Braemar Hotels & Resorts Inc. (NYSE: BHR) trims debt with $176M hotel sale
Braemar Hotels & Resorts Inc., a luxury hotel REIT, reported Q2 2026 total hotel revenue of $171.0 million and net income attributable to the company of $6.9 million, helped by a $17.4 million gain on the $176 million sale of Park Hyatt Beaver Creek Resort & Spa.
For the first six months of 2026, hotel revenue was $380.0 million and net income attributable to the company was $24.7 million, while net income attributable to common stockholders was $4.2 million, or $0.06 per share. Operating cash flow was $42.9 million. Investments in hotel properties, net, declined to $1.10 billion, reflecting asset sales and classification of $327.9 million of properties as held for sale. Indebtedness, net, fell to $745.9 million from $1.10 billion at year‑end, including full repayment of 4.50% Convertible Senior Notes. Redeemable preferred stock redemptions payable increased to $54.8 million, mainly from unsettled Series E and Series M preferred redemptions.
Positive
- Indebtedness, net decreased to $745.9 million at June 30 2026 from $1.10 billion at December 31 2025, aided by repayment of 4.50% Convertible Senior Notes and proceeds from the $176 million Park Hyatt Beaver Creek Resort & Spa sale.
Negative
- Redeemable preferred stock redemptions payable rose to $54.8 million at June 30 2026 from $30.9 million at year‑end, reflecting pending investor‑initiated redemptions of Series E and Series M preferred shares that had not yet been completed.
Filing Explained
The three-property sale closed July 14, 2026, moving beyond held-for-sale status and accompanying a 232.8-million-dollar debt paydown.
As of
The transaction therefore moved these properties from a pending-sale classification to completed status, and the related mortgage loan was paid down by
Separately, the company determined that certain Series E and Series M preferred-stock redemption requests met the criteria for mandatory redemption and were recorded as amounts payable rather than completed redemptions.
Those outstanding requests totaled
The next quarterly filing can show how much of those preferred-stock redemption obligations has been settled.
Key Figures
Total hotel revenue Q2 2026: $171,026,000
Net income attributable to the company Q2 2026: $6,942,000
Net income attributable to common stockholders YTD 2026: $4,190,000
+5 more
8 metrics
Total hotel revenue Q2 2026
$171,026,000
Three months ended June 30, 2026
Net income attributable to the company Q2 2026
$6,942,000
Three months ended June 30, 2026
Net income attributable to common stockholders YTD 2026
$4,190,000
Six months ended June 30, 2026, $0.06 basic and diluted EPS
Net cash from operating activities
$42,869,000
Six months ended June 30, 2026
Indebtedness, net
$745,918,000
June 30, 2026, versus $1,103,450,000 at December 31, 2025
Park Hyatt Beaver Creek sale price
$176,000,000
Cash consideration received May 26, 2026
Gain on Park Hyatt Beaver Creek sale
$17,398,000
Gain for the three and six months ended June 30, 2026
Assets held for sale
$327,886,000
Carrying value of three hotels classified as held for sale at June 30, 2026
Key Terms
real estate investment trust, taxable REIT subsidiaries, variable interest entity, SOFR, +2 more
6 terms
real estate investment trust financial
"Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Code."
A real estate investment trust (REIT) is a company that owns and manages income-producing properties—like apartment buildings, shopping centers, offices, or warehouses—and is required to pass most of its rental income to shareholders as dividends. Think of it as a shared property owner: instead of buying a whole building, investors buy a slice of a portfolio that pays regular income and can offer exposure to property values and rental markets without direct management. REITs matter to investors for predictable income, diversification, and liquidity compared with owning physical real estate.
taxable REIT subsidiaries financial
"11 of our 12 hotel properties were leased by wholly-owned subsidiaries that are treated as taxable REIT subsidiaries."
variable interest entity financial
"Braemar OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance."
A variable interest entity (VIE) is a company structure where one party controls another company’s operations and economic outcomes through contracts or special arrangements instead of owning a majority of its voting shares. For investors, VIEs matter because the controlling party’s financial results, debts and risks can appear in the controller’s reports even though ownership looks separate, so understanding VIEs helps assess true exposure, governance limits and transparency—like spotting a puppet controlled by strings rather than direct ownership.
SOFR financial
"Several mortgage loans bear interest at SOFR plus a stated spread, with SOFR at 3.65% at June 30, 2026."
The Secured Overnight Financing Rate (SOFR) is a market benchmark that measures the cost of borrowing cash overnight using U.S. Treasury securities as collateral. Investors watch SOFR because it acts like a speedometer for short-term interest costs—affecting loan rates, bond yields and the pricing of interest-rate contracts—so movements change borrowing expenses, cash returns and the value of interest-sensitive investments.
payment-in-kind interest financial
"The Loan shall bear payment-in-kind interest during the Term at a rate equal to Term SOFR plus 3.00%."
Payment-in-kind interest is interest that a borrower pays not with cash but by increasing the loan balance or issuing additional securities, like receiving more IOUs instead of money. For investors this matters because it reduces immediate cash receipts, can dilute ownership or increase a company’s debt load over time, and signals how comfortably a borrower can meet cash obligations — all factors that affect valuation and credit risk.
interest rate caps financial
"We use interest rate caps to hedge our debt and our cash flows, which are recorded at fair value."
An interest rate cap is a contractual ceiling that limits how high an interest rate can rise on a loan, bond or other floating-rate exposure, and can also be bought as a financial contract that pays if rates exceed a set level. It matters to investors because it reduces the risk of sharply higher borrowing costs or falling bond prices—think of it as a protective roof that keeps payments or losses from climbing past a known limit.
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FAQ
How did Braemar Hotels & Resorts (BHR) perform in Q2 2026?
Braemar generated $171.0 million in total hotel revenue and net income attributable to the company of $6.9 million in Q2 2026. Net income attributable to common stockholders was a modest loss of $0.7 million, or $0.01 per share.
What were Braemar Hotels & Resorts (BHR) results for the first half of 2026?
For the six months ended June 30 2026, Braemar reported $380.0 million in total hotel revenue and net income attributable to the company of $24.7 million. Net income attributable to common stockholders was $4.2 million, or $0.06 per share, with operating cash flow of $42.9 million.
What major asset sales did Braemar Hotels & Resorts (BHR) execute in 2026?
On May 26 2026, Braemar sold Park Hyatt Beaver Creek Resort & Spa for $176 million in cash, realizing a gain of about $17.4 million. As of June 30 2026, three additional luxury hotels were classified as held for sale with assets of $327.9 million.
How much debt does Braemar Hotels & Resorts (BHR) have after Q2 2026?
At June 30 2026, Braemar’s indebtedness, net was $745.9 million, down from $1.10 billion at December 31 2025. The company also fully repaid its 4.50% Convertible Senior Notes with a prior principal balance of $86.3 million.
What is happening with Braemar Hotels & Resorts (BHR) Series E and M preferred stock?
Braemar had $54.8 million of redeemable preferred stock redemptions payable at June 30 2026, tied to investor‑initiated redemptions of Series E and Series M preferred shares. In the first half of 2026, it redeemed 1.299 million Series E and 32,000 Series M shares.
How strong was Braemar Hotels & Resorts (BHR) cash generation in the first half of 2026?
Braemar produced $42.9 million of net cash provided by operating activities for the six months ended June 30 2026. Investing cash flow benefited from the $169.2 million net proceeds from the Park Hyatt Beaver Creek sale, while financing cash flow reflected significant debt repayment and preferred share redemptions.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS employer identification number) | |||||||
| (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. ☑ Yes ☐ 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). ☑ 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 | ☐ | ☑ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ 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 | ||||||||||||
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 | ||||||||
| (Class) | Outstanding at August 4, 2026 | |||||||
BRAEMAR HOTELS & RESORTS INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2026
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION | |||||
ITEM 1. FINANCIAL STATEMENTS (unaudited) | |||||
Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 | 2 | ||||
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 | 3 | ||||
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2026 and 2025 | 4 | ||||
Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2026 and 2025 | 5 | ||||
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 | 7 | ||||
Notes to Condensed Consolidated Financial Statements | 9 | ||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 35 | ||||
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 57 | ||||
ITEM 4. CONTROLS AND PROCEDURES | 57 | ||||
PART II. OTHER INFORMATION | |||||
ITEM 1. LEGAL PROCEEDINGS | 58 | ||||
ITEM 1A. RISK FACTORS | 59 | ||||
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 60 | ||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 60 | ||||
ITEM 4. MINE SAFETY DISCLOSURES | 60 | ||||
ITEM 5. OTHER INFORMATION | 60 | ||||
ITEM 6. EXHIBITS | 61 | ||||
SIGNATURES | 63 | ||||
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)
| June 30, 2026 | December 31, 2025 | |||||||||||||
| ASSETS | ||||||||||||||
| Investments in hotel properties, gross | $ | $ | ||||||||||||
| Accumulated depreciation | ( | ( | ||||||||||||
| Investments in hotel properties, net | ||||||||||||||
| Cash and cash equivalents | ||||||||||||||
| Restricted cash | ||||||||||||||
Accounts receivable, net of allowance of $ | ||||||||||||||
| Inventories | ||||||||||||||
| Note receivable | ||||||||||||||
| Prepaid expenses | ||||||||||||||
| Deposit paid to Ashford Inc. | ||||||||||||||
| Deferred costs, net | ||||||||||||||
| Investment in unconsolidated entity | ||||||||||||||
| Derivative assets | ||||||||||||||
| Operating lease right-of-use assets | ||||||||||||||
| Other assets | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Due from third-party hotel managers | ||||||||||||||
| Assets held for sale | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Liabilities: | ||||||||||||||
| Indebtedness, net | $ | $ | ||||||||||||
| Accounts payable and accrued expenses | ||||||||||||||
| Redeemable preferred stock redemptions payable | ||||||||||||||
| Dividends and distributions payable | ||||||||||||||
Due to Ashford Inc., net | ||||||||||||||
| Due to related parties, net | ||||||||||||||
| Due to third-party hotel managers | ||||||||||||||
| Operating lease liabilities | ||||||||||||||
| Other liabilities | ||||||||||||||
Liabilities associated with assets held for sale | ||||||||||||||
| Total liabilities | ||||||||||||||
Commitments and contingencies (note 15) | ||||||||||||||
Series E redeemable preferred stock, $ | ||||||||||||||
Series M redeemable preferred stock, $ | ||||||||||||||
| Redeemable noncontrolling interests in operating partnership | ||||||||||||||
| Equity: | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
| Total stockholders’ equity of the Company | ||||||||||||||
| Noncontrolling interest in consolidated entities | ||||||||||||||
| Total equity | ||||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||||
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| REVENUE | |||||||||||||||||||||||||||||
| Rooms | $ | $ | $ | $ | |||||||||||||||||||||||||
| Food and beverage | |||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Total hotel revenue | |||||||||||||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||||||||
| Hotel operating expenses: | |||||||||||||||||||||||||||||
| Rooms | |||||||||||||||||||||||||||||
| Food and beverage | |||||||||||||||||||||||||||||
| Other expenses | |||||||||||||||||||||||||||||
| Management fees | |||||||||||||||||||||||||||||
| Total hotel operating expenses | |||||||||||||||||||||||||||||
| Property taxes, insurance and other | |||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||
| Advisory services fee | |||||||||||||||||||||||||||||
| Corporate general and administrative | ( | ||||||||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||||||||
| Gain (loss) on disposition of assets and hotel property | |||||||||||||||||||||||||||||
| OPERATING INCOME (LOSS) | |||||||||||||||||||||||||||||
| Equity in earnings (loss) of unconsolidated entity | ( | ||||||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||
| Other income (expense) | ( | ( | |||||||||||||||||||||||||||
| Interest expense and amortization of discounts and loan costs | ( | ( | ( | ( | |||||||||||||||||||||||||
| Write-off of loan costs and exit fees | ( | ( | ( | ( | |||||||||||||||||||||||||
| Realized and unrealized gain (loss) on derivatives | ( | ||||||||||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ||||||||||||||||||||||||||||
| Income tax (expense) benefit | ( | ( | ( | ||||||||||||||||||||||||||
| NET INCOME (LOSS) | ( | ||||||||||||||||||||||||||||
| (Income) loss attributable to noncontrolling interest in consolidated entities | ( | ( | |||||||||||||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | ( | ||||||||||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | ( | ||||||||||||||||||||||||||||
| Preferred dividends | ( | ( | ( | ( | |||||||||||||||||||||||||
| Deemed dividends on preferred stock | ( | ( | ( | ( | |||||||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||
| INCOME (LOSS) PER SHARE - BASIC: | |||||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||
| Weighted average common shares outstanding – basic | |||||||||||||||||||||||||||||
| INCOME (LOSS) PER SHARE - DILUTED: | |||||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||
| Weighted average common shares outstanding – diluted | |||||||||||||||||||||||||||||
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| NET INCOME (LOSS) | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: | |||||||||||||||||||||||||||||
Unrealized gain (loss) on investment in securities | ( | ||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | ( | ||||||||||||||||||||||||||||
| Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities | ( | ( | |||||||||||||||||||||||||||
| Comprehensive net (income) loss attributable to redeemable noncontrolling interests in operating partnership | ( | ||||||||||||||||||||||||||||
| COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
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)
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Noncontrolling Interest in Consolidated Entities | Total | Preferred Stock | Series E Redeemable Preferred Stock | Series M Redeemable Preferred Stock | Redeemable Noncontrolling Interests in Operating Partnership | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series B ($ | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series D ($ | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series E ($ | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series M ($ | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase true-up of remaining noncontrolling interest | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of redeemable preferred stock from mezzanine equity to liability | — | — | — | — | — | — | — | — | — | — | ( | ( | ( | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption value adjustment – preferred stock | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption value adjustment | — | — | — | — | — | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income/(loss) | Noncontrolling Interest in Consolidated Entities | Total | Preferred Stock | Series E Redeemable Preferred Stock | Series M Redeemable Preferred Stock | Redeemable Noncontrolling Interests in Operating Partnership | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common stock | — | — | ( | ( | ( | — | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | — | ( | — | — | — | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – common stock ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series B ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series D ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series E ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series M ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption/conversion of operating partnership units | — | — | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on investment in securities | — | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption of preferred stock | — | — | — | — | — | — | — | — | — | — | — | ( | ( | ( | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption value adjustment – preferred stock | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption value adjustment | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Noncontrolling Interest in Consolidated Entities | Total | Preferred Stock | Series E Redeemable Preferred Stock | Series M Redeemable Preferred Stock | Redeemable Noncontrolling Interests in Operating Partnership | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series B ($ | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series D ($ | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series E ($ | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series M ($ | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase true-up of remaining noncontrolling interest | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption/conversion of operating partnership units | — | — | — | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of redeemable preferred stock from mezzanine equity to liability | — | — | — | — | — | — | — | — | — | — | ( | ( | ( | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption value adjustment – preferred stock | — | — | — | — | — | ( | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption value adjustment | — | — | — | — | — | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income/(loss) | Noncontrolling Interest in Consolidated Entities | Total | Series E Redeemable Preferred Stock | Series M Redeemable Preferred Stock | Redeemable Noncontrolling Interests in Operating Partnership | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common stock | — | — | ( | ( | ( | — | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | — | — | — | — | ( | — | — | — | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted shares/units | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – common stock - ($ | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series B ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series D ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series E ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared – preferred stock - Series M ($ | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption/conversion of operating partnership units | — | — | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption of operating partnership units for cash | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption of preferred stock | — | — | — | — | — | — | — | — | — | — | — | ( | ( | ( | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on investment in securities | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption value adjustment – preferred stock | — | — | — | — | — | ( | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption value adjustment | — | — | — | — | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Six Months Ended June 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||
| Net income (loss) | $ | $ | |||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Recognition of deferred income | ( | ( | |||||||||||||||
| Equity-based compensation | ( | ||||||||||||||||
| Bad debt expense | |||||||||||||||||
| Amortization of loan costs and discounts | |||||||||||||||||
| Write-off of loan costs and exit fees | |||||||||||||||||
| Amortization of intangibles | |||||||||||||||||
| Amortization of non-refundable membership initiation fees | ( | ( | |||||||||||||||
| Interest expense accretion on refundable membership club deposits | |||||||||||||||||
Realized (gain) loss on sale of securities | |||||||||||||||||
| (Gain) loss on disposition of assets and hotel property | ( | ||||||||||||||||
| Realized and unrealized (gain) loss on derivatives | ( | ||||||||||||||||
Non-cash interest income | ( | ( | |||||||||||||||
| Equity in (earnings) loss of unconsolidated entity | |||||||||||||||||
| Deferred income tax expense (benefit) | ( | ||||||||||||||||
| Changes in operating assets and liabilities, exclusive of disposition of assets and hotel property: | |||||||||||||||||
| Accounts receivable and inventories | ( | ( | |||||||||||||||
| Prepaid expenses and other assets | ( | ||||||||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||||||||
| Operating lease right-of-use assets | |||||||||||||||||
| Due to/from related parties, net | ( | ||||||||||||||||
| Due to/from third-party hotel managers | ( | ( | |||||||||||||||
| Due to/from Ashford Inc. | ( | ( | |||||||||||||||
| Operating lease liabilities | |||||||||||||||||
| Other liabilities | |||||||||||||||||
| Net cash provided by (used in) operating activities | |||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||
| Proceeds from property insurance | |||||||||||||||||
Proceeds from sale of investment in securities | |||||||||||||||||
Acquisition of land | ( | ||||||||||||||||
| Net proceeds from sale of hotel property | |||||||||||||||||
| Proceeds from sale of investment in unconsolidated entity | |||||||||||||||||
| Improvements and additions to hotel properties | ( | ( | |||||||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||||||||
| (Continued) | |||||||||||||||||
7
| Six Months Ended June 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||
| Borrowings on indebtedness | |||||||||||||||||
| Repayments of indebtedness | ( | ( | |||||||||||||||
| Payments of loan costs and exit fees | ( | ( | |||||||||||||||
| Payments for derivatives | ( | ( | |||||||||||||||
| Proceeds from derivatives | |||||||||||||||||
| Purchase of common stock | ( | ||||||||||||||||
| Payments for dividends and distributions | ( | ( | |||||||||||||||
| Contributions from noncontrolling interest in consolidated entities | |||||||||||||||||
| Redemption of operating partnership units | ( | ||||||||||||||||
| True-up for acquisition of noncontrolling interest in consolidated entities | |||||||||||||||||
| Redemption of preferred stock | ( | ( | |||||||||||||||
| Net cash provided by (used in) financing activities | ( | ( | |||||||||||||||
| Net change in cash, cash equivalents and restricted cash (including cash, cash equivalents and restricted cash held for sale) | ( | ( | |||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||||||||
| Cash, cash equivalents and restricted cash at end of period (including cash, cash equivalents and restricted cash held for sale) | $ | $ | |||||||||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | |||||||||||||||||
| Interest paid | $ | $ | |||||||||||||||
| Income taxes paid (refunded) | |||||||||||||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||||||||||||
| Dividends and distributions declared but not paid | $ | $ | |||||||||||||||
| Common stock purchases accrued but not paid | |||||||||||||||||
Assumption of debt in acquisition of land | |||||||||||||||||
| Capital expenditures accrued but not paid | |||||||||||||||||
| Distributions declared but not paid to a noncontrolling interest in a consolidated entity | |||||||||||||||||
| Non-cash preferred stock dividends | |||||||||||||||||
| Unsettled proceeds from derivatives | |||||||||||||||||
Non-cash common stock/unit dividends | |||||||||||||||||
Non-cash redemption of common units | |||||||||||||||||
Non-cash consideration for acquisition of land | |||||||||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||||||||||
| Cash and cash equivalents at beginning of period | $ | $ | |||||||||||||||
| Restricted cash at beginning of period | |||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | $ | $ | |||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||||||||
| Restricted cash at end of period | |||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||||||||
| Cash and cash equivalents at end of period included in assets held for sale | — | ||||||||||||||||
Restricted cash at end of period included in assets held for sale | |||||||||||||||||
Cash, cash equivalents and restricted cash at end of period (including cash, cash equivalents and restricted cash held for sale) | $ | $ | |||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
8
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 STR, LLC. Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Braemar conducts its business and owns substantially all of its assets through its operating partnership, Braemar Hospitality Limited Partnership (“Braemar OP”). Terms such as the “Company,” “we,” “us” or “our” refer 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 contractually engage hotel management companies to operate them for us under management contracts. Remington Lodging & Hospitality, LLC (“Remington Hospitality”), a subsidiary of Ashford Inc., manages five of our 12 hotel properties as of June 30, 2026. Third-party management companies manage the remaining hotel properties.
