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| 8-K - 8-K - Braemar Hotels & Resorts Inc. | ahpinvestorpresentation8-k.htm |
Company Presentation – January 2017
Certain statements and assumptions in this presentation contain or are based upon “forward-looking” information and are being made
pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties. When we use the words “will likely result,” “may,” “anticipate,” “estimate,” “should,” “expect,” “be lieve,” “intend,” or
similar expressions, we intend to identify forward-looking statements. Such forward-looking statements include, but are not limited to, our
business and investment strategy, our understanding of our competition, current market trends and opportunities, and projected capital
expenditures. Such statements are subject to numerous assumptions and uncertainties, many of which are outside of our control.
These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ
materially from those anticipated, including, without limitation: general volatility of the capital markets, the general economy or the hospitality
industry, whether the result of market events or otherwise; our ability to deploy capital and raise additional capital at reasonable costs to repay
debts, invest in our properties and fund future acquisitions; unanticipated increases in financing and other costs, including a rise in interest
rates; the degree and nature of our competition; actual and potential conflicts of interest with Ashford Hospitality Trust, Inc., Ashford Hospitality
Advisors, LLC (“Ashford LLC”), Ashford Inc., Remington Lodging & Hospitality, LLC, our executive officers and our non-independent directors; our
ability to implement and execute on planned initiatives announced in connection with the conclusion of our independent directors’ strategic
review process; changes in personnel of Ashford LLC or the lack of availability of qualified personnel; changes in governmental regulations,
accounting rules, tax rates and similar matters; legislative and regulatory changes, including changes to the Internal Revenue Code and
related rules, regulations and interpretations governing the taxation of real estate investment trusts (“REITs”); and limitations imposed on our
business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes. These and other risk
factors are more fully discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K, and from time to time, in our other filings
with the Securities and Exchange Commission (“SEC”).
The forward-looking statements included in this presentation are only made as of the date of this presentation. Investors should not place
undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or circumstances, changes in expectations or otherwise.
EBITDA is defined as net income before interest, taxes, depreciation and amortization. EBITDA yield is defined as trailing twelve month EBITDA
divided by the purchase price. A capitalization rate is determined by dividing the property's net operating income by the purchase price. Net
operating income is the property's funds from operations minus a capital expense reserve of either 4% or 5% of gross revenues. Hotel EBITDA
flow-through is the change in Hotel EBITDA divided by the change in total revenues. EBITDA, FFO, AFFO, CAD and other terms are non-GAAP
measures, reconciliations of which have been provided in prior earnings releases and filings with the SEC.
This overview is for informational purposes only and is not an offer to sell, or a solicitation of an offer to buy or sell, any securities of Ashford Prime
or any of its respective affiliates, and may not be relied upon in connection with the purchase or sale of any such security.
2
Certain Disclosures
Strategic Overview
Focused strategy of
investing in luxury
hotels and resorts
3
Bardessono Hotel & Spa
Yountville, CA
Pier House Resort
Key West, FL
The Ritz-Carlton St. Thomas
St. Thomas, USVI
Grow platform
through accretive
acquisitions of high
quality assets
Highly-aligned
management team
and advisory
structure
Simple and
straightforward
investment profile
Grow organically
through strong
revenue and cost
control initiatives
Targets conservative
leverage levels
Refined Strategy; Focus on Luxury
4
The luxury hotel segment exhibits greater long term RevPAR growth trend than the
other chain scale segments
The Upper Upscale segment represents the second greatest long term RevPAR growth
trend
Source: STR
$140.20
$148.64
$171.35
$199.43
$206.17
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
2012 2013 2014 2015 TTM 2016
5
Successfully Increasing Portfolio RevPAR...
