BRAEMAR HOTELS & RESORTS Q3 2024 Earnings Report

BRAEMAR HOTELS & RESORTS EPS Results

• Actual EPS: -$0.02
• Consensus EPS: -$0.04
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: -$0.08

BRAEMAR HOTELS & RESORTS Revenue Results

• Actual Revenue: $148.40 million
• Expected Revenue: $157.78 million
• Beat/Miss: Missed by -$9.38 million
• YoY Revenue Growth: N/A

BRAEMAR HOTELS & RESORTS Announcement Details

• Quarter: Q3 2024
• Date: 11/11/2024
• Time: After Market Closes
• Conference Call Date: Thursday, November 7, 2024
• Conference Call Time: 11:00AM ET

BRAEMAR HOTELS & RESORTS (NYSE:BHR), Inc. (NYSE:BHR) is a publicly traded equity real estate investment trust (REIT) focused on acquiring, owning and operating upper-upscale and luxury hotels and resorts. The company invests in a combination of direct fee interests and equity stakes in well-known branded properties, structuring its investments through long-term leases, ground leases and joint ventures. Braemar’s business model generates stable cash flows through base rent, percentage rent tied to property revenues and reimbursements for property operating expenses and capital improvements.

The company’s portfolio is strategically concentrated in primary urban and resort markets across the United States, including key destinations in California, Florida and the Northeast corridor. By partnering with leading hotel operators and targeting properties with high barriers to entry, Braemar aims to enhance asset performance through active asset management, brand repositioning and selective capital expenditures. Regular portfolio reviews support disciplined acquisition and disposition activities designed to optimize the trust’s risk-adjusted returns.

Braemar Hotels & Resorts is a self-administered REIT led by a management team with deep experience in hospitality real estate and corporate governance. The executive leadership and board of directors bring decades of combined expertise in hotel investment, financial structuring and property operations. As a publicly listed REIT, Braemar provides investors transparent access to a specialized lodging portfolio underpinned by diversified cash flow sources and a commitment to disciplined capital allocation.

BRAEMAR HOTELS & RESORTS Q3 2024 Earnings Call Transcript

Key Takeaways

• Our urban hotel portfolio delivered 6% RevPAR growth in Q3 with urban RevPAR of $213 and EBITDA of $16.4 million, and remains the primary driver of portfolio performance across all demand segments.
• We have addressed all 2024 debt maturities through the sale of Hilton La Jolla Torrey Pines and secured a $407 million CMBS refinancing on five hotels at SOFR+3.24% (extensions to 2029), and are working to refinance our sole 2025 maturity.
• Under our Shareholder Value Creation Plan, we sold Hilton La Jolla Torrey Pines for $165 million at a 7.2% cap rate, redeemed ~$50 million of non-traded preferred stock, and authorized a $50 million common share buyback.
• Operational momentum accelerated with October RevPAR up 7.5%, total revenue growth of nearly 11%, and Q1 2025 group pace up almost 40%, positioning us for strong Q4 performance.
• In Q3 we reported a comparable RevPAR of $261 and hotel EBITDA of $24.7 million, ended the quarter with $168.7 million in cash, a net debt to gross assets ratio of ~41%, and declared a $0.05 per share quarterly dividend.

Presentation

[Operator]

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Braemar Hotels & Resorts Inc third quarter 2024 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Deric Eubanks, Chief Financial Officer. Please go ahead.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Good morning, and welcome to today's call to review results for Braemar Hotels & Resorts for the third quarter of 2024 and to update you on recent developments. On the call today will also be Richard Stockton, President and Chief Executive 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 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.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

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 accompanying tables or schedules, which have been filed in Form 8-K with the SEC on November 6, 2024, and may also be accessed through the company's website at www.bhrreit.com.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the Third Quarter ended September 30, 2024, with the third quarter ended September 30, 2023. I will now turn the call over to Richard Stockton. Please go ahead, Richard.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

