Braemar Hotels & Resorts Reports Second Quarter 2019 Results

31/07/2019 14:15

Source: PR News

DALLAS, July 31, 2019 /PRNewswire/ -- Braemar Hotels & Resorts Inc. (NYSE: BHR) ("Braemar" or the "Company") today reported the following results and performance measures for the second quarter ended June 30, 2019.  The comparable performance measurements for Occupancy, Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), and Hotel EBITDA assume each of the hotel properties in the Company's hotel portfolio as of June 30, 2019 were owned as of the beginning of each of the periods presented.  Unless otherwise stated, all reported results compare the second quarter ended June 30, 2019, with the second quarter ended June 30, 2018 (see discussion below).  The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

STRATEGIC OVERVIEW

  • Focused strategy of investing in luxury hotels and resorts
  • Targets conservative leverage levels of 45% Net Debt to Gross Assets
  • Highly-aligned management team and advisory structure
  • Dividend yield of approximately 6.9%

FINANCIAL AND OPERATING HIGHLIGHTS

  • Net loss attributable to common stockholders for the quarter was $7.0 million or $0.22 per diluted share.
  • Comparable RevPAR for all hotels decreased 2.3% to $232.94 during the quarter.
  • Comparable RevPAR for all hotels not under renovation decreased 1.9% to $252.39 during the quarter.
  • Comparable RevPAR for all hotels excluding Marriott Seattle Waterfront and The Notary Hotel increased 0.8% to $245.53 during the quarter.
  • Adjusted funds from operations (AFFO) was $0.42 per diluted share for the quarter.
  • Adjusted EBITDAre was $32.8 million for the quarter.
  • Subsequent to quarter end, the Company announced the planned opening of The Clancy Hotel, an Autograph Collection property, in downtown San Francisco. The re-branded property, a conversion of the Courtyard San Francisco Downtown, is expected to officially open in January 2020.
  • Subsequent to quarter end, the Company announced the opening of The Notary Hotel, an Autograph Collection property, in downtown Philadelphia.  The re-branded property is a conversion of the Courtyard Philadelphia Downtown hotel. 
  • Capex invested during the quarter was $36.1 million.

UPDATE ON BUSINESS INTERRUPTION INCOME
During the quarter, the Company recognized $6.6 million of business interruption ("BI") income for the Ritz-Carlton St. Thomas related to lost profits for the period of March 2019 through May 2019 due to the impact of Hurricane Irma.

The Company will continue to work with its insurers on the claims at the Ritz-Carlton St. Thomas and expects to continue to receive additional BI income through at least the reopening of the property which is scheduled for the fourth quarter of 2019.

PLANNED OPENING OF THE CLANCY HOTEL
On July 11, 2019, the Company announced the planned opening of The Clancy Hotel in January 2020. Located in San Francisco's vibrant South of Market district, the former Courtyard San Francisco Downtown is undergoing a rebranding and renovation of approximately $30 million to create The Clancy Hotel. The hotel will join Marriott International's Autograph Collection Hotels, a diverse portfolio of independent hotels around the world that reflect unique vision, design, and environments.

OPENING OF THE NOTARY HOTEL
On July 17, 2019, the Company announced the opening of The Notary Hotel, an Autograph Collection property, in downtown Philadelphia. This is the new branding for the former Courtyard Philadelphia Downtown.  Listed on the National Register of Historic Places, the deluxe hotel has undergone an approximate $20 million renovation, fusing Philadelphia's unique soul with its historic legacy and now joins Marriott International's Autograph Collection, a diverse portfolio of independent hotels around the world that reflect unique vision, design, and environments. 

CAPITAL STRUCTURE
At June 30, 2019, the Company had total assets of $1.8 billion and $1.1 billion of mortgage loans of which $49 million related to its joint venture partner's share of the mortgage loan on the Capital Hilton and Hilton La Jolla Torrey Pines.  The Company's total combined mortgage loans had a blended average interest rate of 4.7%. 

PORTFOLIO REVPAR
As of June 30, 2019, the portfolio consisted of thirteen properties.  During the second quarter of 2019, nine of the Company's hotels were not under renovation.  The Company believes reporting its operating metrics for its hotels on a comparable total basis (all 13 hotels) and comparable not under renovation basis (9 hotels) is a measure that reflects a meaningful and focused comparison of the operating results in its portfolio.  Details of each category are provided in the tables attached to this release.