ACCRETIVE
GROWTH OF
HOTEL
PORTFOLIO
Acquired the Ritz-Carlton St. Thomas, Bardessono Hotel & Spa, Sofitel
Chicago Magnificent Mile, & Pier House Resort
Increased portfolio RevPAR since spin-off by over 47% to $206 as of TTM
September 2016
Increased asset base by 50% since spin-off
6
$0.05
$0.10
$0.12
$0.00
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$0.14
2013 Q2 15 2016
Increased quarterly common dividend by
140% since spin-off
Attractive EBITDA flow-through
performance
Disciplined Capital Strategies
5.3%
5.0%
4.7%
4.4%
4.6%
4.8%
5.0%
5.2%
5.4%
2013 2014 2015
Weighted Average Interest Rate
Decreased
weighted
average
interest rate by
60 bps since
2013 improving
cash flow
Refinanced debt at lower weighted average
interest rates
$72 million convertible preferred equity raise at
$18.90 conversion price (34% premium to current
stock price as of January 11, 2017)
77%
63%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Q1 16 YTD Q3 16
...While Delivering Strong Financial Results
7
HIGHLY
ALIGNED
MANAGEMENT
TEAM
Insider ownership of 16%, 6x more than hotel REIT industry average
Insider ownership among the highest of its peers
Management has significant personal wealth invested in the Company
Incentive fee based on AHP total return outperformance vs. its peers
Insider Equity Ownership
Highly-aligned management team with
among highest insider equity ownership
of publicly-traded Hotel REITs
Public Lodging REITs include: CHSP, CLDT, DRH, FCH, HST, HT, INN, LHO, PEB, RLJ, SHO
Source: Company filings.
* Insider equity ownership for Ashford Prime includes direct & indirect interests & interests of related
parties
AHP’s Management Team Is Aligned Like No Other
16%
6%
3% 3% 3%
2% 2% 2% 2% 1% 1% 1% 1%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
AHP HT RLJ CLDT FCH Peer Avg CHSP INN HST PEB DRH SHO LHO
Benefits of the Ashford Structure
8
Structural Attractiveness
• Publicly traded external advisor
increases transparency and provides
strong alignment
• 8 member Board with 6 independent
directors
• Base Fee – based on AHP’s total
enterprise value rather than book value
• Incentive Fee paid only if total
stockholder return exceeds peer group
average (outperformance capped at
25%)
• AHP owns 9.7% of AINC so shareholders
participate in economics of the advisor
Benefits of Structure
• Increased scale through affiliation with
Ashford Trust (AHP = 11 hotels*; AHT =
123 hotels*)
• Strong brand relationships given large
scale
• Capital markets benefits given scale
across the platforms
• Ability to partner with Ashford Trust on
portfolio acquisitions
• G&A savings from being externally
managed
• Other cost synergies given scale
(property insurance, etc.)
• Key money investment from advisor
*As of January 11, 2017
High Quality Portfolio
9 Ashford Prime Hotels
Marriott Seattle
Seattle, WA
Hilton Torrey Pines
La Jolla, CA
Bardessono Hotel & Spa
Yountville, CA
Pier House Resort
Key West, FL
Renaissance Tampa
Tampa, FL
Sofitel Chicago Magnificent Mile
Chicago, IL
Capital Hilton
Washington D.C.
Courtyard San Francisco
San Francisco, CA
Renaissance Tampa
Tampa, FL
Courtyard Philadelphia
Philadelphia, PA
Capital Hilton
Washington D.C.
