8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): March 30, 2023

BRAEMAR HOTELS & RESORTS INC.

(Exact name of registrant as specified in its charter)

Maryland	001-35972	46-2488594
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS employer identification number)
14185 Dallas Parkway
Suite 1200
Dallas
Texas		75254
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (972) 490-9600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    ☐

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. ☐

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

ITEM 8.01     OTHER EVENTS.

Opinion of the Liquidation Value of our Series E Preferred Stock and Series M Preferred Stock as of December 31, 2022

In order to assist broker-dealers in complying with their obligations under FINRA Rule 2331(c)(1)(B) with respect to customer account statements and our non-traded Series E Redeemable Preferred Stock (the “Series E Preferred Stock”) and our non-traded Series M Redeemable Preferred Stock (the “Series M Preferred Stock”), Braemar Hotels & Resorts Inc. (the “Company”, “we”, “us” or “our”) engaged Robert A. Stanger & Co., Inc. (“Stanger”) to provide an opinion of the liquidation value of our Series E Preferred Stock and our Series M Preferred Stock as of December 31, 2022 (the “Valuation Date”). The liquidation value is the amount that a holder of the Series E Preferred Stock or the Series M Preferred Stock would receive per share in the event of our liquidation. Based on certain assumptions and qualifications set forth in its report, Stanger concluded that the estimated liquidation value of the Series E Preferred Stock and the Series M Preferred Stock was $25.00 per share, which equals the per share liquidation preference for each series as set forth in the articles supplementary creating the Series E and the Series M Preferred Stock. In arriving at this conclusion, Stanger used the following valuation approaches:

Market capitalization. Stanger reviewed the public market capitalization of our common stock at its 52-week low, its 52-week high and the closing price as of the Valuation Date. Stanger adjusted the public common stock market capitalization for the liquidation value of all outstanding preferred securities to determine an adjusted market capitalization (before the preferred securities). In all cases, the preferred stock coverage ratio, which is the ratio of the adjusted market capitalization to the total liquidation preference for all of our outstanding preferred securities, was adequate as of the Valuation Date.

Analyst target prices. Stanger reviewed the most recently available target common stock prices published by analysts, as reported by Bloomberg Professional Terminal. Using the lowest target price, highest target price and average or “consensus” target price, Stanger estimated the common market capitalization as of the Valuation Date. Stanger adjusted the common market capitalization for the liquidation value of the preferred securities to determine an adjusted market capitalization. In all cases, the preferred stock coverage ratio, which is the ratio of the adjusted market capitalization to the total liquidation preference for all of our outstanding preferred securities, was adequate as of the Valuation Date.

Direct capitalization analysis. Stanger applied an estimated range of capitalization rates to our net operating income to determine an estimated range of real estate values, as adjusted for loss to lease, deducted our indebtedness, and adjusted for available working capital and for estimated non-controlling interests due to third parties as of the Valuation Date to derive an estimate of our equity value (before accounting for the preferred securities). Using the highest and lowest capitalization rates in Stanger’s range, our equity value exceeded the total liquidation preference for all of our outstanding preferred securities as of the Valuation Date.

Third-party appraisals. Stanger prepared a range of equity values based upon the most recent appraised values of our assets (on an “as is” and “stabilized” basis), deducted our indebtedness, and adjusted for available working capital and for estimated non-controlling interests due to third parties as of the Valuation Date to derive an estimate of our equity value (before accounting for the preferred securities). Using the “as is” values and the “stabilized” values, our equity value exceeded the total liquidation preference for all of our outstanding preferred securities.

Stanger is engaged in the business of providing valuation services for real estate assets and consulting services for non-traded REITs and their sponsors as well as for other real estate programs. Stanger has previously provided valuation services to us, most recently as of December 31, 2021, for which Stanger was paid normal and customary compensation, none of which was contingent upon their findings. In addition, Stanger has provided consulting services to Ashford Securities LLC, a subsidiary of Ashford Inc., since 2019 and has received fees in connection with those services. As previously disclosed, we provide funds to Ashford Inc. in connection with the formation, registration and operations of Ashford Securities LLC.