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, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and cash management services.
The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of June 30, 2026, own 12 hotel properties in five states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands (“USVI”). These hotel properties represent 2,831 total rooms. As a REIT, Braemar is required to comply with limitations imposed by the Code related to operating hotels. As of June 30, 2026, 11 of our 12 hotel properties were leased by wholly-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.
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’s TRSs is eliminated in consolidation. The hotel properties are operated under management contracts with Marriott Hotel Services, LLC (“Marriott”), Hilton Management LLC (“Hilton”), Four Seasons Hotels Limited (“Four Seasons”), The Ritz-Carlton Hotel Company, L.L.C. and its affiliates, each of which is also an affiliate of Marriott (“Ritz-Carlton”), and Remington Hospitality, which are eligible independent contractors under the 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 adjustments) 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 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 unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026.
9
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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 six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
•On August 7, 2025, we sold the Marriott Seattle Waterfront. The operating results of the hotel property were excluded from our results of operations as of the disposition date.
•On November 6, 2025, we sold The Clancy. The operating results of the hotel property were excluded from our results of operations as of the disposition date.
•On May 26, 2026, we sold the Park Hyatt Beaver Creek Resort & Spa. The operating results of the hotel property were excluded from our results of operations as of the disposition 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.
Recently Issued Accounting Standards—In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses that requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the statement of operations.
In January 2025, the FASB issued ASU 2025-01 which amends the effective date of the new disaggregation of income statement expenses standard to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is still permitted. The amendments may be applied either: (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU; or (2) retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact this ASU will have on our disclosures.
10
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
3. Revenue
The following tables present our revenue disaggregated by geographical areas (dollars in thousands):
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Primary Geographical Market | Number of Hotels | Rooms | Food and Beverage | Other Hotel | Total | |||||||||||||||||||||||||||||||||
| California | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Puerto Rico | ||||||||||||||||||||||||||||||||||||||
| Arizona | ||||||||||||||||||||||||||||||||||||||
| Florida | ||||||||||||||||||||||||||||||||||||||
| Illinois | ||||||||||||||||||||||||||||||||||||||
| Pennsylvania | ||||||||||||||||||||||||||||||||||||||
| Washington, D.C. | ||||||||||||||||||||||||||||||||||||||
| USVI | ||||||||||||||||||||||||||||||||||||||
Sold hotel property | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Primary Geographical Market | Number of Hotels | Rooms | Food and Beverage | Other Hotel | Total | |||||||||||||||||||||||||||||||||
| California | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Puerto Rico | ||||||||||||||||||||||||||||||||||||||
| Arizona | ||||||||||||||||||||||||||||||||||||||
| Florida | ||||||||||||||||||||||||||||||||||||||
| Illinois | ||||||||||||||||||||||||||||||||||||||
| Pennsylvania | ||||||||||||||||||||||||||||||||||||||
| Washington, D.C. | ||||||||||||||||||||||||||||||||||||||
| USVI | ||||||||||||||||||||||||||||||||||||||
Sold hotel properties | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Primary Geographical Market | Number of Hotels | Rooms | Food and Beverage | Other Hotel | Total | |||||||||||||||||||||||||||||||||
| California | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Puerto Rico | ||||||||||||||||||||||||||||||||||||||
| Arizona | ||||||||||||||||||||||||||||||||||||||
| Florida | ||||||||||||||||||||||||||||||||||||||
| Illinois | ||||||||||||||||||||||||||||||||||||||
| Pennsylvania | ||||||||||||||||||||||||||||||||||||||
| Washington, D.C. | ||||||||||||||||||||||||||||||||||||||
| USVI | ||||||||||||||||||||||||||||||||||||||
Sold hotel property | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
11
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Primary Geographical Market | Number of Hotels | Rooms | Food and Beverage | Other Hotel | Total | |||||||||||||||||||||||||||||||||
| California | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Puerto Rico | ||||||||||||||||||||||||||||||||||||||
Arizona | ||||||||||||||||||||||||||||||||||||||
| Florida | ||||||||||||||||||||||||||||||||||||||
| Illinois | ||||||||||||||||||||||||||||||||||||||
| Pennsylvania | ||||||||||||||||||||||||||||||||||||||
| Washington, D.C. | ||||||||||||||||||||||||||||||||||||||
| USVI | ||||||||||||||||||||||||||||||||||||||
Sold hotel properties | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
4. Investments in Hotel Properties, net
Investments in hotel properties, net consisted of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Land | $ | $ | ||||||||||||
| Buildings and improvements | ||||||||||||||
| Furniture, fixtures and equipment | ||||||||||||||
| Construction in progress | ||||||||||||||
| Residences | ||||||||||||||
| Total cost | ||||||||||||||
| Accumulated depreciation | ( | ( | ||||||||||||
| Investments in hotel properties, net | $ | $ | ||||||||||||
5. Hotel Dispositions, Impairments and Held for Sale
On August 7, 2025, the Company sold the Marriott Seattle Waterfront for $145 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $88.4 million on the mortgage loan that was partially secured by the hotel property. The sale resulted in a gain of approximately $41.1 million for the year ended December 31, 2025.
On November 6, 2025, the Company sold The Clancy for $115 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $64.7 million on the mortgage loan that was partially secured by the hotel property. The sale resulted in a gain of approximately $41.7 million for the year ended December 31, 2025.
On May 26, 2026, the Company sold the Park Hyatt Beaver Creek Resort & Spa for $176 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid the $70.5 million mortgage loan that was secured by the hotel property. The sale resulted in a gain of approximately $17.4
12
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
We included the results of operations for these hotel properties through the dates of disposition in net income (loss) as shown in our condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025. The following table includes the condensed consolidated financial information from the disposed hotel properties (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| Total hotel revenue | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Total hotel operating expenses | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Property taxes, insurance and other | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Gain (loss) on disposition of assets and hotel property | ||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | ||||||||||||||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||||||||||||
| Interest expense and amortization of loan costs | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Write-off of loan costs and exit fees | ( | |||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | ( | |||||||||||||||||||||||||||||||||||||
| (Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes attributable to the Company | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
Impairment Charges
During the three and six months ended June 30, 2026 and 2025, no
Assets Held For Sale
On June 4, 2026, the Company entered into a purchase and sale agreement for The Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville. As of June 30, 2026, these hotels were classified as held for sale. Depreciation and amortization ceased as of the date the assets were deemed held for sale. Since the sale of these hotels did not represent a strategic shift that has (or will have) a major effect on our operations or financial results, their results of operations were not reported as discontinued operations in the consolidated financial statements. The sale of the three hotel properties closed on July 14, 2026. See note 17.
13
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The major classes of assets and liabilities related to assets held for sale included in the consolidated balance sheet at June 30, 2026 were as follows:
| June 30, 2026 | |||||
| Assets | |||||
| Investments in hotel properties, gross | $ | ||||
| Accumulated depreciation | ( | ||||
| Investments in hotel properties, net | |||||
| Cash and cash equivalents | |||||
| Restricted cash | |||||
| Accounts receivable, net | |||||
| Inventories | |||||
| Prepaid expenses | |||||
| Operating lease right-of-use assets | |||||
| Other assets | |||||
| Intangible assets, net | |||||
| Due from third-party hotel managers | |||||
| Assets held for sale | $ | ||||
| Liabilities | |||||
| Indebtedness, net | $ | ||||
| Accounts payable and accrued expenses | |||||
| Due to Ashford Inc., net | |||||
| Due to related party, net | |||||
| Operating lease liabilities | |||||
| Other liabilities | |||||
| Liabilities associated with assets held for sale | $ | ||||
14
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
6. Indebtedness, net
Indebtedness, net consisted of the following (dollars in thousands):
| Indebtedness | Collateral | Current Maturity | Final Maturity (10) | Interest Rate | June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
Convertible Senior Notes (2) | Equity | June 2026 | June 2026 | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
Mortgage loan (3) | Pier House Resort & Spa | August 2026 | August 2029 | SOFR (1) + | ||||||||||||||||||||||||||||||||||||||||||||||
| The Ritz-Carlton St. Thomas | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Bardessono Hotel & Spa | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Hotel Yountville | ||||||||||||||||||||||||||||||||||||||||||||||||||
| The Ritz-Carlton Sarasota | ||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loan (4) | The Ritz-Carlton Lake Tahoe | October 2026 | January 2027 | SOFR (1) + | ||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loan (5) | Capital Hilton | December 2026 | December 2028 | SOFR (1) + | ||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loan (6) | Park Hyatt Beaver Creek Resort & Spa | February 2027 | February 2027 | SOFR (1) + | ||||||||||||||||||||||||||||||||||||||||||||||
Term Loan (7) | Land | March 2027 | March 2027 | WSJ Prime Rate (1) | ||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loan (8) | The Notary Hotel | March 2027 | March 2030 | SOFR (1) + | ||||||||||||||||||||||||||||||||||||||||||||||
| Sofitel Chicago Magnificent Mile | ||||||||||||||||||||||||||||||||||||||||||||||||||
| The Ritz-Carlton Reserve Dorado Beach | ||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loan (9) | Four Seasons Resort Scottsdale | August 2028 | August 2030 | SOFR (1) + | ||||||||||||||||||||||||||||||||||||||||||||||
| Deferred loan costs, net | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Premiums/(discounts), net | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Indebtedness, net | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness, net related to assets held for sale (3) | Bardessono Hotel & Spa | August 2026 | August 2029 | SOFR (1) + | ||||||||||||||||||||||||||||||||||||||||||||||
| Hotel Yountville | ||||||||||||||||||||||||||||||||||||||||||||||||||
| The Ritz-Carlton Sarasota | ||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
__________________
(1)SOFR rates were 3.65 % and 3.69 % at June 30, 2026 and December 31, 2025, respectively. WSJ Prime Rate was 6.75
(2)On June 1, 2026, we repaid the Convertible Senior Notes.
(3)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. On July 14, 2026, this mortgage loan was paid down $232.8 million in conjunction with the sales of Bardessono Hotel & Spa, Hotel Yountville, and The Ritz-Carlton Sarasota. As of June 30, 2026, these three properties are held for sale.
(4)On June 25, 2026, we extended this mortgage loan secured by The Ritz-Carlton Lake Tahoe. Terms of the amendment included extending the maturity date from July 2026 to October 2026, and added one three-month extension option, subject to satisfaction of certain conditions.
(5)This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 2.00 %.
(6)On June 1, 2026, we repaid this mortgage loan in conjunction with sale of the Park Hyatt Beaver Creek Resort & Spa.
(7)This term loan bears interest at WSJ Prime Rate and has a floor of 4.99 %.
(8)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions.
(9)This mortgage loan has two one-year extension options, subject to the satisfaction of certain conditions.
Convertible Senior Notes
For the three and six months ended June 30, 2026, the Company recorded coupon interest expense of $647,000 and $1.6 million, respectively. For the three and six months ended June 30, 2025, the Company recorded coupon interest expense of $970,000 and $1.9 million, respectively.
For the three and six months ended June 30, 2026, the Company recorded discount amortization of $114,000 and $284,000 , respectively, related to the initial purchase discount. For the three and six months ended June 30, 2025, the Company recorded discount amortization of $163,000 and $324,000 , respectively, related to the initial purchase discount, with the remaining discount balance amortized through June 2026. The convertible senior notes were repaid in full on June 1, 2026.
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. 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 June 30, 2026, we were in compliance with all covenants.
15
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
7. Note Receivable
On July 2, 2024, Braemar, Ashford Hospitality Trust, Inc. (“Ashford Trust”) and Ashford Inc. (collectively with the Company, Ashford Trust and each of Ashford Inc.’s, the Company’s and Ashford Trust’s respective affiliates and any entity advised by Ashford Inc., the “Company Group”) entered into a Cooperation Agreement (the “Agreement”) with Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co. LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Aintabi (collectively, the “Blackwells Parties”) regarding the withdrawal of the Blackwells Parties’ proxy campaign, dismissal of pending litigation involving the parties and certain other matters.
Concurrently and in connection with the Agreement, certain of the parties thereto have also entered into a Share Ownership Agreement (the “Share Ownership Agreement”) and a Loan Agreement (the “Loan Agreement”), pursuant to which agreements the Company will provide to BW Coinvest I, LLC (“Borrower”) an unsecured loan (the “Loan”). The proceeds from the Loan will be used to reimburse Borrower for 70 % of the amount expended by Borrower to purchase on the open market a total of 3,500,000 shares of the Company’s common stock (the “Purchased Shares”) within six months of the date of Loan Agreement, at a price per Purchased Share not to exceed $10 and subject to the other limitations set forth therein. The Loan has a term of five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co. LLC, and Blackwells Asset Management LLC and shall bear payment-in-kind interest during the Term at a rate equal to the sum of: (a) Term SOFR (as defined in the Loan Agreement) and (b) 3.00 % (three hundred basis points) per annum. The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable due diligence expenses incurred on or prior to the date of the Share Ownership Agreement.
As of June 30, 2026, the Company has advanced approximately $8.1 million that has been used to purchase 3.5 million shares of Braemar common stock.
The note receivable is summarized in the table below (dollars in thousands):
Line Item | Interest Rate | June 30, 2026 | December 31, 2025 | |||||||||||||||||
| Note receivable | SOFR + | $ | $ | |||||||||||||||||
We recognized interest income as presented in the table below (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| Line Item | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
Interest income | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
We review receivables for expected credit losses each reporting period. Under the model, the Company estimates credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument and is required to record an allowance for expected credit losses (or reversals) in each reporting period. Our assessment of expected credit losses is based on considerable management judgment and assumptions. No
8. 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 marketplace 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.
16
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
•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 are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rose above the strike rates of the caps. Variable interest rates used in the calculation of projected receipts and payments on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (SOFR forward curves) and volatilities (Level 2 inputs). We also incorporate credit valuation adjustments (Level 3 inputs) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk.