Good morning. Welcome to our third quarter earnings conference call. I will begin today's call by providing an overview of our business, an update on our portfolio, and an update on our recently announced shareholder value creation plan. Then Deric will provide a review of our financial results, and Chris will provide an update on our asset management activity. Afterwards, we'll open the call for Q&A. We have several key themes for today's call. First, our Urban Hotels delivered strong performance again this quarter with impressive comparable RevPAR growth of 6% over the prior year quarter. Second, we have no remaining final debt maturities in 2024 and are currently working on a refinancing of our sole 2025 maturity.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

And third, we're pleased with the progress we have made on our recently announced shareholder value creation plan with the closing of the sale of Hilton La Jolla Torrey Pines at an attractive value and the redemption of approximately $50 million of our non-trading preferred. As it relates to our financial results for the quarter, we reported comparable RevPAR of $261 and comparable hotel EBITDA of $24.7 million. It's useful to note that from a seasonality perspective, the third quarter is the weakest quarter in the year for our portfolio. Importantly, we continue to be encouraged by the strong performance of our Urban Hotels, which, as I said, achieved RevPAR growth of 6% in the quarter. Regarding our Urban assets, RevPAR for the quarter was $213, and comparable hotel EBITDA was $16.4 million. We're seeing strength across all demand segments at our Urban properties.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

Looking ahead, we remain very encouraged by the continued momentum for this segment of our portfolio, and we continue to believe our Urban Hotels will be the primary driver of growth for our portfolio in the coming quarters. Looking at Braemar's capital position, we continue to emphasize balance sheet flexibility. With the recent closing of the sale of the Hilton La Jolla Torrey Pines, we have now addressed all of our 2024 debt maturities and are currently talking to lenders about our sole 2025 maturity. Earlier this year, we announced a shareholder value creation plan, which has four components. They are, one, execute select non-core asset sales, including the recent sale of the Hilton La Jolla Torrey Pines. Two, the repayment of our remaining 2024 debt maturities. Three, a $50 million preferred share redemption program. And four, a $50 million common share buyback authorization.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

During the quarter, we sold the Hilton La Jolla Torrey Pines for $165 million, or $419,000 per key, including anticipated capital expenditures of $40 million. The sale price represented a 7.2% capitalization rate on net operating income for the trailing 12 months ended March 31st, 2024. We also continue to evaluate the sale of additional hotel properties. In early August, we closed on a refinancing involving five hotels at an attractive rate through a CMBS financing. The new loan of $407 million has a two-year initial term and three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029. The loan is interest-only and provides for a floating rate interest of SOFR plus 3.24%.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

Notably, this financing resulted in us paying off our corporate term loan and credit facility and resulted in a lower cost of capital for the debt on these assets, as well as improving our maturity schedule and extending our weighted average maturity. Regarding redemptions of our non-traded preferred stock, to date, we have now redeemed approximately $50 million of our non-traded preferred stock. As we continue to monitor both our leverage and our liquidity needs, as of the end of the quarter, we have not bought back any common shares. In terms of our most recent results, we're pleased to report that comparable RevPAR for our portfolio increased 7.5% in October, with comparable total revenue growth of almost 11%, which sets us up well for fourth quarter performance. Furthermore, our group pace for the first quarter of 2025 is currently up nearly 40%.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

We are very encouraged with these data points and believe Braemar is in a good position to perform well in both the near and long term. I will now turn the call over to Deric to take you through our financials in more detail.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Thanks, Richard. For the quarter, we reported a net loss attributable to common stockholders of $1.4 million, or $0.02 per diluted share, and AFFO per diluted share of -$0.24. Adjusted EBITDAre for the quarter was $18.5 million. At quarter end, we had total assets of $2.2 billion. We had $1.2 billion of loans, of which $27.7 million related to our joint venture partner's share of the loan on the Capital Hilton. Our total combined loans had a blended average interest rate of 7.6%, taking into account in-the-money interest rate caps. Based on the current level of SOFR and our corresponding interest rate caps, approximately 23% of our debt is effectively fixed, and approximately 77% is effectively floating. As of the end of the third quarter, we had approximately 41% net debt to gross assets.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

