Braemar Hotels & Resorts Inc.

Greetings, and welcome to the Bremer Hotel and ResortSync fourth quarter 2022 results conference call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Jordan Jennings, 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 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, Executive Vice President and Head of Asset Management. 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 the 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, including 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 8 with the SEC on February 22, 2023, and may also be accessed through the company's website at www.bhre.com. Each listener is encouraged to review those reconciliations provided in their earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the fourth quarter and full year ended December 31st, 2022 with the fourth quarter and full year ended December 31st, 2021. I will now turn the call over to Richard Stockton. Please go ahead, Richard.

Good morning and welcome to our 2022 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'll open the call for Q&A. We have a few key themes for today's call. First, as we've been anticipating, our urban hotels continue to ramp up strongly with comparable hotel EBITDA growth of 195% in the fourth quarter over the prior year quarter. Second, we have now concluded the capital raising for our non-traded preferred stock offering. The capital raised has allowed us to go on offense and grow our portfolio during an attractive time in the cycle. And we're excited about our recent acquisition of the Four Seasons Resort Scottsdale at Troon North. And third, we are pleased to report that the operating performance at the three hotels we have acquired this cycle has exceeded our original underwriting. And we continue to be excited about the addition of these iconic properties to our portfolio. Moving on to our quarterly results. We're extremely pleased with our record fourth quarter results and continue to see outperformance compared to 2019. Our comparable hotel EBITDA of $52.2 million during the quarter was driven by strong results at our resort properties. Additionally, rev par for all hotels in the portfolio increased approximately 8% for the fourth quarter of 2022 compared to the fourth quarter of 2021, which also represents an increase of approximately 20% when compared to the fourth quarter of 2019. Many of our hotels are in attractive leisure markets and have been well positioned to benefit from persistent leisure demand. In total, 10 of our 16 hotels are considered resort destinations. We are pleased to report that this segment delivered a combined hotel EBITDA of $41 million for the quarter. We continue to be encouraged with the continued ramp up of our urban hotels, which generated $11 million of comparable hotel EBITDA in the fourth quarter. For the fourth quarter, all six urban properties posted positive hotel EBITDA. This is a significant turnaround as demand is quickly returning to our cities. This includes leisure as well as corporate transient and corporate group demand. We've been saying that the recovery in our urban hotels would be the next phase of growth for our portfolio. And in the fourth quarter, these assets continue to exhibit solid growth. While leisure demand continues to be strong, particularly on weekends, we've been encouraged by the continued rebound in corporate transient and corporate group demand. Overall, we have seen these trends continue into a strong start to 2023. For the month of January, our preliminary figures suggest that we finished with 55% occupancy and an ADR of $541, which equates to a REVPAR of $297 for the month, exceeding the prior year month by 19%. and January of 2019 by 20%. We're also excited about our recent acquisition of the Four Seasons Resort Scottsdale at Troon North for $267.8 million. This 210-room luxury resort sits on 37 acres and is ideally located in picturesque North Scottsdale. We closed the transaction in early December with cash on hand, and no common equity was issued to fund the acquisition. We subsequently closed on a $100 million mortgage loan secured by the property and used the majority of the proceeds to completely pay off a more expensive loan secured by the Ritz-Carlton Reserve Dorado Beach. This property fits perfectly into our strategy of owning luxury hotels and resorts and further diversifies our portfolio. Looking at our three most recent acquisitions, the Four Seasons Resort Scottsdale True North, Ritz-Carlton Reserve Dorado Beach and Mr. C Beverly Hills, all are performing nicely and produce solid operating performance during the fourth quarter. The Four Seasons Scottsdale delivered rev par of $503 on a 51% occupancy and an ADR of $980. The Ritz-Carlton Reserve Dorado Beach delivered a rev par of $1,425 on a 57% occupancy and an ADR of $2,519. And the Mr. C. Beverly Hills delivered a ref par of $251 on a 76% occupancy and an ADR of $329. The Mr. C. Hotel significantly outpaced our underwriting and continues to ramp up nicely. For the full year, the Ritz-Carlton Reserve Dorado Beach achieved an 8.2% yield on cost, while the Four Seasons Scottsdale achieved 6.4%. During 2022, the performance of the four-season Scottsdale was impacted by having approximately 100 rooms out of service during parts of the year due to ongoing bathroom renovations. As a result, we expect results for 2023 to be even better. Looking ahead, we remain very excited about the prospects for these properties. Our balance sheet is in good shape, and overall, we have an attractive maturity schedule. We do have three upcoming final maturities this year. The Ritz-Carlton-Sarasota loan matures in April, the Hotel Yonkville loan matures in May, and the Bartisona loan matures in August. These are very low leverage loans, and we are already discussing these financings with lenders and don't anticipate any challenges with these maturities. We've 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, which is focused on the luxury segment and with properties in both resort and urban markets, positions us to perform well in both the near term and the long term as leisure demand remains strong and business and group travel continue to accelerate. We have the highest quality hotel portfolio in the public markets in 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.