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 June 30, 2026, the SOFR interest rate forward curve (Level 2 inputs) assumed an uptrend from 3.65 % to 3.99 % 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 table presents 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) | Total | |||||||||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Derivative assets: | ||||||||||||||||||||||||||||||||
| Interest rate derivatives - caps | $ | $ | $ | $ | (1) | |||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Quoted Market Prices (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives - caps | $ | $ | $ | $ | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
__________________
(1)Reported as “derivative assets” in our condensed consolidated balance sheets.
| | ||||||||||||||||||||||||||||||||
17
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||
| Derivative assets: | |||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives - caps | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
| Total derivative assets | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
| Non-derivative assets: | |||||||||||||||||||||||||||||||||||||||||
Investment in securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||
| Total combined | |||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives - caps | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on derivatives | $ | (1) | $ | ( | (1) | $ | (1) | $ | ( | (1) | |||||||||||||||||||||||||||||||
| Realized gain (loss) on interest rate caps | (1) (2) | (1) (2) | (1) (2) | (1) (2) | |||||||||||||||||||||||||||||||||||||
Realized gain (loss) on investment in securities | ( | (3) | ( | (3) | |||||||||||||||||||||||||||||||||||||
| Net | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||
________
(1)Reported in “realized and unrealized gain (loss) on derivatives” in our condensed consolidated statements of operations.
(2)Represents settled and unsettled payments from counterparties on interest rate caps.
(3)Reported in “other income (expense)” in our condensed consolidated statements of operations.
9. Summary of Fair Value of Financial Instruments
Determining the estimated fair values of certain financial instruments such as 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):
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||
| Financial assets measured at fair value: | ||||||||||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | ||||||||||||||||||||||
Financial assets not measured at fair value (1): | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||||||||||||
| Restricted cash | ||||||||||||||||||||||||||
| Accounts receivable, net | ||||||||||||||||||||||||||
| Note receivable | ||||||||||||||||||||||||||
| Due from third-party hotel managers | ||||||||||||||||||||||||||
Financial liabilities not measured at fair value (1): | ||||||||||||||||||||||||||
| Indebtedness | $ | $ | $ | $ | ||||||||||||||||||||||
| Accounts payable and accrued expenses | ||||||||||||||||||||||||||
| Redeemable preferred stock redemptions payable | ||||||||||||||||||||||||||
| Dividends and distributions payable | ||||||||||||||||||||||||||
| Due to Ashford Inc., net | ||||||||||||||||||||||||||
| Due to related parties, net | ||||||||||||||||||||||||||
Due to third-party hotel managers | ||||||||||||||||||||||||||
18
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
____________________________________
(1) Includes balances associated with assets held for sale and liabilities associated with assets held for sale as of June 30, 2026.
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 parties, net, accounts payable and accrued expenses, redeemable preferred stock redemptions payable, 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.
Note receivable. The carrying amount of note receivable approximates its fair value. This is considered a Level 2 valuation technique.
Derivative assets. See note 8 for a complete description of the methodology and assumptions utilized in determining fair values.
Indebtedness. Fair value of indebtedness is determined using the loan terms, collateral value and financial data such as loan-to-value ratios, debt service coverage ratios, and interest rates for comparable loans. We estimated the fair value of the total indebtedness to be approximately 100.0 % of the carrying value of $956.3 million as of June 30, 2026, and approximately 100.0 % of the carrying value of $1.1 billion as of December 31, 2025. These fair value estimates are considered a Level 2 valuation technique.
10. 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders - basic and diluted: | |||||||||||||||||||||||||||||
| Net income (loss) attributable to the Company | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Less: dividends on preferred stock | ( | ( | ( | ( | |||||||||||||||||||||||||
| Less: deemed dividends on preferred stock | ( | ( | ( | ( | |||||||||||||||||||||||||
| Less: dividends on common stock | ( | ( | |||||||||||||||||||||||||||
| Less: dividends on unvested performance stock units | ( | ( | |||||||||||||||||||||||||||
| Undistributed net income (loss) allocated to common stockholders | ( | ( | ( | ||||||||||||||||||||||||||
| Add back: dividends on common stock | |||||||||||||||||||||||||||||
| Distributed and undistributed net income (loss) - basic and diluted | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||||||||
| Weighted average common shares outstanding – basic and diluted | |||||||||||||||||||||||||||||
| Income (loss) per share - basic and diluted: | |||||||||||||||||||||||||||||
| Net income (loss) allocated to common stockholders per share | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||
19
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Net income (loss) allocated to common stockholders is not adjusted for: | |||||||||||||||||||||||||||||
| Income (loss) allocated to unvested performance stock units | $ | $ | |||||||||||||||||||||||||||
| Income (loss) attributable to redeemable noncontrolling interests in operating partnership | ( | ( | ( | ||||||||||||||||||||||||||
| Dividends on preferred stock - Series B | |||||||||||||||||||||||||||||
| Interest expense on Convertible Senior Notes | |||||||||||||||||||||||||||||
| Dividends on preferred stock - Series E (inclusive of deemed dividends) | |||||||||||||||||||||||||||||
| Dividends on preferred stock - Series M (inclusive of deemed dividends) | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
| Weighted average diluted shares are not adjusted for: | |||||||||||||||||||||||||||||
| Effect of unvested performance stock units | |||||||||||||||||||||||||||||
| Effect of assumed conversion of operating partnership units | |||||||||||||||||||||||||||||
| Effect of assumed conversion of preferred stock - Series B | |||||||||||||||||||||||||||||
| Effect of assumed conversion of Convertible Senior Notes | |||||||||||||||||||||||||||||
| Effect of assumed conversion of preferred stock - Series E | |||||||||||||||||||||||||||||
| Effect of assumed conversion of preferred stock - Series M | |||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||
20
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
11. Redeemable Noncontrolling Interests in Operating Partnership
Redeemable noncontrolling interests in the operating partnership represent 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 following table presents the redeemable noncontrolling interests in Braemar OP (in thousands) and the corresponding approximate ownership percentage of our operating partnership:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Redeemable noncontrolling interests in Braemar OP (in thousands) | $ | $ | |||||||||
Adjustments to redeemable noncontrolling interests (1) (in thousands) | $ | $ | |||||||||
| Ownership percentage of operating partnership | % | % | |||||||||
____________________________________
(1) Reflects the excess of the redemption value over the accumulated historical cost.
We allocated net (income) loss to the redeemable noncontrolling interests as illustrated in the table below (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Distributions declared to holders of common units, LTIP units and Performance LTIP units | $ | $ | $ | $ | |||||||||||||||||||||||||
The following table presents the common units redeemed/exchanged for common stock (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
Units redeemed/exchanged | ||||||||||||||||||||||||||||||||
Fair value of common units redeemed (1) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
(1) The redemption value is the greater of accumulated historical cost or fair value. The accumulated historical cost of the converted units for the six months ended June 30, 2026 was $722,000 . The accumulated historical cost of the converted units for the three and six months ended June 30, 2025 was $7.0 million and $9.3 million, respectively.
21
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents the common units redeemed for cash (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
Units redeemed | ||||||||||||||||||||||||||||||||
Fair value of common units redeemed | $ | $ | $ | $ | ||||||||||||||||||||||||||||
12. Equity
Common Stock Dividends—The following table summarizes the common stock dividends declared during the period (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Common stock dividends declared | $ | $ | $ | $ | |||||||||||||||||||||||||
Stock Repurchases—On May 3, 2024, the board of directors approved a new share 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. As of June 30, 2026, the Company has not repurchased any common stock pursuant to this program.
The following table summarizes dividends declared (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Series D Cumulative Preferred Stock | $ | $ | $ | $ | ||||||||||||||||||||||||||||
13. Redeemable Preferred Stock
Each share of our 5.50 % 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 a conversion price of $18.70 (which represents a conversion rate of 1.3372 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 Series B Convertible Preferred Stock dividend for all issued and outstanding shares is set at $1.375 per annum per share.
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 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 in the Articles Supplementary), 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; and 3) a “REIT Termination Event” and “Listing Event Redemption,” in which at any time (i) a REIT Termination Event (as 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 Convertible Preferred Stock shall have the right to require the Company to redeem any or all
22
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
shares of Series B Convertible 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 a federal 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 the advice of counsel to cease to be qualified as a REIT; or
(v) determination within the meaning of Section 1313(a) of the Code to cease to be qualified as a REIT.
Series B Convertible Preferred Stock does 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 following table summarizes dividends declared (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Series B Convertible Preferred Stock | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Series E Redeemable Preferred Stock
On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of Series E Preferred Stock in a primary offering at a price of $25.00 per share. On February 21, 2023, the Company announced the closing of its Series E Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of the Series E Preferred Stock pursuant to a dividend reinvestment plan (the “DRIP”) at $25.00 per share (the “Stated Value”).
The Series E Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred stock, the Series D Preferred Stock and the Series M Preferred Stock (as defined below)) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.
Holders of the Series E Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of the Series E Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series E Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series E Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.
Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee, subject to the limitations as stated in the Articles Supplementary. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends (with no redemption fee). The Series E Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series E Preferred Stock into a maximum of 5.69476 shares of our common stock.
The redemption fee shall be an amount equal to:
•8.0 % of the stated value of $25.00 per share (the “Stated Value”) beginning on the Original Issue Date (as defined in the Articles Supplementary) of the shares of the Series E Preferred Stock to be redeemed;
•5.0 % of the Stated Value beginning on the second anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed; and
23
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
•0 % of the Stated Value beginning on the third anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed.
The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption.
The Series E Preferred Stock cash dividends are as follows:
•8.00 % per annum of the Stated Value beginning on the date of the first settlement of the Series E Preferred Stock (the “Date of Initial Closing”);
•7.75 % per annum of the Stated Value beginning on the first anniversary from the Date of Initial Closing; and
•7.50 % per annum of the Stated Value beginning on the second anniversary from the Date of Initial Closing.
Dividends are payable on a monthly basis in arrears on the 15th day of each month (or, if such payment date is not a business day, the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year.
The Company has a DRIP that allows participating holders to have their Series E Preferred Stock dividend distributions automatically reinvested in additional shares of the Series E Preferred Stock at a price of $25.00 per share.
The Series E Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside of the Company’s control. As such, the Series E Preferred Stock is classified outside of permanent equity either in mezzanine equity or as a liability.
The Company evaluates the classification of redeemable preferred stock each reporting period based on the substance of holder redemption rights, redemption activity, contractual redemption limits, dividend payment conditions, liquidity, and other relevant factors. When redemption of any portion of a redeemable preferred stock series is considered mandatorily redeemable and not within the Company’s control, such portion is classified as a liability, while the remaining portion continues to be classified in mezzanine equity.
As of June 30, 2026, the Company determined that a portion of the outstanding Series E Preferred Stock met the criteria for mandatory redemption based on certain holders initiating redemption requests that exceeded the limitations set forth in the Articles Supplementary. As of June 30, 2026, the Company has received $53.4 million in investor-initiated Series E Preferred Stock redemption requests, representing approximately 2,137,681 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet. As of December 31, 2025, the Company had received $30.2 million in investor-initiated Series E Preferred Stock redemption requests, representing approximately 1,208,850 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet.
At the date of issuance, the carrying amount of the Series E Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period. The redemption value adjustment of Series E Preferred Stock classified as mezzanine equity is summarized below (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Series E Preferred Stock | $ | $ | |||||||||
Cumulative adjustments to Series E Preferred Stock (1) | $ | $ | |||||||||
________
(1) Reflects the excess of the redemption value over the accumulated carrying value.
The following table summarizes dividends declared (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Series E Preferred Stock | $ | $ | $ | $ | ||||||||||||||||||||||||||||
24
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The redemption activities of Series E Preferred Stock is summarized below (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Series E Preferred Stock shares redeemed | |||||||||||||||||||||||||||||
| Redemption amount, net of redemption fees | $ | $ | $ | $ | |||||||||||||||||||||||||
Series M Redeemable Preferred Stock
On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of the Series M Preferred Stock (par value $0.01 ) in a primary offering at a price of $25.00 per share (or “Stated Value”). On February 21, 2023, the Company announced the closing of its Series M Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of Series M Preferred Stock pursuant to the DRIP at $25.00 per share.
The Series M Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.
Holders of the Series M Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of Series M Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series M Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.
Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee, subject to the limitations as stated in the Articles Supplementary. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends (with no redemption fee). The Series M Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series M Preferred Stock into a maximum of 5.69476 shares of our common stock.
The redemption fee shall be an amount equal to:
•1.5 % of the Stated Value of $25.00 per share beginning on the Series M Original Issue Date (as defined in the Articles Supplementary) of the shares of Series M Preferred Stock to be redeemed; and
•0 % of the Stated Value beginning on the first anniversary from the Series M Original Issue Date of the shares of Series M Preferred Stock to be redeemed.
The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption.
Holders of Series M Preferred Stock are entitled to receive cumulative cash dividends at the initial rate of 8.2 % per annum of the Stated Value of $25.00 per share (equivalent to an annual dividend rate of $2.05 per share). Beginning one year from the date of original issuance of each share of Series M Preferred Stock and on each one-year anniversary thereafter for such share of Series M Preferred Stock, the dividend rate shall increase by 0.10 % per annum; provided, however, that the dividend rate for any share of Series M Preferred Stock shall not exceed 8.7 % per annum of the Stated Value.
Dividends are payable on a monthly basis and in arrears on the 15th day of each month (or, if such payment date is not a business day, on the next succeeding business day) to holders of record at the close of business on the last business day of each
25
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year.
The Company has a DRIP that allows participating holders to have their Series M Preferred Stock dividend distributions automatically reinvested in additional shares of the Series M Preferred Stock at a price of $25.00 per share.
The Series M Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside the Company’s control. As such, the Series M Preferred Stock is classified outside of permanent equity either in mezzanine equity or as a liability.
The Company evaluates the classification of redeemable preferred stock each reporting period based on the substance of holder redemption rights, redemption activity, contractual redemption limits, dividend payment conditions, liquidity, and other relevant factors. When redemption of any portion of a redeemable preferred stock series is considered mandatorily redeemable and not within the Company’s control, such portion is classified as a liability, while the remaining portion continues to be classified in mezzanine equity.
As of June 30, 2026, the Company determined that a portion of the outstanding Series M Preferred Stock met the criteria for mandatory redemption based on certain holders initiating redemption requests that exceeded the limitations set forth in the Articles Supplementary. As of June 30, 2026, the Company has received $1.3 million in investor-initiated Series M Preferred Stock redemption requests, representing approximately 52,725 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet. As of December 31, 2025, the Company had received $642,000 in investor-initiated Series M Preferred Stock redemption requests, representing approximately 25,689 shares, that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet.
At the date of issuance, the carrying amount of the Series M Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period. The redemption value adjustment of Series M Preferred Stock classified as mezzanine equity is summarized below (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Series M Preferred Stock | $ | $ | |||||||||
Cumulative adjustments to Series M Preferred Stock (1) | $ | $ | |||||||||
__________________
(1) Reflects the excess of the redemption value over the accumulated carrying value.
The following table summarizes dividends declared (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Series M Preferred Stock | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The redemption activities of Series M Preferred Stock is summarized below (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Series M Preferred Stock shares redeemed | |||||||||||||||||||||||||||||
| Redemption amount, net of redemption fees | $ | $ | $ | $ | |||||||||||||||||||||||||
26
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
14. Related Party Transactions
Ashford Inc.
Advisory Agreement
Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor. Our chairman, Mr. Monty 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. We pay a monthly base fee equal to 1/12 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 fifth business day of each month.
The minimum base fee for Braemar for each month will be equal to the greater of:
▪90 % of the base fee paid for the same month in the prior year; and
▪1/12 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, PSUs 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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Advisory services fee | ||||||||||||||||||||||||||||||||
| Base advisory fee | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Reimbursable expenses (1) | ||||||||||||||||||||||||||||||||
Equity-based compensation (2) | ( | ( | ||||||||||||||||||||||||||||||
| Incentive fee | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||
________
(1)Reimbursable expenses include overhead, internal audit, risk management advisory, asset management services and deferred cash awards.
(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.
On March 10, 2025, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (the “March 2025 Limited Waiver”). Pursuant to the March 2025 Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waived the operation of any provision in our advisory agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during calendar year 2025, cash incentive compensation to employees and other representatives of the Advisor.
On March 13, 2026, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (the “March 2026 Limited Waiver”). Pursuant to the March 2026 Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waived the operation of any provision in our advisory agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during calendar year 2026, cash incentive compensation to employees and other representatives of the Advisor.
Pursuant to the Company’s hotel management agreements with each hotel management company, the Company bears the economic burden for casualty insurance coverage which includes workers’ compensation, general liability and auto liability coverages. The hotel management companies procure workers’ compensation insurance, the expenses of which are passed
27
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
through to the Company. Under the advisory agreement and hotel management agreements, Ashford Inc. secures general liability and auto liability policies to cover Ashford Trust, Braemar, their hotel managers, as needed, and Ashford Inc. The total cost estimates covered by such policies are based on the collective pool of risk exposures from each party. Ashford Inc. delegates the management of the casualty insurance program to Warwick Insurance Company, LLC (“Warwick”), a subsidiary of Ashford Inc. which issues policies covering general liability, workers’ compensation and auto liability losses. Each year Ashford Inc. collects funds from Ashford Trust, Braemar and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis.