We ended the quarter with cash and cash equivalents of $168.7 million and restricted cash of $48.5 million. The vast majority of that restricted cash is comprised of lender and manager held reserve accounts. At the end of the quarter, we also had $19.9 million in due from third-party hotel managers. This primarily represents cash held by one of our brand managers, which is also available to fund hotel operating costs. With regard to dividends, we again announced a quarterly common stock dividend of $0.05 per share, or $0.20 per diluted share on an annualized basis. This equates to an annual yield of approximately 6.8% based on yesterday's stock price. Our board of directors will continue to review the company's dividend policy on a quarter-to-quarter basis. As Richard mentioned, during the quarter, we closed on a refinancing involving five hotels.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

The new loan of $407 million has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029. The loan is interest-only and provides for a floating interest rate of SOFR +3.24%. As part of this financing, we acquired a tranche of CMBS with a par value of $42.2 million and a rate of SOFR +5.2%, which lowered our net spread on the $364.8 million remaining loan amount to SOFR +3.01%. The loan is secured by five hotels: Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota, and The Ritz-Carlton St. Thomas. The new loan refinanced the $80 million loan secured by the Pier House Resort & Spa, which had an interest rate of SOFR +3.6% and had a final maturity date in September 2026.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

The $42.5 million loan secured by The Ritz-Carlton St. Thomas, which had an interest rate of SOFR +4.35% and had a final maturity date in August 2026, and the $200 million corporate term loan and credit facility secured by The Ritz-Carlton Sarasota, Hotel Yountville, and Bardessono Hotel & Spa, which had an interest rate of SOFR +3.1% and had a final maturity date in July 2027. Looking ahead, our only 2025 maturity is the loan that includes the Sofitel Chicago, the Clancy, the Notary, and the Marriott Seattle, which matures in June. We are in discussions with lenders about the refinancing of this loan and currently expect to have that completed early next year. As of September 30, 2024, our portfolio consisted of 15 hotels with 3,667 net rooms.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Our share count currently stands at 73.9 million fully diluted shares outstanding, which is comprised of 66.5 million shares of common stock and 7.4 million OP units. This concludes our financial review. I'd now like to turn it over to Chris to discuss our asset management activities for the quarter.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

Thank you, Deric. Comparable hotel RevPAR for our portfolio was $261 for the third quarter, a 1.6% decrease over the prior year quarter. The year-over-year decline in RevPAR was primarily driven by two key factors. First is the extensive renovation work ongoing at The Ritz-Carlton Lake Tahoe. The renovation, which we are in the final stages of completing, will transform nearly every area of the hotel and be completed this quarter, which will position the hotel well for the upcoming festive season. The second is the continued normalization of our resort hotels.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

Despite third quarter resort RevPAR being up 16.2% to the comparable period in 2019, we are still seeing a slight decline in leisure demand year-over-year. Portfolio-wide group revenue increased 14% this year through the third quarter compared to the prior year period. Our urban assets continue to perform well, with demand steadily returning to our downtown locations. In the third quarter, our urban portfolio achieved growth in total hotel revenue of 8% and growth in occupancy of 4% compared to the prior year period. Our asset management team continues to work with our property managers to drive ancillary revenue, which increased 8.3% on a per-occupied room basis compared to the prior year quarter. Additionally, our hotels have implemented various initiatives aimed at boosting productivity and efficiency across our portfolio.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

As a result, overall productivity, measured as labor hours per occupied room, improved by 40 basis points compared to the prior year quarter. I would now like to spend some time highlighting some of our successes in the quarter. As previously mentioned, group pace continues to accelerate across the portfolio. Group rooms revenue for the third quarter finished ahead of the prior year quarter by 14%. With the first quarter pacing ahead by 40%, we are well positioned for the full year of 2025, with group rooms revenue pacing ahead by 13% compared to the prior year. This success is partially attributed to an emphasis on lead generation, which resulted in a 14% increase in leads compared to the prior year quarter, despite softening trends industry-wide. Our revenue optimization team works diligently with hotel sales teams to optimize group targets and monitor actionable takeaways from lead generation platforms.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

