10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number: 001-35972

BRAEMAR HOTELS & RESORTS INC.

(Exact name of registrant as specified in its charter)

Maryland	46-2488594
(State or other jurisdiction of incorporation or organization)	(IRS employer identification number)
14185 Dallas Parkway, Suite 1100
Dallas, Texas	75254
(Address of principal executive offices)	(Zip code)

(972) 490-9600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þYes¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	þ
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	þ

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes þ No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BHR	New York Stock Exchange
Preferred Stock, Series B	BHR-PB	New York Stock Exchange
Preferred Stock, Series D	BHR-PD	New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.01 par value per share	32,885,863
(Class)	Outstanding at November 4, 2019

BRAEMAR HOTELS & RESORTS INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2019

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2019 and 2018	4
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2019 and 2018	5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	8
Notes to Condensed Consolidated Financial Statements	10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	60
ITEM 4. CONTROLS AND PROCEDURES	61
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	61
ITEM 1A. RISK FACTORS	61
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	61
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	62
ITEM 4. MINE SAFETY DISCLOSURES	62
ITEM 5. OTHER INFORMATION	62
ITEM 6. EXHIBITS	62
SIGNATURES	64

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS (unaudited)

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share amounts)

	September 30, 2019			December 31, 2018
ASSETS
Investments in hotel properties, gross	$	1,768,160		$	1,562,806
Accumulated depreciation	(296,557		)	(262,905		)
Investments in hotel properties, net	1,471,603			1,299,901
Cash and cash equivalents	82,583			182,578
Restricted cash	57,367			75,910
Accounts receivable, net of allowance of $128 and $101, respectively	19,657			12,739
Inventories	2,350			1,862
Prepaid expenses	6,376			4,409
Investment in Ashford Inc., at fair value	4,724			10,114
Investment in unconsolidated entity	1,949			1,766
Derivative assets	773			772
Operating lease right-of-use assets	82,976			—
Other assets	12,257			13,831
Intangible assets, net	5,114			27,678
Due from related party, net	817			—
Due from third-party hotel managers	18,019			4,927
Total assets	$	1,766,565		$	1,636,487
LIABILITIES AND EQUITY
Liabilities:
Indebtedness, net	$	1,057,467		$	985,873
Accounts payable and accrued expenses	97,945			64,116
Dividends and distributions payable	9,502			8,514
Due to Ashford Inc.	4,749			4,001
Due to related party, net	—			224
Due to third-party hotel managers	2,172			1,633
Operating lease liabilities	61,168			—
Other liabilities	29,525			29,033
Total liabilities	1,262,528			1,093,394
Commitments and contingencies (note 16)
5.50% Series B cumulative convertible preferred stock, $0.01 par value, 4,965,850 shares issued and outstanding at September 30, 2019 and December 31, 2018	106,123			106,123
Redeemable noncontrolling interests in operating partnership	40,584			44,885
Equity:
Preferred stock, $0.01 value, 50,000,000 shares authorized:
Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at September 30, 2019 and December 31, 2018	16			16
Common stock, $0.01 par value, 200,000,000 shares authorized, 32,900,422 and 32,511,660 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	329			325
Additional paid-in capital	518,304			512,545
Accumulated deficit	(155,024		)	(115,410		)
Total stockholders’ equity of the Company	363,625			397,476
Noncontrolling interest in consolidated entities	(6,295		)	(5,391		)
Total equity	357,330			392,085
Total liabilities and equity	$	1,766,565		$	1,636,487

See Notes to Condensed Consolidated Financial Statements.

2

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
REVENUE
Rooms	$	76,808		$	74,358		$	228,660		$	218,304
Food and beverage	26,422			21,171			84,326			70,064
Other	15,652			13,317			52,920			44,085
Total hotel revenue	118,882			108,846			365,906			332,453
Other	2			—			7			—
Total revenue	118,884			108,846			365,913			332,453
EXPENSES
Hotel operating expenses:
Rooms	18,265			16,624			52,080			48,194
Food and beverage	20,721			16,171			62,325			49,078
Other expenses	36,201			32,058			111,431			95,490
Management fees	3,960			3,963			12,542			12,081
Total hotel expenses	79,147			68,816			238,378			204,843
Property taxes, insurance and other	7,690			6,835			20,356			18,516
Depreciation and amortization	16,831			14,474			51,991			42,291
Impairment charges	—			—			—			71
Advisory services fee	5,158			5,733			15,579			15,857
Transaction costs	—			—			704			949
Corporate general and administrative	1,575			1,765			3,633			2,999
Total expenses	110,401			97,623			330,641			285,526
Gain (loss) on disposition of assets and sale of hotel property	(1,163		)	—			(1,154		)	15,711
OPERATING INCOME (LOSS)	7,320			11,223			34,118			62,638
Equity in earnings (loss) of unconsolidated entity	(48		)	(81		)	(149		)	(146		)
Interest income	249			540			898			970
Other income (expense)	(114		)	(64		)	(370		)	(190		)
Interest expense and amortization of loan costs	(13,646		)	(13,084		)	(41,894		)	(35,941		)
Write-off of loan costs and exit fees	(335		)	—			(647		)	(4,178		)
Unrealized gain (loss) on investment in Ashford Inc.	(1,471		)	2,158			(5,390		)	(3,338		)
Unrealized gain (loss) on derivatives	(754		)	(578		)	(972		)	(803		)
INCOME (LOSS) BEFORE INCOME TAXES	(8,799		)	114			(14,406		)	19,012
Income tax (expense) benefit	(155		)	(740		)	(1,493		)	(2,514		)
NET INCOME (LOSS)	(8,954		)	(626		)	(15,899		)	16,498
(Income) loss attributable to noncontrolling interest in consolidated entities	(1,899		)	(1,695		)	(1,750		)	(1,742		)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	1,465			452			2,770			(1,075		)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	(9,388		)	(1,869		)	(14,879		)	13,681
Preferred dividends	(2,533		)	(1,707		)	(7,597		)	(5,122		)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(11,921	)	$	(3,576	)	$	(22,476	)	$	8,559
INCOME (LOSS) PER SHARE - BASIC:
Net income (loss) attributable to common stockholders	$	(0.37	)	$	(0.12	)	$	(0.71	)	$	0.25
Weighted average common shares outstanding – basic	32,347			32,023			32,259			31,905
INCOME (LOSS) PER SHARE - DILUTED:
Net income (loss) attributable to common stockholders	$	(0.37	)	$	(0.12	)	$	(0.71	)	$	0.25
Weighted average common shares outstanding – diluted	32,347			32,023			32,259			31,922

See Notes to Condensed Consolidated Financial Statements.

3

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
NET INCOME (LOSS)	$	(8,954	)	$	(626	)	$	(15,899	)	$	16,498
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Total other comprehensive income (loss)	—			—			—			—
TOTAL COMPREHENSIVE INCOME (LOSS)	(8,954		)	(626		)	(15,899		)	16,498
Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities	(1,899		)	(1,695		)	(1,750		)	(1,742		)
Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership	1,465			452			2,770			(1,075		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	$	(9,388	)	$	(1,869	)	$	(14,879	)	$	13,681

See Notes to Condensed Consolidated Financial Statements.

4

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited, in thousands except per share amounts)

	8.25% Series D Cumulative Preferred Stock			Common Stock				Additional Paid-in Capital		Accumulated Deficit			Noncontrolling Interest in Consolidated Entities			Total			5.50% Series B Cumulative Convertible  Preferred Stock			Redeemable Noncontrolling Interests in Operating Partnership
	Shares	Amount		Shares		Amount													Shares	Amount
Balance at June 30, 2019	1,600	$	16	32,880		$	329	$	516,700	$	(137,775	)	$	(5,540	)	$	373,730		4,966	$	106,123	$	42,075
Equity-based compensation	—	—		—		—		1,604		—			—			1,604			—	—		755
Issuance of restricted shares/units	—	—		23		—		—		—			—			—			—	—		1
Forfeiture of restricted common shares	—	—		(3	)	—		—		—			—			—			—	—		—
Dividends declared – common stock ($0.16/share)	—	—		—		—		—		(5,339		)	—			(5,339		)	—	—		—
Dividends declared – preferred stock - Series B ($0.3437/share)	—	—		—		—		—		(1,708		)	—			(1,708		)	—	—		—
Dividends declared – preferred stock - Series D ($0.5156/share)	—	—		—		—		—		(825		)	—			(825		)	—	—		—
Distributions to noncontrolling interests	—	—		—		—		—		—			(2,654		)	(2,654		)	—	—		(771		)
Net income (loss)	—	—		—		—		—		(9,388		)	1,899			(7,489		)	—	—		(1,465		)
Redemption value adjustment	—	—		—		—		—		11			—			11			—	—		(11		)
Balance at September 30, 2019	1,600	$	16	32,900		$	329	$	518,304	$	(155,024	)	$	(6,295	)	$	357,330		4,966	$	106,123	$	40,584

5

	8.25% Series D Cumulative Preferred Stock			Common Stock				Additional Paid-in Capital			Accumulated Deficit			Noncontrolling Interest in Consolidated Entities			Total			5.50% Series B Cumulative Convertible Preferred Stock			Redeemable Noncontrolling Interests in Operating Partnership
	Shares	Amount		Shares		Amount														Shares	Amount
Balance at December 31, 2018	1,600	$	16	32,512		$	325	$	512,545		$	(115,410	)	$	(5,391	)	$	392,085		4,966	$	106,123	$	44,885
Impact of adoption of new accounting standard (1)	—	—		—		—		—			(103		)	—			(103		)	—	—		—
Purchase of common stock	—	—		(30	)	—		(384		)	—			—			(384		)	—	—		—
Equity-based compensation	—	—		—		—		3,959			—			—			3,959			—	—		1,949
Preferred stock offering costs				—		—		(13		)	—						(13		)	—	—		—
Issuance of restricted shares/units	—	—		260		2		(2		)	—			—			—			—	—		8
Forfeiture of restricted common shares	—	—		(7	)	—		—			—			—			—			—	—		—
Dividends declared – common stock ($0.48/share)	—	—		—		—		—			(16,004		)	—			(16,004		)	—	—		—
Dividends declared – preferred stock - Series B ($1.0312/share)	—	—		—		—		—			(5,122		)	—			(5,122		)	—	—		—
Dividends declared – preferred stock - Series D ($1.5469/share)	—	—		—		—		—			(2,475		)	—			(2,475		)	—	—		—
Distributions to noncontrolling interests	—	—		—		—		—			—			(2,654		)	(2,654		)	—	—		(2,318		)
Redemption/conversion of operating partnership units	—	—		165		2		2,199			—			—			2,201			—	—		(2,201		)
Net income (loss)	—	—		—		—		—			(14,879		)	1,750			(13,129		)	—	—		(2,770		)
Redemption value adjustment	—	—		—		—		—			(1,031		)	—			(1,031		)	—	—		1,031
Balance at September 30, 2019	1,600	$	16	32,900		$	329	$	518,304		$	(155,024	)	$	(6,295	)	$	357,330		4,966	$	106,123	$	40,584

_______________

⁽¹⁾See note 18.

6

	8.25% Series D Cumulative Preferred Stock			Common Stock				Additional Paid-in Capital			Accumulated Deficit			Noncontrolling Interest in Consolidated Entities			Total			5.50% Series B Cumulative Convertible  Preferred Stock			Redeemable Noncontrolling Interests in Operating Partnership
	Shares	Amount		Shares		Amount														Shares	Amount
Balance at June 30, 2018	—	$	—	32,502		$	325	$	472,945		$	(87,777	)	$	(5,245	)	$	380,248		4,966	$	106,123	$	47,818
Purchase of common stock	—	—		—		—		(1		)	—			—			(1		)	—	—		—
Equity-based compensation	—	—		—		—		1,099			—			—			1,099			—	—		575
Issuance of restricted shares/units	—	—		23		—		—			—			—			—			—	—		—
Forfeiture of restricted common shares	—	—		(1	)	—		—			—			—			—			—	—		—
Dividends declared – common stock ($0.16/share)	—	—		—		—		—			(5,276		)	—			(5,276		)	—	—		—
Dividends declared – preferred stock - Series B ($0.3437/share)	—	—		—		—		—			(1,707		)	—			(1,707		)	—	—		—
Distributions to noncontrolling interests	—	—		—		—		—			—			(2,115		)	(2,115		)	—	—		(824		)
Net income (loss)	—	—		—		—		—			(1,869		)	1,695			(174		)	—	—		(452		)
Redemption value adjustment	—	—		—		—		—			(2,609		)	—			(2,609		)	—	—		2,609
Balance at September 30, 2018	—	$	—	32,524		$	325	$	474,043		$	(99,238	)	$	(5,665	)	$	369,465		4,966	$	106,123	$	49,726

	8.25% Series D Cumulative Preferred Stock			Common Stock				Additional Paid-in Capital			Accumulated Deficit			Noncontrolling Interest in Consolidated Entities			Total			5.50% Series B Cumulative Convertible  Preferred Stock			Redeemable Noncontrolling Interests in Operating Partnership
	Shares	Amount		Shares		Amount														Shares	Amount
Balance at January 1, 2018	—	$	—	32,120		$	321	$	469,791		$	(88,807	)	$	(4,753	)	$	376,552		4,966	$	106,123	$	46,627
Purchase of common stock	—	—		(19	)	—		(204		)	—			—			(204		)	—	—		—
Equity-based compensation	—	—		—		—		4,402			—			—			4,402			—	—		1,307
Issuance of restricted shares/units	—	—		429		4		54			—			—			58			—	—		18
Forfeiture of restricted common shares	—	—		(6	)	—		—			—			—			—			—	—		—
Dividends declared – common stock ($0.48/share)	—	—		—		—		—			(15,823		)	—			(15,823		)	—	—		—
Dividends declared – preferred stock - Series B ($1.0312/share)	—	—		—		—		—			(5,122		)	—			(5,122		)	—	—		—
Distributions to noncontrolling interests	—	—		—		—		—			—			(2,654		)	(2,654		)	—	—		(2,468		)
Net income (loss)	—	—		—		—		—			13,681			1,742			15,423			—	—		1,075
Redemption value adjustment	—	—		—		—		—			(3,167		)	—			(3,167		)	—	—		3,167
Balance at September 30, 2018	—	$	—	32,524		$	325	$	474,043		$	(99,238	)	$	(5,665	)	$	369,465		4,966	$	106,123	$	49,726

See Notes to Condensed Consolidated Financial Statements.

7

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine Months Ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(15,899	)	$	16,498
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization	51,991			42,291
Equity-based compensation	5,908			5,709
Bad debt expense	307			186
Amortization of loan costs	3,248			3,157
Write-off of loan costs and exit fees	647			4,178
Amortization of intangibles	366			143
Amortization of non-refundable membership initiation fees	(117		)	(18		)
Interest expense accretion on refundable membership club deposits	651			376
(Gain) loss on disposition of assets and sale of hotel property	1,154			(15,711		)
Impairment charges	—			71
Unrealized (gain) loss on investment in Ashford Inc.	5,390			3,338
Realized and unrealized (gain) loss on derivatives	1,162			803
Net settlement of trading derivatives	(1,074		)	(688		)
Equity in (earnings) loss of unconsolidated entity	149			146
Deferred income tax expense (benefit)	816			136
Changes in operating assets and liabilities, exclusive of the effect of hotel acquisitions and dispositions:
Accounts receivable and inventories	(5,886		)	(5,593		)
Prepaid expenses and other assets	(2,672		)	922
Accounts payable and accrued expenses	13,856			(2,609		)
Operating lease right-of-use assets	398			—
Due to/from related party, net	(1,041		)	344
Due to/from third-party hotel managers	(6,378		)	5,578
Due to/from Ashford Inc.	(345		)	1,479
Operating lease liabilities	(144		)	—
Other liabilities	(3,521		)	(7,851		)
Net cash provided by (used in) operating activities	48,966			52,885
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from property insurance	—			24,663
Acquisition of hotel properties, net of cash and restricted cash acquired	(111,751		)	(177,874		)
Investment in unconsolidated entity	(332		)	(2,000		)
Net proceeds from disposition of assets and sale of hotel property	10,300			65,336
Improvements and additions to hotel properties	(108,182		)	(51,610		)
Net cash provided by (used in) investing activities	(209,965		)	(141,485		)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on indebtedness	329,500			575,000
Repayments of indebtedness	(257,086		)	(399,804		)
Payments of loan costs and exit fees	(4,447		)	(9,407		)
Payments for derivatives	(89		)	(348		)
Purchase of common stock	(384		)	(204		)
Payments for dividends and distributions	(24,931		)	(22,661		)
Preferred stock offering costs	(110		)	—
Distributions to noncontrolling interest in consolidated entities	—			(538		)
Other	8			18
Net cash provided by (used in) financing activities	42,461			142,056
Net change in cash, cash equivalents and restricted cash	(118,538		)	53,456
Cash, cash equivalents and restricted cash at beginning of period	258,488			185,342
Cash, cash equivalents and restricted cash at end of period	$	139,950		$	238,798
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	$	38,221		$	31,641
Income taxes paid (refund)	(490		)	1,626
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Dividends and distributions declared but not paid	9,502			8,840
Capital expenditures accrued but not paid	18,815			5,167
Non-cash dividends paid	—			58

8

	Nine Months Ended September 30,
	2019		2018
Non-cash settlement of note receivable	—		8,098
Non-cash settlement of TIF loan	—		8,098
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	$	182,578	$	137,522
Restricted cash at beginning of period	75,910		47,820
Cash, cash equivalents and restricted cash at beginning of period	$	258,488	$	185,342
Cash and cash equivalents at end of period	$	82,583	$	163,825
Restricted cash at end of period	57,367		74,973
Cash, cash equivalents and restricted cash at end of period	$	139,950	$	238,798

See Notes to Condensed Consolidated Financial Statements.

9

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Description of Business

Braemar Hotels & Resorts Inc., together with its subsidiaries (“Braemar”), is a Maryland corporation that invests primarily in high revenue per available room (“RevPAR”) luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by Smith Travel Research. Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code. Braemar conducts its business and owns substantially all of its assets through its operating partnership, Braemar Hospitality Limited Partnership (“Braemar OP”). In this report, the terms the “Company,” “we,” “us” or “our,” refers to Braemar Hotels & Resorts Inc. and, as the context may require, all entities included in its condensed consolidated financial statements.

We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC” or the “Advisor”) through an advisory agreement. Ashford LLC is a subsidiary of Ashford Inc. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.

We do not operate any of our hotel properties directly; instead we employ hotel management companies to operate them for us under management contracts. As of September 30, 2019, Remington Lodging & Hospitality, LLC, together with its affiliates (“Remington Lodging”), which was beneficially wholly-owned by Mr. Monty J. Bennett, Chairman of our board of directors, and Mr. Archie Bennett, Jr., Chairman Emeritus of Ashford Hospitality Trust, Inc. (“Ashford Trust”), managed three of our thirteen hotel properties. Third-party management companies managed the remaining hotel properties. On May 31, 2019, Ashford Inc., the parent company of Ashford LLC, entered into an agreement to acquire the hotel management business of Remington Holdings, L.P. (as amended by the First Amendment thereto dated July 17, 2019 and the Second Amendment thereto dated August 28, 2019, the “Combination Agreement”), which includes Remington Lodging. The transaction closed on November 6, 2019.

Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to project management services, audio visual services, debt placement services, real estate advisory services, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and mobile key technology.

The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of September 30, 2019, own thirteen hotel properties in six states, the District of Columbia and the U.S. Virgin Islands (“USVI”). The portfolio includes eleven wholly-owned hotel properties and two hotel properties that are owned through a partnership in which Braemar OP has a controlling interest. These hotel properties represent 3,719 total rooms, or 3,484 net rooms, excluding those attributable to our partner. As a REIT, Braemar is required to comply with limitations imposed by the Internal Revenue Code related to operating hotels. As of September 30, 2019, twelve of our thirteen hotel properties were leased by wholly-owned or majority-owned subsidiaries that are treated as taxable REIT subsidiaries (“TRS”) for federal income tax purposes (collectively the TRS entities are referred to as “Braemar TRS”). One hotel property, located in the USVI, is owned by our USVI TRS. Braemar TRS then engages third-party or affiliated hotel management companies to operate the hotel properties under management contracts. Hotel operating results related to the hotel properties are included in the condensed consolidated statements of operations.

As of September 30, 2019, ten of the thirteen hotel properties were leased by Braemar’s wholly-owned TRS and the two hotel properties majority-owned through a consolidated partnership were leased to a TRS wholly-owned by such consolidated partnership. Each leased hotel is leased under a percentage lease that provides for each lessee to pay in each calendar month the base rent plus, in each calendar quarter, percentage rent, if any, based on hotel revenues. Lease revenue from Braemar TRS is eliminated in consolidation. The hotel properties are operated under management contracts with Marriott International, Inc. (“Marriott”), Hilton Worldwide (“Hilton”), Accor Business and Leisure Management, LLC (“Accor”), Hyatt Hotels Corporation (“Hyatt”), Ritz-Carlton, Inc., a subsidiary of Marriott (“Ritz-Carlton”) and Remington Lodging, which are eligible independent contractors under the Internal Revenue Code.

2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed

10

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

consolidated financial statements include the accounts of Braemar Hotels & Resorts Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All significant intercompany accounts and transactions between consolidated entities have been eliminated in these condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K, as originally filed with the Securities and Exchange Commission (“SEC”) on March 8, 2019, as subsequently amended.

Braemar OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC, its general partner. As such, we consolidate Braemar OP.

The following items affect reporting comparability of our historical condensed consolidated financial statements:

• historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three and nine months ended September 30, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019;

• on April 4, 2018, we acquired the Ritz-Carlton, Sarasota. The operating results of the hotel property have been included in the results of operations as of its acquisition date;

• on June 1, 2018, we sold the Tampa Renaissance; and

• on January 15, 2019, we acquired the Ritz-Carlton, Lake Tahoe. The operating results of the hotel property have been included in the results of operations as of its acquisition date.

Use of Estimates—The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Restricted Cash—Restricted cash includes reserves for debt service, real estate taxes and insurance, as well as excess cash flow deposits and reserves for furniture, fixtures and equipment (“FF&E”) replacements of approximately 4% to 5% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions.

Impairment of Investments in Hotel Properties—Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property’s net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating the impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. Asset write-downs resulting from property damage are recorded up to the amount of the allocable property insurance deductible in the period that the property damage occurs. See note 4.

Investment in Ashford Inc.—As of September 30, 2019, we held approximately 195,000 shares of Ashford Inc. common stock, which represented approximately 7.5% of the outstanding common stock in Ashford Inc., with a fair value of $4.7 million. This investment would typically be accounted for under the equity method of accounting, under Accounting Standard Codification (“ASC”) 323-10 - Investments - Equity Method and Joint Ventures since we exercise significant influence. However, we have elected to record our investment in Ashford Inc. using the fair value option under ASC 825-10 - Fair Value Option - Financial Assets and Financial Liabilities. See note 19.

11

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Investment in Unconsolidated Entity—Investment in unconsolidated entity, in which we have ownership interest of 8.6% at September 30, 2019, is accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the entities’ net income/loss. We review our investment in unconsolidated entity for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any impairment is recorded in equity in earnings (loss) of unconsolidated entity. No such impairment was recorded for the three and nine months ended September 30, 2019 and 2018.

Our investment in unconsolidated entity is considered to be a variable interest in the underlying entity. VIEs, as defined by authoritative accounting guidance, must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct the unconsolidated entity’s activities and operations, we are not considered to be the primary beneficiary of this entity on an ongoing basis and therefore such entity should not be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions.

Leases—We determine if an arrangement is a lease at commencement date. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on our consolidated balance sheets. We currently do not have any finance leases.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. The lease terms used to calculate our right-of-use assets may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Equity-Based Compensation—Prior to the adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) in the third quarter of 2018, stock/unit-based compensation for non-employees was accounted for at fair value based on the market price of the shares at period end that resulted in recording expense, included in “advisory services fee” and “management fees,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Performance stock units (“PSUs”) and Performance Long-Term Incentive Plan (“Performance LTIP”) units granted to certain executive officers were accounted for at fair value at period end based on a Monte Carlo simulation valuation model that resulted in recording expense, included in “advisory services fee,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Stock/unit grants to certain independent directors are recorded at fair value based on the market price of the shares/units at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant and included in “corporate general and administrative” expense in the condensed consolidated statements of operations.

After the adoption of ASU 2018-07 in the third quarter of 2018, stock/unit-based compensation for non-employees is measured at the grant date and expensed ratably over the vesting period based on the original measurement as of the grant date. This results in the recording of expense, included in “advisory services fee,” “management fees” and “corporate general and administrative” expense, equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. PSUs and Performance LTIP units granted to certain executive officers vest based on time and market conditions and are measured at the grant date fair value based on a Monte Carlo simulation valuation model. The subsequent expense is then ratably recognized over the service period as the service is rendered regardless of when, if ever, the market conditions are satisfied. This results in recording expense, included in “advisory services fee,” equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. Stock/unit grants to certain independent directors are measured at the grant date based on the market price of the shares/units at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant.

Recently Adopted Accounting Standards—In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Under the new standard, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases ("ASU 2018-10") and ASU 2018-11, Leases (Topic 842), Targeted Improvements (“ASU 2018-11”). The amendments in ASU 2018-10 affect only narrow aspects of the guidance issued in the amendments in ASU 2016-02, including but not limited to lease residual value guarantee, rate implicit

12

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

in the lease, lease term and purchase option. The amendments in ASU 2018-11 provide an optional transition method for adoption of the new standard, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. In December 2018, the FASB issued ASU 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors (“ASU 2018-20”). The amendments create a lessor practical expedient applicable to sales and other similar taxes incurred in connection with a lease, and simplify lessor accounting for lessor costs paid by the lessee.

We adopted the standard effective January 1, 2019 on a modified retrospective basis and implemented internal controls to enable the preparation of financial information on adoption. We elected the practical expedients which provide us the option to apply the new guidance at its effective date on January 1, 2019 without having to adjust the comparative prior period financial statements. The package of practical expedients also allowed us to carry forward the historical lease classification. Additionally, we elected the practical expedients allowing us not to separate lease and non-lease components and not record leases with an initial term of twelve months or less (“short-term leases”) on the balance sheet across all existing asset classes.

The adoption of this standard has resulted in the recognition of ROU assets and lease liabilities primarily related to our ground lease arrangements for which we are the lessee. As of January 1, 2019, we recorded operating lease liabilities of $60.6 million as well as a corresponding operating lease ROU asset of $82.5 million, which includes, among other things, the reclassified intangible assets of $22.3 million. The standard did not have a material impact on our condensed consolidated statements of operations and statements of cash flows. See related disclosures in note 5.

Recently Issued Accounting Standards—In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The ASU sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses (“ASU 2018-19”). ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. We are currently evaluating the impact that ASU 2016-13 will have on our condensed consolidated financial statements and related disclosures.

3. Revenue

Rooms revenue represents revenues from the occupancy of our hotel rooms and is driven by the occupancy and average daily rate charged. Rooms revenue includes revenue for guest no-shows, day use, and early/late departure fees. The contracts for room stays with customers are generally short in duration and revenues are recognized as services are provided over the course of the hotel stay.

Food & Beverage (“F&B”) revenue consists of revenue from the restaurants and lounges at our hotel properties, in-room dining and mini-bars revenue, and banquet/catering revenue from group and social functions. Other F&B revenue may include revenue from audio visual equipment/services, rental of function rooms, and other F&B related revenues. Revenue is recognized as the services or products are provided. Our hotel properties may employ third parties to provide certain services at the property, for example, audio visual services. We evaluate each of these contracts to determine if the hotel is the principal or the agent in the transaction, and record the revenues as appropriate (i.e. gross vs. net).

Other revenue consists of ancillary revenue at the property, including attrition and cancellation fees, condo management fees, resort and destination fees, health center fees, spas, golf, telecommunications, parking, entertainment, business interruption revenue and other guest services, as well as rental revenue primarily from leased retail outlets at our hotel properties, and membership initiation fees and dues, primarily from club memberships. Cancellation fees are recognized from non-cancellable deposits when the customer provides notification of cancellation in accordance with established management policy time frames. Non-refundable membership initiation fees are recognized over the expected life of an active membership.

For the three and nine months ended September 30, 2019, the Company recorded revenue from business interruption losses associated with lost profits from hurricanes of $4.0 million and $16.6 million, respectively. For the three and nine months ended September 30, 2018, the Company recorded revenue from business interruption losses associated with lost profits from hurricanes of $3.8 million and $13.9 million, respectively. Additionally, during the three and nine months ended September 30, 2018, the Company recorded revenue of $0 and $1.9 million, respectively, net of deductibles of $500,000, for business interruption losses associated with lost profits at the Bardessono Hoteland Hotel Yountville as a result of the Napa wildfires.

13

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

For the three and nine months ended September 30, 2018, the Company recorded $0 and $3.3 million of business interruption income for the Tampa Renaissance related to a settlement for lost profits from the BP Deepwater Horizon oil spill in the Gulf of Mexico in 2010. No such revenue was recorded for the three and nine months ended September 30, 2019.

Taxes specifically collected from customers and submitted to taxing authorities are not recorded in revenue. Interest income is recognized when earned.

The following tables present our revenue disaggregated by geographical areas (in thousands):

	Three Months Ended September 30, 2019
Primary Geographical Market	Number of Hotels	Rooms			Food and Beverage		Other Hotel		Other		Total
California	5	$	32,070		$	9,190	$	4,441	$	—	$	45,701
Colorado	1	3,086			3,615		2,368		—		9,069
Florida	2	8,234			4,124		3,308		—		15,666
Illinois	1	7,501			2,250		466		—		10,217
Pennsylvania	1	6,675			1,474		310		—		8,459
Washington	1	10,361			1,649		382		—		12,392
Washington, D.C.	1	8,889			3,688		378		—		12,955
USVI	1	(8		)	432		3,999		—		4,423
Corporate entities	—	—			—		—		2		2
Total	13	$	76,808		$	26,422	$	15,652	$	2	$	118,884

	Three Months Ended September 30, 2018
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	4	$	26,368	$	5,209	$	2,404	$	—	$	33,981
Colorado	1	3,178		3,112		2,438		—		8,728
Florida	2	8,194		4,335		3,420		—		15,949
Illinois	1	8,157		2,280		327		—		10,764
Pennsylvania	1	7,137		1,422		267		—		8,826
Washington	1	11,035		1,799		380		—		13,214
Washington, D.C.	1	8,638		2,729		264		—		11,631
USVI	1	1,651		285		3,817		—		5,753
Total	12	$	74,358	$	21,171	$	13,317	$	—	$	108,846

	Nine Months Ended September 30, 2019
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	5	$	88,533	$	27,311	$	11,893	$	—	$	127,737
Colorado	1	14,059		9,867		7,762		—		31,688
Florida	2	34,674		18,811		12,311		—		65,796
Illinois	1	19,053		5,796		1,168		—		26,017
Pennsylvania	1	18,169		3,187		793		—		22,149
Washington	1	23,378		5,070		1,189		—		29,637
Washington, D.C.	1	29,960		12,679		1,196		—		43,835
USVI	1	834		1,605		16,608		—		19,047
Corporate entities	—	—		—		—		7		7
Total	13	$	228,660	$	84,326	$	52,920	$	7	$	365,913

14

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

	Nine Months Ended September 30, 2018
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	4	$	69,007	$	18,163	$	8,258	$	—	$	95,428
Colorado	1	14,736		9,676		7,712		—		32,124
Florida	2	24,474		12,191		7,343		—		44,008
Illinois	1	19,359		6,100		908		—		26,367
Pennsylvania	1	21,641		4,314		867		—		26,822
Washington	1	25,587		5,164		1,006		—		31,757
Washington, D.C.	1	30,390		10,965		884		—		42,239
USVI	1	4,939		616		13,616		—		19,171
Sold hotel properties	1	8,171		2,875		3,491		—		14,537
Total	13	$	218,304	$	70,064	$	44,085	$	—	$	332,453

4. Investments in Hotel Properties, net

Investments in hotel properties, net consisted of the following (in thousands):

	September 30, 2019			December 31, 2018
Land	$	455,298		$	428,567
Buildings and improvements	1,106,503			989,180
Furniture, fixtures and equipment	109,715			103,025
Construction in progress	96,644			42,034
Total cost	1,768,160			1,562,806
Accumulated depreciation	(296,557		)	(262,905		)
Investments in hotel properties, net	$	1,471,603		$	1,299,901

Ritz-Carlton, Lake Tahoe

On January 15, 2019, the Company acquired a 100% interest in the 170-room Ritz-Carlton, Lake Tahoe located in Truckee, California for $120.0 million. The Company incurred $640,000 in acquisition costs. In connection with the acquisition the Company completed the financing of a $54.0 million mortgage loan secured by the Ritz-Carlton, Lake Tahoe. See note 8.

We accounted for this transaction as an asset acquisition because substantially all of the fair value of the gross assets acquired were concentrated in a group of similar identifiable assets. We allocated the cost of the acquisition including transaction costs to the individual assets acquired and liabilities assumed on a relative fair value basis, which is considered a Level 3 valuation technique, as noted in the following table (in thousands):

Land (1)	$	26,731
Buildings and improvements	89,569
Furniture, fixtures and equipment	2,034
	$	118,334
Capital reserves	6,117
Key money	(3,811		)
	$	120,640
Net other assets (liabilities)	$	510

________

⁽¹⁾  Amount includes the value of a 3.4-acre parking lot adjacent to the hotel which could be used for future development of luxury town homes.

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BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The results of operations of the hotel property have been included in our results of operations as of the acquisition date. The table below summarizes the total revenue and net income (loss) in our condensed consolidated statements of operations for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Total revenue	$	12,206	$	31,624
Net income (loss)	$	643	$	469

Impairment Charges and Insurance Recoveries

In September 2017, the Ritz-Carlton, St. Thomas located in St. Thomas, USVI, the Pier House Resort located in Key West, FL and the Tampa Renaissance located in Tampa, FL (sold in 2018) were impacted by the effects of Hurricanes Irma and Maria. The Company holds insurance policies that provide coverage for property damage and business interruption after meeting certain deductibles at all of its hotel properties.

For the three and nine months ended September 30, 2019, the Company recorded revenue from business interruption losses associated with lost profits from the hurricanes of $4.0 million and $16.6 million, respectively. For the three and nine months ended September 30, 2018, the Company recorded revenue from business interruption losses associated with lost profits from the hurricanes of $3.8 million and $13.9 million, respectively. These revenues are included in “other” hotel revenue in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2019, the Company received proceeds of $6.6 million and $14.9 million, respectively, from our insurance carriers for property damage and business interruption from the hurricanes. The Company received $0 and $34.0 million, respectively, for the three and nine months ended September 30, 2018.

Additionally, during the three and nine months ended September 30, 2018, the Company recorded revenue of $0 and $1.9 million, respectively, net of deductibles of $500,000, for business interruption losses associated with lost profits at the Bardessono Hoteland Hotel Yountville as a result of the Napa wildfires, which is included in “other” hotel revenue in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2018, we recorded impairment charges of $0 and $71,000, respectively, as a result of a change in estimate of property damage from the hurricanes at the Pier House Resort and the Tampa Renaissance. There was no impairment charge recorded for the three and nine months ended September 30, 2019. As of September 30, 2019, the Company had a net liability of $14.3 million, included in “other liabilities” on the condensed consolidated balance sheet, as it has received insurance proceeds in excess of the sum of its impairment, remediation expenses and business interruption revenue recorded through September 30, 2019. The Company will not record revenue for business interruption losses associated with lost profits or gains from property damage recoveries until the amount for such recoveries is known and the amount is realizable.

5. Leases

On January 1, 2019, we adopted ASC 842 on a modified retrospective basis. We elected the practical expedients which allowed us to apply the new guidance at its effective date on January 1, 2019 without adjusting the comparative prior period financial statements. The package of practical expedients also allowed us to carry forward the historical lease classification. Additionally, we elected the practical expedients allowing us not to separate lease and non-lease components and not record short-term leases on the balance sheet across all existing asset classes.

The adoption of this standard has resulted in the recognition of operating lease ROU assets and lease liabilities primarily related to our ground lease arrangements for which we are the lessee. As of January 1, 2019, we recorded operating lease liabilities of $60.6 million as well as a corresponding operating lease ROU asset of $82.5 million, which includes, among other things, the reclassified intangible assets of $22.3 million. The standard did not have a material impact on our condensed consolidated statements of operations and statements of cash flows.

The majority of our leases are operating ground leases. We also have operating equipment leases, such as copier and vehicle leases, at our hotel properties. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years. The exercise of lease renewal options is at our sole discretion. Some leases have variable payments, however, if variable payments are contingent, they are not included in the ROU assets and liabilities. We have no finance leases as of September 30, 2019.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

As of September 30, 2019, our leased assets and liabilities consisted of the following (in thousands):

	September 30, 2019
Assets
Operating lease right-of-use assets	$	82,976
Liabilities
Operating lease liabilities	$	61,168

We incurred the following lease costs related to our operating leases (in thousands):

		Three Months Ended		Nine Months Ended
	Classification	September 30, 2019		September 30, 2019
Operating lease cost (1)	Hotel operating expenses - other	$	1,510	$	4,312

_______________________________________

⁽¹⁾ For the three and nine months endedSeptember 30, 2019, operating lease cost includes approximately $445,000 and $1.1 million of variable lease cost associated with the ground leases and $129,000 and $366,000 of amortization costs related to the intangible assets that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842. Short-term lease costs in aggregate are immaterial.

Other information related to leases is as follows:

	Nine Months Ended
	September 30, 2019
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (in thousands)	$	2,417
Weighted Average Remaining Lease Term
Operating leases (1)	47 years
Weighted Average Discount Rate
Operating leases (1)	4.98		%

_______________________________________

⁽¹⁾ Calculated using the lease term, excluding extension options, and discount rates of the ground leases.

Future minimum lease payments due under non-cancellable leases as of September 30, 2019 were as follows (in thousands):

	Operating Leases
2019	$	806
2020	3,258
2021	3,269
2022	3,224
2023	3,227
Thereafter	151,666
Total future minimum lease payments	165,450
Less: interest	(104,282		)
Present value of lease liabilities	$	61,168

17

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Future minimum lease payments due under non-cancellable leases under ASC 840 as of December 31, 2018 were as follows (in thousands):

2019	$	3,161
2020	3,156
2021	3,152
2022	3,164
2023	3,177
Thereafter	151,244
Total	$	167,054

Enhanced Return Funding Program

We lease certain assets from Ashford Inc. under the Enhanced Return Funding Program. See note 18.

6. Hotel Dispositions

On June 1, 2018, the Company sold the Tampa Renaissance hotel for $68.0 million in cash. The sale resulted in a gain of $15.7 million for the year ended December 31, 2018 and was included in “gain (loss) on disposition of assets and sale of hotel property” in our condensed consolidated statements of operations. Since the sale of the hotel property did not represent a strategic shift that has (or will have) a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in our condensed consolidated financial statements.

We included the results of operations of this hotel property through the date of disposition in net income (loss) as shown in our condensed consolidated statements of operations for the three and nine months ended September 30, 2018. The following table includes the condensed financial information from this hotel property (in thousands):

	Nine Months Ended September 30,
	2018
Total hotel revenue	$	14,537
Total hotel operating expenses	(7,500		)
Property taxes, insurance and other	(486		)
Depreciation and amortization	(1,294		)
Impairment charges	(12		)
Gain (loss) on disposition of assets and sale of hotel property	15,711
Operating income (loss)	20,956
Interest expense and amortization of loan costs	(791		)
Income (loss) before income taxes	20,165
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership	(2,253		)
Income (loss) before income taxes attributable to the Company	$	17,912

7. Investment in Unconsolidated Entity

Ashford Inc.

As of September 30, 2019 and December 31, 2018, we held approximately 195,000 shares of Ashford Inc. common stock. The closing price per share of Ashford Inc. common stock on the NYSE American LLC was $24.24 and $51.90 as of September 30, 2019 and December 31, 2018, respectively. This represented an approximate 7.5% and 8.1% ownership interest in the outstanding common stock of Ashford Inc. for September 30, 2019 and December 31, 2018, respectively. See notes 11, 12 and 19.

We have elected to use the fair value option, under the applicable accounting guidance, to account for our investment in Ashford Inc. as the fair value is readily available since Ashford Inc. common stock is traded on a national exchange. The fair value of our investment in Ashford Inc. is included in “investment in Ashford Inc., at fair value” on our condensed consolidated balance

18

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

sheets, and changes in market value are included in “unrealized gain (loss) on investment in Ashford Inc.” on our condensed consolidated statements of operations.

The following tables summarize the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018, and the condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018, of Ashford Inc. (in thousands):

Ashford Inc.

Condensed Consolidated Balance Sheets

(unaudited)

	September 30, 2019		December 31, 2018
Total assets	$	421,837	$	379,005
Total liabilities	148,779		108,726
Series B Convertible Preferred Stock	202,185		200,847
Redeemable noncontrolling interests	3,641		3,531
Total stockholders’ equity of Ashford Inc.	66,467		65,443
Noncontrolling interests in consolidated entities	765		458
Total equity	67,232		65,901
Total liabilities and equity	$	421,837	$	379,005
Our investment in Ashford Inc., at fair value	$	4,724	$	10,114

Ashford Inc.

Condensed Consolidated Statements of Operations

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total revenue	$	56,889		$	41,565		$	183,675		$	144,544
Total operating expenses	(63,690		)	(53,069		)	(186,991		)	(150,214		)
Operating income (loss)	(6,801		)	(11,504		)	(3,316		)	(5,670		)
Equity in earnings (loss) of unconsolidated entities	464			—			(109		)	—
Interest expense and loan amortization cost	(531		)	(419		)	(1,412		)	(770		)
Other income (expense)	(20		)	25			(86		)	(50		)
Income tax (expense) benefit	297			13,904			(1,429		)	11,593
Net income (loss)	(6,591		)	2,006			(6,352		)	5,103
(Income) loss from consolidated entities attributable to noncontrolling interests	101			413			395			704
Net (income) loss attributable to redeemable noncontrolling interests	334			968			623			817
Net income (loss) attributable to Ashford Inc.	$	(6,156	)	$	3,387		$	(5,334	)	$	6,624
Preferred dividends	(2,909		)	(1,675		)	(8,492		)	(1,675		)
Amortization of preferred stock discount	(363		)	(303		)	(1,338		)	(303		)
Net income attributable to common stockholders	$	(9,428	)	$	1,409		$	(15,164	)	$	4,646
Our unrealized gain (loss) on investment in Ashford Inc.	$	(1,471	)	$	2,158		$	(5,390	)	$	(3,338	)

19

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

OpenKey

On March 28, 2018, the Company made a $2.0 million investment in OpenKey, which is controlled and consolidated by Ashford Inc., for an 8.2% ownership interest, which investment was recommended by our Related Party Transactions Committee and unanimously approved by the independent members of our board of directors. In 2019, we made additional investments of $332,000 which was recommended by our Related Party Transactions Committee and unanimously approved by the independent members of our board of directors. As of September 30, 2019, the Company has made investments in OpenKey totaling $2.3 million.

OpenKey is a hospitality-focused mobile key platform that provides a universal smart phone app and related hardware and software for keyless entry into hotel guest rooms. Our investment is recorded as “investment in unconsolidated entity” in our condensed consolidated balance sheets and is accounted for under the equity method of accounting as we have been deemed to have significant influence over the entity under the applicable accounting guidance.

