Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Investor Presentation (December 2019)
38 slides from Braemar Hotels & Resorts's investor presentation, Dec 12, 2019
Slide 1: Braemar Hotels & Resorts December 2019
BRAEMAR’ December 2019 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 . 22 years of hospitality . 19 years of hospitality . 14 years of hospitality experience experience experience . 3 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 Q3 Hotel Operating Results
2019 Q3 Hotel Operating Results Comparable Hotel Operating Results(1) 2019 Q3 2018 Q3 % Variance ADR $ 281.86 $ 280.01 0.7% Occupancy 83.3% 85.6% (2.6)% RevPAR $ 234.81 $ 239.58 (2.0)% RevPAR (not under renovation)(2) $ 250.48 $ 254.06 (1.4)% Total Hotel Revenue(3) $ 118,525 $ 119,790 (1.1)% Hotel E
Slide 6: 2019 Q3 Highlights and Results
2019 Q3 Highlights and Results Quarter Highlights • Adjusted funds from operations (AFFO) was $0.29 per diluted share for the quarter and Adjusted EBITDAre was $28.6 million for the quarter. • During the quarter, the Company announced the planned opening of The Clancy, an Autograph Collection proper
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 $230 public lodging REIT sector • Geographically diversified portfolio (1) REVPAR located in strong markets Number of TTM TTM TTM TTM Hotel % of (1) (1) (1) (1) Core Location Rooms ADR OCC RevPAR EBITDA Total Bardessono Napa Valley, CA 62
Slide 9: EBITDA Contribution by Brand and Class
EBITDA Contribution by Brand and Class 2019 Q3 TTM Hotel EBITDA by 2019 Q3 TTM Hotel EBITDA by Class(1) Brand(1) 0% 6% 7% 22% 10% 48% 52% 17% 21% 17% Ritz-Carlton Hilton Autograph Independent Luxury Upper Upscale Upscale Marriott Park Hyatt Sofitel (1) Comparable TTM as of 9/30/2019, see appendix fo
Slide 10: Past Operating Performance Relative to Peers
Past Operating Performance Relative to Peers • Braemar has outperformed its REIT peers each of the past 4 years (Braemar results in green or red; REIT averages in black) RevPAR Growth 2015 2016 2017 2018 7.3% 2.4% -2.5%(1) -1.6%(2) 4.9% 1.5% 0.4% 2.4% Comparable Hotel EBITDA Growth 2015 2016 2017 20
Slide 11: Peer Operating Performance Analysis
Peer Operating Performance Analysis Comparable Hotel EBITDA Per Room (Q3 2019) 40,000 37,981 35,594 35,000 32,098 30,000 27,112 25,000 20,000 ($ ($ InThousands ) 15,000 10,000 5,000 - BHR PEB SHO DRH Comparable Hotel EBITDA Margin 30% 32% 31% 30% Source: company filings Company Presentation // Decem
Slide 12: Courtyard San Francisco "The Clancy" – Recent Developments
Courtyard San Francisco “The Clancy” – Recent Developments Financial Highlights Investment Cost $ 32.1 million Expected RevPAR uplift $ 50 Estimated EBITDA $18.5M vs. $14.6M(1) Estimated unlevered IRR ~ 20%(2) NEW LOBBY NEW FACADE Construction Timing (Completion) Guestrooms Done Lobby 2/19 - 3/20 Re
Slide 13: Ritz-Carlton St. Thomas – Recent Developments
Ritz-Carlton St. Thomas – Recent Developments Renovation Status • Permanent roof work is completed • Guestroom renovations underway • Target opening November 2019 • Forward booking rate +10% vs. pre-hurricane Reservations open November 22nd and after NEW FACADE Capital Investments(1) Lobby and New R
Slide 14: Bardessono Hotel & Spa – Recent Developments
Bardessono Hotel & Spa – Recent Developments Highlights • Completed construction of luxury villa consisting of 3 large suites (1,000+SF) • ADR: $2,500 – $3,500/night per suite • $100K+ in revenue during the first month of sales Company Presentation // December 2019 14
Slide 15: 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-90 Jul-95 Jul-00 Jul-05 Jul-10 Jul-15 Jan-88 Jan-93 Jan-98 Jan-03 Jan-08 Jan-13
Slide 16: Market Outlook - 2020
Market Outlook - 2020 Luxury and Upper Upscale are expected to outperform other chain scales in 2020 Chain Scale Occupancy ADR RevPAR Luxury (0.1)% 2.0% 1.9% Upper Upscale (0.4)% 1.2% 0.8% Upscale (0.3)% 0.7% 0.4% Upper Midscale (0.0)% 0.4% 0.4% Midscale (0.0)% 0.2% 0.2% Economy (0.0)% 0.9% 0.8% Ind
Slide 17: Internal Growth - 2020 Portfolio Positioned for Growth
Internal Growth - 2020 Portfolio Positioned for Growth Autograph Autograph Conversion Conversion Complete Completed Q1 2020 July 2019 Courtyard San Francisco The Notary Hotel Beach Improvement Government Shutdown Completed No Signs of 2019 Impact Ritz-Carlton Sarasota Capital Hilton Villa Hurricane
Slide 18: External Growth – Luxury Markets