Marriott Plano Legacy
Plano, TX
The Ritz-Carlton St. Thomas
St. Thomas, USVI
Portfolio Overview
10
(1) As of September 30, 2016
(2) Wells Fargo Securities Research; Lodging: Quarterly TripAdvisor Ranking (December 22, 2016)
Note: Hotel EBITDA in thousands
Will look to re-position or sell non-core hotels over time if conditions warrant
High quality portfolio with total ADR and RevPAR of $250 and $206, respectively for the TTM
period
Geographically diversified portfolio located in strong markets
Third highest TripAdvisor ranking among publicly-traded Hotel REITs(2)
Number of TTM TTM TTM TTM Hotel % of
Core Location Rooms ADR
(1) Occ. (1) RevPAR(1) EBITDA(1) Total
Capital Hilton Washington D.C. 550 $228 87% $198 $16,359 13.6%
Hilton Torrey Pines La Jolla, CA 394 $193 84% $163 $12,453 10.3%
Sofitel Chicago Magnificent Mile Chicago, IL 415 $217 81% $175 $8,306 6.9%
Pier House Key West, FL 142 $405 89% $362 $10,145 8.4%
Bardessono Napa Valley, CA 62 $728 83% $604 $4,848 4.0%
Ritz-Carlton St. Thomas St. Thomas, USVI 180 $538 79% $426 $9,112 7.6%
Marriott Seattle Waterfront Seattle, WA 358 $265 82% $218 $14,992 12.4%
Courtyard San Francisco Downtown San Francisco, CA 405 $275 89% $245 $13,817 11.5%
Total 2,506 $278 85% $235 $90,032 74.7%
Non-Core
Courtyard Philadelphia Downtown Philadelphia, PA 499 $185 82% $152 $13,017 10.8%
Marriott Plano Legacy Dallas, TX 404 $193 70% $136 $10,890 9.0%
Renaissance Tampa Tampa, FL 293 $187 81% $150 $6,563 5.4%
Total 1,196 $188 78% $146 $30,470 25.3%
Total Portfolio 3,702 $250 82% $206 $120,502 100.0%
Asset Management Initiatives
11
Pier House: Complexed GM and sales team resulting in significant labor savings
Renaissance Tampa: Recently completed significant guestrooms and lobby renovation
Bardessono: City approved construction of presidential villa consisting of 3 large-luxurious suites
The Ritz-Carlton St. Thomas: Implemented profit improvement plan estimated to save ~$1mm
annually; recently completed pool renovation
Capital Hilton: Potentially releasing retail space to higher quality tenant and increased rent
Hilton Torrey Pines: Negotiating extension of ground lease, adding potential 52 years in term
Marriott Seattle: Adding 3 keys by moving concierge lounge to lobby level
Marriott Plano: Actively marketing ~15,000 sq. ft. of highly visible retail space
Courtyard San Francisco: Custom guestrooms renovation and consolidating F&B outlets
Sofitel Chicago Magnificent Mile: Renovation of lobby bar and fitness center; 2017 rooms
renovation
Courtyard Philadelphia: Meeting and pre-function space renovation starting Dec. 2016
Capital Structure and Net Working Capital
Conservative leverage in line with platform strategy
All debt is non-recourse, property level mortgage debt
Maintain excess cash balance to capitalize on opportunities
Hedge unfavorable economic shocks
Dry powder to execute opportunistic acquisitions
12
As of September 30, 2016
(1) At market value as of January 11, 2017
Total Enterprise Value Net Working Capital
Figures in millions except per share values
Stock Price (As of January 11, 2017) $14.12
Fully Diluted Shares Outstanding 30.4
Equity Value $429.5
Plus: Convertible Preferred Equity 72.3
Plus: Debt 712.5
Total Market Capitalization $1,214.2
Less: Net Working Capital (144.5)
Total Enterprise Value $1,069.8
Cash & Cash Equivalents $126.0
Restricted Cash 39.3
Accounts Receivable, net 16.1
Prepaid Expenses 4.2
Due From Affiliates, net (2.8)
Due f om Th rd Party Hotel Managers 5.7
Investment in Ashford Inc. (1) 8.6
Total Current Assets $197.1
Accounts Payable, net & Accrued Expenses $47.8
Dividends Payable 4.9
Total Current Liabilities $52.7
Net Working Capital $144.5
Asset Management Expertise – Bardessono
13
Acquired in July 2015
2015 RevPAR of $564
62 keys, 1,350 sq. ft. of meeting space
Located in Yountville, CA the “Culinary
Capital of Napa Valley”
High barrier to entry market
One of only three LEED Platinum certified
hotels in the U.S., only hotel in California
2015 TripAdvisor Travelers' Choice Award
for Top Hotels - #3 in the U.S.
