Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Ashford Hospitality Prime — Investor Presentation (November 2017)
34 slides from Braemar Hotels & Resorts's investor presentation, Nov 6, 2017
Slide 1: Company Presentation November 2017
November 2017 ZS ASHFORD HOSPITALITY PRIME
Slide 2: Forward Looking Statements and Non-GAAP Measures
Company Presentation // November 2017 Forward Looking Statements and Non-GAAP Measures 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
Slide 3: Management Team
Company Presentation // November 2017 Management Team 3 20 years of hospitality experience 1 year with Ashford 15 years with Morgan Stanley Cornell School of Hotel Administration, BS University of Pennsylvania MBA RICHARD J. STOCKTON Chief Executive Officer & President 17 years of hospit
Slide 4: Strategic Overview
Company Presentation // November 2017 Strategic Overview 4 Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL The Ritz-Carlton St. Thomas St. Thomas, USVI Focused strategy of investing in luxury hotels and resorts Grow organically through strong revenue and cost control initiatives
Slide 5: Q3 Earnings Highlights
Company Presentation // November 2017 Q3 Earnings Highlights 5 • Net loss attributable to common stockholders for the quarter was $2.7 million or $0.09 per diluted share • Comparable RevPAR for all hotels decreased 5.3% to $211.36 during the third quarter • Comparable RevPAR for all hotels not under
Slide 6: Recent Developments
Company Presentation // November 2017 Recent Developments 6 Announced Refined Strategy & Amendment to Advisory Agreement Common Equity & Convertible Preferred Equity Raise Acquisition of Park Hyatt Beaver Creek Acquisition of Hotel Yountville Stockholders Approve Amendment to Advisory Agreement Anno
Slide 7: High-Quality Hotels in Leading Urban & Resort Markets
Company Presentation // November 2017 High-Quality Hotels in Leading Urban & Resort Markets 7 Non-Core Assets 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 Sofitel Chicago Magnificent Mil
Slide 8: Hotel portfolio metrics by property
Company Presentation // November 2017 Number of TTM TTM TTM TTM Hotel % of Core Location Rooms ADR(1) OCC(1) RevPAR(1) EBITDA(1),(2) Total Bardessono Napa Valley, CA 62 $779 82% $640 $5,380 4.2% Hotel Yountville Napa Valley, CA 80 $555 80% $442 $6,232 4.9% Ritz-Carlton St. Thomas St. Thomas, USVI 18
Slide 9: Why We Focus on Luxury
Company Presentation // November 2017 Why We Focus on Luxury 9 (1) Total nominal growth from December 1987 to July 2017 Source: STR Greatest long-term RevPAR growth of 229%(1) LUXURY Second greatest long- term RevPAR growth of 150%(1) UPPER-UPSCALE 0 50 100 150 200 250 300 350 D e c -8 7 A u g -8 8
Slide 10: Long-Term Trading Premium
Company Presentation // November 2017 Long-Term Trading Premium 10 Source: STR, SNL Top Quartile: BEE, PEB, LHO Peers: AHT, CLDT, CHSP, DRH, FCH, HT, HPT, HST, INN, RLJ, SHO The top quartile of lodging REITs (by RevPAR) have consistently had higher quality assets and traded at a premium relative to
Slide 11: Highly Aligned Management Team
Company Presentation // November 2017 19.1% 15.8% 7.6% 6.1% 3.6% 3.5% 2.5% 2.3% 2.0% 1.7% 1.6% 1.1% 0.8% 0.5% 0.4% 0.3% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% AHT AHP HT APLE CLDT REIT Avg CHSP RLJ PEB INN HST DRH SHO XHR LHO PK Highly Aligned Management Team 11 Mana
Slide 12: Asset Management Overview
Company Presentation // November 2017 Asset Management Overview 12 TEAM • 1 - EVP • 10 - Asset managers • 2 - Revenue optimization • 3 - Risk & Insurance • 4 - Capex specialists • 2 - Legal • 1 - Property tax specialist • 4 - Analysts MEETINGS WITH PROPERTY MANAGEMENT • Asset manager has a weekly me
Slide 13: Asset Management Overview (cont.)