Limitations of Estimated Liquidation Value per Share

As with any valuation methodology, the methodologies used to assess the estimated liquidation value per share are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates or methodologies could derive different estimated liquidation values per share, and this difference could be significant. The estimated liquidation value per share of each of the Series E Preferred Stock and the Series M Preferred Stock are not audited and do not represent a determination of the fair value of our assets or liabilities based on U.S. generally accepted accounting principles (GAAP) or the amount at which our shares of Series E Preferred Stock or Series M Preferred Stock would trade on a national securities exchange.

Further, the Company did not make any adjustments to the valuation for the impact of other transactions occurring subsequent to December 31, 2022. Because of, among other factors, the high concentration of the Company’s total assets in real estate, changes in the value of individual assets in the Company’s real estate portfolio or changes in valuation assumptions could have a significant impact on the liquidation values of the Series E Preferred Stock and/or the Series M Preferred Stock.

Forward-Looking Statements

The foregoing includes forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to the safe harbors created by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding the estimated values of our real estate portfolio and the Company’s shares of Series E Preferred Stock and Series M Preferred Stock, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. Actual results may differ materially from those contemplated by such forward-looking statements. The appraisal methodologies for the Company’s real estate properties assumes that investors would be willing to invest at similar capitalization rates. Though the estimates of the fair market value of the property investments of the Company is Stanger’s best estimates, the Company can give no assurance in this regard. Even small changes to these assumptions could result in significant differences in the appraised values of the property investments in our portfolio and the estimated values per share of Series E Preferred Stock and/or Series M Preferred Stock. These statements also depend on factors and other risks identified in Part I, Item IA of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC, as updated by the Company’s subsequent Quarterly Reports on Form 10-Q, as filed with the SEC. Actual events may cause the value and returns on the Company’s investments to be less than that used for purposes of assisting the Company with estimating the values per share of its Series E Preferred Stock and its Series M Preferred Stock.

ITEM 9.01     FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

Exhibit

Number     Exhibit Description

23.1    Consent of Robert A. Stanger & Co., Inc.

104    Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

SIGNATURE

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 hereunto duly authorized.

 

	BRAEMAR HOTELS & RESORTS INC.
Dated: March 30, 2022	By:	/s/ Alex Rose
		Alex Rose
		Executive Vice President, General Counsel & Secretary

EX-23.1

EXHIBIT 23.1

CONSENT OF ROBERT A. STANGER & CO., INC.

We consent to the references to our name and the valuation conclusions and methodologies of our report, dated March 30, 2023, prepared by us with respect to the estimated liquidation value per share of Series E Redeemable Preferred Stock and Series M Redeemable Preferred Stock of Braemar Hotels & Resorts Inc. (the “Company”), which is contained in this Form 8-K and incorporated by reference in the Company’s Registration Statements on Form S-3 (SEC File Nos. 333-263517, 333-25488, 333-234663, 333-223799, 333-209389, 333-200718 and 333-200420) and the Company’s Registration Statements on Form S-8 (SEC File Nos. 333-264883, 333-256002, 333-218888, 333-204705 and 333-194968). In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended.

Sincerely,

Robert A. Stanger & Co., Inc.

By: /s/ Robert A. Stanger & Co., Inc.

Date: March 30, 2023

XML

Cover Page Cover Page	Mar. 30, 2023
Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Mar. 30, 2023
Entity Registrant Name	BRAEMAR HOTELS & RESORTS INC.
Entity Incorporation, State or Country Code	MD
Entity File Number	001-35972
Entity Tax Identification Number	46-2488594
Entity Address, Address Line One	14185 Dallas Parkway
Entity Address, Address Line Two	Suite 1200
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75254
City Area Code	972
Local Phone Number	490-9600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0001574085
Amendment Flag	false
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock
Trading Symbol	BHR
Security Exchange Name	NYSE
Series B Preferred Stock
Entity Information [Line Items]
Title of 12(b) Security	Preferred Stock, Series B
Trading Symbol	BHR-PB
Security Exchange Name	NYSE
Series D Preferred Stock
Entity Information [Line Items]
Title of 12(b) Security	Preferred Stock, Series D
Trading Symbol	BHR-PD
Security Exchange Name	NYSE