The following table summarizes our carrying value and ownership interest in OpenKey:

	September 30, 2019			December 31, 2018
Carrying value of the investment in OpenKey (in thousands)	$	1,949		$	1,766
Ownership interest in OpenKey	8.6		%	8.2		%

The following table summarizes our equity in earnings (loss) in OpenKey (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Line Item	2019			2018			2019			2018
Equity in earnings (loss) of unconsolidated entity	$	(48	)	$	(81	)	$	(149	)	$	(146	)

8. Indebtedness

Indebtedness consisted of the following (in thousands):

Indebtedness	Collateral	Maturity	Interest Rate	September 30, 2019			December 31, 2018
Secured revolving credit facility (3)	Equity	November 2019	Base Rate (2) + 1.25% to 2.50% or LIBOR (1) + 2.25% to 3.50%	$	—		$	—
Mortgage loan (4)	Capital Hilton	November 2019	LIBOR(1) + 2.65%	—			187,086
	Hilton La Jolla Torrey Pines
Mortgage loan (5)	Ritz-Carlton, St. Thomas	December 2019	LIBOR (1) + 4.95%	—			42,000
Mortgage loan (6)	Pier House Resort	March 2020	LIBOR (1) + 2.25%	—			70,000
Mortgage loan (7)	Park Hyatt Beaver Creek	April 2020	LIBOR (1) + 2.75%	67,500			67,500
Mortgage loan (8)	The Notary Hotel	June 2020	LIBOR (1) + 2.16%	435,000			435,000
	Courtyard San Francisco Downtown
	Sofitel Chicago Magnificent Mile
	Marriott Seattle Waterfront
Mortgage loan (5)	Ritz-Carlton, St. Thomas	August 2021	LIBOR (1) + 4.95%	42,500			—
Mortgage loan	Hotel Yountville	May 2022	LIBOR (1) + 2.55%	51,000			51,000
Mortgage loan	Bardessono Hotel	August 2022	LIBOR (1) + 2.55%	40,000			40,000
Mortgage loan	Ritz-Carlton, Sarasota	April 2023	LIBOR (1) + 2.65%	100,000			100,000
Mortgage loan	Ritz-Carlton, Lake Tahoe	January 2024	LIBOR (1) + 2.10%	54,000			—
Mortgage loan (4)	Capital Hilton	February 2024	LIBOR (1) + 1.70%	195,000			—
	Hilton La Jolla Torrey Pines
Mortgage loan (6)	Pier House Resort	September 2024	LIBOR (1) + 1.85%	80,000			—
				1,065,000			992,586
Deferred loan costs, net				(7,533		)	(6,713		)
Indebtedness, net				$	1,057,467		$	985,873

__________________

⁽¹⁾  LIBOR rates were 2.016% and 2.503% at September 30, 2019 and December 31, 2018, respectively.

20

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

⁽²⁾  Base Rate, as defined in the secured revolving credit facility agreement, is the greater of (i) the prime rate set by Bank of America, or (ii) federal funds rate + 0.5%, or (iii) LIBOR + 1.0%.

⁽³⁾  Our borrowing capacity under our secured revolving credit facility was $100.0 million at September 30, 2019. See note 19.

⁽⁴⁾  On January 22, 2019, we refinanced this mortgage loan with an outstanding balance of $186.8 million with a new $195.0 million mortgage loan with a five-year term. The new mortgage loan is interest only and bears interest at a rate of LIBOR + 1.70%.

⁽⁵⁾  On August 5, 2019, we amended this mortgage loan totaling $42.0 million. The amended mortgage loan totaling $42.5 million has a two-year initial term and threeone-year extension options, subject to the satisfaction of certain conditions. The amended mortgage loan is interest only and bears interest at a rate of LIBOR + 4.95%.

⁽⁶⁾  On September 30, 2019, we refinanced this mortgage loan totaling $70.0 million with a new $80.0 million mortgage loan with a five-year term. The new mortgage loan is interest only and bears interest at a rate of LIBOR + 1.85%.

⁽⁷⁾  This mortgage loan has threeone-year extension options, subject to satisfaction of certain conditions, of which the first was exercised in April 2019.

⁽⁸⁾  This mortgage loan has fiveone-year extension options, subject to satisfaction of certain conditions.

On April 4, 2018, in connection with the acquisition of the 266-room Ritz-Carlton, Sarasota in Sarasota, Florida, the Company completed the financing of a $100.0 million mortgage loan. This mortgage loan provides for an interest rate of LIBOR + 2.65%. The mortgage loan is interest only until July 1, 2021 and then amortizes 1% annually for the remaining term. The stated maturity is April 2023.

On May 23, 2018, the Company refinanced two mortgage loans with an outstanding balance of $357.6 million with a new $435.0 million mortgage loan with a two-year initial term and fiveone-year extension options subject to the satisfaction of certain conditions. As a result of the refinance the Tampa Renaissance became unencumbered. The new mortgage loan is interest only and bears interest at a rate of LIBOR + 2.16%. The loan is secured by four hotels: The Notary Hotel, Marriott Seattle Waterfront, Courtyard San Francisco Downtown and Sofitel Chicago Magnificent Mile.

On January 15, 2019, in connection with the acquisition of the 170-room Ritz-Carlton, Lake Tahoe located in Truckee, California, the Company completed the financing of a $54.0 million mortgage loan. This mortgage loan provides for an interest rate of LIBOR + 2.10%. The mortgage loan is interest only and has a five year term.

On January 22, 2019, the Company refinanced its existing mortgage loan with an outstanding balance of approximately $186.8 million and a final maturity date in November 2021 with a new $195.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.70% and has a five-year term. The mortgage loan is secured by the same two hotels: the Capital Hilton and Hilton La Jolla Torrey Pines. These two hotels are held in a joint venture in which we have a 75% equity interest.

On August 5, 2019, the Company amended its mortgage loan with an outstanding balance of $42.0 million with a new $42.5 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 4.95% and has a two-year initial term with threeone-year extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Ritz-Carlton St. Thomas.

On September 30, 2019, the Company refinanced its mortgage loan with an outstanding balance of $70.0 million with a new $80.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.85% and has a five-year term with no extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Pier House Resort.

We are required to maintain certain financial ratios under our secured revolving credit facility. If we violate covenants in any debt agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in our inability to borrow unused amounts under our line of credit, even if repayment of some or all of our borrowings is not required. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of the consolidated group. As of September 30, 2019, we were in compliance in all material respects with all covenants or other requirements set forth in our debt agreements as amended.

21

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

9. Income (Loss) Per Share

The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss) attributable to common stockholders - basic and diluted:
Net income (loss) attributable to the Company	$	(9,388	)	$	(1,869	)	$	(14,879	)	$	13,681
Less: Dividends on preferred stock	(2,533		)	(1,707		)	(7,597		)	(5,122		)
Less: Dividends on common stock	(5,177		)	(5,126		)	(15,508		)	(15,364		)
Less: Dividends on unvested performance stock units	(74		)	(72		)	(224		)	(216		)
Less: Dividends on unvested restricted shares	(88		)	(78		)	(272		)	(243		)
Undistributed net income (loss) allocated to common stockholders	(17,260		)	(8,852		)	(38,480		)	(7,264		)
Add back: Dividends on common stock	5,177			5,126			15,508			15,364
Distributed and undistributed net income (loss) - basic and diluted	$	(12,083	)	$	(3,726	)	$	(22,972	)	$	8,100
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic	32,347			32,023			32,259			31,905
Advisory services incentive fee shares	—			—			—			17
Weighted average common shares outstanding – diluted	32,347			32,023			32,259			31,922
Income (loss) per share - basic:
Net income (loss) allocated to common stockholders per share	$	(0.37	)	$	(0.12	)	$	(0.71	)	$	0.25
Income (loss) per share - diluted:
Net income (loss) allocated to common stockholders per share	$	(0.37	)	$	(0.12	)	$	(0.71	)	$	0.25

Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss) allocated to common stockholders is not adjusted for:
Income (loss) allocated to unvested restricted shares	$	88		$	78		$	272		$	243
Income (loss) allocated to unvested performance stock units	74			72			224			216
Income (loss) attributable to redeemable noncontrolling interests in operating partnership	(1,465		)	(452		)	(2,770		)	1,075
Dividends on preferred stock - Series B	1,708			1,707			5,122			5,122
Total	$	405		$	1,405		$	2,848		$	6,656
Weighted average diluted shares are not adjusted for:
Effect of unvested restricted shares	19			81			53			57
Effect of unvested performance stock units	165			52			206			23
Effect of assumed conversion of operating partnership units	4,162			4,173			4,229			4,137
Effect of assumed conversion of preferred stock - Series B	6,569			6,569			6,569			6,569
Effect of advisory services incentive fee shares	73			32			73			—
Total	10,988			10,907			11,130			10,786

10. Derivative Instruments

Interest Rate Derivatives—We are exposed to risks arising from our business operations, economic conditions and financial markets. To manage these risks, we primarily use interest rate derivatives to hedge our debt and our cash flows. The interest rate derivatives include interest rate caps and interest rate floors, which are subject to master netting settlement arrangements. All derivatives are recorded at fair value.

22

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes the interest rate derivatives we entered into over the applicable periods:

	Nine Months Ended September 30,
Interest rate caps:	2019			2018
Notional amount (in thousands)	$	348,500		$	685,000
Strike rate low end of range	3.00		%	2.43		%
Strike rate high end of range	7.80		%	7.80		%
Effective date range	January 2019 - September 2019			February 2018 - May 2018
Termination date range	March 2020 - October 2021			March 2019 - June 2020
Total cost of interest rate caps (in thousands)	$	89		$	348
Interest rate floors:
Notional amount (in thousands)	$	2,000,000		$	4,000,000
Strike rate low end of range	1.63		%	1.38		%
Strike rate high end of range	1.63		%	2.00		%
Effective date	January 2019			July 2018
Termination date	March 2020			July 2019 - September 2019
Total cost of interest rate floors (in thousands)	$	75		$	138

_______________

No instruments were designated as cash flow hedges for during the nine months ended September 30, 2019 and 2018.

Interest rate derivatives consisted of the following:

Interest rate caps: (1)	September 30, 2019			December 31, 2018
Notional amount (in thousands)	$	925,500		$	1,292,500
Strike rate low end of range	3.00		%	2.43		%
Strike rate high end of range	7.80		%	11.61		%
Effective date range	April 2018 - September 2019			January 2017 - December 2018
Termination date range	January 2020 - October 2021			January 2019 - June 2020
Aggregate principal balance on corresponding mortgage loans (in thousands)	$	870,000		$	805,500
Interest rate floors:(1) (2)
Notional amount (in thousands)	$	7,000,000		$	10,850,000
Strike rate low end of range	(0.25		)%	(0.25		)%
Strike rate high end of range	2.00		%	2.00		%
Effective date range	July 2015 - January 2019			July 2015 - July 2018
Termination date range	December 2019 - July 2020			March 2019 - July 2020

_______________

⁽¹⁾  No instruments were designated as cash flow hedges.

⁽²⁾  Cash collateral is posted by us as well as our counterparties. We offset the fair value of the derivative and the obligation/right to return/reclaim cash collateral.

Credit Default Swap Derivatives—We use credit default swaps, tied to the CMBX index, to hedge financial and capital market risk. A credit default swap is a derivative contract that functions like an insurance policy against the credit risk of an entity or obligation. The seller of protection assumes the credit risk of the reference obligation from the buyer (us) of protection in exchange for annual premium payments. If a default or a loss, as defined in the credit default swap agreements, occurs on the underlying bonds, then the buyer of protection is protected against those losses. The only liability for us, the buyer, is the annual premium and any change in value of the underlying CMBX index (if the trade is terminated prior to maturity). For all CMBX trades completed to date, we were the buyer of protection. Credit default swaps are subject to master-netting settlement arrangements and credit support annexes. As of September 30, 2019, we held a credit default swap with a notional amount of $50.0 million, an effective date of August 2017 and an expected maturity date of October 2026. Assuming the underlying bonds pay off at par over their remaining average life, our estimated total exposure for these trades was approximately $1.3 million as of September 30, 2019. Cash collateral is posted by us as well as our counterparties. We offset the fair value of the derivative and the obligation/right to

23

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

return/reclaim cash collateral. The change in market value of credit default swaps is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparties when such change in market value is over $250,000.

11. Fair Value Measurements

Fair Value Hierarchy—Our financial instruments measured at fair value either on a recurring or a non-recurring basis are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the market place as discussed below:

• Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.

• Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

• Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.

The fair value of interest rate caps is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rates of the caps. The variable interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (LIBOR forward curves) and volatilities (the Level 2 inputs). We also incorporate credit valuation adjustments (the Level 3 inputs) to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk.

Fair value of credit default swaps are obtained from a third party who publishes various information including the index composition and price data (Level 2 inputs). The fair value of credit default swaps does not contain credit-risk-related adjustments as the change in fair value is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparty.

The fair value of interest rate floors is calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor. These expected future cash flows are probability-weighted projections based on the contract terms, accounting for both the magnitude and likelihood of potential payments, which are both computed using the appropriate LIBOR forward curve and market implied volatilities as of the valuation date (Level 2 inputs).

The fair value of options on futures contracts is determined based on the last reported settlement price as of the measurement date (Level 1 inputs). These exchange-traded options are centrally cleared, and a clearinghouse stands in between all trades to ensure that the obligations involved in the trades are satisfied.

When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when the valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties, which we consider significant (10% or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels are determined at the end of each reporting period. In determining the fair values of our derivatives at September 30, 2019, the LIBOR interest rate forward curve (Level 2 inputs) assumed a downtrend from 2.016% to 1.222% for the remaining term of our derivatives. Credit spreads (Level 3 inputs) used in determining the fair values derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates.

24

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):

	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting(1)		Total
September 30, 2019
Assets
Derivative assets:
Interest rate derivatives - floors	$	—	$	100		$	—	$	52	$	152
Interest rate derivatives - caps	—		2			—		—		2
Credit default swaps	—		(459		)	—		1,078		619
	—		(357		)	—		1,130		773		(2)
Non-derivative assets:
Investment in Ashford Inc.	4,724		—			—		—		4,724
Total	$	4,724	$	(357	)	$	—	$	1,130	$	5,497

	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting(1)		Total
December 31, 2018
Assets
Derivative assets:
Interest rate derivatives - floors	$	—	$	76	$	—	$	73	$	149
Interest rate derivatives - caps	—		20		—		—		20
Credit default swaps	—		546		—		57		603
	—		642		—		130		772		(2)
Non-derivative assets:
Investment in Ashford Inc.	10,114		—		—		—		10,114
Total	$	10,114	$	642	$	—	$	130	$	10,886

__________________

⁽¹⁾  Represents net cash collateral posted between us and our counterparties.

⁽²⁾  Reported as “derivative assets” in our condensed consolidated balance sheets.

25

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Effect of Fair Value Measured Assets and Liabilities on Condensed Consolidated Statements of Operations

The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands):

	Gain (Loss) Recognized in Income
	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
Assets
Derivative assets:
Interest rate derivatives - floors	$	(717	)		$	(134	)		$	(51	)		$	(218	)
Interest rate derivatives - caps	(26		)		(10		)		(107		)		(271		)
Credit default swaps	(61		)	(1)	(434		)	(1)	(1,004		)	(1)	(314		)	(1)
Total derivative assets	$	(804	)		$	(578	)		$	(1,162	)		$	(803	)
Non-derivative assets:
Investment in Ashford Inc.	(1,471		)		2,158				(5,390		)		(3,338		)
Total	$	(2,275	)		$	1,580			$	(6,552	)		$	(4,141	)
Total combined
Interest rate derivatives - floors	$	(667	)		$	(134	)		$	139			$	(218	)
Interest rate derivatives - caps	(26		)		(10		)		(107		)		(271		)
Credit default swaps	$	(61	)		(434		)		$	(1,004	)		(314		)
Unrealized gain (loss) on derivatives	(754		)		(578		)		(972		)		(803		)
Realized gain (loss) on interest rate floors	(50		)	(2)	—				(190		)	(2)	—
Unrealized gain (loss) on investment in Ashford Inc.	(1,471		)		2,158				(5,390		)		(3,338		)
Net	$	(2,275	)		$	1,580			$	(6,552	)		$	(4,141	)

_______________

⁽¹⁾  Excludes costs associated with credit default swaps of $64 for both the three months ended September 30, 2019 and 2018 and $190 for both the nine months endedSeptember 30, 2019 and 2018, respectively, which is included in “other income (expense)” in our condensed consolidated statements of operations.

⁽²⁾  Included in “other income (expense)” in our condensed consolidated statements of operations.

26

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

12. Summary of Fair Value of Financial Instruments

Determining the estimated fair values of certain financial instruments such as notes receivable and indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.

The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):

	September 30, 2019				December 31, 2018
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets and liabilities measured at fair value:
Investment in Ashford Inc.	$	4,724	$	4,724	$	10,114	$	10,114
Derivative assets	773		773		772		772
Financial assets not measured at fair value:
Cash and cash equivalents	$	82,583	$	82,583	$	182,578	$	182,578
Restricted cash	57,367		57,367		75,910		75,910
Accounts receivable, net	19,657		19,657		12,739		12,739
Due from related party, net	817		817		—		—
Due from third-party hotel managers	18,019		18,019		4,927		4,927
Financial liabilities not measured at fair value:
Indebtedness	$	1,065,000	$994,975 to $1,099,709		$	992,586	$936,904 to $1,035,526
Accounts payable and accrued expenses	97,945		97,945		64,116		64,116
Dividends and distributions payable	9,502		9,502		8,514		8,514
Due to Ashford Inc.	4,749		4,749		4,001		4,001
Due to related party, net	—		—		224		224
Due to third-party hotel managers	2,172		2,172		1,633		1,633

Cash, cash equivalents and restricted cash. These financial assets have maturities of less than 90 days and most bear interest at market rates. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique.

Accounts receivable, net, due to/from related party, net, accounts payable and accrued expenses, dividends and distributions payable, due to Ashford Inc. and due to/from third-party hotel managers. The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.

Investment in Ashford Inc. Fair value of the investment in Ashford Inc. is based on the quoted closing price on the balance sheet date. This is considered a Level 1 valuation technique.

Derivative assets. Fair value of interest rate caps is determined using the net present value of expected cash flows of each derivative based on the market-based interest rate curve and adjusted for credit spreads of us and our counterparties. Fair value of credit default swaps are obtained from a third party who publishes the CMBX index composition and price data. Fair values of interest rate floors are calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor. See notes 10 and 11 for a complete description of the methodology and assumptions utilized in determining fair values.

Indebtedness. Fair value of indebtedness is determined using future cash flows discounted at current replacement rates for these instruments. Cash flows are determined using a forward interest rate yield curve. The current replacement rates are determined by using the U.S. Treasury yield curve or the index to which these financial instruments are tied, and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral. We estimated the fair value of the total indebtedness to be approximately 93.4% to 103.3% of the carrying value of $1.1 billion at September 30, 2019, and approximately 94.4% to 104.3% of the carrying value of $992.6 million at December 31, 2018. This is considered a Level 2 valuation technique.

27

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

13. Redeemable Noncontrolling Interests in Operating Partnership

Redeemable noncontrolling interests in the operating partnership represents the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Braemar OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested. Each common unit may be redeemed, by the holder, for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either: (i) issued pursuant to an effective registration statement; (ii) included in an effective registration statement providing for the resale of such common stock; or (iii) issued subject to a registration rights agreement.

LTIP units, which are issued to certain executives and employees of Ashford LLC as compensation, generally have vesting periods of three years. Additionally, certain independent members of the board of directors have elected to receive LTIP units as part of their compensation, which are fully vested upon grant. Upon reaching economic parity with common units, each vested LTIP unit can be converted by the holder into one common unit which can then be redeemed for cash or, at our election, settled in our common stock. An LTIP unit will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of our operating partnership at a time when our stock is trading at a level in excess of the price it was trading on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for our operating partnership.

The compensation committee of the board of directors of the Company may authorize the issuance of Performance LTIP units to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of Performance LTIP units that will be settled in common units of Braemar OP, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date. The number of Performance LTIP units actually earned may range from 0% to 200% of target based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s compensation committee on the grant date. As of September 30, 2019, there were approximately 552,000 Performance LTIP units, representing 200% of the target, outstanding. The performance criteria for the Performance LTIP units are based on market conditions under the relevant literature, and the Performance LTIP units were granted to non-employees. Following the adoption of ASU 2018-07 in the third quarter of 2018, the corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award, regardless of the actual outcome of the market condition as opposed to being accounted for at fair value based on the market price of the shares at each quarterly measurement date.

As of September 30, 2019, we have issued a total of 1.3 million LTIP units (including Performance LTIP units), net of cancellations, all of which, other than approximately 100,000 LTIP units and 60,000 Performance LTIP units issued from March 2015 to July 2019, had reached full economic parity with, and are convertible into, common units.

The following table presents compensation expense for Performance LTIP units and LTIP units (in thousands):

		Three Months Ended September 30,				Nine Months Ended September 30,
Type	Line Item	2019		2018		2019		2018
Performance LTIP units	Advisory services fee	$	297	$	245	$	847	$	539
LTIP units	Advisory services fee	355		269		999		707
LTIP units - independent directors	Corporate, general and administrative	103		61		103		61
		$	755	$	575	$	1,949	$	1,307

The unamortized cost of the unvested Performance LTIP units of $1.3 million at September 30, 2019, will be expensed over a period of 2.3 years with a weighted average period of 0.9 years.

The unamortized cost of the unvested LTIP units of $1.9 million at September 30, 2019, will be amortized over a period of 2.4 years with a weighted average period of 1.6 years.

28

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table presents the common units redeemed and the fair value upon redemption (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Common units converted to stock	—		—		165		—
Fair value of common units converted	$	—	$	—	$	2,201	$	—

The following table presents the redeemable noncontrolling interests in Braemar OP (in thousands) and the corresponding approximate ownership percentage of our operating partnership:

	September 30, 2019			December 31, 2018
Redeemable noncontrolling interests in Braemar OP	$	40,584		$	44,885
Adjustments to redeemable noncontrolling interests (1)	$	562		$	23
Ownership percentage of operating partnership	10.95		%	11.22		%

____________________________________

⁽¹⁾  Reflects the excess of the redemption value over the accumulated historical cost.

We allocated net income (loss) to the redeemable noncontrolling interests and declared aggregate cash distributions to the holders of common units and holders of LTIP units, which are recorded as a reduction of redeemable noncontrolling interests in operating partnership, as illustrated in the table below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	$	1,465	$	452	$	2,770	$	(1,075	)
Aggregate distributions to holders of common units, LTIP units and Performance LTIP units	771		824		2,318		2,468

14. Equity and Stock-Based Compensation

Common Stock Dividends—The following table summarizes the common stock dividends declared during the period (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Common stock dividends declared	$	5,339	$	5,276	$	16,004	$	15,823

Performance Stock Units—The compensation committee of the board of directors of the Company may authorize the issuance of grants of PSUs to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of PSUs that will be settled in shares of common stock of the Company, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date. The number of PSUs actually earned may range from 0% to 200% of target based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s compensation committee on the grant date. The performance criteria for the PSUs are based on market conditions under the relevant literature, and the PSUs were granted to non-employees. Following the adoption of ASU 2018-07 in the third quarter of 2018, the corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award, regardless of the actual outcome of the market condition as opposed to being accounted for at fair value based on the market price of the shares at each quarterly measurement date.

29

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes the compensation expense for PSUs (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Line Item	2019		2018		2019		2018
Advisory services fee	$	679	$	287	$	1,760	$	2,156

During the nine months ended September 30, 2018, approximately $1.6 million of the compensation expense was related to the accelerated vesting of PSUs granted to one of our executive officers upon his death, in accordance with the terms of the awards.

As of September 30, 2019, we had unamortized compensation expense of $4.7 million related to PSUs which is expected to be recognized over a period of 2.3 years with a weighted average period of 1.6 years.

Restricted Stock Units—We incur stock-based compensation expense in connection with restricted stock units awarded to certain employees of Ashford LLC and its affiliates. We also issue common stock to certain of our independent directors, which vests immediately upon issuance.

The following table summarizes the stock-based compensation expense (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Line Item	2019		2018		2019		2018
Advisory services fee	$	664	$	515	$	1,820	$	1,838
Management fees	36		53		116		164
Corporate general and administrative - Premier	17		—		55		—
Corporate general and administrative - independent directors	208		243		208		243
	$	925	$	811	$	2,199	$	2,245

During the nine months ended September 30, 2018, approximately $640,000 of the compensation expense was related to the accelerated vesting of equity awards granted to one of our executive officers upon his death, in accordance with the terms of the awards.

At September 30, 2019, the unamortized cost of the unvested shares of restricted stock was $4.9 million, which will be expensed over a period of 2.4 years with a weighted average period of 2.0 years, and have vesting dates between November 2019 and February 2022.

8.25% Series D Cumulative Preferred Stock Dividends—The Series D Cumulative Preferred Stock dividend for all issued and outstanding shares is set at $2.0625 per annum per share.

The following table summarizes dividends declared (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Series D Cumulative Preferred Stock	$	825	$	—	$	2,475	$	—

Stock Repurchases—On December 5, 2017, our board of directors reapproved the stock repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share having an aggregate value of up to $50 million. The board of directors’ authorization replaced any previous repurchase authorizations.

No shares were repurchased during the three and nine months ended September 30, 2019 and 2018, pursuant to this authorization. As of September 30, 2019, we have purchased a cumulative 4.3 million shares of our common stock, for approximately $63.2 million, since the program’s inception on November 4, 2014.

At-the-Market Equity Distribution Program—On December 11, 2017, the Company established an “at-the-market” equity distribution program pursuant to which it may, from time to time, sell shares of its Common Stock having an aggregate offering price of up to $50 million. As of September 30, 2019, no shares of our common stock have been sold under this program.

30

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Noncontrolling Interest in Consolidated Entities—A partner had noncontrolling ownership interests of 25% in two hotel properties with a total carrying value of $(6.3) million and $(5.4) million at September 30, 2019 and December 31, 2018, respectively.

The following table summarizes the (income) loss allocated to noncontrolling interest in consolidated entities (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
(Income) loss attributable to noncontrolling interest in consolidated entities	$	(1,899	)	$	(1,695	)	$	(1,750	)	$	(1,742	)

15. 5.5% Series B Cumulative Convertible Preferred Stock

Each share of our 5.5% Series B Cumulative Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at an initial conversion price of $18.90 (which represents an initial conversion rate of 1.3228 shares of our common stock, subject to certain adjustments). The Series B Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control. Holders of the Series B Convertible Preferred Stock have no voting rights, subject to certain exceptions.

The Company may, at its option, cause the Series B Convertible Preferred Stock to be converted in whole or in part, on a pro-rata basis, into fully paid and nonassessable shares of the Company’s common stock at the conversion price, provided that the “Closing Bid Price” (as defined in the Articles Supplementary) of the Company’s common stock shall have equaled or exceeded 110% of the conversion price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion.

Additionally, the Series B Convertible Preferred Stock contains cash redemption features that consist of: 1) an optional redemption in which on or after June 11, 2020, the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends; 2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share plus a make-whole premium equal to the present value, computed using a discount rate of 5.5% per annum compounded quarterly, of all dividend payments on the Series B Convertible Preferred Stock for all remaining dividend periods (excluding any accumulated dividend amount) from the date of such exercise up to but excluding June 11, 2019; and 3) a REIT Termination Event and Listing Event Redemption, in which at any time (i) a REIT Termination Event (defined below) occurs or (ii) the Company’s common stock fails to be listed on the NYSE, NYSE American, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each a “National Exchange”), the holder of Series B Cumulative Preferred Stock shall have the right to require the Company to redeem any or all shares of Series B Cumulative Preferred Stock at 103% of the liquidation preference ($25.00 per share, plus any accumulated, accrued, and unpaid dividends) in cash.

A REIT Termination Event, shall mean the earliest of:

(i) filing of income tax return where the Company does not compute its income as a REIT;

(ii) stockholders’ approval on ceasing to be qualified as a REIT;

(iii) board of directors’ approval on ceasing to be qualified as a REIT;

(iv) board’s determination based on advise of the counsel to cease to be qualified as a REIT; or

(v) determination within the meaning of Section 1313(a) of IRC to cease to be qualified as a REIT.

At September 30, 2019, we had 5.0 million outstanding shares of Series B Convertible Preferred Stock that do not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside our control. As such, the Series B Convertible Preferred Stock is classified outside of permanent equity.

The Series B Convertible Preferred Stock dividend for all issued and outstanding shares is set at $1.375 per annum per share.

31

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The following table summarizes dividends declared (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Series B Convertible Preferred Stock	$	1,708	$	1,707	$	5,122	$	5,122

16. Commitments and Contingencies

Restricted Cash—Under certain management and debt agreements for our hotel properties existing at September 30, 2019, escrow payments are required for insurance, real estate taxes and debt service. In addition, for certain properties based on the terms of the underlying debt and management agreements, we escrow 4% to 5% of gross revenues for capital improvements.

Management Fees—Under property management agreements for our hotel properties existing at September 30, 2019, we pay a monthly property management fee equal to the greater of $14,000 (increased annually based on consumer price index adjustments) or 3% of gross revenues, or in some cases 2% to 7% of gross revenues, as well as annual incentive management fees, if applicable. These management agreements expire from May 2023 through December 2065, with renewal options. If we terminate a management agreement prior to its expiration, we may be liable for estimated management fees through the remaining term, liquidated damages or, in certain circumstances, we may substitute a new management agreement.

Income Taxes—We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years 2015 through 2018 remain subject to potential examination by certain federal and state taxing authorities.

Litigation—We are engaged in various legal proceedings which have arisen but have not been fully adjudicated. The likelihood of loss from these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible and to probable. Based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position or results of operations. However, the final results of legal proceedings cannot be predicted with certainty and if we fail to prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position or results of operations could be materially adversely affected in future periods.

17. Segment Reporting

We operate in one business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments refers to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments have similar economic characteristics and exhibit similar long-term financial performance. As of September 30, 2019 and December 31, 2018, all of our hotel properties were in the U.S. and its territories.

18. Related Party Transactions

Ashford Inc.

Advisory Agreement

Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor. Our Chairman, Mr. Monty J. Bennett, also serves as Chairman of the board of directors and Chief Executive Officer of Ashford Inc. Under our advisory agreement, we pay advisory fees to Ashford LLC. Through December 31, 2018, we were required to pay Ashford LLC a monthly base fee that is 1/12^th the sum of (i) 0.70% of our total market capitalization for the prior month plus the Key Money Asset Management Fee (as defined in our advisory agreement), subject to a minimum monthly base fee, as payment for managing our day-to-day operations in accordance with our investment guidelines. Total market capitalization included the aggregate principal amount of our consolidated indebtedness (including our proportionate share of the debt of any entity that is not consolidated but excluding our joint venture partners’ proportionate share of consolidated debt).

32

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

On January 15, 2019, the Company entered into Amendment No. 1 to the Fifth Amended and Restated Advisory Agreement with Ashford Inc. (“Amendment No. 1”). Amendment No. 1 revised the formula for calculating the base fee to be equal to 1/12^th of the sum of (i) 0.70% of the total market capitalization of our company for the prior month, plus (ii) the Net Asset Fee Adjustment (as defined in our advisory agreement), if any, on the last day of the prior month during which our advisory agreement was in effect; provided, however in no event shall the base fee for any month be less than the minimum base fee as provided by our advisory agreement. The base fee is payable on the 5^th business day of each month.

The minimum base fee for Braemar for each month will be equal to the greater of:

(i) 90% of the base fee paid for the same month in the prior year; and

(ii) 1/12^th of the G&A Ratio (as defined) multiplied by the total market capitalization of Braemar.

We are also required to pay Ashford LLC an incentive fee that is measured annually (or for a stub period if the advisory agreement is terminated at other than year-end). Each year that our annual total stockholder return exceeds the average annual total stockholder return for our peer group we pay Ashford LLC an incentive fee over the following three years, subject to the Fixed Charge Coverage Ratio (“FCCR”) Condition, as defined in the advisory agreement, which relates to the ratio of adjusted EBITDA to fixed charges. We also reimburse Ashford LLC for certain reimbursable overhead and internal audit, risk management advisory and asset management services, as specified in the advisory agreement. We also recorded equity-based compensation expense for equity grants of common stock and LTIP units awarded to officers and employees of Ashford LLC in connection with providing advisory services.

The following table summarizes the advisory services fees incurred (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Advisory services fee
Base advisory fee	$	2,650		$	2,508	$	8,170	$	6,928
Reimbursable expenses (1)	645			529		1,906		1,448
Equity-based compensation (2)	1,995			1,316		5,426		5,240
Incentive fee	(132		)	1,380		77		2,241
Total	$	5,158		$	5,733	$	15,579	$	15,857

________

⁽¹⁾  Reimbursable expenses include overhead, internal audit, risk management advisory and asset management services.

⁽²⁾  Equity-based compensation is associated with equity grants of Braemar’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.

Ashford Securities

On September 25, 2019, Ashford Inc. announced the formation of Ashford Securities LLC (“Ashford Securities”) to raise capital in order to grow its existing and future platforms. In conjunction with the formation of Ashford Securities, Braemar has entered into a contribution agreement with Ashford Inc. pursuant to which Braemar has agreed to contribute, with Ashford Trust, up to $15.0 million to fund the operations of Ashford Securities. As of September 30, 2019, Braemar has funded approximately $165,000.

Enhanced Return Funding Program

Concurrent with the Amendment No. 1, on January 15, 2019, the Company also entered into the Enhanced Return Funding Program Agreement (the “ERFP Agreement”) with Ashford Inc. The “key money investments” concept previously contemplated by our advisory agreement was replaced with the ERFP Agreement. The Amended and Restated Advisory Agreement was also amended to name Ashford Inc. and its subsidiaries as the Company’s sole and exclusive provider of asset management, project management and other services offered by Ashford Inc. or any of its subsidiaries. The independent members of our board of directors and the independent members of the board of directors of Ashford Inc., with the assistance of separate and independent legal counsel, engaged to negotiate the ERFP Agreement on behalf of Ashford Inc. and Braemar, respectively.

The ERFP Agreement generally provides that Ashford LLC will provide funding to facilitate the acquisition of properties by Braemar OP that are recommended by Ashford LLC, in an aggregate amount of up to $50 million (subject to increase to up to

33

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

$100 million by mutual agreement). Each funding will equal 10% of the property acquisition price and will be made either at the time of the property acquisition or at any time generally within the two-year period following the date of such acquisition, in exchange for FF&E for use at the acquired property or any other property owned by Braemar OP.

The initial term of the ERFP Agreement is two years (the “Initial Term”), unless earlier terminated pursuant to the terms of the ERFP Agreement. At the end of the Initial Term, the ERFP Agreement shall automatically renew for successive one-year periods (each such period a “Renewal Term”) unless either Ashford Inc. or Braemar provides written notice to the other at least sixty days in advance of the expiration of the Initial Term or Renewal Term, as applicable, that such notifying party intends not to renew the ERFP Agreement. As a result of the Ritz-Carlton, Lake Tahoe acquisition, Braemar was entitled to receive $10.3 million from Ashford LLC in the form of future purchases of FF&E at Braemar hotel properties that will be leased to us by Ashford LLC rent free. As of September 30, 2019, Ashford LLC has remitted payments of $10.3 million to the Company as further described below.

On June 26, 2019, the Company sold $1.4 million of hotel FF&E from a Braemar hotel property to Ashford LLC which was subsequently leased back to the Company rent free. In accordance with ASC 842, the Company evaluated the transaction and concluded that the transaction qualified as a sale. As a result, the Company recorded a gain of $9,000 for the nine months ended September 30, 2019. The gain is recorded in “gain (loss) on disposition of assets and sale of hotel property” in our condensed consolidated statements of operations.

On July 1, 2019, the Company sold the remaining $8.9 million of hotel FF&E from another Braemar hotel property to Ashford LLC which was subsequently leased back to the Company rent free. The transaction also qualified as a sale and the Company recorded a gain of $23,000 for the three and nine months ended September 30, 2019. The gain is recorded in “gain (loss) on disposition of assets and sale of hotel property” in our condensed consolidated statements of operations.

Under the applicable accounting guidance in ASC 842, the Company has not recorded an operating lease right-of-use asset, an operating lease liability or lease expense for rents as the related party lease has no economic substance because the related party lease is provided rent free.

Project Management Agreement

In connection with Ashford Inc.’s August 8, 2018 acquisition of Remington Lodging’s project management business, we entered into a project management agreement with Ashford Inc.’s indirect subsidiary, Premier Project Management LLC (“Premier”), pursuant to which Premier provides project management services to our hotels, including construction management, interior design, architectural services, and the purchasing, freight management, and supervision of installation of FF&E and related services. Pursuant to the project management agreement, we pay Premier: (a) project management fees of up to 4% of project costs; and (b) for the following services as follows: (i) architectural (6.5% of total construction costs); (ii) construction management for projects without a general contractor (10% of total construction costs); (iii) interior design (6% of the purchase price of the FF&E designed or selected by Premier); and (iv) FF&E purchasing (8% of the purchase price of FF&E purchased by Premier; provided that if the purchase price exceeds $2.0 million for a single hotel in a calendar year, then the purchasing fee is reduced to 6% of the FF&E purchase price in excess of $2.0 million for such hotel in such calendar year).

In accordance with our advisory agreement, our advisor, or entities in which our advisor has an interest, has a right to provide products or services to us or our hotel properties, provided such transactions are evaluated and approved by our independent directors. The following tables summarize the entities in which our advisor has an interest with which we or our hotel properties contracted for products and services, the amounts recorded by us for those services and the applicable classification on our condensed consolidated financial statements (in thousands):

		Three Months Ended September 30, 2019
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Revenue		Other Hotel Expenses		Advisory Services Fee		Property Taxes, Insurance and Other		Write-off of Premiums, Loan Costs and Exit Fees
Ashford LLC	Insurance claims services	$	25	$	—	$	—		$	—	$	—	$	—	$	25	$	—
J&S Audio Visual	Audio visual services	183		—		—			183		—		—		—		—
Lismore Capital	Mortgage placement services	933		—		(720		)	—		—		—		—		213
OpenKey	Mobile key app	21		—		—			—		21		—		—		—
Premier	Project management services	2,838		2,699		—			—		—		139		—		—
Pure Wellness	Hypoallergenic premium rooms	67		55		—			—		12		—		—		—
RED Leisure	Watersport activities and travel/transportation services	326		—		—			—		326		—		—		—

34

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

		Three Months Ended September 30, 2018
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Other Hotel Expenses		Property Taxes, Insurance and Other
Ashford LLC	Insurance claims services	$	31	$	—	$	—	$	31
OpenKey	Mobile key app	5		—		5		—
Premier	Project management services	1,125		1,125		—		—
Pure Wellness	Hypoallergenic premium rooms	128		117		11		—
RED Leisure	Watersport activities and travel/transportation services	180		—		180		—

		Nine Months Ended September 30, 2019
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Revenue		Other Hotel Expenses		Advisory Services Fee		Property Taxes, Insurance and Other		Write-off of Premiums, Loan Costs and Exit Fees
Ashford LLC	Insurance claims services	$	90	$	—	$	—		$	—	$	—	$	—	$	90	$	—
J&S Audio Visual	Audio visual services	383		—		—			383		—		—		—		—
Lismore Capital	Debt placement services	1,208		—		(995		)	—		—		—		—		213
OpenKey	Mobile key app	33		—		—			—		33		—		—		—
Premier	Project management services	8,078		7,674		—			—		—		404		—		—
Pure Wellness	Hypoallergenic premium rooms	143		108		—			—		35		—		—		—
RED Leisure	Watersport activities and travel/transportation services	686		—		—			—		686		—		—		—

		Nine Months Ended September 30, 2018
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Expenses		Property Taxes, Insurance and Other
Ashford LLC	Insurance claims services	$	100	$	—	$	—		$	—	$	100
Lismore Capital	Debt placement services	999		—		(999		)	—		—
OpenKey	Mobile key app	17		—		—			17		—
Premier	Project management services	1,125		1,125		—			—		—
Pure Wellness	Hypoallergenic premium rooms	147		117		—			30		—
RED Leisure	Watersport activities and travel/transportation services	540		—		—			540		—

________

⁽¹⁾  Recorded in FF&E and depreciated over the estimated useful life.

⁽²⁾  Recorded as deferred loan costs, which are included in “indebtedness, net” on our consolidated balance sheets and amortized over the initial term of the applicable loan agreement.

The following table summarizes the due to Ashford Inc. (in thousands):

		Due to Ashford Inc.
Company	Product or Service	September 30, 2019		December 31, 2018
Ashford LLC	Advisory services	$	1,830	$	2,264
Ashford LLC	Insurance claims services	25		37
J&S Audio Visual	Audio visual services	185		—
OpenKey	Mobile key app	—		13
Premier	Project management services	2,651		1,657
Pure Wellness	Hypoallergenic premium rooms	58		30
		$	4,749	$	4,001

In 2015, $2.0 million of key money consideration was invested in FF&E by Ashford LLC to be used by Braemar, which represented all of the key money consideration for the Bardessono Hotel. Upon adoption of ASC 842, we evaluated this arrangement, which is accounted for as a lease that will expire in 2020. Under the applicable accounting guidance in ASC 842, as the related party lease is provided rent-free, there is no economic substance related to the lease which results in not recording an operating lease right-of-use asset, an operating lease liability or lease expense for rents.

35

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Remington Lodging

On August 8, 2018, Ashford Inc. completed the acquisition of Premier. As a result of Ashford Inc.’s acquisition, the project management services are no longer provided by Remington Lodging and are now provided by a subsidiary of Ashford Inc. under the respective project management agreement with each customer, including Ashford Trust and Braemar. Remington Lodging continues to provide property management services to the Company with respect to three of our thirteen hotel properties.

At September 30, 2019, Remington Lodging managed three of our thirteen hotel properties and we incurred the following fees related to the management agreements with the related party (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Property management fees, including incentive property management fees	$	455	$	438	$	1,322	$	1,334
Market service and project management fees	—		831		—		3,328
Corporate general and administrative expenses	84		85		262		250
Total	$	539	$	1,354	$	1,584	$	4,912

Certain employees of Remington Lodging, who perform work on behalf of Braemar, were granted shares of restricted stock under the Braemar Stock Plan. These share grants were accounted for under the applicable accounting guidance related to share-based payments granted to non-employees and are recorded as a component of “management fees” in our condensed consolidated statements of operations (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Management fees	$	36	$	53	$	116	$	164

The unamortized compensation expense of these grants was $234,000 as of September 30, 2019, which will be amortized over a period of 2.4 years.

19. Subsequent Events

On October 2, 2019, the Company entered into a stock purchase agreement with Ashford LLC under which Ashford LLC purchased all of the common stock held by one of our TRS subsidiaries, totaling 19,897 shares, for $30 per share, resulting in total proceeds of approximately $597,000 to the Company.

On October 21, 2019, the Company announced that its board of directors had declared the distribution of its remaining 174,983 shares of common stock of Ashford Inc. Both common stockholders of Braemar and unitholders of Braemar OP received their pro-rata share of Ashford Inc. common stock. The distribution to Company stockholders and unitholders was completed through a pro-rata taxable dividend of Ashford Inc. common stock on November 5, 2019 (the “Distribution Date”) to stockholders and unitholders of record (“Company Record Holders”) as of the close of business of the New York Stock Exchange (“NYSE”) on October 29, 2019 (the “Record Date”). On the Distribution Date, each Company Record Holder received approximately 0.0047 shares of Ashford common stock for every unit and/or share of the Company’s common stock held by such Company Record Holder on the Record Date. No fractional shares of Ashford Inc. common stock were issued. Fractional shares of Ashford Inc. common stock to which Braemar Record Holders would otherwise be entitled will be aggregated and, after the distribution, sold in the open market by the distribution agent. The aggregate net proceeds of the sales will be distributed in a pro-rata manner as cash payments to the Braemar Record Holders who would otherwise have received fractional shares of Ashford Inc. common stock. Additionally, Braemar Record Holders who hold in “street name” on behalf of their customers may sell additional shares into the open market to make cash payments to their customers who would have otherwise received fractional shares of Ashford Inc. common stock. Subsequent to the distribution, the Company does not have any ownership interest in Ashford Inc.

