BRAEMAR HOTELS & RESORTS Q1 2025 Earnings Report

BRAEMAR HOTELS & RESORTS EPS Results

• Actual EPS: $0.40
• Consensus EPS: $0.35
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

BRAEMAR HOTELS & RESORTS Revenue Results

• Actual Revenue: $218.41 million
• Expected Revenue: $211.64 million
• Beat/Miss: Beat by +$6.77 million
• YoY Revenue Growth: N/A

BRAEMAR HOTELS & RESORTS Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• 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 Q1 2025 Earnings Call Transcript

Key Takeaways

• Our portfolio achieved a record 4.2% comparable RevPAR growth in Q1 2025, driven by 11.3% growth at urban properties and 1.9% at luxury resorts.
• We refinanced $363 million of debt at a spread of SOFR+2.52% and extended our weighted average maturity past 2030, eliminating our only remaining 2025 debt maturity.
• To strengthen our balance sheet, we have redeemed approximately $90 million (20%) of non-traded preferred stock and intend to continue redemptions to deleverage and improve cash flow per share.
• In Q1, we reported a net loss of $2.5 million (–$0.04/share), AFFO of $0.40/share, Adjusted EBITDAre of $63 million, and maintained a net debt to gross assets ratio of 42.3% with a 10.4% annualized dividend yield.
• Group room revenue grew 31% year-over-year in Q1, with 2025 group pace up 7% and 2026 up 10%, highlighting strong demand and successful sales initiatives across our portfolio.

Presentation

[Operator]

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 First Quarter 2025 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. 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 first quarter of 2025 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 on Form 8K with the SEC on May 7, 2025, and may also be accessed through the company's website at www.bhr.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 first quarter ended March 31, 2025, with the first quarter ended March 31, 2024. I will now turn the call over to Richard Stockton. Please go ahead, Richard.

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

Morning. Welcome to our first quarter earnings conference call. I'll begin today's call by providing an overview of our recent results and our strategic priorities for 2025. Deric will provide a review of our financial results, and Chris will provide an update on our asset management activity. Afterwards, we will open the call for Q&A. We have a few key themes for today's call. First, I'm pleased to report that our portfolio achieved 4.2% comparable RevPAR growth in the first quarter, and we saw growth in both our urban markets and hotels and resorts. Second, during the quarter, we addressed our final 2025 debt maturity, which not only resulted in lower cost of capital for the debt on these assets, but also improved our maturity schedule by extending our weighted average maturity.

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

Third, while there has been some rhetoric about economic uncertainty that seems to have dissipated, our booking pace continues to be strong, and we believe our portfolio is well-positioned to outperform. Turning to our first quarter results, I'm excited to report that our portfolio delivered solid results with comparable RevPAR of $404, reflecting an increase of 4.2% over the prior year quarter. This is the highest quarterly RevPAR Braemar has ever achieved and remains the portfolio in the lodging rate section with the highest RevPAR. This marks our second consecutive quarter of RevPAR growth, which I believe reflects an important inflection point in our performance. Additionally, comparable total hotel revenue increased by 4.4% over the prior year period, and comparable hotel EBITDA was $70.8 million, which represents a 5.3% increase over the prior year quarter.

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

Nine of our 15 hotels are considered resort destinations, and this luxury resort portfolio delivered solid first quarter performance. Returning to a more normalized growth trajectory, our resort portfolio reported comparable RevPAR of $800, a 1.9% increase over the prior year period, and combined comparable hotel EBITDA of $62 million, a 2% increase over the prior year period. We're also encouraged by the continued strong performance of our urban hotels, which delivered comparable RevPAR growth of 11.3% in the first quarter. Notably, the presidential inauguration in Washington, D.C., provided a meaningful uplift for the Capitol Hilton, which delivered 19.3% year-over-year RevPAR growth. While the Capitol Hilton benefited directly from the inauguration, our urban portfolio still achieved RevPAR growth of 8.1%, even when excluding this property.

