Braemar Hotels & Resorts Inc.

Greetings. Welcome to the Braemar Hotels and Resorts Inc. Third Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. A 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. Please note that this conference is being recorded. I will now turn the conference over to your host, Jordan Jettings of Investor Relations. You may begin.

Good morning and welcome to today's call to review results for Braemar Hotels and Resorts for the third quarter of 2021 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 Welter, Chief Operating Officer. Your 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 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 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 in company tables or schedules, which have been filed on form AK with the SEC on October 27, 2021, and may also be accessed through the company's website at www.bhrreit.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 earnings conference call. I will begin by providing an overview of our business and an update on our portfolio. 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. We have five key themes for today's call. First, our luxury resort portfolio continues to outperform and help drive comparable hotel EBITDA of $27.8 million for the quarter. second for the third quarter in a row we were cash flow positive at the corporate level third our portfolio is well positioned to continue to outperform with very strong forward bookings fourth our balance sheet is in good shape with no near-term debt maturities and fifth we completed the acquisition of the mr c beverly hills hotel in los angeles california a luxury hotel ideally located in close proximity to high-end shopping on rodeo drive and business demand from Century City and Culver City. Our comparable hotel EBITDA of $27.8 million during the quarter was driven by strong occupancy levels at our resort properties and a 16.3% increase in ADR over the prior year quarter. Additionally, REVPAR for all hotels in the portfolio increased approximately 168% for the third quarter of 2021 compared to the third quarter of 2020. Our portfolio REVPAR decreased approximately 6.1% when compared to third quarter 2019 REVPAR. We are very encouraged to see our portfolio getting so close to our 2019 levels. As we have said before, we believe our portfolio will get back to 2019 levels before a lot of our peers, given our portfolio composition and quality, but also certain factors that made 2019 not a great benchmark year for us. Specifically, we had three of our properties under major renovation, including the Notary, the Clancy, and the Ritz Carlton St. Thomas. Several of our hotels achieved very strong hotel EBITDA margins during the quarter, with Bartisano at 45%, Hotel Yonville at 50%, and Pier House Resort at 54%. Our overall portfolio comparable EBITDA margin was 23.5%, despite including two hotels with negative hotel EBITDA. While leisure demand continues to be strong, particularly on weekends, Any significant uptick in REVPAR performance is likely to rely on the recovery of corporate transient demand and ultimately group demand. Overall, our resorts continue to perform well, and forward bookings look strong with occupancy for October at approximately 65% at a rate of over $300. Two of this quarter's best performing assets were our Napa Valley properties, with comparable REVPAR up 138% in Partizano and 179% at Hotel Yonville during the third quarter. driven by strong gains in both rate and occupancy. In addition to the strong performance of our Napa Valley assets, the Ritz-Carlton St. Thomas continues to be a standout performer, producing $5.3 million in hotel EBITDA during the quarter. For the full year, we currently forecast our Ritz-Carlton St. Thomas should have close to $30 million in hotel EBITDA, which is a phenomenal result when you consider that we acquired this hotel for $65 million in 2015, and it funded only approximately $30 million in owner-funded capital expenditures over that time. Many of our hotels are in drive-to leisure markets and have been well-positioned to benefit from the resurgence of pent-up leisure demand in recent months. In total, 8 of our 14 hotels are considered resort destinations. These include the Ritz-Carlton Sarasota, Artisano, Hotel Yonville, Ritz-Carlton Lake Tahoe, Pier House Resort, Park High at Beaver Creek, Hilton La Jolla at Torrey Pines, and the Ritz-Carlton St. Thomas. We are pleased to report that this segment delivered a combined hotel EBITDA of $26.7 million for the quarter. I'm also encouraged by the advancing recovery of our urban properties. These properties include the Capitol Hilton, Marriott Seattle Waterfront, the Notary Hotel, the Clancy, Mr. C. Beverly Hills, and Sofitel Chicago. For the third quarter, four of these six properties posted positive hotel EBITDA. This is a significant turnaround. It demonstrates that demand is quickly returning to our cities both amongst the leisure and, to a lesser extent, the corporate transient segment. We expect this trend to accelerate as office reopenings continue during the remainder of 2021 and into 2022. Additionally, we were cash flow positive again at the corporate level for the third consecutive quarter. While our balance sheet was in good shape as we entered 2021, this puts us in a much stronger position financially. We're also happy to resume our growth strategy with the acquisition of the 138-room Mr. C. Beverly Hills Hotel in Los Angeles, California for $77.9 million. An irreplaceable luxury property in a premier location in Los Angeles, this acquisition fits perfectly with our strategy of owning high rev-par luxury hotels and further diversifies our portfolio. It is also an attractive price per key of $474,000 for fee-simple ownership of a luxury hotel. It's an impressive property in the middle of over 45 million square feet of office space, supporting substantial corporate demand and a wide array of world-renowned leisure demand generators, including unrivaled shopping with high-end retailers, vibrant restaurants, and various art and cultural attractions. As part of the transaction, we also acquired five luxury condominium residences adjacent to the hotel, which are currently being offered for extended stay rentals. Additionally, Remington assumed management of the hotel post-acquisition, which we believe will help drive superior operating performance at the property going forward. We believe this property is a great addition to our portfolio and are very excited about the prospects of this acquisition as the hotel's performance during the third quarter has exceeded our expectations with REVPAR growth of 143% over the prior year period. Looking ahead, we continue to see a meaningful uptick on acquisition opportunities in the market. We will continue to be extremely disciplined in our investment approach and only focus on transactions that are accretive to total shareholder return. On the capital markets front, subsequent to quarter end, we finalized one-year extensions on our mortgage loans for the Bar De Soto Resort and Spa and the Hotel Yonkville. Importantly, our balance sheet is in good shape. We have an attractive maturity schedule with no debt maturities for the balance of this year and only one loan maturing in 2022. We've also been active on the investor relations front. Over the past few months, we've attended several investor conferences and participated in numerous investor meetings. We also held a well-attended investor day in New York a couple of weeks ago. Looking ahead to 2022, we will continue to get out on the road to meet with investors to communicate our strategy and the attractiveness of an investment in Braemar. Looking ahead, our unique portfolio, focused on a luxury segment with many properties and drive-to leisure markets, positions us to perform well in both the near term and the long term as business and group travel resumes. We continue to believe that Braemar represents a compelling opportunity in the lodging REIT space. We are a differentiated story with the majority of our assets in very desirable resort locations, the highest quality portfolio in the public markets, and a portfolio that is generating positive cash flow at the corporate level. And what we believe is a solid liquidity position and balance sheet with attractive debt financing in place. I will now turn the call over to Derek.