On October 25, 2019, the Company entered into a new $75 million secured credit facility which replaces the Company's previous credit facility that was scheduled to mature on November 10, 2019. The new credit facility provides for a three-year revolving line of credit and bears interest at a range of 2.25% - 3.50% over LIBOR, depending on the leverage level of the Company. There are two, one-year extension options subject to the satisfaction of certain conditions. The new credit facility includes the

36

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

opportunity to expand the borrowing capacity by up to $175 million to an aggregate size of $250 million. There were no amounts outstanding on the Company's previous credit facility.

On November 6, 2019, Ashford Inc. completed its acquisition of Remington’s Hotel Management Business, as approved by Ashford Inc.’s stockholders at an Ashford Inc. special meeting of stockholders held on October 24, 2019 to consider and vote upon on the transactions contemplated by the Combination Agreement.

37

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the references to “we,” “us,” “our,” the “Company” or “Braemar” refer to Braemar Hotels & Resorts Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Braemar Hospitality Limited Partnership, a Delaware limited partnership, which we refer to as “our operating partnership” or “Braemar OP.” “Ashford Trust” refers to Ashford Hospitality Trust, Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Limited Partnership, a Delaware limited partnership and Ashford Trust’s operating partnership, which we refer to as “Ashford Trust OP.” “Ashford Inc.” refers to Ashford Inc., a Maryland corporation and, as the context may require, its consolidated subsidiaries. “Ashford LLC” or our “advisor” refers to Ashford Hospitality Advisors LLC, a Delaware limited liability company and a subsidiary of Ashford Inc. and “Premier” refers to Premier Project Management LLC, a Maryland limited liability company and a subsidiary of Ashford LLC. “Remington Lodging” refers to Remington Lodging & Hospitality, LLC, a Delaware limited liability company, which (together with its affiliates) is a property management company owned by Mr. Monty J. Bennett, chairman of our board of directors, and his father, Mr. Archie Bennett, Jr., chairman emeritus of Ashford Trust. “Our TRSs” refers to our taxable REIT subsidiaries, including Braemar TRS Corporation, a Delaware corporation, which we refer to as “Braemar TRS,” and its subsidiaries, together with the two taxable REIT subsidiaries that lease our two hotels held in a consolidated joint venture and are wholly-owned by the joint venture and the U.S. Virgin Islands’ (“USVI”) taxable REIT subsidiary that owns the Ritz-Carlton, St. Thomas hotel.

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains registered trademarks that are the exclusive property of their respective owners, which are companies other than us, including Marriott International®, Hilton Worldwide®, Sofitel®, Hyatt® and Accor®.

FORWARD-LOOKING STATEMENTS

Throughout this Form 10-Q, we make forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature:

• our business and investment strategy;

• our projected operating results and dividend rates;

• our ability to obtain future financing arrangements;

• our understanding of our competition;

• market trends;

• projected capital expenditures;

• anticipated acquisitions or dispositions; and

• the impact of technology on our operations and business.

Such forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events and factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Additionally, the following factors could cause actual results to vary from our forward-looking statements:

• the factors discussed in our Form 10-K for the year ended December 31, 2018, as originally filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2019 (the “ 2018 10-K”), including those set forth under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “Properties;”

• general and economic business conditions affecting the lodging and travel industry;

• general volatility of the capital markets and the market price of our common and preferred stock;

• changes in our business or investment strategy;

• availability, terms and deployment of capital;

• unanticipated increases in financing and other costs, including a rise in interest rates;

• availability of qualified personnel to our advisor;

• changes in our industry and the market in which we operate, interest rates, or local economic conditions;

38

• the degree and nature of our competition;

• the impact of the divestiture of our shares of Ashford Inc., including the shares sold through the stock purchase agreement with Ashford LLC and the pro-rata distribution of shares of Ashford Inc. common stock to Company Record Holders;

• actual and potential conflicts of interest with Ashford Trust, Ashford LLC, Ashford Inc., Remington Lodging, our executive officers and our non-independent director;

• 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 of 1986, as amended (the “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.

When considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” in Part I of our 2018 10-K, and the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Form 10-Q. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Form 10-Q to conform these statements to actual results and performance, except as may be required by applicable law.

Overview

We are a Maryland corporation formed in April 2013. We became a public company on November 19, 2013 when Ashford Trust, a NYSE-listed REIT, completed the spin-off of our company through the distribution of our outstanding common stock to Ashford Trust stockholders. We invest primarily in high revenue per available room (“RevPAR”), luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by Smith Travel Research. Two times the U.S. national average was $172 for the year ended December 31, 2018. We have elected to be taxed as a REIT under the Internal Revenue Code beginning with our short taxable year ended December 31, 2013. We conduct our business and own substantially all of our assets through our operating partnership, Braemar OP.

We operate in the direct hotel investment segment of the hotel lodging industry. As of September 30, 2019, we owned interests in thirteen hotel properties in six states, the District of Columbia and St. Thomas, U.S. Virgin Islands with 3,719 total rooms, or 3,484 net rooms, excluding those attributable to our joint venture partner. The hotel properties in our current portfolio are predominantly located in U.S. urban markets and resort locations with favorable growth characteristics resulting from multiple demand generators. We own eleven of our hotel properties directly, and the remaining two hotel properties through an investment in a majority-owned consolidated entity.

We are advised by Ashford LLC, a subsidiary of Ashford Inc., through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.

We do not operate any of our hotel properties directly; instead we employ hotel management companies to operate them for us under management contracts. As of September 30, 2019, Remington Lodging, which was beneficially wholly-owned by Mr. Monty J. Bennett, Chairman of our board of directors, and Mr. Archie Bennett, Jr., Chairman Emeritus of Ashford Trust, managed three of our thirteen hotel properties. Third-party management companies managed the remaining hotel properties.

As of November 6, 2019, Ashford Inc. completed its acquisition of Remington’s Hotel Management Business. In connection with its acquisition, Ashford Inc. effected a holding company reorganization through a merger. As a result of the foregoing, Ashford Inc. (which is incorporated in Nevada) became the successor issuer of Ashford OAINC II Inc., (formerly named Ashford Inc. and incorporated in Maryland) under Rule 12g-3 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).

Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to project management services, debt placement services, audio visual services, real estate advisory services, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and mobile key technology. Mr. Monty J. Bennett is chairman and chief executive officer of Ashford Inc. and, together with Mr. Archie Bennett, Jr., as of November 6, 2019, owned approximately 352,592 shares of Ashford Inc. common stock, which represented an approximate 16.0% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc. Series D Convertible Preferred Stock, which was exercisable (at an exercise price of $117.50 per share)

39

into an additional approximate 3,991,191 shares of Ashford Inc. common stock, which if exercised as of November 6, 2019 would have increased the Bennetts’ ownership interest in Ashford Inc. to 70.1%. The 18,758,600 Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts.

Pursuant to the provisions of the Fifth Amended and Restated Advisory Agreement, as amended on January 15, 2019, the revenues and expenses used to calculate Net Earnings (as defined) for the twelve months ended September 30, 2019, are as follows (in thousands):

Revenues	$	29,834
Expenses	(10,461		)
Net Earnings	$	19,373

Additional Developments

On January 15, 2019, the Company acquired a 100% interest in the 170-room Ritz-Carlton, Lake Tahoe located in Truckee, California for $120.0 million. The Company incurred $640,000 in acquisition costs. In connection with the acquisition the Company completed the financing of a $54.0 million mortgage loan secured by the Ritz-Carlton, Lake Tahoe. The loan is interest-only, bears interest at LIBOR + 2.10%, and has a five year term.

In conjunction with the transaction, the Company entered into the ERFP Agreement with Ashford Inc. The Amended and Restated Advisory Agreement was also amended to name Ashford Inc. and its subsidiaries as the Company’s sole and exclusive provider of asset management, project management and other services offered by Ashford Inc. or any of its subsidiaries. The independent members of our board of directors and the independent members of the board of directors of Ashford Inc., with the assistance of separate and independent legal counsel, engaged to negotiate the ERFP Agreement on behalf of Ashford Inc. and Braemar, respectively.

The ERFP Agreement generally provides that Ashford LLC will provide funding to facilitate the acquisition of properties by Braemar OP that are recommended by Ashford LLC, in an aggregate amount of up to $50 million (subject to increase to up to $100 million by mutual agreement). Each funding will equal 10% of the property acquisition price and will be made either at the time of the property acquisition or at any time generally within the two-year period following the date of such acquisition, in exchange for FF&E for use at the acquired property or any other property owned by Braemar OP.

The initial term of the ERFP Agreement is two years, unless earlier terminated pursuant to the terms of the ERFP Agreement. At the end of the Initial Term, the ERFP Agreement shall automatically renew for successive Renewal Terms unless either Ashford Inc. or Braemar provides written notice to the other at least sixty days in advance of the expiration of the Initial Term or Renewal Term, as applicable, that such notifying party intends not to renew the ERFP Agreement. As a result of the Ritz-Carlton, Lake Tahoe acquisition, Braemar was entitled to receive $10.3 million from Ashford LLC in the form of future purchases of hotel FF&E at Braemar hotel properties that was leased to us by Ashford LLC rent free. As of September 30, 2019, Ashford LLC has remitted payments of $10.3 million to the Company as further described below.

On June 26, 2019, the Company sold $1.4 million of hotel FF&E from a Braemar hotel property to Ashford LLC which was subsequently leased back to the Company rent free. In accordance with ASC 842, the Company evaluated the transaction and concluded that the transaction qualified as a sale. As a result, the Company recorded a gain of $9,000 for the nine months ended September 30, 2019.

On July 1, 2019, the Company sold the remaining $8.9 million of hotel FF&E from another Braemar hotel property to Ashford LLC which was subsequently leased back to the Company rent free. In accordance with ASC 842, the Company evaluated the transaction and concluded that the transaction qualified as a sale. As a result, the Company recorded a gain of $23,000 for the three and nine months ended September 30, 2019.

On January 22, 2019, the Company refinanced its existing mortgage loan of approximately $186.8 million with a final maturity date in November 2021 with a new $195.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.70% and has a five-year term. The mortgage loan is secured by the same two hotels: the Capital Hilton and Hilton La Jolla Torrey Pines. These two hotels are held in a joint venture in which we have a 75% equity interest.

On February 6, 2019, we invested an additional $156,000 in OpenKey, which investment was approved by the independent members of our board of directors.

On August 5, 2019, the Company amended its mortgage loan with an outstanding balance of $42.0 million with a new $42.5 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 4.95% and has a two-year initial term with three

40

one-year extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Ritz-Carlton St. Thomas.

On August 13, 2019, we invested an additional $176,000 in OpenKey, which investment was approved by the independent members of our board of directors.

On September 25, 2019, Ashford Inc. announced the formation of Ashford Securities LLC (“Ashford Securities”) to raise capital in order to grow its existing and future platforms. In conjunction with the formation of Ashford Securities, Braemar has entered into a contribution agreement with Ashford Inc. pursuant to which Braemar has agreed to contribute, with Ashford Trust, up to $15 million to fund the operations of Ashford Securities.

On September 30, 2019, the Company refinanced its mortgage loan with an outstanding balance of $70.0 million with a new $80.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.85% and has a five-year term with no extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Pier House Resort.

On October 2, 2019, the Company entered into a stock purchase agreement with Ashford LLC under which Ashford LLC purchased all of the common stock held by one of our TRS subsidiaries, totaling 19,897 shares, for $30 per share, resulting in total proceeds of approximately $597,000 to the Company.

On October 3, 2019, the Company announced the opening of The Maple Grove Presidential Villa at the Bardessono Hotel, adding 3 additional luxury suites, increasing the total room count from 62 to 65.

On October 21, 2019, the Company announced that its board of directors had declared the distribution of its remaining 174,983 shares of common stock of Ashford Inc. Both common stockholders of Braemar and unitholders of Braemar OP received their pro-rata share of Ashford Inc. common stock. The distribution to Company Record Holders was completed through a pro-rata taxable dividend of Ashford Inc. common stock on the Distribution Date to Company Record Holders as of the close of business of the NYSE on the Record Date. On the Distribution Date, each Company Record Holder received approximately 0.0047 shares of Ashford common stock for every unit and/or share of the Company’s common stock held by such Company Record Holder on the Record Date. No fractional shares of Ashford Inc. common stock were issued. Fractional shares of Ashford Inc. common stock to which Braemar Record Holders would otherwise be entitled will be aggregated and, after the distribution, sold in the open market by the distribution agent. The aggregate net proceeds of the sales will be distributed in a pro-rata manner as cash payments to the Braemar Record Holders who would otherwise have received fractional shares of Ashford Inc. common stock. Additionally, Braemar Record Holders who hold in “street name” on behalf of their customers may sell additional shares into the open market to make cash payments to their customers who would have otherwise received fractional shares of Ashford Inc. common stock. Subsequent to the distribution, the Company does not have any ownership interest in Ashford Inc.

On October 25, 2019, the Company entered into a new $75 million secured credit facility which replaces the Company's previous credit facility that was scheduled to mature on November 10, 2019. The new credit facility provides for a three-year revolving line of credit and bears interest at a range of 2.25% - 3.50% over LIBOR, depending on the leverage level of the Company. There are two, one-year extension options subject to the satisfaction of certain conditions. The new credit facility includes the opportunity to expand the borrowing capacity by up to $175 million to an aggregate size of $250 million. There were no amounts outstanding on the Company's previous credit facility.

On November 6, 2019, Ashford Inc. completed its acquisition of Remington’s Hotel Management Business, as approved by Ashford Inc.’s stockholders at an Ashford Inc. special meeting of stockholders held on October 24, 2019 to consider and vote upon on the transactions contemplated by the Combination Agreement. The Company, acting at the direction of a committee of independent directors of the Company, who are independent within the meaning of applicable rules of the NYSE and do not have a material financial interest within the meaning of Section 2-419 of the Maryland General Corporation Law in the transactions contemplated by the Combination Agreement, voted all of the shares beneficially owned by the Company in favor of each proposal presented at the Ashford Inc. special meeting of stockholders.

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Key Indicators of Operating Performance

We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include:

• Occupancy. Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period.

• ADR. ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate.

• RevPAR.RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs. RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees.

RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increased other operating department revenue and expense. Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs.

Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue comprised approximately 64.6% and 62.5% of our total hotel revenue for the three and nine months ended September 30, 2019, and is dictated by demand (as measured by occupancy), pricing (as measured by ADR) and our available supply of hotel rooms.

We also use funds from operations (“FFO”), Adjusted FFO, earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”) and Adjusted EBITDAre as measures of the operating performance of our business. See “Non-GAAP Financial Measures.”

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

The following table summarizes changes in key line items from our condensed consolidated statements of operations for the three months ended September 30, 2019 and 2018 (in thousands except percentages):

	Three Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change
Revenue
Rooms	$	76,808		$	74,358		$	2,450		3.3	%
Food and beverage	26,422			21,171			5,251			24.8
Other	15,652			13,317			2,335			17.5
Total hotel revenue	118,882			108,846			10,036			9.2
Other	2			—			2
Total revenue	118,884			108,846			10,038			9.2
Expenses
Hotel operating expenses:
Rooms	18,265			16,624			(1,641		)	(9.9	)
Food and beverage	20,721			16,171			(4,550		)	(28.1	)
Other expenses	36,201			32,058			(4,143		)	(12.9	)
Management fees	3,960			3,963			3			0.1
Total hotel expenses	79,147			68,816			(10,331		)	(15.0	)
Property taxes, insurance and other	7,690			6,835			(855		)	(12.5	)
Depreciation and amortization	16,831			14,474			(2,357		)	(16.3	)
Advisory services fee	5,158			5,733			575			10.0
Corporate general and administrative	1,575			1,765			190			10.8
Total expenses	110,401			97,623			(12,778		)	(13.1	)
Gain (loss) on disposition of assets and sale of hotel property	(1,163		)	—			1,163
Operating income (loss)	7,320			11,223			(3,903		)	(34.8	)
Equity in earnings (loss) of unconsolidated entity	(48		)	(81		)	33			40.7
Interest income	249			540			(291		)	(53.9	)
Other income (expense)	(114		)	(64		)	(50		)	(78.1	)
Interest expense and amortization of loan costs	(13,646		)	(13,084		)	(562		)	(4.3	)
Write-off of loan costs and exit fees	(335		)	—			(335		)
Unrealized gain (loss) on investment in Ashford Inc.	(1,471		)	2,158			(3,629		)	(168.2	)
Unrealized gain (loss) on derivatives	(754		)	(578		)	(176		)	(30.4	)
Income (loss) before income taxes	(8,799		)	114			(8,913		)	(7,818.4	)
Income tax (expense) benefit	(155		)	(740		)	585			79.1
Net income (loss)	(8,954		)	(626		)	(8,328		)	(1,330.4	)
(Income) loss attributable to noncontrolling interest in consolidated entities	(1,899		)	(1,695		)	(204		)	(12.0	)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	1,465			452			1,013			224.1
Net income (loss) attributable to the Company	$	(9,388	)	$	(1,869	)	$	(7,519	)	(402.3	)%

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All hotel properties owned for the three months ended September 30, 2019 and 2018 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the three months ended September 30, 2019 and 2018. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following acquisitions and dispositions affect reporting comparability related to our condensed consolidated financial statements:

Hotel Properties	Location	Acquisition/Disposition	Acquisition/Disposition Date
Ritz-Carlton, Lake Tahoe (1)	Truckee, CA	Acquisition	January 15, 2019

________

⁽¹⁾  The operating results of this hotel property has been included in our results of operations as of its acquisition date.

The following table illustrates the key performance indicators of all hotel properties owned for the periods indicated:

	Three Months Ended September 30,
	2019			2018
Occupancy	83.21		%	85.86		%
ADR (average daily rate)	$	282.72		$	272.72
RevPAR (revenue per available room)	$	235.24		$	234.17
Rooms revenue (in thousands)	$	76,808		$	74,358
Total hotel revenue (in thousands)	$	118,882		$	108,846

The following table illustrates the key performance indicators of the twelve hotel properties that were included for the full three months ended September 30, 2019 and 2018:

	Three Months Ended September 30,
	2019			2018
Occupancy	83.55		%	85.86		%
ADR (average daily rate)	$	273.20		$	272.72
RevPAR (revenue per available room)	$	228.25		$	234.17
Rooms revenue (in thousands)	$	70,746		$	74,358
Total hotel revenue (in thousands)	$	106,676		$	108,846

Net Income (Loss) Attributable to the Company. Net loss attributable to the Company increased $7.5 million, from $1.9 million for the three months ended September 30, 2018 (the “2018 quarter”) to $9.4 million for the three months ended September 30, 2019 (the “2019 quarter”), as a result of the factors discussed below.

Rooms Revenue. Rooms revenue increased $2.5 million, or 3.3%, to $76.8 million during the 2019 quarter compared to the 2018 quarter. During the 2019 quarter, we experienced a 3.7%increase in room rates and a 265 basis point decrease in occupancy. Rooms revenue at our twelve comparable hotel properties decreased $3.6 million due to a 231 basis point decrease in occupancy, partially offset by an increase in room rates of 0.2%. Rooms revenue increased (i) $6.1 million at the Ritz-Carlton, Lake Tahoe as a result of its acquisition on January 15, 2019; (ii) $294,000 at the Hotel Yountville as a result of a 933 basis point increase in occupancy, partially offset by 3.8% lower room rates at the hotel; (iii) $253,000 at the Ritz-Carlton, Sarasota as a result of 13.6% higher rooms rates, partially offset by a 455 basis point decrease in occupancy at the hotel; (iv) $251,000 at the Capital Hilton as a result of 4.15% higher room rates, partially offset by a 104 basis point decrease in occupancy at the hotel; and (v) $91,000 at the Bardessono Hotel as a result of a 323 basis point increase in occupancy, partially offset by 1.8% lower room rates at the hotel. These increases were partially offset by decreases of (i) $1.7 million at the Ritz-Carlton, St. Thomas due to the negative impact caused by Hurricanes Irma and Maria (during the 2019 quarter all rooms were out of service as the hotel is being renovated); (ii) $675,000 at the Seattle Marriott Waterfront as a result of 7.55% lower room rates, partially offset by a 144 basis point increase in occupancy at the hotel; (iii) $656,000 at the Chicago Sofitel Magnificent Mile as a result of 7.4% lower room rates and a 59 basis point decrease in occupancy at the hotel; (iv) $463,000 at The Notary Hotel as a result of a 934 basis point decrease in occupancy due to a renovation during the 2019 quarter, partially offset by 4.7% higher room rates at the hotel; (v) $387,000 at the Hilton La Jolla Torrey Pines as a result of 4.14% lower room rates and an 89 basis point decrease in occupancy at the hotel; (vi) $358,000 at the San Francisco Courtyard Downtown as a result of 3.1% lower room rates and a 17 basis point decrease in occupancy at the hotel; (vii) $211,000 at the Pier House Resort as a result of a 678 basis point decrease in occupancy, partially offset by 2.9% higher room rates at the hotel; and (viii) $92,000 at the

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Park Hyatt Beaver Creek as a result of a 716 basis point decrease in occupancy at the hotel due to a renovation during the 2019 quarter, partially offset by 7.5% higher room rates at the hotel.

Food and Beverage Revenue. Food and beverage revenue increased $5.3 million, or 24.8%, to $26.4 million during the 2019 quarter compared to the 2018 quarter. This increase is primarily attributable to an increase in food and beverage revenue of $4.5 million at the Ritz-Carlton, Lake Tahoe as a result of its acquisition on January 15, 2019 and an aggregate increase in food and beverage revenue of $2.0 million at the Capital Hilton, Park Hyatt Beaver Creek, Hilton La Jolla Torrey Pines, Ritz-Carlton, St. Thomas, Bardessono Hotel, The Notary Hotel, Hotel Yountville and Pier House Resort. These increases were partially offset by an aggregate decrease in food and beverage revenue of $1.2 million at the San Francisco Courtyard Downtown, Ritz-Carlton, Sarasota, Seattle Marriott Waterfront and Chicago Sofitel Magnificent Mile.

Other Hotel Revenue. Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals and business interruption revenue, increased $2.3 million, or 17.5%, to $15.7 million during the 2019 quarter compared to the 2018 quarter. The increase is attributable to an increase in other hotel revenue of $1.7 million at the Ritz-Carlton, Lake Tahoe as a result of its acquisition in January 2019 and an aggregate increase of $669,000 at the Hotel Yountville, Chicago Sofitel Magnificent Mile, Capital Hilton, San Francisco Courtyard Downtown, The Notary Hotel, Bardessono Hotel, Hilton La Jolla Torrey Pines and Seattle Marriott Waterfront and higher business interruption revenue of $220,000 from the Ritz-Carlton, St. Thomas. These increases were partially offset by an aggregate decrease in other hotel revenue of $223,000 at the Ritz-Carlton, Sarasota, Park Hyatt Beaver Creek, Ritz-Carlton, St. Thomas and Pier House Resort.

During the 2019 quarter we recognized business interruption revenue of $4.0 million at the Ritz-Carlton, St. Thomas as a result of Hurricanes Irma and Maria. During the 2018 quarter we recognized business interruption revenue of $3.8 million at the Ritz-Carlton, St. Thomas.

Rooms Expense. Rooms expense increased $1.6 million, or 9.9%, to $18.3 million in the 2019 quarter compared to the 2018 quarter. This increase is attributable to an increase of $1.6 million at the Ritz-Carlton, Lake Tahoe as a result of its acquisition on January 15, 2019. We experienced an additional aggregate increase in room expense $380,000 at the Chicago Sofitel Magnificent Mile, Capital Hilton, Hotel Yountville, The Notary Hotel, Park Hyatt Beaver Creek and Bardessono Hotel. This increase was partially offset by an aggregate decrease in room expense of $318,000 at Ritz-Carlton, Sarasota, San Francisco Courtyard Downtown, Pier House Resort, Ritz-Carlton, St. Thomas, Seattle Marriott Waterfront and Hilton La Jolla Torrey Pines.

Food and Beverage Expense. Food and beverage expense increased $4.6 million, or 28.1%, to $20.7 million during the 2019 quarter compared to the 2018 quarter. The increase is attributable to $3.6 million at the Ritz-Carlton, Lake Tahoe as a result of its acquisition on January 15, 2019. We experienced an additional aggregate increase of $933,000 at our twelve comparable hotel properties.

Other Operating Expenses. Other operating expenses increased $4.1 million, or 12.9%, to $36.2 million in the 2019 quarter compared to the 2018 quarter. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees. We experienced an increase of $831,000 in direct expenses and an increase of $3.3 million in indirect expenses and incentive management fees in the 2019 quarter as compared to the 2018 quarter. Direct expenses were 3.8% of total hotel revenue for the 2019 quarter and 3.4% for the 2018 quarter. The increase in direct expenses is primarily attributable to an increase of $834,000 at the Ritz-Carlton, Lake Tahoe as a result of its acquisition on January 15, 2019. This increase was partially offset by an aggregate decrease in direct expenses of $3,000 at our twelve comparable hotel properties. The increase in indirect expenses is attributable to increases in (i) general and administrative costs of $3.1 million, comprised of $1.4 million at the Ritz-Carlton, Lake Tahoe as a result of its acquisition and $1.7 million at our twelve comparable hotel properties; (ii) marketing costs of $743,000, attributable to an increase of $848,000 at the Ritz-Carlton, Lake Tahoe as a result of its acquisition, partially offset by a decrease of $105,000 at our twelve comparable hotel properties; (iii) repairs and maintenance of $431,000, comprised of an increase of $269,000 at the Ritz-Carlton, Lake Tahoe and $162,000 at our twelve comparable hotel properties; (iv) energy costs of $414,000, attributable to an increase of $251,000 at the Ritz-Carlton, Lake Tahoe as a result of its acquisition and $163,000 from our twelve comparable hotel properties. These increases were partially offset by a decrease in (i) incentive management fees of $1.3 million at our twelve comparable hotel properties. There was no incentive management fee at the Ritz-Carlton, Lake Tahoe; and (ii) lease expense of $29,000 comprised of an increase of $38,000 at the Ritz-Carlton, Lake Tahoe, partially offset by a decrease of $67,000 at our twelve comparable hotel properties.

Management Fees. Base management fees decreased $3,000, or 0.1%, to $4.0 million in the 2019 quarter compared to the 2018 quarter. The decrease is comprised of a decrease of $320,000 at our twelve comparable hotel properties. This decrease was partially offset by an increase of $317,000 at the Ritz-Carlton, Lake Tahoe as a result of its acquisition.

Property Taxes, Insurance and Other. Property taxes, insurance and other increased $855,000, or 12.5%, to $7.7 million in the 2019 quarter compared to the 2018 quarter, which is attributable to an increase of $672,000 at the Ritz-Carlton, Lake Tahoe as a result of its acquisition as well as an increase of $183,000 at our twelve comparable hotel properties.

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Depreciation and Amortization. Depreciation and amortization increased $2.4 million, or 16.3%, to $16.8 million for the 2019 quarter compared to the 2018 quarter, which is due to an increase of $1.1 million at the Ritz-Carlton, Lake Tahoe as a result of its acquisition and $1.2 million at our twelve comparable hotel properties.

Advisory Services Fee. Advisory services fee decreased $575,000, or 10.0%, to $5.2 million in the 2019 quarter compared to the 2018 quarter due to a decrease in the incentive fee of $1.5 million, partially offset by increases in equity-based compensation of $679,000, base advisory fee of $142,000 and reimbursable expenses of $116,000. In the 2019 quarter, we recorded an advisory services fee of $5.2 million, which included a base advisory fee of $2.7 million, reimbursable expenses of $645,000, $2.0 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and a credit to incentive fee of $132,000. In the 2018 quarter, we recorded an advisory services fee of $5.7 million, which included a base advisory fee of $2.5 million, reimbursable expenses of $529,000, an incentive fee of $1.4 million and $1.3 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. 

Corporate General and Administrative. Corporate general and administrative expense was $1.6 million in the 2019 quarter and $1.8 million in the 2018 quarter. The decrease in corporate general and administrative expenses is due to lower public company costs of $10,000, miscellaneous expenses of $66,000 and professional fees of $250,000, partially offset by higher equity-based compensation to employees of Premier of $25,000 and insurance recoveries of $112,000 related to the 2017 proxy contest and litigation that was recorded in the 2018 quarter.

Gain (loss) on Disposition of Assets and Sale of Hotel Property. In the 2019 quarter, we recorded a loss of $1.2 million that consisted of a $1.2 million loss related to the disposition of FF&E resulting from the renovation at The Notary Hotel and a $23,000 gain related to the sale of assets at the Ritz-Carlton, Sarasota related to ERFP. There was no gain (loss) in the 2018 quarter.

Equity in Earnings (Loss)of Unconsolidated Entity. In the 2019 quarter and 2018 quarter, we recorded equity in loss of unconsolidated entity related to our investment in OpenKey of $48,000 and $81,000, respectively.

Interest Income. Interest income decreased $291,000, or 53.9%, to $249,000 for the 2019 quarter compared to the 2018 quarter.

Other Income (Expense). Other expense increased $50,000, or 78.1% to $114,000 in the 2019 quarter compared to the 2018 quarter. In the 2019 quarter, we recorded other expense of $64,000 related to CMBX premiums and interest paid on collateral and a realized loss of $50,000 on interest rate floors. In the 2018 quarter, we recorded other expense of $64,000 related to CMBX premiums and interest paid on collateral. 

Interest Expense and Amortization of Loan Costs. Interest expense and amortization of loan costs increased $562,000, or 4.3%, to $13.6 million for the 2019 quarter compared to the 2018 quarter. The increase is primarily due to a new mortgage loan associated with the acquisition of the Ritz-Carlton, Lake Tahoe and a higher average LIBOR rate. The average LIBOR rates for the 2019 quarter and the 2018 quarter were 2.15% and 2.11%, respectively.

Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $335,000 for the 2019 quarter, resulting from costs of $278,000 associated with a modification to our $42.0 million loan and the write-off of $57,000 unamortized loan costs related to the refinancing of our $70.0 million mortgage loan. The mortgage loan was refinanced with an $80.0 million mortgage loan due September 2024. There was no write-off of loan costs and exit fees during the 2018 quarter.

Unrealized Gain (Loss) on Investment in Ashford Inc. Unrealized loss on investment in Ashford Inc. changed $3.6 million, or 168.2%, from an unrealized gain of $2.2 million in the 2018 quarter to an unrealized loss of $1.5 million in the 2019 quarter. The fair value is based on the closing market price of Ashford Inc. common stock at the end of the period.

Unrealized Gain (Loss) on Derivatives. Unrealized loss on derivatives of $754,000 for the 2019 quarter consisted of a $667,000 unrealized loss on interest rate floors, a $61,000 unrealized loss on CMBX credit default swaps and a $26,000 unrealized loss on interest rate caps. Unrealized loss on derivatives of $578,000 for the 2018 quarter consisted of a $434,000 unrealized loss on CMBX credit default swaps, a $134,000 unrealized loss on interest rate floors and a $10,000 unrealized loss on interest rate caps. The fair value of the interest rate caps and floors is primarily based on movements in the LIBOR forward curve and the passage of time. The fair value of credit default swaps is based on the change in value of CMBX indices.

Income Tax (Expense) Benefit. Income tax expense decreased $585,000, or 79.1%, to $155,000 for the 2019 quarter. This decrease was primarily due to a decrease in the profitability of our TRS entities in the 2019 quarter compared to the 2018 quarter.

(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities.Our noncontrolling interest partner in consolidated entities was allocated income of $1.9 million and $1.7 million for the 2019 quarter and the 2018 quarter, respectively. At both September 30, 2019 and 2018, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

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Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $1.5 million and $452,000 for the 2019 quarter and the 2018 quarter, respectively. Redeemable noncontrolling interests in Braemar OP represented ownership interests of 10.95% and 11.22% as of September 30, 2019 and 2018, respectively.

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Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30,2018

The following table summarizes changes in key line items from our condensed consolidated statements of operations for the nine months endedSeptember 30, 2019 and 2018 (in thousands except percentages):

	Nine Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			$ Change			% Change
Revenue
Rooms	$	228,660		$	218,304		$	10,356		4.7	%
Food and beverage	84,326			70,064			14,262			20.4
Other	52,920			44,085			8,835			20.0
Total hotel revenue	365,906			332,453			33,453			10.1
Other	7			—			7
Total revenue	365,913			332,453			33,460			10.1
Expenses
Hotel operating expenses:
Rooms	52,080			48,194			(3,886		)	(8.1	)
Food and beverage	62,325			49,078			(13,247		)	(27.0	)
Other expenses	111,431			95,490			(15,941		)	(16.7	)
Management fees	12,542			12,081			(461		)	(3.8	)
Total hotel expenses	238,378			204,843			(33,535		)	(16.4	)
Property taxes, insurance and other	20,356			18,516			(1,840		)	(9.9	)
Depreciation and amortization	51,991			42,291			(9,700		)	(22.9	)
Impairment charges	—			71			71			100.0
Advisory services fee	15,579			15,857			278			1.8
Transaction costs	704			949			245			25.8
Corporate general and administrative	3,633			2,999			(634		)	(21.1	)
Total expenses	330,641			285,526			(45,115		)	(15.8	)
Gain (loss) on disposition of assets and sale of hotel property	(1,154		)	15,711			16,865			107.3
Operating income (loss)	34,118			62,638			(28,520		)	(45.5	)
Equity in earnings (loss) of unconsolidated entity	(149		)	(146		)	(3		)	(2.1	)
Interest income	898			970			(72		)	(7.4	)
Other income (expense)	(370		)	(190		)	(180		)	(94.7	)
Interest expense and amortization of loan costs	(41,894		)	(35,941		)	(5,953		)	(16.6	)
Write-off of loan costs and exit fees	(647		)	(4,178		)	3,531			84.5
Unrealized gain (loss) on investment in Ashford Inc.	(5,390		)	(3,338		)	(2,052		)	(61.5	)
Unrealized gain (loss) on derivatives	(972		)	(803		)	(169		)	(21.0	)
Income (loss) before income taxes	(14,406		)	19,012			(33,418		)	(175.8	)
Income tax (expense) benefit	(1,493		)	(2,514		)	1,021			40.6
Net income (loss)	(15,899		)	16,498			(32,397		)	(196.4	)
(Income) loss attributable to noncontrolling interest in consolidated entities	(1,750		)	(1,742		)	(8		)	(0.5	)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	2,770			(1,075		)	3,845			357.7
Net income (loss) attributable to the Company	$	(14,879	)	$	13,681		$	(28,560	)	(208.8	)%

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All hotel properties owned for the nine months endedSeptember 30, 2019 and 2018 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the nine months endedSeptember 30, 2019 and 2018. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following acquisitions and dispositions affect reporting comparability related to our condensed consolidated financial statements:

Hotel Properties	Location	Acquisition/Disposition	Acquisition/Disposition Date
Ritz-Carlton, Sarasota (1)	Sarasota, FL	Acquisition	April 4, 2018
Tampa Renaissance	Tampa, FL	Disposition	June 1, 2018
Ritz-Carlton, Lake Tahoe (1)	Truckee, CA	Acquisition	January 15, 2019

________

⁽¹⁾  The operating results of these hotel properties have been included in our results of operations as of their acquisition dates.

The following table illustrates the key performance indicators of all hotel properties for the periods indicated:

	Nine Months Ended September 30,
	2019			2018
Occupancy	79.55		%	83.19		%
ADR (average daily rate)	$	296.62		$	272.85
RevPAR (revenue per available room)	$	235.97		$	226.99
Rooms revenue (in thousands)	$	228,660		$	218,304
Total hotel revenue (in thousands)	$	365,906		$	332,453

The following table illustrates the key performance indicators of the eleven hotel properties that were included for the full nine months endedSeptember 30, 2019 and 2018:

	Nine Months Ended September 30,
	2019			2018
Occupancy	81.03		%	83.79		%
ADR (average daily rate)	$	276.97		$	273.38
RevPAR (revenue per available room)	$	224.42		$	229.05
Rooms revenue (in thousands)	$	190,715		$	199,192
Total hotel revenue (in thousands)	$	286,954		$	291,556

Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $28.6 million, from net income of $13.7 million for the nine months ended September 30, 2018 (the “2018 period”), to a net loss of $14.9 million for the nine months ended September 30, 2019 (the “2019 period”), as a result of the factors discussed below.

Rooms Revenue. Rooms revenue increased $10.4 million, or 4.7%, to $228.7 million during the 2019 period compared to the 2018 period. During the 2019 period, we experienced an 8.7%increase in room rates and a 364 basis point decrease in occupancy compared to the 2018 period. Rooms revenue at our eleven comparable hotel properties decreased $8.5 million due to a 276 basis point decrease in occupancy, partially offset by an increase in room rates of 1.3%. Rooms revenue increased (i) $9.6 million at the Ritz-Carlton, Sarasota as a result of its acquisition on April 4, 2018; (ii) $17.4 million at the Ritz-Carlton, Lake Tahoe as a result of its acquisition on January 15, 2019; (iii) $2.5 million at the San Francisco Courtyard Downtown as a result of 5.5% higher room rates and a 267 basis point increase in occupancy at the hotel as a result of its guestroom renovation during the 2018 period; and (iv) $641,000 at the Pier House Resort as a result of 6.3% higher room rates, partially offset by a 117 basis point decrease in occupancy at the hotel. These increases were partially offset by decreases of (i) $8.2 million at the Tampa Renaissance as a result of its sale on June 1, 2018; (ii) $4.1 million at the Ritz-Carlton, St. Thomas due to the hotel being closed for renovation. During the 2019 period the hotel operated with limited rooms until March 1, 2019 when all rooms were removed from service while the hotel is being renovated; (iii) $3.5 million at The Notary Hotel as a result of a 1,749 basis point decrease in occupancy at the hotel due to a renovation during the 2019 period, partially offset by 5.2% higher room rates at the hotel; (iv) $2.2 million at the Seattle Marriott Waterfront as a result of 7.6% lower room rates and a 99 basis point decrease in occupancy at the hotel; (v) $677,000 at the Park Hyatt Beaver Creek as a result of a 403 basis point decrease in occupancy, partially offset by 1.7% higher room rates at

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the hotel; (vi) $431,000 at the Capital Hilton as a result of 0.3% lower room rate and a 99 basis point decrease in occupancy at the hotel; (vii) $306,000 at the Chicago Sofitel Magnificent Mile as a result of 5.4% lower room rates, partially offset by a 325 basis point increase in occupancy at the hotel; (viii) $228,000 at the Bardessono Hotel as a result of a 158 basis point decrease in occupancy and 0.1% lower room rates at the hotel; (ix) $189,000 at the Hotel Yountville as a result of 1.5% lower room rates and a 42 basis point decrease in occupancy at the hotel; and (x) $36,000 at the Hilton La Jolla Torrey Pines as a result of a 198 basis point decrease in occupancy, partially offset by 2.1% higher room rates at the hotel.

Food and Beverage Revenue. Food and beverage revenue increased $14.3 million, or 20.4%, to $84.3 million during the 2019 period compared to the 2018 period. This increase is primarily attributable to an increase in food and beverage revenue of $6.4 million at the Ritz-Carlton, Sarasota and $9.8 million at the Ritz-Carlton, Lake Tahoe as a result of their acquisitions on April 4, 2018 and January 15, 2019, respectively. We experienced an additional aggregate increase in food and beverage revenue of $3.7 million at the Capital Hilton, Ritz-Carlton, St. Thomas, Bardessono Hotel, Hilton La Jolla Torrey Pines, Pier House Resort, Park Hyatt Beaver Creek and Hotel Yountville. These increases were partially offset by decreases of $2.9 million at the Tampa Renaissance due to its sale on June 1, 2018 and an aggregate decrease in food and beverage revenue of $2.8 million at San Francisco Courtyard Downtown, The Notary Hotel, Chicago Sofitel Magnificent Mile and Seattle Marriott Waterfront.

Other Hotel Revenue. Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking, rentals and business interruption revenue, increased $8.8 million, or 20.0%, to $52.9 million during the 2019 period compared to the 2018 period. The increase is attributable to an increase in other hotel revenue of $5.0 million at the Ritz-Carlton, Sarasota and $4.4 million at the Ritz-Carlton, Lake Tahoe as a result of their acquisitions in April 2018 and January 2019, respectively. There was also an aggregate increase of $2.4 million at the Hotel Yountville, Pier House Resort, Bardessono Hotel, Capital Hilton, Chicago Sofitel Magnificent Mile, Seattle Marriott Waterfront, Hilton La Jolla Torrey Pines, San Francisco Courtyard Downtown and Park Hyatt Beaver Creek. These increases were partially offset by lower other hotel revenue of $175,000 at the Tampa Renaissance due to its sale on June 1, 2018, an aggregate decrease of $132,000 at The Notary Hotel and Ritz-Carlton, St. Thomas and lower business interruption revenue of $2.6 million.

During the 2019 period we recognized business interruption revenue of $16.6 million at the Ritz-Carlton, St. Thomas. During the 2018 period we recognized business interruption revenue of $13.9 million at the Ritz-Carlton, St. Thomas and the Pier House Resort as a result of the hurricanes and $1.9 million, net of deductibles of $500,000 at the Bardessono Hotel and Hotel Yountville as a result of the Napa wildfires. We also recorded $3.3 million of business interruption income for the Tampa Renaissance related to a settlement for lost profits from the BP Deepwater Horizon oil spill in the Gulf of Mexico in 2010.

Rooms Expense. Rooms expense increased $3.9 million, or 8.1%, to $52.1 million in the 2019 period compared to the 2018 period. The increase is primarily attributable to an increase of $1.8 million at the Ritz-Carlton, Sarasota and $4.0 million at the Ritz-Carlton, Lake Tahoe as a result of their acquisitions on April 4, 2018 and January 15, 2019, respectively. We experienced an additional aggregate increase in room expense of $821,000 at the Chicago Sofitel Magnificent Mile, San Francisco Courtyard Downtown, Park Hyatt Beaver Creek, Pier House Resort and Capital Hilton. This increase was partially offset by a decrease of $1.4 million at the Tampa Renaissance due to its sale on June 1, 2018 and an aggregate decrease in room expense of $1.4 million at The Notary Hotel, Hotel Yountville, Bardessono Hotel, Seattle Marriott Waterfront, Hilton La Jolla Torrey Pines and Ritz-Carlton, St. Thomas.

Food and Beverage Expense. Food and beverage expense increased $13.2 million, or 27.0%, to $62.3 million during the 2019 period compared to the 2018 period. The increase is attributable to $4.5 million at the Ritz-Carlton, Sarasota and $8.8 million at the Ritz-Carlton, Lake Tahoe as a result of their acquisitions on April 4, 2018 and January 15, 2019, respectively. We experienced an additional aggregate increase of $1.7 million at our eleven comparable hotel properties. These increases were partially offset by decrease of $1.8 million at the Tampa Renaissance due to its sale on June 1, 2018.

Other Operating Expenses. Other operating expenses increased $15.9 million, or 16.7%, to $111.4 million in the 2019 period compared to the 2018 period. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees. We experienced an increase of $4.7 million in direct expenses and $11.3 million in indirect expenses and incentive management fees in the 2019 period compared to the 2018 period. Direct expenses were 3.9% of total hotel revenue for the 2019 period and 2.9% for the 2018 period. The increase in direct expenses is primarily attributable to increases of $2.2 million at the Ritz-Carlton, Sarasota and $2.3 million at the Ritz-Carlton, Lake Tahoe as a result of their acquisitions on April 4, 2018 and January 15, 2019, respectively. We experienced an additional aggregate increase in direct expenses of $334,000 at our eleven comparable hotel properties. These increases were partially offset by a decrease of $91,000 at the Tampa Renaissance as a result of its sale. The increase in indirect expenses is attributable to increases in (i) general and administrative costs of $8.6 million, comprised of $5.9 million at the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe as a result of their acquisitions and $3.7 million at our eleven comparable hotel properties, partially offset by a decrease of $1.0 million at the Tampa Renaissance as a result of its sale; (ii) marketing costs of $2.6 million, attributable to an increase of $3.6 million at the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe as a result of their acquisitions,

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partially offset by a decreases of $865,000 at the Tampa Renaissance as a result of its sale and $152,000 at our eleven comparable hotel properties; (iii) repairs and maintenance of $1.7 million, comprised of an increase of $1.8 million at the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe and $279,000 at our eleven comparable hotel properties, partially offset by a decrease of $359,000 at the Tampa Renaissance as a result of its sale; and (iv) energy costs of $782,000, attributable to an increase of $1.3 million at the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe as a result of their acquisitions, partially offset by decreases of $205,000 at the Tampa Renaissance as a result of its sale and $317,000 at our eleven comparable hotel properties. These increases were partially offset by decreases in (i) incentive management fees of $2.3 million including $946,000 at the Tampa Renaissance as a result of its sale and $1.7 million at our eleven comparable hotel properties, partially offset by an increase of $336,000 at the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe; and (ii) lease expense of $170,000 comprised of a decrease of $341,000 at the Tampa Renaissance as a result of its sale, partially offset by increases of $90,000 at the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe as a result of their acquisitions and $81,000 from our eleven comparable hotel properties.