On August 26, 2025, Braemar entered into a Letter Agreement with Ashford Inc. to explore a potential sale of Braemar. Pursuant to the Letter Agreement, Braemar and Ashford Inc. agreed that the termination fee payable to Ashford Inc. under the advisory agreement is $574.8 million (exclusive of accrued fees). However, Braemar and Ashford Inc. have agreed to the payment of a discounted aggregate amount of $480.0 million plus accrued fees (the “Company Sale Fee”). Ashford Inc. received a $17.0 million payment upon execution of the agreement. The $17.0 million payment will be credited against other amounts due to Ashford Inc. from Braemar if the sale of the Company does not occur before July 1, 2028. The $17.0 million payment is presented in “deposit paid to Ashford Inc.” on the condensed consolidated balance sheets.
On December 22, 2025, Braemar entered into an amendment to the Letter Agreement. The Amendment was entered into in order to eliminate unintended ambiguity regarding the circumstances under which the termination fees become due and payable to Ashford Inc. and the timing of payment in order to more fully reflect the parties’ original intent under the Letter Agreement and ensure consistency across potential transaction structures in how the proceeds from a Company Sale Transaction (as defined in the Letter Agreement) are applied. Specifically, the Amendment revises the definition of “Company Sale Transaction” to clarify that it is a Company Change of Control (as defined in the advisory agreement). Pursuant to the Amendment, Braemar and Ashford Inc. further agreed that the Company Sale Fee (as defined in the Letter Agreement) will be paid directly to Ashford Inc. from Net Sale Proceeds (as defined in the Amendment) of a Company Sale Transaction (as defined in the Amendment), after payment of any Master Agreement Termination Fee (as defined in the Amendment), but before any other payments, dividends or distributions are made. In the event that Braemar’s assets are sold in more than one Company Sale Transaction and the Net Sale Proceeds from a particular Company Sale Transaction is insufficient to pay the Company Sale Fee and accrued fees in full, the Amendment provides that the Net Sale Proceeds from subsequent sales or dispositions of assets will be applied towards the payment of the Company Sale Fee until the Company Sale Fee is paid in full.
The Amendment further provides that upon the complete satisfaction and discharge of the Company Sale Fee, and the Master Agreement Termination Fee (if applicable), each of the Company and Ashford Inc. may terminate the advisory agreement upon providing 60 days’ prior written notice to the other. The Amendment further provides that in the case of a sale or disposition of assets representing 50 % or more of the Gross Asset Value (as defined in the advisory agreement and calculated as of January 1, 2025) of all of Braemar’s assets, the buyer must pay directly to Ashford Inc. the cash proceeds from such sale or disposition transaction necessary to satisfy the Master Agreement Termination Fee, and the related master agreements will terminate upon closing of such transaction. If proceeds are insufficient to pay the Master Agreement Termination Fee, proceeds from subsequent sales will be applied until the fee is paid in full. Additionally, upon the approval of a plan of liquidation by Braemar’s stockholders, the master agreements will terminate, subject to payment of the Master Agreement Termination Fee.
Lismore
We engage Lismore or its subsidiaries to provide debt placement services and assist with loan modifications or refinancings on our behalf and brokerage services.
For both the three and six months ended June 30, 2026, we incurred no 0 and $1.7 million, respectively.
Ashford Securities
The Company, Ashford Trust, and Ashford Inc. are party to the Fourth Amended and Restated Contribution Agreement with respect to funding certain expenses of Ashford Securities LLC, a subsidiary of Ashford Inc. (“Ashford Securities”). As of June 30, 2026, Braemar has funded approximately $13.7 million.
28
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The table below summarizes the amount Braemar has expensed related to reimbursed operating expenses of Ashford Securities (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| Line Item | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
Corporate general and administrative | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||
Design and Construction Services
Premier Project Management LLC (“Premier”), a subsidiary of Ashford Inc., provides design and construction 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 design and construction services agreement, we pay Premier: (a) design and construction fees of up to 4 % of project costs; and (b) for the following services: (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). Such fees are payable monthly as the service is delivered based on percentage complete, as reasonably determined by Premier for each service, or payable as set forth in other agreements.
Hotel Management Services
As of June 30, 2026, Remington Hospitality managed five of our 12 hotel properties.
We pay monthly hotel management fees equal to the greater of approximately $18,000 per hotel (increased annually based on consumer price index adjustments) or 3 % of gross revenues, as well as annual incentive management fees, if certain operational criteria were met, and other general and administrative expense reimbursements primarily related to accounting services. Our hotel management agreement also requires that we fund property-level operating costs, including the hotel manager’s payroll and related costs.
Investment in OpenKey
The Company previously held an investment in OpenKey, Inc. (“OpenKey”), a subsidiary of Ashford Inc., with a carrying value of $0 as of December 31, 2025. During the fourth quarter of 2025, Ashford Inc., Ashford Trust and Braemar entered into a purchase and sale agreement to sell OpenKey. The transaction closed in January 2026.
The Company also previously had a loan funding agreement with Ashford Inc. and OpenKey. During the fourth quarter of 2025, we determined that the full amount of the note receivable was not collectible and the note receivable was impaired. As of June 30, 2026 and December 31, 2025, the carrying amount of the note receivable was $0 and $89,000 , respectively included in “investment in unconsolidated entity” on our condensed consolidated balance sheets. During the six months ended June 30, 2026, the Company received proceeds of approximately $58,000 related to the note receivable with OpenKey and wrote off the remaining $31,000 balance.
15. Commitments and Contingencies
Restricted Cash—Under certain management and debt agreements for our hotel properties existing at June 30, 2026, 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 3 % to 5 % of gross revenues for capital improvements.
Franchise Fees—We currently have two hotel properties that operate under franchise agreements. The Cameo Beverly Hills franchise agreement has a 25-year term that expires on December 31, 2050. Under the terms of the agreement, we paid monthly franchise fees of 3 % of gross rooms revenue through April 30, 2026. We will pay monthly franchise fees of 4 % of gross rooms revenue from May 1, 2026 through December 31, 2026 and 5 % of gross rooms revenue for the remainder of the term. We also paid monthly program fees of 2 % of gross rooms revenue through April 30, 2026. We will pay monthly program fees of 3 % of gross rooms revenue from May 1, 2026 through August 3, 2026 and 4 % of gross rooms revenue for the remainder of the term.
29
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Under the franchise agreement for the Sofitel Chicago Magnificent Mile, we pay franchisor royalty fees of 4.4 % of gross rooms revenue. Additionally, we pay a marketing fee of 1.5 % of gross rooms revenue. This franchise agreement expires in 2041, with extension options.
The table below summarizes the franchise fees incurred (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| Line Item | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Other hotel expenses | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Management Fees—Under hotel management agreements for our hotel properties existing at June 30, 2026, we pay a monthly hotel management fee equal to the greater of approximately $18,000 per hotel (increased annually based on consumer price index adjustments) or 3 % of gross revenues, or in some cases, approximately 2.6 % to 4.0 % of gross revenues, as well as annual incentive management fees, if applicable. These management agreements expire from November 2029 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. Our hotel management agreements also require that we fund property-level operating costs, including the hotel manager’s payroll and related costs.
Income Taxes—We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years 2021 through 2025 remain subject to potential examination by certain federal and state taxing authorities.
Litigation—On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt out of the class; however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt-out period has been extended until such time that discovery has concluded. In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified. After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. A tentative settlement in the amount of $850,000 was reached on February 14, 2025. Final court approval was obtained on September 12, 2025. Braemar’s portion of the settlement is 11.7 %. The case is now in the settlement administration phase. Settlement distributions were scheduled to begin on July 22, 2026, and the Court has set a compliance hearing for November 18, 2026. As of June 30, 2026, the settlement liability amount has been accrued.
On June 8, 2022, a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines. The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and Private Attorneys General Act (“PAGA”) claims. On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement. At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $3.5 million, which the parties have since agreed to. The allocation to Hilton La Jolla Torrey Pines is approximately $401,000 , which was accrued as of June 30, 2026. The Court granted a motion for preliminary approval of the settlement on October 27, 2025. A hearing on the motion for final approval occurred on April 20, 2026, and the Court entered a final judgment.
On August 4, 2020, a lawsuit, Benjamin Zermeno v. Beverly Hills Marriott, was filed in Alameda County Superior Court as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The plaintiff’s individual claims were compelled to arbitration. On August 18, 2022, another lawsuit, Cristina Catalano v. Beverly Hills Marriott and Mr. C, was filed as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The co-defendant separately settled and the individual arbitration has also settled. A private mediation was held on December 27, 2024 to globally resolve the three outstanding matters. The Court approved the settlement of all matters on January 16, 2026. The aggregate settlement is $2.5 million. Braemar’s portion of the settlement is approximately $679,000 . As of June 30, 2026, the settlement liability was paid in full.
30
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
On February 6, 2024, we received a Request for Information Under Section 114 of the Clean Air Act dated January 11, 2024, from the Environmental Protection Agency (EPA), Region 2, relating to The Ritz-Carlton St. Thomas. We complied with the Request for Information and provided the requested information on March 12, 2024. Then, on April 16, 2025, we received a subsequent communication from the EPA alleging certain failures to comply with various record keeping and reporting requirements. The EPA also indicated that they had concerns regarding the operation of the hotel’s generators and the lack of certain certifications that should be held by hotel employees. We met with the EPA in May 2025 to discuss and respond to the allegations in the EPA’s April 16, 2025 communication. Since this meeting, we have been working with the hotel management team to ensure full compliance with all applicable regulatory requirements at the hotel, including ensuring all appropriate hotel employees have all applicable certifications, engaging third-party environmental consultants, working with outside counsel, preparing standard operating procedures for the hotel, and reviewing options relating to the operation of the hotel’s generators. This matter has been resolved for approximately $350,000 , which has been accrued as of June 30, 2026, with no admission with respect to the factual allegations or alleged violations.
On June 12, 2026, the Company announced its intention to terminate the Advisory Agreement with Ashford Inc. and transition to a self-managed REIT. In connection with the pending asset sale transactions and the planned termination of the Advisory Agreement, certain shareholders have publicly expressed opposition to aspects of the asset sale transactions and the termination of the Advisory Agreement, and have indicated an intention to pursue legal remedies. There can be no assurance that litigation will not be commenced or, if commenced, that it will be resolved quickly or in the Company’s favor. If a court were to issue a temporary restraining order, preliminary injunction, or other form of equitable relief, the closing of one or more pending hotel sale transactions could be prevented or delayed, which could in turn prevent or delay the termination of the Advisory Agreement.
We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws). The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do 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, results of operations or cash flow.
Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not 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, results of operations, or cash flows could be materially adversely affected in future periods.
16. Segment Reporting
We operate in one
Each hotel property derives revenue primarily from guestroom sales, food and beverage sales, and revenues from other lodging services and amenities. The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies in note 2 of the consolidated financial statements included in our 2025 Annual Report on Form 10-K.
The CODM reviews and makes decisions on all aspects of the Company’s business using all available financial and non-financial data for each hotel individually. Capital allocation decisions to acquire, sell, enhance, redevelop, or perform renewal and replacement expenditures are determined on a hotel-by-hotel basis. Specifically, the CODM reviews the results of each hotel to assess the hotel’s profitability. The key measure the CODM uses to allocate resources and assess performance is individual hotel net income (loss) before interest expense, income taxes, depreciation, and amortization, adjusted to exclude
31
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
certain items determined by management to not be reflective of its ongoing operating performance or incurred in the normal course of business (Hotel Adjusted EBITDA). The adjustments include gains and losses on hotel dispositions, impairment charges, pre-opening costs associated with extensive renovation projects, property-level legal settlements, restructuring, severance, and management transition costs, and other expenses identified by management to be non-recurring. The CODM does not regularly review asset information by segment.
32
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following tables include revenues, significant hotel operating expenses, and Hotel Adjusted EBITDA for the Company’s hotels, reconciled to the consolidated amounts included in the Company’s condensed consolidated statements of operations (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| REVENUE | |||||||||||||||||||||||||||||
| Rooms | $ | $ | $ | $ | |||||||||||||||||||||||||
| Food and beverage | |||||||||||||||||||||||||||||
| Other hotel revenue | |||||||||||||||||||||||||||||
| Total hotel revenue | $ | $ | $ | $ | |||||||||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||||||||
| Hotel expenses: | |||||||||||||||||||||||||||||
| Rooms | $ | $ | $ | $ | |||||||||||||||||||||||||
| Food and beverage | |||||||||||||||||||||||||||||
| Direct expenses | |||||||||||||||||||||||||||||
| Indirect expenses: | |||||||||||||||||||||||||||||
| Property, general and administration | |||||||||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||||||||
| Information and telecommunications systems | |||||||||||||||||||||||||||||
| Repairs and maintenance | |||||||||||||||||||||||||||||
| Energy | |||||||||||||||||||||||||||||
| Lease expense | |||||||||||||||||||||||||||||
| Ownership expenses | |||||||||||||||||||||||||||||
| Incentive management fee | |||||||||||||||||||||||||||||
| Management fees | |||||||||||||||||||||||||||||
| Property taxes | |||||||||||||||||||||||||||||
| Other taxes | |||||||||||||||||||||||||||||
| Insurance | |||||||||||||||||||||||||||||
| Total expenses | |||||||||||||||||||||||||||||
| Hotel adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Hotel adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||||||||
| Ownership expenses included in other hotel expenses | ( | ( | ( | ( | |||||||||||||||||||||||||
| Ownership expenses included in property taxes, insurance and other | ( | ( | ( | ( | |||||||||||||||||||||||||
| Management fees | ( | ( | ( | ( | |||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | |||||||||||||||||||||||||
| Advisory services fee | ( | ( | ( | ( | |||||||||||||||||||||||||
Corporate general and administrative | ( | ( | ( | ||||||||||||||||||||||||||
| Gain (loss) on disposition of assets and hotel property | |||||||||||||||||||||||||||||
| Equity in earnings (loss) of unconsolidated entities | ( | ||||||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||
| Other income (expense) | ( | ( | |||||||||||||||||||||||||||
| Interest expense and amortization of discounts and loan costs | ( | ( | ( | ( | |||||||||||||||||||||||||
| Write-off of loan costs and exit fees | ( | ( | ( | ( | |||||||||||||||||||||||||
| Realized and unrealized gain (loss) on derivatives | ( | ||||||||||||||||||||||||||||
| Income tax (expense) benefit | ( | ( | ( | ||||||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
33
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
17. Subsequent Event
On July 13, 2026, the Company entered into a definitive agreement to sell the Pier House Resort & Spa for a purchase price of $190 million in cash, subject to customary pro-rations and adjustments. The agreement included a nonrefundable deposit of $6.0 million.
On July 14, 2026, the Company completed the sale of the Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville for a purchase price of $437.5 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $232.8 million on the mortgage loan that was partially secured by the hotel properties. Upon closing, the Company Sale Fee was triggered under the Advisory Agreement with Ashford Inc., and as a result, the Company incurred a related liability of $480.0 million during the third quarter of 2026. The Company subsequently paid $173.0 million to Ashford Inc. to pay down a portion of the Company Sale Fee.
In July 2026, the Company exercised its put option to require the noncontrolling interest holder to repurchase the Company’s interest in CR JV, a joint venture that owns a parcel of land and is consolidated by the Company. As a result, in August 2026, the noncontrolling interest holder repurchased CR JV for $6.3 million and, in conjunction with the repurchase, the Company derecognized the land and the related mortgage loan secured by the land.
34
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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;
•anticipated or expected purchases or sales of assets;
•our projected operating results;
•completion of any pending transactions;
•our understanding of our competition;
•projected capital expenditures; 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 or 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, 2025, as filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2026 (the “2025 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,” “Properties” and other filings under the Exchange Act;
•changes in interest rates and inflation;
•macroeconomic conditions, such as a prolonged period of weak economic growth, and volatility in capital markets;
•uncertainty in the business sector and market volatility;
•catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine, Israel-Palestine-Iran conflict, ongoing instability in Venezuela and changes to tariffs or trade policies;
•extreme weather conditions, which may cause property damage or interrupt business;
•our ability to raise sufficient capital and/or take other actions to improve our liquidity position or otherwise meet our liquidity requirements;
•general volatility of the capital markets and the market price of our common and preferred stock;
•general business and economic conditions affecting the lodging and travel industry;
•changes in our business or investment strategy;
•availability, terms and deployment of capital;
•risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to pay dividends;
•unanticipated increases in financing and other costs, including changes in interest rates;
•changes in our industry and the markets in which we operate, interest rates, or local economic conditions;
•the degree and nature of our competition;
•actual and potential conflicts of interest with Ashford Trust, Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hospitality and Premier), and our executive officers and our non-independent directors;
•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;
35
•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 REITs, including impacts from the One Big Beautiful Bill Act;
•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; and
•future sales and issuances of our common stock or other securities, which might result in dilution and could cause the price of our common stock to decline.
When considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” in Part I of our 2025 10-K and this Form 10-Q, 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 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 STR, LLC. Two times the U.S. national average was $200 for the year ended December 31, 2025. We have elected to be taxed as a REIT under the Code. 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 June 30, 2026, we owned interests in 12 hotel properties in five states, the District of Columbia, Puerto Rico and St. Thomas, U.S. Virgin Islands with 2,831 total rooms. 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 are advised by Ashford Hospitality Advisors LLC (“Ashford LLC”) 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 contractually engage hotel management companies to operate them for us under management contracts. As of June 30, 2026, Remington Hospitality, a subsidiary of Ashford Inc., managed five of our 12 hotel properties. Third-party management companies managed the remaining hotel properties.
