Braemar Hotels & Resorts Reports Third Quarter 2018 Results

DALLAS, Oct. 31, 2018 /PRNewswire/ -- Braemar Hotels & Resorts Inc. (NYSE: BHR) ("Braemar" or the "Company") today reported the following results and performance measures for the third quarter ended September 30, 2018.  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 September 30, 2018 were owned as of the beginning of each of the periods presented.  Unless otherwise stated, all reported results compare the third quarter ended September 30, 2018, with the third quarter ended September 30, 2017 (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 5.9%

FINANCIAL AND OPERATING HIGHLIGHTS

• 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
• Comparable RevPAR for all hotels not under renovation increased 3.3% to $240.05 during the quarter
• Comparable Hotel EBITDA increased 10.3%
• 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
• Hotel EBITDA margin for all hotels not under renovation was 30.4%
• Capex invested during the quarter was $19.2 million

UPDATE ON BUSINESS INTERRUPTION INCOME
During the third quarter of 2018, the Company recognized $3.8 million of business interruption income for the Ritz-Carlton St. Thomas related to lost profits for the period of June 2018 through August 2018 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 incur additional claims through at least the reopening of the property which is scheduled for October 2019.

CAPITAL STRUCTURE
At September 30, 2018, the Company had total assets of $1.6 billion.  As of September 30, 2018, the Company had $993 million of mortgage loans of which $47 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 4.8%.

PORTFOLIO REVPAR
As of September 30, 2018, the portfolio consisted of twelve properties.  During the third quarter of 2018, 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 12 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 increased 1.8% to $234.04 for all hotels on a 0.4% increase in ADR and a 1.4% increase in occupancy
• Comparable RevPAR increased 3.3% to $240.05 for hotels not under renovation on a 2.5% increase in ADR and a 0.8% increase in 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.  Given the substantial seasonality in the Company's portfolio, to help investors better understand this seasonality, 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 twelve hotels are provided in the table attached to this release.

COMMON STOCK DIVIDEND
On September 14, 2018, 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 third quarter ending September 30, 2018. The dividend, which equates to an annual rate of $0.64 per share, was paid on October 15, 2018, to shareholders of record as of September 28, 2018.

"We continue to diligently execute on our strategic objectives focusing on the luxury hotel segment," said Richard J. Stockton, Braemar's President and Chief Executive Officer. "By clearly aligning our platform with this segment, we believe Braemar is well-positioned to capitalize on strong consumer confidence trends and a healthy macroeconomic outlook. Operationally, we've made significant progress on the asset management and capital investment front and remain on track with our Autograph Collection conversions at both the Courtyard Philadelphia Downtown and Courtyard San Francisco Downtown. Looking ahead, our portfolio is well-positioned, and we remain committed to enhancing shareholder value by delivering solid operational performance and executing on all aspects of our business plan."

INVESTOR CONFERENCE CALL AND SIMULCAST
Braemar will conduct a conference call on Thursday, November 1, 2018, at 12:00 p.m. ET.  The number to call for this interactive teleconference is (334) 323-0522.  A replay of the conference call will be available through Thursday, November 8, 2018, by dialing (719) 457-0820 and entering the confirmation number, 2734956.

The Company will also provide an online simulcast and rebroadcast of its third quarter 2018 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, November 1, 2018, beginning at 12:00 p.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. The 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 reconciliation of non-GAAP measures to the closing GAAP measures are provided below and provide further details of our results for the period being reported.

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

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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.