Braemar Hotels & Resorts has concluded its strategic review process and plans to transition to a self-managed real estate investment trust while remaining publicly traded, the company announced. The company originally put itself up for sale last August. The move is intended to simplify the company’s structure and align management more closely with shareholder interests, while maintaining its focus on luxury hotel assets in major U.S. and international markets.
As part of the transition, Braemar will terminate the advisory agreement and contractual arrangements with Ashford and its affiliates and will internalize its management functions. Following termination, management, including Braumar's President and CEO Richard Stockton, will employed directly by Braemar. This new structure is expected to reduce Braemar's general and administrative costs by more than $25 million annually. By canceling the Ashford Master Agreements, Braemar "will be free to utilize any third-party company to provide property management, project management or other services at the company's hotels."
Braemar is terminating its contractual relationships with Remington Lodging & Hospitality and Premier Project Management, both are subsidiaries of Ashford. Certain immaterial, short-term contracts will be retained with Inspire, Pure and RED Hospitality to avoid disrupting existing hotel operations.
"The steps we are announcing today are the result of the special committee's thorough review of strategic alternatives and represent what the Board believes is the best outcome for Braemar's shareholders," Rebeca Odino-Johnson, chairperson of the special committee said in a statement. "In formulating the path forward, the board carefully considered the feedback it has received in the context of ongoing discussions with a number of shareholders, as well as the advice of its independent financial and legal advisors. Braemar's self-management will create meaningful value, and shareholders will benefit from a new, purpose-built Board."
The company intends to maintain a portfolio of approximately six to eight luxury properties across the U.S. and the Caribbean, which had a gross asset value of over $1 billion and generated total annual revenue of $300 to $350 million.
The company intends to directly hire employees and relocate to new office space, headquartered in Dallas. By directly employing its own management team, Braemar expects to reduce G&A costs by more than $25 million per year.
"With a streamlined portfolio, in-house management and renewed focus on operational efficiency, Braemar will be better positioned for long-term profitability, shareholder alignment and value creation," Stockton said. "We are also pleased with the consideration we are receiving from the recently announced asset sales at attractive values. We expect to continue evaluating the sale of an additional two or three assets to satisfy the Company's obligations associated with the termination of the Ashford advisory relationship and focus on maximizing the value of our remaining luxury portfolio. We believe that the combination of these factors will be materially accretive to shareholder value."
Five new independent directors will be added to the board. Concurrent with these appointments, all existing directors, including the Chairman Monty Bennett, except for Stockton, have agreed to step down from the board.
Selling Off 3
An 8-K filing with the U.S. Securities and Exchange Commission earlier this month shows Braemar subsidiaries will sell The Ritz-Carlton Sarasota in Sarasota, Fla.; the Hotel Yountville in Yountville, Calif.; and Bardessono Hotel and Spa, also located in Yountville, Calif. Other terms and conditions were not disclosed.
The company’s portfolio will continue to center on high-end, full-service hotels and resorts, with a strategy focused on driving long-term value through asset management, capital investment and market positioning. Braemar also noted that the transition is expected to provide greater flexibility in pursuing future growth opportunities, including acquisitions and capital allocation initiatives.
The company did not disclose a specific timeline for the completion of the transition but indicated that additional details will be shared as the plan progresses.