Braemar Hotels & Resorts Inc. · NYSE:BHR
Braemar Hotels & Resorts — Ashford Hospitality Prime — Proxy Contest (March 2016)
29 slides from Braemar Hotels & Resorts's proxy contest presentation, Mar 24, 2016
Slide 1: Company Presentation – March 2016
Company Presentation – March 2016
Slide 2: Safe Harbor and Important Information
* 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: Ashford Prime – Update
Ashford Prime – Update Ashford Prime is under attack from what the Company believes is an irresponsible and inexperienced shareholderAshford Prime’s operations have performed exceptionally well with 2015 RevPAR growth #1 amongst its peersThe Ashford Prime Board is reviewing all possible strategic al
Slide 4: Maximizing Value is Our #1 Objective
Maximizing Value is Our #1 Objective * Accretively Grow Hotel Portfolio Acquired the Ritz-Carlton St. Thomas, Bardessono Hotel & Spa, Sofitel Chicago, & Pier House ResortIncreased portfolio RevPAR since spin-off by over 40% to $199 as of 12/31/15Increased asset base by 50% since spin-off Conservativ
Slide 5: Strategic Alternatives Update
Strategic Alternatives Update After implementing several steps to improve value, in August of 2015, the Company announced a plan to explore a full range of strategic alternatives, including a possible sale of the CompanyIndependent directors engaged Deutsche Bank as financial advisorBoard is discuss
Slide 6: Sessa Has Proposed No Plan To Maximize Value
Sessa Has Proposed No Plan To Maximize Value * Sessa’s Proposals Negative Impacts Replace Board through proxy contest Could trigger termination fee in the hundreds of millions of dollarsThe Company believes the election of Sessa's nominees could result in hostile relationship with advisor that would
Slide 7: Sessa Has Proposed No Plan To Maximize Value (cont'd)
* Sessa’s Proposals Negative Impacts Litigation Sessa has pursued litigation against the Company, the Board of Directors, and Ashford Inc.Costly for shareholders Distracting to Management and BoardWe believe the existing Board is in a better position to negotiate with Ashford Inc. than a hostile sla
Slide 8: Sessa's Criticisms Are Misleading: Here are the Facts
Sessa's Criticisms Are Misleading: Here are the Facts * Sessa’s Criticism AHP Response Conflicts of interest Highest insider ownership of any hotel REITBase fee based on enterprise value (not book value)Fewer conflicts than internally managed peersIncentive fee based on total return outperformance v
Slide 9: Sessa's Criticisms Are Misleading: Here are the Facts (cont'd)
Sessa's Criticisms Are Misleading: Here are the Facts (cont'd) * Sessa’s Criticism AHP Response Weak corporate governance Sessa is not asking for governance changes but rather contractual changes with Ashford Inc. that the Company believes Ashford Inc. will not agree toHighly qualified, majority ind
Slide 10: Sessa's Criticisms Are Misleading: Here are the Facts (cont'd)
Sessa's Criticisms Are Misleading: Here are the Facts (cont'd) * Sessa’s Criticism AHP Response No 2016 meeting date set yet Since the spin-off from Ashford Trust, the Company has never publicly announced a meeting date by March 17The Company will be announcing the meeting date and sending out proxy
Slide 11: Sessa's Criticisms Are Misleading: Here are the Facts (cont'd)
Sessa's Criticisms Are Misleading: Here are the Facts (cont'd) * Sessa’s Criticism AHP Response Purchase of AINC stock Investment allows AHP shareholders to participate in the economics of AINC and we believe it will be an attractive investment for AHPWe viewed this as an attractive opportunity to a
Slide 12: Poorly Informed / Incapable of Research
Poorly Informed / Incapable of Research The company believes that Sessa:Failed to research their own slateFailed to research or understand our contractual obligations in our advisory agreementFailed to file lawsuit in the proper jurisdictionFailed to follow simple Company bylawsFailed to properly re
Slide 13: Sessa is Not the Right Steward for Shareholders
Sessa is Not the Right Steward for Shareholders * WeakTrack Record No hospitality experience No hotel real estate asset management experienceUnproven hotel market cycle knowledgeOnly 3 years in business with no activist experience Inadequate Slate Lack of significant public board experienceApparent
Slide 14: Benefits of Current Ashford Structure
Benefits of Current Ashford Structure * Structural Attractiveness Publicly traded external advisor increases transparency and provides strong alignment7 member Board with 5 independent directorsAbility to terminate advisory agreementBase Fee - 70 bps of AHP’s total enterprise value rather than book
