Braemar Hotels & Resorts Inc.

Greetings and welcome to the Braemar Hotels and Resorts fourth quarter 2021 earnings 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. As a reminder, this conference is being recorded. I would now like to turn the call over to Jordan Jennings, Manager of Investor Relations. Thank you. You may begin.

Good morning and welcome to today's call to review results for Braemar Hotels and Resorts for the fourth quarter and full year 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 Chris Nixon, Senior Vice President and Head of Asset Management. Your 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 state's corporate 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 the company's tables or schedules, which have been filed on form 8K with SEC on February 24, 2022, and may also be accessed through the company's website at www.chrreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in release. I will now turn the call over to Richard Stockton. Please go ahead, Richard.

Good morning. And welcome to our fourth 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 Chris 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 $35.5 million for the quarter. an increase of 12.2% versus the comparable quarter in 2019. Second, we continue to be cashflow 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 and with our recent refinancing of the Park High at Beaver Creek, we have no near term debt maturities. And fifth, we announced the pending acquisition of the Dorado Beach at Ritz-Carlton Reserve in Dorado, Puerto Rico, one of the most iconic luxury assets in the Americas. Our comparable hotel even of $35.5 million during the quarter was driven by strong occupancy levels at our resort properties and an 18.5% increase in ADR over the prior year quarter. Additionally, RevPAR for all hotels in the portfolio increased approximately 163% for the fourth quarter of 2021 compared to the fourth quarter of 2020. Our portfolio REVPAR increased approximately 6.3% when compared to fourth quarter 2019 REVPAR and ADR was up over 32% compared to the fourth quarter 2019. In fact, in the fourth quarter, we achieved the highest quarterly REVPAR in our company's And we are very encouraged to see our portfolio getting so close to our full year 2019 REVPAR levels. We enter 2022 excited about our opportunities to deliver continued growth and expect to achieve full year 2019 REVPAR levels by this calendar year. And also expect to meet or exceed full year 2019 Hotel EBITDA by calendar year 2023. As we have said before, we believe our portfolio will get back to 2019 levels before most 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 Bar De Cento at 41%, Hotel Yonville at 46%, and Pier House Resort at 57%. Our overall portfolio comparable EBITDA margin was 27.1%, despite including one hotel with negative hotel EBITDA. While leisure demand continues to be strong, particularly on weekends, any significant uptake in RevCar performance is likely to rely on the recovery of corporate transient demand and ultimately corporate group demand. Overall, our resorts have started the year strongly, despite industry-wide pullback associated with Omicron. For the month of January, We finished at 44% occupancy and an ADR of $500, which equated to RevPAR exceeding 2019 levels by 2.6%. For February, we expect to exceed 55% occupancy with continued RevPAR outperformance versus 2019. The Ritz-Carlton St. Thomas continues to be a standout performer, producing $6.6 million in hotel EBITDA during the fourth quarter. For the full year, our Ritz-Carlton St. Thomas had approximately $28 million of hotel EBITDA, which is a phenomenal result when you consider that we acquired this hotel for $65 million in 2015 and have funded only approximately $30 million in owner-funded capital expenditures over that time. Many of our hotels are in drive-to leisure markets that have been well-positioned to benefit from the resurgence of pent-up leisure demand in recent months. In total, eight of our 14 hotels are considered resort destinations. These hotels include the Ritz-Carlton Sarasota, Bar De Sono, Hotel Yonfield, the 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're pleased to report that this segment delivered a combined hotel EBITDA of $31.8 million for the quarter. I also continue to be encouraged by the advancing recovery of our urban properties. These properties include the Capitol Hilton, the Marriott Seattle Waterfront, the Notary Hotel, the Clancy, Mr. C Beverly Hills, and the Sofitel Chicago. For the fourth quarter, five of these six properties posted positive hotel EBITDA. This is a significant turnaround and 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 2022. Additionally, we were cash flow positive again at the corporate level for the fourth consecutive quarter. While our balance sheet is in good shape as we enter 2022, this puts us in a much stronger position financially. We're also happy to be continuing to implement our growth strategy with the announcement of the pending acquisition of the 96-room Dorado Beach, a Ritz-Carlton Reserve in Dorado, Puerto Rico, for $186.6 million. An iconic luxury asset, the Dorado Beach was the first Ritz-Carlton Reserve in the Americas, and is one of only five Ritz-Carlton Reserve properties worldwide. With its premier beachfront location on the north coast of Puerto Rico, the property is situated within Dorado Beach Resort, a 1,900-acre master-planned community and one of the most sought-after residential real estate markets in both Puerto Rico as well as the United States. The ultra-luxury asset offers guests numerous world-class amenities, both within the resort as well as the surrounding development. In addition, we will also be acquiring the income stream attributable to $14,000 luxury residential units adjacent to the ultra luxury resort that participate in a rental management program. We believe this property will be a great addition to our portfolio and are very excited about the prospects of this acquisition as the hotel's performance during the fourth quarter delivered RevPar of $1,432 with 66% occupancy and an ADR of $2,165. We plan to complete the acquisition in the coming weeks. Looking ahead, we continue to see a meaningful uptake on acquisition opportunities in the market. We will continue to be extremely disciplined in our investment approach and only focus on transactions that are creative to total shareholder return. On the capital markets front, we continue to raise capital via our non-traded preferred stock. And subsequent to quarter end, we completed the refinancing of the Park High at Beaver Creek Resort and Spa on very attractive terms. Derek will provide more details on that in a moment. Importantly, our balance sheet is in good shape We have an attractive maturity schedule with our next hard maturity not until April 2023. 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. In the months ahead, 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 the luxury segment with many properties and drive-to leisure markets positions us to perform well in both the near-term and long-term as business and group travel resumes. We continue to believe that Braemar represents a compelling opportunity in the Lodge and Read 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, 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. Thanks, Richard.