Braemar Hotels & Resorts Inc. [BHR] Filings

10-Q 1 bhr-20230331.htm 10-Q bhr-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number: 001-35972

BRAEMAR HOTELS & RESORTS INC.

(Exact name of registrant as specified in its charter)


Maryland						46-2488594
(State or other jurisdiction of incorporation or organization)						(IRS employer identification number)

14185 Dallas Parkway
Suite 1200
Dallas
Texas						75254
(Address of principal executive offices)						(Zip code)

(972) 490-9600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

BHR

New York Stock Exchange

Preferred Stock, Series B

BHR-PB

New York Stock Exchange

Preferred Stock, Series D

BHR-PD

New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, $0.01 par value per share						65,949,147
(Class)						Outstanding at May 4, 2023

BRAEMAR HOTELS & RESORTS INC.

FORM 10-Q

FOR THE QUARTER ENDED March 31, 2023

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022			2
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022			3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022			4
Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2023 and 2022			5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022			6
Notes to Condensed Consolidated Financial Statements			8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			29
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			45
ITEM 4. CONTROLS AND PROCEDURES			46
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			46
ITEM 1A. RISK FACTORS			47
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			47
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			47
ITEM 4. MINE SAFETY DISCLOSURES			48
ITEM 5. OTHER INFORMATION			48
ITEM 6. EXHIBITS			48
SIGNATURES			49

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (unaudited)

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share amounts)


	March 31, 2023		December 31, 2022
ASSETS
Investments in hotel properties, gross	$	2,335,545	$	2,325,093
Accumulated depreciation	(455,279)		(440,492)
Investments in hotel properties, net	1,880,266		1,884,601
Cash and cash equivalents	281,490		261,541

Restricted cash	63,063		54,155
Accounts receivable, net of allowance of $285 and $339, respectively	44,998		51,448

Inventories	5,243		5,238

Prepaid expenses	8,826		7,044

Investment in unconsolidated entity	1,715		1,689
Derivative assets	4,933		6,482
Operating lease right-of-use assets	79,189		79,449
Other assets	16,292		14,621
Intangible assets, net	3,788		3,883


Due from related parties, net	586		938
Due from third-party hotel managers	19,133		26,625

Total assets	$	2,409,522	$	2,397,714
LIABILITIES AND EQUITY
Liabilities:
Indebtedness, net	$	1,277,642	$	1,334,130

Accounts payable and accrued expenses	129,567		133,978
Dividends and distributions payable	8,756		8,184



Due to Ashford Inc.	3,759		10,005

Due to third-party hotel managers	1,463		2,096

Operating lease liabilities	60,620		60,692
Other liabilities	22,537		22,343
Derivative liabilities	181		284

Total liabilities	1,504,525		1,571,712
Commitments and contingencies (note 15)
5.50% Series B cumulative convertible preferred stock, $0.01 par value, 3,078,017 shares issued and outstanding at March 31, 2023 and December 31, 2022	65,426		65,426
Series E redeemable preferred stock, $0.01 par value, 16,474,156 and 12,656,529 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	378,906		291,076
Series M redeemable preferred stock, $0.01 par value, 1,960,267 and 1,428,332 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	48,294		35,182
Redeemable noncontrolling interests in operating partnership	34,820		40,555
Equity:
Preferred stock, $0.01 par value, 80,000,000 shares authorized:
8.25% Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at March 31, 2023 and December 31, 2022	16		16
Common stock, $0.01 par value, 250,000,000 shares authorized, 65,949,691 and 69,919,065 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	659		699
Additional paid-in capital	715,729		734,134
Accumulated deficit	(324,840)		(324,740)
Total stockholders’ equity of the Company	391,564		410,109
Noncontrolling interest in consolidated entities	(14,013)		(16,346)
Total equity	377,551		393,763
Total liabilities and equity	$	2,409,522	$	2,397,714

See Notes to Condensed Consolidated Financial Statements.