Management Fees. Base management fees increased $461,000, or 3.8%, to $12.5 million in the 2019 period compared to the 2018 period. The increase is comprised of increases of $1.4 million at the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe as a result of their acquisitions in April 2018 and January 2019, respectively. These increases are partially offset by a decrease of $509,000 at the Tampa Renaissance as a result of its sale in June 2018 and $457,000 at our eleven comparable hotel properties.

Property Taxes, Insurance and Other. Property taxes, insurance and other increased $1.8 million, or 9.9%, to $20.4 million in the 2019 period compared to the 2018 period, which is attributable to increases of $1.3 million at the Ritz-Carlton, Sarasota and $1.9 million at the Ritz-Carlton, Lake Tahoe, as a result of their acquisitions in April 2018 and January 2019, respectively. These increases were partially offset by a decrease $486,000 at the Tampa Renaissance as a result of its sale in June 2018 and $885,000 at our eleven comparable hotel properties.

Depreciation and Amortization. Depreciation and amortization increased $9.7 million, or 22.9%, to $52.0 million for the 2019 period compared to the 2018 period due to an aggregate increase of $4.8 million at the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe as a result of their acquisitions in April 2018 and January 2019, respectively, and $6.2 million at our eleven comparable hotel properties, partially offset by a decrease of $1.3 million at the Tampa Renaissance as a result of its sale in June 2018.

Impairment Charges. In the 2018 period we recorded an impairment charge of $59,000 at the Pier House Resort and $12,000 at the Tampa Renaissance as a result of changes in the estimates of property damage from the hurricanes. There were no impairment charges in the 2019 period.

Advisory Services Fee. Advisory services fee decreased $278,000, or 1.8%, to $15.6 million in the 2019 period compared to the 2018 period due to a lower incentive fee of $2.2 million, partially offset by a higher base advisory fee of $1.2 million, higher reimbursable expenses of $458,000 and higher equity-based compensation of $186,000. In the 2019 period, we recorded an advisory services fee of $15.6 million, which included a base advisory fee of $8.2 million, reimbursable expenses of $1.9 million, an incentive fee of $77,000 and $5.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. In the 2018 period, we recorded an advisory services fee of $15.9 million, which included a base advisory fee of $6.9 million, reimbursable expenses of $1.4 million, an incentive fee of $2.2 million and $5.2 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. During the nine months ended September 30, 2018, approximately $2.2 million of the equity-based compensation expense was related to the accelerated vesting of equity awards granted to one of our executive officers upon his death, in accordance with the terms of the awards.

Transaction Costs. In the 2019 period, we recorded transaction costs of $704,000 primarily related to the acquisition of the Ritz-Carlton, Sarasota. In the 2018 period, we recorded transaction costs of $949,000 primarily related to the acquisitions of Ritz-Carlton, Sarasota.

Corporate General and Administrative. Corporate general and administrative expense was $3.6 million in the 2019 period and $3.0 million in the 2018 period. The increase in corporate general and administrative expenses is due to insurance recoveries of $1.2 million related to the 2017 proxy contest and litigation that was recorded in the 2018 period, higher public company costs of $116,000 and higher equity-based compensation to employees of Premier of $63,000, partially offset by lower professional fees of $717,000 and miscellaneous expenses of $70,000.

Gain (loss) on Disposition of Assets and Sale of Hotel Property. In the 2019 period, we recorded a loss of $1.2 million related to the disposition of FF&E resulting from the renovation at The Notary Hotel, partially offset by a gain of $23,000 and $9,000 at the Ritz-Carlton, Sarasota and Hotel Yountville, respectively, related to ERFP. In the 2018 period we recorded a gain of $15.7 million related the sale of the Tampa Renaissance on June 1, 2018.

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Equity in Earnings (Loss)of Unconsolidated Entity. In the 2019 period, we recorded equity in loss of unconsolidated entity of $149,000 related to our investment in OpenKey. In the 2018 period, we recorded equity in loss of unconsolidated entity of $146,000 related to our investment in OpenKey.

Interest Income. Interest income decreased $72,000, or 7.4%, to $898,000 for the 2019 period compared to the 2018 period.

Other Income (Expense). Other expense increased $180,000, or 94.7% to $370,000 in the 2019 period compared to the 2018 period. In the 2019 period, we recorded other expense of $190,000 related to CMBX premiums and interest paid on collateral and a realized loss of $190,000 on interest rate floors, partially offset by other income of $10,000. In the 2018 period, we recorded other expense of $190,000 related to CMBX premiums and interest paid on collateral. 

Interest Expense and Amortization of Loan Costs. Interest expense and amortization of loan costs increased $6.0 million, or 16.6%, to $41.9 million for the 2019 period compared to the 2018 period. The increase is primarily due to new mortgage loans associated with the acquisitions of the Ritz-Carlton, Sarasota and Ritz-Carlton, Lake Tahoe and a higher average LIBOR rate. The average LIBOR rates for the 2019 period and the 2018 period were 2.36% and 1.89%, respectively.

Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $647,000 for the 2019 period, resulting from the write-off of unamortized loan costs of $338,000 and other costs of $309,000 associated with a loan modification and the refinancing of two mortgage loans. Write-off of loan costs and exit fees was $4.2 million in the 2018 period, resulting from the write-off of unamortized loan costs of $1.6 million and other costs of $2.6 million associated with the refinancing of two mortgage loans.

Unrealized Gain (Loss) on Investment in Ashford Inc. Unrealized loss on investment in Ashford Inc. increased $2.1 million, or 61.5%, to $5.4 million in the 2019 period compared to the 2018 period. The fair value is based on the closing market price of Ashford Inc. common stock at the end of the period.

Unrealized Gain (Loss) on Derivatives. Unrealized loss on derivatives of $972,000 for the 2019 period consisted of a $1.0 million unrealized loss on CMBX credit default swaps and an $107,000 unrealized loss on interest rate caps, partially offset by a $139,000 unrealized gain on interest rate floors. Unrealized loss on derivatives of $803,000 for the 2018 period consisted of a $271,000 unrealized loss on interest rate caps and a $218,000 unrealized loss on interest rate floors and a $314,000 unrealized loss on CMBX credit default swaps. The fair value of the interest rate caps and floors is primarily based on movements in the LIBOR forward curve and the passage of time. The fair value of credit default swaps is based on the change in value of CMBX indices.

Income Tax (Expense) Benefit. Income tax expense decreased $1.0 million, from $2.5 million for the 2018 period to $1.5 million for the 2019 period. This decrease was primarily due to a decrease in the profitability of our TRS entities in the 2019 period compared to the 2018 period.

(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities. Our noncontrolling interest partner in consolidated entities was allocated income of $1.8 million and $1.7 million for the 2019 period and the 2018 period, respectively. At both September 30, 2019 and 2018, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $2.8 million and net income of $1.1 million for the 2019 period and the 2018 period, respectively. Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 10.95% and 11.22% as of September 30, 2019 and 2018, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our hotel properties, including:

• advisory fees payable to Ashford LLC;

• recurring maintenance necessary to maintain our hotel properties in accordance with brand standards;

• interest expense and scheduled principal payments on outstanding indebtedness, including our secured revolving credit facility (see “Contractual Obligations and Commitments”);

• distributions, in the form of dividends on our common stock, necessary to qualify for taxation as a REIT;

• dividends on preferred stock; and

• capital expenditures to improve our hotel properties.

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We expect to meet our short-term liquidity requirements generally through net cash provided by operations, existing cash balances and, if necessary, short-term borrowings under our secured revolving credit facility.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotel properties and redevelopments, renovations, expansions and other capital expenditures that need to be made periodically with respect to our hotel properties and scheduled debt payments. We expect to meet our long-term liquidity requirements through various sources of capital, including our secured revolving credit facility and future equity and preferred equity issuances, existing working capital, net cash provided by operations, proceeds from insurance claims, hotel mortgage indebtedness and other secured and unsecured borrowings. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, including the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity and market perceptions about us. The success of our business strategy will depend, in part, on our ability to access these various capital sources. Based on our current level of operations, management believes that our cash flow from operations and our existing cash balances should be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity principal payments), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for federal income tax purposes.

Our hotel properties will require periodic capital expenditures and renovation to remain competitive. In addition, acquisitions, redevelopments or expansions of hotel properties may require significant capital outlays. We may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions or hotel redevelopment through retained earnings is very limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations and prospects could be materially and adversely affected.

Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotel properties decline. When these provisions are triggered, substantially all of the profit generated by the hotel properties securing such loan is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders. This could affect our liquidity and our ability to make distributions to our stockholders until such time that a cash trap is no longer in effect for such loan.

On December 5, 2017, our board of directors reapproved the stock repurchase program pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share having an aggregate value of up to $50 million. The Board’s authorization replaced any previous repurchase authorizations. No shares were repurchased during the three and nine months ended September 30, 2019, pursuant to this authorization.

On December 11, 2017, we entered into equity distribution agreements with certain sales agents to sell from time to time shares of our common stock having an aggregate offering price of up to $50.0 million. Sales of shares of our common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 of the Securities Act, including sales made directly on the NYSE, the existing trading market for our common stock, or sales made to or through a market maker other than on an exchange or through an electronic communications network. We will pay each of the sales agents a commission, which in each case shall not be more than 2.0% of the gross sales price of the shares of our common stock sold through such sales agent. As of September 30, 2019, no shares of our common stock have been sold under this program.

On January 15, 2019, in connection with the acquisition of the 170-room Ritz-Carlton, Lake Tahoe in Truckee, California, we completed the financing of a $54 million mortgage loan secured by the Ritz-Carlton, Lake Tahoe. The loan is interest-only, bears interest at LIBOR + 2.10%, and has a five year term.

On January 22, 2019, the Company refinanced its existing mortgage loan of approximately $186.8 million with a final maturity date in November 2021 with a new $195.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.70% and has a five-year term. The mortgage loan is secured by the same two hotels: the Capital Hilton and Hilton La Jolla Torrey Pines. These two hotels are held in a joint venture in which we have a 75% equity interest.

On August 5, 2019, the Company amended its mortgage loan with an outstanding balance of $42.0 million with a new $42.5 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 4.95% and has a two-year initial term with threeone-year extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Ritz-Carlton St. Thomas.

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On September 25, 2019, Ashford Inc. announced the formation of Ashford Securities LLC (“Ashford Securities”) to raise capital in order to grow its existing and future platforms. In conjunction with the formation of Ashford Securities, Braemar has entered into a contribution agreement with Ashford Inc. pursuant to which Braemar has agreed to contribute, with Ashford Trust, up to $15 million to fund the operations of Ashford Securities. As of September 30, 2019, Braemar has funded approximately $165,000.

On September 30, 2019, the Company refinanced its mortgage loan with an outstanding balance of $70.0 million with a new $80.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.85% and has a five-year initial term with no extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Pier House Resort.

On October 2, 2019, the Company entered into a stock purchase agreement with Ashford LLC under which Ashford LLC purchased all of the common stock held by one of our TRS subsidiaries, totaling 19,897 shares, for $30 per share, resulting in total proceeds of approximately $597,000 to the Company.

Secured Revolving Credit Facility

As of September 30, 2019, we had a senior secured revolving credit facility in the amount of $100 million. It included $15 million available in letters of credit and $15 million available in swingline loans.

As of September 30, 2019, the secured revolving credit facility was provided by a syndicate of financial institutions with Bank of America, N.A., serving as the administrative agent to Braemar OP, as the borrower. We and certain of our subsidiaries guaranteed the secured revolving credit facility, which was secured by a pledge of 100% of the equity interests we hold in Braemar OP and 100% of the equity interest issued by any guarantor (other than Braemar) or any other subsidiary of ours that is not restricted under its loan documents or organizational documents from having its equity pledged (subject to certain exclusions), all mortgage receivables held by the borrower or any guarantor, and certain deposit accounts and securities accounts held by the borrower and any guarantor. The proceeds of the secured revolving credit facility may be used for working capital, capital expenditures, property acquisitions, and any other lawful purposes.

The secured revolving credit facility also contained customary terms, covenants, negative covenants, events of default, limitations and other conditions for credit facilities of this type. Subject to certain exceptions, we were subject to restrictions on incurring additional indebtedness, mergers and fundamental changes, sales or other dispositions of property, changes in the nature of our business, investments and capital expenditures.

We were also subject to certain financial covenants, as set forth below, which were tested by the borrower on a consolidated basis (net of the amounts attributable to the non-controlling interest held by our partner in a majority-owned consolidated entity) and include, but are not limited to, the following:

• consolidated indebtedness (less cash and cash equivalents in excess of $10,000,000) to total asset value (based on property capitalization rates defined within the secured revolving credit facility agreement) not to exceed 60%. Our ratio was 58.1% at September 30, 2019.

• consolidated recourse indebtedness other than the secured revolving credit facility not to exceed $50,000,000.

• consolidated fixed charge coverage ratio not less than 1.40x initially, with such ratio being increased beginning October 1, 2017 to 1.50x. Our ratio was 1.56x at September 30, 2019.

• indebtedness of the consolidated parties that accrues interest at a variable rate (other than the secured revolving credit facility) that is not subject to a “cap,” “collar,” or other similar arrangement not to exceed 25% of consolidated indebtedness.

• consolidated tangible net worth not less than 75% of the consolidated tangible net worth on the closing date of the secured revolving credit facility plus 75% of the net proceeds of any future equity issuances.

• secured debt that is secured by real property not to exceed 70% of the as-is appraised value of such real property.

All financial covenants were tested and certified by the borrower on a quarterly basis. We were in compliance with all covenants at September 30, 2019.

The secured revolving credit facility included customary events of default and the occurrence of an event of default would have permitted the lenders to terminate commitments to lend under the secured revolving credit facility and accelerate payment of all amounts outstanding thereunder. If a default had occurred and was continuing, we would have been precluded from making distributions on our shares of common stock (other than those required to allow us to qualify and maintain our status as a REIT, so long as such default did not arise from a payment default or event of insolvency).

Borrowings under the secured revolving credit facility bore interest, at our option, at either LIBOR for a designated interest period plus an applicable margin, or the Base Rate (as defined in the credit agreement) plus an applicable margin. The applicable

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margin for borrowings under the secured revolving credit facility for base rate loans ranged from 1.25% to 2.50% per annum and the applicable margin for borrowings under the secured revolving credit facility for LIBOR loans ranged from 2.25% to 3.50% per annum, depending on the ratio of consolidated indebtedness to EBITDA, with the lowest rate applying if such ratio is less than 4.0x and the highest rate applying if such ratio is greater than 6.0x.

The secured revolving credit facility was terminated on October 25, 2019, has two one-year extension options if certain terms and conditions are satisfied and a 0.25% extension fee is paid.

On October 25, 2019, the Company entered into a new $75 million secured credit facility which replaces the Company's previous credit facility that was scheduled to mature on November 10, 2019. The new credit facility provides for a three-year revolving line of credit and bears interest at a range of 2.25% - 3.50% over LIBOR, depending on the leverage level of the Company. There are two, one-year extension options subject to the satisfaction of certain conditions. The new credit facility includes the opportunity to expand the borrowing capacity by up to $175 million to an aggregate size of $250 million. There were no amounts outstanding on the Company's previous credit facility. We believe the secured revolving credit facility will provide us with significant financial flexibility to fund future acquisitions and hotel redevelopments.

We intend to repay any indebtedness incurred under our secured revolving credit facility from time to time out of net cash provided by operations and from the net proceeds of issuances of additional equity and debt securities or sale of assets, as market conditions permit.

Sources and Uses of Cash

We had approximately $82.6 million and $182.6 million of cash and cash equivalents at September 30, 2019 and December 31, 2018, respectively.

We anticipate that our principal sources of funds to meet our cash requirements will include cash on hand, positive cash flow from operations and capital market activities.

Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows provided by operating activities were $49.0 million and $52.9 million for the nine months endedSeptember 30, 2019 and 2018, respectively. Cash flows from operations are impacted by changes in hotel operations of our eleven comparable hotel properties, the sale of the Tampa Renaissance on June 1, 2018 as well as the acquisitions of the Ritz-Carlton, Sarasota on April 4, 2018 and the Ritz-Carlton, Lake Tahoe on January 15, 2019. Cash flows from operations are also impacted by the timing of working capital cash flows such as collecting receivables from hotel guests, paying vendors, settling with derivative counterparties, settling with related parties, settling with hotel managers and timing differences between the receipt of proceeds from business interruption insurance claims and the recognition of the related revenue.

Net Cash Flows Provided by (Used in) Investing Activities. For the nine months endedSeptember 30, 2019, net cash flows used in investing activities were $210.0 million. These cash outflows were primarily attributable to $111.8 million for the acquisition of the Ritz-Carlton, Lake Tahoe, $108.2 million of capital improvements made to various hotel properties and additional investments in OpenKey of $332,000. Cash outflows were partially offset by cash inflows of $10.3 million from proceeds received from the sale of FF&E pursuant to the ERFP. For the nine months endedSeptember 30, 2018, net cash flows used in investing activities were $141.5 million. These cash outflows were primarily attributable to $177.9 million for the acquisition of the Ritz-Carlton, Sarasota, $51.6 million of capital improvements made to various hotel properties and a $2.0 million investment in OpenKey, partially offset by $65.3 million of proceeds from the sale of the Tampa Renaissance and $24.7 million of insurance proceeds received related to the hurricanes.

Net Cash Flows Provided by (Used in) Financing Activities. For the nine months endedSeptember 30, 2019, net cash flows provided by financing activities were $42.5 million. Cash inflows primarily consisted of borrowings on indebtedness of $329.5 million partially offset by $257.1 million for repayments of indebtedness, $24.9 million for payments of dividends and distributions and $4.4 million for payments of loan costs and exit fees. For the nine months endedSeptember 30, 2018, net cash flows provided by financing activities were $142.1 million. Cash inflows primarily consisted of borrowings on indebtedness of $575.0 million partially offset by $399.8 million for repayments of indebtedness, $22.7 million for payments of dividends and distributions, $9.4 million for payments of loan costs and exit fees and $538,000 related to distributions to noncontrolling interest in consolidated entities.

55

Seasonality

Our properties’ operations historically have been seasonal as certain properties maintain higher occupancy rates during the summer months and some during the winter months. This seasonality pattern can cause fluctuations in our quarterly lease revenue under our percentage leases. We anticipate that our cash flows from the operations of our properties and cash on hand will be sufficient to enable us to make quarterly distributions to maintain our REIT status. To the extent that cash flows from operations and cash on hand are insufficient during any quarter due to temporary or seasonal fluctuations in lease revenue, we expect to utilize borrowings to fund distributions required to maintain our REIT status. However, we cannot make any assurances that we will make distributions in the future.

Contractual Obligations and Commitments

Other than the contribution agreement with Ashford Inc. in which we have agreed to contribute, with Ashford Trust, up to $15 million to fund the operations of Ashford Securities, there have been no material changes since December 31, 2018, outside of the ordinary course of business, to contractual obligations specified in the table of contractual obligations included in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2018 Form10-K.

Off-Balance Sheet Arrangements

In the normal course of business, we may form or invest in partnerships or joint ventures. We evaluate each partnership and joint venture to determine whether the entity is a VIE. If the entity is determined to be a VIE we assess whether we are the primary beneficiary and need to consolidate the entity. For further discussion see note 2 to our condensed consolidated financial statements.

We have no other off-balance sheet arrangements.

Critical Accounting Policies

Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2018 Form10-K. There have been no material changes in these critical accounting policies.

Non-GAAP Financial Measures

The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, Funds From Operations (“FFO”) and Adjusted FFO are presented to help our investors evaluate our operating performance.

EBITDA is defined as net income (loss) before interest expense and amortization of loan costs, depreciation and amortization, income taxes, equity in (earnings) loss of unconsolidated entity and after the Company’s portion of EBITDA of OpenKey. In addition, we excluded impairment on real estate, (gain) loss on disposition of assets and sale of hotel property and Company’s portion of EBITDAre of OpenKey from EBITDA to calculate EBITDA for real estate, or EBITDAre, as defined by NAREIT.

We then further adjust EBITDAre to exclude certain additional items such as amortization of favorable (unfavorable) contract assets (liabilities), transaction and management conversion costs, write-off of loan costs and exit fees, legal, advisory and settlement costs, advisory services incentive fee, uninsured hurricane and wildfire related costs, other/income expense, Company’s portion of adjustments to EBITDAre of OpenKey and non-cash items such as unrealized gain/loss on investments, unrealized gain/ loss on derivatives and stock/unit-based compensation.

We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they reflect more accurately the ongoing performance of our hotel assets and other investments and provide more useful information to investors as they are indicators of our ability to meet our future debt payment requirements, working capital requirements and they provide an overall evaluation of our financial condition. EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define the terms. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity.

56

The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) (unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	(8,954	)	$	(626	)	$	(15,899	)	$	16,498
Interest expense and amortization of loan costs	13,646			13,084			41,894			35,941
Depreciation and amortization	16,831			14,474			51,991			42,291
Income tax expense (benefit)	155			740			1,493			2,514
Equity in (earnings) loss of unconsolidated entities	48			81			149			146
Company’s portion of EBITDA of OpenKey	(50		)	(79		)	(147		)	(143		)
EBITDA	21,676			27,674			79,481			97,247
Impairment charges on real estate	—			—			—			71
(Gain) loss on disposition of assets and sale of hotel property	1,163			—			1,154			(15,711		)
EBITDAre	22,839			27,674			80,635			81,607
Amortization of favorable (unfavorable) contract assets (liabilities)	129			51			366			143
Transaction and management conversion costs	506			—			1,183			965
Other (income) expense	114			64			370			190
Write-off of loan costs and exit fees	335			—			647			4,178
Unrealized (gain) loss on investment in Ashford Inc.	1,471			(2,158		)	5,390			3,338
Unrealized (gain) loss on derivatives	754			578			972			803
Non-cash stock/unit-based compensation	2,359			1,674			5,908			5,709
Legal, advisory and settlement costs	203			277			349			(667		)
Advisory services incentive fee	(132		)	1,380			77			2,241
Uninsured hurricane and wildfire related costs	—			—			—			412
Company’s portion of adjustments to EBITDAre of OpenKey	4			2			22			4
Adjusted EBITDAre	$	28,582		$	29,542		$	95,919		$	98,923

57

We calculate FFO and Adjusted FFO in the following table. FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on disposition of assets and sale of hotel property and extraordinary items as defined by GAAP, plus impairment charges on real estate, depreciation and amortization of real estate assets, and after redeemable noncontrolling interests in the operating partnership and adjustments for unconsolidated entities. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. Our calculation of Adjusted FFO excludes dividends on convertible preferred stock, transaction and management conversion costs, write-off of loan costs and exit fees, amortization of loan costs, legal, advisory and settlement costs, advisory services incentive fee, uninsured hurricane and wildfire related costs, other income/expense and non-cash items such as unrealized gain/loss on investments, interest expense accretion on refundable membership club deposits, unrealized gain/loss on derivatives, stock/unit-based compensation and the Company’s portion of adjustments to FFO of OpenKey. FFO and Adjusted FFO exclude amounts attributable to the portion of a partnership owned by the third party. We consider FFO and Adjusted FFO to be appropriate measures of our ongoing normalized operating performance as a REIT. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than us. FFO and Adjusted FFO do not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to GAAP net income or loss as an indication of our financial performance or GAAP cash flows from operating activities as a measure of our liquidity. FFO and Adjusted FFO are also not indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in our condensed consolidated financial statements.

58

The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands) (unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	(8,954	)	$	(626	)	$	(15,899	)	$	16,498
(Income) loss attributable to noncontrolling interest in consolidated entities	(1,899		)	(1,695		)	(1,750		)	(1,742		)
Net (Income) loss attributable to redeemable noncontrolling interests in operating partnership	1,465			452			2,770			(1,075		)
Preferred dividends	(2,533		)	(1,707		)	(7,597		)	(5,122		)
Net income (loss) attributable to common stockholders	(11,921		)	(3,576		)	(22,476		)	8,559
Depreciation and amortization on real estate (1)	16,036			13,720			49,609			40,030
Impairment charges on real estate	—			—			—			71
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership	(1,465		)	(452		)	(2,770		)	1,075
Equity in (earnings) loss of unconsolidated entity	48			81			149			146
(Gain) loss on disposition of assets and sale of hotel property	1,163			—			1,154			(15,711		)
Company’s portion of FFO of OpenKey	(51		)	(81		)	(151		)	(146		)
FFO available to common stockholders and OP unitholders	3,810			9,692			25,515			34,024
Series B Cumulative Convertible Preferred dividends	1,708			1,707			5,122			5,122
Transaction and management conversion costs	506			—			1,183			965
Other (income) expense	114			64			370			190
Interest expense accretion on refundable membership club benefits	213			226			651			376
Write-off of loan costs and exit fees	335			—			647			4,178
Amortization of loan costs (1)	1,029			1,070			3,187			3,084
Unrealized (gain) loss on investment in Ashford Inc.	1,471			(2,158		)	5,390			3,338
Unrealized (gain) loss on derivatives	754			578			972			803
Non-cash stock/unit-based compensation	2,359			1,674			5,908			5,709
Legal, advisory and settlement costs	203			277			349			(667		)
Advisory services incentive fee	(132		)	1,380			77			2,241
Uninsured hurricane and wildfire related costs	—			—			—			412
Company’s portion of adjustments to FFO of OpenKey	5			2			24			4
Adjusted FFO available to common stockholders and OP unitholders	$	12,375		$	14,512		$	49,395		$	59,779

____________________

⁽¹⁾  Net of adjustments for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for non-controlling interests for each line item:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Depreciation and amortization on real estate	$	(795	)	$	(754	)	$	(2,382	)	$	(2,261	)
Amortization of loan costs	(18		)	(24		)	(61		)	(73		)

59

Hotel Properties

The following table presents certain information related to our hotel properties:

Hotel Property	Location	Service Type	Total Rooms	% Owned		Owned Rooms
Fee Simple Properties
Capital Hilton	Washington, D.C.	Full	550	75	%	413
Seattle Marriott Waterfront	Seattle, WA	Full	361	100	%	361
The Notary Hotel	Philadelphia, PA	Full	499	100	%	499
San Francisco Courtyard Downtown (1)	San Francisco, CA	Select	410	100	%	410
Chicago Sofitel Magnificent Mile	Chicago, IL	Full	415	100	%	415
Pier House Resort	Key West, FL	Full	142	100	%	142
Ritz-Carlton, St. Thomas (2)	St. Thomas, USVI	Full	180	100	%	180
Park Hyatt Beaver Creek	Beaver Creek, CO	Full	190	100	%	190
Hotel Yountville	Yountville, CA	Full	80	100	%	80
Ritz-Carlton, Sarasota	Sarasota, FL	Full	266	100	%	266
Ritz-Carlton, Lake Tahoe	Truckee, CA	Full	170	100	%	170
Ground Lease Properties
Hilton La Jolla Torrey Pines (3)	La Jolla, CA	Full	394	75	%	296
Bardessono Hotel (4) (5)	Yountville, CA	Full	65	100	%	65
Total			3,722			3,487

________

⁽¹⁾ Announced plan to convert to Autograph Collection. On July 11, 2019, the Company announced the planned opening of The Clancy in early 2020, which will be a full service hotel.

⁽²⁾  Due to the impact from hurricanes Irma and Maria, the Ritz-Carlton, St. Thomas was closed for renovation throughout the third quarter of 2019, as such, the room count was 0 at September 30, 2019. The hotel had 180 total rooms in service prior to the hurricanes.

⁽³⁾  The ground lease expires in 2067.

⁽⁴⁾  The initial ground lease expires in 2065. The ground lease contains two 25-year extension options, at our election.

⁽⁵⁾  On October 3, 2019, the Company announced the opening of The Maple Grove Presidential Villa at the Bardessono Hotel, adding 3 additional luxury suites, increasing the total room count from 62 to 65.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our primary market risk exposure consists of changes in interest rates on borrowings under our debt instruments that bear interest at variable rates that fluctuate with market interest rates. To the extent that we acquire assets or conduct operations in an international jurisdiction, we will also have currency exchange risk. We may enter into certain hedging arrangements in order to manage interest rate and currency fluctuations. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.

At September 30, 2019, our total indebtedness of $1.1 billion was comprised of 100% variable-rate debt. The impact on the results of operations of a 25-basis point change in the interest rate on the outstanding balance of variable-rate debt at September 30, 2019, would be approximately $2.7 million per year.

The above amounts were determined based on the impact of hypothetical interest rates on our borrowings and assume no changes in our capital structure. The information presented above includes those exposures that existed at September 30, 2019, but it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies at the time, and the related interest rates.

We use credit default swaps, tied to the CMBX index, to hedge financial and capital market risk. We have entered into credit default swap transactions with notional amounts totaling $50.0 million, to hedge financial and capital market risk. A credit default swap is a derivative contract that functions like an insurance policy against the credit risk of an entity or obligation. The seller of protection assumes the credit risk of the reference obligation from the buyer (us) of protection in exchange for annual premium payments. If a default or a loss, as defined in the credit default swap agreements, occurs on the underlying bonds, then the buyer of protection is protected against those losses. The only liability for us, the buyer, is the annual premium and any change in value of the underlying CMBX index (if the trade is terminated prior to maturity). For all CMBX trades completed to date, we were the buyer of protection. Credit default swaps are subject to master-netting settlement arrangements and credit support annexes. Assuming the underlying bonds pay off at par over their remaining average life, our estimated total exposure for these trades was approximately $1.3 million at September 30, 2019.

60

We hold interest rate floors with notional amounts totaling $7.0 billion and strike rates ranging from (0.25)% to 2.00%. Our total exposure is capped at our initial total cost of $3.7 million. These instruments have termination dates ranging from December 2019 to July 2020.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of September 30, 2019 (the “Evaluation Date”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective: (i) to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms; and (ii) is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

There have been no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are engaged in various legal proceedings which have arisen but have not been fully adjudicated. The likelihood of loss from these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible and to probable. Based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position or results of operations. However, the final results of legal proceedings cannot be predicted with certainty and if we fail to prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position or results of operations could be materially adversely affected in future periods.

ITEM 1A. RISK FACTORS

The discussion of our business and operations should be read together with the risk factors contained in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. As of September 30, 2019, there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

On December 5, 2017, our board of directors reapproved the stock repurchase program pursuant to which the Board granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share having an aggregate value of up to $50 million. The Board’s authorization replaced any previous repurchase authorizations. No shares were repurchased during the three and nine months ended September 30, 2019, pursuant to this authorization.

61

The following table provides the information with respect to purchases and forfeitures of our common stock during each of the months in the third quarter of 2019:

Period	Total Number of Shares Purchased	Average Price Paid Per Share			Total Number of Shares Purchased as Part of a Publicly Announced Plan	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan
Common stock:
July 1 to July 31	516	$	—	(1)	—	$	50,000,000
August 1 to August 31	132	$	—	(1)	—	$	50,000,000
September 1 to September 30	1,643	$	—	(1)	—	$	50,000,000
Total	2,291	$	—		—

__________________

⁽¹⁾  There is no cost associated with the forfeiture of 516, 132 and 1,643 restricted shares of our common stock in July, August and September, respectively.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit	Description
3.1	Articles of Amendment and Restatement of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 29, 2016)
3.2	Articles Supplementary of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on May 18, 2015)
3.3	Articles of Amendment of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on April 29, 2016)
3.4	Amendment Number One to the Articles of Amendment and Restatement of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on December 8, 2017)
3.5	Amendment Number Two to Articles of Amendment and Restatement of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 23, 2018)
3.6	Fourth Amended and Restated Bylaws of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 20, 2018)
31.1*	Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended
31.2*	Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

62

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 are formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements Comprehensive Income; (iii) Consolidated Statements of Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to the Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
101.INS	XBRL Instance Document	Submitted electronically with this report.
101.SCH	XBRL Taxonomy Extension Schema Document	Submitted electronically with this report.
101.CAL	XBRL Taxonomy Calculation Linkbase Document	Submitted electronically with this report.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Submitted electronically with this report.
101.LAB	XBRL Taxonomy Label Linkbase Document	Submitted electronically with this report.
101.PRE	XBRL Taxonomy Presentation Linkbase Document	Submitted electronically with this report.

___________________________________

* Filed herewith.

63

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BRAEMAR HOTELS & RESORTS INC.

Date:	November 6, 2019	By:	/s/ RICHARD J. STOCKTON
			Richard J. Stockton
			President and Chief Executive Officer
Date:	November 6, 2019	By:	/s/ DERIC S. EUBANKS
			Deric S. Eubanks
			Chief Financial Officer

64

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Richard J. Stockton, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Braemar Hotels & Resorts Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2019

/s/ RICHARD J. STOCKTON

Richard J. Stockton

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Deric S. Eubanks, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Braemar Hotels & Resorts Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2019

/s/ DERIC S. EUBANKS

Deric S. Eubanks

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Braemar Hotels & Resorts Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard J. Stockton, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2019

/s/ RICHARD J. STOCKTON

Richard J. Stockton

President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Braemar Hotels & Resorts Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Deric S. Eubanks, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2019

/s/ DERIC S. EUBANKS

Deric S. Eubanks

Chief Financial Officer

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Segment Reporting

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We operate in one business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments refers to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments have similar economic characteristics and exhibit similar long-term financial performance. As of September 30, 2019 and December 31, 2018, all of our hotel properties were in the U.S. and its territories.

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Redeemable Noncontrolling Interests in Operating Partnership

9 Months Ended

Sep. 30, 2019

Noncontrolling Interest [Abstract]

Redeemable Noncontrolling Interests in Operating Partnership

Redeemable Noncontrolling Interests in Operating Partnership

Redeemable noncontrolling interests in the operating partnership represents the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Braemar OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested. Each common unit may be redeemed, by the holder, for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either: (i) issued pursuant to an effective registration statement; (ii) included in an effective registration statement providing for the resale of such common stock; or (iii) issued subject to a registration rights agreement.

LTIP units, which are issued to certain executives and employees of Ashford LLC as compensation, generally have vesting periods of three years. Additionally, certain independent members of the board of directors have elected to receive LTIP units as part of their compensation, which are fully vested upon grant. Upon reaching economic parity with common units, each vested LTIP unit can be converted by the holder into one common unit which can then be redeemed for cash or, at our election, settled in our common stock. An LTIP unit will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of our operating partnership at a time when our stock is trading at a level in excess of the price it was trading on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for our operating partnership.

The compensation committee of the board of directors of the Company may authorize the issuance of Performance LTIP units to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of Performance LTIP units that will be settled in common units of Braemar OP, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date. The number of Performance LTIP units actually earned may range from 0% to 200% of target based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s compensation committee on the grant date. As of September 30, 2019, there were approximately 552,000 Performance LTIP units, representing 200% of the target, outstanding. The performance criteria for the Performance LTIP units are based on market conditions under the relevant literature, and the Performance LTIP units were granted to non-employees. Following the adoption of ASU 2018-07 in the third quarter of 2018, the corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award, regardless of the actual outcome of the market condition as opposed to being accounted for at fair value based on the market price of the shares at each quarterly measurement date.

As of September 30, 2019, we have issued a total of 1.3 million LTIP units (including Performance LTIP units), net of cancellations, all of which, other than approximately 100,000 LTIP units and 60,000 Performance LTIP units issued from March 2015 to July 2019, had reached full economic parity with, and are convertible into, common units.

The following table presents compensation expense for Performance LTIP units and LTIP units (in thousands):

		Three Months Ended September 30,				Nine Months Ended September 30,
Type	Line Item	2019		2018		2019		2018
Performance LTIP units	Advisory services fee	$	297	$	245	$	847	$	539
LTIP units	Advisory services fee	355		269		999		707
LTIP units - independent directors	Corporate, general and administrative	103		61		103		61
		$	755	$	575	$	1,949	$	1,307

The unamortized cost of the unvested Performance LTIP units of $1.3 million at September 30, 2019, will be expensed over a period of 2.3 years with a weighted average period of 0.9 years.

The unamortized cost of the unvested LTIP units of $1.9 million at September 30, 2019, will be amortized over a period of 2.4 years with a weighted average period of 1.6 years.

The following table presents the common units redeemed and the fair value upon redemption (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Common units converted to stock	—		—		165		—
Fair value of common units converted	$	—	$	—	$	2,201	$	—

The following table presents the redeemable noncontrolling interests in Braemar OP (in thousands) and the corresponding approximate ownership percentage of our operating partnership:

	September 30, 2019			December 31, 2018
Redeemable noncontrolling interests in Braemar OP	$	40,584		$	44,885
Adjustments to redeemable noncontrolling interests (1)	$	562		$	23
Ownership percentage of operating partnership	10.95		%	11.22		%

____________________________________

⁽¹⁾  Reflects the excess of the redemption value over the accumulated historical cost.

