Braemar Hotels & Resorts Inc.

Greetings, and welcome to the Braemar Hotel and Resorts Incorporated third quarter 2020 results conference call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Jornie Jennings or Braymar. Please go ahead, Ms. Jennings.

Good morning and welcome to today's call to review results for Braymar Hotel and Resorts for the third 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 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 State 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 accounting 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 in the company's tables or schedules, which have been filed on Form 8K with the SEC on October 28, 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 third quarter 2020 earnings conference call. I will begin by providing an overview of our business and an update on our portfolio, which includes our hotels achieving positive hotel EBITDA for the quarter and all of our hotels now being open, including the recently rebranded Clancy Hotel in San Francisco. After that, Derek will provide a review of our financial results and Jeremy will provide an update on our asset management activity. Afterward, we will open the call for Q&A. The COVID-19 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 at our hotels, our hotel guests, and the communities in which we operate have been a top priority, and we have taken several 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 last time we spoke, the vast majority of our portfolio had suspended operations for a significant portion of the second quarter. Thus, I am extremely pleased to report that since then, all of our properties have reopened and we reached an important milestone by achieving positive hotel EBITDA across our portfolio during the quarter, driven by a strong occupancy performance of over 48% at our resort properties. Upon the bulk of our properties reopening in July, We achieved portfolio-wide occupancy of almost 30% and hovered around that level for August and September, while our ADR declined as a result of adding lower-rated room inventory to the reopened portfolio. While leisure demand is holding up nicely, particularly on weekends, any significant uptick in RevPAR performance is likely to rely on the recovery of corporate transient demand and ultimately group demand as a result of widespread vaccination or achieving herd immunity. Many of our hotels are in drive-to leisure markets and have been well-positioned to benefit from the resurgence of leisure demand in recent months. In total, eight of our 13 hotels are considered resort destinations. These hotels include the Ritz-Carlton Sarasota, Bar De Sono, Hotel Yonville, 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 as all eight of these properties had positive EBITDA for the quarter. While it is still early in the reopening process and the impact of the virus is still unpredictable, it is clear from the feedback we are hearing that guests are excited to be traveling again. With all of our hotels now 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 enhance guest safety, Our properties have instituted stringent safety measures and protocols consistent with evolving best practice recommendations regarding COVID-19, ranging from enhanced hygiene standards to keyless check-in and electrostatic sprayers to protect guests. Additionally, in the near term, we have specific plans to contain expenses across the portfolio as we continue to navigate the reopening process. We are offering optional housekeeping services at some properties for stayovers. We are also eliminating van transportation, airport shuttle service, valet parking services, turndown service, and all amenities that exceed brand standards. We are 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 continued ramp-up in operations that we now anticipate. We are also excited about the recent opening of the Clancy in early October. Located in San Francisco's vibrant Soma Market. The former Courtyard San Francisco downtown underwent a rebranding and renovation in excess of $30 million to create the Clancy. It joins Marriott International's autograph collection hotels, and the property features 410 guest rooms over 11,000 square feet of modern meeting space throughout 16 event rooms. While construction restrictions delayed the Clancy's reopening by several months, and we expect that occupancy levels will be moderately low given COVID-19's negative impact on group and business transient demand. We look forward to realizing enhanced financial performance from this property over the long term as a result of the rebranding and renovation. While we continue to face the challenges of the pandemic and the uncertainties that go with it, we have 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 more clarity on the recovery and the direction of the economy. All in, we estimate that we have reduced our run rate corporate, G&A, and reimbursable expenses under our advisory agreement by approximately 25%. As previously discussed, 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 25, 2022. During the quarter, we also finalized discussions with our property-level lenders and now have no defaults across our borrowings. Our intention is to remain current on these obligations going forward. We successfully navigated through a very challenging operating environment during this quarter. Our balance sheet is in good shape, and I believe we are set up very well for the ultimate recovery in our industry. I will now turn the call over to Derek.