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, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and cash management services.
Mr. Monty J. Bennett, chairman of our board of directors and chairman and chief executive officer of Ashford Inc. and his father, Mr. Archie Bennett, Jr. (together, the “Bennetts”), as of June 30, 2026, hold a controlling interest in Ashford Inc. The Bennetts owned approximately 810,123 shares of Ashford Inc. common stock, which represented an approximate 52.5% ownership interest in Ashford Inc., and owned 18,777,914 shares of Ashford Inc. Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,745,833 shares of Ashford Inc. common stock, which if converted as of June 30, 2026, would have increased the Bennetts’ ownership interest in Ashford Inc. to 88.4%. The 18,777,914 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts. Additionally, Mr. Monty J. Bennett acquired the right to direct votes, effective March 25, 2025, and as of June 30, 2026, those rights represented approximately 534,000 common shares.
As of June 30, 2026, Mr. Monty J. Bennett and Mr. Archie Bennett, Jr., together owned approximately 2,472,808 shares of our common stock (including common units, LTIP and performance LTIP units), which represented an approximate 3.4% ownership in the Company.
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Recent Developments
On May 26, 2026, the Company sold the Park Hyatt Beaver Creek Resort & Spa for $176 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid the $70.5 million mortgage loan that was secured by the hotel property.
On June 12, 2026, the Company announced 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. Following the conclusion of a lengthy strategic review process, and upon the recommendation of a Special Committee comprised solely of independent directors (the “Special Committee”), the BHR Board of Directors (the “Board”) has approved a management spin-out, which will enable Braemar to become a self-managed real estate investment trust (REIT). These actions include the initiation of steps to terminate the Fifth Amended and Restated Advisory Agreement (the “Advisory Agreement”) with Ashford Inc. and its affiliates (“Ashford”), hire employees directly, and reconstitute the Company’s Board.
Benefits for Shareholders
•A focused business generating significant revenue: On a go-forward basis, the Company intends to maintain a portfolio of approximately six to eight luxury properties across the U.S. and the Caribbean, which had a gross asset value of over $1 billion and generated total annual revenue of $300 to $350 million as of the trailing twelve months ending March 31, 2026.
•Long-term cost savings: The Company intends to directly hire employees and relocate to new office space, headquartered in Dallas. By directly employing its own management team, Braemar expects to reduce G&A costs by more than $25 million per year. Based on prevailing industry EBITDA multiples, ranging from 11-13x, these savings imply significant potential equity value accretion.
•Board and management fully aligned with shareholders’ best interests: The in-house management structure and a new Board are designed to improve shareholder alignment. The Company has retained Ferguson Partners, an independent executive search firm, to identify five new independent Board members. The new Board members will be appointed to the Board, with the existing directors simultaneously stepping down, at the termination of the Advisory Agreement and will also be nominated for election at the Company’s next annual meeting.
•No disruption to management team: Certain members of the management team currently employed by Ashford will become employees of Braemar, who will work exclusively for the Company and have no ongoing relationship with Ashford or its affiliates.
The Special Committee and the entire Board has worked tirelessly to exhaust all available options to maximize shareholder value. While initially a sale of the Company was explored, the Special Committee ultimately concluded that there was a superior value creation available by terminating the Advisory Agreement, spinning out management, and remaining publicly listed. While the directors have agreed to formally resign their positions, they remain devoted to the future success of the Company.
Transition to Self-Managed REIT
As part of the transition, Braemar will terminate the Advisory Agreement and all other material legacy contractual arrangements with Ashford and its affiliates. Following the termination, management, including Mr. Richard Stockton, will be employed directly by Braemar. This new structure is expected to reduce Braemar’s general and administrative costs by more than $25 million annually. Furthermore, by canceling the Ashford Master Agreements, the Company will be free to utilize any third-party company to provide property management, project management or other services at the Company’s hotels.
The new self-management structure was recommended by the Special Committee and approved by the independent members of the full Board.
Board Refreshment and Corporate Governance Enhancements
Five new independent directors will be identified and added to the Board. Concurrent with these appointments, all existing directors (including the Chairman, Mr. Monty Bennett), except for Mr. Richard Stockton, have agreed to step down from the Board to make way for the new directors. The reconstituted Board will have an independent Chairman.
The Company has retained Ferguson Partners to assist in the search for new directors, with a focus on ensuring that they collectively possess the right mix of skills and experience to oversee the Company and shape its future strategy. No individuals
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will be appointed who have existing or prior relationships with Ashford, its Chairman and Chief Executive Officer, Monty J. Bennett, or Archie Bennett Jr.
Governance Reforms
The Company is also taking steps to implement best-practice corporate governance reforms to better align the Company with the best interests of all shareholders, including a thorough review and revision of the Company’s Bylaws, Corporate Governance Guidelines, Code of Ethics and Board Committee Charters.
Additionally, Braemar will terminate its contractual relationships with Premier Project Management LLC and Remington Lodging & Hospitality, LLC, both of which are subsidiaries of Ashford Inc. Certain immaterial, short-term contracts will be retained with Inspire, Pure and RED Hospitality to avoid disrupting existing hotel operations.
The Company Sale Fee will be triggered under the Advisory Agreement with Ashford upon the closing of previously announced asset sales. Net sale proceeds from future asset sales, after working capital needs and other reserves, will be transferred to Ashford to pay down a portion or all of the Company Sale Fee.
The Company does not intend to sell all or substantially all of its assets, only the approximate number necessary to satisfy the Company’s obligation to pay the Company Sale Fee and Master Agreement Termination Fee.
On June 25, 2026 the Company extended its $43.4 million mortgage loan secured by The Ritz-Carlton Lake Tahoe. The loan had an initial maturity date of July 15, 2026 and now has a maturity date of October 15, 2026. An additional three-month maturity extension is also available at the Company’s discretion on the same terms.
On July 13, 2026, the Company entered into a definitive agreement to sell the Pier House Resort & Spa for a purchase price of $190 million in cash, subject to customary pro-rations and adjustments. The agreement included a nonrefundable deposit of $6.0 million.
On July 14, 2026, the Company completed the sale of the Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville for a purchase price of $437.5 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $232.8 million on the mortgage loan that was partially secured by the hotel properties. Upon closing, the Company Sale Fee was triggered under the Advisory Agreement with Ashford Inc., and as a result, the Company incurred a related liability of $480.0 million during the third quarter of 2026. The Company subsequently paid $173.0 million to Ashford Inc. to pay down a portion of the Company Sale Fee.
In July 2026, the Company exercised its put option to require the noncontrolling interest holder to repurchase the Company’s interest in CR JV, a joint venture that owns a parcel of land and is consolidated by the Company. As a result, in August 2026, the noncontrolling interest holder repurchased CR JV for $6.3 million and, in conjunction with the repurchase, the Company derecognized the land and the related mortgage loan secured by the land.
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
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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 expenses. 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 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 June 30, 2026 Compared to Three Months Ended June 30, 2025
The following table summarizes changes in key line items from our condensed consolidated statements of operations for three months ended June 30, 2026 and 2025 (in thousands except percentages):
| Three Months Ended June 30, | Favorable (Unfavorable) | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Rooms | $ | 102,183 | $ | 109,824 | $ | (7,641) | (7.0) | % | |||||||||||||||
| Food and beverage | 45,322 | 45,571 | (249) | (0.5) | |||||||||||||||||||
| Other | 23,521 | 23,682 | (161) | (0.7) | |||||||||||||||||||
| Total hotel revenue | 171,026 | 179,077 | (8,051) | (4.5) | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Hotel operating expenses: | |||||||||||||||||||||||
| Rooms | 24,218 | 27,285 | 3,067 | 11.2 | |||||||||||||||||||
| Food and beverage | 34,897 | 35,767 | 870 | 2.4 | |||||||||||||||||||
| Other expenses | 52,924 | 56,445 | 3,521 | 6.2 | |||||||||||||||||||
| Management fees | 5,138 | 5,541 | 403 | 7.3 | |||||||||||||||||||
| Total hotel operating expenses | 117,177 | 125,038 | 7,861 | 6.3 | |||||||||||||||||||
| Property taxes, insurance and other | 7,507 | 7,892 | 385 | 4.9 | |||||||||||||||||||
| Depreciation and amortization | 21,433 | 23,360 | 1,927 | 8.2 | |||||||||||||||||||
| Advisory services fee | 7,280 | 7,191 | (89) | (1.2) | |||||||||||||||||||
| Corporate general and administrative | 4,413 | (2,298) | (6,711) | (292.0) | |||||||||||||||||||
| Total expenses | 157,810 | 161,183 | 3,373 | 2.1 | |||||||||||||||||||
| Gain (loss) on disposition of assets and hotel property | 17,395 | — | 17,395 | ||||||||||||||||||||
| Operating income (loss) | 30,611 | 17,894 | 12,717 | 71.1 | |||||||||||||||||||
| Interest income | 774 | 1,519 | (745) | (49.0) | |||||||||||||||||||
| Other income (expense) | — | (1,250) | 1,250 | 100.0 | |||||||||||||||||||
| Interest expense and amortization of discounts and loan costs | (20,513) | (25,361) | 4,848 | 19.1 | |||||||||||||||||||
| Write-off of loan costs and exit fees | (1,484) | (3) | (1,481) | (49,366.7) | |||||||||||||||||||
| Realized and unrealized gain (loss) on derivatives | 35 | 15 | 20 | 133.3 | |||||||||||||||||||
| Income (loss) before income taxes | 9,423 | (7,186) | 16,609 | 231.1 | |||||||||||||||||||
| Income tax (expense) benefit | (2,481) | 345 | (2,826) | (819.1) | |||||||||||||||||||
| Net income (loss) | 6,942 | (6,841) | 13,783 | 201.5 | |||||||||||||||||||
| (Income) loss attributable to noncontrolling interest in consolidated entities | 48 | (115) | (163) | (141.7) | |||||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | 48 | 1,489 | (1,441) | (96.8) | |||||||||||||||||||
| Net income (loss) attributable to the Company | $ | 7,038 | $ | (5,467) | $ | 12,505 | 228.7 | % | |||||||||||||||
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All hotel properties owned for the three months ended June 30, 2026 and 2025 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 June 30, 2026 and 2025. 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 dispositions affect reporting comparability related to our condensed consolidated financial statements:
| Hotel Property | Location | Type | Date | |||||||||||||||||
Marriott Seattle Waterfront | Seattle, Washington | Disposition | August 7, 2025 | |||||||||||||||||
The Clancy | San Francisco, California | Disposition | November 6, 2025 | |||||||||||||||||
Park Hyatt Beaver Creek Resort & Spa | Avon, Colorado | Disposition | May 26, 2026 | |||||||||||||||||
The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the three months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Occupancy | 70.84 | % | 71.85 | % | |||||||
| ADR (average daily rate) | $ | 533.37 | $ | 438.58 | |||||||
| RevPAR (revenue per available room) | $ | 377.83 | $ | 315.11 | |||||||
| Rooms revenue (in thousands) | $ | 102,183 | $ | 109,824 | |||||||
| Total hotel revenue (in thousands) | $ | 171,026 | $ | 179,077 | |||||||
The following table illustrates the key performance indicators of the 12 hotel properties that were owned for the full three months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Occupancy | 72.61 | % | 73.10 | % | |||||||
| ADR (average daily rate) | $ | 537.64 | $ | 476.32 | |||||||
| RevPAR (revenue per available room) | $ | 390.37 | $ | 348.22 | |||||||
| Rooms revenue (in thousands) | $ | 101,431 | $ | 90,564 | |||||||
| Total hotel revenue (in thousands) | $ | 168,298 | $ | 152,509 | |||||||
Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $12.5 million, from a net loss of $5.5 million for the three months ended June 30, 2025 (the “2025 quarter”) to net income of $7.0 million for the three months ended June 30, 2026 (the “2026 quarter”), as a result of the factors discussed below.
Rooms Revenue. Rooms revenue decreased $7.6 million, or 7.0%, to $102.2 million during the 2026 quarter compared to the 2025 quarter primarily due to the sales of Marriott Seattle Waterfront in August 2025, The Clancy in November 2025 and the Park Hyatt Beaver Creek Resort & Spa in May 2026. During the 2026 quarter, our 12 comparable hotel properties experienced a 49 basis point decrease in occupancy and a 12.9% increase in room rates.
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Fluctuations in rooms revenue between the 2026 quarter and the 2025 quarter are a result of the changes in occupancy and ADR between the 2026 quarter and the 2025 quarter as reflected in the table below (dollars in thousands):
| Hotel Property | Favorable (Unfavorable) | |||||||||||||||||||||||||||||||
| Rooms Revenue | Occupancy (change in bps) | ADR (change in %) | ||||||||||||||||||||||||||||||
| Comparable | ||||||||||||||||||||||||||||||||
| Capital Hilton | $ | 342 | (19) | 2.9 | % | |||||||||||||||||||||||||||
| The Notary Hotel | 1,076 | (205) | 15.7 | % | ||||||||||||||||||||||||||||
| Sofitel Chicago Magnificent Mile | 903 | 82 | 9.5 | % | ||||||||||||||||||||||||||||
| Pier House Resort & Spa | 629 | 836 | (0.4) | % | ||||||||||||||||||||||||||||
| The Ritz-Carlton St. Thomas | 2,092 | 469 | 12.3 | % | ||||||||||||||||||||||||||||
| Hotel Yountville | 522 | 188 | 14.4 | % | ||||||||||||||||||||||||||||
| The Ritz-Carlton Sarasota | 1,728 | 708 | 7.4 | % | ||||||||||||||||||||||||||||
| Bardessono Hotel and Spa | 211 | (505) | 12.9 | % | ||||||||||||||||||||||||||||
| The Ritz-Carlton Lake Tahoe | (499) | (1,388) | 21.7 | % | ||||||||||||||||||||||||||||
| Cameo Beverly Hills | 936 | (365) | 45.4 | % | ||||||||||||||||||||||||||||
| The Ritz-Carlton Reserve Dorado Beach | 3,271 | 903 | 11.6 | % | ||||||||||||||||||||||||||||
| Four Seasons Resort Scottsdale | (344) | (1,111) | 17.3 | % | ||||||||||||||||||||||||||||
| Total | $ | 10,867 | (49) | 12.9 | % | |||||||||||||||||||||||||||
| Noncomparable | ||||||||||||||||||||||||||||||||
| Park Hyatt Beaver Creek Resort & Spa | (718) | 36 | (16.5) | % | ||||||||||||||||||||||||||||
| Marriott Seattle Waterfront | (8,911) | n/a | n/a | |||||||||||||||||||||||||||||
| The Clancy | (8,879) | n/a | n/a | |||||||||||||||||||||||||||||
Food and Beverage Revenue. Food and beverage revenue decreased $249,000, or 0.5%, to $45.3 million during the 2026 quarter compared to the 2025 quarter. This decrease is attributable to an aggregate decrease of $3.2 million at Sofitel Chicago Magnificent Mile, Hotel Yountville, The Ritz-Carlton Lake Tahoe, Bardessono Hotel and Spa and Four Seasons Resort Scottsdale and a decrease of $2.9 million due to the sales of Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa. These decreases were partially offset by an aggregate increase of $5.8 million at seven comparable hotel properties.
Other Hotel Revenue. Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, decreased $161,000, or 0.7%, to $23.5 million during the 2026 quarter compared to the 2025 quarter. This decrease is attributable to a decrease of $2.5 million due to the sales of Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa and an aggregate decrease of $217,000 at Capital Hilton, Sofitel Chicago Magnificent Mile, The Ritz-Carlton Lake Tahoe and Cameo Beverly Hills, partially offset by an aggregate increase of $2.5 million at eight comparable hotel properties.
Rooms Expense. Rooms expense decreased $3.1 million, or 11.2%, to $24.2 million in the 2026 quarter compared to the 2025 quarter. This decrease is primarily attributable to an aggregate decrease of $5.0 million due to the sales of Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa and an aggregate decrease of $208,000 at Capital Hilton, Bardessono Hotel and Spa, The Ritz-Carlton Lake Tahoe and Four Seasons Resort Scottsdale. These decreases are partially offset by an aggregate increase of $2.1 million at eight comparable hotel properties.
Food and Beverage Expense. Food and beverage expense decreased $870,000, or 2.4%, to $34.9 million during the 2026 quarter compared to the 2025 quarter. This decrease is attributable to an aggregate decrease of $802,000 at Sofitel Chicago Magnificent Mile, Pier House Resort & Spa, The Ritz-Carlton Lake Tahoe and Four Seasons Resort Scottsdale and a decrease of $3.2 million from the three disposed hotel properties, partially offset by an aggregate increase of $3.1 million at eight comparable hotel properties.
Other Operating Expenses. Other operating expenses decreased $3.5 million, or 6.2%, to $52.9 million in the 2026 quarter compared to the 2025 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 a decrease of $3.3 million in indirect expenses and incentive management fees and a decrease of $222,000 in direct expenses in the 2026 quarter as compared to the 2025 quarter. Direct expenses were 4.7% of total hotel revenue in the 2026 quarter and 4.6% in the 2025 quarter.