External Growth – Luxury Markets ~272,000 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 18 24,137 Hawaii $471.79 New York, NY 61 15,238 Utah Area $430.37 Los Angeles/Long Beach, CA 65 13,163
Slide 19: 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 (1) Based on internal analysis as of 9/30/2019 19 Company Presentation // December 2019 Note: Fundamentals includes forecasts for RevPAR,
Slide 20: Funding External Growth – Joint Venture Capital
Funding External Growth – Joint Venture Capital Investor Rationale - Institutional - Access lower cost alternative capital - Private Equity - Maintain transaction pipeline Incentive Fees - Family Office 5%-20% (GP) 80%-95% (LP) Benefits - Promoted structure - Diversification - Accretive growth Joint
Slide 21: Asset Management - Overview
Asset Management - Overview Revenue Optimization Legal 3 3 Asset Managers 3 Risk/Property Tax Team 10 Breakdown 4 5 Analytics Capital Management Company Presentation // December 2019 21
Slide 22: 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 on September 30, 2019 was 10.8%(1) Historical RevPAR
Slide 23: 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 on September 30, 2019 was 7.1%(1) Quarterly NOI and NOI Yield Historical RevPAR $630 $6,000 9.0% 8.0% $610 $5,000 $1,354
Slide 24: Case Study – Hilton La Jolla Torrey Pines
Case Study – Hilton La Jolla Torrey Pines • Hired an on-property sales person to supplement our sales cluster • Hired new GM; Extended the current ground lease • NOI yield on cost was 7.8% in 2015, yield on cost on September 30, 2019 was 10.1%(1) Historical RevPAR Quarterly NOI and NOI Yield $14,000
Slide 25: 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 26: Cash Management Strategy
Cash Management Strategy NET WORKING CAPITAL(1) CASH TO GROSS DEBT Cash & Cash Equivalents $76.4 Restricted Cash $55.6 TARGET 10% Accounts Receivable, net $18.5 Prepaid Expenses $6.1 Due from Third-Party Hotel Managers, net $16.0 Investment in Ashford Inc.(2) $4.7 Total Current Assets $177.4 $29.0M
Slide 27: Debt Maturities
Debt Maturities The Notary Hotel OVERVIEW Philadelphia, PA 2022 1.6x 4.3% NEXT HARD DEBT FCCR(1) WEIGHTED AVG. MATURITY INTEREST RATE(1) Laddered debt maturities(1) 900 800 700 600 500 millions) 400 $806.5 ($ In($ 300 200 100 $158.5 $0.0 $100.0 0 $0.0 2019 2020 2021 2022 2023 Thereafter Fixed-Rate F
Slide 28: 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 29: Valuation
Valuation Stock Price Performance 2019 - YTD 2018 Comparable RevPAR(1) 160 150 BHR $226 140 130 PEB $205 120 110 100 SHO $192 90 80 DRH $187 BHR SHO DRH PEB TTM CAP RATE(2) TEV / 2019E EBITDA MULTIPLE(2),(3) PRICE / 2019E AFFO / SHARE MULTIPLE(2),(3) 8.5% 8.1% 13.5x 13.2x 14.0x 8.0% 12.7x 8.0% 7.6%
Slide 30: 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 $49M Total dollar value of insider ownership (as of 11/13/2019) 20.0% 18.0% 17.4% 16.0% 14.3% Highly-aligned management team is among
Slide 31: 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 32: Appendix
Appendix
Slide 33: Portfolio Performance
Portfolio Performance RevPAR TTM RevPAR TTM Hotel EBITDA Core 2019 Q3 Growth YoY 2019 Q3 Growth YoY Per Room(1) Bardessono 2.1% 5.2% $93.5 Hotel Yountville 8.0% 5.9% $76.9 Ritz-Carlton St. Thomas * * $55.4 Pier House -6.0% 7.3% $81.0 Park Hyatt Beaver Creek -2.9% -4.8% $52.9 Marriott Seattle Waterfr
Slide 34: 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 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2019 Net income (loss) $ (8,954) $ (5,623) $ (1,32
Slide 35: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA In thousands except room and per room data Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2019 Net income (loss) $ 9,1
Slide 36: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA In thousands Three Months Ended September 30, 2018 Net income (loss) $ 14,567 Non-property adjustments - Interest income (57) Interest expense 4,100 Amortization of loan cost 279 Depreciation and amortization 14,474 Income tax expense (b
Slide 37: Reconciliation of Net Income to Hotel EBITDA by Property
Reconciliation of Net Income to Hotel EBITDA by Property In thousands TTM Ended September 30, 2019 C hi c a go Capital Hilton S of i t e l San Francisco S e a t t l e Washington La Jolla Hilton Magnificent Bardessono Key West Pier H ot e l Park Hyatt The Notary C our t y a r d Sarasota Ritz- Lake Ta
Slide 38: 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 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2019 Net income (loss) $ (8,954) $ (5,623) $ (1,322) $
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