On July 17, 2024, Braemar Hotels & Resorts Inc. (“Braemar” or the “Company”) completed the sale of the 390-room Hilton Torrey Pines located in La Jolla, California (“Hilton Torrey Pines”) for approximately $163.1 million in cash, net of selling expenses. Additionally, the Company repaid the $66.6 million mortgage loan secured by the hotel property. The Company owns an indirect 75% equity interest in the Hilton Torrey Pines.
The following unaudited pro forma financial information of the Company, as of and for the three months ended March 31, 2024 and for the year ended December 31, 2023, has been prepared for informational purposes only and does not purport to be indicative of what would have resulted had the disposition occurred on the date indicated or what may result in the future. The unaudited pro forma consolidated balance sheet assumes the disposition closed on March 31, 2024. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2023, and the three months ended March 31, 2024, assumes the disposition closed on January 1, 2023. The unaudited pro forma financial information of the Company reflects the removal of the assets and liabilities of the Hilton Torrey Pines and its results of operations, which contains a non-recurring gain associated with the disposition of the hotel property. The pro forma gain resulting from the disposition of the Hilton Torrey Pines is preliminary. Therefore, the actual results may differ from the amounts reflected in the pro forma financial statements. There are no other non-recurring items associated with the transaction.
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2024
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Braemar
Consolidated
Historical (A) | | Hilton Torrey Pines (B) | | Adjustments | | Braemar
Consolidated
Pro Forma |
| ASSETS | | | | | | | |
| Investment in hotel properties, gross | $ | 2,388,484 | | | $ | 121,922 | | | $ | — | | | $ | 2,266,562 | |
| | | | | | | |
| Accumulated depreciation | (512,215) | | | (55,869) | | | — | | | (456,346) | |
| Investment in hotel properties, net | 1,876,269 | | | 66,053 | | | — | | | 1,810,216 | |
| Cash and cash equivalents | 137,051 | | | 4,196 | | | 163,050 | | (C) (i) | 230,432 | |
| | | | | 1,327 | | (C) (i) | |
| | | | | (66,800) | | (C) (ii) | |
| Restricted cash | 82,372 | | | 7,747 | | | — | | | 74,625 | |
| | | | | | | |
| Accounts receivable, net of allowance | 41,001 | | | 1,231 | | | — | | | 39,770 | |
| Inventories | 4,681 | | | 60 | | | — | | | 4,621 | |
| | | | | | | |
| Prepaid expenses | 11,342 | | | 1,190 | | | — | | | 10,152 | |
| Investment in unconsolidated entity | 1,625 | | | — | | | — | | | 1,625 | |
| Derivative assets | 3,087 | | | — | | | — | | | 3,087 | |
| Operating lease right-of-use assets | 78,117 | | | 43,626 | | | — | | | 34,491 | |
| Other assets | 18,701 | | | 104 | | | — | | | 18,597 | |
| Intangible assets, net | 3,409 | | | — | | | — | | | 3,409 | |
| | | | | | | |
| | | | | | | |
| Due from third-party hotel managers | 23,777 | | | — | | | — | | | 23,777 | |
| Total assets | $ | 2,281,432 | | | $ | 124,207 | | | $ | 97,577 | | | $ | 2,254,802 | |
| LIABILITIES AND EQUITY | | | | | | | |
| Liabilities: | | | | | | | |
| Indebtedness, net | $ | 1,223,277 | | | $ | 66,135 | | | $ | — | | | $ | 1,157,142 | |
| | | | | | | |
