Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Q3 2022 Earnings Presentation
41 slides from Braemar Hotels & Resorts's earnings presentation, Nov 3, 2022
Slide 1: Braemar Hotels & Resorts November 2022
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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: Experienced Management Team
Experienced Management Team RICHARD J. STOCKTON DERIC S. EUBANKS, CFA CHRISTOPHER C. NIXON Chief Executive Officer & Chief Financial Officer Executive Vice President & President Head of Asset Management ▪ 24 years of hospitality ▪ 21 years of hospitality ▪ 12 years of hospitality experience experien
Slide 4: BHR Positioned Ideally for Outperformance
BHR Positioned Ideally for Outperformance Lodging Industry Back Above Pre-pandemic Levels Attractive Portfolio Composition Recent Results & Developments Balance Sheet Strategy The Notary Hotel Company Presentation | November 2022 4
Slide 5: Lodging Industry Back Above Pre-pandemic Levels
Lodging Industry Back Above Pre-pandemic Levels All Time High Performance Continuing
Slide 6: Industry RevPAR Expected to Exceed 2019 in 2022
Industry RevPAR Expected to Exceed 2019 in 2022 U.S. KPIs, Indexed to 2019 Occupancy Index ADR Index RevPAR Index 140 140 140 122.9 123.4 119.7 119.5 120 120 116.1 120 112.8 113.8 107.7 99.8 100.5 98.0 100 95.5 100 95.3 100 87.3 83.2 80 80 80 60 60 60 40 40 40 20 20 20 0 0 0 2021 2022 2023 2024 2025
Slide 7: Lodging REITs and Luxury Hotels Favored in Current Economic Environment
Lodging REITs and Luxury Hotels are Favored in the Current Economic Environment REIT Index Performance During Rate Increases Key Takeaways 10-Year Rate Change (bps) 112 112 121 128 100 127 99 35.0% 27.3% 28.0% 24.0% 21.9% 21.0% 14.0% 8.1% Short-Term REITs(1) 7.0% -5.0% 0.3% -0.9% Consistently Outper
Slide 8: Urban Hotels Have Almost Fully Recovered from the Pandemic
Urban Hotels Have Almost Fully Recovered from the Pandemic RevPAR as a % of 2019 140% 117% 120% 97% 100% 80% 60% 40% 20% 0% Resort Urban Source: CBRE Hotels Research, Kalibri Labs, Q2 2022, August 3rd, 2022 Data from 1/1/2020 – 6/30/2022 Company Presentation | November 2022 8
Slide 9: Attractive Portfolio Composition
Attractive Portfolio Composition Taking Advantage of Strategic Asset Class
Slide 10: High Quality Assets with High Barriers to Entry
High Quality Assets with High Barriers to Entry The Ritz-Carlton Lake Tahoe Park Hyatt Beaver Creek Pier House Resort & Spa Truckee, CA Beaver Creek, CO Key West, FL Bardessono Hilton La Jolla Torrey Pines The Ritz-Carlton Reserve Dorado Beach Yountville, CA La Jolla, CA Dorado, PR Hotel Yountville
Slide 11: Portfolio Resort Exposure Lifts Performance
Portfolio Resort Exposure Lifts Performance ADR Ramping Up(1) – Q3 2018 to Q3 2022 Occupancy Ramping Up(1) – Q3 2018 to Q3 2022 700 100% 90% 600 80% 500 70% 60% 400 50% 300 40% 200 30% 20% 100 10% - 0% Q3'18 Q3'19 Q3'20 Q3'21 Q3'22 Q3'18 Q3'19 Q3'20 Q3'21 Q3'22 Key: Resort Urban Average (1) Same-sto
Slide 12: Portfolio Resort Exposure Lifts Performance
Portfolio Resort Exposure Lifts Performance RevPAR(1) Ramping Up – Q3 2018 to Q3 2022 450 Key Observations 400 Urban properties are 350 rapidly approaching 2019 RevPAR levels 300 250 Resort properties continue to show high resiliency, recovering quickly 200 and pushing RevPAR to new heights 150 100