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)


	Three Months Ended March 31,
		2023		2022
REVENUE
Rooms		$	137,527	$	105,192
Food and beverage		52,228		36,707

Other		25,546		19,981
Total hotel revenue		215,301		161,880


EXPENSES
Hotel operating expenses:
Rooms		27,358		20,184
Food and beverage		39,739		28,028
Other expenses		62,295		46,207
Management fees		6,705		4,148
Total hotel operating expenses		136,097		98,567
Property taxes, insurance and other		8,116		8,603
Depreciation and amortization		22,521		18,441


Advisory services fee		7,948		7,322


Corporate general and administrative		2,820		2,495
Total operating expenses		177,502		135,428

OPERATING INCOME (LOSS)		37,799		26,452
Equity in earnings (loss) of unconsolidated entity		(73)		(72)
Interest income		2,108		25

Interest expense and amortization of discounts and loan costs		(22,873)		(8,522)
Write-off of loan costs and exit fees		(12)		(76)

Gain (loss) on extinguishment of debt		2,318		—
Realized and unrealized gain (loss) on derivatives		(334)		408
INCOME (LOSS) BEFORE INCOME TAXES		18,933		18,215
Income tax (expense) benefit		(2,329)		(2,611)
NET INCOME (LOSS)		16,604		15,604
(Income) loss attributable to noncontrolling interest in consolidated entities		(309)		26
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership		(261)		(967)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY		16,034		14,663
Preferred dividends		(10,350)		(3,303)
Deemed dividends on preferred stock		(2,454)		—

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	3,230	$	11,360
INCOME (LOSS) PER SHARE - BASIC:
Net income (loss) attributable to common stockholders		$	0.05	$	0.17
Weighted average common shares outstanding – basic		66,498		65,878
INCOME (LOSS) PER SHARE - DILUTED:
Net income (loss) attributable to common stockholders		$	0.05	$	0.15
Weighted average common shares outstanding – diluted		72,478		89,895

See Notes to Condensed Consolidated Financial Statements.

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)


	Three Months Ended March 31,
		2023		2022
NET INCOME (LOSS)		$	16,604	$	15,604
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX


Total other comprehensive income (loss)		—		—
TOTAL COMPREHENSIVE INCOME (LOSS)		16,604		15,604
Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities		(309)		26
Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership		(261)		(967)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY		$	16,034	$	14,663

See Notes to Condensed Consolidated Financial Statements.

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited, in thousands except per share amounts)


	8.25% Series D Cumulative Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Noncontrolling Interest in Consolidated Entities			Total		5.50% Series B Cumulative Convertible Preferred Stock			Series E Redeemable Preferred Stock			Series M Redeemable Preferred Stock			Redeemable Noncontrolling Interests in Operating Partnership
	Shares	Amount		Shares	Amount								Shares			Amount	Shares		Amount	Shares		Amount
Balance at December 31, 2022	1,600	$	16	69,919	$	699	$	734,134	$	(324,740)	$	(16,346)		$	393,763	3,078	$	65,426	12,657	$	291,076	1,428	$	35,182	$	40,555

Purchase of common stock	—	—		(3,968)	(40)		(19,210)		—		—			(19,250)		—	—		—	—		—	—		—
Equity-based compensation	—	—		—	—		805		—		—			805		—	—		—	—		—	—		1,408


Issuance of preferred stock	—	—		—	—		—		—		—			—		—	—		3,828	85,916		533	12,879		—