We allocated net income (loss) to the redeemable noncontrolling interests and declared aggregate cash distributions to the holders of common units and holders of LTIP units, which are recorded as a reduction of redeemable noncontrolling interests in operating partnership, as illustrated in the table below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	$	1,465	$	452	$	2,770	$	(1,075	)
Aggregate distributions to holders of common units, LTIP units and Performance LTIP units	771		824		2,318		2,468

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Revenue (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following tables present our revenue disaggregated by geographical areas (in thousands):

	Three Months Ended September 30, 2019
Primary Geographical Market	Number of Hotels	Rooms			Food and Beverage		Other Hotel		Other		Total
California	5	$	32,070		$	9,190	$	4,441	$	—	$	45,701
Colorado	1	3,086			3,615		2,368		—		9,069
Florida	2	8,234			4,124		3,308		—		15,666
Illinois	1	7,501			2,250		466		—		10,217
Pennsylvania	1	6,675			1,474		310		—		8,459
Washington	1	10,361			1,649		382		—		12,392
Washington, D.C.	1	8,889			3,688		378		—		12,955
USVI	1	(8		)	432		3,999		—		4,423
Corporate entities	—	—			—		—		2		2
Total	13	$	76,808		$	26,422	$	15,652	$	2	$	118,884

	Three Months Ended September 30, 2018
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	4	$	26,368	$	5,209	$	2,404	$	—	$	33,981
Colorado	1	3,178		3,112		2,438		—		8,728
Florida	2	8,194		4,335		3,420		—		15,949
Illinois	1	8,157		2,280		327		—		10,764
Pennsylvania	1	7,137		1,422		267		—		8,826
Washington	1	11,035		1,799		380		—		13,214
Washington, D.C.	1	8,638		2,729		264		—		11,631
USVI	1	1,651		285		3,817		—		5,753
Total	12	$	74,358	$	21,171	$	13,317	$	—	$	108,846

	Nine Months Ended September 30, 2019
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	5	$	88,533	$	27,311	$	11,893	$	—	$	127,737
Colorado	1	14,059		9,867		7,762		—		31,688
Florida	2	34,674		18,811		12,311		—		65,796
Illinois	1	19,053		5,796		1,168		—		26,017
Pennsylvania	1	18,169		3,187		793		—		22,149
Washington	1	23,378		5,070		1,189		—		29,637
Washington, D.C.	1	29,960		12,679		1,196		—		43,835
USVI	1	834		1,605		16,608		—		19,047
Corporate entities	—	—		—		—		7		7
Total	13	$	228,660	$	84,326	$	52,920	$	7	$	365,913

	Nine Months Ended September 30, 2018
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	4	$	69,007	$	18,163	$	8,258	$	—	$	95,428
Colorado	1	14,736		9,676		7,712		—		32,124
Florida	2	24,474		12,191		7,343		—		44,008
Illinois	1	19,359		6,100		908		—		26,367
Pennsylvania	1	21,641		4,314		867		—		26,822
Washington	1	25,587		5,164		1,006		—		31,757
Washington, D.C.	1	30,390		10,965		884		—		42,239
USVI	1	4,939		616		13,616		—		19,171
Sold hotel properties	1	8,171		2,875		3,491		—		14,537
Total	13	$	218,304	$	70,064	$	44,085	$	—	$	332,453

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Investment in Hotel Properties, net - Impairment Charges and Insurance Recoveries (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Property, Plant and Equipment [Line Items]
Proceeds from insurance carriers	$ 6,600,000	$ 0	$ 14,900,000	$ 34,000,000
Impairment charges	0	0	0	71,000
Liability for excess of the sum of its impairment, remediation expenses and business interruption revenue recorded	14,300,000		14,300,000
Bardessono Hotel and Hotel Yountville
Property, Plant and Equipment [Line Items]
Revenue from business interruption losses		0		1,900,000
Insurance deductible		500,000		500,000
Other Hotel Revenue
Property, Plant and Equipment [Line Items]
Revenue from business interruption losses	$ 4,000,000	$ 3,800,000	$ 16,600,000	$ 13,900,000

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Equity and Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Dividends

The following table summarizes the common stock dividends declared during the period (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Common stock dividends declared	$	5,339	$	5,276	$	16,004	$	15,823

The following table summarizes dividends declared (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Series D Cumulative Preferred Stock	$	825	$	—	$	2,475	$	—

Schedule of Compensation Cost

The following table summarizes the compensation expense for PSUs (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Line Item	2019		2018		2019		2018
Advisory services fee	$	679	$	287	$	1,760	$	2,156

The following table summarizes the stock-based compensation expense (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Line Item	2019		2018		2019		2018
Advisory services fee	$	664	$	515	$	1,820	$	1,838
Management fees	36		53		116		164
Corporate general and administrative - Premier	17		—		55		—
Corporate general and administrative - independent directors	208		243		208		243
	$	925	$	811	$	2,199	$	2,245

Schedule of Noncontrolling Interest in Consolidated Entities

The following table summarizes the (income) loss allocated to noncontrolling interest in consolidated entities (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
(Income) loss attributable to noncontrolling interest in consolidated entities	$	(1,899	)	$	(1,695	)	$	(1,750	)	$	(1,742	)

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Significant Accounting Policies (Details) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jan. 01, 2019	Dec. 31, 2018
Significant Accounting Policies [Line Items]
Impairment	$ 0	$ 0	$ 0	$ 0
Operating lease liabilities	61,168,000		61,168,000			$ 0
Operating lease right-of-use assets	$ 82,976,000		$ 82,976,000			$ 0
ASU 2016-02
Significant Accounting Policies [Line Items]
Operating lease liabilities					$ 60,600,000
Operating lease right-of-use assets					82,500,000
Reclassified intangible assets					$ 22,300,000
Ashford Inc.
Significant Accounting Policies [Line Items]
Investment owned (in shares)	195		195			195
Ownership percentage	7.50%		7.50%			8.10%
Investment in unconsolidated entity						$ 10,114,000
Minimum | Restricted Cash
Significant Accounting Policies [Line Items]
Replacement reserve escrow as percentage of property revenue			4.00%
Maximum | Restricted Cash
Significant Accounting Policies [Line Items]
Replacement reserve escrow as percentage of property revenue			5.00%

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Related Party Transactions (Details)				3 Months Ended		9 Months Ended
	Sep. 25, 2019 USD ($)	Jan. 15, 2019 USD ($)	Aug. 08, 2018 USD ($)	Sep. 30, 2019 USD ($) hotel	Sep. 30, 2018 USD ($) hotel	Sep. 30, 2019 USD ($) hotel	Sep. 30, 2018 USD ($) hotel	Jul. 01, 2019 USD ($)	Jun. 26, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2015 USD ($)
Related Party Transaction [Line Items]
Base fee, net asset fee adjustment		0.70%
Minimum base fee		90.00%
Term of agreement						3 years
Advisory services fee				$ 5,158,000	$ 5,733,000	$ 15,579,000	$ 15,857,000
Gain (loss) on disposition of assets and sale of hotel property				(1,163,000)	$ 0	(1,154,000)	$ 15,711,000
Maximum Project Management Fee As Percentage Of Project Cost			4.00%
Advisory Agreement, Architecture Fees			6.50%
Advisory Agreement, Construction Management Fees			10.00%
Advisory Agreement, Interior Design Fees			6.00%
Advisory Agreement, FF&E Purchasing Fees			8.00%
Advisory Agreement, FF&E Purchasing Fees, Freight and Tax Threshold			$ 2,000,000
Advisory Agreement, FF&E Purchasing Fees, with Freight and Tax Threshold			6.00%
Advisory Agreement, FF&E Purchasing Fees, with Freight and Tax Threshold in Excess			$ 2,000,000
Due to Ashford Inc.				$ 4,749,000		$ 4,749,000				$ 4,001,000
Number of hotel properties managed by related party | hotel				3		3
Number of hotels | hotel				13	13	13	13
Advisory Services Fee
Related Party Transaction [Line Items]
Equity-based compensation expense				$ 755,000	$ 575,000	$ 1,949,000	$ 1,307,000
Restricted Stock
Related Party Transaction [Line Items]
Equity-based compensation expense				925,000	811,000	2,199,000	2,245,000
Compensation not yet recognized				4,900,000		$ 4,900,000
Period for recognition						2 years 4 months 24 days
Restricted Stock | Advisory Services Fee
Related Party Transaction [Line Items]
Equity-based compensation expense				664,000	515,000	$ 1,820,000	1,838,000
Restricted Stock | Management fees
Related Party Transaction [Line Items]
Equity-based compensation expense				36,000	53,000	116,000	164,000
Ashford LLC
Related Party Transaction [Line Items]
Advisory Agreement, Base Management Fee										0.70%
ERFP Agreement, Commitment		$ 50,000,000
ERFP Agreement, Commitment with Increase		$ 100,000,000
ERFP Agreement, Percent of Property Acquisition Price		10.00%
ERFP Agreement, Funding Term		2 years
ERFP Agreement, Initial Term		2 years
ERFP Agreement, Renewal Term		1 year
ERFP Agreement, Notice Term		60 days
ERFP, amount due				10,300,000		10,300,000
ERFP Agreement, Amount Sold								$ 8,900,000	$ 1,400,000
Gain (loss) on disposition of assets and sale of hotel property						9,000
Ashford LLC | Advisory Services Fee
Related Party Transaction [Line Items]
Due to Ashford Inc.				1,830,000		1,830,000				$ 2,264,000
Ashford LLC | Insurance claims services
Related Party Transaction [Line Items]
Amount of transaction				25,000	31,000	90,000	100,000
Due to Ashford Inc.				25,000		25,000				37,000
Ashford LLC | Insurance claims services | Investments in Hotel Properties, Net
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
Ashford LLC | Insurance claims services | Indebtedness, net
Related Party Transaction [Line Items]
Amount of transaction				0		0	0
Ashford LLC | Insurance claims services | Other Hotel Revenue
Related Party Transaction [Line Items]
Amount of transaction				0		0
Ashford LLC | Insurance claims services | Other Hotel Expenses
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
Ashford LLC | Insurance claims services | Advisory Services Fee
Related Party Transaction [Line Items]
Amount of transaction				0		0
Ashford LLC | Insurance claims services | Property Taxes, Insurance and Other
Related Party Transaction [Line Items]
Amount of transaction				25,000	31,000	90,000	100,000
Ashford LLC | Insurance claims services | Write-off of Premiums, Loan Costs and Exit Fees
Related Party Transaction [Line Items]
Amount of transaction				0		0
Ashford LLC | Affiliated Entity
Related Party Transaction [Line Items]
Advisory services fee				5,158,000	5,733,000	15,579,000	15,857,000
Gain (loss) on disposition of assets and sale of hotel property						23,000
Ashford LLC | Affiliated Entity | Base advisory fee
Related Party Transaction [Line Items]
Advisory services fee				2,650,000	2,508,000	8,170,000	6,928,000
Ashford LLC | Affiliated Entity | Reimbursable expenses
Related Party Transaction [Line Items]
Advisory services fee				645,000	529,000	1,906,000	1,448,000
Ashford LLC | Affiliated Entity | Equity-based compensation
Related Party Transaction [Line Items]
Advisory services fee				1,995,000	1,316,000	5,426,000	5,240,000
Ashford LLC | Affiliated Entity | Incentive fee
Related Party Transaction [Line Items]
Advisory services fee				(132,000)	1,380,000	77,000	2,241,000
Ashford Inc.
Related Party Transaction [Line Items]
Funding amount	$ 15,000,000
Investments in affiliate				165,000		165,000
Key money consideration											$ 2,000,000
J&S Audio Visual | Audio visual services
Related Party Transaction [Line Items]
Amount of transaction				183,000		383,000
Due to Ashford Inc.				185,000		185,000				0
J&S Audio Visual | Audio visual services | Investments in Hotel Properties, Net
Related Party Transaction [Line Items]
Amount of transaction				0		0
J&S Audio Visual | Audio visual services | Indebtedness, net
Related Party Transaction [Line Items]
Amount of transaction				0		0
J&S Audio Visual | Audio visual services | Other Hotel Revenue
Related Party Transaction [Line Items]
Amount of transaction				183,000		383,000
J&S Audio Visual | Audio visual services | Other Hotel Expenses
Related Party Transaction [Line Items]
Amount of transaction				0		0
J&S Audio Visual | Audio visual services | Advisory Services Fee
Related Party Transaction [Line Items]
Amount of transaction				0		0
J&S Audio Visual | Audio visual services | Property Taxes, Insurance and Other
Related Party Transaction [Line Items]
Amount of transaction				0		0
J&S Audio Visual | Audio visual services | Write-off of Premiums, Loan Costs and Exit Fees
Related Party Transaction [Line Items]
Amount of transaction				0		0
Lismore Capital | Debt placement services
Related Party Transaction [Line Items]
Amount of transaction				933,000		1,208,000	999,000
Lismore Capital | Debt placement services | Investments in Hotel Properties, Net
Related Party Transaction [Line Items]
Amount of transaction				0		0	0
Lismore Capital | Debt placement services | Indebtedness, net
Related Party Transaction [Line Items]
Amount of transaction				(720,000)		(995,000)	(999,000)
Lismore Capital | Debt placement services | Other Hotel Revenue
Related Party Transaction [Line Items]
Amount of transaction				0		0
Lismore Capital | Debt placement services | Other Hotel Expenses
Related Party Transaction [Line Items]
Amount of transaction				0		0	0
Lismore Capital | Debt placement services | Advisory Services Fee
Related Party Transaction [Line Items]
Amount of transaction				0		0
Lismore Capital | Debt placement services | Property Taxes, Insurance and Other
Related Party Transaction [Line Items]
Amount of transaction				0		0	0
Lismore Capital | Debt placement services | Write-off of Premiums, Loan Costs and Exit Fees
Related Party Transaction [Line Items]
Amount of transaction				213,000		213,000
OpenKey | Mobile key app
Related Party Transaction [Line Items]
Amount of transaction				21,000	5,000	33,000	17,000
Due to Ashford Inc.				0		0				13,000
OpenKey | Mobile key app | Investments in Hotel Properties, Net
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
OpenKey | Mobile key app | Indebtedness, net
Related Party Transaction [Line Items]
Amount of transaction				0		0	0
OpenKey | Mobile key app | Other Hotel Revenue
Related Party Transaction [Line Items]
Amount of transaction				0		0
OpenKey | Mobile key app | Other Hotel Expenses
Related Party Transaction [Line Items]
Amount of transaction				21,000	5,000	33,000	17,000
OpenKey | Mobile key app | Advisory Services Fee
Related Party Transaction [Line Items]
Amount of transaction				0		0
OpenKey | Mobile key app | Property Taxes, Insurance and Other
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
OpenKey | Mobile key app | Write-off of Premiums, Loan Costs and Exit Fees
Related Party Transaction [Line Items]
Amount of transaction				0		0
Premier | Project management services
Related Party Transaction [Line Items]
Amount of transaction				2,838,000	1,125,000	8,078,000	1,125,000
Due to Ashford Inc.				2,651,000		2,651,000				1,657,000
Premier | Project management services | Investments in Hotel Properties, Net
Related Party Transaction [Line Items]
Amount of transaction				2,699,000	1,125,000	7,674,000	1,125,000
Premier | Project management services | Indebtedness, net
Related Party Transaction [Line Items]
Amount of transaction				0		0	0
Premier | Project management services | Other Hotel Revenue
Related Party Transaction [Line Items]
Amount of transaction				0		0
Premier | Project management services | Other Hotel Expenses
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
Premier | Project management services | Advisory Services Fee
Related Party Transaction [Line Items]
Amount of transaction				139,000		404,000
Premier | Project management services | Property Taxes, Insurance and Other
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
Premier | Project management services | Write-off of Premiums, Loan Costs and Exit Fees
Related Party Transaction [Line Items]
Amount of transaction				0		0
Pure Wellness | Hypoallergenic premium rooms
Related Party Transaction [Line Items]
Amount of transaction				67,000	128,000	143,000	147,000
Due to Ashford Inc.				58,000		58,000				$ 30,000
Pure Wellness | Hypoallergenic premium rooms | Investments in Hotel Properties, Net
Related Party Transaction [Line Items]
Amount of transaction				55,000	117,000	108,000	117,000
Pure Wellness | Hypoallergenic premium rooms | Indebtedness, net
Related Party Transaction [Line Items]
Amount of transaction				0		0	0
Pure Wellness | Hypoallergenic premium rooms | Other Hotel Revenue
Related Party Transaction [Line Items]
Amount of transaction				0		0
Pure Wellness | Hypoallergenic premium rooms | Other Hotel Expenses
Related Party Transaction [Line Items]
Amount of transaction				12,000	11,000	35,000	30,000
Pure Wellness | Hypoallergenic premium rooms | Advisory Services Fee
Related Party Transaction [Line Items]
Amount of transaction				0		0
Pure Wellness | Hypoallergenic premium rooms | Property Taxes, Insurance and Other
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
Pure Wellness | Hypoallergenic premium rooms | Write-off of Premiums, Loan Costs and Exit Fees
Related Party Transaction [Line Items]
Amount of transaction				0		0
RED Leisure | Watersport activities and travel/transportation services
Related Party Transaction [Line Items]
Amount of transaction				326,000	180,000	686,000	540,000
RED Leisure | Watersport activities and travel/transportation services | Investments in Hotel Properties, Net
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
RED Leisure | Watersport activities and travel/transportation services | Indebtedness, net
Related Party Transaction [Line Items]
Amount of transaction				0		0	0
RED Leisure | Watersport activities and travel/transportation services | Other Hotel Revenue
Related Party Transaction [Line Items]
Amount of transaction				0		0
RED Leisure | Watersport activities and travel/transportation services | Other Hotel Expenses
Related Party Transaction [Line Items]
Amount of transaction				326,000	180,000	686,000	540,000
RED Leisure | Watersport activities and travel/transportation services | Advisory Services Fee
Related Party Transaction [Line Items]
Amount of transaction				0		0
RED Leisure | Watersport activities and travel/transportation services | Property Taxes, Insurance and Other
Related Party Transaction [Line Items]
Amount of transaction				0	0	0	0
RED Leisure | Watersport activities and travel/transportation services | Write-off of Premiums, Loan Costs and Exit Fees
Related Party Transaction [Line Items]
Amount of transaction				0		0
Remington Lodging
Related Party Transaction [Line Items]
Property management fees, including incentive property management fees				455,000	438,000	1,322,000	1,334,000
Market service and project management fees				0	831,000	0	3,328,000
Corporate general and administrative expenses				84,000	85,000	262,000	250,000
Total				539,000	$ 1,354,000	1,584,000	$ 4,912,000
Remington Lodging | Restricted Stock
Related Party Transaction [Line Items]
Compensation not yet recognized				$ 234,000		$ 234,000
Period for recognition						2 years 4 months 24 days

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Equity and Stock-Based Compensation (Details)	3 Months Ended		9 Months Ended		59 Months Ended
	Sep. 30, 2019 USD ($) hotel $ / shares shares	Sep. 30, 2018 USD ($) shares	Sep. 30, 2019 USD ($) hotel $ / shares shares	Sep. 30, 2018 USD ($) shares	Sep. 30, 2019 USD ($) hotel $ / shares shares	Dec. 31, 2018 USD ($) hotel $ / shares	Dec. 11, 2017 USD ($)	Dec. 05, 2017 USD ($) $ / shares
Class of Stock [Line Items]
Dividends declared - common stock	$ 5,339,000	$ 5,276,000	$ 16,004,000	$ 15,823,000
Dividends declared – preferred stock	$ 825,000	0	$ 2,475,000	0
Common stock, par value (in dollars per share) | $ / shares	$ 0.01		$ 0.01		$ 0.01	$ 0.01
Value of stock repurchased during period		1,000	$ 384,000	204,000
At-the-market equity distribution program, authorized amount							$ 50,000,000
At-the-market equity distribution program, shares sold (in shares) | shares	0		0		0
Noncontrolling interest in a consolidated entity	25.00%		25.00%		25.00%	25.00%
Number of hotel properties with JV interests | hotel	2		2		2	2
Noncontrolling interest in consolidated entities	$ (6,295,000)		$ (6,295,000)		$ (6,295,000)	$ (5,391,000)
(Income) loss attributable to noncontrolling interest in consolidated entities	$ (1,899,000)	$ (1,695,000)	$ (1,750,000)	$ (1,742,000)
Stock Repurchase Program
Class of Stock [Line Items]
Share repurchase program authorized amount								$ 50,000,000
Common stock, par value (in dollars per share) | $ / shares								$ 0.01
Shares of stock repurchased during period (in shares) | shares	0	0	0	0	4,300,000
Value of stock repurchased during period					$ 63,200,000
Advisory Services Fee
Class of Stock [Line Items]
Equity-based compensation expense	$ 755,000	$ 575,000	$ 1,949,000	$ 1,307,000
Performance Shares
Class of Stock [Line Items]
Award service period			3 years
Compensation not yet recognized	4,700,000		$ 4,700,000		4,700,000
Period for recognition			2 years 3 months 18 days
Weighted period of recognition			1 year 7 months 6 days
Performance Shares | Advisory Services Fee
Class of Stock [Line Items]
Equity-based compensation expense	679,000	287,000	$ 1,760,000	2,156,000
Performance Shares | Executive Officer
Class of Stock [Line Items]
Equity-based compensation expense			1,600,000
Restricted Stock
Class of Stock [Line Items]
Equity-based compensation expense	925,000	811,000	2,199,000	2,245,000
Compensation not yet recognized	4,900,000		$ 4,900,000		$ 4,900,000
Period for recognition			2 years 4 months 24 days
Weighted period of recognition			2 years
Restricted Stock | Advisory Services Fee
Class of Stock [Line Items]
Equity-based compensation expense	664,000	515,000	$ 1,820,000	1,838,000
Restricted Stock | Management fees
Class of Stock [Line Items]
Equity-based compensation expense	36,000	53,000	116,000	164,000
Restricted Stock | Premier | Corporate General and Administrative Expense
Class of Stock [Line Items]
Equity-based compensation expense	17,000	0	55,000	0
Restricted Stock | Executive Officer
Class of Stock [Line Items]
Equity-based compensation expense				640,000
Restricted Stock | Independent Directors | Corporate General and Administrative Expense
Class of Stock [Line Items]
Equity-based compensation expense	208,000	243,000	$ 208,000	243,000
Minimum | Performance Shares
Class of Stock [Line Items]
Award performance target			0.00%
Maximum | Performance Shares
Class of Stock [Line Items]
Award performance target			200.00%
Common Stock
Class of Stock [Line Items]
Dividends declared - common stock	5,339,000	$ 5,276,000	$ 16,004,000	$ 15,823,000
Series D Preferred Stock
Class of Stock [Line Items]
Dividends declared – preferred stock	$ 825,000		$ 2,475,000
Annual preferred stock dividend (in dollars per share) | $ / shares			$ 2.0625

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Indebtedness (Details) $ in Thousands							9 Months Ended
	Sep. 30, 2019 USD ($) hotel extension	Aug. 05, 2019 USD ($) extension	Jan. 22, 2019 USD ($) hotel	Jan. 15, 2019 USD ($) room	May 23, 2018 USD ($) hotel loan extension	Apr. 04, 2018 USD ($) room	Sep. 30, 2019 USD ($) hotel extension	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Deferred loan costs, net	$ (7,533)						$ (7,533)	$ (6,713)
Indebtedness, net	$ 1,057,467						$ 1,057,467	$ 985,873
LIBOR rate	2.016%						2.016%	2.503%
Indebtedness, gross	$ 1,065,000						$ 1,065,000	$ 992,586
Number of rooms | hotel	3,719						3,719
Ritz-Carlton, Lake Tahoe
Debt Instrument [Line Items]
Number of rooms | room				170
Mortgages
Debt Instrument [Line Items]
Mortage loan			$ 186,800		$ 357,600
Number of loans | loan					2
Line of Credit | Senior Revolving Credit Facility
Debt Instrument [Line Items]
Borrowing capacity	$ 100,000						$ 100,000
Indebtedness, gross	0						$ 0	0
Line of Credit | Senior Revolving Credit Facility | Base Rate | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate							1.25%
Line of Credit | Senior Revolving Credit Facility | Base Rate | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate							2.50%
Line of Credit | Senior Revolving Credit Facility | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate							2.25%
Line of Credit | Senior Revolving Credit Facility | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate							3.50%
Mortgages
Debt Instrument [Line Items]
Number of hotels used as collateral | hotel			2
Ownership percentage			75.00%
Mortgages | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate							0.50%
Mortgages | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							1.00%
Mortgages | Mortgage Loan 1
Debt Instrument [Line Items]
Indebtedness, gross	0						$ 0	187,086
Mortgages | Mortgage Loan 1 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							2.65%
Mortgages | Mortgage Loan 2
Debt Instrument [Line Items]
Mortage loan		$ 42,000
Indebtedness, gross	0						$ 0	42,000
Mortgages | Mortgage Loan 2 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							4.95%
Mortgages | Mortgage Loan 3
Debt Instrument [Line Items]
Mortage loan	70,000
Indebtedness, gross	$ 0						$ 0	70,000
Mortgages | Mortgage Loan 3 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							2.25%
Mortgages | Mortgage Loan 4
Debt Instrument [Line Items]
Number of extension options | extension	3						3
Term of extension options							1 year
Indebtedness, gross	$ 67,500						$ 67,500	67,500
Mortgages | Mortgage Loan 4 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							2.75%
Mortgages | Mortgage Loan 5
Debt Instrument [Line Items]
Basis spread on variable rate					2.16%
Number of extension options | extension	5				5		5
Term of extension options					1 year		1 year
Indebtedness, gross	$ 435,000				$ 435,000		$ 435,000	435,000
Term of debt					2 years
Number of hotels used as collateral | hotel					4
Mortgages | Mortgage Loan 5 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							2.16%
Mortgages | Mortgage Loan 6
Debt Instrument [Line Items]
Number of extension options | extension		3
Term of extension options		1 year
Indebtedness, gross	42,500	$ 42,500					$ 42,500	0
Term of debt		2 years
Mortgages | Mortgage Loan 6 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		4.95%					4.95%
Mortgages | Mortgage Loan 7
Debt Instrument [Line Items]
Indebtedness, gross	51,000						$ 51,000	51,000
Mortgages | Mortgage Loan 7 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							2.55%
Mortgages | Mortgage Loan 8
Debt Instrument [Line Items]
Indebtedness, gross	40,000						$ 40,000	40,000
Mortgages | Mortgage Loan 8 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							2.55%
Mortgages | Mortgage Loan 9
Debt Instrument [Line Items]
Indebtedness, gross	100,000					$ 100,000	$ 100,000	100,000
Number of rooms | room						266
Annual amortization						1.00%
Mortgages | Mortgage Loan 9 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate						2.65%	2.65%
Mortgages | Mortgage Loan 10
Debt Instrument [Line Items]
Basis spread on variable rate				2.10%
Indebtedness, gross	54,000						$ 54,000	0
Term of debt				5 years
Mortgages | Mortgage Loan 10 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							2.10%
Mortgages | Mortgage Loan 11
Debt Instrument [Line Items]
Indebtedness, gross	$ 195,000		$ 195,000				$ 195,000	0
Term of debt							5 years
Mortgages | Mortgage Loan 11 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate			1.70%				1.70%
Mortgages | Mortgage Loan 12
Debt Instrument [Line Items]
Number of extension options | extension	0						0
Indebtedness, gross	$ 80,000						$ 80,000	$ 0
Term of debt							5 years
Mortgages | Mortgage Loan 12 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							1.85%
Ritz-Carlton, Lake Tahoe
Debt Instrument [Line Items]
Number of rooms | room				170
Mortage financing				$ 54,000

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Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Operating leases
2019	$ 806
2020	3,258
2021	3,269
2022	3,224
2023	3,227
Thereafter	151,666
Total future minimum lease payments	165,450
Less: interest	(104,282)
Present value of lease liabilities	$ 61,168	$ 0

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Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Significance of current credit spreads to level 3 input considerations	10.00%		10.00%
LIBOR interest rate forward curve	2.016%		2.016%
LIBOR interest rate forward curve downtrend	1.222%		1.222%
Derivative assets	$ 773		$ 773		$ 772
Effect of Fair Value Hedges on Results of Operations [Abstract]
Our unrealized gain (loss) on investment in Ashford Inc.	(1,471)	$ 2,158	(5,390)	$ (3,338)
Unrealized gain (loss) on derivatives	(754)	(578)	(972)	(803)
Ashford Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment in unconsolidated entity					10,114
Credit Default Swap | Derivative Financial Instruments, Assets
Effect of Fair Value Hedges on Results of Operations [Abstract]
Derivative cost	64	64	190	190
Quoted Market Prices (Level 1) | Investment in Affiliate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments	4,724		4,724
Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	773		773		772
Counterparty and Cash Collateral Netting	1,130		1,130		130
Total	5,497		5,497
Total					10,886
Effect of Fair Value Hedges on Results of Operations [Abstract]
Gain (Loss) Recognized in Income	(2,275)	1,580	(6,552)	(4,141)
Our unrealized gain (loss) on investment in Ashford Inc.	(1,471)	2,158	(5,390)	(3,338)
Fair Value, Recurring | Investment in Affiliate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments	4,724		4,724		10,114
Fair Value, Recurring | Derivative Financial Instruments, Assets
Effect of Fair Value Hedges on Results of Operations [Abstract]
Gain (Loss) Recognized in Income	(804)	(578)	(1,162)	(803)
Fair Value, Recurring | Non-Derivative Assets
Effect of Fair Value Hedges on Results of Operations [Abstract]
Gain (Loss) Recognized in Income	(2,275)	1,580	(6,552)	(4,141)
Fair Value, Recurring | Derivative
Effect of Fair Value Hedges on Results of Operations [Abstract]
Unrealized gain (loss) on derivatives	(754)	(578)	(972)	(803)
Fair Value, Recurring | Interest rate floors
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	152		152		149
Counterparty and Cash Collateral Netting	52		52		73
Effect of Fair Value Hedges on Results of Operations [Abstract]
Unrealized gain (loss) on derivatives	(667)	(134)	139	(218)
Realized gain (loss) on interest rate floors	(50)	0	(190)	0
Fair Value, Recurring | Interest rate floors | Derivative Financial Instruments, Assets
Effect of Fair Value Hedges on Results of Operations [Abstract]
Gain (Loss) Recognized in Income	(717)	(134)	(51)	(218)
Fair Value, Recurring | Interest rate caps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	2		2		20
Counterparty and Cash Collateral Netting	0		0		0
Effect of Fair Value Hedges on Results of Operations [Abstract]
Unrealized gain (loss) on derivatives	(26)	(10)	(107)	(271)
Fair Value, Recurring | Interest rate caps | Derivative Financial Instruments, Assets
Effect of Fair Value Hedges on Results of Operations [Abstract]
Gain (Loss) Recognized in Income	(26)	(10)	(107)	(271)
Fair Value, Recurring | Credit Default Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	619		619		603
Counterparty and Cash Collateral Netting	1,078		1,078		57
Effect of Fair Value Hedges on Results of Operations [Abstract]
Unrealized gain (loss) on derivatives	(61)	(434)	(1,004)	(314)
Fair Value, Recurring | Credit Default Swap | Derivative Financial Instruments, Assets
Effect of Fair Value Hedges on Results of Operations [Abstract]
Gain (Loss) Recognized in Income	(61)	$ (434)	(1,004)	$ (314)
Fair Value, Recurring | Quoted Market Prices (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0		0
Total	4,724		4,724
Total					10,114
Fair Value, Recurring | Quoted Market Prices (Level 1) | Ashford Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment in unconsolidated entity	4,724		4,724
Fair Value, Recurring | Quoted Market Prices (Level 1) | Investment in Affiliate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments					10,114
Fair Value, Recurring | Quoted Market Prices (Level 1) | Interest rate floors
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0		0
Fair Value, Recurring | Quoted Market Prices (Level 1) | Interest rate caps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0		0
Fair Value, Recurring | Quoted Market Prices (Level 1) | Credit Default Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0		0
Fair Value, Recurring | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	(357)		(357)		642
Total	(357)		(357)
Total					642
Fair Value, Recurring | Significant Other Observable Inputs (Level 2) | Investment in Affiliate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments	0		0		0
Fair Value, Recurring | Significant Other Observable Inputs (Level 2) | Interest rate floors
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	100		100		76
Fair Value, Recurring | Significant Other Observable Inputs (Level 2) | Interest rate caps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	2		2		20
Fair Value, Recurring | Significant Other Observable Inputs (Level 2) | Credit Default Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	(459)		(459)		546
Fair Value, Recurring | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0		0
Total	0		0
Total					0
Fair Value, Recurring | Significant Unobservable Inputs (Level 3) | Investment in Affiliate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments	0		0		0
Fair Value, Recurring | Significant Unobservable Inputs (Level 3) | Interest rate floors
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0		0
Fair Value, Recurring | Significant Unobservable Inputs (Level 3) | Interest rate caps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0		0
Fair Value, Recurring | Significant Unobservable Inputs (Level 3) | Credit Default Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	$ 0		$ 0		$ 0

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Income (Loss) Per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Income (Loss) Per Share

Income (Loss) Per Share

The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss) attributable to common stockholders - basic and diluted:
Net income (loss) attributable to the Company	$	(9,388	)	$	(1,869	)	$	(14,879	)	$	13,681
Less: Dividends on preferred stock	(2,533		)	(1,707		)	(7,597		)	(5,122		)
Less: Dividends on common stock	(5,177		)	(5,126		)	(15,508		)	(15,364		)
Less: Dividends on unvested performance stock units	(74		)	(72		)	(224		)	(216		)
Less: Dividends on unvested restricted shares	(88		)	(78		)	(272		)	(243		)
Undistributed net income (loss) allocated to common stockholders	(17,260		)	(8,852		)	(38,480		)	(7,264		)
Add back: Dividends on common stock	5,177			5,126			15,508			15,364
Distributed and undistributed net income (loss) - basic and diluted	$	(12,083	)	$	(3,726	)	$	(22,972	)	$	8,100
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic	32,347			32,023			32,259			31,905
Advisory services incentive fee shares	—			—			—			17
Weighted average common shares outstanding – diluted	32,347			32,023			32,259			31,922
Income (loss) per share - basic:
Net income (loss) allocated to common stockholders per share	$	(0.37	)	$	(0.12	)	$	(0.71	)	$	0.25
Income (loss) per share - diluted:
Net income (loss) allocated to common stockholders per share	$	(0.37	)	$	(0.12	)	$	(0.71	)	$	0.25

Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss) allocated to common stockholders is not adjusted for:
Income (loss) allocated to unvested restricted shares	$	88		$	78		$	272		$	243
Income (loss) allocated to unvested performance stock units	74			72			224			216
Income (loss) attributable to redeemable noncontrolling interests in operating partnership	(1,465		)	(452		)	(2,770		)	1,075
Dividends on preferred stock - Series B	1,708			1,707			5,122			5,122
Total	$	405		$	1,405		$	2,848		$	6,656
Weighted average diluted shares are not adjusted for:
Effect of unvested restricted shares	19			81			53			57
Effect of unvested performance stock units	165			52			206			23
Effect of assumed conversion of operating partnership units	4,162			4,173			4,229			4,137
Effect of assumed conversion of preferred stock - Series B	6,569			6,569			6,569			6,569
Effect of advisory services incentive fee shares	73			32			73			—
Total	10,988			10,907			11,130			10,786

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Leases

On January 1, 2019, we adopted ASC 842 on a modified retrospective basis. We elected the practical expedients which allowed us to apply the new guidance at its effective date on January 1, 2019 without adjusting the comparative prior period financial statements. The package of practical expedients also allowed us to carry forward the historical lease classification. Additionally, we elected the practical expedients allowing us not to separate lease and non-lease components and not record short-term leases on the balance sheet across all existing asset classes.

The adoption of this standard has resulted in the recognition of operating lease ROU assets and lease liabilities primarily related to our ground lease arrangements for which we are the lessee. As of January 1, 2019, we recorded operating lease liabilities of $60.6 million as well as a corresponding operating lease ROU asset of $82.5 million, which includes, among other things, the reclassified intangible assets of $22.3 million. The standard did not have a material impact on our condensed consolidated statements of operations and statements of cash flows.

The majority of our leases are operating ground leases. We also have operating equipment leases, such as copier and vehicle leases, at our hotel properties. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years. The exercise of lease renewal options is at our sole discretion. Some leases have variable payments, however, if variable payments are contingent, they are not included in the ROU assets and liabilities. We have no finance leases as of September 30, 2019.

As of September 30, 2019, our leased assets and liabilities consisted of the following (in thousands):

	September 30, 2019
Assets
Operating lease right-of-use assets	$	82,976
Liabilities
Operating lease liabilities	$	61,168

We incurred the following lease costs related to our operating leases (in thousands):

		Three Months Ended		Nine Months Ended
	Classification	September 30, 2019		September 30, 2019
Operating lease cost (1)	Hotel operating expenses - other	$	1,510	$	4,312

_______________________________________

⁽¹⁾ For the three and nine months endedSeptember 30, 2019, operating lease cost includes approximately $445,000 and $1.1 million of variable lease cost associated with the ground leases and $129,000 and $366,000 of amortization costs related to the intangible assets that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842. Short-term lease costs in aggregate are immaterial.

Other information related to leases is as follows:

	Nine Months Ended
	September 30, 2019
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (in thousands)	$	2,417
Weighted Average Remaining Lease Term
Operating leases (1)	47 years
Weighted Average Discount Rate
Operating leases (1)	4.98		%

_______________________________________

⁽¹⁾ Calculated using the lease term, excluding extension options, and discount rates of the ground leases.

Future minimum lease payments due under non-cancellable leases as of September 30, 2019 were as follows (in thousands):

	Operating Leases
2019	$	806
2020	3,258
2021	3,269
2022	3,224
2023	3,227
Thereafter	151,666
Total future minimum lease payments	165,450
Less: interest	(104,282		)
Present value of lease liabilities	$	61,168

Future minimum lease payments due under non-cancellable leases under ASC 840 as of December 31, 2018 were as follows (in thousands):

2019	$	3,161
2020	3,156
2021	3,152
2022	3,164
2023	3,177
Thereafter	151,244
Total	$	167,054

Enhanced Return Funding Program

We lease certain assets from Ashford Inc. under the Enhanced Return Funding Program. See note 18.

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Allowance for doubtful notes receivable	$ 128	$ 101
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	32,900,422	32,511,660
Common stock, shares outstanding (in shares)	32,900,422	32,511,660
Preferred stock par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Series B Preferred Stock
Series B preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Series B preferred stock, shares issued (in shares)	4,965,850	4,965,850
Series B preferred stock, shares outstanding (in shares)	4,965,850	4,965,850
Series D Preferred Stock
Preferred stock, shares issued (in shares)	1,600,000	1,600,000
Preferred stock, shares outstanding (in shares)	1,600,000	1,600,000

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Summary of Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Investments, All Other Investments [Abstract]

Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):

	September 30, 2019				December 31, 2018
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets and liabilities measured at fair value:
Investment in Ashford Inc.	$	4,724	$	4,724	$	10,114	$	10,114
Derivative assets	773		773		772		772
Financial assets not measured at fair value:
Cash and cash equivalents	$	82,583	$	82,583	$	182,578	$	182,578
Restricted cash	57,367		57,367		75,910		75,910
Accounts receivable, net	19,657		19,657		12,739		12,739
Due from related party, net	817		817		—		—
Due from third-party hotel managers	18,019		18,019		4,927		4,927
Financial liabilities not measured at fair value:
Indebtedness	$	1,065,000	$994,975 to $1,099,709		$	992,586	$936,904 to $1,035,526
Accounts payable and accrued expenses	97,945		97,945		64,116		64,116
Dividends and distributions payable	9,502		9,502		8,514		8,514
Due to Ashford Inc.	4,749		4,749		4,001		4,001
Due to related party, net	—		—		224		224
Due to third-party hotel managers	2,172		2,172		1,633		1,633

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Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (15,899,000)	$ 16,498,000
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization	51,991,000	42,291,000
Equity-based compensation	5,908,000	5,709,000
Bad debt expense	307,000	186,000
Amortization of loan costs	3,248,000	3,157,000
Write-off of loan costs and exit fees	647,000	4,178,000
Amortization of intangibles	366,000	143,000
Amortization of non-refundable membership initiation fees	(117,000)	(18,000)
Interest expense accretion on refundable membership club deposits	651,000	376,000
(Gain) loss on disposition of assets and sale of hotel property	1,154,000	(15,711,000)
Impairment charges	0	71,000
Unrealized (gain) loss on investment in Ashford Inc.	5,390,000	3,338,000
Realized and unrealized (gain) loss on derivatives	1,162,000	803,000
Net settlement of trading derivatives	(1,074,000)	(688,000)
Equity in (earnings) loss of unconsolidated entity	149,000	146,000
Deferred income tax expense (benefit)	816,000	136,000
Changes in operating assets and liabilities, exclusive of the effect of hotel acquisitions and dispositions:
Accounts receivable and inventories	(5,886,000)	(5,593,000)
Prepaid expenses and other assets	(2,672,000)	922,000
Accounts payable and accrued expenses	13,856,000	(2,609,000)
Operating lease right-of-use assets	398,000	0
Due to/from related party, net	(1,041,000)	344,000
Due to/from third-party hotel managers	(6,378,000)	5,578,000
Due to/from Ashford Inc.	(345,000)	1,479,000
Operating lease liabilities	(144,000)	0
Other liabilities	(3,521,000)	(7,851,000)
Net cash provided by (used in) operating activities	48,966,000	52,885,000
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from property insurance	0	24,663,000
Acquisition of hotel properties, net of cash and restricted cash acquired	(111,751,000)	(177,874,000)
Investment in unconsolidated entity	(332,000)	(2,000,000)
Net proceeds from disposition of assets and sale of hotel property	10,300,000	65,336,000
Improvements and additions to hotel properties	(108,182,000)	(51,610,000)
Net cash provided by (used in) investing activities	(209,965,000)	(141,485,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on indebtedness	329,500,000	575,000,000
Repayments of indebtedness	(257,086,000)	(399,804,000)
Payments of loan costs and exit fees	(4,447,000)	(9,407,000)
Payments for derivatives	(89,000)	(348,000)
Purchase of common stock	(384,000)	(204,000)
Payments for dividends and distributions	(24,931,000)	(22,661,000)
Preferred stock offering costs	(110,000)	0
Distributions to noncontrolling interest in consolidated entities	0	(538,000)
Other	8,000	18,000
Net cash provided by (used in) financing activities	42,461,000	142,056,000
Net change in cash, cash equivalents and restricted cash	(118,538,000)	53,456,000
Cash, cash equivalents and restricted cash at beginning of period	258,488,000	185,342,000
Cash, cash equivalents and restricted cash at end of period	139,950,000	238,798,000
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	38,221,000	31,641,000
Income taxes paid (refund)	(490,000)	1,626,000
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Dividends and distributions declared but not paid	9,502,000	8,840,000
Capital expenditures accrued but not paid	18,815,000	5,167,000
Non-cash dividends paid	0	58,000
Non-cash settlement of note receivable	0	8,098,000
Non-cash settlement of TIF loan	$ 0	$ 8,098,000

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Investment in Hotel Properties, net (Tables)

9 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

Schedule of Investment in Hotel Properties

Investments in hotel properties, net consisted of the following (in thousands):

	September 30, 2019			December 31, 2018
Land	$	455,298		$	428,567
Buildings and improvements	1,106,503			989,180
Furniture, fixtures and equipment	109,715			103,025
Construction in progress	96,644			42,034
Total cost	1,768,160			1,562,806
Accumulated depreciation	(296,557		)	(262,905		)
Investments in hotel properties, net	$	1,471,603		$	1,299,901

We accounted for this transaction as an asset acquisition because substantially all of the fair value of the gross assets acquired were concentrated in a group of similar identifiable assets. We allocated the cost of the acquisition including transaction costs to the individual assets acquired and liabilities assumed on a relative fair value basis, which is considered a Level 3 valuation technique, as noted in the following table (in thousands):

Land (1)	$	26,731
Buildings and improvements	89,569
Furniture, fixtures and equipment	2,034
	$	118,334
Capital reserves	6,117
Key money	(3,811		)
	$	120,640
Net other assets (liabilities)	$	510

________

⁽¹⁾  Amount includes the value of a 3.4-acre parking lot adjacent to the hotel which could be used for future development of luxury town homes.

The results of operations of the hotel property have been included in our results of operations as of the acquisition date. The table below summarizes the total revenue and net income (loss) in our condensed consolidated statements of operations for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Total revenue	$	12,206	$	31,624
Net income (loss)	$	643	$	469

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Indebtedness (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Indebtedness

Indebtedness consisted of the following (in thousands):

Indebtedness	Collateral	Maturity	Interest Rate	September 30, 2019			December 31, 2018
Secured revolving credit facility (3)	Equity	November 2019	Base Rate (2) + 1.25% to 2.50% or LIBOR (1) + 2.25% to 3.50%	$	—		$	—
Mortgage loan (4)	Capital Hilton	November 2019	LIBOR(1) + 2.65%	—			187,086
	Hilton La Jolla Torrey Pines
Mortgage loan (5)	Ritz-Carlton, St. Thomas	December 2019	LIBOR (1) + 4.95%	—			42,000
Mortgage loan (6)	Pier House Resort	March 2020	LIBOR (1) + 2.25%	—			70,000
Mortgage loan (7)	Park Hyatt Beaver Creek	April 2020	LIBOR (1) + 2.75%	67,500			67,500
Mortgage loan (8)	The Notary Hotel	June 2020	LIBOR (1) + 2.16%	435,000			435,000
	Courtyard San Francisco Downtown
	Sofitel Chicago Magnificent Mile
	Marriott Seattle Waterfront
Mortgage loan (5)	Ritz-Carlton, St. Thomas	August 2021	LIBOR (1) + 4.95%	42,500			—
Mortgage loan	Hotel Yountville	May 2022	LIBOR (1) + 2.55%	51,000			51,000
Mortgage loan	Bardessono Hotel	August 2022	LIBOR (1) + 2.55%	40,000			40,000
Mortgage loan	Ritz-Carlton, Sarasota	April 2023	LIBOR (1) + 2.65%	100,000			100,000
Mortgage loan	Ritz-Carlton, Lake Tahoe	January 2024	LIBOR (1) + 2.10%	54,000			—
Mortgage loan (4)	Capital Hilton	February 2024	LIBOR (1) + 1.70%	195,000			—
	Hilton La Jolla Torrey Pines
Mortgage loan (6)	Pier House Resort	September 2024	LIBOR (1) + 1.85%	80,000			—
				1,065,000			992,586
Deferred loan costs, net				(7,533		)	(6,713		)
Indebtedness, net				$	1,057,467		$	985,873

__________________

⁽¹⁾  LIBOR rates were 2.016% and 2.503% at September 30, 2019 and December 31, 2018, respectively.

⁽²⁾  Base Rate, as defined in the secured revolving credit facility agreement, is the greater of (i) the prime rate set by Bank of America, or (ii) federal funds rate + 0.5%, or (iii) LIBOR + 1.0%.

⁽³⁾  Our borrowing capacity under our secured revolving credit facility was $100.0 million at September 30, 2019. See note 19.

⁽⁴⁾  On January 22, 2019, we refinanced this mortgage loan with an outstanding balance of $186.8 million with a new $195.0 million mortgage loan with a five-year term. The new mortgage loan is interest only and bears interest at a rate of LIBOR + 1.70%.

⁽⁵⁾  On August 5, 2019, we amended this mortgage loan totaling $42.0 million. The amended mortgage loan totaling $42.5 million has a two-year initial term and threeone-year extension options, subject to the satisfaction of certain conditions. The amended mortgage loan is interest only and bears interest at a rate of LIBOR + 4.95%.

⁽⁶⁾  On September 30, 2019, we refinanced this mortgage loan totaling $70.0 million with a new $80.0 million mortgage loan with a five-year term. The new mortgage loan is interest only and bears interest at a rate of LIBOR + 1.85%.

⁽⁷⁾  This mortgage loan has threeone-year extension options, subject to satisfaction of certain conditions, of which the first was exercised in April 2019.

⁽⁸⁾  This mortgage loan has fiveone-year extension options, subject to satisfaction of certain conditions.