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

While there was a period of uncertainty around future economic conditions over the past month, looking ahead, we continue to see strong trends across our portfolio. Our group pace for 2025 is up 7%, and 2026 shows continued growth at 10%. Chris will discuss this in more detail. On the capital markets front, during the quarter, we successfully extended the mortgage loan secured by the 170-room Ritz-Carlton Lake Tahoe. The loan had an initial maturity date in January of 2025 and a final maturity date in January of 2026. The loan has been extended with a paydown of $10 million. The spread on the loan is now SOFR plus 3.25%. We also closed on a refinancing involving five hotels at a very attractive spread. The new loan totaled $363 million and has a two-year initial term with three one-year extension options.

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

Importantly, this financing addressed our only remaining final debt maturity for 2025, and it not only results in a lower cost of capital for the debt on these assets, but also improves our maturity schedule by extending our weighted average maturity. Subsequent to quarter end, we restructured the 415-room Sofitel Chicago Magnificent Mile as a franchise. Under this new agreement, the hotel will continue to operate under the Sofitel Chicago Magnificent Mile brand, while day-to-day management has been assumed by Remington Hospitality. Notably, we expect an immediate uplift in the value of this property due to the Sofitel brand remaining on the hotel and the management agreement with Remington being terminable on sale. I'm also pleased to report that to date we have redeemed approximately $90 million of our non-traded preferred stock, which represents approximately 20% of the original capital raise.

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

We expect to continue to redeem these shares as we seek to deleverage our platform and improve our cash flow per share. 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 $2.5 million or $0.04 per diluted share and AFFO per diluted share of $0.40. Adjusted EBITDA RE for the quarter was $63 million. At quarter end, we had total assets of $2.1 billion. We had $1.2 billion of loans, of which $27.7 million related to our joint venture partner share of the loan on the Capitol Hilton. Our total combined loans had a blended average interest rate of 7.1%, 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 first quarter, we had approximately 42.3% net debt to gross assets.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

We ended the quarter with cash and cash equivalents of $81.7 million plus restricted cash of $54.5 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 $25.5 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 10.4% 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. Regarding capital markets, during the quarter, we closed on a refinancing involving five hotels.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

The new loan totals $363 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2030. The loan is interest-only and provides for a floating interest rate of SOFR plus 2.52%. The loan is secured by five hotels: the Clancy, the Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, and the Ritz-Carlton Reserve Dorado Beach. The $363 million loan amount represents a 48.9% loan to value based on third-party appraisals completed by the lender. This loan replaced higher-cost loans that were priced at SOFR plus 2.66% and SOFR plus 4.75%. As of March 31, 2025, our portfolio consisted of 15 hotels with 3,667 net rooms. Our share count currently stands at 73.9 million fully diluted shares outstanding, which is comprised of 67 million shares of common stock and 6.9 million OP units.

[Deric Eubanks, CFO at Braemar Hotels & Resorts]

This concludes our financial review, and 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. We are pleased to report a strong start to the year. As Richard mentioned, in the first quarter, comparable hotel RevPAR across our portfolio was $404, up 4% over the prior year period. Our urban assets continue to show strong growth with steady demand returning to downtown locations. During the first quarter, RevPAR for our urban portfolio increased 11% over the prior year period. Our resort properties also continued to grow during the first quarter, posting a 2% increase in RevPAR over the prior year period, supported by strong leisure demand and healthy rate growth. Guest spending on food and beverage, spa, and recreation remained strong, supporting higher total revenue per available room.

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

Additionally, our property managers aggressively rolled out a number of initiatives at the beginning of the year focused on cost control, resulting in an improvement of 34 basis points in hotel EBITDA margin compared to the prior year period. While overall performance was strong, we did face some headwinds. For example, the California wildfires disrupted the Los Angeles market, with our Cameo Beverly Hills experiencing some displacement in group room revenue in January and February. Despite some challenges, total portfolio hotel EBITDA increased 5% during the first quarter compared to the prior year period. This growth notably outpaced our 4% increase in comparable total revenue, reflecting the success our property managers have had with their cost containment efforts and enhanced operational efficiency in driving margin expansion. With that, I would now like to highlight several of the key wins we achieved during the first quarter.

