Braemar Hotels & Resorts Inc.

Braemar Hotels and Resorts Inc. First Quarter 2022 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jordan Jennings, Manager, Investor Relations. Thank you and please go ahead.

Good morning and welcome to today's call to review results for Braemar Hotels and Resorts for the first quarter of 2022 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. 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 and certainties and known or unknown risk 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. Before 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 perspective, 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 SEC on May 4, 2022, and may also be accessed through the company's website at www.chre.com. Each listener is encouraged to review those reconciliations provided in the earnings released together with all other information provided in the release. I will now turn the call over to Richard Sutton. Please go ahead, Richard.

Good morning and welcome to our first 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 $59.4 million for the quarter, an increase of 26.9% versus the comparable quarter in 2019. Second, we continue to be cash flow positive at the corporate level. and generated more cash flow in the first quarter than we did for the full year of 2021. Third, our portfolio is well positioned to continue to outperform with very strong forward bookings, as we are now seeing corporate transient and group business accelerating in their recovery on top of the already strong leisure segment. Fourth, our balance sheet is in good shape with our recent refinancing of the Park High at Beaver Creek We have no remaining final debt maturities in 2022. And fifth, we completed the acquisition of the Ritz-Carlton Reserve Dorado Beach in Dorado, Puerto Rico, one of the most iconic luxury assets in the Americas, which will further increase our already industry-leading rev par. Our comparable hotel EBITDA of $59.4 million during the quarter was driven by strong occupancy levels at our resort properties and a 13.9% increase in ADR over the prior year quarter. Additionally, REVPAR for all hotels in the portfolio increased approximately 68% for the first quarter of 2022 compared to the first quarter of 2021, and our comparable portfolio REVPAR increased approximately 19% when compared to the first quarter of 2019. In fact, In the first quarter, we achieved the highest quarterly rev par in our company's history. We are very encouraged to see our portfolio exceed comparable 2019 rev par levels. Additionally, as discussed, we just closed on the acquisition of the Ritz-Carlton Reserve Toronto Beach in mid-March. Assuming that we had owned the property for the entire month of March, we would have achieved a rev par in the month of March of an unprecedented $400. I'm going to speak a little more about this luxury asset in a few moments. but this property is going to significantly increase our reported REVPAR going forward. We remain excited about our opportunities to deliver continued growth, and for calendar year 2022, we now expect to materially exceed both 2019 REVPAR and 2019 Hotel y Bidat on both a comparable and actual basis. Several of our hotels achieved very strong Hotel y Bidat margins during the quarter, with Pier House Resort at 62%, Park Hire Beaver Creek at 42%, the Ritz-Carlton St. Thomas at 42%, and the Ritz-Carlton Sarasota at 41%. Our overall portfolio comparable EBITDA margin was 33%, despite including one hotel 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 recovery of corporate transient demand and ultimately corporate group demand. Overall, we have seen a strong start to the second quarter at our resort properties. For the month of April, we finished with 68% occupancy and an ADR of $482, which equated to rent apart for the month exceeding 2019 by almost 36%. 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, nine of our 15 hotels are considered resort destinations. These hotels include the Ritz-Carlton Sarasota, Bar de Sona, Hotel Yachtville, the Ritz-Carlton Lake Tahoe, the Ritz-Carlton Reserve Dorado Beach, Pier House Resort, Park Hyatt Beaver Creek, Hilton La Jolla Torrey Pines, and the Ritz-Carlton St. Thomas. We are pleased to report that this segment delivered a combined hotel EBITDA of $59.5 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 Maranciano Waterfront, the Notary Hotel, the Clancy, Mr. C Beverly Hills, and the Sofitel Chicago. For the first 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 fifth consecutive quarter. While our balance sheet was already in good shape as we entered 2022, this puts us in a much stronger position financially. We're also happy to be continuing to implement our growth strategy with the acquisition of the 96-room Ritz-Carlton Reserve Dorado Beach in Dorado, Puerto Rico for $193 million, an iconic luxury asset. This hotel was the first Ritz-Carlton Reserve in the Americas and is one of only five Ritz-Carlton Reserve properties worldwide. The 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 in one of the most sought-after residential real estate markets in both Puerto Rico as well as the United States. The ultra-luxury aspect offers guests numerous world-class amenities both within the resort as well as the surrounding development. In addition, we acquired the income stream attributable to 14 luxury residential units adjacent to the ultra-luxury resort that participate in a rental management program. 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 first quarter delivered comparable rep part of $1,725 with 56% occupancy and an APR of $3,083. Looking ahead, we continue to see a robust pipeline of acquisition opportunities in the market. We will continue to be extremely disciplined in our investment approach and only focus on transactions that we believe will be accretive to total shareholder return. On the capital markets front, we continue to raise capital via our non-traded preferred stock offering, and during the quarter, 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, and we recently reinstated our common dividend. We have also been active on the investor relations front. 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 the long term as business and group travel resumes. We continue to believe that Braemar represents a compelling opportunity in a luxury 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.