Company Presentation // November 2017 13 Asset Management Overview (cont.) BRAND NEGOTIATIONS • Branding decisions, negotiations, and extensions • Brand related PIPs and capital directives • Asset management team members serve on brand owner advisory committees • Respond to all brand development pro
Slide 14: Past Operating Performance Relative to Peers
Company Presentation // November 2017 Past Operating Performance Relative to Peers 14 RevPAR Growth 2.4% 4.3% 2.4% 1.7% 1.3% 0.4% Hotel EBITDA Growth 3.7% 5.0% 2.2% 2.5% 0.2% -1.6% 0.4% -0.6% 2.9% -2.9% 2016 2.5% 0.8% 2.1% -5.2% 2016 Q3 2016 Q4 2017 Q1 2017 Q2 Peers: CHSP, PEB, DRH, LHO, SHO • Prime
Slide 15: Case Study – The Ritz-Carlton St. Thomas
Investor and Analyst Day // New York Case Study – The Ritz-Carlton St. Thomas 15 MAKE CHART RATHER THAN TABLE; INCLUDE EBITDA FLOWTHROUGH 2016 (1st Full Year of Ownership) 450 83% RPI INCREASE (BPS) HOTEL EBITDA FLOW-THROUGH Ritz Carlton St. Thomas Quarterly Performance 2016 Q1 2016 Q2 2016 Q3 2016
Slide 16: Case Study – Pier House Resort
Company Presentation // November 2017 Case Study – Pier House Resort 16 Ashford Prime acquired in early 2014 for $92.7 million 2015 2.5% 255 86% RPI GROWTH HOTEL EBITDA MARGIN INCREASE (BPS) HOTEL EBITDA FLOW-THROUGH 2016 4.9% 170 206% RPI GROWTH HOTEL EBITDA MARGIN INCREASE (BPS) HOTEL EBITDA FLOW-
Slide 17: Case Study – Bardessono Hotel & Spa
Company Presentation // November 2017 Case Study – Bardessono Hotel & Spa 17 • Acquired in July 2015 for $85 million and installed affiliated property manager Remington • Proven ability to outperform 2016 (First Full Year of Ownership) 10% 518 242% REVPAR GROWTH HOTEL EBITDA MARGIN INCREASE (BPS) HO
Slide 18: Opportunity – Bardessono Resort and Spa
Investor and Analyst Day // New York Opportunity – Bardessono Resort and Spa 18 Received approval to construct luxury villa consisting of 3 large keys, hospitality suite and private auto court Favorable ground lease amendment to capture adjacent parcel Unsatisfied demand for large luxury rooms
Slide 19: External Growth – Luxury Markets
Company Presentation // November 2017 External Growth – Luxury Markets 19 TOP 15 LUXURY MARKETS BY ROOMS(1) (1) Based on information provided by STR for luxury class as of May 2017 Market Hotels Rooms Las Vegas 18 26,273 New York 71 17,288 Miami 51 13,132 Los Angeles 53 11,340 Hawaii 28 8,398 San Fr
Slide 20: Target Market Analysis
Company Presentation // November 2017 0 5 10 15 20 25 30 35 40 45 50 Fundamentals Market Size Pricing Target Market Analysis(1) 20 (1) Based on internal analysis Market Size Fundamentals Pricing Desirability
Slide 21: Acquisition Rationale – Hotel Yountville
Investor and Analyst Day // New York Acquisition Rationale – Hotel Yountville 21 Expected Savings by Department ROOMS OTHER DEPARTMENT SALES & MARKETING EXPENSES • Acquired 80-room Hotel Yountville in May 2017 • Announced TTM NOI cap rate at time of acquisition: 6.2% F&B ADMINISTRATIVE & GENERAL EXP
Slide 22: Acquisition Rationale – Park Hyatt Beaver Creek
Investor and Analyst Day // New York Acquisition Rationale – Park Hyatt Beaver Creek 22 Purchased 190-room Park Hyatt Beaver Creek for $145.5 MM in April 2017 Immediately commenced PIP that found initial $230k in savings Developing value-add program, including addition of upscale membership sk
Slide 23: Conservative Capital Structure
Company Presentation // November 2017 Conservative Capital Structure 23 45% TARGET LEVERAGE Net Debt Gross Assets (1) As of September 30, 2017 Current leverage at 45%(1) OVERVIEW Conservative capital structure Floating-rate debt provides a natural hedge to hotel cash flows Appropriate use of leverag