Notably, two of our most recently renovated hotels have seen robust sales performance. Our largest hotel, Capital Hilton, finished the third quarter with group rooms revenue 31% above the prior year quarter. Additionally, The Ritz-Carlton Lake Tahoe, which is currently completing a full transformative renovation, has restructured their sales team. The hotel's new sales leader conducted a detailed analysis of the sales and marketing expenses, identifying opportunities to intensify marketing efforts on group and event booking platforms. This initiative led to a 67% increase in lead volume during the third quarter compared to the prior year quarter. As we cited earlier, our urban hotels continue to experience strength, as hotel RevPAR for the third quarter grew by 600 basis points compared to the prior year period for these hotels.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

Our Marriott Seattle Waterfront hotel had a successful quarter with a 13% increase in total revenue and an 8% increase in hotel EBITDA compared to the prior year quarter. The hotel implemented a comprehensive strategy to increase its group base, capture market share, and drive food and beverage revenue. As a result, during the quarter, the hotel successfully hosted two additional large groups in July, while simultaneously pushing rates and allocating premium rooms to leisure customers during the market's peak season. In addition to the hotel's marketing efforts, the team has collaborated closely with local tourism authorities, including Visit Seattle, to launch Destination Waterfront, a business development strategy aimed at enhancing the visibility of our waterfront location in Seattle. This strategy involved developing visual aids and presentations that showcase the transformations occurring in the market and at the hotel.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

These materials were presented to local government officials and internal sales teams, enabling us to successfully secure a significant international conference hosted by a U.S. government agency in September, which generated $376,000 in total revenue for the property. Similar to the rest of the industry, this portfolio typically sees a negative impact during the third quarter of an election year, as government business stalls. However, The Notary in Philadelphia has seen a benefit from this being an election year, based on its location in a key battleground state. The hotel successfully capitalized on favorable group and transit demand. At the same time, The Notary has achieved significant operational efficiencies by optimizing staffing levels, managing PTO, and eliminating task force labor.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

The increased demand, combined with efforts to control costs, drove strong third quarter results at this hotel, with comparable total revenue increasing by 17% and hotel EBITDA increasing by 38% over the prior year quarter. In late September and early October, some of our hotels were impacted by Hurricane Helene in the southeastern United States and Hurricane Milton, which hit right at the beginning of the fourth quarter. Our risk management team proactively handles hurricane procedures by identifying and notifying potentially impacted hotels, allowing them ample time to prepare. We then preemptively align with the hotels on preparation procedures, such as identifying low spots, adding sandbags, removing debris, and strapping down equipment. All of our hotels have access to generators in case of a power outage. These procedures have helped us to forge strong relationships with disaster relief companies who provide quick aid to our hotels with cleanup.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

While we did sustain damage to the beach club at our The Ritz-Carlton Sarasota due to the storm surge that pushed sand up to our pool deck level and some roof damage caused by high winds, we experienced minimal operational impact to the hotel during the third quarter. Moving on to capital expenditures, during the third quarter of 2024, we completed several transformative renovations at The Ritz-Carlton Lake Tahoe. These upgrades included the relocation and expansion of the living room bar, which now serves as a centerpiece of the space. We also completed significant upgrades to the fitness center, meeting spaces, and outdoor pool area, including the addition of three luxury cabanas, which are expected to enhance the guest experience and generate strong ROI through increased poolside revenue. Additionally, we completed the restaurant refresh at the iconic Jack Dusty in The Ritz-Carlton Sarasota.

[Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts]

Progress continues at the Four Seasons Resort Scottsdale, where we are converting underutilized back-of-house space into an epicurean retail market, offering guests continuous access to curated food and beverage selections to drive incremental revenue for the property. In the third quarter, we also initiated comprehensive updates to the beachfront restaurant at the Ritz-Carlton St. Thomas, but expect completion by year-end. Looking ahead to the fourth quarter, we plan to begin renovations at our fine dining restaurants at The Ritz-Carlton Lake Tahoe and The Ritz-Carlton Reserve Dorado Beach. Additionally, we will start construction on five luxury beachside cabanas at The Ritz-Carlton St. Thomas, which are expected to enhance the guest experience and generate strong incremental revenue. For 2024, we expect capital expenditures to range between $70 million-$90 million, as we continue to invest in key renovations and strategic upgrades across our portfolio.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

Thank you, Chris. In summary, I'd like to reiterate that we continue to be pleased with the performance of our hotels, in particular the continued strong performance of our urban properties. We also remain well positioned with a solid balance sheet and promising outlook. We look forward to updating you on our progress in the quarters ahead. This concludes our prepared remarks, and we'll now open the call for Q&A. Thank you.

[Operator]

At this time, I'd like to remind everyone in order to ask a question, press star followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question will come from the line of Jonathan Jenkins with Oppenheimer. Please go ahead.

[Jonathan Jenkins, Equity Research Associate Director at Oppenheimer]

Good morning. Thank you for taking my questions. First one for me, when you look at the quarter, can you maybe talk about the underlying impact of mixed shifts to more BT demand and how that strong group outlook could impact that mix going forward? And maybe if you could just remind us what your normal mix, historical mix, has been in the past.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Yeah, thanks, Jonathan. Our historical mix, we've done typically anywhere from 25%-30% group business. I think as we look at how our group pace is layered in the year for next year, 2025, we're very happy, so Q1 is typically our strongest quarter from a RevPAR standpoint because we have a festive season that impacts a lot of our resorts, and we run very high ADRs in that quarter. However, from an occupancy standpoint, Q1 is actually where we run a lower occupancy than other quarters, and so we prefer group base in that quarter. As we kind of dive deeper into the quarter, March is historically the softest month within Q1, and that's where we have our largest group pace increases year-over-year. Group pace currently for the month of March is up over 70% to prior year.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

And so we're very happy with kind of our group pace, not only that it's just up double digits for the full year, but also when you kind of zoom in where it's layered throughout the year and throughout the first quarter. From a mixed standpoint, we are seeing softer leisure trends, softer leisure demand on the weekends, especially impacting our resorts. Corporate continues to increase. Our corporate revenue was up 12% year on year, and we're seeing that in nearly all markets. The only exception I'd say is San Francisco, which continues to be very, very challenged. They had soft citywide production this quarter. They've seen office vacancy rates increase to an all-time high, and we're certainly seeing that in our BT pace there. But if you exclude that hotel on the whole, corporate demand is very strong for us.

[Jonathan Jenkins, Equity Research Associate Director at Oppenheimer]

Okay, Deric, and I appreciate the color there. And maybe on that line of thinking, I'm curious if you think that that strength is kind of a shift or inflection higher in demand post-Labor Day for corporate demand, or is it a continuation of the steady improvement you've seen kind of throughout the year?

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Yeah, there was a slight acceleration kind of post-Labor Day, but we've seen strength and growth year on year. It hasn't quite been as strong as we saw in Q3, and we did see some acceleration kind of post-Labor Day to the segment.

[Jonathan Jenkins, Equity Research Associate Director at Oppenheimer]

Okay, thank you for that. And maybe to follow on the commentary on the election, you noted the strength at the Notary, but can you maybe talk about for the overall portfolio kind of how the election has impacted kind of demand here in November?

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Yeah, in D.C., we've got Capital Hilton saw some softening to government segments and some other segments in November. We saw some softening broadly in advance of the election. There was a lot of uncertainty around how the election would turn out, and government and government-related travel did decline. We're hopeful that kind of post-election, now that that's behind us, there's a big acceleration. I will say that Capital Hilton in particular, we mitigated some of that with our group pace. They're looking very well from a group standpoint. We've also seen very strong demand, very strong ability to capture high ADRs kind of coming out of our renovation, where they continue to just set records at the hotel. I got a stat from our team that five of the hotel's best months ever in the history of the hotel happened within the last year.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

And so the hotel's performing well, but to government specifically, your question around election impact, we did see a softening there in DC.