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Derivative Instruments (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Interest rate floors | Not Designated as Hedging Instrument
Derivative [Line Items]
Notional amount	$ 7,000,000		$ 10,850,000
Interest rate floors | Not Designated as Hedging Instrument | Minimum
Derivative [Line Items]
Strike rate floor	(0.25%)		(0.25%)
Interest rate floors | Not Designated as Hedging Instrument | Maximum
Derivative [Line Items]
Strike rate	2.00%		2.00%
Interest rate caps | Not Designated as Hedging Instrument
Derivative [Line Items]
Notional amount	$ 925,500		$ 1,292,500
Aggregate principal balance on corresponding mortgage loans (in thousands)	$ 870,000		$ 805,500
Interest rate caps | Not Designated as Hedging Instrument | Minimum
Derivative [Line Items]
Strike rate	3.00%		2.43%
Interest rate caps | Not Designated as Hedging Instrument | Maximum
Derivative [Line Items]
Strike rate	7.80%		11.61%
Interest rate caps | Not Designated as Hedging Instrument
Derivative [Line Items]
Notional amount	$ 348,500	$ 685,000
Cost of derivative	$ 89	$ 348
Interest rate caps | Not Designated as Hedging Instrument | Minimum
Derivative [Line Items]
Strike rate	3.00%	2.43%
Interest rate caps | Not Designated as Hedging Instrument | Maximum
Derivative [Line Items]
Strike rate	7.80%	7.80%
Interest rate floors | Not Designated as Hedging Instrument
Derivative [Line Items]
Notional amount	$ 2,000,000	$ 4,000,000
Strike rate	1.63%	1.38%
Cost of derivative	$ 75	$ 138
Interest rate floors | Not Designated as Hedging Instrument | Maximum
Derivative [Line Items]
Strike rate	1.63%		2.00%
Credit Default Swap
Derivative [Line Items]
Notional amount	$ 50,000
Maximum exposure	1,300
Change in market value threshold for settlement	$ 250

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Investment in Unconsolidated Entity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended		18 Months Ended
	Mar. 28, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 28, 2018	Dec. 31, 2017
Schedule of Equity Method Investments [Line Items]
Total assets		$ 1,766,565		$ 1,766,565		$ 1,766,565		$ 1,636,487
Total liabilities		1,262,528		1,262,528		1,262,528		1,093,394
Redeemable noncontrolling interests		40,584		40,584		40,584		44,885
Total stockholders’ equity of Ashford Inc.		363,625		363,625		363,625		397,476
Noncontrolling interests in consolidated entities		(6,295)		(6,295)		(6,295)		(5,391)
Total equity		357,330	$ 369,465	357,330	$ 369,465	357,330	$ 373,730	392,085	$ 380,248		$ 376,552
Total liabilities and equity		1,766,565		1,766,565		$ 1,766,565		$ 1,636,487
Investment in unconsolidated entity				332	2,000
Total operating expenses		(110,401)	(97,623)	(330,641)	(285,526)
Operating income (loss)		7,320	11,223	34,118	62,638
Equity in earnings (loss) of unconsolidated entities		(48)	(81)	(149)	(146)
Interest expense and loan amortization cost		(13,646)	(13,084)	(41,894)	(35,941)
Income tax (expense) benefit		(155)	(740)	(1,493)	(2,514)
NET INCOME (LOSS)		(8,954)	(626)	(15,899)	16,498
Net (income) loss attributable to redeemable noncontrolling interests		1,465	452	2,770	(1,075)
Net income (loss) attributable to Ashford Inc.		(9,388)	(1,869)	(14,879)	13,681
Preferred dividends		(2,533)	(1,707)	(7,597)	(5,122)
Our unrealized gain (loss) on investment in Ashford Inc.		$ (1,471)	2,158	$ (5,390)	(3,338)
Ashford Inc.
Schedule of Equity Method Investments [Line Items]
Investment owned (in shares)		195		195		195		195
Share price (in dollars per share)		$ 24.24		$ 24.24		$ 24.24		$ 51.90
Ownership percentage		7.50%		7.50%		7.50%		8.10%
Total assets		$ 421,837		$ 421,837		$ 421,837		$ 379,005
Total liabilities		148,779		148,779		148,779		108,726
Series B Convertible Preferred Stock		202,185		202,185		202,185		200,847
Redeemable noncontrolling interests		3,641		3,641		3,641		3,531
Total stockholders’ equity of Ashford Inc.		66,467		66,467		66,467		65,443
Noncontrolling interests in consolidated entities		765		765		765		458
Total equity		67,232		67,232		67,232		65,901
Total liabilities and equity		421,837		421,837		$ 421,837		379,005
Our investment in Ashford Inc., at fair value								$ 10,114
Total revenue		56,889	41,565	183,675	144,544
Total operating expenses		(63,690)	(53,069)	(186,991)	(150,214)
Operating income (loss)		(6,801)	(11,504)	(3,316)	(5,670)
Equity in earnings (loss) of unconsolidated entities		464	0	(109)	0
Interest expense and loan amortization cost		(531)	(419)	(1,412)	(770)
Other income (expense)		(20)	25	(86)	(50)
Income tax (expense) benefit		297	13,904	(1,429)	11,593
NET INCOME (LOSS)		(6,591)	2,006	(6,352)	5,103
(Income) loss from consolidated entities attributable to noncontrolling interests		101	413	395	704
Net (income) loss attributable to redeemable noncontrolling interests		334	968	623	817
Net income (loss) attributable to Ashford Inc.		(6,156)	3,387	(5,334)	6,624
Preferred dividends		(2,909)	(1,675)	(8,492)	(1,675)
Amortization of preferred stock discount		(363)	(303)	(1,338)	(303)
Net income attributable to common stockholders		$ (9,428)	$ 1,409	$ (15,164)	$ 4,646
OpenKey
Schedule of Equity Method Investments [Line Items]
Ownership percentage		8.60%		8.60%		8.60%		8.20%		8.20%
Investment in unconsolidated entity	$ 2,000					$ 2,300
Our investment in Ashford Inc., at fair value		$ 1,949		$ 1,949		1,949		$ 1,766
Equity Method Investee | OpenKey
Schedule of Equity Method Investments [Line Items]
Our investment in Ashford Inc., at fair value		$ 332		$ 332		$ 332

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Leases - Lease Cost and Other Information (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Leases [Abstract]
Operating lease cost	$ 1,510	$ 4,312
Variable lease expense	445	1,100
Amortization costs related to the intangible assets and liabilities	$ 129	366
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (in thousands)		$ 2,417
Weighted Average Remaining Lease Term	47 years	47 years
Weighted Average Discount Rate	4.98%	4.98%

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Indebtedness

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Indebtedness

Indebtedness

Indebtedness consisted of the following (in thousands):

Indebtedness	Collateral	Maturity	Interest Rate	September 30, 2019			December 31, 2018
Secured revolving credit facility (3)	Equity	November 2019	Base Rate (2) + 1.25% to 2.50% or LIBOR (1) + 2.25% to 3.50%	$	—		$	—
Mortgage loan (4)	Capital Hilton	November 2019	LIBOR(1) + 2.65%	—			187,086
	Hilton La Jolla Torrey Pines
Mortgage loan (5)	Ritz-Carlton, St. Thomas	December 2019	LIBOR (1) + 4.95%	—			42,000
Mortgage loan (6)	Pier House Resort	March 2020	LIBOR (1) + 2.25%	—			70,000
Mortgage loan (7)	Park Hyatt Beaver Creek	April 2020	LIBOR (1) + 2.75%	67,500			67,500
Mortgage loan (8)	The Notary Hotel	June 2020	LIBOR (1) + 2.16%	435,000			435,000
	Courtyard San Francisco Downtown
	Sofitel Chicago Magnificent Mile
	Marriott Seattle Waterfront
Mortgage loan (5)	Ritz-Carlton, St. Thomas	August 2021	LIBOR (1) + 4.95%	42,500			—
Mortgage loan	Hotel Yountville	May 2022	LIBOR (1) + 2.55%	51,000			51,000
Mortgage loan	Bardessono Hotel	August 2022	LIBOR (1) + 2.55%	40,000			40,000
Mortgage loan	Ritz-Carlton, Sarasota	April 2023	LIBOR (1) + 2.65%	100,000			100,000
Mortgage loan	Ritz-Carlton, Lake Tahoe	January 2024	LIBOR (1) + 2.10%	54,000			—
Mortgage loan (4)	Capital Hilton	February 2024	LIBOR (1) + 1.70%	195,000			—
	Hilton La Jolla Torrey Pines
Mortgage loan (6)	Pier House Resort	September 2024	LIBOR (1) + 1.85%	80,000			—
				1,065,000			992,586
Deferred loan costs, net				(7,533		)	(6,713		)
Indebtedness, net				$	1,057,467		$	985,873

__________________

⁽¹⁾  LIBOR rates were 2.016% and 2.503% at September 30, 2019 and December 31, 2018, respectively.

⁽²⁾  Base Rate, as defined in the secured revolving credit facility agreement, is the greater of (i) the prime rate set by Bank of America, or (ii) federal funds rate + 0.5%, or (iii) LIBOR + 1.0%.

⁽³⁾  Our borrowing capacity under our secured revolving credit facility was $100.0 million at September 30, 2019. See note 19.

⁽⁴⁾  On January 22, 2019, we refinanced this mortgage loan with an outstanding balance of $186.8 million with a new $195.0 million mortgage loan with a five-year term. The new mortgage loan is interest only and bears interest at a rate of LIBOR + 1.70%.

⁽⁵⁾  On August 5, 2019, we amended this mortgage loan totaling $42.0 million. The amended mortgage loan totaling $42.5 million has a two-year initial term and threeone-year extension options, subject to the satisfaction of certain conditions. The amended mortgage loan is interest only and bears interest at a rate of LIBOR + 4.95%.

⁽⁶⁾  On September 30, 2019, we refinanced this mortgage loan totaling $70.0 million with a new $80.0 million mortgage loan with a five-year term. The new mortgage loan is interest only and bears interest at a rate of LIBOR + 1.85%.

⁽⁷⁾  This mortgage loan has threeone-year extension options, subject to satisfaction of certain conditions, of which the first was exercised in April 2019.

⁽⁸⁾  This mortgage loan has fiveone-year extension options, subject to satisfaction of certain conditions.

On April 4, 2018, in connection with the acquisition of the 266-room Ritz-Carlton, Sarasota in Sarasota, Florida, the Company completed the financing of a $100.0 million mortgage loan. This mortgage loan provides for an interest rate of LIBOR + 2.65%. The mortgage loan is interest only until July 1, 2021 and then amortizes 1% annually for the remaining term. The stated maturity is April 2023.

On May 23, 2018, the Company refinanced two mortgage loans with an outstanding balance of $357.6 million with a new $435.0 million mortgage loan with a two-year initial term and fiveone-year extension options subject to the satisfaction of certain conditions. As a result of the refinance the Tampa Renaissance became unencumbered. The new mortgage loan is interest only and bears interest at a rate of LIBOR + 2.16%. The loan is secured by four hotels: The Notary Hotel, Marriott Seattle Waterfront, Courtyard San Francisco Downtown and Sofitel Chicago Magnificent Mile.

On January 15, 2019, in connection with the acquisition of the 170-room Ritz-Carlton, Lake Tahoe located in Truckee, California, the Company completed the financing of a $54.0 million mortgage loan. This mortgage loan provides for an interest rate of LIBOR + 2.10%. The mortgage loan is interest only and has a five year term.

On January 22, 2019, the Company refinanced its existing mortgage loan with an outstanding balance of approximately $186.8 million and a final maturity date in November 2021 with a new $195.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.70% and has a five-year term. The mortgage loan is secured by the same two hotels: the Capital Hilton and Hilton La Jolla Torrey Pines. These two hotels are held in a joint venture in which we have a 75% equity interest.

On August 5, 2019, the Company amended its mortgage loan with an outstanding balance of $42.0 million with a new $42.5 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 4.95% and has a two-year initial term with threeone-year extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Ritz-Carlton St. Thomas.

On September 30, 2019, the Company refinanced its mortgage loan with an outstanding balance of $70.0 million with a new $80.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.85% and has a five-year term with no extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Pier House Resort.

We are required to maintain certain financial ratios under our secured revolving credit facility. If we violate covenants in any debt agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in our inability to borrow unused amounts under our line of credit, even if repayment of some or all of our borrowings is not required. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of the consolidated group. As of September 30, 2019, we were in compliance in all material respects with all covenants or other requirements set forth in our debt agreements as amended.

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Investment in Hotel Properties, net

9 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

Investments in Hotel Properties, net

Investments in Hotel Properties, net

Investments in hotel properties, net consisted of the following (in thousands):

	September 30, 2019			December 31, 2018
Land	$	455,298		$	428,567
Buildings and improvements	1,106,503			989,180
Furniture, fixtures and equipment	109,715			103,025
Construction in progress	96,644			42,034
Total cost	1,768,160			1,562,806
Accumulated depreciation	(296,557		)	(262,905		)
Investments in hotel properties, net	$	1,471,603		$	1,299,901

Ritz-Carlton, Lake Tahoe

On January 15, 2019, the Company acquired a 100% interest in the 170-room Ritz-Carlton, Lake Tahoe located in Truckee, California for $120.0 million. The Company incurred $640,000 in acquisition costs. In connection with the acquisition the Company completed the financing of a $54.0 million mortgage loan secured by the Ritz-Carlton, Lake Tahoe. See note 8.

We accounted for this transaction as an asset acquisition because substantially all of the fair value of the gross assets acquired were concentrated in a group of similar identifiable assets. We allocated the cost of the acquisition including transaction costs to the individual assets acquired and liabilities assumed on a relative fair value basis, which is considered a Level 3 valuation technique, as noted in the following table (in thousands):

Land (1)	$	26,731
Buildings and improvements	89,569
Furniture, fixtures and equipment	2,034
	$	118,334
Capital reserves	6,117
Key money	(3,811		)
	$	120,640
Net other assets (liabilities)	$	510

________

⁽¹⁾  Amount includes the value of a 3.4-acre parking lot adjacent to the hotel which could be used for future development of luxury town homes.

The results of operations of the hotel property have been included in our results of operations as of the acquisition date. The table below summarizes the total revenue and net income (loss) in our condensed consolidated statements of operations for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Total revenue	$	12,206	$	31,624
Net income (loss)	$	643	$	469

Impairment Charges and Insurance Recoveries

In September 2017, the Ritz-Carlton, St. Thomas located in St. Thomas, USVI, the Pier House Resort located in Key West, FL and the Tampa Renaissance located in Tampa, FL (sold in 2018) were impacted by the effects of Hurricanes Irma and Maria. The Company holds insurance policies that provide coverage for property damage and business interruption after meeting certain deductibles at all of its hotel properties.

For the three and nine months ended September 30, 2019, the Company recorded revenue from business interruption losses associated with lost profits from the hurricanes of $4.0 million and $16.6 million, respectively. For the three and nine months ended September 30, 2018, the Company recorded revenue from business interruption losses associated with lost profits from the hurricanes of $3.8 million and $13.9 million, respectively. These revenues are included in “other” hotel revenue in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2019, the Company received proceeds of $6.6 million and $14.9 million, respectively, from our insurance carriers for property damage and business interruption from the hurricanes. The Company received $0 and $34.0 million, respectively, for the three and nine months ended September 30, 2018.

Additionally, during the three and nine months ended September 30, 2018, the Company recorded revenue of $0 and $1.9 million, respectively, net of deductibles of $500,000, for business interruption losses associated with lost profits at the Bardessono Hoteland Hotel Yountville as a result of the Napa wildfires, which is included in “other” hotel revenue in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2018, we recorded impairment charges of $0 and $71,000, respectively, as a result of a change in estimate of property damage from the hurricanes at the Pier House Resort and the Tampa Renaissance. There was no impairment charge recorded for the three and nine months ended September 30, 2019. As of September 30, 2019, the Company had a net liability of $14.3 million, included in “other liabilities” on the condensed consolidated balance sheet, as it has received insurance proceeds in excess of the sum of its impairment, remediation expenses and business interruption revenue recorded through September 30, 2019. The Company will not record revenue for business interruption losses associated with lost profits or gains from property damage recoveries until the amount for such recoveries is known and the amount is realizable.

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Lease Balances

As of September 30, 2019, our leased assets and liabilities consisted of the following (in thousands):

	September 30, 2019
Assets
Operating lease right-of-use assets	$	82,976
Liabilities
Operating lease liabilities	$	61,168

Lease Cost and Other Information

We incurred the following lease costs related to our operating leases (in thousands):

		Three Months Ended		Nine Months Ended
	Classification	September 30, 2019		September 30, 2019
Operating lease cost (1)	Hotel operating expenses - other	$	1,510	$	4,312

_______________________________________

⁽¹⁾ For the three and nine months endedSeptember 30, 2019, operating lease cost includes approximately $445,000 and $1.1 million of variable lease cost associated with the ground leases and $129,000 and $366,000 of amortization costs related to the intangible assets that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842. Short-term lease costs in aggregate are immaterial.

Other information related to leases is as follows:

	Nine Months Ended
	September 30, 2019
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (in thousands)	$	2,417
Weighted Average Remaining Lease Term
Operating leases (1)	47 years
Weighted Average Discount Rate
Operating leases (1)	4.98		%

_______________________________________

⁽¹⁾ Calculated using the lease term, excluding extension options, and discount rates of the ground leases.

Maturities of Operating Lease Liabilities

Future minimum lease payments due under non-cancellable leases as of September 30, 2019 were as follows (in thousands):

	Operating Leases
2019	$	806
2020	3,258
2021	3,269
2022	3,224
2023	3,227
Thereafter	151,666
Total future minimum lease payments	165,450
Less: interest	(104,282		)
Present value of lease liabilities	$	61,168

Future Minimum Lease Payments

Future minimum lease payments due under non-cancellable leases under ASC 840 as of December 31, 2018 were as follows (in thousands):

2019	$	3,161
2020	3,156
2021	3,152
2022	3,164
2023	3,177
Thereafter	151,244
Total	$	167,054

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Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Summary of amounts used in calculating basic and diluted earnings (loss) per share

The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss) attributable to common stockholders - basic and diluted:
Net income (loss) attributable to the Company	$	(9,388	)	$	(1,869	)	$	(14,879	)	$	13,681
Less: Dividends on preferred stock	(2,533		)	(1,707		)	(7,597		)	(5,122		)
Less: Dividends on common stock	(5,177		)	(5,126		)	(15,508		)	(15,364		)
Less: Dividends on unvested performance stock units	(74		)	(72		)	(224		)	(216		)
Less: Dividends on unvested restricted shares	(88		)	(78		)	(272		)	(243		)
Undistributed net income (loss) allocated to common stockholders	(17,260		)	(8,852		)	(38,480		)	(7,264		)
Add back: Dividends on common stock	5,177			5,126			15,508			15,364
Distributed and undistributed net income (loss) - basic and diluted	$	(12,083	)	$	(3,726	)	$	(22,972	)	$	8,100
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic	32,347			32,023			32,259			31,905
Advisory services incentive fee shares	—			—			—			17
Weighted average common shares outstanding – diluted	32,347			32,023			32,259			31,922
Income (loss) per share - basic:
Net income (loss) allocated to common stockholders per share	$	(0.37	)	$	(0.12	)	$	(0.71	)	$	0.25
Income (loss) per share - diluted:
Net income (loss) allocated to common stockholders per share	$	(0.37	)	$	(0.12	)	$	(0.71	)	$	0.25

Summary of computation of diluted income per share

Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss) allocated to common stockholders is not adjusted for:
Income (loss) allocated to unvested restricted shares	$	88		$	78		$	272		$	243
Income (loss) allocated to unvested performance stock units	74			72			224			216
Income (loss) attributable to redeemable noncontrolling interests in operating partnership	(1,465		)	(452		)	(2,770		)	1,075
Dividends on preferred stock - Series B	1,708			1,707			5,122			5,122
Total	$	405		$	1,405		$	2,848		$	6,656
Weighted average diluted shares are not adjusted for:
Effect of unvested restricted shares	19			81			53			57
Effect of unvested performance stock units	165			52			206			23
Effect of assumed conversion of operating partnership units	4,162			4,173			4,229			4,137
Effect of assumed conversion of preferred stock - Series B	6,569			6,569			6,569			6,569
Effect of advisory services incentive fee shares	73			32			73			—
Total	10,988			10,907			11,130			10,786

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
ASSETS
Investments in hotel properties, gross	$ 1,768,160	$ 1,562,806
Accumulated depreciation	(296,557)	(262,905)
Investments in hotel properties, net	1,471,603	1,299,901
Cash and cash equivalents at end of period	82,583	182,578
Restricted cash	57,367	75,910
Accounts receivable, net of allowance of $128 and $101, respectively	19,657	12,739
Inventories	2,350	1,862
Prepaid expenses	6,376	4,409
Derivative assets	773	772
Operating lease right-of-use assets	82,976	0
Other assets	12,257	13,831
Intangible assets, net	5,114	27,678
Due from related party, net	817	0
Due from third-party hotel managers	18,019	4,927
Total assets	1,766,565	1,636,487
Liabilities:
Indebtedness, net	1,057,467	985,873
Accounts payable and accrued expenses	97,945	64,116
Dividends and distributions payable	9,502	8,514
Due to Ashford Inc.	4,749	4,001
Due to related party, net	0	224
Due to third-party hotel managers	2,172	1,633
Operating lease liabilities	61,168	0
Other liabilities	29,525	29,033
Total liabilities	1,262,528	1,093,394
Commitments and contingencies (note 16)
5.50% Series B cumulative convertible preferred stock, $0.01 par value, 4,965,850 shares issued and outstanding at September 30, 2019 and December 31, 2018	106,123	106,123
Redeemable noncontrolling interests in operating partnership	40,584	44,885
Preferred stock, $0.01 value, 50,000,000 shares authorized:
Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at September 30, 2019 and December 31, 2018	16	16
Common stock, $0.01 par value, 200,000,000 shares authorized, 32,900,422 and 32,511,660 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	329	325
Additional paid-in capital	518,304	512,545
Accumulated deficit	(155,024)	(115,410)
Total stockholders’ equity of the Company	363,625	397,476
Noncontrolling interest in consolidated entities	(6,295)	(5,391)
Total equity	357,330	392,085
Total liabilities and equity	1,766,565	1,636,487
Ashford Inc.
ASSETS
Investment in unconsolidated entity		10,114
Total assets	421,837	379,005
Liabilities:
Total liabilities	148,779	108,726
Redeemable noncontrolling interests in operating partnership	3,641	3,531
Preferred stock, $0.01 value, 50,000,000 shares authorized:
Total stockholders’ equity of the Company	66,467	65,443
Noncontrolling interest in consolidated entities	765	458
Total equity	67,232	65,901
Total liabilities and equity	421,837	379,005
OpenKey
ASSETS
Investment in unconsolidated entity	$ 1,949	$ 1,766

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Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands		Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Noncontrolling Interest in Consolidated Entities	Redeemable Noncontrolling Interests in Operating Partnership	Series B Preferred Stock	Series B Preferred Stock Accumulated Deficit	Series B Preferred Stock Preferred Stock	Series D Preferred Stock	Series D Preferred Stock Accumulated Deficit	Series D Preferred Stock Preferred Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
5.50% Series B Cumulative Convertible Preferred Stock										$ 106,123
Beginning balance (in shares) at Dec. 31, 2017			32,120							4,966			0
Beginning balance at Dec. 31, 2017		$ 376,552	$ 321	$ 469,791	$ (88,807)	$ (4,753)							$ 0
Beginning balance at Dec. 31, 2017							$ 46,627
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Purchase of common stock (in shares)			(19)
Purchase of common stock		(204)		(204)
Equity-based compensation		4,402		4,402			1,307
Issuance of restricted shares/units (in shares)			429
Issuance of restricted shares/units		58	$ 4	54			18
Forfeiture of restricted common shares (in shares)			(6)
Forfeiture of restricted common shares		0
Dividends declared – common stock		$ (15,823)			(15,823)
Dividends declared per common share (in dollars per share)		$ 0.48
Dividends declared – preferred stock		$ 0						$ (5,122)	$ (5,122)
Dividends declared per preferred share (in dollars per share)								$ 1.0312
Distributions to noncontrolling interests		(2,654)				(2,654)	(2,468)
Net income (loss)		13,681			13,681		1,075
Net income (loss)		15,423				1,742
Redemption value adjustment		(3,167)			(3,167)		3,167
Ending balance (in shares) at Sep. 30, 2018			32,524							4,966			0
Ending balance at Sep. 30, 2018		369,465	$ 325	474,043	(99,238)	(5,665)							$ 0
Ending balance at Sep. 30, 2018							49,726
Beginning balance (in shares) at Dec. 31, 2017			32,120							4,966			0
Beginning balance at Dec. 31, 2017		376,552	$ 321	469,791	(88,807)	(4,753)							$ 0
Beginning balance at Dec. 31, 2017							46,627
Ending balance (in shares) at Dec. 31, 2018			32,512							4,966			1,600
Ending balance at Dec. 31, 2018		392,085	$ 325	512,545	(115,410)	(5,391)							$ 16
Ending balance at Dec. 31, 2018		325
Ending balance at Dec. 31, 2018		512,545
Ending balance at Dec. 31, 2018		(115,410)
Ending balance at Dec. 31, 2018		44,885					44,885
Increase (Decrease) in Stockholders' Equity [Roll Forward]
5.50% Series B Cumulative Convertible Preferred Stock										$ 106,123
Beginning balance (in shares) at Jun. 30, 2018			32,502							4,966			0
Beginning balance at Jun. 30, 2018		380,248	$ 325	472,945	(87,777)	(5,245)							$ 0
Beginning balance at Jun. 30, 2018							47,818
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Purchase of common stock		(1)		(1)
Equity-based compensation		1,099		1,099			575
Issuance of restricted shares/units (in shares)			23
Issuance of restricted shares/units		0
Forfeiture of restricted common shares (in shares)			(1)
Forfeiture of restricted common shares		0
Dividends declared – common stock		$ (5,276)			(5,276)
Dividends declared per common share (in dollars per share)		$ 0.16
Dividends declared – preferred stock		$ 0						$ (1,707)	(1,707)
Dividends declared per preferred share (in dollars per share)								$ 0.3437
Distributions to noncontrolling interests		(2,115)				(2,115)	(824)
Net income (loss)		(1,869)			(1,869)		(452)
Net income (loss)		(174)				1,695
Redemption value adjustment		(2,609)			(2,609)		2,609
Ending balance (in shares) at Sep. 30, 2018			32,524							4,966			0
Ending balance at Sep. 30, 2018		369,465	$ 325	474,043	(99,238)	(5,665)							$ 0
Ending balance at Sep. 30, 2018							49,726
Increase (Decrease) in Stockholders' Equity [Roll Forward]
5.50% Series B Cumulative Convertible Preferred Stock										$ 106,123
5.50% Series B Cumulative Convertible Preferred Stock		106,123								$ 106,123
Beginning balance (in shares) at Dec. 31, 2018			32,512							4,966			1,600
Beginning balance at Dec. 31, 2018		392,085	$ 325	512,545	(115,410)	(5,391)							$ 16
Beginning balance at Dec. 31, 2018		44,885					44,885
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Impact of adoption of new accounting standard	[1]	(103)			(103)
Purchase of common stock (in shares)			(30)
Purchase of common stock		(384)		(384)
Equity-based compensation		3,959		3,959			1,949
Preferred stock offering costs		(13)		(13)
Issuance of restricted shares/units (in shares)			260
Issuance of restricted shares/units		0	$ 2	(2)			8
Forfeiture of restricted common shares (in shares)			(7)
Forfeiture of restricted common shares		0
Dividends declared – common stock		$ (16,004)			(16,004)
Dividends declared per common share (in dollars per share)		$ 0.48
Dividends declared – preferred stock		$ (2,475)						$ (5,122)	(5,122)		$ (2,475)	$ (2,475)
Dividends declared per preferred share (in dollars per share)								$ 1.0312			$ 1.5469
Distributions to noncontrolling interests		(2,654)				(2,654)	(2,318)
Redemption/conversion of operating partnership units			165
Redemption/conversion of operating partnership units		2,201	$ 2	2,199
Redemption/conversion of operating partnership units							(2,201)
Net income (loss)		(14,879)			(14,879)		(2,770)
Net income (loss)		(13,129)				1,750
Redemption value adjustment		(1,031)			(1,031)		1,031
Ending balance (in shares) at Sep. 30, 2019			32,900							4,966			1,600
Ending balance at Sep. 30, 2019		357,330	$ 329	518,304	(155,024)	(6,295)							$ 16
Ending balance at Sep. 30, 2019		329	$ 329
Ending balance at Sep. 30, 2019		518,304		518,304
Ending balance at Sep. 30, 2019		(155,024)			(155,024)
Ending balance at Sep. 30, 2019		40,584					40,584
Increase (Decrease) in Stockholders' Equity [Roll Forward]
5.50% Series B Cumulative Convertible Preferred Stock										$ 106,123
Beginning balance (in shares) at Jun. 30, 2019			32,880							4,966			1,600
Beginning balance at Jun. 30, 2019		373,730	$ 329	516,700	(137,775)	(5,540)							$ 16
Beginning balance at Jun. 30, 2019							42,075
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation		1,604		1,604			755
Issuance of restricted shares/units (in shares)			23
Issuance of restricted shares/units		0					1
Forfeiture of restricted common shares (in shares)			(3)
Forfeiture of restricted common shares		0
Dividends declared – common stock		$ (5,339)			(5,339)
Dividends declared per common share (in dollars per share)		$ 0.16
Dividends declared – preferred stock		$ (825)						$ (1,708)	$ (1,708)		$ (825)	$ (825)
Dividends declared per preferred share (in dollars per share)								$ 0.3437			$ 0.5156
Distributions to noncontrolling interests		(2,654)				(2,654)	(771)
Net income (loss)		(9,388)					(1,465)
Net income (loss)		(7,489)				1,899
Redemption value adjustment		11			11		(11)
Ending balance (in shares) at Sep. 30, 2019			32,900							4,966			1,600
Ending balance at Sep. 30, 2019		357,330	$ 329	518,304	(155,024)	$ (6,295)							$ 16
Ending balance at Sep. 30, 2019		329	$ 329
Ending balance at Sep. 30, 2019		518,304		$ 518,304
Ending balance at Sep. 30, 2019		(155,024)			$ (155,024)
Ending balance at Sep. 30, 2019		40,584					$ 40,584
Increase (Decrease) in Stockholders' Equity [Roll Forward]
5.50% Series B Cumulative Convertible Preferred Stock		$ 106,123								$ 106,123

[1] See note 18.

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Redeemable Noncontrolling Interests in Operating Partnership (Tables)

9 Months Ended

Sep. 30, 2019

Noncontrolling Interest [Abstract]

Schedule of Share-based Compensation

The following table presents compensation expense for Performance LTIP units and LTIP units (in thousands):

		Three Months Ended September 30,				Nine Months Ended September 30,
Type	Line Item	2019		2018		2019		2018
Performance LTIP units	Advisory services fee	$	297	$	245	$	847	$	539
LTIP units	Advisory services fee	355		269		999		707
LTIP units - independent directors	Corporate, general and administrative	103		61		103		61
		$	755	$	575	$	1,949	$	1,307

Redeemable Noncontrolling Interest

The following table presents the common units redeemed and the fair value upon redemption (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Common units converted to stock	—		—		165		—
Fair value of common units converted	$	—	$	—	$	2,201	$	—

The following table presents the redeemable noncontrolling interests in Braemar OP (in thousands) and the corresponding approximate ownership percentage of our operating partnership:

	September 30, 2019			December 31, 2018
Redeemable noncontrolling interests in Braemar OP	$	40,584		$	44,885
Adjustments to redeemable noncontrolling interests (1)	$	562		$	23
Ownership percentage of operating partnership	10.95		%	11.22		%

____________________________________

⁽¹⁾  Reflects the excess of the redemption value over the accumulated historical cost.

We allocated net income (loss) to the redeemable noncontrolling interests and declared aggregate cash distributions to the holders of common units and holders of LTIP units, which are recorded as a reduction of redeemable noncontrolling interests in operating partnership, as illustrated in the table below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	$	1,465	$	452	$	2,770	$	(1,075	)
Aggregate distributions to holders of common units, LTIP units and Performance LTIP units	771		824		2,318		2,468

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Braemar Hotels & Resorts Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All significant intercompany accounts and transactions between consolidated entities have been eliminated in these condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K, as originally filed with the Securities and Exchange Commission (“SEC”) on March 8, 2019, as subsequently amended.

Braemar OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC, its general partner. As such, we consolidate Braemar OP.

The following items affect reporting comparability of our historical condensed consolidated financial statements:

• historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three and nine months ended September 30, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019;

• on April 4, 2018, we acquired the Ritz-Carlton, Sarasota. The operating results of the hotel property have been included in the results of operations as of its acquisition date;

• on June 1, 2018, we sold the Tampa Renaissance; and

• on January 15, 2019, we acquired the Ritz-Carlton, Lake Tahoe. The operating results of the hotel property have been included in the results of operations as of its acquisition date.

Use of Estimates

Use of Estimates—The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Restricted Cash

Restricted Cash—Restricted cash includes reserves for debt service, real estate taxes and insurance, as well as excess cash flow deposits and reserves for furniture, fixtures and equipment (“FF&E”) replacements of approximately 4% to 5% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions.

Impairment of Investments in Hotel Properties

Impairment of Investments in Hotel Properties—Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property’s net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating the impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. Asset write-downs resulting from property damage are recorded up to the amount of the allocable property insurance deductible in the period that the property damage occurs. See note 4.

Investment in Ashford Inc.

Investment in Ashford Inc.—As of September 30, 2019, we held approximately 195,000 shares of Ashford Inc. common stock, which represented approximately 7.5% of the outstanding common stock in Ashford Inc., with a fair value of $4.7 million. This investment would typically be accounted for under the equity method of accounting, under Accounting Standard Codification (“ASC”) 323-10 - Investments - Equity Method and Joint Ventures since we exercise significant influence. However, we have elected to record our investment in Ashford Inc. using the fair value option under ASC 825-10 - Fair Value Option - Financial Assets and Financial Liabilities.

Investment in Unconsolidated Entity

Investment in Unconsolidated Entity—Investment in unconsolidated entity, in which we have ownership interest of 8.6% at September 30, 2019, is accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the entities’ net income/loss. We review our investment in unconsolidated entity for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any impairment is recorded in equity in earnings (loss) of unconsolidated entity. No such impairment was recorded for the three and nine months ended September 30, 2019 and 2018.

Our investment in unconsolidated entity is considered to be a variable interest in the underlying entity. VIEs, as defined by authoritative accounting guidance, must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct the unconsolidated entity’s activities and operations, we are not considered to be the primary beneficiary of this entity on an ongoing basis and therefore such entity should not be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions.

Leases

Leases—We determine if an arrangement is a lease at commencement date. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on our consolidated balance sheets. We currently do not have any finance leases.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. The lease terms used to calculate our right-of-use assets may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Equity-Based Compensation

Equity-Based Compensation—Prior to the adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) in the third quarter of 2018, stock/unit-based compensation for non-employees was accounted for at fair value based on the market price of the shares at period end that resulted in recording expense, included in “advisory services fee” and “management fees,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Performance stock units (“PSUs”) and Performance Long-Term Incentive Plan (“Performance LTIP”) units granted to certain executive officers were accounted for at fair value at period end based on a Monte Carlo simulation valuation model that resulted in recording expense, included in “advisory services fee,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Stock/unit grants to certain independent directors are recorded at fair value based on the market price of the shares/units at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant and included in “corporate general and administrative” expense in the condensed consolidated statements of operations.

After the adoption of ASU 2018-07 in the third quarter of 2018, stock/unit-based compensation for non-employees is measured at the grant date and expensed ratably over the vesting period based on the original measurement as of the grant date. This results in the recording of expense, included in “advisory services fee,” “management fees” and “corporate general and administrative” expense, equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. PSUs and Performance LTIP units granted to certain executive officers vest based on time and market conditions and are measured at the grant date fair value based on a Monte Carlo simulation valuation model. The subsequent expense is then ratably recognized over the service period as the service is rendered regardless of when, if ever, the market conditions are satisfied. This results in recording expense, included in “advisory services fee,” equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. Stock/unit grants to certain independent directors are measured at the grant date based on the market price of the shares/units at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant.

Recently Adopted and Issued Accounting Standards

Recently Adopted Accounting Standards—In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Under the new standard, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases ("ASU 2018-10") and ASU 2018-11, Leases (Topic 842), Targeted Improvements (“ASU 2018-11”). The amendments in ASU 2018-10 affect only narrow aspects of the guidance issued in the amendments in ASU 2016-02, including but not limited to lease residual value guarantee, rate implicit in the lease, lease term and purchase option. The amendments in ASU 2018-11 provide an optional transition method for adoption of the new standard, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. In December 2018, the FASB issued ASU 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors (“ASU 2018-20”). The amendments create a lessor practical expedient applicable to sales and other similar taxes incurred in connection with a lease, and simplify lessor accounting for lessor costs paid by the lessee.

We adopted the standard effective January 1, 2019 on a modified retrospective basis and implemented internal controls to enable the preparation of financial information on adoption. We elected the practical expedients which provide us the option to apply the new guidance at its effective date on January 1, 2019 without having to adjust the comparative prior period financial statements. The package of practical expedients also allowed us to carry forward the historical lease classification. Additionally, we elected the practical expedients allowing us not to separate lease and non-lease components and not record leases with an initial term of twelve months or less (“short-term leases”) on the balance sheet across all existing asset classes.

The adoption of this standard has resulted in the recognition of ROU assets and lease liabilities primarily related to our ground lease arrangements for which we are the lessee. As of January 1, 2019, we recorded operating lease liabilities of $60.6 million as well as a corresponding operating lease ROU asset of $82.5 million, which includes, among other things, the reclassified intangible assets of $22.3 million. The standard did not have a material impact on our condensed consolidated statements of operations and statements of cash flows. See related disclosures in note 5.

Recently Issued Accounting Standards—In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The ASU sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses (“ASU 2018-19”). ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. We are currently evaluating the impact that ASU 2016-13 will have on our condensed consolidated financial statements and related disclosures.

Revenue Recognition

Rooms revenue represents revenues from the occupancy of our hotel rooms and is driven by the occupancy and average daily rate charged. Rooms revenue includes revenue for guest no-shows, day use, and early/late departure fees. The contracts for room stays with customers are generally short in duration and revenues are recognized as services are provided over the course of the hotel stay.

Food & Beverage (“F&B”) revenue consists of revenue from the restaurants and lounges at our hotel properties, in-room dining and mini-bars revenue, and banquet/catering revenue from group and social functions. Other F&B revenue may include revenue from audio visual equipment/services, rental of function rooms, and other F&B related revenues. Revenue is recognized as the services or products are provided. Our hotel properties may employ third parties to provide certain services at the property, for example, audio visual services. We evaluate each of these contracts to determine if the hotel is the principal or the agent in the transaction, and record the revenues as appropriate (i.e. gross vs. net).

Other revenue consists of ancillary revenue at the property, including attrition and cancellation fees, condo management fees, resort and destination fees, health center fees, spas, golf, telecommunications, parking, entertainment, business interruption revenue and other guest services, as well as rental revenue primarily from leased retail outlets at our hotel properties, and membership initiation fees and dues, primarily from club memberships. Cancellation fees are recognized from non-cancellable deposits when the customer provides notification of cancellation in accordance with established management policy time frames. Non-refundable membership initiation fees are recognized over the expected life of an active membership.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Restricted Cash—Under certain management and debt agreements for our hotel properties existing at September 30, 2019, escrow payments are required for insurance, real estate taxes and debt service. In addition, for certain properties based on the terms of the underlying debt and management agreements, we escrow 4% to 5% of gross revenues for capital improvements.

Management Fees—Under property management agreements for our hotel properties existing at September 30, 2019, we pay a monthly property management fee equal to the greater of $14,000 (increased annually based on consumer price index adjustments) or 3% of gross revenues, or in some cases 2% to 7% of gross revenues, as well as annual incentive management fees, if applicable. These management agreements expire from May 2023 through December 2065, with renewal options. If we terminate a management agreement prior to its expiration, we may be liable for estimated management fees through the remaining term, liquidated damages or, in certain circumstances, we may substitute a new management agreement.

Income Taxes—We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years 2015 through 2018 remain subject to potential examination by certain federal and state taxing authorities.

Litigation—We are engaged in various legal proceedings which have arisen but have not been fully adjudicated. The likelihood of loss from these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible and to probable. Based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position or results of operations. However, the final results of legal proceedings cannot be predicted with certainty and if we fail to prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position or results of operations could be materially adversely affected in future periods.

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Summary of Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2019

Investments, All Other Investments [Abstract]

Summary of Fair Value of Financial Instruments

Summary of Fair Value of Financial Instruments

Determining the estimated fair values of certain financial instruments such as notes receivable and indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.

The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):

	September 30, 2019				December 31, 2018
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets and liabilities measured at fair value:
Investment in Ashford Inc.	$	4,724	$	4,724	$	10,114	$	10,114
Derivative assets	773		773		772		772
Financial assets not measured at fair value:
Cash and cash equivalents	$	82,583	$	82,583	$	182,578	$	182,578
Restricted cash	57,367		57,367		75,910		75,910
Accounts receivable, net	19,657		19,657		12,739		12,739
Due from related party, net	817		817		—		—
Due from third-party hotel managers	18,019		18,019		4,927		4,927
Financial liabilities not measured at fair value:
Indebtedness	$	1,065,000	$994,975 to $1,099,709		$	992,586	$936,904 to $1,035,526
Accounts payable and accrued expenses	97,945		97,945		64,116		64,116
Dividends and distributions payable	9,502		9,502		8,514		8,514
Due to Ashford Inc.	4,749		4,749		4,001		4,001
Due to related party, net	—		—		224		224
Due to third-party hotel managers	2,172		2,172		1,633		1,633

Cash, cash equivalents and restricted cash. These financial assets have maturities of less than 90 days and most bear interest at market rates. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique.

Accounts receivable, net, due to/from related party, net, accounts payable and accrued expenses, dividends and distributions payable, due to Ashford Inc. and due to/from third-party hotel managers. The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.

Investment in Ashford Inc. Fair value of the investment in Ashford Inc. is based on the quoted closing price on the balance sheet date. This is considered a Level 1 valuation technique.

Derivative assets. Fair value of interest rate caps is determined using the net present value of expected cash flows of each derivative based on the market-based interest rate curve and adjusted for credit spreads of us and our counterparties. Fair value of credit default swaps are obtained from a third party who publishes the CMBX index composition and price data. Fair values of interest rate floors are calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor. See notes 10 and 11 for a complete description of the methodology and assumptions utilized in determining fair values.

Indebtedness. Fair value of indebtedness is determined using future cash flows discounted at current replacement rates for these instruments. Cash flows are determined using a forward interest rate yield curve. The current replacement rates are determined by using the U.S. Treasury yield curve or the index to which these financial instruments are tied, and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral. We estimated the fair value of the total indebtedness to be approximately 93.4% to 103.3% of the carrying value of $1.1 billion at September 30, 2019, and approximately 94.4% to 104.3% of the carrying value of $992.6 million at December 31, 2018. This is considered a Level 2 valuation technique.

