Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Investor Presentation (May 2018)
29 slides from Braemar Hotels & Resorts's investor presentation, May 24, 2018
Slide 1: Braemar Hotels & Resorts May 2018
BRAEMAR May 2018 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 . 20 years of hospitality . 18 years of hospitality . 13 years of hospitality experience experience experience . 1 year with the Company . 15
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: 2018 Q1 Hotel Operating Results
2018 Q1 Hotel Operating Results Comparable Hotel Operating Results(1) 2018 Q1 2017 Q1 % Variance ADR $ 266.01 $ 292.40 (9.03)% Occupancy 78.67% 79.38% (0.89)% RevPAR $ 209.27 $ 232.11 (9.84)% RevPAR (not under renovation) $ 237.21 $ 231.81 2.33% Total Hotel Revenue(2) $ 102,489 $ 110,212 (7.01)% Hot
Slide 6: 2018 Q1 Company Results
2018 Q1 Company Results Earnings Results • Adjusted EBITDAre was $29.8 million for the quarter, compared with $24.9 million for the prior year quarter • Comparable RevPAR for all hotels not under renovation increased 2.3% to $237.21 during the quarter • Adjusted funds from operations (AFFO) was $0.4
Slide 7: High-Quality Hotels in Leading Urban & Resort Markets
High-Quality Hotels in Leading Urban & Resort Markets Courtyard Philadelphia Philadelphia, PA Capital Hilton Marriott Seattle Washington D.C. Hotel Yountville Sofitel Chicago Magnificent Mile Seattle, WA Yountville, CA Chicago, IL Capital Hilton Washington D.C. Renaissance Tampa Tampa, FL Bardessono
Slide 8: Portfolio Detail
Portfolio Detail • Core portfolio quality unparalleled in the $234 $213 public lodging REIT sector • Geographically diversified portfolio CORE REVPAR OVERALL 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 Bardesso
Slide 9: Recent Developments: Rebranding to Braemar
Recent Developments We are proud to announce that going forward the company will be known as Braemar Hotels & Resorts. • Reflects the new strategy announced by the company in January 2017 to focus exclusively on owning luxury hotels and resorts • "Braemar" pays homage to a stronghold in Scotland • T
Slide 10: Recent Developments: Sarasota Acquisition and Tampa Sale
Recent Developments We recently agreed to sell the 293-room We recently completed the acquisition of Renaissance Tampa in Tampa, Florida for the 266-room Ritz-Carlton $68 million Sarasota in Sarasota, Florida for $171 million Meets Defined Strategy . Luxury Chain scale Segment TTM Cap Rate: 6% . Inc
Slide 11: EBITDA Contribution by Brand and Class
EBITDA Contribution by Brand and Class Q1 2018 TTM Hotel EBITDA by Brand Q1 2018 TTM EBITDA by Class (3/31/2018)(1) Pro Forma (3/31/2018)(1) 4% 7% 19% 17% 49% 46% 23% 35% Marriott Hilton Independent Hyatt Accor Luxury Upper Upscale Upscale (1) Includes Ritz-Carlton Sarasota, excludes Renaissance Tam
Slide 12: Why We Focus on Luxury
Why We Focus on Luxury LUXURY UPPER UPSCALE Greatest long-term Second greatest long- RevPAR growth of term RevPAR growth of 4.0%(1) 3.1%(1) 350 300 250 200 150 RevPAR (Indexed) RevPAR 100 50 Jul-89 Jul-92 Jul-95 Jul-98 Jul-01 Jul-04 Jul-07 Jul-10 Jul-13 Jul-16 Apr-90 Apr-93 Apr-96 Apr-99 Apr-02 Apr-
Slide 13: Long-Term Trading Premium
Long-Term Trading Premium(1) The top quartile of lodging REITs (by RevPAR) have consistently had higher quality assets and 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 7.0x 5.0
Slide 14: Asset Management Overview
Asset Management Overview Senior Oversight 1 – Chief Operating Officer 8 – Asset managers 2 – Legal 1 – Director of Underwriting 2 – Revenue Optimization 1 – Analyst 1 – Analyst 4 – Capex specialists Acquisition Revenue Underwriting Optimization Risk Expense Management Control 3 – Risk & Insurance 1
Slide 15: Past Operating Performance Relative to Peers
Past Operating Performance Relative to Peers • Braemar has outperformed its REIT peers each of the past 3 years (Braemar results in green or red; REIT averages in black) Hotel EBITDA Growth 2015 2016 2017 Q1 2018 8.5% 3.7% 0.2% 0.9% 8.3% 2.5% -2.3% -3.9% RevPAR Growth 2015 2016 2017 Q1 2018 7.3% 2.4