Forfeiture of restricted common shares	—	—		(1)	—		—		—		—			—		—	—		—	—		—	—		—
Dividends declared – common stock ($0.05 /share)	—	—		—	—		—		(3,334)		—			(3,334)		—	—		—	—		—	—		—
Dividends declared – preferred stock - Series B ($0.34/share)	—	—		—	—		—		(1,058)		—			(1,058)		—	—		—	—		—	—		—
Dividends declared – preferred stock - Series D ($0.52/share)	—	—		—	—		—		(825)		—			(825)		—	—		—	—		—	—		—
Dividends declared – preferred stock - Series E ($0.48/share)	—	—		—	—		—		(7,534)		—			(7,534)		—	—		—	—		—	—		—
Dividends declared – preferred stock - Series M ($0.52/share)	—	—		—	—		—		(933)		—			(933)		—	—		—	—		—	—		—
Contributions from noncontrolling interests	—	—		—	—		—		—		2,024			2,024		—	—		—	—		—	—		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—			—		—	—		—	—		—	—		(361)
Redemption/conversion of operating partnership units	—	—		—	—		—		—		—			—		—	—		—	—		—	—		(7,039)
Net income (loss)	—	—		—	—		—		16,034		309			16,343		—	—		—	—		—	—		261
Redemptions of preferred stock	—	—		—	—		—		—		—			—		—	—		(11)	(282)		(1)	(25)		—


Redemption value adjustment - preferred stock	—	—		—	—		—		(2,454)		—			(2,454)		—	—		—	2,196		—	258		—
Redemption value adjustment	—	—		—	—		—		4		—			4		—	—		—	—		—	—		(4)
Balance at March 31, 2023	1,600	$	16	65,950	$	659	$	715,729	$	(324,840)	$	(14,013)		$	377,551	3,078	$	65,426	16,474	$	378,906	1,960	$	48,294	$	34,820


	8.25% Series D Cumulative Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Noncontrolling Interest in Consolidated Entities			Total		5.50% Series B Cumulative Convertible Preferred Stock			Series E Redeemable Preferred Stock			Series M Redeemable Preferred Stock			Redeemable Noncontrolling Interests in Operating Partnership
	Shares	Amount		Shares	Amount								Shares			Amount	Shares		Amount	Shares		Amount
Balance at December 31, 2021	1,600	$	16	65,365	$	653	$	707,418	$	(309,240)	$	(16,549)		$	382,298	3,078	$	65,426	1,710	$	39,339	29	$	715	$	36,087
Impact of adoption of new accounting standard	—	—		—	—		(6,257)		656		—			(5,601)		—	—		—	—		—	—		—
Purchase of common stock	—	—		(93)	(1)		(551)		—		—			(552)		—	—		—	—		—	—		—
Equity-based compensation	—	—		—	—		1,320		—		—			1,320		—	—		—	—		—	—		934
Issuance of common stock	—	—		6,000	60		34,981		—		—			35,041		—	—		—	—		—	—		—
Issuance of preferred stock	—	—		—	—		—		—		—			—		—	—		1,481	33,093		33	802		—


Forfeiture of restricted common shares	—	—		(2)	—		—		—		—			—		—	—		—	—		—	—		—
Dividends declared - common stock - ($0.01/share)	—			—	—		—		(720)		—			(720)		—	—		—	—		—	—		—
Dividends declared – preferred stock - Series B ($0.34/share)	—	—		—	—		—		(1,058)		—			(1,058)		—	—		—	—		—	—		—
Dividends declared – preferred stock-Series D ($0.52/share)	—	—		—	—		—		(825)		—			(825)		—	—		—	—		—	—		—
Dividends declared – preferred stock - Series E ($0.50/share)	—	—		—	—		—		(1,399)		—			(1,399)		—	—		—	—		—	—		—
Dividends declared – preferred stock - Series M ($$0.51/share)	—	—		—	—		—		(21)		—			(21)		—	—		—	—		—	—		—
Distributions to noncontrolling interests	—	—		—	—		—		—		—			—		—	—		—	—		—	—		(83)
Contributions from noncontrolling interests	—	—		—	—		—		—		164			164		—	—		—	—		—	—		—

Net income (loss)	—	—		—	—		—		14,663		(26)			14,637		—	—		—	—		—	—		967


Redemption value adjustment - preferred stock	—	—		—	—		—		(993)		—			(993)		—	—		—	972		—	21		—
Redemption value adjustment	—	—		—	—		—		(4,386)		—			(4,386)		—	—		—	—		—	—		4,386
Balance at March 31, 2022	1,600	$	16	71,270	$	712	$	736,911	$	(303,323)	$	(16,411)		$	417,905	3,078	$	65,426	3,191	$	73,404	62	$	1,538	$	42,291

See Notes to Condensed Consolidated Financial Statements.

