Braemar Hotels & Resorts Inc.

Hello and welcome to the Braemar Hotels and Resorts second quarter 2020 results conference call. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Jordan Jennings, Investor Relations for Braemar Hotels and Resorts. Please go ahead.

Good morning and welcome to today's call to review results for Braemar Hotels and Resorts for the second quarter of 2020 and to update you on recent developments. On the call today will be Richard Stockton, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, and Jeremy Walter, Chief Operating Officer. The results as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were distributed yesterday in a press release. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the federal securities regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or a solicitation of an offer to buy any securities. Securities will be offered only by means of a registration statement and prospectus, which can be found at www.sec.gov. In addition, certain terms used in this call are non-GAAP financial measures reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on Form 8K with the SEC on July 30, 2020, and may also be accessed through the company's website at www.bhreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. I will now turn the call over to Richard Stockton. Please go ahead, Richard.

Good morning. Welcome to our second quarter 2020 earnings conference call. I will begin by providing an overview of our business and an update on our portfolio, including the reopening of almost all of our hotels. After that, Derek will provide a review of our financial results, and then Jeremy will provide an update on our asset management activity. Afterward, we will open the call for Q&A. The COVID-19 global pandemic has created both social and economic disruption on an unprecedented level. and has created a volatile landscape throughout the hospitality industry. As I have said previously, this has been an extraordinary period for all of us, and our entire leadership team has been steadfast in our commitment to protect all of our stakeholders during this unprecedented time. A few objectives have continued to guide us. The health and well-being of the employees of our hotels, our hotel guests, and the communities in which we operate have been a top priority. and we have taken a number of preventative measures to keep them safe. As stay-at-home orders were implemented, we quickly adapted to the restrictions and challenges affecting our properties and adjusted the staffing model at our hotels while reducing other operating expenses in an effort to preserve cash and minimize near-term losses. The vast majority of our portfolio have suspended operations for a significant portion of the second quarter. As we discussed on our last call, We believe that our portfolio was well positioned to benefit as our hotels resumed operations, given that eight of our 13 hotels generate a significant amount of leisure demand. These include the Ritz-Carlton Sarasota, Bar De Sono, Hotel Yachtville, Ritz-Carlton Lake Tahoe, Pier House Resort, Park High at Beaver Creek, Hilton La Jolla Torrey Pines, and Ritz-Carlton St. Thomas. We are pleased to report that this thesis has played out just as we expected. We're seeing good results across our reopened hotels, and it's clear from the feedback we're hearing that guests are excited to be traveling again. It's still early in the reopening process, and the impact of the virus is still unpredictable, but we are encouraged so far. As far as operating results, the Ritz-Carlton Sarasota, Pier House Resort, and Bar De Sono all had positive hotel EBITDA for the month of June. The Ritz-Carlton Sarasota, despite RevPar being down over 60% during the quarter, had positive hotel EBITDA for the entire second quarter. This was a fantastic result given the disruption to our business during this quarter and is a testament not only to the team at the hotel, but also to the fact that a significant amount of the revenue at that property is recurring membership revenue, which is less volatile and more predictable than rooms and F&B revenue. In fact, the property was also able to increase its EBITDA margin by 74 basis points during the second quarter. a truly impressive result. With nearly all of our hotels reopened to the public, we continue to prioritize the health and safety of our guests and staff, and we are being thoughtful, deliberate, and flexible as our hotels resume operations. To ensure guest safety, our properties have instituted stringent safety measures and protocols consisting with evolving best practice recommendations regarding COVID-19, ranging from enhanced hygiene standards, tequilas check-in, and electrostatic sprayers to protect guests. Additionally, in the near term, we have specific plans to contain expenses as the portfolio continues the reopening process. We're offering optional housekeeping service at some properties for stayovers. We're also eliminating van transportation, airport shuttle service, valet parking services, turndown service, and all amenities that exceed brand standards. We're also suspending some services at concierge lounges, M-Clubs, and all spas and kids clubs. Our asset management efforts have been relentless and have positioned us well for the impending ramp-up in our properties that we now anticipate. Looking ahead a few months, we continue to be excited about the Courtyard San Francisco Downtown and its upcoming conversion to the Autograph Collection under the name The Clancy. The renovation continued during the second quarter with the completion of the lobby, meeting space, new cafe, market, facade, and new front entrance. We're currently working on the restaurant and bar and expect to have the renovation completed in September. Given the current uncertainties, we've also taken proactive and aggressive actions to protect and enhance our corporate liquidity. This included cutting expenses at the corporate level and significantly reducing our planned capex spend for the year. We will continue to preserve cash until we have clarity on the recovery and direction of the economy. We estimate that we have reduced our run rate corporate G&A and reimbursable expenses under our advisory agreement by approximately 25%. We also closed on an amendment to our corporate credit facility. With a pay down of $10 million, the amendment converted the $75 million corporate credit facility into a $65 million term loan with the same maturity date of October 25th, 2022. We've also made significant progress in our discussions with our property level lenders. Derek will discuss this in more detail. We successfully navigated through a very challenging operating environment during the quarter, and I believe we are set up very well for the ultimate recovery. As I turn the call over to Derek to discuss our financial results, please keep in mind that almost all of our properties were closed during the second quarter. So while this quarter's financial metrics are interesting from a voyeuristic perspective, they provide little useful direction to inform investors on the state or potential of the business. I will now turn the call over to Derek.