Slide 16: External Growth – Luxury Markets
External Growth – Luxury Markets ~260,000 total luxury hotel rooms in U.S.(1) TOP 15 LUXURY MARKETS BY ROOMS(1) TOP 15 LUXURY MARKETS BY REVPAR(2) Market Hotels Rooms Market RevPAR Las Vegas 19 26,378 Hawaii $ 439 New York 80 18,573 New York, NY $ 369 Miami 47 12,458 Utah Area $ 369 Los Angeles 55 1
Slide 17: Target Market Analysis
Target Market Analysis(1) Market Size Fundamentals Pricing Desirability 60 50 40 30 20 10 0 Fundamentals Market Size Pricing Company Presentation // May 2018 17 (1) Based on internal analysis as of February, 2018
Slide 18: Capital Strategy
Capital Strategy Acquire Luxury Assets, Focus on Expanding Margins and Increasing NOI by Aggressive Asset Management and Careful Capex Spend Capex Hotel EBITDA Margins $50,000 32.0% 31.6% $45,000 43,044 31.5% $40,000 $35,000 31.0% 31.0% $30,000 $25,000 23,423 30.5% 19,322 $20,000 30.0% 15,736 29.9%
Slide 19: 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%, current yield on cost is 11.1% 2016 Quarterly NOI and NOI Yield $1
Slide 20: 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%, current yield on cost is 7.1%* Despite California wildfire negative Quarterly NOI and NOI Yield impact in Q4, property continues to gr
Slide 21: Conservative Capital Structure
Conservative Capital Structure TARGET LEVERAGE OVERVIEW Floating-rate debt Non-recourse debt provides a natural lowers risk profile of hedge to hotel cash the platform flows Gross Assets Maximizes flexibility Long-standing lender in all economic relationships Net Debt environments Company Presentati
Slide 22: Cash Management Strategy
Cash Management Strategy NET WORKING CAPITAL(1) Cash & Cash Equivalents $90.2 10-15% 12% $3.98 Restricted Cash 62.2 Accounts Receivable, net 18.2 CURRENT CASH TO Insurance Receivable 14.2 CASH TO GROSS DEBT TARGET (1) NWC / SHARE GROSS DEBT Prepaid Expenses 5.6 Due from Affiliates, net 0.6 Due from
Slide 23: Debt Maturities
Debt Maturities Courtyard Philadelphia OVERVIEW(1) Philadelphia, PA 2019 2.2x 4.7% NEXT HARD DEBT FCCR WEIGHTED AVG. MATURITY INTEREST RATE Laddered debt maturities $300 $250 $200 $150 $277.6 (Inmillions) $100 $189.3 $158.5 $50 $112.0 $80.0 $0 2018 2019 2020 2021 2022 Thereafter Fixed-Rate Floating-
Slide 24: Valuation Opportunity
Valuation Opportunity Valuation Opportunity 2017 Comparable RevPAR(1) 270 3.4 6.4 BHR $219 #1 Discount to Discount to Discount to PEB $207 #2 average peer average peer average peer trading cap trading EBITDA trading AFFO rate (bps) multiple (turns) multiple (turns) LHO $204 #3 Opportunity to capture
Slide 25: Intrinsic Value
Intrinsic Value(1),(2) Current Equity Implied Equity Implied Equity Valuation Market Cap(3) Market Cap(4) Value Upside Disconnect $392M $709M $317M BRAEMAR PORTFOLIO $814 (In millions $) Low-End High-End 81% Increase $709 TTM NOI(5) $101.8 $101.8 $605 Cap Rate(6) 7.5% 6.5% Implied Value 1,357 $1,5
Slide 26: Key Takeaways
Key Takeaways Highest Quality Portfolio Amongst All Lodging REITs…In The Segment With Greatest Growth Trajectory Bardessono Hotel & Spa Growing Organically: Rigorous Asset Management Yountville, CA While Mining Portfolio for Investment Opportunities Growing Externally: Redeploying Capital into Accre
Slide 27: Appendix
Appendix
Slide 28: Reconciliation of Net Income (Loss) to Hotel NOI
Reconciliation of Net Income (Loss) to Hotel NOI Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2018 Net income (loss)$ 16,761 $ 35,206 $ 10,705 $ 21,607 $ 84,279 Non-property adjustmen
Slide 29: Reconciliation of Net Income (Loss) to Cash Available for Distribution
Reconciliation of Net Income (Loss) to Cash Available for Distribution Three Months Ended Three Months Ended Three Months Ended Three Months Ended TTM Ended March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2018 Net income (loss) $ 4,270 $ 28,444 $ (217) $ 386 $ 32,883 (Inc
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