Slide 13: Hotel EBITDA Rebounding Through Resorts
Hotel EBITDA Rebounding Through Resorts Pier House Resort & Spa (1) In thousands Company Presentation | November 2022 13
Slide 14: High Exposure to Luxury Hotels and Resorts
High Exposure to Luxury Hotels and Resorts Ritz-Carlton Drives Q3 TTM Hotel EBITDA(1) Luxury Hotels Drive Q3 TTM Hotel EBITDA(1) $105,000 Ritz-Carlton $180,000 $92,702 Luxury $90,000 $160,000 $152,409 $140,000 $75,000 $120,000 $60,000 $100,000 Independent $45,000 $39,956 $80,000 Marriott/ Upper Upsc
Slide 15: Recent Results & Developments
Recent Results & Developments Solid Q3 Results Signal Potential For Sharp Recovery
Slide 16: RevPAR Recovers Significantly in Q3
RevPAR Recovers Significantly in Q3 Comparable Hotel Operating 2022 Q3 2021 Q3 % Variance 2019 Q3 % Variance Results(1)(4) 2021 2019 ADR $ 403 $ 396 2% $ 297 36% Occupancy 72% 61% 16% 81% (12)% RevPAR $ 288 $ 243 19% $ 242 19% Total Hotel Revenue(2) $ 162,225 $ 133,152 22% $ 132,367 23% Hotel EBITDA
Slide 17: Strong Performance Continues in Q3 2022
Strong Performance Continues in Q3 2022 Quarter Highlights • Comparable RevPAR for all hotels increased 19% over the prior year quarter to $288. Comparable ADR increased 1.8% over the prior year quarter to $403 and Comparable Occupancy increased 16.5% over the prior year quarter to 71.5%. Compared t
Slide 18: BHR Acquisitions Performance
BHR Acquisitions Performance Yield on Cost 21.00% 18.9% 18.00% 17.5% 15.00% 14.7% 13.3% 12.00% NOI / Book Value 9.00% 6.9%-7.6% 6.00% 3.5% 3.00% 0.00% Current Avg. Yield on Cost: 11.2% -3.00% -6.00% Q1'14 Q3'14 Q1'15 Q3'15 Q1'16 Q3'16 Q1'17 Q3'17 Q1'18 Q3'18 Q1'19 Q3'19 Q1'20 Q3'20 Q1'21 Q3'21 Q1'22
Slide 19: Potentially Accretive New Acquisition
Potentially Accretive New Acquisition Property Overview Number of Rooms 210 Meeting Space (S.F.) 35,900 Location Scottsdale, Arizona Built 1999 Last Renovation 2016-2021 Fee Simple 37.6 Acre Site Transaction includes 5.7 acres of undeveloped land 9K S.F. Spa with 14 Treatment Rooms, 2 Tennis Courts,
Slide 20: Balance Sheet Strategy
Balance Sheet Strategy Maintain Liquidity, Monitor Leverage, Navigate Recovery
Slide 21: Current Liquidity Fuels Growth
Current Liquidity Fuels Growth CASH POSITION(1) CASH & CASH EQUIVALENTS $354.8M RESTRICTED CASH $51.8M DUE FROM 3RD PARTY MANAGERS $21.7M TOTAL CASH $428.3M POSITIVE YTD OPERATING CASH FLOW(2) ADJ. EBITDARE $133.3M PREFERRED DIVIDENDS ($13.4M) CAPEX ($36.5M) DEBT SERVICE(3) ($29.7M) CASH FLOW ~$53.7
Slide 22: Conservative Leverage Strategy
Conservative Leverage Strategy With No Significant Near-Term Debt Maturities Overview • Delever to 35% Net Debt to Gross Assets • Hold 10% of Gross Debt Balance as cash on the balance sheet • Floating-rate debt provides a natural hedge to hotel cash flows NEXT HARD DEBT MATURITY 2023 and increases f
Slide 23: Hedged Against the Market
Hedged Against the Market Interest Rate Caps Protect Against Rising Rates Overview Summary of Positions(3) • Braemar currently holds $860.5M in interest rate Effective Expiration caps with strikes ranging from 2.0% - 4.0% Strike Rate $ Amount Date Date • The caps range in agreement end date, with 2.