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

First quarter, group revenue increased 31% compared to the prior year period, underscoring the effectiveness of our property sales strategies. This performance reflects the result of an exhaustive sales and marketing deep dive conducted during the hotel budgeting process. That initiative identified high-impact opportunities by property and aligned sales efforts with targeted performance goals, which we actively monitored throughout the quarter to drive accountability and execution. The Ritz-Carlton Lake Tahoe experienced strong early momentum following the deployment of a newly assembled global sales team. Despite suboptimal ski conditions during the quarter, the team drove an 80% increase in group room revenue compared to the prior year period, a testament to the repositioning efforts and the property's enhanced sales infrastructure. We also saw strong group performance from our resort assets in warmer climates. The Ritz-Carlton St.

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

Thomas and Four Seasons Scottsdale posted 24% and 26% year-over-year increases in group room nights, respectively, signaling robust demand and continued strength in leisure-adjacent group business. Group demand was particularly notable at the Ritz-Carlton Reserve Dorado Beach, where February group room nights surged nearly 75%, driving a 36% increase in group room revenue for the quarter compared to the prior year period. In total, 14 of our 15 hotels achieved year-over-year growth in group revenue, reflecting not only the success of our individual sales strategies but the strength and resilience of our portfolio-wide group positioning. This level of performance across geography, brand, and climate gives us continued confidence in the durability of this segment and our ability to capture share in a competitive landscape. Looking ahead, group room revenue pace remains strong, with 2025 up 7% and 2026 showing continued growth at 10%.

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

Our urban assets delivered exceptional performance during the quarter. Comparable total revenue increased 10%, and comparable hotel EBITDA increased 39% over the prior year period. These results were largely driven by two major citywide events that our team effectively capitalized on. In Philadelphia, the Notary Hotel leveraged the excitement surrounding the Eagles Super Bowl run and the ensuing parade celebrations. Elevated transient demand and strong pricing power contributed to a $500,000 year-over-year increase in room revenue, with transient ADR of 12% compared to the prior year period. Additionally, the implementation of a $25 destination fee in December 2024 has already generated $254,000 in high-margin incremental revenue year-to-date through March. In Washington, D.C., the Capitol Hilton delivered standout results, primarily fueled by the presidential inauguration in January.

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

Over the three-day period from January 18th through January 20th, the hotel achieved a 30% increase in revenue compared to the last comparable inauguration in 2017. Notably, two nights during this period exceeded an ADR of $1,000, setting new records for the property. Group performance at Capitol Hilton was equally strong, with year-to-date group occupancy up 27% over the prior year period. In recognition of these outstanding efforts, I am proud to share that Capitol Hilton sales team was awarded Hilton's 2024 Global Sales Team of the Year, an incredible achievement and a testament to their continued excellence and impact on the property's success. Moving on to capital expenditures, during the first quarter, we initiated the guest room renovation at Hotel Yountville, further elevating its luxury positioning in the heart of Napa Valley. The renovation is progressing well, with completion expected later this year.

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

In addition, we completed the conversion of previously underutilized space at Bar de Sono Hotel and Spa into a premium suite, enhancing the asset's revenue-generating potential and improving the overall guest experience. During the second quarter, we plan to launch several transformative renovations across the portfolio. At the Park Hyatt Beaver Creek, we will embark on a comprehensive guest room renovation designed to further refine the resort's world-class alpine experience. At the Ritz-Carlton St. Thomas, construction will begin on five luxury beachside cabanas, a project that will enhance the beachfront offering and generate incremental revenue. We will also be converting the highly visible underutilized space at Four Seasons Scottsdale into a café and gelato shop, an amenity aimed at enriching the guest experience while capturing additional revenue.

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

Later this year, at the Ritz-Carlton Dorado Beach, we will initiate a series of targeted renovations to meet evolving guest preferences and unlock incremental returns. Planned enhancements include converting underutilized space into a high-end event lawn, adding two spa treehouses, and constructing additional beachside cabanas to further elevate the luxury experience. In addition, we will commence the renovation of Cameo Beverly Hills in preparation for its planned conversion to Hilton's LXR luxury portfolio, marking a significant step in aligning this asset with an elevated brand standard. These initiatives reflect our disciplined capital deployment strategy and our continued focus on long-term value creation through strategic reinvestment, portfolio quality, and brand alignment. For 2025, we anticipate spending between $75 million and $95 million on capital expenditures. This has been a strong start to the year.