  • Comparable RevPAR decreased 2.3% to $232.94 for all hotels on a 1.4% increase in ADR and a 3.7% decrease in occupancy.
  • Comparable RevPAR decreased 1.9% to $252.39 for all hotels not under renovation on a 1.9% decrease in ADR and relatively flat occupancy.

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS
The Company believes year-over-year Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin comparisons are more meaningful to gauge the performance of the Company's hotels than sequential quarter-over-quarter comparisons.  To help investors better understand the substantial seasonality in the Company's portfolio, the Company provides quarterly detail on its Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin for the current and certain prior-year periods based upon the number of hotels in the Company's portfolio as of the end of the current period.  As the Company's portfolio mix changes from time to time so will the seasonality for Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin.  The details of the quarterly calculations for the previous four quarters for the thirteen hotels are provided in the table attached to this release.

COMMON STOCK DIVIDEND
On June 14, 2019, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.16 per diluted share for the Company's common stock for the second quarter ending June 30, 2019. The dividend, which equates to an annual rate of $0.64 per share, was paid on July 15, 2019, to shareholders of record as of June 28, 2019.

"We continue to diligently execute on our strategy of focusing on the luxury hotel segment," said Richard J. Stockton, Braemar's President and Chief Executive Officer. "Demand continues to be strong in our markets, with limited new supply, and we believe our portfolio has several factors that position us well to outperform.  We are executing on our business plan of converting two of our properties to Autograph Collection hotels, with The Notary Hotel in Philadelphia now open and our Courtyard San Francisco Downtown scheduled to convert to The Clancy Hotel in January 2020. Looking ahead, our portfolio of luxury hotels and resorts has unique aspects that are expected to result in RevPAR performance that may not necessarily track the broader market, and we are committed to enhancing shareholder value and focused on delivering solid operational performance in the second half of 2019."

The Company plans to host an Investor Day on October 3, 2019 at the St. Regis Hotel in New York City.  More information will be forthcoming about this event.

INVESTOR CONFERENCE CALL AND SIMULCAST
Braemar will conduct a conference call on Thursday, August 1, 2019, at 11:00 a.m. ET.  The number to call for this interactive teleconference is (323) 794-2093.  A replay of the conference call will be available through Thursday, August 8, 2019, by dialing (719) 457-0820 and entering the confirmation number, 4291364.

The Company will also provide an online simulcast and rebroadcast of its second quarter 2019 earnings release conference call.  The live broadcast of Braemar's quarterly conference call will be available online at the Company's web site, www.bhrreit.com on Thursday, August 1, 2019, beginning at 11:00 a.m. ET.  The online replay will follow shortly after the call and continue for approximately one year.

We use certain non-GAAP measures, in addition to the required GAAP presentations, as we believe these measures improve the understanding of our operational results and make comparisons of operating results among peer real estate investment trusts more meaningful. Non-GAAP financial measures, which should not be relied upon as a substitute for GAAP measures, used in this press release are FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA.  Please refer to our most recently filed Annual Report on Form 10-K for a more detailed description of how these non-GAAP measures are calculated.  The reconciliations of non-GAAP measures to the closest GAAP measures are provided below and provide further details of our results for the period being reported.

Braemar Hotels & Resorts is a real estate investment trust (REIT) focused on investing in luxury hotels and resorts.

Ashford has created an Ashford App for the hospitality REIT investor community.  The Ashford App is available for free download at Apple's App Store and the Google Play Store by searching "Ashford."

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the federal securities regulations.  Forward-looking statements in this press release may include, among others, statements about the implied share price for the Company's common stock.  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 statements are subject to numerous assumptions and uncertainties, many of which are outside Braemar's control.

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 conditions 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; our ability to successfully complete and integrate acquisitions, and manage our planned growth, and the degree and nature of our competition.  These and other risk factors are more fully discussed in Braemar's filings with the Securities and Exchange Commission. 

The forward-looking statements included in this press release are only made as of the date of this press release.  The Company can give no assurance that these forward-looking statements will be attained or that any deviation will not occur.  We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.