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5.5% Series B Cumulative Convertible Preferred Stock (Tables)

9 Months Ended

Sep. 30, 2019

Temporary Equity Disclosure [Abstract]

Schedule of Dividends Declared

The following table summarizes dividends declared (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Series B Convertible Preferred Stock	$	1,708	$	1,707	$	5,122	$	5,122

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Revenue (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) hotel	Sep. 30, 2018 USD ($) hotel	Sep. 30, 2019 USD ($) hotel	Sep. 30, 2018 USD ($) hotel
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	13	13	13	13
Total revenue	$ 118,884,000	$ 108,846,000	$ 365,913,000	$ 332,453,000
California
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	5	4	5	4
Total revenue	$ 45,701,000	$ 33,981,000	$ 127,737,000	$ 95,428,000
Colorado
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	1	1	1	1
Total revenue	$ 9,069,000	$ 8,728,000	$ 31,688,000	$ 32,124,000
Florida
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	2	2	2	2
Total revenue	$ 15,666,000	$ 15,949,000	$ 65,796,000	$ 44,008,000
Illinois
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	1	1	1	1
Total revenue	$ 10,217,000	$ 10,764,000	$ 26,017,000	$ 26,367,000
Pennsylvania
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	1	1	1	1
Total revenue	$ 8,459,000	$ 8,826,000	$ 22,149,000	$ 26,822,000
Washington
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	1	1	1	1
Total revenue	$ 12,392,000	$ 13,214,000	$ 29,637,000	$ 31,757,000
Washington, D.C.
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	1	1	1	1
Total revenue	$ 12,955,000	$ 11,631,000	$ 43,835,000	$ 42,239,000
USVI
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	1	1	1	1
Total revenue	$ 4,423,000	$ 5,753,000	$ 19,047,000	$ 19,171,000
Sold hotel properties
Disaggregation of Revenue [Line Items]
Number of hotels | hotel		1		1
Total revenue				$ 14,537,000
Corporate entities
Disaggregation of Revenue [Line Items]
Number of hotels | hotel	0		0
Total revenue	$ 2,000		$ 7,000
Rooms
Disaggregation of Revenue [Line Items]
Total revenue	76,808,000	$ 74,358,000	228,660,000	218,304,000
Rooms | California
Disaggregation of Revenue [Line Items]
Total revenue	32,070,000	26,368,000	88,533,000	69,007,000
Rooms | Colorado
Disaggregation of Revenue [Line Items]
Total revenue	3,086,000	3,178,000	14,059,000	14,736,000
Rooms | Florida
Disaggregation of Revenue [Line Items]
Total revenue	8,234,000	8,194,000	34,674,000	24,474,000
Rooms | Illinois
Disaggregation of Revenue [Line Items]
Total revenue	7,501,000	8,157,000	19,053,000	19,359,000
Rooms | Pennsylvania
Disaggregation of Revenue [Line Items]
Total revenue	6,675,000	7,137,000	18,169,000	21,641,000
Rooms | Washington
Disaggregation of Revenue [Line Items]
Total revenue	10,361,000	11,035,000	23,378,000	25,587,000
Rooms | Washington, D.C.
Disaggregation of Revenue [Line Items]
Total revenue	8,889,000	8,638,000	29,960,000	30,390,000
Rooms | USVI
Disaggregation of Revenue [Line Items]
Total revenue	(8,000)	1,651,000	834,000	4,939,000
Rooms | Sold hotel properties
Disaggregation of Revenue [Line Items]
Total revenue				8,171,000
Rooms | Corporate entities
Disaggregation of Revenue [Line Items]
Total revenue	0		0
Food and Beverage
Disaggregation of Revenue [Line Items]
Total revenue	26,422,000	21,171,000	84,326,000	70,064,000
Food and Beverage | California
Disaggregation of Revenue [Line Items]
Total revenue	9,190,000	5,209,000	27,311,000	18,163,000
Food and Beverage | Colorado
Disaggregation of Revenue [Line Items]
Total revenue	3,615,000	3,112,000	9,867,000	9,676,000
Food and Beverage | Florida
Disaggregation of Revenue [Line Items]
Total revenue	4,124,000	4,335,000	18,811,000	12,191,000
Food and Beverage | Illinois
Disaggregation of Revenue [Line Items]
Total revenue	2,250,000	2,280,000	5,796,000	6,100,000
Food and Beverage | Pennsylvania
Disaggregation of Revenue [Line Items]
Total revenue	1,474,000	1,422,000	3,187,000	4,314,000
Food and Beverage | Washington
Disaggregation of Revenue [Line Items]
Total revenue	1,649,000	1,799,000	5,070,000	5,164,000
Food and Beverage | Washington, D.C.
Disaggregation of Revenue [Line Items]
Total revenue	3,688,000	2,729,000	12,679,000	10,965,000
Food and Beverage | USVI
Disaggregation of Revenue [Line Items]
Total revenue	432,000	285,000	1,605,000	616,000
Food and Beverage | Sold hotel properties
Disaggregation of Revenue [Line Items]
Total revenue				2,875,000
Food and Beverage | Corporate entities
Disaggregation of Revenue [Line Items]
Total revenue	0		0
Other Hotel
Disaggregation of Revenue [Line Items]
Total revenue	15,652,000	13,317,000	52,920,000	44,085,000
Other Hotel | California
Disaggregation of Revenue [Line Items]
Total revenue	4,441,000	2,404,000	11,893,000	8,258,000
Other Hotel | Colorado
Disaggregation of Revenue [Line Items]
Total revenue	2,368,000	2,438,000	7,762,000	7,712,000
Other Hotel | Florida
Disaggregation of Revenue [Line Items]
Total revenue	3,308,000	3,420,000	12,311,000	7,343,000
Other Hotel | Illinois
Disaggregation of Revenue [Line Items]
Total revenue	466,000	327,000	1,168,000	908,000
Other Hotel | Pennsylvania
Disaggregation of Revenue [Line Items]
Total revenue	310,000	267,000	793,000	867,000
Other Hotel | Washington
Disaggregation of Revenue [Line Items]
Total revenue	382,000	380,000	1,189,000	1,006,000
Other Hotel | Washington, D.C.
Disaggregation of Revenue [Line Items]
Total revenue	378,000	264,000	1,196,000	884,000
Other Hotel | USVI
Disaggregation of Revenue [Line Items]
Total revenue	3,999,000	3,817,000	16,608,000	13,616,000
Other Hotel | Sold hotel properties
Disaggregation of Revenue [Line Items]
Total revenue				3,491,000
Other Hotel | Corporate entities
Disaggregation of Revenue [Line Items]
Total revenue	0		0
Other
Disaggregation of Revenue [Line Items]
Total revenue	2,000	0	7,000	0
Other | California
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Other | Colorado
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Other | Florida
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Other | Illinois
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Other | Pennsylvania
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Other | Washington
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Other | Washington, D.C.
Disaggregation of Revenue [Line Items]
Total revenue	0	0	0	0
Other | USVI
Disaggregation of Revenue [Line Items]
Total revenue	0	$ 0	0	0
Other | Sold hotel properties
Disaggregation of Revenue [Line Items]
Total revenue				$ 0
Other | Corporate entities
Disaggregation of Revenue [Line Items]
Total revenue	2,000		7,000
Total hotel revenue
Disaggregation of Revenue [Line Items]
Number of hotels | hotel		12		12
Total revenue	118,882,000	$ 108,846,000	365,906,000	$ 332,453,000
Bardessono Hotel and Hotel Yountville
Disaggregation of Revenue [Line Items]
Revenue from business interruption losses		0		1,900,000
Insurance deductible		500,000		500,000
Tampa Renaissance
Disaggregation of Revenue [Line Items]
Business interruption income		0		3,300,000
Other Hotel Revenue
Disaggregation of Revenue [Line Items]
Revenue from business interruption losses	$ 4,000,000	$ 3,800,000	$ 16,600,000	$ 13,900,000

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Leases - Narrative and Lease Balances (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating lease liabilities	$ 61,168		$ 0
Operating lease right-of-use assets	$ 82,976		$ 0
ASU 2016-02
Lessee, Lease, Description [Line Items]
Operating lease liabilities		$ 60,600
Operating lease right-of-use assets		82,500
Reclassified intangible assets		$ 22,300
Minimum
Lessee, Lease, Description [Line Items]
Lease renewal term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Lease renewal term	50 years

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Segment Reporting (Details)	9 Months Ended
	Sep. 30, 2019 segment
Segment Reporting [Abstract]
Number of operating segments	1

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Redeemable Noncontrolling Interests in Operating Partnership (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2017
Noncontrolling Interest [Line Items]
Redeemable noncontrolling interests in Braemar OP	$ 40,584		$ 40,584		$ 44,885
Adjustments to redeemable noncontrolling interests	$ 11	$ (2,609)	$ (1,031)	$ (3,167)
Ownership percentage of operating partnership	25.00%		25.00%		25.00%
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	$ 1,465	452	$ 2,770	(1,075)
Aggregate distributions to holders of common units, LTIP units and Performance LTIP units	$ 771	824	2,318	2,468
Braemar OP
Noncontrolling Interest [Line Items]
Adjustments to redeemable noncontrolling interests			$ 562		$ 23
Ownership percentage of operating partnership	10.95%		10.95%		11.22%
Advisory Services Fee
Noncontrolling Interest [Line Items]
Equity-based compensation expense	$ 755	575	$ 1,949	1,307
Performance Long Term Incentive Plan Units
Noncontrolling Interest [Line Items]
Other than options (in shares)	552		552
Units which have not reached full economic parity with the common units (in shares)	60		60
Compensation not yet recognized	$ 1,300		$ 1,300
Period for recognition			2 years 3 months 18 days
Weighted period of recognition			10 months 24 days
Performance Long Term Incentive Plan Units | Advisory Services Fee
Noncontrolling Interest [Line Items]
Equity-based compensation expense	$ 297	245	$ 847	539
Performance Long Term Incentive Plan Units | Minimum
Noncontrolling Interest [Line Items]
Award performance target			0.00%
Performance Long Term Incentive Plan Units | Maximum
Noncontrolling Interest [Line Items]
Award performance target			200.00%
Long Term Incentive Plan Units
Noncontrolling Interest [Line Items]
Award vesting period			3 years
Other than options (in shares)	1,300		1,300
Units which have not reached full economic parity with the common units (in shares)	100		100
Compensation not yet recognized	$ 1,900		$ 1,900
Period for recognition			2 years 4 months 24 days
Weighted period of recognition			1 year 7 months 6 days
Long Term Incentive Plan Units | Advisory Services Fee
Noncontrolling Interest [Line Items]
Equity-based compensation expense	355	269	$ 999	707
Long Term Incentive Plan Units | Corporate General and Administrative Expense
Noncontrolling Interest [Line Items]
Equity-based compensation expense	$ 103	$ 61	$ 103	$ 61
Operating Partnership Units
Noncontrolling Interest [Line Items]
Common units redeemed (in shares)	0	0	165	0
Redemption/conversion of operating partnership units	$ 0	$ 0	$ 2,201	$ 0
Redeemable noncontrolling interests in Braemar OP
Noncontrolling Interest [Line Items]
Redemption/conversion of operating partnership units			2,201
Redeemable noncontrolling interests in Braemar OP	40,584	49,726	40,584	49,726	$ 44,885	$ 42,075	$ 47,818	$ 46,627
Adjustments to redeemable noncontrolling interests	$ (11)	$ 2,609	$ 1,031	$ 3,167

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Income (Loss) Per Share (Reconciliation) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income (loss) attributable to common stockholders - basic and diluted:
Net income (loss) attributable to the Company	$ (9,388)	$ (1,869)	$ (14,879)	$ 13,681
Less: Dividends on preferred stock	(2,533)	(1,707)	(7,597)	(5,122)
Undistributed net income (loss) allocated to common stockholders	(17,260)	(8,852)	(38,480)	(7,264)
Distributed and undistributed net income (loss) - basic and diluted	$ (12,083)	$ (3,726)	$ (22,972)	$ 8,100
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic (in shares)	32,347	32,023	32,259	31,905
Advisory services incentive fee shares (in shares)	0	0	0	17
Weighted average common shares outstanding – diluted (in shares)	32,347	32,023	32,259	31,922
Income (loss) per share - basic:
Net income (loss) allocated to common stockholders per share (in dollars per share)	$ (0.37)	$ (0.12)	$ (0.71)	$ 0.25
Income (loss) per share - diluted:
Net income (loss) allocated to common stockholders per share (in dollars per share)	$ (0.37)	$ (0.12)	$ (0.71)	$ 0.25
Performance Shares
Net income (loss) attributable to common stockholders - basic and diluted:
Dividends	$ (74)	$ (72)	$ (224)	$ (216)
Restricted Stock
Net income (loss) attributable to common stockholders - basic and diluted:
Dividends	(88)	(78)	(272)	(243)
Common Stock
Net income (loss) attributable to common stockholders - basic and diluted:
Dividends	$ (5,177)	$ (5,126)	$ (15,508)	$ (15,364)

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Leases - Future Minimum Lease Payments (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 3,161
2020	3,156
2021	3,152
2022	3,164
2023	3,177
Thereafter	151,244
Total	$ 167,054

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Investment in Unconsolidated Entity (Tables)

9 Months Ended

Sep. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

The following table summarizes our carrying value and ownership interest in OpenKey:

	September 30, 2019			December 31, 2018
Carrying value of the investment in OpenKey (in thousands)	$	1,949		$	1,766
Ownership interest in OpenKey	8.6		%	8.2		%

The following table summarizes our equity in earnings (loss) in OpenKey (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Line Item	2019			2018			2019			2018
Equity in earnings (loss) of unconsolidated entity	$	(48	)	$	(81	)	$	(149	)	$	(146	)

Ashford Inc.

Condensed Consolidated Balance Sheets

(unaudited)

	September 30, 2019		December 31, 2018
Total assets	$	421,837	$	379,005
Total liabilities	148,779		108,726
Series B Convertible Preferred Stock	202,185		200,847
Redeemable noncontrolling interests	3,641		3,531
Total stockholders’ equity of Ashford Inc.	66,467		65,443
Noncontrolling interests in consolidated entities	765		458
Total equity	67,232		65,901
Total liabilities and equity	$	421,837	$	379,005
Our investment in Ashford Inc., at fair value	$	4,724	$	10,114

Ashford Inc.

Condensed Consolidated Statements of Operations

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total revenue	$	56,889		$	41,565		$	183,675		$	144,544
Total operating expenses	(63,690		)	(53,069		)	(186,991		)	(150,214		)
Operating income (loss)	(6,801		)	(11,504		)	(3,316		)	(5,670		)
Equity in earnings (loss) of unconsolidated entities	464			—			(109		)	—
Interest expense and loan amortization cost	(531		)	(419		)	(1,412		)	(770		)
Other income (expense)	(20		)	25			(86		)	(50		)
Income tax (expense) benefit	297			13,904			(1,429		)	11,593
Net income (loss)	(6,591		)	2,006			(6,352		)	5,103
(Income) loss from consolidated entities attributable to noncontrolling interests	101			413			395			704
Net (income) loss attributable to redeemable noncontrolling interests	334			968			623			817
Net income (loss) attributable to Ashford Inc.	$	(6,156	)	$	3,387		$	(5,334	)	$	6,624
Preferred dividends	(2,909		)	(1,675		)	(8,492		)	(1,675		)
Amortization of preferred stock discount	(363		)	(303		)	(1,338		)	(303		)
Net income attributable to common stockholders	$	(9,428	)	$	1,409		$	(15,164	)	$	4,646
Our unrealized gain (loss) on investment in Ashford Inc.	$	(1,471	)	$	2,158		$	(5,390	)	$	(3,338	)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):

	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting(1)		Total
September 30, 2019
Assets
Derivative assets:
Interest rate derivatives - floors	$	—	$	100		$	—	$	52	$	152
Interest rate derivatives - caps	—		2			—		—		2
Credit default swaps	—		(459		)	—		1,078		619
	—		(357		)	—		1,130		773		(2)
Non-derivative assets:
Investment in Ashford Inc.	4,724		—			—		—		4,724
Total	$	4,724	$	(357	)	$	—	$	1,130	$	5,497

	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting(1)		Total
December 31, 2018
Assets
Derivative assets:
Interest rate derivatives - floors	$	—	$	76	$	—	$	73	$	149
Interest rate derivatives - caps	—		20		—		—		20
Credit default swaps	—		546		—		57		603
	—		642		—		130		772		(2)
Non-derivative assets:
Investment in Ashford Inc.	10,114		—		—		—		10,114
Total	$	10,114	$	642	$	—	$	130	$	10,886

__________________

⁽¹⁾  Represents net cash collateral posted between us and our counterparties.

⁽²⁾  Reported as “derivative assets” in our condensed consolidated balance sheets.

Effect of Fair Value Measured Assets and Liabilities on Consolidated Statements of Operations

The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands):

	Gain (Loss) Recognized in Income
	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
Assets
Derivative assets:
Interest rate derivatives - floors	$	(717	)		$	(134	)		$	(51	)		$	(218	)
Interest rate derivatives - caps	(26		)		(10		)		(107		)		(271		)
Credit default swaps	(61		)	(1)	(434		)	(1)	(1,004		)	(1)	(314		)	(1)
Total derivative assets	$	(804	)		$	(578	)		$	(1,162	)		$	(803	)
Non-derivative assets:
Investment in Ashford Inc.	(1,471		)		2,158				(5,390		)		(3,338		)
Total	$	(2,275	)		$	1,580			$	(6,552	)		$	(4,141	)
Total combined
Interest rate derivatives - floors	$	(667	)		$	(134	)		$	139			$	(218	)
Interest rate derivatives - caps	(26		)		(10		)		(107		)		(271		)
Credit default swaps	$	(61	)		(434		)		$	(1,004	)		(314		)
Unrealized gain (loss) on derivatives	(754		)		(578		)		(972		)		(803		)
Realized gain (loss) on interest rate floors	(50		)	(2)	—				(190		)	(2)	—
Unrealized gain (loss) on investment in Ashford Inc.	(1,471		)		2,158				(5,390		)		(3,338		)
Net	$	(2,275	)		$	1,580			$	(6,552	)		$	(4,141	)

_______________

⁽¹⁾  Excludes costs associated with credit default swaps of $64 for both the three months ended September 30, 2019 and 2018 and $190 for both the nine months endedSeptember 30, 2019 and 2018, respectively, which is included in “other income (expense)” in our condensed consolidated statements of operations.

⁽²⁾  Included in “other income (expense)” in our condensed consolidated statements of operations.

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Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$ 82,583	$ 182,578	$ 163,825	$ 137,522
Restricted cash	57,367	75,910	74,973	47,820
Cash, cash equivalents and restricted cash	$ 139,950	$ 258,488	$ 238,798	$ 185,342

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
REVENUE
Total revenue	$ 118,884,000	$ 108,846,000	$ 365,913,000	$ 332,453,000
Hotel operating expenses:
Total hotel expenses	79,147,000	68,816,000	238,378,000	204,843,000
Property taxes, insurance and other	7,690,000	6,835,000	20,356,000	18,516,000
Depreciation and amortization	16,831,000	14,474,000	51,991,000	42,291,000
Impairment charges	0	0	0	71,000
Advisory services fee	5,158,000	5,733,000	15,579,000	15,857,000
Transaction costs	0	0	704,000	949,000
Corporate general and administrative	1,575,000	1,765,000	3,633,000	2,999,000
Total expenses	110,401,000	97,623,000	330,641,000	285,526,000
Gain (loss) on disposition of assets and sale of hotel property	(1,163,000)	0	(1,154,000)	15,711,000
Operating income (loss)	7,320,000	11,223,000	34,118,000	62,638,000
Equity in earnings (loss) of unconsolidated entity	(48,000)	(81,000)	(149,000)	(146,000)
Interest income	249,000	540,000	898,000	970,000
Other income (expense)	(114,000)	(64,000)	(370,000)	(190,000)
Interest expense and amortization of loan costs	(13,646,000)	(13,084,000)	(41,894,000)	(35,941,000)
Write-off of loan costs and exit fees	(335,000)	0	(647,000)	(4,178,000)
Unrealized gain (loss) on investment in Ashford Inc.	(1,471,000)	2,158,000	(5,390,000)	(3,338,000)
Unrealized gain (loss) on derivatives	(754,000)	(578,000)	(972,000)	(803,000)
INCOME (LOSS) BEFORE INCOME TAXES	(8,799,000)	114,000	(14,406,000)	19,012,000
Income tax (expense) benefit	(155,000)	(740,000)	(1,493,000)	(2,514,000)
NET INCOME (LOSS)	(8,954,000)	(626,000)	(15,899,000)	16,498,000
(Income) loss attributable to noncontrolling interest in consolidated entities	(1,899,000)	(1,695,000)	(1,750,000)	(1,742,000)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	1,465,000	452,000	2,770,000	(1,075,000)
Net income (loss) attributable to Ashford Inc.	(9,388,000)	(1,869,000)	(14,879,000)	13,681,000
Preferred dividends	(2,533,000)	(1,707,000)	(7,597,000)	(5,122,000)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (11,921,000)	$ (3,576,000)	$ (22,476,000)	$ 8,559,000
INCOME (LOSS) PER SHARE - BASIC:
Net income (loss) attributable to common stockholders (in dollars per share)	$ (0.37)	$ (0.12)	$ (0.71)	$ 0.25
Weighted average common shares outstanding – basic (in shares)	32,347	32,023	32,259	31,905
INCOME (LOSS) PER SHARE - DILUTED:
Net income (loss) attributable to common stockholders (in dollars per share)	$ (0.37)	$ (0.12)	$ (0.71)	$ 0.25
Weighted average common shares outstanding – diluted (in shares)	32,347	32,023	32,259	31,922
Total hotel revenue
REVENUE
Total revenue	$ 118,882,000	$ 108,846,000	$ 365,906,000	$ 332,453,000
Rooms
REVENUE
Total revenue	76,808,000	74,358,000	228,660,000	218,304,000
Hotel operating expenses:
Total hotel expenses	18,265,000	16,624,000	52,080,000	48,194,000
Food and beverage
REVENUE
Total revenue	26,422,000	21,171,000	84,326,000	70,064,000
Hotel operating expenses:
Total hotel expenses	20,721,000	16,171,000	62,325,000	49,078,000
Other
REVENUE
Total revenue	15,652,000	13,317,000	52,920,000	44,085,000
Hotel operating expenses:
Total hotel expenses	36,201,000	32,058,000	111,431,000	95,490,000
Other
REVENUE
Total revenue	2,000	0	7,000	0
Management fees
Hotel operating expenses:
Total hotel expenses	$ 3,960,000	$ 3,963,000	$ 12,542,000	$ 12,081,000

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Hotel Dispositions

9 Months Ended

Sep. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Hotel Dispositions

Hotel Dispositions

On June 1, 2018, the Company sold the Tampa Renaissance hotel for $68.0 million in cash. The sale resulted in a gain of $15.7 million for the year ended December 31, 2018 and was included in “gain (loss) on disposition of assets and sale of hotel property” in our condensed consolidated statements of operations. Since the sale of the hotel property did not represent a strategic shift that has (or will have) a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in our condensed consolidated financial statements.

We included the results of operations of this hotel property through the date of disposition in net income (loss) as shown in our condensed consolidated statements of operations for the three and nine months ended September 30, 2018. The following table includes the condensed financial information from this hotel property (in thousands):

	Nine Months Ended September 30,
	2018
Total hotel revenue	$	14,537
Total hotel operating expenses	(7,500		)
Property taxes, insurance and other	(486		)
Depreciation and amortization	(1,294		)
Impairment charges	(12		)
Gain (loss) on disposition of assets and sale of hotel property	15,711
Operating income (loss)	20,956
Interest expense and amortization of loan costs	(791		)
Income (loss) before income taxes	20,165
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership	(2,253		)
Income (loss) before income taxes attributable to the Company	$	17,912

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Basis of Presentation and Principles of Consolidation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Braemar Hotels & Resorts Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All significant intercompany accounts and transactions between consolidated entities have been eliminated in these condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K, as originally filed with the Securities and Exchange Commission (“SEC”) on March 8, 2019, as subsequently amended.

Braemar OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC, its general partner. As such, we consolidate Braemar OP.

The following items affect reporting comparability of our historical condensed consolidated financial statements:

• historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three and nine months ended September 30, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019;

• on April 4, 2018, we acquired the Ritz-Carlton, Sarasota. The operating results of the hotel property have been included in the results of operations as of its acquisition date;

• on June 1, 2018, we sold the Tampa Renaissance; and

• on January 15, 2019, we acquired the Ritz-Carlton, Lake Tahoe. The operating results of the hotel property have been included in the results of operations as of its acquisition date.

Use of Estimates—The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Restricted Cash—Restricted cash includes reserves for debt service, real estate taxes and insurance, as well as excess cash flow deposits and reserves for furniture, fixtures and equipment (“FF&E”) replacements of approximately 4% to 5% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions.

Impairment of Investments in Hotel Properties—Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property’s net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating the impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. Asset write-downs resulting from property damage are recorded up to the amount of the allocable property insurance deductible in the period that the property damage occurs. See note 4.

Investment in Ashford Inc.—As of September 30, 2019, we held approximately 195,000 shares of Ashford Inc. common stock, which represented approximately 7.5% of the outstanding common stock in Ashford Inc., with a fair value of $4.7 million. This investment would typically be accounted for under the equity method of accounting, under Accounting Standard Codification (“ASC”) 323-10 - Investments - Equity Method and Joint Ventures since we exercise significant influence. However, we have elected to record our investment in Ashford Inc. using the fair value option under ASC 825-10 - Fair Value Option - Financial Assets and Financial Liabilities. See note 19.

Investment in Unconsolidated Entity—Investment in unconsolidated entity, in which we have ownership interest of 8.6% at September 30, 2019, is accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the entities’ net income/loss. We review our investment in unconsolidated entity for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any impairment is recorded in equity in earnings (loss) of unconsolidated entity. No such impairment was recorded for the three and nine months ended September 30, 2019 and 2018.

Our investment in unconsolidated entity is considered to be a variable interest in the underlying entity. VIEs, as defined by authoritative accounting guidance, must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct the unconsolidated entity’s activities and operations, we are not considered to be the primary beneficiary of this entity on an ongoing basis and therefore such entity should not be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions.

Leases—We determine if an arrangement is a lease at commencement date. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on our consolidated balance sheets. We currently do not have any finance leases.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. The lease terms used to calculate our right-of-use assets may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Equity-Based Compensation—Prior to the adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) in the third quarter of 2018, stock/unit-based compensation for non-employees was accounted for at fair value based on the market price of the shares at period end that resulted in recording expense, included in “advisory services fee” and “management fees,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Performance stock units (“PSUs”) and Performance Long-Term Incentive Plan (“Performance LTIP”) units granted to certain executive officers were accounted for at fair value at period end based on a Monte Carlo simulation valuation model that resulted in recording expense, included in “advisory services fee,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Stock/unit grants to certain independent directors are recorded at fair value based on the market price of the shares/units at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant and included in “corporate general and administrative” expense in the condensed consolidated statements of operations.

After the adoption of ASU 2018-07 in the third quarter of 2018, stock/unit-based compensation for non-employees is measured at the grant date and expensed ratably over the vesting period based on the original measurement as of the grant date. This results in the recording of expense, included in “advisory services fee,” “management fees” and “corporate general and administrative” expense, equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. PSUs and Performance LTIP units granted to certain executive officers vest based on time and market conditions and are measured at the grant date fair value based on a Monte Carlo simulation valuation model. The subsequent expense is then ratably recognized over the service period as the service is rendered regardless of when, if ever, the market conditions are satisfied. This results in recording expense, included in “advisory services fee,” equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. Stock/unit grants to certain independent directors are measured at the grant date based on the market price of the shares/units at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant.

Recently Adopted Accounting Standards—In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Under the new standard, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases ("ASU 2018-10") and ASU 2018-11, Leases (Topic 842), Targeted Improvements (“ASU 2018-11”). The amendments in ASU 2018-10 affect only narrow aspects of the guidance issued in the amendments in ASU 2016-02, including but not limited to lease residual value guarantee, rate implicit in the lease, lease term and purchase option. The amendments in ASU 2018-11 provide an optional transition method for adoption of the new standard, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. In December 2018, the FASB issued ASU 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors (“ASU 2018-20”). The amendments create a lessor practical expedient applicable to sales and other similar taxes incurred in connection with a lease, and simplify lessor accounting for lessor costs paid by the lessee.

We adopted the standard effective January 1, 2019 on a modified retrospective basis and implemented internal controls to enable the preparation of financial information on adoption. We elected the practical expedients which provide us the option to apply the new guidance at its effective date on January 1, 2019 without having to adjust the comparative prior period financial statements. The package of practical expedients also allowed us to carry forward the historical lease classification. Additionally, we elected the practical expedients allowing us not to separate lease and non-lease components and not record leases with an initial term of twelve months or less (“short-term leases”) on the balance sheet across all existing asset classes.

The adoption of this standard has resulted in the recognition of ROU assets and lease liabilities primarily related to our ground lease arrangements for which we are the lessee. As of January 1, 2019, we recorded operating lease liabilities of $60.6 million as well as a corresponding operating lease ROU asset of $82.5 million, which includes, among other things, the reclassified intangible assets of $22.3 million. The standard did not have a material impact on our condensed consolidated statements of operations and statements of cash flows. See related disclosures in note 5.

Recently Issued Accounting Standards—In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The ASU sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses (“ASU 2018-19”). ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. We are currently evaluating the impact that ASU 2016-13 will have on our condensed consolidated financial statements and related disclosures.

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Derivative Instruments

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Interest Rate Derivatives—We are exposed to risks arising from our business operations, economic conditions and financial markets. To manage these risks, we primarily use interest rate derivatives to hedge our debt and our cash flows. The interest rate derivatives include interest rate caps and interest rate floors, which are subject to master netting settlement arrangements. All derivatives are recorded at fair value.

The following table summarizes the interest rate derivatives we entered into over the applicable periods:

	Nine Months Ended September 30,
Interest rate caps:	2019			2018
Notional amount (in thousands)	$	348,500		$	685,000
Strike rate low end of range	3.00		%	2.43		%
Strike rate high end of range	7.80		%	7.80		%
Effective date range	January 2019 - September 2019			February 2018 - May 2018
Termination date range	March 2020 - October 2021			March 2019 - June 2020
Total cost of interest rate caps (in thousands)	$	89		$	348
Interest rate floors:
Notional amount (in thousands)	$	2,000,000		$	4,000,000
Strike rate low end of range	1.63		%	1.38		%
Strike rate high end of range	1.63		%	2.00		%
Effective date	January 2019			July 2018
Termination date	March 2020			July 2019 - September 2019
Total cost of interest rate floors (in thousands)	$	75		$	138

_______________

No instruments were designated as cash flow hedges for during the nine months ended September 30, 2019 and 2018.

Interest rate derivatives consisted of the following:

Interest rate caps: (1)	September 30, 2019			December 31, 2018
Notional amount (in thousands)	$	925,500		$	1,292,500
Strike rate low end of range	3.00		%	2.43		%
Strike rate high end of range	7.80		%	11.61		%
Effective date range	April 2018 - September 2019			January 2017 - December 2018
Termination date range	January 2020 - October 2021			January 2019 - June 2020
Aggregate principal balance on corresponding mortgage loans (in thousands)	$	870,000		$	805,500
Interest rate floors:(1) (2)
Notional amount (in thousands)	$	7,000,000		$	10,850,000
Strike rate low end of range	(0.25		)%	(0.25		)%
Strike rate high end of range	2.00		%	2.00		%
Effective date range	July 2015 - January 2019			July 2015 - July 2018
Termination date range	December 2019 - July 2020			March 2019 - July 2020

_______________

⁽¹⁾  No instruments were designated as cash flow hedges.

⁽²⁾  Cash collateral is posted by us as well as our counterparties. We offset the fair value of the derivative and the obligation/right to return/reclaim cash collateral.

Credit Default Swap Derivatives—We use credit default swaps, tied to the CMBX index, to hedge financial and capital market risk. A credit default swap is a derivative contract that functions like an insurance policy against the credit risk of an entity or obligation. The seller of protection assumes the credit risk of the reference obligation from the buyer (us) of protection in exchange for annual premium payments. If a default or a loss, as defined in the credit default swap agreements, occurs on the underlying bonds, then the buyer of protection is protected against those losses. The only liability for us, the buyer, is the annual premium and any change in value of the underlying CMBX index (if the trade is terminated prior to maturity). For all CMBX trades completed to date, we were the buyer of protection. Credit default swaps are subject to master-netting settlement arrangements and credit support annexes. As of September 30, 2019, we held a credit default swap with a notional amount of $50.0 million, an effective date of August 2017 and an expected maturity date of October 2026. Assuming the underlying bonds pay off at par over their remaining average life, our estimated total exposure for these trades was approximately $1.3 million as of September 30, 2019. Cash collateral is posted by us as well as our counterparties. We offset the fair value of the derivative and the obligation/right to return/reclaim cash collateral. The change in market value of credit default swaps is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparties when such change in market value is over $250,000.

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Related Party Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Ashford Inc.

Advisory Agreement

Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor. Our Chairman, Mr. Monty J. Bennett, also serves as Chairman of the board of directors and Chief Executive Officer of Ashford Inc. Under our advisory agreement, we pay advisory fees to Ashford LLC. Through December 31, 2018, we were required to pay Ashford LLC a monthly base fee that is 1/12^th the sum of (i) 0.70% of our total market capitalization for the prior month plus the Key Money Asset Management Fee (as defined in our advisory agreement), subject to a minimum monthly base fee, as payment for managing our day-to-day operations in accordance with our investment guidelines. Total market capitalization included the aggregate principal amount of our consolidated indebtedness (including our proportionate share of the debt of any entity that is not consolidated but excluding our joint venture partners’ proportionate share of consolidated debt).

On January 15, 2019, the Company entered into Amendment No. 1 to the Fifth Amended and Restated Advisory Agreement with Ashford Inc. (“Amendment No. 1”). Amendment No. 1 revised the formula for calculating the base fee to be equal to 1/12^th of the sum of (i) 0.70% of the total market capitalization of our company for the prior month, plus (ii) the Net Asset Fee Adjustment (as defined in our advisory agreement), if any, on the last day of the prior month during which our advisory agreement was in effect; provided, however in no event shall the base fee for any month be less than the minimum base fee as provided by our advisory agreement. The base fee is payable on the 5^th business day of each month.

The minimum base fee for Braemar for each month will be equal to the greater of:

(i) 90% of the base fee paid for the same month in the prior year; and

(ii) 1/12^th of the G&A Ratio (as defined) multiplied by the total market capitalization of Braemar.

We are also required to pay Ashford LLC an incentive fee that is measured annually (or for a stub period if the advisory agreement is terminated at other than year-end). Each year that our annual total stockholder return exceeds the average annual total stockholder return for our peer group we pay Ashford LLC an incentive fee over the following three years, subject to the Fixed Charge Coverage Ratio (“FCCR”) Condition, as defined in the advisory agreement, which relates to the ratio of adjusted EBITDA to fixed charges. We also reimburse Ashford LLC for certain reimbursable overhead and internal audit, risk management advisory and asset management services, as specified in the advisory agreement. We also recorded equity-based compensation expense for equity grants of common stock and LTIP units awarded to officers and employees of Ashford LLC in connection with providing advisory services.

The following table summarizes the advisory services fees incurred (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Advisory services fee
Base advisory fee	$	2,650		$	2,508	$	8,170	$	6,928
Reimbursable expenses (1)	645			529		1,906		1,448
Equity-based compensation (2)	1,995			1,316		5,426		5,240
Incentive fee	(132		)	1,380		77		2,241
Total	$	5,158		$	5,733	$	15,579	$	15,857

________

⁽¹⁾  Reimbursable expenses include overhead, internal audit, risk management advisory and asset management services.

⁽²⁾  Equity-based compensation is associated with equity grants of Braemar’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.

Ashford Securities

On September 25, 2019, Ashford Inc. announced the formation of Ashford Securities LLC (“Ashford Securities”) to raise capital in order to grow its existing and future platforms. In conjunction with the formation of Ashford Securities, Braemar has entered into a contribution agreement with Ashford Inc. pursuant to which Braemar has agreed to contribute, with Ashford Trust, up to $15.0 million to fund the operations of Ashford Securities. As of September 30, 2019, Braemar has funded approximately $165,000.

Enhanced Return Funding Program

Concurrent with the Amendment No. 1, on January 15, 2019, the Company also entered into the Enhanced Return Funding Program Agreement (the “ERFP Agreement”) with Ashford Inc. The “key money investments” concept previously contemplated by our advisory agreement was replaced with the ERFP Agreement. The Amended and Restated Advisory Agreement was also amended to name Ashford Inc. and its subsidiaries as the Company’s sole and exclusive provider of asset management, project management and other services offered by Ashford Inc. or any of its subsidiaries. The independent members of our board of directors and the independent members of the board of directors of Ashford Inc., with the assistance of separate and independent legal counsel, engaged to negotiate the ERFP Agreement on behalf of Ashford Inc. and Braemar, respectively.

The ERFP Agreement generally provides that Ashford LLC will provide funding to facilitate the acquisition of properties by Braemar OP that are recommended by Ashford LLC, in an aggregate amount of up to $50 million (subject to increase to up to $100 million by mutual agreement). Each funding will equal 10% of the property acquisition price and will be made either at the time of the property acquisition or at any time generally within the two-year period following the date of such acquisition, in exchange for FF&E for use at the acquired property or any other property owned by Braemar OP.

The initial term of the ERFP Agreement is two years (the “Initial Term”), unless earlier terminated pursuant to the terms of the ERFP Agreement. At the end of the Initial Term, the ERFP Agreement shall automatically renew for successive one-year periods (each such period a “Renewal Term”) unless either Ashford Inc. or Braemar provides written notice to the other at least sixty days in advance of the expiration of the Initial Term or Renewal Term, as applicable, that such notifying party intends not to renew the ERFP Agreement. As a result of the Ritz-Carlton, Lake Tahoe acquisition, Braemar was entitled to receive $10.3 million from Ashford LLC in the form of future purchases of FF&E at Braemar hotel properties that will be leased to us by Ashford LLC rent free. As of September 30, 2019, Ashford LLC has remitted payments of $10.3 million to the Company as further described below.

On June 26, 2019, the Company sold $1.4 million of hotel FF&E from a Braemar hotel property to Ashford LLC which was subsequently leased back to the Company rent free. In accordance with ASC 842, the Company evaluated the transaction and concluded that the transaction qualified as a sale. As a result, the Company recorded a gain of $9,000 for the nine months ended September 30, 2019. The gain is recorded in “gain (loss) on disposition of assets and sale of hotel property” in our condensed consolidated statements of operations.

On July 1, 2019, the Company sold the remaining $8.9 million of hotel FF&E from another Braemar hotel property to Ashford LLC which was subsequently leased back to the Company rent free. The transaction also qualified as a sale and the Company recorded a gain of $23,000 for the three and nine months ended September 30, 2019. The gain is recorded in “gain (loss) on disposition of assets and sale of hotel property” in our condensed consolidated statements of operations.

Under the applicable accounting guidance in ASC 842, the Company has not recorded an operating lease right-of-use asset, an operating lease liability or lease expense for rents as the related party lease has no economic substance because the related party lease is provided rent free.

Project Management Agreement

In connection with Ashford Inc.’s August 8, 2018 acquisition of Remington Lodging’s project management business, we entered into a project management agreement with Ashford Inc.’s indirect subsidiary, Premier Project Management LLC (“Premier”), pursuant to which Premier provides project management services to our hotels, including construction management, interior design, architectural services, and the purchasing, freight management, and supervision of installation of FF&E and related services. Pursuant to the project management agreement, we pay Premier: (a) project management fees of up to 4% of project costs; and (b) for the following services as follows: (i) architectural (6.5% of total construction costs); (ii) construction management for projects without a general contractor (10% of total construction costs); (iii) interior design (6% of the purchase price of the FF&E designed or selected by Premier); and (iv) FF&E purchasing (8% of the purchase price of FF&E purchased by Premier; provided that if the purchase price exceeds $2.0 million for a single hotel in a calendar year, then the purchasing fee is reduced to 6% of the FF&E purchase price in excess of $2.0 million for such hotel in such calendar year).

In accordance with our advisory agreement, our advisor, or entities in which our advisor has an interest, has a right to provide products or services to us or our hotel properties, provided such transactions are evaluated and approved by our independent directors. The following tables summarize the entities in which our advisor has an interest with which we or our hotel properties contracted for products and services, the amounts recorded by us for those services and the applicable classification on our condensed consolidated financial statements (in thousands):

		Three Months Ended September 30, 2019
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Revenue		Other Hotel Expenses		Advisory Services Fee		Property Taxes, Insurance and Other		Write-off of Premiums, Loan Costs and Exit Fees
Ashford LLC	Insurance claims services	$	25	$	—	$	—		$	—	$	—	$	—	$	25	$	—
J&S Audio Visual	Audio visual services	183		—		—			183		—		—		—		—
Lismore Capital	Mortgage placement services	933		—		(720		)	—		—		—		—		213
OpenKey	Mobile key app	21		—		—			—		21		—		—		—
Premier	Project management services	2,838		2,699		—			—		—		139		—		—
Pure Wellness	Hypoallergenic premium rooms	67		55		—			—		12		—		—		—
RED Leisure	Watersport activities and travel/transportation services	326		—		—			—		326		—		—		—

		Three Months Ended September 30, 2018
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Other Hotel Expenses		Property Taxes, Insurance and Other
Ashford LLC	Insurance claims services	$	31	$	—	$	—	$	31
OpenKey	Mobile key app	5		—		5		—
Premier	Project management services	1,125		1,125		—		—
Pure Wellness	Hypoallergenic premium rooms	128		117		11		—
RED Leisure	Watersport activities and travel/transportation services	180		—		180		—

		Nine Months Ended September 30, 2019
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Revenue		Other Hotel Expenses		Advisory Services Fee		Property Taxes, Insurance and Other		Write-off of Premiums, Loan Costs and Exit Fees
Ashford LLC	Insurance claims services	$	90	$	—	$	—		$	—	$	—	$	—	$	90	$	—
J&S Audio Visual	Audio visual services	383		—		—			383		—		—		—		—
Lismore Capital	Debt placement services	1,208		—		(995		)	—		—		—		—		213
OpenKey	Mobile key app	33		—		—			—		33		—		—		—
Premier	Project management services	8,078		7,674		—			—		—		404		—		—
Pure Wellness	Hypoallergenic premium rooms	143		108		—			—		35		—		—		—
RED Leisure	Watersport activities and travel/transportation services	686		—		—			—		686		—		—		—

		Nine Months Ended September 30, 2018
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Expenses		Property Taxes, Insurance and Other
Ashford LLC	Insurance claims services	$	100	$	—	$	—		$	—	$	100
Lismore Capital	Debt placement services	999		—		(999		)	—		—
OpenKey	Mobile key app	17		—		—			17		—
Premier	Project management services	1,125		1,125		—			—		—
Pure Wellness	Hypoallergenic premium rooms	147		117		—			30		—
RED Leisure	Watersport activities and travel/transportation services	540		—		—			540		—

________

⁽¹⁾  Recorded in FF&E and depreciated over the estimated useful life.

⁽²⁾  Recorded as deferred loan costs, which are included in “indebtedness, net” on our consolidated balance sheets and amortized over the initial term of the applicable loan agreement.

The following table summarizes the due to Ashford Inc. (in thousands):

		Due to Ashford Inc.
Company	Product or Service	September 30, 2019		December 31, 2018
Ashford LLC	Advisory services	$	1,830	$	2,264
Ashford LLC	Insurance claims services	25		37
J&S Audio Visual	Audio visual services	185		—
OpenKey	Mobile key app	—		13
Premier	Project management services	2,651		1,657
Pure Wellness	Hypoallergenic premium rooms	58		30
		$	4,749	$	4,001

In 2015, $2.0 million of key money consideration was invested in FF&E by Ashford LLC to be used by Braemar, which represented all of the key money consideration for the Bardessono Hotel. Upon adoption of ASC 842, we evaluated this arrangement, which is accounted for as a lease that will expire in 2020. Under the applicable accounting guidance in ASC 842, as the related party lease is provided rent-free, there is no economic substance related to the lease which results in not recording an operating lease right-of-use asset, an operating lease liability or lease expense for rents.

Remington Lodging

On August 8, 2018, Ashford Inc. completed the acquisition of Premier. As a result of Ashford Inc.’s acquisition, the project management services are no longer provided by Remington Lodging and are now provided by a subsidiary of Ashford Inc. under the respective project management agreement with each customer, including Ashford Trust and Braemar. Remington Lodging continues to provide property management services to the Company with respect to three of our thirteen hotel properties.

At September 30, 2019, Remington Lodging managed three of our thirteen hotel properties and we incurred the following fees related to the management agreements with the related party (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Property management fees, including incentive property management fees	$	455	$	438	$	1,322	$	1,334
Market service and project management fees	—		831		—		3,328
Corporate general and administrative expenses	84		85		262		250
Total	$	539	$	1,354	$	1,584	$	4,912

Certain employees of Remington Lodging, who perform work on behalf of Braemar, were granted shares of restricted stock under the Braemar Stock Plan. These share grants were accounted for under the applicable accounting guidance related to share-based payments granted to non-employees and are recorded as a component of “management fees” in our condensed consolidated statements of operations (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Management fees	$	36	$	53	$	116	$	164

The unamortized compensation expense of these grants was $234,000 as of September 30, 2019, which will be amortized over a period of 2.4 years.

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Equity and Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Equity and Stock-Based Compensation

Equity and Stock-Based Compensation

Common Stock Dividends—The following table summarizes the common stock dividends declared during the period (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Common stock dividends declared	$	5,339	$	5,276	$	16,004	$	15,823

Performance Stock Units—The compensation committee of the board of directors of the Company may authorize the issuance of grants of PSUs to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of PSUs that will be settled in shares of common stock of the Company, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date. The number of PSUs actually earned may range from 0% to 200% of target based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s compensation committee on the grant date. The performance criteria for the PSUs are based on market conditions under the relevant literature, and the PSUs were granted to non-employees. Following the adoption of ASU 2018-07 in the third quarter of 2018, the corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award, regardless of the actual outcome of the market condition as opposed to being accounted for at fair value based on the market price of the shares at each quarterly measurement date.