Hotel Overview
Received $2 million of Key Money from
AINC
Opportunity to add 2 to 3 luxury villas to
attract ultra-luxury guests
Cost control opportunities
Implementation of Remington revenue
initiatives
From August 2015 to September 2016
(since acquisition): RevPAR up 8%, EBITDA
Margin up 488 bps, & EBITDA flow-through
of 152%
Opportunities
Bardessono – Yountville, CA
Bardessono – Yountville, CA
Asset Management Expertise – Pier House
14
Asset management performance significantly
exceeded underwriting
Eliminated $1.5mm in expenses through cost
cutting initiatives:
Right-sized staffing level
Implemented improved housekeeping
practices
Identified additional F&B efficiencies
Realized synergies with other Remington-
managed Key West assets
Saved $385,000 in insurance expense by adding to
Ashford program
Realized approximately $350,000 in annualized
incremental parking revenue
Implemented Strategies
Pier House Resort – Key West, FL
Jun-May 2013
Pre-Takeover
Jun-May 2014
Post-Takeover
Increase
(%, BPs)
RevPAR $283.94 $323.66 14.0%
Total
Revenue*
$19,196 $21,284 10.9%
RPI 97.7% 101.7% 4.09%
EBITDA* $6,031 $8,312 37.8%
EBITDA Flow 109.2%
*$ in Thousands
(1) As of September 30, 2016
Original going-in cap rate of 6.2% in May 2013 and current cap rate of 10.2%(1)
Asset Management Expertise – Ritz St. Thomas
15
The Ritz-Carlton St. Thomas
Acquired in December 2015
180 keys, 10,000 sq. ft. of meeting space
Acquisition completed at favorable
metrics of 7.2x TTM EBITDA and 10% TTM
NOI cap rate
Located in St. Thomas in the U.S. Virgin
Islands with high barriers to entry
30 oceanfront acres along Great Bay
Recognized in the 2015 U.S. News &
World Report's Best Hotel Rankings
Hotel Overview
Significant upside after recently completed
extensive $22 million renovation of guest
rooms and public space
Since closing of the acquisition, our asset
management team has identified several
opportunities to improve performance
EBITDA flow-through of 96% YTD Q3 2016 (1st
full 3 quarters of ownership) with no
change in property manager
Opportunities
Great Bay View
The Ritz-Carlton St. Thomas
Recent Corporate Governance Enhancements
16
Adoption of a majority voting standard for uncontested director elections
and a plurality voting standard in contested director elections
Separate the roles of Chairman and CEO
Prohibit share recycling with respect to share forfeitures, stock options and
stock appreciation rights under the Company’s stock plan by executives
and directors
Implementation of a mandatory equity award retention period for
executives and directors
Adoption of a proxy access resolution which would enable a shareholder, or
a group of not more than 20 shareholders, who have continuously owned
3% or more of the Company’s common stock for a minimum of 3 years to
include nominees in its proxy materials for the greater of two or 20% of the
Board
Addition of two independent directors to the Board. As part of this initiative,
the Company is pleased to announce that Ken Fearn has joined the Board
of Directors, bringing the total number of directors to eight and the total
independent directors to six
Investor feedback shared with Board at quarterly board meetings
Board of Directors Diversity Matrix
Professional Experience Geography Independence
Real Estate /
Hospitality
C-Suite
Executive
Entrepreneurship Legal Public Office Southwest
West
Coast
Southeast Independent
Monty J.
Bennett
Curtis B.
McWilliams
Douglas A.
Kessler
Matthew D.
Rinaldi
Stefani D.
Carter
W. Michael
Murphy
Andrew L.
Strong
Kenneth H.
Fearn
17
Board of Directors Diversity Matrix (cont.)
Gender Age Ethnicity
Male Female 25-40 41-55 56-75
White /
Caucasian
African
American
Monty J. Bennett
Curtis B.
McWilliams
Douglas A.
Kessler
Matthew D.
Rinaldi
Stefani D. Carter
W. Michael
Murphy
Andrew L. Strong
Kenneth H. Fearn
18
Key Takeaways
19
High quality portfolio with focused strategy of investing in luxury hotels
and resorts
Announced recent corporate governance enhancements, appointment
of new independent director, and appointment of new CEO
Ample liquidity to pursue accretive acquisitions
Highly aligned management team
Company Presentation – January 2017