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

The momentum we've experienced underscores the resilience of our diversified portfolio and the strength of the strategic positioning we've built over time. We remain optimistic about the opportunities ahead and look forward to sharing continued updates on our progress throughout 2025. I will now turn the call back over to Richard for final remarks.

[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 will now open the call for Q&A. Thank you.

[Operator]

We will now begin the question-and-answer session. To ask a question, press star one. Our first question comes from the line of Jonathan Jenkins with Oppenheimer. Please go ahead.

[Jonathan Jenkins, Analyst at Oppenheimer]

Good morning. Thank you for taking my questions. First one for me, maybe for Chris. On the group side, is there anything worth calling out in terms of shortening booking window, increased cancellations, or attrition? Any trends or variability worth calling out outside of pace in light of that macroeconomic volatility that's out there?

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

Yeah. This portfolio seems to be very well-insulated from kind of those macro headwinds and challenges that we're seeing. While the booking window is shortening slightly, we're not seeing much impact to group across the portfolio. We're not seeing the deceleration that others in the industry are seeing. Q1, as you heard in my remarks, finished very strong, up 31%. Q1 only decelerated by 100 basis points in the quarter, which is common when you're ahead by that much. We actually saw acceleration in group pace as we look ahead to 2026, where 2026 pace started ahead, and then as we finished Q1, it was even further ahead. We're not seeing any major impact to leads. Lead volume was roughly flat, down slightly year-over-year. Conversion is remaining strong. There is a slight shortening of the booking window, but resilience broadly across this portfolio.

[Jonathan Jenkins, Analyst at Oppenheimer]

Okay. That's great to hear. Maybe on a similar line, can you help us think about how much inbound international exposure you have in the portfolio and if you're seeing any impact there?

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

Yeah. The international inbound is a very small part of this portfolio's makeup. It's mid-single digits in total. What we're seeing broadly is very market-specific. St. Thomas, for instance, their international inbound was down. However, they had 30 fewer international inbound arrivals in Q1 than they did last year. It's still roughly 2% of their business. It's very small, and the declines are minimal. We saw the inverse in Puerto Rico, where their international inbound actually grew year-over-year. It increased from 3.9% of total arrivals last year to 4.1% of total arrivals this year. You're talking about 18-20 additional arrivals. There's very little impact. The impact, I would say, is muted. It's market-specific, but it's nothing material that we're seeing pull through in the data broadly.

[Jonathan Jenkins, Analyst at Oppenheimer]

Okay. I appreciate the color. Switching gears to expenses, the EBITDA margin was better than we were thinking. I'm curious how you think about the opportunity in the near term to grow margin. Does it necessitate an environment with rate-driven RevPAR growth, or can you do that if RevPAR is flat? Maybe as a follow-on, any color on kind of what the opportunity is or how you think about the opportunity to further reduce costs and manage margins back to 2018, 2019 levels?

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

Yeah. I'm very optimistic about the outlook for margin within this portfolio. Our team got ahead of it. We had fairly aggressive budgets coming into the year. At the end of last year, we implemented some aggressive cost containment plans across the portfolio to give us the best opportunity to achieve those budgets. It was very timely. When I look, we're still improving productivity. Productivity improved 1% year-over-year, so we're doing more with less labor. We're reducing our contract labor exposure. Contract labor was only 2% of total labor in Q1, and that was down significantly to last year. We're seeing that wages are stabilizing within this portfolio. The wage growth in March was less than February, which was less than January.

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

I think when you look at all those things, how this portfolio is positioned in terms of revenue pace and revenue on the books, when you look at the cost containment measures, the productivity improvements we've driven, the reduction in contract labor, all of those things make me very optimistic that we'll continue to see EBITDA growth.

[Jonathan Jenkins, Analyst at Oppenheimer]

Excellent. Maybe last one for me, if I could. On the Magnificent Mile conversion, can you just provide some additional color on the conversion, why it makes sense, the immediate uplift opportunity that was talked about, and also maybe too early to tell, but what kind of CapEx spend we should expect on that?

