Throwing together a quick note on Braemar Hotels & Resorts (BHR) (~$180MM market cap) before I start a busy Friday, forgive me if there are any glaring mistakes, I'll come back and fix them over the weekend. Today, BHR announced the conclusion of their strategic review, originally it was a sale process, but now the luxury hotel REIT is going to internalize management and distance itself from its external manager, Ashford Inc. My first take is this move is designed to get Ashford Inc its $480MM termination fee without being subject to a shareholder vote (10% holder Al Shams Investments Ltd has been vocal in trying to block this payment to Monty Bennett) that would come with a full sale of the company. BHR recently announced the sale of 3 hotels for a total of $437.5MM (12.5x hotel EBITDA by my math) that along with cash on the balance sheet, should be sufficient to payoff Monty. Ashford directors are resigning, the board will be refreshed, and the new REIT will be free to pursue life without external management conflicts.
Post-internalization, this will be a pretty small subscale REIT that should attract takeover attention. Hotel REITs have been performing exceptionally this year, the top of the K-shaped economy is doing well, especially with all the Mag7 stock comp and AI IPO money hitting the upper class brokerage accounts. Below is my back of envelope of what BHR might fetch in a sale (so its not including corporate overhead as a standalone to be clear):
I own too much of this to begin with, but depending on where it trades today, could be provide an interesting entry point for those on the sideline now that Ashford will be out of the picture. Some of these properties are exceptional assets that any number of other REITs or private investors would gladly scoop up.
Disclosure: I own shares of BHR
No comments:
Post a Comment