[Jonathan Jenkins, Equity Research Associate Director at Oppenheimer]

Okay, that's excellent color. Then maybe last one for me, if I could. Can you talk about the transaction market broadly in terms of volume and pricing? Has there been any closing in the gap between buyer and seller expectations or any other moves as of late, given the interest rate movement here in September or since September? And maybe adding to that, has there been any change in the refi conversations that you've been having?

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

Yeah, Jonathan, I'll handle that on the transaction market, and I'll let Deric talk about the financing market. Look, I think everything that we've seen over the last two months has been very positive for the transaction market. There are no more buyers modeling in recession risk for next year. Now that the Fed has started cutting rates, people are modeling in that forward curve. So all these things are helpful. That said, there just aren't a lot of data points just yet. That said, we typically, or I shouldn't say typically, but from time to time, we'll ask brokers their opinion and value on our assets. And I can tell you we have been extraordinarily surprised on the upside. Those numbers have come back, which suggests that there is definitely some firming of cap rates, certainly at least in the eyes of the brokers.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

So as I mentioned, our intention is to sell another two hotels. That will take place next year. It's a long process to sell a hotel on averaging six or nine months. But hopefully, we'll be able to capitalize on what I would consider to be a very constructive transaction market right now.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Yeah, and then on the financing side, I would say we've seen spreads continue to come down some. There's plenty of debt capital out there available. We've seen a lot of hotels get financed in the CMBS market, and so that's been an attractive source of capital. Banks, for the most part, the large banks continue to be on the sidelines. We're not seeing them very active, which is kind of frustrating because they're the cheapest source of capital, and you'd like to see them being more active in allocating capital out.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

But I suspect that's probably a function of issues with other types of commercial real estate on their balance sheet. But the market's attractive, and we've held off on doing some financings until the market was more attractive, and I feel like we're well positioned, and it's an opportune time to be in the market to address the maturity that we have. And we feel very good about our maturity schedule. Thankfully, we've got very few maturities that we're looking at, and the one that we are working on, we're getting plenty of interest in.

[Jonathan Jenkins, Equity Research Associate Director at Oppenheimer]

Okay, that's very helpful, color. Thank you for all the insights, everyone. That's all for me.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

Thanks, Jonathan.

[Operator]

As a reminder, to ask a question, press star one on your telephone keypad, and we'll take our next question from the line of Daniel Hogan with Baird. Please go ahead.

[Daniel Hogan, Equity Research Associate at Baird]

Hey, everyone. Thanks for taking my question. I know you mentioned briefly that there wasn't too much damage from the hurricane impact, but is there a flow-through impact that you're expecting just in terms of demand impact?

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

Yeah, thanks, Daniel. The majority of the impact that was sustained was to the beach club. There was some damage there, as I mentioned, with kind of the storm surge and the water levels and the sand that had moved upwards into the pool areas. We did have some group cancellations in October. We're estimating an impact of, I'd say, anywhere from $500K-$700K at that hotel. So it was impactful in terms of October business. Luckily for us, you heard Richard cite kind of our October results, and the rest of the portfolio performed so well that it outran that and more than offset it. So a lot of the impact was isolated at that hotel to October, but we're very happy with how the portfolio performed as a whole for that month.

[Daniel Hogan, Equity Research Associate at Baird]

All right. That's it for me. All the other questions are asked. Thanks for your time.

[Operator]

That will conclude today's question and answer session. I'll hand the call back to management for any closing remarks.

[Richard Stockton, President and CEO at Braemar Hotels & Resorts]

Thank you all for joining us on our third quarter earnings call, and we look forward to speaking with you again next quarter.

[Operator]

That will conclude today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Deric Eubanks, CFO

Analysts

• Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts
• Richard Stockton, President and CEO at Braemar Hotels & Resorts
• Jonathan Jenkins, Equity Research Associate Director at Oppenheimer
• Daniel Hogan, Equity Research Associate at Baird