Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Ashford Hospitality Prime — Investor Day (October 2015)
42 slides from Braemar Hotels & Resorts's investor day presentation, Oct 20, 2015
Slide 1: Investor & Analyst Day – October 2015
Investor & Analyst Day – October 2015
Slide 2: Safe Harbor
2 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. When we use the words "will likely result," "m
Slide 3: Management Team Attending
3 Management Team Attending Monty J. Bennett Chairman & Chief Executive Officer Ashford/Predecessor Experience: 26 yrs Douglas A. Kessler President Ashford/Predecessor Experience: 13 yrs Jeremy J. Welter EVP – Asset Management Ashford/Remington Experience: 10 yrs David A. Brooks Chief Operating Offi
Slide 4: Investor Day Timeline
4 Investor Day Timeline Vision Monty J. Bennett, Chairman & Chief Executive Officer Strategy Execution Douglas A. Kessler, President Asset Management Jeremy J. Welter, EVP – Asset Management Balance Sheet Overview Deric S. Eubanks, Chief Financial Officer Speaker Subject Time 10:30 am – 10:45 am 10:
Slide 5: Ashford on Mobile & Social Media
5 Ashford on Mobile & Social Media Follow Chairman and Chief Executive Officer, Monty J. Bennett, on Twitter at www.twitter.com/MBennettAshford or @MBennettAshford The Ashford App is now available for free download at Apple's App Store and Google Play Store by searching "Ashford”
Slide 6: Vision – Monty Bennett, Chairman & CEO
Vision – Monty Bennett, Chairman & CEO Bardessono Hotal & Spa Yountville, CA
Slide 7: Ashford Hospitality Prime Vision
Ashford Hospitality Prime Vision Well defined strategy investing in luxury hotels in gateway and resort markets 7 Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL Chicago Sofitel WaterTower Chicago, IL` Grow platform through accretive acquisitions of high quality assets Mai
Slide 8: Strategic Alternatives Update
Strategic Alternatives Update In August, the Company announced a plan to explore a full range of strategic alternatives including a possible sale of the Company Independent directors engaged Deutsche Bank as advisors Board is discussing all possible strategic alternatives to maximize value for
Slide 9: Recent Developments
Recent Developments 9 Acquisition of the Bardessono Hotel & issuance of convertible preferred equity Very high quality asset in high demand market with high barriers to entry Enabled us to grow the portfolio without raising dilutive equity Amendments to Advisory Agreement with Ashford, Inc.
Slide 10: Relative Trading
6.0x 7.0x 8.0x 9.0x 10.0x 11.0x 12.0x 13.0x 14.0x 15.0x 16.0x $75.00 $100.00 $125.00 $150.00 $175.00 $200.00 $225.00 $250.00 2016E EBITDA Multiple * YTD 2015 RevPAR PEB BEE HT LHO CHSP HST DRH FCH SHO RHP CLDT RLJ AHP INN HPT AHP The Company's trading discount is almost entirely explained by a lac
Slide 11: Discount to Private Market Values
6.0x 7.0x 8.0x 9.0x 10.0x 11.0x 12.0x 13.0x 14.0x 15.0x 16.0x $75.00 $100.00 $125.00 $150.00 $175.00 $200.00 $225.00 $250.00 2016E EBITDA Multipl e (1 ) YTD 2015 RevPAR ` Discount to Private Market Values 11 EBITDA Multiple vs. YTD 2015 RevPAR (as of 9/10/2015) (1) Based on consensus 2016 EBITDA est
Slide 12: Highest Insider Ownership
Highest Insider Ownership 12 Public Lodging REITs include: BEE, CHSP, CLDT, DRH, FCH, HST, HT, INN, LHO, PEB, RLJ, SHO Source: Company filings. * Insider ownership for Ashford Prime includes direct & indirect interests & interests of related parties Insider Ownership 14%* 5% 4% 3% 3% 2% 2% 2% 2% 1%
Slide 13: Asset Performance
Asset Performance 13 Source: Company filings 11.6% 9.2% 8.8% 8.3% 6.8% 6.3% 5.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% DRH PEB LHO AHP SHO BEE CHSP 9.8% 7.4% 7.0% 6.8% 5.8% 4.7% 3.8% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% AHP BEE SHO DRH CHSP LHO PEB 2014 RevPAR Growth YTD Q2 2015 RevPAR Growth
Slide 14: Shareholder Alignment
Shareholder Alignment 14 Peers Ashford Prime Incentivized to grow No sizeable share repurchases Low insider ownership Reluctance to monetize Internal Incentivized to outperform Significant share repurchases High insider ownership Willingness to monetize External or internal His
