November 2018
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. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such forward-looking statements include, but are not limited to, our business and investment strategy, our understanding of our competition, current market trends and opportunities, projected operating results, and projected capital expenditures. These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated including, without limitation: general volatility of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy, and the degree and nature of our competition. These and other risk factors are more fully discussed in the company's filings with the Securities and Exchange Commission. EBITDA is defined as net income before interest, taxes, depreciation and amortization. EBITDA yield is defined as trailing twelve month EBITDA divided by the purchase price or debt amount. A capitalization rate is determined by dividing the property's net operating income by the purchase price. Net operating income is the property's funds from operations minus a capital expense reserve of either 4% or 5% of gross revenues. Hotel EBITDA flow-through is the change in Hotel EBITDA divided by the change in total revenues. EBITDA, FFO, AFFO, CAD and other terms are non-GAAP measures, reconciliations of which have been provided in prior earnings releases and filings with the SEC or in the appendix to this presentation. The calculation of implied equity value is derived from an estimated blended capitalization rate (“Cap Rate”) for the entire portfolio using the capitalization rate method. The estimated Cap Rate is based on recent Cap Rates of publically traded peers involving a similar blend of asset types found in the portfolio, which is then applied to Net Operating Income (“NOI”) of the company’s a ssets to calculate a Total Enterprise Value (“TEV”) of the company. From the TEV, we deduct debt and preferred equity and then add bac k working capital and the company’s investment in Ashford Inc. to derive an equity value. The capitalization rate method is one of several valuation methods for estimating asset value and implied equity value. Among the limitations of using the capitalization rate method for determining an implied equity value are that it does not take into account the potential change or variability in future cash flows, potential significant future capital expenditures, the intended hold period of the asset, or a change in the future risk profile of an asset. This overview is for informational purposes only and is not an offer to sell, or a solicitation of an offer to buy or sell, any securities of Braemar Hotels & Resorts, Inc. or any of its respective affiliates, and may not be relied upon in connection with the purchase or sale of any such security. 2 Company Presentation // November 2018
Management Team R ICHARD J. S TOCKTON J EREMY J. W ELTER D ERIC S. E UBANKS , CFA Chief Executive Officer & Chief Operating Officer Chief Financial Officer President 13 years of hospitality 20 years of hospitality 18 years of hospitality experience experience experience 8 years with the Company (5 2 years with the Company 15 years with the Company years with the Company’s 15 years with Morgan Stanley 3 years with ClubCorp predecessor) Cornell School of Hotel CFA charterholder 5 years with Stephens Administration, BS Southern Methodist University Investment Bank University of Pennsylvania BBA Oklahoma State University BS MBA 3 Company Presentation // November 2018
Strategic Overview Focused strategy of investing in luxury hotels and resorts Bardessono Hotel & Spa Yountville, CA Grow organically through strong revenue and cost control initiatives Grow externally through accretive acquisitions of high quality assets Pier House Resort Key West, FL Targets conservative leverage of Net Debt / Gross Assets of 45% with non-recourse property debt The Ritz-Carlton St. Thomas St. Thomas, USVI Highly-aligned management team and advisory structure 4 Company Presentation // November 2018