Slide 24: Highly Aligned Management Team
Highly Aligned Management Team 8.4% Management has significant personal wealth invested in the Company 1.9x Insider ownership 1.9x higher than public lodging REIT industry average $33.2M Total dollar value of insider ownership (as of 10/31/2022) 24% 20.8% Highly-aligned management team is among high
Slide 25: Key Takeaways
Key Takeaways COVID is Over; All Time High Performance Continuing Attractive Portfolio Composition Focus on Growth Solid Balance Sheet and Liquidity The Notary Hotel Company Presentation | November 2022 25
Slide 26: Appendix
Appendix
Slide 27: Indebtedness
Indebtedness Company Presentation | November 2022 27
Slide 28: Indebtedness
Indebtedness Company Presentation | November 2022 28
Slide 29: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA Company Presentation | November 2022 29
Slide 30: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA 2019 2019 2019 2019 December 31, 2019 4th Q uarter 3rd Q uarter 2nd Q uarter 1st Q uarter TTM Net income (loss) $ 31,806 $ 9,410 $ 12,828 $ 16,800 $ 70,844 Non-property adjustments (26,320) 1,441 (9) — (24,888) Interest income (69) (79)
Slide 31: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA Company Presentation | November 2022 31
Slide 32: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA by Hotel
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA by Hotel Company Presentation | November 2022 32
Slide 33: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA by Hotel
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA by Hotel Company Presentation | November 2022 33
Slide 34: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA by Hotel
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA by Hotel Company Presentation | November 2022 34
Slide 35: Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA by Hotel
Reconciliation of Net Income (Loss) to Comparable Hotel EBITDA by Hotel Company Presentation | November 2022 35
Slide 36: Reconciliation of Net Income (Loss) to EBITDAre and Adjusted EBITDAre
Reconciliation of Net Income (Loss) to EBITDAre and Adjusted EBITDAre Company Presentation | November 2022 36
Slide 37: Reconciliation of Net Income (Loss) to EBITDAre and Adjusted EBITDAre
Reconciliation of Net Income (Loss) to EBITDAre and Adjusted EBITDAre Company Presentation | November 2022 37
Slide 38: Reconciliation of Net Income (Loss) to Adjusted FFO Q3
Reconciliation of Net Income (Loss) to Adjusted FFO Q3 In thousands except per share amounts Effective beginning with the third quarter of 2022 we will no longer include the effect of the Series B Cumulative Convertible Preferred Stock and convertible notes on an “as-converted” basis in AFFO. For co
Slide 39: Reconciliation of Net Income (Loss) to Adjusted FFO Q2
Reconciliation of Net Income (Loss) to Adjusted FFO Q2 In thousands except per share amounts Effective beginning with the third quarter of 2022 we will no longer include the effect of the Series B Cumulative Convertible Preferred Stock and convertible notes on an “as-converted” basis in AFFO. For co
Slide 40: Reconciliation of Net Income (Loss) to Adjusted FFO Q1
Reconciliation of Net Income (Loss) to Adjusted FFO Q1 In thousands except per share amounts Effective beginning with the third quarter of 2022 we will no longer include the effect of the Series B Cumulative Convertible Preferred Stock and convertible notes on an “as-converted” basis in AFFO. For co
Slide 41: Reconciliation of Net Income (Loss) to Adjusted FFO Q4
Reconciliation of Net Income (Loss) to Adjusted FFO Q4 In thousands except per share amounts Effective beginning with the third quarter of 2022 we will no longer include the effect of the Series B Cumulative Convertible Preferred Stock and convertible notes on an “as-converted” basis in AFFO. For co
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