Braemar Hotels & Resorts Inc. — Q1 2024 Form 10-Q
Business context and period. Unaudited results for the three months ended March 31, 2024, compared with Q1 2023. Braemar is a REIT focused on luxury, high-RevPAR hotels and resorts. At quarter-end it owned interests in 16 properties with 4,201 rooms (3,963 net rooms); it operates through hotel managers and is advised by Ashford LLC.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Hotel revenue | $219.1 million | $215.3 million |
| Operating income | $42.5 million | $37.8 million |
| Net income | $15.5 million | $16.6 million |
| Net income attributable to the company | $15.9 million | $16.0 million |
| Net income attributable to common stockholders | $3.5 million; $0.05 per share | $3.2 million; $0.05 per share |
| Operating cash flow | $36.0 million | $42.3 million |
| Adjusted EBITDAre | $66.2 million | $66.1 million |
| FFO available to common stockholders and OP unitholders | $28.0 million | $25.3 million |
| Adjusted FFO available to common stockholders and OP unitholders | $30.3 million | $32.1 million |
Total hotel revenue increased 1.8%. Operating margin was approximately 19.4%, up from 17.6%. Occupancy rose to 65.39% from 64.85%, while ADR declined 1.4% to $551.46 and RevPAR fell 0.6% to $360.59. Interest expense increased to $26.5 million from $22.9 million, primarily reflecting higher average interest rates; average SOFR was 5.33% versus 4.50%.
At March 31, cash and cash equivalents were $137.1 million and restricted cash was $82.4 million. Net cash from financing was $39.7 million, including $62.0 million of new borrowings; capital improvements used $23.3 million. Indebtedness, net, was $1.223 billion, up from $1.162 billion at year-end. Management reported net debt to gross assets of 39.6% and compliance with debt covenants. Approximately $1.1 billion of debt was variable-rate; the filing estimates a 25-basis-point rate increase would add about $2.7 million of annual interest expense before considering caps.
Material changes, outlook, and risks
- Revenue growth and higher operating income were offset below the operating line by higher interest expense, lower interest income, a $0.7 million write-off of loan costs and exit fees, and the absence of the $2.3 million debt-extinguishment gain recorded in Q1 2023. Net income declined 6.8%.
- Reported corporate general and administrative expense was a $2.2 million credit, versus $2.8 million of expense a year earlier. A $5.6 million credit from an Ashford Securities contribution true-up was the principal reason; this is an unusual, non-recurring comparison item.
- Debt actions included extensions of the Pier House and Ritz-Carlton St. Thomas loans, an extension and increase to a 9% fixed rate on the Hilton La Jolla loan, and a new $62.0 million interest-only loan secured by Dorado Beach at SOFR plus 4.75%. The loan table showed a $293.2 million loan with a June 2024 current maturity and a $66.6 million loan with an August 2024 maturity. The company subsequently repaid the $30.0 million Cameo Beverly Hills loan in April.
- After quarter-end, Braemar agreed to sell Hilton La Jolla Torrey Pines for $165 million in cash, subject to customary adjustments and closing conditions; Braemar owns an indirect 75% interest in the seller. Closing was expected in Q2 2024. The board also authorized up to $50 million of common-share repurchases. Management described a $50 million preferred-share redemption program among May strategic updates, but the excerpt does not provide its terms or establish a completed redemption authorization.
- The company expected a $0.05 quarterly common dividend for 2024 ($0.20 annualized), but future dividends remain subject to quarterly board review. The filing provides no earnings or operating guidance and cautions that hotel seasonality makes Q1 results not necessarily indicative of the full year.
- Risks include variable-rate debt and refinancing needs, possible lender cash traps (Ritz-Carlton Lake Tahoe was subject to a cash trap, though no cash was trapped at quarter-end), reliance on capital markets and asset sales, and related-party arrangements with Ashford entities. A California employment case has no recorded accrual because the loss is not estimable; $371,000 was accrued for the Hilton La Jolla allocation of a separate proposed settlement. Cyber-incident class actions are pending, with potential loss not estimable. Blackwells’ proxy contest and related litigation add governance and expense uncertainty.
Important facts for investors to verify
- Progress and net proceeds from the Hilton La Jolla sale, and how proceeds will be applied to debt maturities, preferred shares, or common-share repurchases.
- Refinancing, extension, and repayment outcomes for loans with 2024 current maturities, including applicable extension conditions and fees.
- Cash available for general use versus restricted or manager-held reserves, and any changes to cash-trap status or credit-facility availability.
- Whether the announced preferred-share redemption program is formally authorized, its size and terms, and the status of the $50 million common repurchase authorization.
- Underlying hotel trends—especially ADR and RevPAR—and the durability of the Ashford Securities true-up credit and other adjustments in non-GAAP measures.