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The decrease in direct expenses is associated with lower direct expenses of $565,000 due to the sales of Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa partially offset by higher direct expenses of $343,000 at our 12 comparable hotel properties.
The decrease in indirect expenses comprises decreases in: (i) general and administrative costs of $2.2 million comprising an aggregate decrease of $3.0 million from the three disposed hotel properties, partially offset by an aggregate increase of $874,000 at our 12 comparable hotel properties; (ii) marketing costs of $1.4 million comprising a decrease of $1.9 million from the three disposed hotel properties partially offset by an aggregate increase of $510,000 at our 12 comparable hotel properties; (iii) repairs and maintenance of $974,000 comprising a decrease of $1.1 million from the three disposed hotel properties partially offset by an aggregate increase of $121,000 at our 12 comparable hotel properties; and (iv) energy costs of $220,000 comprising a decrease of $582,000 from the three disposed hotel properties partially offset by an aggregate increase of $362,000 at our 12 comparable hotel properties. These increases were partially offset by increases in incentive management fees of $1.4 million comprising an aggregate increase of $1.2 million at our 12 comparable hotel properties and an increase of $253,000 from the three disposed hotel properties.
Management Fees. Base management fees decreased $403,000, or 7.3%, to $5.1 million in the 2026 quarter compared to the 2025 quarter. Base management fees decreased $131,000 at The Ritz-Carlton Lake Tahoe and Four Seasons Resort Scottsdale and $932,000 from the three disposed hotel properties. These decreases were partially offset by an aggregate increase of $659,000 at ten comparable hotel properties.
Property Taxes, Insurance and Other. Property taxes, insurance and other decreased $385,000, or 4.9%, to $7.5 million in the 2026 quarter compared to the 2025 quarter. The decrease is primarily attributable to an aggregate decrease of approximately $281,000 at eleven comparable hotel properties and a decrease of $1.6 million from the three disposed hotel properties. These decreases were partially offset by an aggregate increase of approximately $1.5 million at the Sofitel Chicago Magnificent Mile.
Depreciation and Amortization. Depreciation and amortization decreased $1.9 million, or 8.2%, to $21.4 million in the 2026 quarter compared to the 2025 quarter. There was an aggregate decrease of $306,000 at Capital Hilton, The Notary Hotel, Pier House Resort & Spa and The Ritz-Carlton Sarasota and a decrease of $3.6 million from the three disposed hotel properties, partially offset by an aggregate increase of $2.0 million at eight comparable hotel properties.
Advisory Services Fee. Advisory services fee increased $89,000, or 1.2%, to $7.3 million in the 2026 quarter compared to the 2025 quarter due to increases of $312,000 in the base advisory fee and $51,000 in equity-based compensation partially offset by decreases of $188,000 in the incentive fee and $86,000 in reimbursable expenses.
In the 2026 quarter, we recorded an advisory services fee of $7.3 million, which included a base advisory fee of $3.8 million and reimbursable expenses of $3.5 million.
In the 2025 quarter, we recorded an advisory services fee of $7.2 million, which included a base advisory fee of $3.5 million, reimbursable expenses of $3.6 million, incentive fee of $188,000, and a credit to expense of $51,000 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 $4.4 million in the 2026 quarter and consisted of $2.6 million in professional fees, $1.4 million of public company costs and $410,000 of miscellaneous expenses.
Corporate general and administrative expense was a credit to expense of $2.3 million in the 2025 quarter and consisted of $1.6 million in professional fees, $5.0 million of reimbursed legal costs, $122,000 in miscellaneous expenses and $936,000 in public company costs.
Gain (loss) on disposition of assets and hotel property. In the 2026 quarter, we recorded a gain of approximately $17.4 million related to the sale of the Park Hyatt Beaver Creek Resort & Spa.
Interest Income. Interest income was $774,000 and $1.5 million in the 2026 quarter and 2025 quarter, respectively. The decrease in interest income in the 2026 quarter was primarily attributable to lower interest rates and lower excess cash balances in the 2026 quarter compared to the 2025 quarter.
Other Income (Expense). Other expense was $1.3 million in the 2025 quarter due to a realized loss on the sale of a portion of CMBS.
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Interest Expense and Amortization of Loan Costs. Interest expense and amortization of loan costs decreased $4.8 million, or 19.1%, to $20.5 million in the 2026 quarter compared to the 2025 quarter. This decrease is primarily due to lower interest expense of $4.6 million and lower amortization costs of $246,000 from lower average interest rates and lower loan balances.
Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $1.5 million in the 2026 quarter due to The Ritz-Carlton Lake Tahoe loan extension. Write-off of loan costs and exit fees was $3,000 in the 2025 quarter.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain on derivatives of $35,000 for the 2026 quarter consisted primarily of an unrealized gain on interest rate caps.
Realized and unrealized gain on derivatives of $15,000 for the 2025 quarter consisted of a realized gain of $180,000 associated with payments received from counterparties on in-the-money interest rate caps, partially offset by an unrealized loss on interest rate caps of approximately $165,000.
Income Tax (Expense) Benefit. Income tax (expense) benefit changed $2.8 million, from a benefit of $345,000 in the 2025 quarter to expense of $2.5 million in the 2026 quarter. This change was primarily due to an increase in the taxable income of certain of our TRS entities in the 2026 quarter compared to the 2025 quarter.
(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities. Our noncontrolling interest partners in consolidated entities were allocated a loss of $48,000 and income of $115,000 in the 2026 quarter and the 2025 quarter, respectively. At June 30, 2026, noncontrolling interest in consolidated entities represented an ownership interest of 25% ownership interest in a JV. At June 30, 2025, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity and a 25% ownership interest in a JV.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $48,000 and $1.5 million in the 2026 quarter and the 2025 quarter, respectively. Redeemable noncontrolling interests in Braemar OP represented ownership interests of 6.27% and 8.51% as of June 30, 2026 and 2025, respectively.
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Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The following table summarizes changes in key line items from our condensed consolidated statements of operations for the six months ended June 30, 2026 and 2025 (in thousands except percentages):
| Six Months Ended June 30, | Favorable (Unfavorable) | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Rooms | $ | 230,984 | $ | 245,916 | $ | (14,932) | (6.1) | % | |||||||||||||||
| Food and beverage | 97,664 | 97,359 | 305 | 0.3 | |||||||||||||||||||
| Other | 51,361 | 51,622 | (261) | (0.5) | |||||||||||||||||||
| Total hotel revenue | 380,009 | 394,897 | (14,888) | (3.8) | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Hotel operating expenses: | |||||||||||||||||||||||
| Rooms | 49,096 | 55,504 | 6,408 | 11.5 | |||||||||||||||||||
| Food and beverage | 73,807 | 75,977 | 2,170 | 2.9 | |||||||||||||||||||
| Other expenses | 112,802 | 116,821 | 4,019 | 3.4 | |||||||||||||||||||
| Management fees | 11,332 | 12,451 | 1,119 | 9.0 | |||||||||||||||||||
| Total hotel operating expenses | 247,037 | 260,753 | 13,716 | 5.3 | |||||||||||||||||||
| Property taxes, insurance and other | 12,159 | 18,357 | 6,198 | 33.8 | |||||||||||||||||||
| Depreciation and amortization | 44,012 | 46,755 | 2,743 | 5.9 | |||||||||||||||||||
| Advisory services fee | 14,684 | 13,802 | (882) | (6.4) | |||||||||||||||||||
| Corporate general and administrative | 9,280 | 596 | (8,684) | (1,457.0) | |||||||||||||||||||
| Total expenses | 327,172 | 340,263 | 13,091 | 3.8 | |||||||||||||||||||
| Gain (loss) on disposition of assets and hotel property | 17,398 | — | 17,398 | ||||||||||||||||||||
| Operating income (loss) | 70,235 | 54,634 | 15,601 | 28.6 | |||||||||||||||||||
| Equity in earnings (loss) of unconsolidated entity | (31) | — | (31) | ||||||||||||||||||||
| Interest income | 1,584 | 3,407 | (1,823) | (53.5) | |||||||||||||||||||
| Other income (expense) | — | (1,250) | 1,250 | 100.0 | |||||||||||||||||||
| Interest expense and amortization of discounts and loan costs | (41,708) | (50,188) | 8,480 | 16.9 | |||||||||||||||||||
| Write-off of loan costs and exit fees | (1,489) | (1,467) | (22) | 1.5 | |||||||||||||||||||
| Realized and unrealized gain (loss) on derivatives | 283 | (183) | 466 | 254.6 | |||||||||||||||||||
| Income (loss) before income taxes | 28,874 | 4,953 | 23,921 | 483.0 | |||||||||||||||||||
| Income tax (expense) benefit | (3,898) | (1,122) | (2,776) | (247.4) | |||||||||||||||||||
| Net income (loss) | 24,976 | 3,831 | 21,145 | 551.9 | |||||||||||||||||||
| (Income) loss attributable to noncontrolling interest in consolidated entities | 65 | (51) | 116 | 227.5 | |||||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | (299) | 1,751 | (2,050) | (117.1) | |||||||||||||||||||
| Net income (loss) attributable to the Company | $ | 24,742 | $ | 5,531 | $ | 19,211 | 347.3 | % | |||||||||||||||
All hotel properties owned for the six months ended June 30, 2026 and 2025 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 six months ended June 30, 2026 and 2025. 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 dispositions affect reporting comparability related to our condensed consolidated financial statements:
| Hotel Property | Location | Type | Date | |||||||||||||||||
Marriott Seattle Waterfront | Seattle, Washington | Disposition | August 7, 2025 | |||||||||||||||||
The Clancy | San Francisco, California | Disposition | November 6, 2025 | |||||||||||||||||
| Park Hyatt Beaver Creek Resort & Spa | Avon, Colorado | Disposition | May 26, 2026 | |||||||||||||||||
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The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Occupancy | 67.65 | % | 68.23 | % | |||||||
| ADR (average daily rate) | $ | 626.48 | $ | 519.90 | |||||||
| RevPAR (revenue per available room) | $ | 423.79 | $ | 354.74 | |||||||
| Rooms revenue (in thousands) | $ | 230,984 | $ | 245,916 | |||||||
| Total hotel revenue (in thousands) | $ | 380,009 | $ | 394,897 | |||||||
The following table illustrates the key performance indicators of the 12 comparable hotel properties that were owned for the full six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Occupancy | 68.18 | % | 68.31 | % | |||||||
| ADR (average daily rate) | $ | 616.07 | $ | 561.80 | |||||||
| RevPAR (revenue per available room) | $ | 420.04 | $ | 383.74 | |||||||
| Rooms revenue (in thousands) | $ | 217,184 | $ | 198,506 | |||||||
| Total hotel revenue (in thousands) | $ | 355,506 | $ | 328,323 | |||||||
Net Income (Loss) Attributable to the Company. Net income attributable to the Company increased $19.2 million from $5.5 million for the six months ended June 30, 2025 (the “2025 period”) to $24.7 million for the six months ended June 30, 2026 (the “2026 period”), as a result of the factors discussed below.
Rooms Revenue. Rooms revenue decreased $14.9 million to $231.0 million during the 2026 period compared to the 2025 period primarily due to the sales of Marriott Seattle Waterfront in August 2025, The Clancy in November 2025 and Park Hyatt Beaver Creek Resort & Spa in May 2026. During the 2026 period, our 12 comparable hotel properties experienced a 9.7% increase in room rates and a 13 basis point decrease in occupancy compared to the 2025 period.
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Fluctuations in rooms revenue between the 2026 period and the 2025 period are a result of the changes in occupancy and ADR between the 2026 period and the 2025 period as reflected in the table below (dollars in thousands):
| Hotel Property | Favorable (Unfavorable) | ||||||||||||||||||||||
| Rooms Revenue | Occupancy (change in bps) | ADR (change in %) | |||||||||||||||||||||
| Comparable | |||||||||||||||||||||||
Capital Hilton | $ | (1,101) | (58) | (3.9) | % | ||||||||||||||||||
| The Notary Hotel | 1,363 | (32) | 10.2 | % | |||||||||||||||||||
| Sofitel Chicago Magnificent Mile | 992 | 11 | 8.3 | % | |||||||||||||||||||
| Pier House Resort & Spa | 1,433 | 822 | (0.2) | % | |||||||||||||||||||
The Ritz-Carlton St. Thomas | 4,441 | 448 | 9.7 | % | |||||||||||||||||||
| Hotel Yountville | 469 | 109 | 8.3 | % | |||||||||||||||||||
The Ritz-Carlton Sarasota | 3,228 | 475 | 7.7 | % | |||||||||||||||||||
Bardessono Hotel and Spa | 669 | (222) | 14.4 | % | |||||||||||||||||||
The Ritz-Carlton Lake Tahoe | (577) | (674) | 10.3 | % | |||||||||||||||||||
Cameo Beverly Hills | 799 | (930) | 36.5 | % | |||||||||||||||||||
| The Ritz-Carlton Reserve Dorado Beach | 5,325 | 458 | 9.1 | % | |||||||||||||||||||
| Four Seasons Resort Scottsdale | 1,635 | (514) | 15.9 | % | |||||||||||||||||||
| Total | $ | 18,676 | (13) | 9.7 | % | ||||||||||||||||||
| Noncomparable | |||||||||||||||||||||||
| Park Hyatt Beaver Creek Resort & Spa | $ | (1,493) | 428 | 4.3 | % | ||||||||||||||||||
| Marriott Seattle Waterfront | $ | (18,655) | n/a | n/a | |||||||||||||||||||
The Clancy | $ | (13,460) | n/a | n/a | |||||||||||||||||||
Food and Beverage Revenue. Food and beverage revenue increased $305,000, or 0.3%, to $97.7 million during the 2026 period compared to the 2025 period. We experienced an aggregate increase in food and beverage revenue of approximately $8.5 million at seven comparable hotel properties. This increase was partially offset by an aggregate decrease of $3.6 million at Sofitel Chicago Magnificent Mile, Hotel Yountville, Bardessono Hotel and Spa, The Ritz-Carlton Lake Tahoe, and Four Seasons Resort Scottsdale and a decrease of $4.6 million due to the sales of the Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa.
Other Hotel Revenue. Other hotel revenue, which consists mainly of condominium management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, decreased $261,000, or 0.5%, to $51.4 million during the 2026 period compared to the 2025 period. This decrease is attributable to an aggregate decrease of approximately $705,000 at the Capital Hilton, Sofitel Chicago Magnificent Mile and Cameo Beverly Hills as well as a decrease of $3.9 million due to the sales of the Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa. These decreases were partially offset by higher other hotel revenue of $4.3 million at nine comparable hotel properties.
Rooms Expense. Rooms expense decreased $6.4 million, or 11.5%, to $49.1 million in the 2026 period compared to the 2025 period. This decrease is attributable to an aggregate decrease in rooms expense of $411,000 at Capital Hilton, Pier House Resort & Spa, Bardessono Hotel and Spa and The Ritz-Carlton Lake Tahoe and a decrease of $9.2 million due to the sales of the Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa. These decreases were partially offset by an aggregate increase of $3.2 million at eight comparable hotel properties.
Food and Beverage Expense. Food and beverage expense decreased $2.2 million, or 2.9%, to $73.8 million during the 2026 period compared to the 2025 period. This decrease is attributable to lower aggregate food and beverage expense of approximately $1.2 million at the Sofitel Chicago Magnificent Mile, Pier House Resort & Spa, Bardessono Hotel and Spa, The Ritz-Carlton Lake Tahoe and Four Seasons Resort Scottsdale and a decrease of $5.2 million due to the sales of the Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa. These decreases were partially offset by an aggregate increase of approximately $4.3 million at seven comparable hotel properties.
Other Operating Expenses. Other operating expenses decreased $4.0 million, or 3.4%, to $112.8 million in the 2026 period compared to the 2025 period. Other 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 $330,000 in direct expenses and a decrease of $4.3 million in indirect expenses and incentive management fees in the 2026 period compared to the 2025 period. Direct expenses were 4.7% of total hotel revenue in the 2026 period and 4.5% in the 2025 period.
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The increase in direct expenses is associated with higher direct expenses of $951,000 at our 12 comparable hotel properties partially offset by a decrease of $621,000 due to the sales of Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa.
The decrease in indirect expenses is comprised of decreases in: (i) general and administrative costs of $2.7 million comprising a decrease of $4.9 million from the three disposed hotel properties partially offset by an aggregate increase of $2.1 million at our 12 comparable hotel properties; (ii) marketing costs of $2.1 million comprising an aggregate decrease of $3.1 million from the three disposed hotel properties partially offset by an increase of $1.0 million at our 12 comparable hotel properties; and (iii) repairs and maintenance of $2.0 million comprising a decrease of $2.0 million from the three disposed hotel properties partially offset by an aggregate increase of $38,000 at our 12 comparable hotel properties. These decreases were partially offset by increases in: (i) incentive management fees of $2.3 million at our 12 comparable hotel properties and an increase of $267,000 from the three disposed hotel properties; and (ii) energy costs of $350,000 comprising an aggregate increase of $1.3 million at our 12 comparable hotel properties partially offset by a decrease of $984,000 from the three disposed hotel properties.