| Accounts payable and accrued expenses | 144,240 | | | 5,005 | | | (200) | | (C) (ii) | 139,035 | |
| Dividends and distributions payable | 9,253 | | | — | | | — | | | 9,253 | |
| | | | | | | |
| Due to Ashford Inc. | 3,728 | | | — | | | — | | | 3,728 | |
| Due to related parties, net | 766 | | — | | | — | | | 766 | |
| Due to third-party hotel managers | 1,993 | | | 449 | | | — | | | 1,544 | |
| Operating lease liabilities | 60,298 | | | 41,186 | | | — | | | 19,112 | |
| | | | | | | |
| Other liabilities | 22,895 | | | — | | | — | | | 22,895 | |
| Derivative liabilities | — | | | — | | | — | | | — | |
| Total liabilities | 1,466,450 | | | 112,775 | | | (200) | | | 1,353,475 | |
| 5.50% Series B cumulative convertible preferred stock, $.01 par value, 3,078,017 shares issued and outstanding at March 31, 2024 | 65,426 | | | — | | | — | | | 65,426 | |
| Series E redeemable preferred stock, $0.01 par value, 16,162,834 shares issued and outstanding at March 31, 2024 | 375,261 | | | — | | | — | | | 375,261 | |
| Series M redeemable preferred stock, $0.01 par value, 1,747,771 shares issued and outstanding at March 31, 2024 | 43,694 | | | — | | | — | | | 43,694 | |
| Redeemable noncontrolling interests in operating partnership | 33,005 | | | — | | | — | | | 33,005 | |
| Equity: | | | | | | | |
| Preferred stock, $0.01 value, 80,000,000 shares authorized: | | | | | | | |
| 8.25% Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at March 31, 2024 | 16 | | | — | | | — | | | 16 | |
| Common stock, $0.01 par value, 250,000,000 shares authorized, 66,477,431 shares issued and outstanding at March 31, 2024 | 664 | | | — | | | — | | | 664 | |
| Additional paid-in capital | 718,606 | | | 11,432 | | | 76,240 | | (C) (i) | 718,606 | |
| | | | | 1,327 | | (C) (i) | |
| | | | | (66,135) | | (C) (ii) | |
| | | | | | | |
| | | | | | | |
| Accumulated deficit | (412,013) | | | — | | | 65,107 | | (C) (i) | (347,255) | |
| | | | | (349) | | (C) (ii) | |
| Total stockholders’ equity of the Company | 307,273 | | | 11,432 | | | 76,190 | | | 372,031 | |
| Noncontrolling interest in consolidated entities | (9,677) | | | — | | | 21,703 | | (C) (i) | 11,910 | |
| — | | | — | | | (116) | | (C) (ii) | — | |
| Total equity | 297,596 | | | 11,432 | | | 97,777 | | | 383,941 | |
| Total liabilities and equity | $ | 2,281,432 | | | $ | 124,207 | | | $ | 97,577 | | | $ | 2,254,802 | |
See accompanying notes.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(A)Represents the historical consolidated balance sheet of Braemar as of March 31, 2024, as reported in its Quarterly Report on Form 10-Q for the three months ended March 31, 2024, filed on May 9, 2024.
(B)Represents the removal of the historical balance sheet of the Hilton Torrey Pines as of March 31, 2024.
(C)Represents adjustments for Braemar’s disposition of the Hilton Torrey Pines as of March 31, 2024, which includes: (i) an adjustment for the cash consideration received of approximately $163.1 million, net of selling expenses and cash received for hotel net working capital; and (ii) the cash paid to repay the mortgage loan secured by the Hilton Torrey Pines and accrued interest.
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2023
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Braemar
Consolidated
Historical (A) | | Hilton Torrey Pines (B) | | Adjustments | | Braemar
Consolidated
