Braemar Hotels & Resorts: Navigating the Post-COVID Landscape

Braemar Hotels & Resorts Inc. (BHR) has been a notable player in the luxury hotel and resort sector, but the post-COVID environment has presented significant challenges. The company's recent financial performance, strategic initiatives, and market position offer a nuanced picture of its current state and future prospects.

Financial Performance: A Mixed Bag

Braemar's fourth-quarter 2024 financial results reveal a company grappling with the aftermath of the pandemic. The net loss attributable to common stockholders was $(31.1) million, or $(0.47) per diluted share. This loss, while substantial, is not an outlier in the industry. Competitors like Host Hotels and Resorts Inc. also reported significant losses, indicating that the entire sector is still recovering from the pandemic's impact.



However, Braemar's adjusted EBITDAre of $30.2 million for the quarter shows that the company is generating operational cash flow despite the net loss. This figure, while lower than that of larger competitors, suggests that Braemar is not entirely off track in terms of operational efficiency.

Strategic Initiatives: Optimizing for the Future

Braemar has undertaken several strategic initiatives to navigate the post-COVID inflationary environment. One key move was the extension of its mortgage loan secured by the 170-room Ritz-Carlton Lake Tahoe. This extension, with a paydown of $10 million and a new spread of SOFR + 3.25%, provided additional liquidity and optimized the capital structure.



Another significant step was the refinancing of $407 million involving five hotels. This new facility has a two-year initial term with three one-year extension options and bears interest at SOFR + 3.24%. This refinancing addressed several 2024 and 2025 maturities, improving the company’s debt profile and reducing near-term refinancing risks.

Additionally, Braemar has been proactive in optimizing its portfolio through asset sales. The sale of the Hilton La Jolla Torrey Pines for $165 million, representing a 11.9x LTM EBITDA / 7.2% all-in cap rate, allowed BHR to address its last remaining 2024 debt maturity and improve its leverage profile. Management is evaluating the potential sale of two additional properties, which could further strengthen the company’s balance sheet.

Market Position: Holding Ground

Braemar's market share within the Real Estate Investment Trusts (REITs) industry stands at 3.66% for the 12 months ending Q4 2024. While this is lower than that of competitors like Host Hotels and Resorts Inc. (28.57%) and Park Hotels and Resorts Inc. (13.06%), it is important to note that Braemar's focus on luxury properties positions it uniquely in the market.



The company's comparable RevPAR for all hotels increased 1.9% over the prior year quarter to $305, and comparable ADR increased 0.4% over the prior year quarter to $480. These figures indicate that Braemar is making progress in recovering from the pandemic's impact, despite the challenges.

Conclusion: A Path Forward

Braemar Hotels & Resorts Inc. is navigating a complex post-COVID landscape with a mix of financial challenges and strategic initiatives. While the company's net loss and lower adjusted EBITDAre compared to competitors are concerning, its proactive measures to optimize its capital structure and portfolio suggest a path forward. As the luxury hotel sector continues to recover, Braemar's focus on high-end properties and strategic initiatives position it well for future growth. Investors will be watching closely to see how the company continues to adapt and thrive in this evolving market.