis as of 6/30/2018
Slide 16: Long-Term Trading Premium
Long-Term Trading Premium(1) The top quartile of lodging REITs (by RevPAR) have consistently had higher quality assets and 2.3 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 17: 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 18: 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 Q2 YTD 7.3% 2.4% -2.5% (0.6%)(1) -5.0% (1.5%)(2) 4.2% 1.7% -0.2% 1.2% Hotel EBITDA Growth 2015 2
Slide 19: 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 10.9%* 2016 Quarterly NOI and NOI Yield $
Slide 20: 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 7.3%* Despite California wildfire negative Quarterly NOI and NOI Yield impact in Q4, property continues to gr
Slide 21: 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 22: Cash Management Strategy
Cash Management Strategy NET WORKING CAPITAL(1) Cash & Cash Equivalents $163.0 10-15% 17% $5.59 Restricted Cash $81.5 Accounts Receivable, net $21.2 CASH TO GROSS Prepaid Expenses $4.1 CASH TO GROSS DEBT TARGET NWC / SHARE DEBT(1) Due from Affiliates $0.0 Due from Third-Party Hotel Managers, net $3.
Slide 23: Debt Maturities
Debt Maturities Courtyard Philadelphia OVERVIEW Philadelphia, PA 2020 2.1x 4.6% NEXT HARD DEBT FCCR(1) WEIGHTED AVG. MATURITY INTEREST RATE(1) Laddered debt maturities(1) $600.0 $500.0 $400.0 $300.0 $535.0 (In millions)(In $200.0 $100.0 $189.3 $158.5 $112.0 $0.0 2018 2019 2020 2021 2022 Thereafter F
Slide 24: Valuation
Valuation 2017 Comparable RevPAR(1) BHR $219 Valuation PEB $206 210 3.0 7.1 LHO $204 Discount to Discount to Discount to average peer average peer average peer CHSP $187 trading cap trading EBITDA trading AFFO rate (bps) multiple (turns) multiple (turns) DRH $184 SHO $175 TTM CAP RATE(2) TEV / 2018E
Slide 25: Intrinsic Value
Intrinsic Value(1),(2) Current Equity Implied Equity Implied Equity Valuation Market Cap(3) Market Cap(4) Value Upside Disconnect $402M $820M $418M BRAEMAR PORTFOLIO $949 104% Increase (In millions $) Low-End High-End $820 $691 TTM NOI(5),(7) $108.6 $108.6 Cap Rate(6) 7.0% 6.0% $402 Implied Value
Slide 26: Highly Aligned Management Team
Highly Aligned Management Team 14% Management has significant personal wealth invested in the Company 4.0x Insider ownership 4.0x higher than REIT industry average $57M Total dollar value of insider ownership (as of 8/14/2018) 20.0% 17.7% 18.0% 16.0% 14.3% Highly-aligned management team is among 14.
Slide 27: 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 28: Appendix
Appendix
Slide 29: 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 June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2018 Net income (loss) $ 38,623 $ 16,761 $ 35,206 $ 10,705 $ 101,295 Non-property adjustme
Slide 30: 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 June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 March 31, 2018 Net income (loss) $ 12,854 $ 4,270 $ 28,444 $ (217) $ 45,351 (
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