Pro Forma |
| REVENUE | | | | | | | |
| Rooms | $ | 464,899 | | | $ | 28,736 | | | $ | — | | | $ | 436,163 | |
| Food and beverage | 185,331 | | | 15,827 | | | — | | | 169,504 | |
| Other | 89,113 | | | 6,152 | | | — | | | 82,961 | |
| Total hotel revenue | 739,343 | | | 50,715 | | | — | | | 688,628 | |
| | | | | | | |
| | | | | | | |
| EXPENSES | | | | | | | |
| Hotel operating expenses: | | | | | | | |
| Rooms | 105,439 | | | 5,277 | | | — | | | 100,162 | |
| Food and beverage | 144,544 | | | 8,324 | | | — | | | 136,220 | |
| Other expenses | 227,913 | | | 15,875 | | | — | | | 212,038 | |
| Management fees | 23,261 | | | 1,523 | | | — | | | 21,738 | |
| Total hotel operating expenses | 501,157 | | | 30,999 | | | — | | | 470,158 | |
| Property taxes, insurance and other | 38,629 | | | 2,877 | | | — | | | 35,752 | |
| Depreciation and amortization | 93,272 | | | 4,176 | | | | | 89,096 | |
| | | | | | | |
| Advisory services fee | 31,089 | | | — | | | — | | | 31,089 | |
| | | | | | | |
| | | | | | | |
| Corporate general and administrative | 13,523 | | | — | | | — | | | 13,523 | |
| Total expenses | 677,670 | | | 38,052 | | | — | | | 639,618 | |
| Gain (loss) on disposition of assets | — | | | — | | | 86,810 | | (C) (i) | 86,810 | |
| OPERATING INCOME (LOSS) | 61,673 | | | 12,663 | | | 86,810 | | | 135,820 | |
| Equity in earnings (loss) of unconsolidated entity | (253) | | | — | | | — | | | (253) | |
| Interest income | 6,401 | | | 346 | | | — | | | 6,055 | |
| Other income (expense) | 293 | | | — | | | — | | | 293 | |
| Interest expense and amortization of premiums and loan costs | (94,219) | | | (6,069) | | | — | | | (88,150) | |
| Write-off of premiums, loan costs and exit fees | (3,489) | | | — | | | (465) | | (C) (ii) | (3,954) | |
| Gain (loss) on extinguishment of debt | 2,318 | | | — | | | — | | | 2,318 | |
| Unrealized gain (loss) on derivatives | (663) | | | — | | | — | | | (663) | |
| INCOME (LOSS) BEFORE INCOME TAXES | (27,939) | | | 6,940 | | | 86,345 | | | 51,466 | |
| Income tax (expense) benefit | (2,689) | | | (174) | | | — | | | (2,515) | |
| NET INCOME (LOSS) | (30,628) | | | 6,766 | | | 86,345 | | | 48,951 | |
| (Income) loss from consolidated entities attributable to noncontrolling interests | (1,619) | | | — | | | (19,895) | | (C) (iii) | (21,514) | |
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | 5,230 | | | — | | | (3,957) | | (C) (iv) | 1,273 | |
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | (27,017) | | | 6,766 | | | 62,493 | | | 28,710 | |
| Preferred dividends | (42,304) | | | — | | | — | | | (42,304) | |
| Deemed dividends on preferred stock | (4,719) | | | — | | | — | | | (4,719) | |
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMMON STOCKHOLDERS | $ | (74,040) | | | $ | 6,766 | | | $ | 62,493 | | | $ | (18,313) | |
| INCOME (LOSS) PER SHARE - BASIC: | | | | | | | |
| Net income (loss) attributable to common stockholders | $ | (1.13) | | | | | | | $ | (0.28) | |
| Weighted average common shares outstanding—basic | 65,989 | | | | | | | 65,989 | |
| INCOME (LOSS) PER SHARE - DILUTED: | | | | | | | |
| Net income (loss) attributable to common stockholders | $ | (1.13) | | | | | | | $ | (0.28) | |
| Weighted average common shares outstanding—diluted | 65,989 | | | | | | | 65,989 | |
| | | | | | | |
| | | | | | | |
See accompanying notes.