Slide 24: Total Enterprise Value and Non-Recourse Debt
Company Presentation // November 2017 Figures in millions except per share values Stock Price (As of October 27, 2017) $9.90 Fully Diluted Shares Outstanding 37.3 Equity Value $369.4 Plus: Convertible Preferred Equity 124.1 Plus: Debt 771.4 Total Market Capitalization $1,265.0 Less: Net Working Capi
Slide 25: Net Working Capital and Cash Target
Company Presentation // November 2017 Cash & Cash Equivalents $136.1 Restricted Cash 29.8 Accounts Receivable, net 18.9 Insurance Receivable 16.4 Prepaid Expenses 4.3 Due from Affiliates, net (0.7) Due from Third-Party Hotel Managers, net 5.1 Investment in Ashford Inc. 13.0 Total Current Assets $222
Slide 26: Value-Add Refinancings
Company Presentation // November 2017 Value-Add Refinancings Long-Term Interest Rate Improvement Cash Flow 26 (1) As of September 30, 2017 (2) GAAP reconciliation in appendix $12M 3-PACK REFI - JAN 2017 $45M CAD(1),(2) 4.0% SEP 2017 Expected Cash Flow Savings $1M BARDESSONO REFI - AUG 2017 Expected
Slide 27: Debt Maturities
Company Presentation // November 2017 $80.0 $112.0 $190.5 $436.5 0 50 100 150 200 250 300 350 400 450 500 2017 2018 2019 2020 2021 Thereafter Fixed-Rate Floating-Rate Laddered debt maturities Active management of refinancings Debt Maturities 27 2019 NEXT HARD DEBT MATURITY 2x FCCR 4% WEIGHTED AVG IN
Slide 28: Valuation Opportunity
Company Presentation // November 2017 AHP SHO DRH CHSP LHO PEB Valuation Opportunity 28 (1) As reported by company earnings releases (2) Pro forma for acquisitions of Park Hyatt Beaver Creek and Hotel Yountville TEV / 2018E EBITDA MULTIPLE(3),(4) PRICE / 2018E AFFO / SHARE MULTIPLE(3),(4) TTM CAP RA
Slide 29: Valuation Disconnect: Implied Equity Market Cap
Company Presentation // November 2017 $369 $601 $704 $807 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 Current Market Cap Low End - Implied Equity Market Cap Avg - Implied Equity Market Cap High End - Implied Equity Market Cap ASHFORD PRIME PORTFOLIO *(ADJUSTED FOR SALE OF MARRIOTT PLANO) (millio
Slide 30: Hurricane Irma Update
Company Presentation // November 2017 Hurricane Irma Update 30 Accepting reservations and has resumed full operations PIER HOUSE RESORT Working with insurers to assess the damage and will be examining the implementation of a planned renovation program THE RITZ-CARLTON ST. THOMAS Online reservations
Slide 31: Key Takeaways
Company Presentation // November 2017 Key Takeaways 31 Bardessono Hotel & Spa Yountville, CA Pier House Resort Key West, FL The Ritz-Carlton St. Thomas St. Thomas, USVI Highest Quality Portfolio Amongst All Lodging REITs…In The Segment With Greatest Growth Trajectory Growing Organically: Rigorous As
Slide 32: Appendix
Appendix
Slide 33: Reconciliation of Net Income (Loss) to Hotel NOI
Company Presentation // November 2017 Reconciliation of Net Income (Loss) to Hotel NOI 33 Three Months Ended September 30, 2017 Three Months Ended June 30, 2017 Three Months Ended March 31, 2017 Three Months Ended December 31, 2016 TTM Ended September 30, 2017 Net income (loss) 10,705$ 21,607$ 14,95
Slide 34: Reconciliation of Net Income (Loss) to Cash Available for Distribution
Company Presentation // November 2017 Reconciliation of Net Income (Loss) to Cash Available for Distribution 34 Three Months Ended September 30, 2017 Three Months Ended June 30, 2017 Three Months Ended March 31, 2017 Three Months Ended December 31, 2016 TTM Ended September 30, 2017 Net income (loss)
Ashford Hospitality Prime — Investor Presentation (November 2017) on 6ix