Slide 15: PKF RevPAR Growth Forecasts
PKF RevPAR Growth Forecasts 15 PKF RevPAR Growth 5.4% 8.2% 6.8% 5.4% 8.3% 7.2% 6.3% 5.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 2010 2011 2012 2013 2014 2015F 2016F 2017F Historical RevPAR Growth Forecased RevPAR Growth
Slide 16: Future Potential Growth
Future Potential Growth 16 COMPOUNDED 2-YEAR REVPAR GROWTH RATE 24.3% 5.0% 5.5% 6.0% 6.5% 7.0% 20.0% 8.2% 9.0% 9.9% 10.7% 11.6% 25.0% 10.3% 11.3% 12.4% 13.4% 14.5% 30.0% 12.3% 13.6% 14.8% 16.1% 17.4% 35.0% 14.4% 15.8% 17.3% 18.8% 20.3% 40.0% 16.4% 18.1% 19.8% 21.5% 23.2% 45.0% 18.5% 20.3% 22.2% 24.2
Slide 17: Key Takeaways
Key Takeaways 17 High quality portfolio Simple, focused strategy on luxury hotels Focus on increasing shareholder value with review of strategic alternatives Strong industry fundamentals Strong management team with a long track record of creating shareholder value Highly-aligned platform
Slide 18: Strategy Execution – Douglas Kessler, President
Strategy Execution – Douglas Kessler, President Marriott Seattle Waterfront Seattle, WA
Slide 19: Maximizing Shareholder Value
Maximizing Shareholder Value Consistently committed to maximizing shareholder value including the following initiatives: Doubled common dividend to $0.10 per share in Q2 2015 $65 million convertible preferred equity raise at $18.90 conversion price Accretive acquisition of the luxury Bardess
Slide 20: High Quality Portfolio
High Quality Portfolio 20 Ashford Prime Hotels Courtyard Seattle Downtown Seattle, WA Marriott Seattle Seattle, WA Hilton Torrey Pines La Jolla, CA Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL Renaissance Tampa Tampa, FL Chicago Sofitel WaterTower Chicago, IL Courtyard Philad
Slide 21: Portfolio Overview
Portfolio Overview 21 (1) As of June 30, 2015 for 11 owned hotels as of October 20, 2015 (2) Wells Fargo Securities Research; Lodging: TripAdvisor Rankings (September 4, 2015) Note: Hotel EBITDA in thousands High quality portfolio with total ADR and RevPAR of $224 and $185, respectively for the TT
Slide 22: Investment Strategy
Investment Strategy 22 Luxury hotels Gateway and resort markets Disciplined capital allocation Lower leverage Investment Strategy Competitive Advantage Material impact of one acquisition to portfolio given size Market knowledge given existing presence across all Ashford companies Oppor
Slide 23: Recent Acquisition – Bardessono Hotel
Recent Acquisition – Bardessono Hotel Premier asset in Napa Valley One of the strongest and most desirable lodging markets in the U.S. with very high barriers to entry and minimal new supply Extraordinary RevPAR of over $550 The only California LEED Platinum certified hotel was built in 2009
Slide 24: Asset Management – Jeremy Welter, EVP
Asset Management – Jeremy Welter, EVP Pier House Resort Key West, FL
Slide 25: Asset Management Overview
Asset Management Overview 25 Strong Operational Performance Ownership Value Add
Slide 26: Strong Operational Performance
Strong Operational Performance 26 Strong Operational Performance Maximize revenue generating opportunities throughout the portfolio with creative pricing strategies Continuously meet performance expectations even under challenging market conditions Consistently outperform peer average in EBITD
Slide 27: Case Study – Marriott Seattle
Case Study – Marriott Seattle 27 Seattle Marriott Waterfront – Seattle, WA Segment Jul-Aug 2012 Jul-Aug 2013 Jul-Aug 2014 Jul-Aug 2015 ADR Premium Retail $ 327.49 $ 354.85 $ 411.14 $ 449.95 Regular Retail $ 281.73 $ 309.96 $ 348.03 $ 371.66 Difference $ 45.76 $ 44.90 $ 63.10 $ 78.29 Premium Rooms
Slide 28: Case Study – Capital Hilton
Case Study – Capital Hilton 28 The Capital Hilton – Washington, DC Installed Upsell program, driving $250,000 of incremental revenue Daily focus on pricing in order to drive retail transient penetration to historical high; retail RPI up 19% TTM Weekly reviews of group position, leading to 5% T
