Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Investor Day (October 2019)
40 slides from Braemar Hotels & Resorts's investor day presentation, Oct 3, 2019
Slide 1: 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 forw ard-looking and subject to certain risks and uncertainties that could cause results to differ materially from those projecte
Slide 2: Richard Stockton, Chief Executive Officer
Richard Stockton Chief Executive Officer 22 years of hospitality experience 3 years with the Company 15 years with Morgan Stanley Cornell School of Hotel Administration, BS University of Pennsylvania, MBA Investor Day 2019
Slide 3: Why Should Investors Own Braemar?
Why Should Investors Own Braemar? S t r a t e g y & V i s i o n • Quality of Portfolio • Growth Opportunities • Dividend Yield & Coverage 4
Slide 4: Why Should Investors Own Braemar?
Why Should Investors Own Braemar? = Strategy & Vision * Quality of Portfolio * Growth Opportunities + Dividend Yield & Coverage
Slide 5: High Quality Portfolio Diversified in Leading Urban & Resort Markets
High Quality Portfolio D i v e r s i f i e d i n L e a d i n g U r b a n & R e s o r t M a r k e t s The Notary Hotel Philadelphia, PA Hotel Yountville Yountville, CA The Ritz-Carlton Lake Tahoe Lake Tahoe, CA Marriott Seattle Seattle, WA Sofitel Chicago Magnificent Mile Chicago, IL Capital Hilton W
Slide 6: Hotel Portfolio
Hotel Portfolio 3,719 $231 79% TTM Comparable Hotel EBITDA(1) $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 $14,861 $14,725 $11,680 $11,440 $10,623 $10,010 $7,799 RevPAR EBITDA Contribution 7 (1) Comparable TTM as of 6/30/2019 in thousands, see appendix for a reconciliation
Slide 7: EBITDA Contribution by Brand and Class
EBITDA Contribution by Brand and Class 5% 7% 23% 10% 49% 51% 16% 21% 18% Luxury Upper Upscale Ritz-Carlton Marriott Hilton Park Hyatt Autograph Sofitel Independent (1) Comparable TTM as of 6/30/2019, see appendix for a reconciliation of TTM hotel net income (loss) to hotel TTM EBITDA; pro forma for
Slide 8: EBITDA Contribution by Brand and Class
EBITDA Contribution by Brand and Class
Slide 9: Growth Opportunity
Growth Opportunity 350 300 250 200 150 100 50 Luxury Class Upper Upscale Class Upscale Class Upper Midscale Class Midscale Class Economy Class 10 Source: STR (1) CAGR from 12/31/1987 to 6/30/2019 Jan-88 Apr-89 Jul-90 Oct-91 Jan-93 Apr-94 Jul-95 Oct-96 Jan-98 Apr-99 Jul-00 Oct-01 Jan-03 Apr-04 Jul-05
Slide 10: RevPAR Growth Trends
2 0 2 0 R E V P A R G R O W T H T R E N D S % A N N U A L G R O W T H 1.9 2.0 1.0 0.6 0.0 2020 FORECAST Average of Other Classes Luxury Source: PwC Hospitality Directions August 2019 11 +130bps LUXURY REVPAR OUTPERFORMANCE
Slide 11: Future Growth Opportunity
Future Growth n i t y O p p o r t u Autograph Conversion Autograph Conversion Complete Q1 2020 Completed July 2019 The Notary Hotel Courtyard San Francisco Beach Improvement Completed 2019 Government Shutdown No Signs of Impact Ritz-Carlton Sarasota Capital Hilton Villa Construction Hurricane Recove
Slide 12: Joint Venture Capital Opportunity for Growth
Joint O p p o r Venture Capital nvestor t u n i t y f o r G r o w t h Rationale Incentive Fees Benefits Joint Venture 13 -Asset -Portfolio -Fund -Promoted structure -Diversification -Accretive growth -ROFOs -Exit strategy optionality -Access lower cost alternative capital -Maintain transaction pipel
Slide 13: Dividend Yield & Coverage
DIVIDEND YIELD & COVERAGE 11'11
Slide 14: Common and Preferred Dividends
Common and Preferred Dividends $0.80 $35,000 $30,000 $25,000 $20,000 $0.40 $15,000 $10,000 $5,000 $-2015 2016 2017 2018 2019 Q2 YTD $0.00 2015 2016 2017 2018 2019 15 $6,795 $7,205 $23,414 $23,549 $3,860 $5,064 $14,618 $1,986 $12,212 $11,598 $0.16 $0.16 $0.16 $0.16 $0.12 $0.10 $0.12 $0.16 $0.16 $0.16
Slide 15: Attractive Dividend Yield & Coverage
Attractive Dividend Yield & Coverage 2.50x 7.0% 6.0% 2.00x 4.8% 5.0% 1.50x 4.0% 3.0% 1.00x 2.0% 0.50x 1.0% 0.00x 0.0% DRH BHR SHO PEB BHR PEB DRH SHO (1) (2) AFFO per share divided by Dividend per share, TTM as of 6/30/2019, see appendix for reconciliation from net income (loss) to AFFO Stock price