Management Fees. Base management fees decreased $1.1 million, or 9.0%, to $11.3 million in the 2026 period compared to the 2025 period. Management fees decreased $1.7 million due to the sales of the Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa as well as decreases of $112,000 at Capital Hilton and The Ritz-Carlton Lake Tahoe. These decreases were partially offset by an aggregate increase of $700,000 at ten comparable hotel properties.
Property Taxes, Insurance and Other. Property taxes, insurance and other decreased $6.2 million, or 33.8%, to $12.2 million in the 2026 period compared to the 2025 period. This decrease is primarily attributable to a decrease of $3.1 million due to the sales of the Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa and an aggregate decrease of $3.0 million at our 12 comparable hotel properties, primarily attributable to a favorable property tax assessment at the Sofitel Chicago Magnificent Mile.
Depreciation and Amortization. Depreciation and amortization decreased $2.7 million, or 5.9%, to $44.0 million for the 2026 period compared to the 2025 period. This decrease is due to lower depreciation of $6.3 million from the sales of the Marriott Seattle Waterfront, The Clancy and Park Hyatt Beaver Creek Resort & Spa and an aggregate decrease of $475,000 at Capital Hilton, Pier House Resort & Spa and Sofitel Chicago Magnificent Mile. These decreases were partially offset by an aggregate increase of $4.0 million at nine comparable hotel properties.
Advisory Services Fee. Advisory services fee increased $882,000, or 6.4%, to $14.7 million in the 2026 period compared to the 2025 period due to higher reimbursable expenses of $549,000, higher base advisory fee of $504,000 and higher equity-based compensation of $99,000, partially offset by a lower incentive fee of $270,000.
In the 2026 period, we recorded an advisory services fee of $14.7 million, which included a base advisory fee of $7.6 million and reimbursable expenses of $7.1 million.
In the 2025 period, we recorded an advisory services fee of $13.8 million, which included a base advisory fee of $7.1 million, reimbursable expenses of $6.6 million, an incentive fee of $270,000 and a credit to expense of $99,000 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 $9.3 million in the 2026 period and consisted of $6.1 million in professional fees, $2.1 million of public company costs, $435,000 related to Ashford Securities and $682,000 in miscellaneous expenses.
Corporate general and administrative expense was $596,000 in the 2025 period and consisted of $3.1 million in professional fees, $1.6 million of public company costs and $839,000 in miscellaneous expenses. These expenses were partially offset by an expense reduction of $5.0 million from an insurance recovery for prior legal expenses.
Gain (loss) on disposition of assets and hotel property. In the 2026 period we recorded a gain of approximately $17.4 million related to the sale of the Park Hyatt Beaver Creek Resort & Spa.
Equity in Earnings (Loss) of Unconsolidated Entity. There was a $31,000 loss in equity in earnings (loss) of unconsolidated entity in the 2026 period as a result of writing off the remaining OpenKey note receivable balance.
Other Income (Expense). Other expense was $1.3 million in the 2025 period due to a realized loss on the sale of a portion of CMBS.
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Interest Income. Interest income was $1.6 million and $3.4 million in the 2026 period and the 2025 period, respectively. The decrease in interest income in the 2026 period was primarily attributable to lower interest rates and lower excess cash balances compared to the 2025 period.
Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs decreased $8.5 million, or 16.9%, to $41.7 million for the 2026 period compared to the 2025 period. The decrease is primarily due to lower interest expense of $8.5 million from lower average interest rates and lower average debt balances in the 2026 period partially offset by higher amortization of loan costs of approximately $31,000 in the 2026 period compared to the 2025 period.
Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $1.5 million in the 2026 period related to The Ritz-Carlton Lake Tahoe loan extension. Write-off of loan costs and exit fees was $1.5 million in the 2025 period related to various loan refinances and modifications.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain on derivatives of $283,000 for the 2026 period consisted of an unrealized gain on interest rate caps of $273,000 and a realized gain of $10,000 associated with payments received from counterparties on in-the-money interest rate caps.
Realized and unrealized loss on derivatives of $183,000 for the 2025 period consisted of an unrealized loss on interest rate caps of $551,000, partially offset by a realized gain of $368,000 associated with payments received from counterparties on in-the-money interest rate caps.
Income Tax (Expense) Benefit. Income tax expense increased $2.8 million, from $1.1 million in the 2025 period to $3.9 million in the 2026 period. This change was primarily due to an increase in the taxable income of certain of our TRS entities in the 2026 period compared to the 2025 period.
(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities. Our noncontrolling interest partners in consolidated entities were allocated a loss of $65,000 and income of $51,000 in the 2026 period and the 2025 period, respectively. For the 2026 period noncontrolling interest in consolidated entities represented a 25% ownership interest in a JV. As of June 30, 2025, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity and a 25% ownership interest in a JV.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net income of $299,000 in the 2026 period and a net loss of $1.8 million in the 2025 period. Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 6.27% and 8.51% as of June 30, 2026 and 2025, 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, including the Company Sale Fee, 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;
•dividends on our common stock;
•dividends on our preferred stock;
•redemptions of our non-traded preferred stock; and
•capital expenditures to improve our hotel properties.
We expect to meet our short-term liquidity requirements generally through net cash provided by operations, capital market activities, asset sales and existing cash balances.
Pursuant to the advisory agreement between us and our Advisor, we must pay our Advisor on a monthly basis a base advisory fee, subject to a minimum base advisory fee. The minimum base advisory fee is equal to the greater of: (i) 90% of the base fee paid for the same month in the prior fiscal year; and (ii) 1/12th of the “G&A Ratio” for the most recently completed fiscal quarter multiplied by our total market capitalization on the last balance sheet date included in the most recent quarterly report on Form 10-Q or annual report on Form 10-K that we file with the SEC. Thus, even if our total market capitalization and performance decline, we will still be required to make payments to our Advisor equal to the minimum base advisory fee, which could adversely impact our liquidity and financial condition. Additionally, under the terms of the Amended Side Letter agreed
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with our Advisor in December 2025, we are required to remit property sale net proceeds, after taking into account our anticipated working capital requirements, to our Advisor to satisfy the Company Sale Fee and Master Agreements Termination Fee, once triggered.
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 future common and preferred equity issuances, existing working capital, net cash provided by operations, 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, 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. While management cannot provide any assurances, management believes that our cash flow from operations and our existing cash balances will be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity principal payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes.
Our hotel properties will require periodic capital expenditures and renovations 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 declines. 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. These cash trap provisions have been triggered on two mortgage loans, as discussed below. Our loans that are in cash traps may remain subject to the cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT. As of June 30, 2026, the mortgage loan secured by The Ritz-Carlton Lake Tahoe and the loan secured by the Capital Hilton were in cash traps. The amount of cash in the cash traps as of June 30, 2026 was $0.
As of June 30, 2026, the Company held cash and cash equivalents of $98.2 million (inclusive of amounts held for sale) and restricted cash of $52.6 million, the vast majority of which is comprised of lender and manager-held reserves. As of June 30, 2026, $19.4 million (inclusive of amounts held for sale) was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. As of June 30, 2026, our net debt to gross assets was 43.5%.
The Company’s cash and cash equivalents are primarily comprised of corporate cash invested in short-term U.S. Treasury securities with maturity dates of less than 90 days and corporate cash held at commercial banks in Insured Cash Sweep (“ICS”) accounts, which are fully insured by the FDIC. The Company’s cash and cash equivalents also includes property-level operating cash deposited with commercial banks that have been designated as a Global Systemically Important Bank (“G-SIB”) by the Financial Stability Board (“FSB”) and a small amount deposited with other commercial banks.
Each share of our Series E Preferred Stock and Series M Preferred Stock is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee, subject to the limitations as stated in the Articles Supplementary.
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As of June 30, 2026, the Company determined that a portion of the outstanding Series E Preferred Stock and Series M Preferred Stock met the criteria for mandatory redemption based on certain holders initiating redemption requests that exceeded the limitations set forth in the Articles Supplementary. As of June 30, 2026, the Company has received $53.4 million in investor-initiated Series E Preferred Stock redemption requests and $1.3 million in investor-initiated Series M Preferred Stock redemption requests that have not been completed and are included in “redeemable preferred stock redemptions payable” in our condensed consolidated balance sheet.
Based on the various limitations in place as of June 30, 2026, and not considering any future redemption requests received, we expect that all of these redemption requests will be fulfilled over the subsequent twelve months from June 30, 2026. As of July 31, 2026, the redeemable preferred stock redemptions payable was approximately $57.8 million.
Equity Transactions
On November 13, 2019, we filed an initial registration statement with the SEC, as amended on January 24, 2020, for shares of 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”). The registration statement became effective on February 21, 2020, and contemplates the issuance and sale of up to 20,000,000 shares of Series E Preferred Stock or Series M Preferred Stock in a primary offering and up to 8,000,000 shares of Series E Preferred Stock or Series M Preferred Stock pursuant to a dividend reinvestment plan. On February 25, 2020, we filed our prospectus with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager and wholesaler of the Series E Preferred Stock and Series M Preferred Stock. On April 2, 2021, the Company filed with the State Department of Assessments and Taxation of the State of Maryland (the “SDAT”) articles supplementary to the Company’s Articles of Amendment and Restatement that provided for: (i) reclassifying the existing 28,000,000 shares of Series E Preferred Stock and 28,000,000 shares of Series M Preferred Stock as unissued shares of preferred stock; (ii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series E Preferred Stock (the “Series E Articles Supplementary”); and (iii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series M Preferred Stock (the “Series M Articles Supplementary”). The Series E Articles Supplementary and Series M Articles Supplementary were filed to revise the preferred stock terms related to the dividend rate, our optional redemption right and certain other voting rights. The Company also caused its operating partnership to execute Amendment No. 5 to the Third Amended and Restated Agreement of Limited Partnership to amend the terms of its operating partnership agreement to conform to the terms of the Series E Articles Supplementary and Series M Articles Supplementary. In total, the Company issued approximately 16.4 million shares of Series E Preferred Stock and received net proceeds of approximately $369.5 million and issued approximately 2.0 million shares of Series M Preferred Stock and received net proceeds of approximately $47.6 million. On February 21, 2023, the Company announced the closing of its offering of the Series E Preferred Stock and Series M Preferred Stock.
On May 3, 2024, our board of directors approved a new share 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 Company may repurchase shares through open market transactions, privately negotiated transactions or other means. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice. The board of directors’ authorization replaced any previous repurchase authorizations. As of August 4, 2026, the Company has not repurchased any common stock pursuant to the plan.
Debt Transactions
On May 26, 2026, the Company sold the Park Hyatt Beaver Creek Resort & Spa for $176 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid the $70.5 million mortgage loan that was secured by the hotel property.
On June 1, 2026 the Company repaid its $86.3 million Convertible Senior Notes in full.
On June 25, 2026 the Company extended its $43.4 million mortgage loan secured by The Ritz-Carlton Lake Tahoe. The loan had an initial maturity date of July 15, 2026 and now has a maturity date of October 15, 2026. An additional three-month maturity extension is also available at the Company’s discretion on the same terms.
On July 14, 2026, the Company completed the sale of the Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville for a purchase price of $437.5 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid approximately $232.8 million on the mortgage loan that was partially secured by the hotel properties.
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Sources and Uses of Cash
We had approximately $98.2 million (inclusive of amounts held for sale) and $124.4 million of cash and cash equivalents at June 30, 2026 and December 31, 2025, 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 $42.9 million and $38.2 million for the six months ended June 30, 2026 and 2025, respectively. Cash flows from operations were impacted by changes in hotel operations and the disposition of hotel properties. 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 related parties and settling with hotel managers.
Net Cash Flows Provided by (Used in) Investing Activities. For the six months ended June 30, 2026, net cash flows provided by investing activities were $152.2 million. Cash inflows consisted of net proceeds from the sale of the Park Hyatt Beaver Creek Resort & Spa of $169.2 million, $716,000 from property insurance proceeds and $58,000 from the sale of OpenKey. These cash inflows were partially offset by cash outflows of $17.8 million from capital improvements made to various hotel properties. Our capital improvements consisted of approximately $12.8 million of return on investment capital projects and approximately $5.0 million of renewal and replacement capital projects.
For the six months ended June 30, 2025, net cash flows used in investing activities were $11.7 million. Cash outflows were primarily attributable to $33.0 million of capital improvements made to various hotel properties and acquisition of land of $5.5 million, partially offset by cash inflows of $23.8 million from sale of investment in securities and $3.1 million from property insurance proceeds. Our capital improvements consisted of approximately $23.2 million of return on investment capital projects and approximately $9.9 million of renewal and replacement capital projects.
Return on investment capital projects are designed to improve the positioning of our hotel properties within their markets and competitive sets. Renewal and replacement capital projects are designed to maintain the quality and competitiveness of our hotels.
Net Cash Flows Provided by (Used in) Financing Activities. For the six months ended June 30, 2026, net cash flows used in financing activities were $210.0 million. Cash outflows primarily consisted of $156.8 million of repayments of indebtedness, $1.6 million of payments of loan costs and exit fees, $33.3 million for cash redemptions of Series E and Series M Preferred Stock and $18.4 million of dividend and distribution payments.
For the six months ended June 30, 2025, net cash flows used in financing activities were $75.9 million. Cash outflows primarily consisted of $365.2 million of repayments of indebtedness, $40.7 million for cash redemptions of Series E and Series M preferred stock, $24.2 million of dividend and distribution payments, $8.9 million of payments of loan costs and exit fees, $508,000 to purchase interest rate caps, and $92,000 from the redemption of operating partnership units. These cash outflows were partially offset by cash inflows of $363.0 million from borrowings on indebtedness, $424,000 of proceeds from in-the-money interest rate caps and a contribution of $306,000 from a noncontrolling interest holder in a consolidated entity.
Dividend Policy
Our board of directors has not declared a dividend policy for 2026. The board of directors will continue to review the Company’s dividend policy. For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof.
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. Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as pandemics, extreme weather conditions, natural disasters, terrorist attacks or alerts, civil unrest, government shutdowns, airline strikes or reduced airline capacity, economic factors and other considerations affecting travel. 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.
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Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us 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. 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 2025 Form 10-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, 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 exclude impairment on real estate, (gain) loss on disposition of assets and hotel properties and the 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 conversion costs, other income/expense, write-off of loan costs and exit fees, gain/loss on insurance settlements, legal, advisory and settlement costs, advisory services incentive fee, gain/loss on extinguishment of debt, stock/unit-based compensation and the Company’s portion of adjustments to EBITDAre of OpenKey and non-cash items such as unrealized gain/ loss on derivatives.
We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they are useful to an investor in evaluating our operating performance because they provide investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe they help investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions. 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.
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The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) (unaudited):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Net income (loss) | $ | 6,942 | $ | (6,841) | $ | 24,976 | $ | 3,831 | |||||||||||||||||||||
| Interest expense and amortization of loan costs | 20,513 | 25,361 | 41,708 | 50,188 | |||||||||||||||||||||||||
| Depreciation and amortization | 21,433 | 23,360 | 44,012 | 46,755 | |||||||||||||||||||||||||
| Income tax expense (benefit) | 2,481 | (345) | 3,898 | 1,122 | |||||||||||||||||||||||||
| Equity in (earnings) loss of unconsolidated entity | — | — | 31 | — | |||||||||||||||||||||||||
EBITDA | 51,369 | 41,535 | 114,625 | 101,896 | |||||||||||||||||||||||||
| (Gain) loss on disposition of assets and hotel property | (17,395) | — | (17,398) | — | |||||||||||||||||||||||||
| EBITDAre | 33,974 | 41,535 | 97,227 | 101,896 | |||||||||||||||||||||||||
| Amortization of favorable (unfavorable) contract assets (liabilities) | 107 | 107 | 214 | 214 | |||||||||||||||||||||||||
Transaction and conversion costs | 1,144 | 471 | 3,819 | 1,166 | |||||||||||||||||||||||||
| Write-off of premiums, loan costs and exit fees | 1,484 | 3 | 1,489 | 1,467 | |||||||||||||||||||||||||
| Realized and unrealized (gain) loss on derivatives | (35) | (15) | (283) | 183 | |||||||||||||||||||||||||
| Stock/unit-based compensation | — | (47) | — | (95) | |||||||||||||||||||||||||
Legal, advisory and settlement costs | 808 | (4,626) | 1,312 | (4,482) | |||||||||||||||||||||||||
| Advisory services incentive fee | — | 188 | — | 270 | |||||||||||||||||||||||||
Other (income) expense | — | 1,250 | — | 1,250 | |||||||||||||||||||||||||
Severance | 311 | — | 548 | — | |||||||||||||||||||||||||
| Adjusted EBITDAre | $ | 37,793 | $ | 38,866 | $ | 104,326 | $ | 101,869 | |||||||||||||||||||||
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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, 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 transaction and conversion costs, other income/expense, write-off of premiums, loan costs and exit fees, legal, advisory and settlement costs, stock/unit-based compensation, severance, gain/loss on insurance settlements, gain/loss on extinguishment of debt, and non-cash items such as deemed dividends on redeemable preferred stock, interest expense accretion on refundable membership club deposits, amortization of loan costs, unrealized gain/loss on derivatives 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 present FFO and Adjusted FFO because we consider FFO and Adjusted FFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and Adjusted FFO when reporting their results. FFO and Adjusted FFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and Adjusted FFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and Adjusted FFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. 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.