Slide 29: Case Study – Marriott Plano Legacy
Case Study – Marriott Plano Legacy 29 108 110 112 114 116 118 120 122 124 126 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 RPI, Trailing 12-Months Strong RPI growth despite opening of Hilton Granite Park in Sep. 2014 Installed Sr. RM in Q1 2014 2014 & 2015 Business Transient Pricing
Slide 30: Ownership Value Add
Ownership Value Add 30 Ownership Value Add Exceptional track record of significantly improving revenue and profitability following acquisition Identify opportunities to add keys in destination and high barrier to entry markets Evaluate portfolio for opportunities to reposition assets to captur
Slide 31: Case Study – Conversion to Remington Managed
Case Study – Conversion to Remington Managed 31 Asset management performance significantly exceeded underwriting Eliminated $1.5mm in expenses through cost cutting initiatives: Right-sized staffing level Implemented improved housekeeping practices Identified additional F&B efficiencies R
Slide 32: Case Study – Room Additions
Case Study – Room Additions 32 Fourth highest occupancy hotel in Prime portfolio Iconic hotel located in downtown Washington DC and 3 blocks north of the White House Converted 1 Ambassador Suite and relocated concierge lounge to 1st floor, gained 6 additional keys Project Overview: Fourth hi
Slide 33: Opportunity – Courtyard San Francisco
Opportunity – Courtyard San Francisco 33 Courtyard San Francisco has historically underperformed compared to the rest of Ashford’s select portfolio in ADR index A one point increase in RevPAR index equals $171,000 in EBITDA Repositioning hotel with $14.5mm extensive guestrooms and lobby renova
Slide 34: Opportunity – Bardessono Hotel
Opportunity – Bardessono Hotel 34 Bardessono – Yountville, CA Acquired in July 2015 62 keys, 1,350 sq. ft. of meeting space Located in Yountville, CA the “Culinary Capital of Napa Valley” High barrier to entry market Easily accessible to the major markets in Northern California One of on
Slide 35: Asset Management Overview (cont.)
Asset Management Overview (cont.) 35 Exceptional Guest Service Risk Management & Property Taxes Prudent Capital Investment Risk Management – Reduced General Liability per key by 25% since 2007 Property Taxes – Aggressively appeal property tax assessments to drive down assessed values Increased
Slide 36: Asset Management Overview (cont.)
Asset Management Overview (cont.) 36 Energy Cost Management Preventive Maintenance Conservative hedging strategy to minimize volatility while optimizing market price lows Prime realized a utility expense savings of 16% in 2014 in deregulated markets against published utility rates Active conse
Slide 37: Balance Sheet – Deric Eubanks, CFO
Balance Sheet – Deric Eubanks, CFO Chicago Sofitel Water Tower Chicago, IL
Slide 38: Capital Structure
Capital Structure Conservative leverage in line with platform strategy Targeted Net Debt / EBITDA of 5.0x All debt is non-recourse, property level mortgage debt 38 As of June 30, 2015 (1) Adjusted for acquisition of Bardessono Hotel and AINC stock purchase Figures in millions except per share
Slide 39: Target Cash Balance and Net Working Capital
Target Cash Balance and Net Working Capital 39 As of June 30, 2015 (1) Adjusted for acquisition of Bardessono Hotel and AINC stock purchase (2) Market value as of October 13, 2015 Targeted cash balance of 25% to 30% of market capitalization Maintain excess cash balance to capitalize on opportuni
Slide 40: Debt Maturities and Leverage
Debt Maturities and Leverage Target leverage: Net Debt / EBITDA < 5.0x Maintain mix of fixed and floating rate debt Ladder maturities Exclusive use of property-level, non-recourse debt 40 As of June 30, 2015 (1) Assumes extension options are exercised Note: All debt yield statistics are base
Slide 41: Ashford Prime Q&A
Ashford Prime Q&A Hilton Torrey Pines La Jolla, CA
Slide 42: Investor & Analyst Day – October 2015
Investor & Analyst Day – October 2015
Ashford Hospitality Prime — Investor Day (October 2015) on 6ix