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

Yeah. I'll let Chris talk a little bit about the CapEx plans there. This is Richard. Yeah. It's just very simple. Unencumbered assets trade at lower cap rates typically than versus encumbered assets. That's what we've observed looking at multiple examples of both. If you're able to cancel a long-term management contract and instead put in a contract that's turnable on sale, we believe that that would enable the asset to trade at a higher value if and when we ever chose to sell it. That's kind of what sits behind that comment that we made. Yeah. In addition to that, we also believe there's upside in the performance. We think that Remington is a very good operator, and they'll be able to operate the property very leanly.

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

In terms of the CapEx to convert, we're looking at a public space and a meeting space renovation, which we'll look to execute next year. That was kind of in our plans either way. The property needs it, and so that'll be part of it, I would say, minimal CapEx.

[Jonathan Jenkins, Analyst at Oppenheimer]

Okay. Very helpful. Thank you for all the color. That's all for me.

[Operator]

Our next question comes from the line of Michael Bellisario with Baird. Please go ahead.

[Michael Bellisario, Analyst at Baird]

Hey. Good morning, everyone.

[Jonathan Jenkins, Analyst at Oppenheimer]

Hey, Mike.

[Michael Bellisario, Analyst at Baird]

First question is just on the preferred redemptions, probably for Deric here. But maybe how much can you buy back? Do you have to wait for shareholders to put in for redemptions? Can you actively seek out shareholders through your broker-dealer network, just trying to understand the mechanics there and maybe what the limiting factor is in terms of how much you can actually repurchase?

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

Yeah. The nature of the security is that it's redeemable by the company after it's been outstanding for two years, and it's redeemable by the holder at par after it's been outstanding for three years. That's the structure of the security. Yeah. I'll just add to that what Deric said. The issuance occurred over time, and you've got different buyers that are at different stages of that period, that initial three-year period. It is possible for the holders also to redeem immediately upon purchase, but then there's a redemption fee that has to be paid, and that burns off over a three-year period. That's how that works.

[Michael Bellisario, Analyst at Baird]

Got it. It seems like your limiting factor is more just sort of timing and sequencing of when the issuance occurred relative to when you can maybe repurchase it in the same place, two or three years down the road. Okay. Understood. Separate topic, just on asset sales, Richard, maybe can you provide an update on what you're seeing in the marketplace and how you expect asset sale proceeds to be utilized?

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

Yeah. I'll tell you, I've been pleasantly surprised at the amount of increased buyer activity that's out there. We are testing the market with a couple of assets right now. I know I've been talking about this process for a while. It does take a long time. We are having buyers tour our assets. We're getting LOIs. We are seeing a fair amount of activity. I think that's really being bolstered by more constructive debt markets. You've seen spreads come in quite a lot relative to maybe a year ago in the CMBS market, but also from some of the debt funds who have more attractive warehouse line financing. That's what's driving it. I think you're also seeing more predictable growth patterns. We're seeing it in our resort portfolio, of course, but on the urban side, there's even a better story to tell.

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

I would say that the assets that we would consider selling comprise the upper upscale assets of the portfolio. We have four of those. We would consider them, I haven't officially designated them as non-core, but clearly our strategy is to own luxury assets. That's how I would think about those. I think we'll probably get to closing on one or two hotels this year. As and when we have a buyer where we've gone hard and have a clear line to a closing, we'll make that announcement. In terms of use of proceeds you asked about, I mean, we have a couple of different uses of proceeds that we've talked about in terms of the shareholder value creation plan, including preferred equity redemptions, possible share buybacks, which we do have an authorization for, but we haven't executed on yet.

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

In your recent note, Mike, you correctly identified that we have a corporate convertible note maturing next year, and proceeds from asset sales could be utilized to retire that as well.

[Michael Bellisario, Analyst at Baird]

That's all for me. Thank you.

[Operator]

That will conclude our question-and-answer session. I'll turn the call back over to management for any closing remarks.

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

Thank you all for joining us on our first quarter earnings call. We look forward to speaking to you again next quarter.

[Operator]

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

Participants

Executives

• Deric Eubanks, CFO

Analysts

• Jonathan Jenkins, Analyst at Oppenheimer
• Chris Nixon, EVP and Head of Asset Management at Braemar Hotels & Resorts
• Michael Bellisario, Analyst at Baird
• Richard Stockton, President and CEO at Braemar Hotels & Resorts