Slide 15: Highest Insider Ownership in the Industry
Highest Insider Ownership in the Industry * Public Lodging REITs include: CHSP, CLDT, DRH, FCH, HST, HT, INN, LHO, PEB, RLJ, SHOSource: Company filings.* Insider ownership for Ashford Prime includes direct & indirect interests & interests of related parties Insider Ownership High insider ownership e
Slide 16: Management Team with Deep Experience
Management Team with Deep Experience * Aggregate 139 Years of Relevant Industry Experience 27 years of hospitality experience13 years with Ashford (14 years with Ashford predecessor)Cornell School of Hotel Administration BSCornell S.C. Johnson MBA Montgomery J. BennettChief Executive Officer & Chair
Slide 17: This Management Team Has A Long-Term Track Record of Value Creation
This Management Team Has A Long-Term Track Record of Value Creation * Since AHT IPO on August 26, 2003Peer average includes: CHSP, CLDT, DRH, FCH, HT, INN, LHO, RLJ, SHOReturns as of 3/18/16Source: SNL Total Shareholder Return Significant long-term outperformance proves management's ability to creat
Slide 18: Strong Asset Performance
Strong Asset Performance * Source: Company filings FY2015 RevPAR Growth 2015 RevPAR growth was the highest amongst our peers
Slide 19: Asset Management Expertise – Bardessono
Asset Management Expertise – Bardessono * Bardessono – Yountville, CA Acquired in July 20152015 RevPAR of $56462 keys, 1,350 sq. ft. of meeting spaceLocated in Yountville, CA the “Culinary Capital of Napa Valley”High barrier to entry marketEasily accessible to the major markets in Northern Californi
Slide 20: Asset Management Expertise – Pier House
Asset Management Expertise – Pier House * Asset management performance significantly exceeded underwritingEliminated $1.5mm in expenses through cost cutting initiatives: Right-sized staffing levelImplemented improved housekeeping practicesIdentified additional F&B efficienciesRealized synergies with
Slide 21: Asset Management Expertise – Ritz St. Thomas
Asset Management Expertise – Ritz St. Thomas * The Ritz-Carlton St. Thomas Acquired in December 2015180 keys, 10,000 sq. ft. of meeting spaceAcquisition completed at favorable metrics of 7.2x TTM EBITDA and 10% TTM NOI cap rateLocated in St. Thomas in the stunning U.S. Virgin Islands with high barri
Slide 22: Current AHP Board of Directors is Experienced and Highly Qualified
Current AHP Board of Directors is Experienced and Highly Qualified * Aggregate 44 Years of Public Board Experience Hospitality ExperienceREIT ExperienceReal Estate ExperiencePublic Company Board ExperienceLegal ExperienceCapital Markets Experience Montgomery J. BennettChairman 13 years of public boa
Slide 23: Key Takeaways
Key Takeaways Shareholders should ignore the Sessa proxyWe are already conducting a strategic review…and Sessa seemingly has no plan other than costly litigationIf Sessa wins it could trigger a termination fee in the hundreds of millions of dollars - significantly destroying shareholder valueAshford
Slide 24: Appendix
* Appendix
Slide 25: Ashford Hospitality Prime Vision
Ashford Hospitality Prime Vision Well defined strategy investing in luxury hotels in gateway and resort markets * Bardessono Hotel & SpaYountville, CA Pier House ResortKey West, FL Chicago Sofitel WaterTowerChicago, IL Grow platform through accretive acquisitions of high quality assets Highly-aligne
Slide 26: High Quality Portfolio
High Quality Portfolio * Ashford Prime Hotels Courtyard Seattle DowntownSeattle, WA Marriott SeattleSeattle, WA Hilton Torrey PinesLa Jolla, CA Bardessono Hotel & SpaYountville, CA Pier House ResortKey West, FL Renaissance TampaTampa, FL Chicago Sofitel WaterTowerChicago, IL Courtyard PhiladelphiaPh
Slide 27: Portfolio Overview
Portfolio Overview * As of December 31, 2015Wells Fargo Securities Research; Lodging: TripAdvisor Rankings (September 4, 2015) Note: Hotel EBITDA in thousands High quality portfolio with total ADR and RevPAR of $243 and $199, respectively for the TTM periodGeographically diversified portfolio locate
Slide 28: Debt Maturities and Leverage
Debt Maturities and Leverage Target leverage: Net Debt / EBITDA < 5.0xMaintain mix of fixed and floating rate debtLadder maturitiesExclusive use of property-level, non-recourse debt * As of December 31, 2015Assumes extension options are exercisedNote: All debt yield statistics are based on EBITDA to
Slide 29: March 2016
Company Presentation — March 2016
Ashford Hospitality Prime — Proxy Contest (March 2016) on 6ix