Braemar Hotels & Resorts (BHR) 1 Aug 24 2024 Q2 Earnings call transcript
2min read In the recently concluded earnings call for the second quarter of 2024, Braemar Hotels & Resorts Inc. showcased a strong financial performance amidst strategic changes and growth opportunities. The company's management team, led by President and CEO, Richard Stockton, CFO, Deric Eubanks, and Executive Vice President and Head of Asset Management, Chris Nixon, provided insights into the company's financial health, asset management activities, and future outlook.
Financial Highlights and Strategic Initiatives
Braemar Hotels & Resorts reported a net loss attributable to common stockholders of $21.9 million, or $0.33 per diluted share, for the second quarter of 2024. However, adjusted funds from operations (AFFO) per diluted share stood at $0.10, indicating a stable financial position. The company's total assets at the end of the quarter were valued at $2.2 billion, with a total debt of $1.2 billion, including loans for the Capital Hilton and Hilton La Jolla Torrey Pines.
In line with its strategic initiatives, Braemar announced a shareholder value creation plan, which includes select noncore asset sales, repayment of 2024 debt maturities, a preferred share redemption program, and a common share buyback authorization. The sale of the Hilton La Jolla Torrey Pines for $165 million, at a 7.2% capitalization rate on net operating income, was a significant step in addressing the company's debt maturities.
Asset Management and Performance
Chris Nixon, Head of Asset Management, highlighted the company's asset management activities, noting a 22% increase in comparable hotel RevPAR compared to the second quarter of 2019. Group revenue pace for the portfolio is showing strength, with a 5% increase in total revenue over the second quarter of 2023. The urban assets, particularly the Capitol Hilton, experienced a transformative guest room renovation, leading to a 14% increase in total revenue and 24% increase in hotel EBITDA. The acquisition of the Four Seasons Resort Scottsdale at Troon North has also proved successful, with a 22% increase in hotel EBITDA over the prior year quarter.
Challenges and Future Outlook
Despite the strong performance, the company faced challenges in the form of softness in resort average daily rates, which are still recovering from pandemic-induced highs. However, the company remains optimistic about the prospects of its luxury resort portfolio, particularly the Four Seasons Resort Scottsdale, which is exceeding expectations.
Looking ahead, Braemar Hotels & Resorts is focused on strategic asset sales, debt repayment, and shareholder value creation, positioning the company for a strong future in the hospitality sector. The company's commitment to balance sheet flexibility and strategic initiatives, including a $50 million common share buyback authorization, underscore its confidence in its financial health and growth prospects.
Conclusion
Braemar Hotels & Resorts Inc.'s second quarter earnings call painted a picture of a company navigating strategic changes and growth opportunities with a strong financial foundation. Despite challenges, the company's strategic initiatives, including asset sales and debt repayment, along with its focus on asset management and capital allocation, position it well for future success in the hospitality sector.