Dive Brief:
- Braemar Hotels & Resorts has ended a strategic review process, with plans to terminate its advisory agreement with Ashford Inc. and its affiliates and become a self-managed real estate investment trust, the company announced Friday. Braemar will also remain publicly traded.
- The company will undergo “a series of actions designed to simplify its corporate structure, reduce costs, enhance governance and position the Company for long-term profitability and value creation,” the release detailed.
- The decision comes after Braemar initiated a process to sell its company last August, saying at that time it was in the best interests of company shareholders to pursue a deal. However, after a special committee’s “thorough review of strategic alternatives,” Braemar’s board of directors has determined this new course of action is “the best outcome for shareholders,” Rebeca Odino-Johnson, chairperson of the special committee, which comprised independent directors, said in a Friday statement.
Dive Insight:
In addition to terminating its advisory agreement with Ashford, Braemar plans to hire employees directly as a cost-savings measure and restructure its board of directors to “improve shareholder alignment,” per the release.
The company has retained an independent executive search firm to identify five new independent board members. Once the new members are added to the board, all existing directors, including Chairman Monty Bennett, will step down, with the exception of Braemar President and CEO Richard Stockton.
Braemar also plans to maintain a portfolio of approximately six to eight luxury properties across the U.S. and the Caribbean on a go-forward basis, per the release. The portfolio is expected to have a gross asset value of more than $1 billion and generate total annual revenue of $300 million to $350 million, according to the company.
At the time Braemar initiated its sale process last summer, the REIT’s portfolio included nine resorts and five urban hotels. Hospitality professionals told Hotel Dive at the time that the portfolio had historically underperformed because of its ties to the Ashford platform.
Over the last year, Braemar has sold properties including the Park Hyatt Beaver Creek Resort & Spa in Avon, Colorado, and the Marriott Seattle Waterfront in Seattle.
Braemar is currently evaluating three additional asset sales “to satisfy the Company’s obligations associated with the termination of the Ashford advisory relationship and focus on maximizing the value of our remaining luxury portfolio,” Stockton said in a statement.
“With a streamlined portfolio, in-house management and renewed focus on operational efficiency, Braemar will be better positioned for long-term profitability, shareholder alignment and value creation,” Stockton said. “We are also pleased with the consideration we are receiving from the recently announced asset sales at attractive values.”
As part of its new structure, Braemar will also terminate its contractual relationships with Ashford affiliates Premier Project Management LLC and Remington Lodging & Hospitality LLC, per the release.
