Following Braemar Hotels & Resorts’ Friday announcement to cut ties with Ashford Inc. and become a self-managed real estate investment trust, the company’s largest shareholder criticized and threatened legal action to rectify “indefensible” actions that led to the decision.
Braemar disclosed Friday that it ended a strategic review process and, rather than selling its business, would terminate its advisory agreement with Ashford Inc. and its affiliates. In line with the decision, Braemar also intends to restructure its board of directors and potentially sell up to three additional assets from its portfolio to satisfy the termination obligations. Braemar representatives said in a statement the decision was “the best outcome for shareholders.”
One shareholder, however, doesn’t see it that way. On Monday, Braemar’s largest shareholder, Bermuda-based Al Shams Investments Limited, sent a letter to Braemar’s outside directors admonishing their authorization of three asset sales that triggered the termination with Ashford Inc., including a “termination fee” owed to Ashford totaling some $480 million.
Braemar’s move constitutes “self-dealing,” Al Shams claimed in the open letter, dated June 15. The letter, along with other government filings and public statements reviewed by Hotel Dive, outlined what led to Braemar’s recent decision, why Al Shams sees it as a “betrayal” and the legal actions the shareholder could take to “remedy” the situation.
‘A massive windfall’
Earlier this month, Braemar entered into an agreement to sell the Ritz-Carlton Sarasota in Florida as well as the Hotel Yountville and the Bardessono Hotel and Spa, both located in Yountville, California, for a combined $437.5 million, according to a June 4 filing with the U.S. Securities and Exchange Commission.
Braemar’s authorization of these hotel sales (together representing more than 20% of the company’s gross asset value) set in motion a “massive windfall” of $480 million to Ashford, per Al Shams, in accordance with an advisory agreement the companies entered into last summer. While the three hotel sales don’t total the full termination obligation, Braemar CEO Richard Stockton said Friday the company plans to sell up to three additional properties to meet those requirements.
Al Shams claims that Monty Bennett, who is the founder, chairman and CEO at Dallas-based Ashford Inc. as well as the founder and chairman of Braemar, approved the transactions to personally financially benefit.
While shareholders have been left with stock trading at roughly $2.10 per share after Braemar’s share price dropped following the company’s split from Ashford, Bennett stands to receive significantly more per share from the termination payout, AI Shams alleged in the letter.
In response to the letter, a Braemar spokesperson said in a statement to Hotel Dive Monday that Al Shams’ claims “are nothing more than an attempt to mislead shareholders and hide its true intentions.”
The spokesperson said that since Al Shams made its initial investment in Braemar, the firm has implemented several of Al Shams’ suggestions, “including wholly refreshing the Board, installing an independent Chairman, becoming a self-managed REIT, and separating from Ashford.”
On Friday, Braemar announced that in line with becoming self-managed, the company would restructure its board to “improve shareholder alignment.” The company said it has retained an independent executive search firm to identify five new independent board members, and once those members join the board, all existing directors, including Bennett, will step down. The company spokesperson confirmed Monday that the selections are taking place “without any involvement from Ashford or Mr. Bennett.”
But Al Shams alleged in the letter that that action was taken too late, saying Braemar’s “belated resignations and talk of reconstituting the Board fool no one.” With Stockton still serving as CEO, Al Shams said it is concerned about the validity of the director selections.
Previously ‘warned’
Braemar’s Friday decision came after Al Shams had previously “warned” Braemar’s outside directors not to pursue additional transactions or make changes to its board of directors or company strategy without the input of company shareholders, according to a Monday news release.
In a May 8 letter, Al Shams asserted that further hotel divestitures — following Braemar’s sale of the Park Hyatt Beaver Creek Resort & Spa in Avon, Colorado — would risk triggering the $480 million termination fee to Ashford, with that payment being “made directly to Ashford before any proceeds reach shareholders.”
In the May letter, Al Shams called on Braemar to pause additional hotel sales until shareholders had the opportunity to elect a new board of directors that would “act with dedication to shareholders.” Al Shams subsequently sent open letters to the board on June 2 and June 10, expressing additional concerns.
In its Monday letter, Al Shams said it “intends to pursue every available legal remedy” against Bennett as well as “all parties complicit in these transactions.” The investor also said it plans to “nominate a full slate of genuinely independent directors for the 2026 Annual Meeting and vigorously oppose every candidate selected” by Braemar or Bennett.
“We call on you to hold the Annual Meeting immediately, so that shareholders — the true owners of this Company — can replace you with directors who understand what a fiduciary duty actually means,” the letter said.