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Three Months Ended March 31,
	2023		2022

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	16,604	$	15,604
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization	22,521		18,441
Equity-based compensation	2,213		2,254
Bad debt expense	188		269
(Gain) loss on extinguishment of debt	(2,318)		—
Amortization of loan costs, discounts and capitalized default interest	447		109
Write-off of loan costs and exit fees	12		76
Amortization of intangibles	119		119
Amortization of non-refundable membership initiation fees	(410)		(333)
Interest expense accretion on refundable membership club deposits	178		190





Realized and unrealized (gain) loss on derivatives	334		(408)

Equity in (earnings) loss of unconsolidated entity	73		72
Deferred income tax expense (benefit)	37		—

Changes in operating assets and liabilities, exclusive of the effect of hotel acquisitions:
Accounts receivable and inventories	6,473		(1,068)

Prepaid expenses and other assets	(3,453)		(4,662)
Accounts payable and accrued expenses	(731)		7,046
Operating lease right-of-use assets	141		147
Due to/from related parties, net	(13)		840

Due to/from third-party hotel managers	6,859		(12,230)

Due to/from Ashford Inc.	(7,314)		1,703
Operating lease liabilities	(72)		(73)
Other liabilities	426		698
Net cash provided by (used in) operating activities	42,314		28,794

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from property insurance	75		—



Acquisition of hotel properties, net of cash and restricted cash acquired	—		(86,958)

Investment in unconsolidated entity	(99)		—

Improvements and additions to hotel properties	(18,706)		(10,791)
Net cash provided by (used in) investing activities	(18,730)		(97,749)

CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on indebtedness	—		70,500
Repayments of indebtedness	(54,250)		(67,750)
Payments of loan costs and exit fees	(404)		(1,667)
Payments for derivatives	(755)		(76)
Proceeds from derivatives	1,601		—
Purchase of common stock	(18,952)		—

Payments for dividends and distributions	(12,630)		(2,951)
Proceeds from issuance of preferred stock	98,009		33,735
Proceeds from issuance of common stock	—		(36)





Contributions from noncontrolling interest in consolidated entities	2,024		164

Redemption of operating partnership units	(7,039)		—
Distributions to noncontrolling interest in consolidated entities	(2,024)		—

Redemption of preferred stock	(307)		—

Net cash provided by (used in) financing activities	5,273		31,919
Net change in cash, cash equivalents and restricted cash	28,857		(37,036)
Cash, cash equivalents and restricted cash at beginning of period

Braemar Hotels & Resorts Inc. [BHR] Filings
Braemar Hotels & Resorts Inc. [BHR-PD] Filings
Braemar Hotels & Resorts Inc. [BHR-PB] Filings
10-Q	[2023-05-08]
10-K	[2023-03-10]
10-Q	[2022-11-07]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-03-10]
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-05]
10-Q	[2020-11-09]
10-Q	[2020-08-06]
10-Q	[2020-05-28]
10-K	[2020-03-13]
10-Q	[2019-11-06]
10-Q	[2019-08-06]
10-Q	[2019-05-08]
10-K	[2019-03-08]
10-Q	[2018-11-07]
10-Q	[2018-08-09]
10-Q	[2018-05-09]
10-K	[2018-03-14]
10-Q	[2017-11-08]
10-Q	[2017-08-08]
10-Q	[2017-05-09]
10-K	[2017-02-28]
10-Q	[2016-11-09]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-03-15]
10-Q	[2015-11-09]
10-Q	[2015-08-10]
10-Q	[2015-05-11]
10-K	[2015-03-16]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-12]
10-K	[2014-03-31]

Braemar Hotels & Resorts Inc. [BHR] Filings

Braemar Hotels & Resorts Inc. [BHR-PD] Filings

Braemar Hotels & Resorts Inc. [BHR-PB] Filings