Braemar Hotels & Resorts Inc. (BHR) is a Maryland-based real estate investment trust (REIT) that primarily invests in high revenue per available room (RevPAR) luxury hotels and resorts. The company's portfolio consists of 16 hotel properties across seven states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, representing a total of 4,201 rooms, or 3,963 net rooms excluding those attributable to its joint venture partner.

Financials

For the fiscal year ended December 31, 2023, Braemar reported annual revenue of $739.3 million and a net loss of $27.0 million. The company's annual operating cash flow stood at $84.7 million, while its annual free cash flow was $7.6 million. These financial results demonstrated Braemar's ability to generate substantial revenue and cash flow, despite the challenges faced by the hospitality industry in recent years.

In the first quarter of 2024, Braemar reported net income attributable to common stockholders of $3.5 million, or $0.05 per diluted share, and Adjusted FFO per diluted share of $0.42. The company's Adjusted EBITDAre for the quarter was $66.2 million. These quarterly results highlighted Braemar's continued resilience and ability to navigate the evolving market conditions.

Business Overview

Portfolio Strength

One of the key strengths of Braemar's portfolio is its focus on high-end, luxury hotel properties. The company's luxury resort portfolio, which includes 10 out of its 16 hotels, delivered strong performance in the first quarter, with combined hotel EBITDA of $65 million. This segment of Braemar's portfolio continued to demonstrate the company's ability to capitalize on the growing demand for high-end travel experiences.

Recent Acquisitions

Braemar's recent acquisitions, the Ritz-Carlton Reserve Dorado Beach in Puerto Rico and the Four Seasons Resort Scottsdale at Troon North in Arizona, have also been performing well and exceeding the company's original underwriting. The Ritz-Carlton Reserve Dorado Beach achieved a RevPAR of $2,162 in the first quarter, reflecting a 23.4% increase over the prior year period, while the Four Seasons Resort Scottsdale delivered strong hotel EBITDA despite facing challenging year-over-year comparisons.

Geographic Diversification

The company's geographic diversification has also been a key factor in its resilience. Braemar's portfolio includes properties in various markets, including urban centers and resort destinations, which has helped to mitigate the impact of localized market fluctuations. For example, the company's Caribbean hotels, such as the Ritz-Carlton St. Thomas, have been performing exceptionally well, with hotel EBITDA margin expansion of 215 basis points compared to the prior year quarter.

Recent Developments

Braemar's management team has also been proactive in addressing the company's capital structure and liquidity position. During the first quarter and subsequent to the end of the quarter, the company refinanced, extended, or paid off almost all of its 2024 debt maturities, demonstrating its commitment to maintaining a strong balance sheet. Additionally, the company recently announced a shareholder value creation plan that includes the sale of the Hilton La Jolla Torrey Pines hotel, the repayment of remaining 2024 debt maturities, a $50 million preferred share redemption program, and a $50 million common share buyback authorization.

Outlook

Looking ahead, Braemar remains optimistic about the company's performance and its ability to create value for shareholders. The company's luxury resort portfolio, coupled with its strategic acquisitions and proactive capital management, position Braemar well to navigate the evolving market landscape. Additionally, the company's focus on cost control and operational efficiency has resulted in margin improvements across its portfolio, further enhancing its financial resilience.

Conclusion

Despite the challenges faced by the hospitality industry, Braemar has demonstrated its ability to adapt and thrive. The company's unique portfolio, strategic initiatives, and experienced management team have positioned Braemar as a leader in the high-end hotel and resort sector. As the industry continues to evolve, Braemar remains well-equipped to capitalize on emerging opportunities and deliver long-term value for its shareholders.