Slide 16: Best-in-Class Asset Management
B e s t - i n - C l a s s Asset Management Jeremy Welter Chief Operating Officer - Operating Performance 14 years of hospitality experience - Value-Add Initiatives - CapEx Investments 9 years with the Company (5 years with the Company’s predecessor) 5 years with Stephens Investment Bank Oklahoma Sta
Slide 17: Asset Management Overview
Asset Management O v e r v i e w 33 3 Team 104 5 18 Analytics Capital Management Risk/Property Tax Asset Managers Legal Revenue Optimization
Slide 18: Portfolio Performance
Portfolio Performance E B I T D A G r o w t h Outperformed Our Peers 4 Out of the Last 4 Years 4.0% BHR CAGR Year 2018 Peers 1.6% BHR 3.1% 2017 -1.9% 0.2% 2.5% Peers CAGR 2016 2.4% 3.7% 2015 8.1% 8.5% 19 Peer group: CHSP, DHR, LHO, PEB, SHO Cumulative Outperformance: 660bps
Slide 19: The Notary Hotel Opportunity – Autograph Conversion
The Notary Hotel O p p o r t u n i t y – A u t o g r a p h C o n v e r s i o n $166 $191 RevPAR RevPAR $12.3M $14.5M EBITDA EBITDA 34.0% 35.1% EBITDA Margin Note: Metrics are Courtyard and Autograph stabilized 2022 underwriting performance comparisons EBITDA Margin 20 Guestrooms Guestrooms Restauran
Slide 20: Courtyard San Francisco Downtown Opportunity – Autograph Conversion
Courtyard San Francisco Downtown O p p o r t u n i t y – A u t o g r a p h C o n v e r s i o n $269 $320 RevPAR RevPAR $14.6M $18.5M EBITDA EBITDA 31.8% 33.7% EBITDA Margin Note: Metrics are Courtyard and Autograph stabilized 2022 underwriting performance comparisons EBITDA Margin 21 Guestrooms Gues
Slide 21: Park Hyatt Beaver Creek Opportunity
Park Hyatt Beaver Creek O p p o r t u n i t y Patio Renovation 22 $2.6M $504K $3.9M $3.7M Capital Investment Strategic Initiatives 10 Additional Keys Enhanced Lobby New Cafe
Slide 22: Ritz-Carlton St. Thomas Opportunity – Rebuild/Enhance
Ritz-Carlton St. Thomas O p p o r t u n i t y - R e b u i l d / E n h a n c e 2019 Q4 ~$77M Insurance Proceeds (Excludes $48M in BI) $14.7M Capital Investments(1) Official Opening Lobby and New Retail Outlets: $2.2M Repositioning Restaurant: $5.6M New Family Pool: $3.2M Pool Cabanas: $1.4M Market/Ca
Slide 23: Bardessono Hotel & Spa Opportunity – Presidential Villa
Bardessono Hotel & Spa O p p o r t u n i t y – P r e s i d e n t i a l V i l l a Highlights 24 - Completed construction of luxury villa consisting of 3 large suites (1,000+SF) - Limited supply of luxury rooms greater than 1,000 sq. ft. in Napa market (only 1: Hotel Yountville) - ADR: $2,500 – $9,000
Slide 24: Ritz-Carlton Lake Tahoe Case Study – Asset Acquisition Strategy
Ritz-Carlton Lake Tahoe C a s e S t u d y - A s s e t A c q u i s i t i o n Strategy YTD July 2019 Post Takeover $25.6M Hotel Revenue $408 RevPAR 211.9 RevPAR Index 25 - Increased seasonal resort fee to $55/$45 and parking fees to $45 - Initiated Revenue Management transition to Luxury cluster - Loa
Slide 25: Ritz-Carlton Lake Tahoe Opportunity
Ritz-Carlton Lake Tahoe O p p o r t u n i t y Strategy have available to broader customer base floor lobby) guests to rent boats from our dock bar, and new soft/case goods 26 - $3.7M renovation of the Living Room (2nd-Merchandise the Lake Club online and - Buildout of new event space, relocation of-
Slide 26: Capital Hilton Case Study
Capital Hilton C a s e S t u d y -$760K Complexed Sales Team +$1.4M Stand Alone Sales Team Strategy - Added sales resource focused on-Implemented additional tools (e.g. E-Pro solicitationDirect, Hospitality Softnet, Group360) - Implemented Q9 RFP response platform-Increased marketing efforts (e.g. v
Slide 27: Hilton La Jolla Torrey Pines Case Study
Hilton La Jolla Torrey Pines C a s e S t u d y Highlights $16.0 $190 +76.0%(2) EBITDA Growth: $15.0 $180 $14.0 $170 $13.0 $12.0 $160 $11.0 $150 $10.0 $140 $9.0 $8.0 $130 (1) TTM 2019 2013 2014 2015 2016 2017 2018 (1) (2) TTM July 2019 YE 2013 compared to TTM July 2019 28 RevPAR Millions RevPAR Growt
Slide 28: Portfolio Tax Savings Case Study