2018 Q3 Hotel Operating Results Comparable Hotel Operating Results (1) 2018 Q3 2017 Q3 % Variance ADR $ 272.57 $ 271.43 0.42% Occupancy 85.86% 84.68% 1.39% RevPAR $ 234.04 $ 229.86 1.82% RevPAR (not under renovation) $ 240.05 $ 232.30 3.34% Total Hotel Revenue (2) $ 108,466 $ 107,592 0.81% Hotel EBITDA (2) $ 33,210 $ 30,111 10.29% Hotel EBITDA Margin 30.62% 27.99% 2.63% C OMPARABLE R EV PAR (3) C OMPARABLE H OTEL EBITDA (3) $138.7 $235 $140 $224 $225 $135 $219 $215 (In millions) $130 $207 $126.9 $205 $199 $125 $123.3 $121.1 $195 $120 $185 $115 $175 2015 2016 2017 2018 Q3 2015 2016 2017 2018 Q3 TTM TTM (1) Includes: Bardessono, Hotel Yountville, Ritz-Carlton St. Thomas, Pier House, Marriott Seattle Waterfront, Capital Hilton, Sofitel Chicago, Hilton Torrey Pines, Courtyard San Francisco, Courtyard Philadelphia, Park Hyatt Beaver Creek, and Ritz-Carlton Sarasota (2) In thousands. (3) As reported in Earnings Releases: 2015, as reported on 2/25/2016; 2016 as reported on 2/22/2017; 2017 as reported on 2/28/2018; Q3 2018 as reported on 10/31/2018 5 Company Presentation // November 2018
2018 Q3 Company Results Earnings Results Net loss attributable to common stockholders for the quarter was $3.6 million or $0.12 per diluted • share Actual RevPAR for all hotels increased 9.9% to $234.17 during the quarter • Actual RevPAR for all hotels not under renovation increased 15.1% to $240.23 during the quarter • Adjusted funds from operations (AFFO) was $0.34 per diluted share for the quarter • Adjusted EBITDAre was $29.5 million for the quarter, compared with $28.4 million for the prior year • quarter, reflecting 4% growth Capex invested during the quarter was $19.2 million • A DJUSTED EBITDA RE AFFO PER S HARE Q UARTERLY D IVIDEND PER S HARE $2.00 $122.7 $0.80 $125 $120 $1.60 $115 $0.34 $0.31 $0.20 $0.16 $110 (In millions) $1.20 $0.38 $0.34 $0.37 $102.5 $105 $0.42 $101.4 $0.40 $0.12 $0.16 $0.16 $100 $0.80 $0.10 $0.50 $0.56 $0.60 $0.12 $95 $0.16 $0.16 $0.62 $88.3 $0.10 $90 $0.40 $0.12 $0.10 $85 $0.46 $0.44 $0.39 $0.16 $0.16 $0.26 $0.10 $0.05 $80 $0.00 $0.00 2015 2016 2017 2018 Q3 2015 2016 2017 2018 2015 2016 2017 2018 TTM 6 Company Presentation // November 2018
Recent Developments November 2018 We recently agreed to acquire the 170-room Ritz-Carlton Raised $40.0 million of perpetual preferred stock. Lake Tahoe, in Truckee, California for $103.4 million (1) Dividends accrue at a rate of 8.25% per annum. 754.2 817.6 124.1 124.1 11.5% 40.0 Preferred 443.4 443.4 R ITZ -C ARLTON L AKE T AHOE TEV TEV (Pro Forma) Stabilized Yield (2) : 8.5% Unlevered IRR (4) : 10.0% (5) Equity Perpetual Preferred RevPAR (3) : $372 Price per Key: $608,000 Convertible Preferred Net Debt Marginal Capital % Capital Cost of Capital Meets Defined Strategy WACC Further diversifies the portfolio while increases overall portfolio Debt 54,000 52.2% 4.40% RevPAR Property is in excellent physical conditions with limited capex Preferred 40,000 38.7% 8.25% needs Property Financial Overview (3) Cash 9,400 9.1% 0.0% Hotel Net Operating Income of $6.0 million Total 103,400 100% 5.5% 5.8% TTM NOI Cap Rate Hotel EBITDA $7.7 million 13.5x Hotel EBITDA multiple (1) Excluding $8.2M of Capital Reserves and $8.4M for the adjacent developable parcel (2) Expected unlevered stabilized yield 7 (3) TTM at time of announcement Company Presentation // November 2018 (4) Underwritten unlevered IRR (5) As of 9/30/2018
High-Quality Hotels in Leading Urban & Resort Markets Courtyard Philadelphia Philadelphia, PA Capital Hilton Washington D.C. Marriott Seattle Sofitel Chicago Magnificent Mile Hotel Yountville Seattle, WA Chicago, IL Yountville, CA Capital Hilton Washington D.C. Renaissance Tampa Tampa, FL Bardessono Hotel & Spa Yountville, CA The Ritz-Carlton, Courtyard San Francisco Sarasota, FL San Francisco, CA Hilton Torrey Pines Pier House Resort Pier House Resort The Ritz-Carlton St. Thomas Park Hyatt Beaver Creek La Jolla, CA Key West, FL Key West, FL St. Thomas, USVI Beaver Creek, CO 8 Company Presentation // November 2018 Core Assets Non-Core Assets
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