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The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands) (unaudited):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Net income (loss) | $ | 6,942 | $ | (6,841) | $ | 24,976 | $ | 3,831 | |||||||||||||||||||||
| (Income) loss attributable to noncontrolling interest in consolidated entities | 48 | (115) | 65 | (51) | |||||||||||||||||||||||||
| Net (Income) loss attributable to redeemable noncontrolling interests in operating partnership | 48 | 1,489 | (299) | 1,751 | |||||||||||||||||||||||||
| Preferred dividends | (7,741) | (8,992) | (15,781) | (18,261) | |||||||||||||||||||||||||
Deemed dividends on preferred stock | (8) | (1,559) | (4,771) | (5,835) | |||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | (711) | (16,018) | 4,190 | (18,565) | |||||||||||||||||||||||||
Depreciation and amortization on real estate (1) | 21,433 | 22,690 | 44,012 | 45,366 | |||||||||||||||||||||||||
| Net income (loss) attributable to redeemable noncontrolling interests in operating partnership | (48) | (1,489) | 299 | (1,751) | |||||||||||||||||||||||||
| Equity in (earnings) loss of unconsolidated entity | — | — | 31 | — | |||||||||||||||||||||||||
| (Gain) loss on disposition of assets and hotel property | (17,395) | — | (17,398) | — | |||||||||||||||||||||||||
| FFO available to common stockholders and OP unitholders | 3,279 | 5,183 | 31,134 | 25,050 | |||||||||||||||||||||||||
Deemed dividends on preferred stock | 8 | 1,559 | 4,771 | 5,835 | |||||||||||||||||||||||||
Transaction and conversion costs | 1,144 | 471 | 3,819 | 1,166 | |||||||||||||||||||||||||
| Write-off of premiums, loan costs and exit fees | 1,484 | 3 | 1,489 | 1,467 | |||||||||||||||||||||||||
| Unrealized (gain) loss on derivatives | (33) | 165 | (273) | 551 | |||||||||||||||||||||||||
| Stock/unit-based compensation | — | (47) | — | (95) | |||||||||||||||||||||||||
Legal, advisory and settlement costs | 808 | (4,626) | 1,312 | (4,482) | |||||||||||||||||||||||||
| Interest expense accretion on refundable membership club deposits | 120 | 135 | 255 | 286 | |||||||||||||||||||||||||
Amortization of loan costs (1) | 2,441 | 2,651 | 4,850 | 4,748 | |||||||||||||||||||||||||
| Advisory services incentive fee | — | 188 | — | 270 | |||||||||||||||||||||||||
Other (income) expense | — | 1,250 | — | 1,250 | |||||||||||||||||||||||||
Severance | 311 | — | 548 | — | |||||||||||||||||||||||||
| Adjusted FFO available to common stockholders and OP unitholders | $ | 9,562 | $ | 6,932 | $ | 47,905 | $ | 36,046 | |||||||||||||||||||||
____________________
(1)Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for noncontrolling interests for each line item:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Depreciation and amortization on real estate | $ | — | $ | (670) | $ | — | $ | (1,389) | |||||||||||||||||||||
| Amortization of loan costs | — | (36) | — | (71) | |||||||||||||||||||||||||
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The following table presents certain information related to our hotel properties as of June 30, 2026:
| Hotel Property | Location | Total Rooms | ||||||||||||||||||||||||||||||||||||||||||||||||
| Fee Simple Properties | ||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Hilton | Washington, D.C. | 559 | ||||||||||||||||||||||||||||||||||||||||||||||||
| The Notary Hotel | Philadelphia, PA | 499 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Sofitel Chicago Magnificent Mile | Chicago, IL | 415 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Pier House Resort & Spa | Key West, FL | 142 | ||||||||||||||||||||||||||||||||||||||||||||||||
| The Ritz-Carlton St. Thomas | St. Thomas, USVI | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Hotel Yountville | Yountville, CA | 80 | ||||||||||||||||||||||||||||||||||||||||||||||||
| The Ritz-Carlton Sarasota | Sarasota, FL | 276 | ||||||||||||||||||||||||||||||||||||||||||||||||
The Ritz-Carlton Lake Tahoe (1) | Truckee, CA | 170 | ||||||||||||||||||||||||||||||||||||||||||||||||
Cameo Beverly Hills (2) | Los Angeles, CA | 139 | ||||||||||||||||||||||||||||||||||||||||||||||||
The Ritz-Carlton Reserve Dorado Beach (3) | Dorado, Puerto Rico | 96 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Four Seasons Resort Scottsdale | Scottsdale, AZ | 210 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ground Lease Property (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Bardessono Hotel and Spa (5) | Yountville, CA | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 2,831 | |||||||||||||||||||||||||||||||||||||||||||||||||
(1) The above information does not include the operations of the voluntary rental program with respect to condominium units not owned by the Company.
(2) Includes 138 hotel rooms and one residence adjacent to the hotel.
(3) The above information does not include the operations of the voluntary rental program with respect to residential units not owned by the Company.
(4) Some of our hotel properties are on land subject to ground leases, one of which covers the entire property.
(5) The initial ground lease expires in 2065. The ground lease contains two 25-year extension options, at our election.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES 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.
As of June 30, 2026, our total indebtedness of approximately $1.0 billion included all 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 as of June 30, 2026, would be approximately $2.4 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 as of June 30, 2026, 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.
ITEM 4.CONTROLS AND PROCEDURES
Under the supervision and with the participation of our Chief Executive Officer and Chief Accounting Officer and Principal 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 June 30, 2026. Based upon that evaluation, our Chief Executive Officer and Chief Accounting Officer and Principal Financial Officer concluded that, as of June 30, 2026, our disclosure controls and procedures are effective to ensure that: (i) 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’s rules and forms; and (ii) information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Accounting Officer and Principal 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.
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PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt out of the class; however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt-out period has been extended until such time that discovery has concluded. In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified. After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. A tentative settlement in the amount of $850,000 was reached on February 14, 2025. Final court approval was obtained on September 12, 2025. Braemar’s portion of the settlement is 11.7%. The case is now in the settlement administration phase. Settlement distributions were scheduled to begin on July 22, 2026, and the Court has set a compliance hearing for November 18, 2026. As of June 30, 2026, the settlement liability amount has been accrued.
On June 8, 2022, a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines. The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and Private Attorneys General Act (“PAGA”) claims. On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement. At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $3.5 million, which the parties have since agreed to. The allocation to Hilton La Jolla Torrey Pines is approximately $401,000, which was accrued as of June 30, 2026. The Court granted a motion for preliminary approval of the settlement on October 27, 2025. A hearing on the motion for final approval occurred on April 20, 2026, and the Court entered a final judgment.
On August 4, 2020, a lawsuit, Benjamin Zermeno v. Beverly Hills Marriott, was filed in Alameda County Superior Court as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The plaintiff’s individual claims were compelled to arbitration. On August 18, 2022, another lawsuit, Cristina Catalano v. Beverly Hills Marriott and Mr. C, was filed as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties. The co-defendant separately settled and the individual arbitration has also settled. A private mediation was held on December 27, 2024 to globally resolve the three outstanding matters. The Court approved the settlement of all matters on January 16, 2026. The aggregate settlement is $2.5 million. Braemar’s portion of the settlement is approximately $679,000. As of June 30, 2026, the settlement liability was paid in full.
On February 6, 2024, we received a Request for Information Under Section 114 of the Clean Air Act dated January 11, 2024, from the Environmental Protection Agency (EPA), Region 2, relating to The Ritz-Carlton St. Thomas. We complied with the Request for Information and provided the requested information on March 12, 2024. Then, on April 16, 2025, we received a subsequent communication from the EPA alleging certain failures to comply with various record keeping and reporting requirements. The EPA also indicated that they had concerns regarding the operation of the hotel’s generators and the lack of certain certifications that should be held by hotel employees. We met with the EPA in May 2025 to discuss and respond to the allegations in the EPA’s April 16, 2025 communication. Since this meeting, we have been working with the hotel management team to ensure full compliance with all applicable regulatory requirements at the hotel, including ensuring all appropriate hotel employees have all applicable certifications, engaging third-party environmental consultants, working with outside counsel, preparing standard operating procedures for the hotel, and reviewing options relating to the operation of the hotel’s generators. This matter has been resolved for approximately $350,000, which has been accrued as of June 30, 2026, with no admission with respect to the factual allegations or alleged violations.
On June 12, 2026, the Company announced its intention to terminate the Advisory Agreement with Ashford Inc. and transition to a self-managed REIT. In connection with the pending asset sale transactions and the planned termination of the Advisory Agreement, certain shareholders have publicly expressed opposition to aspects of the asset sale transactions and the termination of the Advisory Agreement, and have indicated an intention to pursue legal remedies. There can be no assurance that litigation will not be commenced or, if commenced, that it will be resolved quickly or in the Company’s favor. If a court were to issue a temporary restraining order, preliminary injunction, or other form of equitable relief, the closing of one or more pending hotel sale transactions could be prevented or delayed, which could in turn prevent or delay the termination of the
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Advisory Agreement. In such event, the anticipated reduction in general and administrative costs of more than $25 million annually would not be realized, and the other expected benefits of self-management would be delayed or not achieved.
We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws). The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do 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, results of operations, or cash flow.
Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not 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, results of operations, or cash flows 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, 2025, filed with the SEC, 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. In addition to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, the following risk factor should be carefully considered in evaluating us and our business.
The pending hotel sale transactions necessary to fund the termination of the Advisory Agreement may not close, or may be delayed or enjoined, which could prevent or delay our planned transition to self-management and result in material harm to the Company.
On June 12, 2026, we announced our intention to terminate the Fifth Amended and Restated Advisory Agreement (the “Advisory Agreement”) with Ashford Inc. and its affiliates (“Ashford”) and transition to a self-managed real estate investment trust. Our planned transition to self-management depends on our ability to close asset sale transactions, the net proceeds of which are required to satisfy the Company Sale Fee and Master Agreement Termination Fee payable to Ashford under the Advisory Agreement upon its termination. On July 14, 2026, we completed the sale of the Ritz-Carlton Sarasota, the Bardessono Hotel and Spa and the Hotel Yountville for a purchase price of $437.5 million in cash, upon which the Company Sale Fee was triggered and $173.0 million of net sale proceeds were paid to Ashford to pay down a portion of the Company Sale Fee. We have also entered into a definitive agreement to sell the Pier House Resort & Spa for a purchase price of $190 million in cash, and may enter into agreements for the sale of additional hotel properties, to satisfy our remaining obligations to Ashford associated with the termination of the Advisory Agreement. We do not intend to sell all or substantially all of our assets, only the approximate number necessary to satisfy our obligation to pay the Company Sale Fee and Master Agreement Termination Fee after working capital needs and other reserves.
There can be no assurance that any pending or contemplated hotel sale transaction will close on the terms announced, or at all. Hotel sale transactions are subject to numerous conditions and risks beyond our control, including the ability of prospective buyers to obtain financing, the satisfaction of customary closing conditions, the receipt of required third-party consents and regulatory approvals, and other factors affecting real estate markets generally. If a pending sale transaction fails to close, or if net sale proceeds are materially less than anticipated, we may be unable to satisfy our remaining financial obligations to Ashford upon termination of the Advisory Agreement, which could prevent or materially delay our planned transition to self-management.
In addition, one or more third parties, including shareholders or other stakeholders who oppose the pending asset sale transactions or the terms of the Advisory Agreement’s termination, may seek to enjoin, delay, or otherwise challenge the pending hotel sale transactions or the termination of the Advisory Agreement through litigation or other legal proceedings. Certain shareholders have publicly expressed opposition to aspects of the asset sale transactions and the termination of the Advisory Agreement, and have indicated an intention to pursue legal remedies. There can be no assurance that such litigation will not be commenced or, if commenced, that it will be resolved quickly or in our favor. A temporary restraining order, preliminary injunction, or other form of equitable relief could prevent or delay the closing of one or more pending hotel sale transactions, increase our legal costs and management distraction, create uncertainty that adversely affects our business and the
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market price of our securities, and cause us to be unable to complete our planned transition to a self-managed REIT in the anticipated timeframe, or at all.
If we are unable to terminate the Advisory Agreement as planned, or if there is a material delay in doing so, we would continue to incur advisory fees and related costs payable to Ashford under the Advisory Agreement, the anticipated reduction in general and administrative costs of more than $25 million annually would not be realized, and the other expected benefits of self-management — including the reconstitution of our Board of Directors with new independent directors and improved shareholder alignment — would be delayed or not achieved. Any of these outcomes could have a material adverse effect on our business, financial condition, results of operations, and the market price of our common stock and preferred stock.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Equity Securities by the Issuer
On May 3, 2024, our board of directors approved a new share 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 Company may repurchase shares through open market transactions, privately negotiated transactions or other means. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice. The board of directors’ authorization replaced any previous repurchase authorizations.
The following table provides the information with respect to purchases and forfeitures of our common stock during each of the months in the second quarter of 2026:
| 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: | ||||||||||||||||||||||||||
| April 1 - April 30 | — | $ | — | — | $ | 50,000,000 | ||||||||||||||||||||
| May 1 - May 31 | — | $ | — | — | $ | 50,000,000 | ||||||||||||||||||||
| June 1 - June 30 | — | $ | — | — | $ | 50,000,000 | ||||||||||||||||||||
| Total | — | $ | — | — | ||||||||||||||||||||||
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.OTHER INFORMATION
Rule 10b5-1 Trading Agreements
During the three months ended June 30, 2026, no director or officer of the Company adopted terminated
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ITEM 6.EXHIBITS
| Exhibit | Description | ||||||||||
| 3.1 | Articles of Amendment and Restatement of Ashford Hospitality Prime, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 29, 2016) (File No. 001-35972). | ||||||||||
| 3.2 | Articles of Amendment of Ashford Hospitality Prime, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on April 29, 2016) (File No. 001-35972). | ||||||||||
| 3.3 | Articles Supplementary of Ashford Hospitality Prime, Inc. (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed on April 29, 2016) (File No. 001-35972). | ||||||||||
| 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) (File No. 001-35972). | ||||||||||
| 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) (File No. 001-35972). | ||||||||||
| 3.6 | Articles of Amendment of Braemar Hotels & Resorts Inc., accepted for record and certified by the SDAT on January 23, 2020 (incorporated by reference to Exhibit 3.13 to Amendment No. 1 to the Registration Statement on Form S-3 filed with the SEC on January 24, 2020) (File No. 333-234663). | ||||||||||
| 3.7 | Fifth Amended and Restated Bylaws, as amended by Amendment No.1 on February 27, 2024, adopted on February 27, 2024 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on March 1, 2024) (File No. 001-35972). | ||||||||||
| 10.1 | Limited Waiver Under Advisory Agreement, dated as of March 13, 2026, by and among Braemar Hotels & Resorts Inc., Braemar Hospitality Limited Partnership, Braemar TRS Corporation, Ashford Inc., and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on March 17, 2026) (File No. 001-35972). | ||||||||||
| 10.2† | Form of 2026 Deferred Cash Award Agreement) (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on March 17, 2026 (File No. 001-35972). | ||||||||||
| 10.3† | Form of 2026 Deferred Cash Award Agreement) (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on March 17, 2026 (File No. 001-35972). | ||||||||||
| 10.4 | Notice of Exercise of Extension of Term under Fifth Amended and Restated Advisory Agreement, as amended, dated as of March 31, 2026 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 3, 2026) (File No. 001-35972). | ||||||||||
| 10.5 | Agreement of Purchase and Sale, dated as of April 27, 2026, by and among Ashford BC LP, Ashford TRS BC LLC and Apres Owner, LLC (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed on May 7, 2026) (File No. 001-35972). | ||||||||||
| 10.6* | Agreement of Purchase and Sale, dated as of June 4, 2026, by and among Ashford Yountville LP, Ashford Yountville II LP, Ashford Sarasota LP, Ashford TRS Sarasota Residence LLC, Ashford TRS Yountville LLC, Ashford TRS Yountville II LLC and Ashford TRS Sarasota LLC and BRDO Property, LLC, YNTV Property, LLC, 1776 Sarasota Associates, LLC and 1776 Sarasota Golf Associates, LLC | ||||||||||
| 10.7 | Amendment No. 3 to the Fifth Amended and Restated Advisory Agreement, dated as of May 21, 2026, by and among Braemar Hotels & Resorts Inc., Braemar Hospitality Limited Partnership, Braemar TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on May 22, 2026) (File No. 001-35972). | ||||||||||
| 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 Accounting Officer and Principal 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 Accounting Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
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The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 are formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Equity; (v) Consolidated Statements of Cash Flows; and (vi) 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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Submitted electronically with this report. | |||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Submitted electronically with this report. | |||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Submitted electronically with this report. | |||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | Submitted electronically with this report. | |||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | Submitted electronically with this report. | |||||||||
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | ||||||||||
___________________________________
* Filed herewith.
** Furnished herewith.
† Management contract or compensatory plan or arrangement.
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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: | August 6, 2026 | By: | /s/ RICHARD J. STOCKTON | |||||||||||
| Richard J. Stockton | ||||||||||||||
| President and Chief Executive Officer | ||||||||||||||
| Date: | August 6, 2026 | By: | /s/ JUSTIN R. COE | |||||||||||
Justin R. Coe | ||||||||||||||
| Chief Accounting Officer and Principal Financial Officer | ||||||||||||||
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