Portfolio Tax Savings C a s e S t u d y (1) (2) Savings based on tax assessment YTD July 2019 29 Total Taxes Saved: $6.8M $671K 2015(1) $512K 2016(1) $2.0M 2017(1) $1.5M 2018(1) $2.1M YTD 2019(1),(2) Implemented aggressive and focused strategy to minimize property tax burden
Slide 29: Portfolio Energy Initiatives/Savings Case Study
Portfolio Energy Initiatives/Savings C a s e S t u d y Energy Saving ROI(1) $4.1M Energy Audits(1) $3.5M Energy Contract Renewals(1) $631K 30 (1) Assumed 6.5% cap rate
Slide 30: Asset Management Performance
Asset Management P e r f o r m a n c e Partners (1) On June 3, 2019, Ashford Inc. announced its acquisition of Remington Holdings, L.P.’s hotel management business. Investors and security holders should refer to Ashford Inc.’s Form 8-K dated May 31, 2019, and definitive proxy statement filed Septemb
Slide 31: Balance Sheet – Deric Eubanks, Chief Financial Officer
Balance Sheet Deric Eubanks Chief Financial Officer - Target Leverage 19 years of hospitality experience - Cash Management - Maturity Schedule 16 years with the Company CFA Charterholder Southern Methodist University, BBA
Slide 32: Conservative Capital Structure
Conservative Capital Structure 45% environments relationships 33 Long-standing lender Proactive strategy to opportunistically refinance loans and extend maturities Gross Assets Net Debt Floating-rate debt provides a natural hedge to hotel cash flows and maximizes flexibility in all economic Non-reco
Slide 33: Cash Management Strategy
Cash Management Strategy NET WORKING CAPITAL(1),(5) Cash & Cash Equivalents Restricted Cash Accounts Receivable, net Prepaid Expenses Due from Third-Party Hotel Managers, net Investment in Ashford Inc.( 2) Total Current Assets $73.9 $68.0 $17.7 $7.9 $8.7 $3.9 $180.2 Accounts Payable, net & Accrued E
Slide 34: Debt Maturities Overview
Debt Maturities Overview 2022 4.7% 1.6x FCCR 900 800 700 600 500 400 300 200 100 0 2019 2020 2021 2022 Floating-Rate 2023 Thereafter Fixed-Rate 35 (1)As of 6/30/2019, assumes options are exercised (2)Pro forma for recent refinancing of the Ritz-Carlton St. Thomas, and Key West Pier House Resort Mill
Slide 35: Debt Maturities Overview
Debt Maturities a Overview 2022 1.6x 4.7% epuered | aes ae Laddered debt maturities(").(2) ° a om 2019 2020 2021 2022 2023 Thereafter lFixed-Rate mFloating-Rate 35
Slide 36: Valuation Relative to Peers
Valuation R e l a t i v e t o P e e r s TEV / 2020E EBITDA MULTIPLE(1),(2) (1),(2) TEV/ KEY 15.0x $500,000 14.0x $400,000 13.0x $309,612 12.2x $300,000 12.0x 11.1x $200,000 11.0x 10.0x $100,000 9.0x $0 SHO BHR DRH Peer Avg PEB DRH SHOPeer Avg BHR PEB PRICE / 2020E AFFO / SHARE MULTIPLE(1),(2) TTM CA
Slide 37: Valuation Relative to Peers
Valuation Relative to Peers TEV/ Key") $500,000 $483,140 sa04s55 $400,000 0807 sani 925250 $300,000 $200,000 $100,000 $0 DRH SHO PeerAvg BHR PER. TIM Cap Rate(1)(2) od 73 TSR am TEV / 2020E EBITDA MuttipLe()(2) 15.0x 9 | 14d 14.0x 4 SHO BHR «RH PeerAvg PEB PRICE / 2020E AFFO / SHARE MuttiPLe()(2) 13
Slide 38: Reconciliation of Net Income to Hotel EBITDA by Property
Reconciliation of Net Income to Hotel EBITDA by Property T T M E nd ed June 3 0 , 2 0 19 C a p i t a l H i l t o n Wa sh i n g t o n D . C . L a J o l l a H i l t o n T o r r e y P i n e s C h i c a g o S o f i t e l M a g n i f i c e n t M i l e B a r d e sso n o H o t e l & S p a K e y We st P i e
Slide 39: Reconciliation of Net Income (Loss) to AFFO and Cash Available for Distribution
Reconciliation of net income (loss) to AFFO and Cash Available for Distribution Three Months Ended June 30, 2019 Three Months Ended March 31, 2019 Three Months Ended December 31, 2018 Three Months Ended September 30, 2018 TTM Ended June 30, 2019 Net income (loss) (I ncome) loss from consolidated ent
Slide 40: Reconciliation of Net Income (Loss) to AFFO and Cash Available for Distribution
Reconciliation of net income (loss) to AFFO and Cash Available for Distribution Netincome (lw) income! xs rom consolidated antes atibvlable to norcoritoing interest Net fncome! oer ateeutabie fo redeemable noncenitaing interests n operating partners Prelered dvigende Netincome fos] aticutabe fo comm
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