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 2024
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Braemar
Consolidated
Historical (A) | | Hilton Torrey Pines (B) | | Adjustments | | Braemar
Consolidated
Pro Forma |
| Revenue | | | | | | | |
| Rooms | $ | 138,552 | | | $ | 6,295 | | | $ | — | | | $ | 132,257 | |
| Food and beverage | 53,547 | | | 4,066 | | | — | | | 49,481 | |
| Other | 26,980 | | | 1,379 | | | — | | | 25,601 | |
| Total hotel revenue | 219,079 | | | 11,740 | | | — | | | 207,339 | |
| | | | | | | |
| | | | | | | |
| Expenses | | | | | | | |
| Hotel operating expenses: | | | | | | | |
| Rooms | 28,264 | | | 1,285 | | | — | | | 26,979 | |
| Food and beverage | 40,717 | | | 2,137 | | | — | | | 38,580 | |
| Other expenses | 60,076 | | | 3,419 | | | — | | | 56,657 | |
| Management fees | 6,976 | | | 352 | | | — | | | 6,624 | |
| Total hotel operating expenses | 136,033 | | | 7,193 | | | — | | | 128,840 | |
| Property taxes, insurance and other | 10,685 | | | 789 | | | — | | | 9,896 | |
| Depreciation and amortization | 25,420 | | | 1,090 | | | — | | | 24,330 | |
| | | | | | | |
| Advisory services fee | 6,700 | | | — | | | — | | | 6,700 | |
| | | | | | | |
| | | | | | | |
| Corporate general and administrative | (2,226) | | | — | | | — | | | (2,226) | |
| Total operating expenses | 176,612 | | | 9,072 | | | — | | | 167,540 | |
| Operating income (loss) | 42,467 | | | 2,668 | | | — | | | 39,799 | |
| Equity in earnings (loss) of unconsolidated entity | (49) | | | — | | | — | | | (49) | |
| Interest income | 796 | | | 99 | | | — | | | 697 | |
| | | | | | | |
| Interest expense and amortization of loan costs | (26,491) | | | (1,692) | | | — | | | (24,799) | |
| Write-off of premiums, loan costs and exit fees | (721) | | | — | | | — | | | (721) | |
| Unrealized gain (loss) on derivatives | 932 | | | — | | | — | | | 932 | |
| Income (loss) before income taxes | 16,934 | | | 1,075 | | | — | | | 15,859 | |
| Income tax (expense) benefit | (1,452) | | | (64) | | | — | | | (1,388) | |
| Net income (loss) | 15,482 | | | 1,011 | | | — | | | 14,471 | |
| (Income) loss from consolidated entities attributable to noncontrolling interests | 743 | | | — | | | 253 | | (C) (iii) | 996 | |
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | (296) | | | — | | | 59 | | (C) (iv) | (237) | |
| Net income (loss) attributable to the Company | 15,929 | | | 1,011 | | | 312 | | | 15,230 | |
| Preferred dividends | (10,407) | | | — | | | — | | | (10,407) | |
| Deemed dividend on preferred stock | (1,998) | | | — | | | — | | | (1,998) | |
| Net income (loss) available to common stockholders | $ | 3,524 | | | $ | 1,011 | | | $ | 312 | | | $ | 2,825 | |
| Income (loss) per share – basic: | | | | | | | |
| Income (loss) attributable to common stockholders | $ | 0.05 | | | | | | | $ | 0.04 | |
| Weighted average common shares outstanding—basic | 66,455 | | | | | | | 66,455 | |
| Income (loss) per share – diluted: | | | | | | | |
| Income (loss) attributable to common stockholders | $ | 0.05 | | | | | | | $ | 0.04 | |
| Weighted average common shares outstanding—diluted | 268,516 | | | | | | | 72,357 | |
| | | | | | | |
| | | | | | | |
See accompanying notes.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(A)Represents the historical consolidated statement of operations of Braemar for the year ended December 31, 2023, as reported in its Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 14, 2024 and the historical consolidated statement of operations of Braemar for the three months ended March 31, 2024, as reported in its Quarterly Report on Form 10-Q for the three months ended March 31, 2024, filed on May 9, 2024.
(B)Represents the removal of the historical consolidated statements of operations of the Hilton Torrey Pines for the year ended December 31, 2023 and the three months ended March 31, 2024.
(C)Represents adjustments for the Company’s sale of the Hilton Torrey Pines, which includes: (i) the estimated non-recurring gain on the disposition of the Hilton Torrey Pines for the year ended December 31, 2023; (ii) an adjustment for the write-off of deferred loan costs; (iii) the (income) loss allocated to noncontrolling interest in consolidated entities related to the disposition of the Hilton Torrey Pines, including the estimated non-recurring gain for the year ended December 31, 2023, based on an ownership percentage of 25% for both the year ended December 31, 2023, and the three months ended March 31, 2024; and (iv) the net (income) loss allocated to redeemable noncontrolling interests in operating partnership related to the disposition of the Hilton Torrey Pines, including the estimated non-recurring gain for the year ended December 31, 2023, based on an ownership percentage of 6.63% for the year ended December 31, 2023, and 7.75% for the three months ended March 31, 2024. There is no additional estimated tax effect associated with the hotel no longer being part of the consolidated group for the year ended December 31, 2023, and the three months ended March 31, 2024. The pro forma gain and the related tax effects, resulting from the disposition of the Hilton Torrey Pines are preliminary. The actual results may differ from the amounts reflected in the pro forma financial statements.