The following table summarizes the compensation expense for PSUs (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Line Item	2019		2018		2019		2018
Advisory services fee	$	679	$	287	$	1,760	$	2,156

During the nine months ended September 30, 2018, approximately $1.6 million of the compensation expense was related to the accelerated vesting of PSUs granted to one of our executive officers upon his death, in accordance with the terms of the awards.

As of September 30, 2019, we had unamortized compensation expense of $4.7 million related to PSUs which is expected to be recognized over a period of 2.3 years with a weighted average period of 1.6 years.

Restricted Stock Units—We incur stock-based compensation expense in connection with restricted stock units awarded to certain employees of Ashford LLC and its affiliates. We also issue common stock to certain of our independent directors, which vests immediately upon issuance.

The following table summarizes the stock-based compensation expense (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Line Item	2019		2018		2019		2018
Advisory services fee	$	664	$	515	$	1,820	$	1,838
Management fees	36		53		116		164
Corporate general and administrative - Premier	17		—		55		—
Corporate general and administrative - independent directors	208		243		208		243
	$	925	$	811	$	2,199	$	2,245

During the nine months ended September 30, 2018, approximately $640,000 of the compensation expense was related to the accelerated vesting of equity awards granted to one of our executive officers upon his death, in accordance with the terms of the awards.

At September 30, 2019, the unamortized cost of the unvested shares of restricted stock was $4.9 million, which will be expensed over a period of 2.4 years with a weighted average period of 2.0 years, and have vesting dates between November 2019 and February 2022.

8.25% Series D Cumulative Preferred Stock Dividends—The Series D Cumulative Preferred Stock dividend for all issued and outstanding shares is set at $2.0625 per annum per share.

The following table summarizes dividends declared (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Series D Cumulative Preferred Stock	$	825	$	—	$	2,475	$	—

Stock Repurchases—On December 5, 2017, our board of directors reapproved the stock repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share having an aggregate value of up to $50 million. The board of directors’ authorization replaced any previous repurchase authorizations.

No shares were repurchased during the three and nine months ended September 30, 2019 and 2018, pursuant to this authorization. As of September 30, 2019, we have purchased a cumulative 4.3 million shares of our common stock, for approximately $63.2 million, since the program’s inception on November 4, 2014.

At-the-Market Equity Distribution Program—On December 11, 2017, the Company established an “at-the-market” equity distribution program pursuant to which it may, from time to time, sell shares of its Common Stock having an aggregate offering price of up to $50 million. As of September 30, 2019, no shares of our common stock have been sold under this program.

Noncontrolling Interest in Consolidated Entities—A partner had noncontrolling ownership interests of 25% in two hotel properties with a total carrying value of $(6.3) million and $(5.4) million at September 30, 2019 and December 31, 2018, respectively.

The following table summarizes the (income) loss allocated to noncontrolling interest in consolidated entities (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
(Income) loss attributable to noncontrolling interest in consolidated entities	$	(1,899	)	$	(1,695	)	$	(1,750	)	$	(1,742	)

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5.5% Series B Cumulative Convertible Preferred Stock (Details) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) day $ / shares shares	Sep. 30, 2018 USD ($)	Dec. 31, 2018 shares
Class of Stock [Line Items]
Series B Convertible Preferred Stock | $	$ 2,533	$ 1,707	$ 7,597	$ 5,122
Series B Preferred Stock
Class of Stock [Line Items]
Preferred stock dividend rate			5.50%
Initial conversion price (in dollars per share)	$ 18.90		$ 18.90
Preferred stock conversion rate			1.3228
Consecutive trading days | day			45
Days ending prior to notice of conversion			3 days
Redemption price (in dollars per share)	25.00		$ 25.00
Liquidation preference per share (in dollars per share)	$ 25.00		$ 25.00
Redemption percent of liquidation preference	103.00%		103.00%
Series B preferred stock, shares outstanding (in shares) | shares	4,965,850		4,965,850		4,965,850
Annual preferred stock dividend (in dollars per share)			$ 1.375
Series B Convertible Preferred Stock | $	$ 1,708	$ 1,707	$ 5,122	$ 5,122
Series B Preferred Stock | Minimum
Class of Stock [Line Items]
Percent of conversion price	110.00%		110.00%

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Summary of Fair Value of Financial Instruments (Carrying Amounts and Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Financial assets and liabilities measured at fair value:
Derivative assets	$ 773	$ 772
Derivative assets, Estimated fair value	773	772
Financial assets not measured at fair value:
Cash and cash equivalents	82,583	182,578	$ 163,825	$ 137,522
Cash and cash equivalents, Estimated fair value	82,583	182,578
Restricted cash, Carrying value	57,367	75,910	$ 74,973	$ 47,820
Restricted cash, Estimated fair value	57,367	75,910
Accounts receivable, Carrying value	19,657	12,739
Accounts receivable, Estimated fair value	19,657	12,739
Due from related party, net, Carrying value	817	0
Due from related party, net, Estimated fair value	817	0
Due from third-party hotel managers, Carrying value	18,019	4,927
Due from third-party hotel managers, Estimated fair value	18,019	4,927
Financial liabilities not measured at fair value:
Indebtedness, Carrying value	1,065,000	992,586
Accounts payable and accrued expenses, Carrying value	97,945	64,116
Accounts payable and accrued expenses, Estimated fair value	97,945	64,116
Dividends and distributions payable, Carrying value	9,502	8,514
Dividends and distributions payable, Estimated fair value	9,502	8,514
Due to affiliate, net, Carrying Value	4,749	4,001
Due to Affiliate, Fair Value Disclosure	4,749	4,001
Due to related party, net, Carrying value	0	224
Due to related party, net, Estimated fair value	0	224
Due to third-party hotel managers, Carrying value	2,172	1,633
Due to third-party hotel managers, Estimated fair value	2,172	1,633
Minimum
Financial liabilities not measured at fair value:
Indebtedness, Estimated fair value	994,975	936,904
Maximum
Financial liabilities not measured at fair value:
Indebtedness, Estimated fair value	$ 1,099,709	1,035,526
Ashford Inc.
Financial assets and liabilities measured at fair value:
Investment in unconsolidated entity		$ 10,114

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Subsequent Events (Details)			9 Months Ended
	Oct. 25, 2019 USD ($) extension	Oct. 02, 2019 USD ($) $ / shares shares	Sep. 30, 2019 USD ($)	Nov. 05, 2019	Oct. 21, 2019 shares	Dec. 31, 2018 USD ($)
Subsequent Event [Line Items]
Indebtedness, gross			$ 1,065,000,000			$ 992,586,000
Line of Credit | Senior Revolving Credit Facility
Subsequent Event [Line Items]
Borrowing capacity			100,000,000
Indebtedness, gross			$ 0			$ 0
Line of Credit | Senior Revolving Credit Facility | LIBOR | Minimum
Subsequent Event [Line Items]
Basis spread on variable rate			2.25%
Line of Credit | Senior Revolving Credit Facility | LIBOR | Maximum
Subsequent Event [Line Items]
Basis spread on variable rate			3.50%
Subsequent Event | Line of Credit | Senior Revolving Credit Facility
Subsequent Event [Line Items]
Borrowing capacity	$ 75,000,000
Term of debt	3 years
Number of extension options | extension	2
Term of extension options	1 year
Possible expansion	$ 175,000,000
Possible expansion, aggregate size	250,000,000
Indebtedness, gross	$ 0
Subsequent Event | Line of Credit | Senior Revolving Credit Facility | LIBOR | Minimum
Subsequent Event [Line Items]
Basis spread on variable rate	2.25%
Subsequent Event | Line of Credit | Senior Revolving Credit Facility | LIBOR | Maximum
Subsequent Event [Line Items]
Basis spread on variable rate	3.50%
Subsequent Event | Ashford LLC
Subsequent Event [Line Items]
Stock purchase (in shares) | shares		19,897
Stock purchase (in dollars per share) | $ / shares		$ 30
Proceeds from stock purchase agreement		$ 597,000
Subsequent Event | Ashford Inc.
Subsequent Event [Line Items]
Shares distribution (in shares) | shares					174,983
Conversion ratio (in shares)				0.0047

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Organization and Description of Business (Details)	Sep. 30, 2019 hotel state	Sep. 30, 2018 hotel
Real Estate Properties [Line Items]
Number of hotel properties managed by related party	3
Number of hotels	13	13
Number of states in which entity operates | state	6
Number of rooms	3,719
Number of units in real estate property, net partnership interest	3,484
Wholly Owned Properties
Real Estate Properties [Line Items]
Number of hotels	11
Consolidated Properties
Real Estate Properties [Line Items]
Number of hotels	2
Leased by Wholly-Owned or Majority-Owned Taxable REIT Subsidiaries
Real Estate Properties [Line Items]
Number of hotels	12
US Virgin Islands Taxable REIT Subsidiary
Real Estate Properties [Line Items]
Number of hotels	1
Leased by Ashford Prime Wholly-Owned Taxable REIT Subsidiary
Real Estate Properties [Line Items]
Number of hotels	10

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Investment in Hotel Properties, net - Acquisition (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Jan. 15, 2019 USD ($) a room	Sep. 30, 2019 USD ($) hotel	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) hotel	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Real Estate Properties [Line Items]
Number of rooms | hotel		3,719		3,719
Transaction costs		$ 0	$ 0	$ 704	$ 949
Land		455,298		455,298		$ 428,567
Buildings and improvements		1,106,503		1,106,503		989,180
Furniture, fixtures and equipment		109,715		109,715		103,025
Total cost		1,768,160		1,768,160		1,562,806
Investments in hotel properties, net		1,471,603		1,471,603		$ 1,299,901
Total revenue		118,884	108,846	365,913	332,453
Net income (loss)		(8,954)	$ (626)	(15,899)	$ 16,498
Ritz-Carlton, Lake Tahoe
Real Estate Properties [Line Items]
Ownership interest acquired	100.00%
Number of rooms | room	170
Consideration transferred	$ 120,000
Transaction costs	640
Face amount of debt	54,000
Land	26,731
Buildings and improvements	89,569
Furniture, fixtures and equipment	2,034
Total cost	118,334
Capital reserves	6,117
Key money	(3,811)
Investments in hotel properties, net	120,640
Net other assets (liabilities)	$ 510
Area of parking lot | a	3.4
Total revenue		12,206		31,624
Net income (loss)		$ 643		$ 469

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Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On October 2, 2019, the Company entered into a stock purchase agreement with Ashford LLC under which Ashford LLC purchased all of the common stock held by one of our TRS subsidiaries, totaling 19,897 shares, for $30 per share, resulting in total proceeds of approximately $597,000 to the Company.

On October 21, 2019, the Company announced that its board of directors had declared the distribution of its remaining 174,983 shares of common stock of Ashford Inc. Both common stockholders of Braemar and unitholders of Braemar OP received their pro-rata share of Ashford Inc. common stock. The distribution to Company stockholders and unitholders was completed through a pro-rata taxable dividend of Ashford Inc. common stock on November 5, 2019 (the “Distribution Date”) to stockholders and unitholders of record (“Company Record Holders”) as of the close of business of the New York Stock Exchange (“NYSE”) on October 29, 2019 (the “Record Date”). On the Distribution Date, each Company Record Holder received approximately 0.0047 shares of Ashford common stock for every unit and/or share of the Company’s common stock held by such Company Record Holder on the Record Date. No fractional shares of Ashford Inc. common stock were issued. Fractional shares of Ashford Inc. common stock to which Braemar Record Holders would otherwise be entitled will be aggregated and, after the distribution, sold in the open market by the distribution agent. The aggregate net proceeds of the sales will be distributed in a pro-rata manner as cash payments to the Braemar Record Holders who would otherwise have received fractional shares of Ashford Inc. common stock. Additionally, Braemar Record Holders who hold in “street name” on behalf of their customers may sell additional shares into the open market to make cash payments to their customers who would have otherwise received fractional shares of Ashford Inc. common stock. Subsequent to the distribution, the Company does not have any ownership interest in Ashford Inc.

On October 25, 2019, the Company entered into a new $75 million secured credit facility which replaces the Company's previous credit facility that was scheduled to mature on November 10, 2019. The new credit facility provides for a three-year revolving line of credit and bears interest at a range of 2.25% - 3.50% over LIBOR, depending on the leverage level of the Company. There are two, one-year extension options subject to the satisfaction of certain conditions. The new credit facility includes the opportunity to expand the borrowing capacity by up to $175 million to an aggregate size of $250 million. There were no amounts outstanding on the Company's previous credit facility.

On November 6, 2019, Ashford Inc. completed its acquisition of Remington’s Hotel Management Business, as approved by Ashford Inc.’s stockholders at an Ashford Inc. special meeting of stockholders held on October 24, 2019 to consider and vote upon on the transactions contemplated by the Combination Agreement.

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5.5% Series B Cumulative Convertible Preferred Stock

9 Months Ended

Sep. 30, 2019

Temporary Equity Disclosure [Abstract]

5.5% Series B Cumulative Convertible Preferred Stock

5.5% Series B Cumulative Convertible Preferred Stock

Each share of our 5.5% Series B Cumulative Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at an initial conversion price of $18.90 (which represents an initial conversion rate of 1.3228 shares of our common stock, subject to certain adjustments). The Series B Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control. Holders of the Series B Convertible Preferred Stock have no voting rights, subject to certain exceptions.

The Company may, at its option, cause the Series B Convertible Preferred Stock to be converted in whole or in part, on a pro-rata basis, into fully paid and nonassessable shares of the Company’s common stock at the conversion price, provided that the “Closing Bid Price” (as defined in the Articles Supplementary) of the Company’s common stock shall have equaled or exceeded 110% of the conversion price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion.

Additionally, the Series B Convertible Preferred Stock contains cash redemption features that consist of: 1) an optional redemption in which on or after June 11, 2020, the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends; 2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share plus a make-whole premium equal to the present value, computed using a discount rate of 5.5% per annum compounded quarterly, of all dividend payments on the Series B Convertible Preferred Stock for all remaining dividend periods (excluding any accumulated dividend amount) from the date of such exercise up to but excluding June 11, 2019; and 3) a REIT Termination Event and Listing Event Redemption, in which at any time (i) a REIT Termination Event (defined below) occurs or (ii) the Company’s common stock fails to be listed on the NYSE, NYSE American, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each a “National Exchange”), the holder of Series B Cumulative Preferred Stock shall have the right to require the Company to redeem any or all shares of Series B Cumulative Preferred Stock at 103% of the liquidation preference ($25.00 per share, plus any accumulated, accrued, and unpaid dividends) in cash.

A REIT Termination Event, shall mean the earliest of:

(i) filing of income tax return where the Company does not compute its income as a REIT;

(ii) stockholders’ approval on ceasing to be qualified as a REIT;

(iii) board of directors’ approval on ceasing to be qualified as a REIT;

(iv) board’s determination based on advise of the counsel to cease to be qualified as a REIT; or

(v) determination within the meaning of Section 1313(a) of IRC to cease to be qualified as a REIT.

At September 30, 2019, we had 5.0 million outstanding shares of Series B Convertible Preferred Stock that do not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside our control. As such, the Series B Convertible Preferred Stock is classified outside of permanent equity.

The Series B Convertible Preferred Stock dividend for all issued and outstanding shares is set at $1.375 per annum per share.

The following table summarizes dividends declared (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Series B Convertible Preferred Stock	$	1,708	$	1,707	$	5,122	$	5,122

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Commitments and Contingencies - Narrative (Details)	9 Months Ended
	Sep. 30, 2019 USD ($)
Restricted Cash | Minimum
Commitments and Contingencies [Line Items]
Replacement reserve escrow as percentage of property revenue	4.00%
Restricted Cash | Maximum
Commitments and Contingencies [Line Items]
Replacement reserve escrow as percentage of property revenue	5.00%
Management fees | Minimum
Commitments and Contingencies [Line Items]
Property management fee, percent	2.00%
Management fees | Maximum
Commitments and Contingencies [Line Items]
Property management fee, percent	7.00%
Management fees | Minimum
Commitments and Contingencies [Line Items]
Monthly property management fee	$ 14,000
Property management fee, percent	3.00%

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Summary of Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Maximum maturity term of financial assets	90 days
Indebtedness, Carrying value	$ 1,065,000	$ 992,586
Minimum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total indebtedness fair value variance from carrying value (as a percent)	93.40%	94.40%
Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total indebtedness fair value variance from carrying value (as a percent)	103.30%	104.30%

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The following tables summarize the entities in which our advisor has an interest with which we or our hotel properties contracted for products and services, the amounts recorded by us for those services and the applicable classification on our condensed consolidated financial statements (in thousands):

		Three Months Ended September 30, 2019
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Revenue		Other Hotel Expenses		Advisory Services Fee		Property Taxes, Insurance and Other		Write-off of Premiums, Loan Costs and Exit Fees
Ashford LLC	Insurance claims services	$	25	$	—	$	—		$	—	$	—	$	—	$	25	$	—
J&S Audio Visual	Audio visual services	183		—		—			183		—		—		—		—
Lismore Capital	Mortgage placement services	933		—		(720		)	—		—		—		—		213
OpenKey	Mobile key app	21		—		—			—		21		—		—		—
Premier	Project management services	2,838		2,699		—			—		—		139		—		—
Pure Wellness	Hypoallergenic premium rooms	67		55		—			—		12		—		—		—
RED Leisure	Watersport activities and travel/transportation services	326		—		—			—		326		—		—		—

		Three Months Ended September 30, 2018
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Other Hotel Expenses		Property Taxes, Insurance and Other
Ashford LLC	Insurance claims services	$	31	$	—	$	—	$	31
OpenKey	Mobile key app	5		—		5		—
Premier	Project management services	1,125		1,125		—		—
Pure Wellness	Hypoallergenic premium rooms	128		117		11		—
RED Leisure	Watersport activities and travel/transportation services	180		—		180		—

		Nine Months Ended September 30, 2019
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Revenue		Other Hotel Expenses		Advisory Services Fee		Property Taxes, Insurance and Other		Write-off of Premiums, Loan Costs and Exit Fees
Ashford LLC	Insurance claims services	$	90	$	—	$	—		$	—	$	—	$	—	$	90	$	—
J&S Audio Visual	Audio visual services	383		—		—			383		—		—		—		—
Lismore Capital	Debt placement services	1,208		—		(995		)	—		—		—		—		213
OpenKey	Mobile key app	33		—		—			—		33		—		—		—
Premier	Project management services	8,078		7,674		—			—		—		404		—		—
Pure Wellness	Hypoallergenic premium rooms	143		108		—			—		35		—		—		—
RED Leisure	Watersport activities and travel/transportation services	686		—		—			—		686		—		—		—

		Nine Months Ended September 30, 2018
Company	Product or Service	Total		Investments in Hotel Properties, net (1)		Indebtedness, net (2)			Other Hotel Expenses		Property Taxes, Insurance and Other
Ashford LLC	Insurance claims services	$	100	$	—	$	—		$	—	$	100
Lismore Capital	Debt placement services	999		—		(999		)	—		—
OpenKey	Mobile key app	17		—		—			17		—
Premier	Project management services	1,125		1,125		—			—		—
Pure Wellness	Hypoallergenic premium rooms	147		117		—			30		—
RED Leisure	Watersport activities and travel/transportation services	540		—		—			540		—

________

⁽¹⁾  Recorded in FF&E and depreciated over the estimated useful life.

⁽²⁾  Recorded as deferred loan costs, which are included in “indebtedness, net” on our consolidated balance sheets and amortized over the initial term of the applicable loan agreement.

The following table summarizes the due to Ashford Inc. (in thousands):

		Due to Ashford Inc.
Company	Product or Service	September 30, 2019		December 31, 2018
Ashford LLC	Advisory services	$	1,830	$	2,264
Ashford LLC	Insurance claims services	25		37
J&S Audio Visual	Audio visual services	185		—
OpenKey	Mobile key app	—		13
Premier	Project management services	2,651		1,657
Pure Wellness	Hypoallergenic premium rooms	58		30
		$	4,749	$	4,001

At September 30, 2019, Remington Lodging managed three of our thirteen hotel properties and we incurred the following fees related to the management agreements with the related party (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Property management fees, including incentive property management fees	$	455	$	438	$	1,322	$	1,334
Market service and project management fees	—		831		—		3,328
Corporate general and administrative expenses	84		85		262		250
Total	$	539	$	1,354	$	1,584	$	4,912

These share grants were accounted for under the applicable accounting guidance related to share-based payments granted to non-employees and are recorded as a component of “management fees” in our condensed consolidated statements of operations (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Management fees	$	36	$	53	$	116	$	164

The following table summarizes the advisory services fees incurred (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Advisory services fee
Base advisory fee	$	2,650		$	2,508	$	8,170	$	6,928
Reimbursable expenses (1)	645			529		1,906		1,448
Equity-based compensation (2)	1,995			1,316		5,426		5,240
Incentive fee	(132		)	1,380		77		2,241
Total	$	5,158		$	5,733	$	15,579	$	15,857

________

⁽¹⁾  Reimbursable expenses include overhead, internal audit, risk management advisory and asset management services.

⁽²⁾  Equity-based compensation is associated with equity grants of Braemar’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.

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Investment in Hotel Properties, net (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Abstract]
Land	$ 455,298	$ 428,567
Buildings and improvements	1,106,503	989,180
Furniture, fixtures and equipment	109,715	103,025
Construction in progress	96,644	42,034
Total cost	1,768,160	1,562,806
Accumulated depreciation	(296,557)	(262,905)
Investments in hotel properties, net	$ 1,471,603	$ 1,299,901

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Income (Loss) Per Share (Antidilutive) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income (loss) allocated to common stockholders is not adjusted for:
Total	$ 405	$ 1,405	$ 2,848	$ 6,656
Weighted average diluted shares are not adjusted for:
Antidilutive securities excluded (in shares)	10,988	10,907	11,130	10,786
Restricted Stock
Net income (loss) allocated to common stockholders is not adjusted for:
Income (loss) allocated to unvested shares	$ 88	$ 78	$ 272	$ 243
Weighted average diluted shares are not adjusted for:
Antidilutive securities excluded (in shares)	19	81	53	57
Performance Shares
Net income (loss) allocated to common stockholders is not adjusted for:
Income (loss) allocated to unvested shares	$ 74	$ 72	$ 224	$ 216
Weighted average diluted shares are not adjusted for:
Antidilutive securities excluded (in shares)	165	52	206	23
Operating Partnership Units
Net income (loss) allocated to common stockholders is not adjusted for:
Income (loss) attributable to redeemable noncontrolling interests in operating partnership	$ (1,465)	$ (452)	$ (2,770)	$ 1,075
Weighted average diluted shares are not adjusted for:
Antidilutive securities excluded (in shares)	4,162	4,173	4,229	4,137
Series B Preferred Stock
Net income (loss) allocated to common stockholders is not adjusted for:
Dividends on preferred stock	$ 1,708	$ 1,707	$ 5,122	$ 5,122
Weighted average diluted shares are not adjusted for:
Antidilutive securities excluded (in shares)	6,569	6,569	6,569	6,569
Advisory Services Incentive Fee Shares
Weighted average diluted shares are not adjusted for:
Antidilutive securities excluded (in shares)	73	32	73	0

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Hotel Dispositions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Jun. 01, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on disposition of assets and sale of hotel property	$ (1,163)	$ 0	$ (1,154)	$ 15,711
Renaissance Tampa | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration for disposal						$ 68,000
Total hotel revenue				14,537
Total hotel operating expenses				(7,500)
Property taxes, insurance and other				(486)
Depreciation and amortization				(1,294)
Impairment charges				(12)
Gain (loss) on disposition of assets and sale of hotel property				15,711	$ 15,700
Operating income (loss)				20,956
Interest expense and amortization of loan costs				(791)
Income (loss) before income taxes				20,165
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership				(2,253)
Income (loss) before income taxes attributable to the Company				$ 17,912

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 04, 2019
Cover page.
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Registrant Name	BRAEMAR HOTELS & RESORTS INC.
Amendment Flag	false
Entity Central Index Key	0001574085
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		32,885,863

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Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (8,954)	$ (626)	$ (15,899)	$ 16,498
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Total other comprehensive income (loss)	0	0	0	0
TOTAL COMPREHENSIVE INCOME (LOSS)	(8,954)	(626)	(15,899)	16,498
Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities	(1,899)	(1,695)	(1,750)	(1,742)
Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership	1,465	452	2,770	(1,075)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	$ (9,388)	$ (1,869)	$ (14,879)	$ 13,681

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Hotel Dispositions (Tables)

9 Months Ended

Sep. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Condensed financial information from hotel property

The following table includes the condensed financial information from this hotel property (in thousands):

	Nine Months Ended September 30,
	2018
Total hotel revenue	$	14,537
Total hotel operating expenses	(7,500		)
Property taxes, insurance and other	(486		)
Depreciation and amortization	(1,294		)
Impairment charges	(12		)
Gain (loss) on disposition of assets and sale of hotel property	15,711
Operating income (loss)	20,956
Interest expense and amortization of loan costs	(791		)
Income (loss) before income taxes	20,165
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership	(2,253		)
Income (loss) before income taxes attributable to the Company	$	17,912

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Organization and Description of Business

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business

Organization and Description of Business

Braemar Hotels & Resorts Inc., together with its subsidiaries (“Braemar”), is a Maryland corporation that invests primarily in high revenue per available room (“RevPAR”) luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by Smith Travel Research. Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code. Braemar conducts its business and owns substantially all of its assets through its operating partnership, Braemar Hospitality Limited Partnership (“Braemar OP”). In this report, the terms the “Company,” “we,” “us” or “our,” refers to Braemar Hotels & Resorts Inc. and, as the context may require, all entities included in its condensed consolidated financial statements.

We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC” or the “Advisor”) through an advisory agreement. Ashford LLC is a subsidiary of Ashford Inc. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.

We do not operate any of our hotel properties directly; instead we employ hotel management companies to operate them for us under management contracts. As of September 30, 2019, Remington Lodging & Hospitality, LLC, together with its affiliates (“Remington Lodging”), which was beneficially wholly-owned by Mr. Monty J. Bennett, Chairman of our board of directors, and Mr. Archie Bennett, Jr., Chairman Emeritus of Ashford Hospitality Trust, Inc. (“Ashford Trust”), managed three of our thirteen hotel properties. Third-party management companies managed the remaining hotel properties. On May 31, 2019, Ashford Inc., the parent company of Ashford LLC, entered into an agreement to acquire the hotel management business of Remington Holdings, L.P. (as amended by the First Amendment thereto dated July 17, 2019 and the Second Amendment thereto dated August 28, 2019, the “Combination Agreement”), which includes Remington Lodging. The transaction closed on November 6, 2019.

Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to project management services, audio visual services, debt placement services, real estate advisory services, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and mobile key technology.

The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of September 30, 2019, own thirteen hotel properties in six states, the District of Columbia and the U.S. Virgin Islands (“USVI”). The portfolio includes eleven wholly-owned hotel properties and two hotel properties that are owned through a partnership in which Braemar OP has a controlling interest. These hotel properties represent 3,719 total rooms, or 3,484 net rooms, excluding those attributable to our partner. As a REIT, Braemar is required to comply with limitations imposed by the Internal Revenue Code related to operating hotels. As of September 30, 2019, twelve of our thirteen hotel properties were leased by wholly-owned or majority-owned subsidiaries that are treated as taxable REIT subsidiaries (“TRS”) for federal income tax purposes (collectively the TRS entities are referred to as “Braemar TRS”). One hotel property, located in the USVI, is owned by our USVI TRS. Braemar TRS then engages third-party or affiliated hotel management companies to operate the hotel properties under management contracts. Hotel operating results related to the hotel properties are included in the condensed consolidated statements of operations.

As of September 30, 2019, ten of the thirteen hotel properties were leased by Braemar’s wholly-owned TRS and the two hotel properties majority-owned through a consolidated partnership were leased to a TRS wholly-owned by such consolidated partnership. Each leased hotel is leased under a percentage lease that provides for each lessee to pay in each calendar month the base rent plus, in each calendar quarter, percentage rent, if any, based on hotel revenues. Lease revenue from Braemar TRS is eliminated in consolidation. The hotel properties are operated under management contracts with Marriott International, Inc. (“Marriott”), Hilton Worldwide (“Hilton”), Accor Business and Leisure Management, LLC (“Accor”), Hyatt Hotels Corporation (“Hyatt”), Ritz-Carlton, Inc., a subsidiary of Marriott (“Ritz-Carlton”) and Remington Lodging, which are eligible independent contractors under the Internal Revenue Code.

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Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table summarizes the interest rate derivatives we entered into over the applicable periods:

	Nine Months Ended September 30,
Interest rate caps:	2019			2018
Notional amount (in thousands)	$	348,500		$	685,000
Strike rate low end of range	3.00		%	2.43		%
Strike rate high end of range	7.80		%	7.80		%
Effective date range	January 2019 - September 2019			February 2018 - May 2018
Termination date range	March 2020 - October 2021			March 2019 - June 2020
Total cost of interest rate caps (in thousands)	$	89		$	348
Interest rate floors:
Notional amount (in thousands)	$	2,000,000		$	4,000,000
Strike rate low end of range	1.63		%	1.38		%
Strike rate high end of range	1.63		%	2.00		%
Effective date	January 2019			July 2018
Termination date	March 2020			July 2019 - September 2019
Total cost of interest rate floors (in thousands)	$	75		$	138

_______________

No instruments were designated as cash flow hedges for during the nine months ended September 30, 2019 and 2018.

Interest rate derivatives consisted of the following:

Interest rate caps: (1)	September 30, 2019			December 31, 2018
Notional amount (in thousands)	$	925,500		$	1,292,500
Strike rate low end of range	3.00		%	2.43		%
Strike rate high end of range	7.80		%	11.61		%
Effective date range	April 2018 - September 2019			January 2017 - December 2018
Termination date range	January 2020 - October 2021			January 2019 - June 2020
Aggregate principal balance on corresponding mortgage loans (in thousands)	$	870,000		$	805,500
Interest rate floors:(1) (2)
Notional amount (in thousands)	$	7,000,000		$	10,850,000
Strike rate low end of range	(0.25		)%	(0.25		)%
Strike rate high end of range	2.00		%	2.00		%
Effective date range	July 2015 - January 2019			July 2015 - July 2018
Termination date range	December 2019 - July 2020			March 2019 - July 2020

_______________

⁽¹⁾  No instruments were designated as cash flow hedges.

⁽²⁾  Cash collateral is posted by us as well as our counterparties. We offset the fair value of the derivative and the obligation/right to return/reclaim cash collateral.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair Value Hierarchy—Our financial instruments measured at fair value either on a recurring or a non-recurring basis are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the market place as discussed below:

• Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.

• Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

• Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.

The fair value of interest rate caps is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rates of the caps. The variable interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (LIBOR forward curves) and volatilities (the Level 2 inputs). We also incorporate credit valuation adjustments (the Level 3 inputs) to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk.

Fair value of credit default swaps are obtained from a third party who publishes various information including the index composition and price data (Level 2 inputs). The fair value of credit default swaps does not contain credit-risk-related adjustments as the change in fair value is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparty.

The fair value of interest rate floors is calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor. These expected future cash flows are probability-weighted projections based on the contract terms, accounting for both the magnitude and likelihood of potential payments, which are both computed using the appropriate LIBOR forward curve and market implied volatilities as of the valuation date (Level 2 inputs).

The fair value of options on futures contracts is determined based on the last reported settlement price as of the measurement date (Level 1 inputs). These exchange-traded options are centrally cleared, and a clearinghouse stands in between all trades to ensure that the obligations involved in the trades are satisfied.

When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when the valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties, which we consider significant (10% or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels are determined at the end of each reporting period. In determining the fair values of our derivatives at September 30, 2019, the LIBOR interest rate forward curve (Level 2 inputs) assumed a downtrend from 2.016% to 1.222% for the remaining term of our derivatives. Credit spreads (Level 3 inputs) used in determining the fair values derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):

	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting(1)		Total
September 30, 2019
Assets
Derivative assets:
Interest rate derivatives - floors	$	—	$	100		$	—	$	52	$	152
Interest rate derivatives - caps	—		2			—		—		2
Credit default swaps	—		(459		)	—		1,078		619
	—		(357		)	—		1,130		773		(2)
Non-derivative assets:
Investment in Ashford Inc.	4,724		—			—		—		4,724
Total	$	4,724	$	(357	)	$	—	$	1,130	$	5,497

	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting(1)		Total
December 31, 2018
Assets
Derivative assets:
Interest rate derivatives - floors	$	—	$	76	$	—	$	73	$	149
Interest rate derivatives - caps	—		20		—		—		20
Credit default swaps	—		546		—		57		603
	—		642		—		130		772		(2)
Non-derivative assets:
Investment in Ashford Inc.	10,114		—		—		—		10,114
Total	$	10,114	$	642	$	—	$	130	$	10,886

__________________

⁽¹⁾  Represents net cash collateral posted between us and our counterparties.

⁽²⁾  Reported as “derivative assets” in our condensed consolidated balance sheets.

Effect of Fair Value Measured Assets and Liabilities on Condensed Consolidated Statements of Operations

The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands):

	Gain (Loss) Recognized in Income
	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
Assets
Derivative assets:
Interest rate derivatives - floors	$	(717	)		$	(134	)		$	(51	)		$	(218	)
Interest rate derivatives - caps	(26		)		(10		)		(107		)		(271		)
Credit default swaps	(61		)	(1)	(434		)	(1)	(1,004		)	(1)	(314		)	(1)
Total derivative assets	$	(804	)		$	(578	)		$	(1,162	)		$	(803	)
Non-derivative assets:
Investment in Ashford Inc.	(1,471		)		2,158				(5,390		)		(3,338		)
Total	$	(2,275	)		$	1,580			$	(6,552	)		$	(4,141	)
Total combined
Interest rate derivatives - floors	$	(667	)		$	(134	)		$	139			$	(218	)
Interest rate derivatives - caps	(26		)		(10		)		(107		)		(271		)
Credit default swaps	$	(61	)		(434		)		$	(1,004	)		(314		)
Unrealized gain (loss) on derivatives	(754		)		(578		)		(972		)		(803		)
Realized gain (loss) on interest rate floors	(50		)	(2)	—				(190		)	(2)	—
Unrealized gain (loss) on investment in Ashford Inc.	(1,471		)		2,158				(5,390		)		(3,338		)
Net	$	(2,275	)		$	1,580			$	(6,552	)		$	(4,141	)

_______________

⁽¹⁾  Excludes costs associated with credit default swaps of $64 for both the three months ended September 30, 2019 and 2018 and $190 for both the nine months endedSeptember 30, 2019 and 2018, respectively, which is included in “other income (expense)” in our condensed consolidated statements of operations.

⁽²⁾  Included in “other income (expense)” in our condensed consolidated statements of operations.

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Investment in Unconsolidated Entity

9 Months Ended

Sep. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated Entity

Investment in Unconsolidated Entity

Ashford Inc.

As of September 30, 2019 and December 31, 2018, we held approximately 195,000 shares of Ashford Inc. common stock. The closing price per share of Ashford Inc. common stock on the NYSE American LLC was $24.24 and $51.90 as of September 30, 2019 and December 31, 2018, respectively. This represented an approximate 7.5% and 8.1% ownership interest in the outstanding common stock of Ashford Inc. for September 30, 2019 and December 31, 2018, respectively. See notes 11, 12 and 19.

We have elected to use the fair value option, under the applicable accounting guidance, to account for our investment in Ashford Inc. as the fair value is readily available since Ashford Inc. common stock is traded on a national exchange. The fair value of our investment in Ashford Inc. is included in “investment in Ashford Inc., at fair value” on our condensed consolidated balance sheets, and changes in market value are included in “unrealized gain (loss) on investment in Ashford Inc.” on our condensed consolidated statements of operations.

The following tables summarize the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018, and the condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018, of Ashford Inc. (in thousands):

Ashford Inc.

Condensed Consolidated Balance Sheets

(unaudited)

	September 30, 2019		December 31, 2018
Total assets	$	421,837	$	379,005
Total liabilities	148,779		108,726
Series B Convertible Preferred Stock	202,185		200,847
Redeemable noncontrolling interests	3,641		3,531
Total stockholders’ equity of Ashford Inc.	66,467		65,443
Noncontrolling interests in consolidated entities	765		458
Total equity	67,232		65,901
Total liabilities and equity	$	421,837	$	379,005
Our investment in Ashford Inc., at fair value	$	4,724	$	10,114

Ashford Inc.

Condensed Consolidated Statements of Operations

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Total revenue	$	56,889		$	41,565		$	183,675		$	144,544
Total operating expenses	(63,690		)	(53,069		)	(186,991		)	(150,214		)
Operating income (loss)	(6,801		)	(11,504		)	(3,316		)	(5,670		)
Equity in earnings (loss) of unconsolidated entities	464			—			(109		)	—
Interest expense and loan amortization cost	(531		)	(419		)	(1,412		)	(770		)
Other income (expense)	(20		)	25			(86		)	(50		)
Income tax (expense) benefit	297			13,904			(1,429		)	11,593
Net income (loss)	(6,591		)	2,006			(6,352		)	5,103
(Income) loss from consolidated entities attributable to noncontrolling interests	101			413			395			704
Net (income) loss attributable to redeemable noncontrolling interests	334			968			623			817
Net income (loss) attributable to Ashford Inc.	$	(6,156	)	$	3,387		$	(5,334	)	$	6,624
Preferred dividends	(2,909		)	(1,675		)	(8,492		)	(1,675		)
Amortization of preferred stock discount	(363		)	(303		)	(1,338		)	(303		)
Net income attributable to common stockholders	$	(9,428	)	$	1,409		$	(15,164	)	$	4,646
Our unrealized gain (loss) on investment in Ashford Inc.	$	(1,471	)	$	2,158		$	(5,390	)	$	(3,338	)

OpenKey

On March 28, 2018, the Company made a $2.0 million investment in OpenKey, which is controlled and consolidated by Ashford Inc., for an 8.2% ownership interest, which investment was recommended by our Related Party Transactions Committee and unanimously approved by the independent members of our board of directors. In 2019, we made additional investments of $332,000 which was recommended by our Related Party Transactions Committee and unanimously approved by the independent members of our board of directors. As of September 30, 2019, the Company has made investments in OpenKey totaling $2.3 million.

OpenKey is a hospitality-focused mobile key platform that provides a universal smart phone app and related hardware and software for keyless entry into hotel guest rooms. Our investment is recorded as “investment in unconsolidated entity” in our condensed consolidated balance sheets and is accounted for under the equity method of accounting as we have been deemed to have significant influence over the entity under the applicable accounting guidance.

The following table summarizes our carrying value and ownership interest in OpenKey:

	September 30, 2019			December 31, 2018
Carrying value of the investment in OpenKey (in thousands)	$	1,949		$	1,766
Ownership interest in OpenKey	8.6		%	8.2		%

The following table summarizes our equity in earnings (loss) in OpenKey (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Line Item	2019			2018			2019			2018
Equity in earnings (loss) of unconsolidated entity	$	(48	)	$	(81	)	$	(149	)	$	(146	)

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Revenue

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Rooms revenue represents revenues from the occupancy of our hotel rooms and is driven by the occupancy and average daily rate charged. Rooms revenue includes revenue for guest no-shows, day use, and early/late departure fees. The contracts for room stays with customers are generally short in duration and revenues are recognized as services are provided over the course of the hotel stay.

Food & Beverage (“F&B”) revenue consists of revenue from the restaurants and lounges at our hotel properties, in-room dining and mini-bars revenue, and banquet/catering revenue from group and social functions. Other F&B revenue may include revenue from audio visual equipment/services, rental of function rooms, and other F&B related revenues. Revenue is recognized as the services or products are provided. Our hotel properties may employ third parties to provide certain services at the property, for example, audio visual services. We evaluate each of these contracts to determine if the hotel is the principal or the agent in the transaction, and record the revenues as appropriate (i.e. gross vs. net).

Other revenue consists of ancillary revenue at the property, including attrition and cancellation fees, condo management fees, resort and destination fees, health center fees, spas, golf, telecommunications, parking, entertainment, business interruption revenue and other guest services, as well as rental revenue primarily from leased retail outlets at our hotel properties, and membership initiation fees and dues, primarily from club memberships. Cancellation fees are recognized from non-cancellable deposits when the customer provides notification of cancellation in accordance with established management policy time frames. Non-refundable membership initiation fees are recognized over the expected life of an active membership.

For the three and nine months ended September 30, 2019, the Company recorded revenue from business interruption losses associated with lost profits from hurricanes of $4.0 million and $16.6 million, respectively. For the three and nine months ended September 30, 2018, the Company recorded revenue from business interruption losses associated with lost profits from hurricanes of $3.8 million and $13.9 million, respectively. Additionally, during the three and nine months ended September 30, 2018, the Company recorded revenue of $0 and $1.9 million, respectively, net of deductibles of $500,000, for business interruption losses associated with lost profits at the Bardessono Hoteland Hotel Yountville as a result of the Napa wildfires.

For the three and nine months ended September 30, 2018, the Company recorded $0 and $3.3 million of business interruption income for the Tampa Renaissance related to a settlement for lost profits from the BP Deepwater Horizon oil spill in the Gulf of Mexico in 2010. No such revenue was recorded for the three and nine months ended September 30, 2019.

Taxes specifically collected from customers and submitted to taxing authorities are not recorded in revenue. Interest income is recognized when earned.

The following tables present our revenue disaggregated by geographical areas (in thousands):

	Three Months Ended September 30, 2019
Primary Geographical Market	Number of Hotels	Rooms			Food and Beverage		Other Hotel		Other		Total
California	5	$	32,070		$	9,190	$	4,441	$	—	$	45,701
Colorado	1	3,086			3,615		2,368		—		9,069
Florida	2	8,234			4,124		3,308		—		15,666
Illinois	1	7,501			2,250		466		—		10,217
Pennsylvania	1	6,675			1,474		310		—		8,459
Washington	1	10,361			1,649		382		—		12,392
Washington, D.C.	1	8,889			3,688		378		—		12,955
USVI	1	(8		)	432		3,999		—		4,423
Corporate entities	—	—			—		—		2		2
Total	13	$	76,808		$	26,422	$	15,652	$	2	$	118,884

	Three Months Ended September 30, 2018
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	4	$	26,368	$	5,209	$	2,404	$	—	$	33,981
Colorado	1	3,178		3,112		2,438		—		8,728
Florida	2	8,194		4,335		3,420		—		15,949
Illinois	1	8,157		2,280		327		—		10,764
Pennsylvania	1	7,137		1,422		267		—		8,826
Washington	1	11,035		1,799		380		—		13,214
Washington, D.C.	1	8,638		2,729		264		—		11,631
USVI	1	1,651		285		3,817		—		5,753
Total	12	$	74,358	$	21,171	$	13,317	$	—	$	108,846

	Nine Months Ended September 30, 2019
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	5	$	88,533	$	27,311	$	11,893	$	—	$	127,737
Colorado	1	14,059		9,867		7,762		—		31,688
Florida	2	34,674		18,811		12,311		—		65,796
Illinois	1	19,053		5,796		1,168		—		26,017
Pennsylvania	1	18,169		3,187		793		—		22,149
Washington	1	23,378		5,070		1,189		—		29,637
Washington, D.C.	1	29,960		12,679		1,196		—		43,835
USVI	1	834		1,605		16,608		—		19,047
Corporate entities	—	—		—		—		7		7
Total	13	$	228,660	$	84,326	$	52,920	$	7	$	365,913

	Nine Months Ended September 30, 2018
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
California	4	$	69,007	$	18,163	$	8,258	$	—	$	95,428
Colorado	1	14,736		9,676		7,712		—		32,124
Florida	2	24,474		12,191		7,343		—		44,008
Illinois	1	19,359		6,100		908		—		26,367
Pennsylvania	1	21,641		4,314		867		—		26,822
Washington	1	25,587		5,164		1,006		—		31,757
Washington, D.C.	1	30,390		10,965		884		—		42,239
USVI	1	4,939		616		13,616		—		19,171
Sold hotel properties	1	8,171		2,875		3,491		—		14,537
Total	13	$	218,304	$	70,064	$	44,085	$	—	$	332,453