 

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)






June 30,
 2019


December 31,
 2018

ASSETS




Investments in hotel properties, gross

$

1,748,734



$

1,562,806


Accumulated depreciation

(288,319)



(262,905)


Investments in hotel properties, net

1,460,415



1,299,901


Cash and cash equivalents

80,360



182,578


Restricted cash

70,064



75,910


Accounts receivable, net of allowance of $119 and $101, respectively

19,266



12,739


Inventories

2,321



1,862


Prepaid expenses

8,246



4,409


Investment in Ashford Inc., at fair value

6,195



10,114


Investment in OpenKey

1,821



1,766


Derivative assets

911



772


Other assets

10,847



13,831


Operating lease right-of-use assets

82,353




Intangible assets, net

5,208



27,678


Due from related party, net

875




Due from third-party hotel managers

11,557



4,927


Total assets

$

1,760,439



$

1,636,487






LIABILITIES AND EQUITY




Liabilities:




Indebtedness, net

$

1,047,681



$

985,873


Accounts payable and accrued expenses

85,542



64,116


Dividends and distributions payable

9,334



8,514


Due to Ashford Inc., net

4,030



4,001


Due to related party, net



224


Due to third-party hotel managers

3,154



1,633


Operating lease liabilities

60,779




Other liabilities

27,991



29,033


Total liabilities

1,238,511



1,093,394






5.50% Series B Cumulative Convertible Preferred Stock, $0.01 par value, 4,965,850 shares issued and outstanding at June 30, 2019 and December 31, 2018

106,123



106,123


Redeemable noncontrolling interests in operating partnership

42,075



44,885


Equity:




Preferred stock, $0.01 value, 50,000,000 shares authorized:




Series D Cumulative Preferred Stock, 1,600,000 shares issued and outstanding at June 30, 2019 and December 31, 2018

16



16


Common stock, $0.01 par value, 200,000,000 shares authorized, 32,879,913 and 32,511,660 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively

329



325


Additional paid-in capital

516,700



512,545


Accumulated deficit

(137,775)



(115,410)


Total stockholders' equity of the Company

379,270



397,476


Noncontrolling interest in consolidated entities

(5,540)



(5,391)


Total equity

373,730



392,085


Total liabilities and equity

$

1,760,439



$

1,636,487


 

 

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,


2019


2018


2019


2018

REVENUE








Rooms

$

75,121



$

78,439



$

151,852



$

143,946


Food and beverage

25,790



25,393



57,904



48,893


Other

17,605



17,286



37,268



30,768


Total hotel revenue

118,516



121,118



247,024



223,607


Other





5




Total revenue

118,516



121,118



247,029



223,607


EXPENSES








Hotel operating expenses:








Rooms

16,833



16,652



33,815



31,570


Food and beverage

19,394



17,287



41,604



32,907


Other expenses

36,335



33,768



75,230



63,432


Management fees

4,166



4,501



8,582



8,118


Total hotel operating expenses

76,728



72,208



159,231



136,027


Property taxes, insurance and other

5,206



6,077



12,666



11,681


Depreciation and amortization

18,474



14,811



35,160



27,817


Impairment charges



59





71


Advisory services fee:








Base advisory fee

2,860



2,313



5,520



4,420


Reimbursable expenses

681



499



1,261



919


Incentive fee

(1,105)



691



209



861


Non-cash stock/unit-based compensation

1,961



1,377



3,431



3,924


Transaction costs

70



461



704



949


Corporate, general and administrative:








Non-cash stock/unit-based compensation

19





38




Other general and administrative

913



1,206



2,020



1,234


Total operating expenses

105,807



99,702



220,240



187,903


Gain (loss) on sale of hotel property

9



15,711



9



15,711


OPERATING INCOME (LOSS)

12,718



37,127



26,798



51,415


Equity in earnings (loss) of unconsolidated entity

(51)



(62)



(101)



(65)


Interest income

287



230



649



430


Other income (expense)

(139)



(63)



(256)



(126)


Interest expense

(13,034)



(11,603)



(26,047)



(20,794)


Amortization of loan costs

(1,021)



(1,075)



(2,201)



(2,063)


Write-off of loan costs and exit fees



(4,176)



(312)



(4,178)


Unrealized gain (loss) on investments

(4,626)



(6,024)



(3,919)



(5,496)


Unrealized gain (loss) on derivatives

654



(298)



(218)



(225)


INCOME (LOSS) BEFORE INCOME TAXES

(5,212)



14,056



(5,607)



18,898


Income tax (expense) benefit

(411)



(1,202)



(1,338)



(1,774)


NET INCOME (LOSS)

(5,623)



12,854



(6,945)



17,124


(Income) loss from consolidated entities attributable to noncontrolling interest

248



(89)



149



(47)


Net (income) loss attributable to redeemable noncontrolling interests in operating partnership

865



(1,235)



1,305



(1,527)


NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

(4,510)



11,530



(5,491)



15,550


Preferred dividends

(2,532)



(1,708)



(5,064)



(3,415)


NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

$

(7,042)



$

9,822



$

(10,555)



$

12,135










INCOME (LOSS) PER SHARE – BASIC AND DILUTED



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