On November 6, 2024, Braemar Hotels & Resorts Inc (BHR, Financial) released its 8-K filing detailing the financial results for the third quarter ending September 30, 2024. Braemar Hotels & Resorts Inc is a real estate investment trust focusing on luxury hotels in key U.S. locations, operating under brands like Marriott and Hilton.
Performance Overview
Braemar Hotels & Resorts Inc reported a net loss attributable to common stockholders of $1.4 million, or $0.02 per diluted share, missing the analyst estimate of -$0.02 per share. The company's total revenue for the quarter was $148.4 million, falling short of the estimated $154.66 million. The decrease in revenue was primarily due to a 1.6% decline in Comparable RevPAR to $261 and a 3.8% drop in Comparable ADR to $383, despite a 2.3% increase in occupancy to 68.2%.
Financial Achievements and Challenges
Despite the challenges, Braemar Hotels & Resorts Inc achieved an Adjusted EBITDAre of $18.5 million and a Comparable Hotel EBITDA of $24.7 million. These metrics are crucial for REITs as they reflect the company's ability to generate cash flow from its hotel operations. The company also ended the quarter with $168.7 million in cash and cash equivalents, providing a solid liquidity position.
Strategic Moves and Capital Structure
During the quarter, Braemar Hotels & Resorts Inc completed the sale of the Hilton La Jolla Torrey Pines for $165 million, which was part of a joint venture where the company held a 75% interest. Additionally, the company refinanced five hotels with a new $407 million loan, extending the maturity to 2029. This refinancing effort is part of Braemar's strategy to optimize its capital structure and manage interest rate risks, with 23% of its debt effectively fixed.
Income Statement and Balance Sheet Highlights
The company's total assets stood at $2.2 billion, with $1.2 billion in loans. The net debt to gross assets ratio was 41.0%, indicating a moderate leverage level. The company also declared a quarterly cash dividend of $0.05 per share, maintaining its commitment to returning value to shareholders.
Commentary and Outlook
“We’re very pleased with the strong third quarter performance of our urban hotels, which reported a RevPAR increase of 6% over the prior year period,” noted Richard J. Stockton, Braemar’s President and Chief Executive Officer.
Stockton emphasized the company's focus on maximizing shareholder value through strategic asset sales and effective risk management. The company remains optimistic about its portfolio's potential to outperform in the near and long term.
Conclusion
Braemar Hotels & Resorts Inc's third-quarter results highlight both the challenges and strategic initiatives undertaken by the company. While the earnings missed analyst estimates, the company's strategic refinancing and asset sales demonstrate a proactive approach to enhancing financial stability and shareholder value. Investors will be keen to see how these strategies impact future performance, especially in the context of the broader economic environment.
Explore the complete 8-K earnings release (here) from Braemar Hotels & Resorts Inc for further details.
