Activist Brancous LP1 presses Braemar (NYSE: BHR) to cut $480M termination costs

Rhea-AI Filing Summary

Brancous LP1, a significant shareholder of Braemar Hotels & Resorts, has published an exempt solicitation letter challenging the company’s management termination framework. The letter focuses on termination payments of approximately $480 million to Ashford Inc. and $25 million to Remington Hospitality approved by the board.

The shareholder contends these amounts were calculated by capitalizing not only long-term advisory fees but also various short-term, replaceable service fees from Ashford-affiliated subsidiaries, which it argues should not receive long-term termination protection. It urges independent directors to limit termination economics to the core advisory agreement as the Ashford contract approaches its potential ten‑year extension decision in 2026.

Brancous LP1 states that Braemar’s shares trade at roughly 30% of its estimated net asset value and links this discount to the current termination structure. It argues that if termination obligations were reduced to around $150 million, shareholders could potentially realize up to $9.00 per common share through transactions and distributions, framing this as a key consideration in the ongoing strategic sale process.

Insights

Corporate governance and REIT activist analyst

Activist investor challenges Braemar’s external management termination fees as misaligned with shareholder value during a strategic sale process.

The letter from Brancous LP1 targets Braemar’s external management structure with Ashford Inc. during an active strategic review. It highlights board‑approved termination payments of about $480 million to Ashford and $25 million to Remington, arguing that these were derived by capitalizing both advisory and multiple ancillary service fees.

The activist emphasizes that many Ashford‑affiliated service providers operate under ordinary-course, renegotiable arrangements rather than long-term contracts, yet their fees are included in termination calculations. It calls on independent directors to reassess which fees merit termination protection, limit coverage to the core advisory agreement, and use upcoming renewal negotiations before 2027 to seek materially lower obligations.

Brancous LP1 links what it views as an inflated termination framework to Braemar’s trading level of roughly 30% of its estimated net asset value and suggests that a reduced obligation of around $150 million could support value realization of up to $9.00 per share. The actual impact depends on the board’s response, any renegotiations with Ashford, and outcomes of the strategic sale process.

SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

NOTICE OF EXEMPT SOLICITATION (VOLUNTARY SUBMISSION)

NAME OF REGISTRANT: Braemar Hotels & Resorts Inc.

CIK: 1574085

NAME OF PERSON RELYING ON EXEMPTION: Brancous LP1

ADDRESS OF PERSON RELYING ON EXEMPTION: 56A Mill St E #290, Acton, Ontario L7J 1H3, Canada

Written materials are submitted pursuant to Rule 14a-6(g)(1) promulgated under the Securities Exchange Act of 1934:

• Letter to Shareholders dated February 2, 2026

 

February 2, 2026

Fellow Shareholders,

We are writing to you as significant shareholders of Braemar Hotels & Resorts to express our deep concern regarding a critical issue that, in our view, is suppressing shareholder value at a decisive moment for the Company.

In August 2025, Braemar announced the initiation of a strategic sale process. Given the time that has elapsed since that announcement, it is reasonable to expect that indications of interest or preliminary proposals should now be emerging. Yet one structural issue threatens to undermine both the credibility and the economic outcome of this process: the Company’s termination agreements with its external manager and affiliated entities.

A Termination Framework That Distorts Value

Braemar is externally managed under an advisory agreement with Ashford Inc., which retains the unilateral right to extend that agreement for an additional ten-year term, exercisable by June 2026, with the renewed agreement commencing January 1, 2027. Absent such extension, the existing management agreement expires at the end of 2026.

Despite this looming expiration and renewal negotiation, the Board has approved termination payments totaling approximately $480 million payable to Ashford, plus an additional $25 million payable to Remington Hospitality.

These figures are extraordinary — and, in our view, economically unjustifiable.

The termination amount has been calculated by capitalizing not only the core advisory fee payable under the Ashford management agreement, but also a wide range of ancillary fees paid to Ashford-controlled subsidiaries, including fees related to mortgage brokerage, insurance brokerage, and other service arrangements.

Critically, these subsidiary service providers are not parties to long-term contractual arrangements with the Company. They are not bound by ten-year advisory agreements. They are service providers retained under ordinary-course arrangements that are renegotiable, replaceable, and terminable.

There is therefore no rational basis for multiplying these short-term, non-exclusive, and replaceable service fees into a massive termination payment.

There Is No Justification to Pay These Fees Today

If the Company is genuinely pursuing a sale, shareholders must ask a simple question:

Why would Braemar pay a $480 million termination fee today when the scope of that fee can be materially reduced in just a few months?

Only Ashford’s advisory agreement is subject to long-term renewal. The numerous subsidiary fees that have been swept into the termination calculation — including mortgage brokerage fees, insurance brokerage fees, and similar arrangements — can and should be renegotiated, excluded, or eliminated entirely as part of the upcoming renewal discussions.

There is no commercial logic, and no fiduciary justification, for locking shareholders into the most punitive termination structure possible before those negotiations occur.

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To do so would voluntarily surrender the Board’s leverage at precisely the moment when that leverage is greatest.

The Board’s Fiduciary Duty Is Clear

The Board, acting through its independent directors, has both the authority and the fiduciary obligation to:

·Reassess which fees are legitimately subject to termination protection 

·Exclude ancillary and conflicted subsidiary fees from any termination calculation 

·Ensure that only the core advisory agreement — if any — is considered in termination economics 

If the Board believes a transaction is in shareholders’ best interests, then the Board must first require Ashford to agree to a materially reduced termination framework that reflects economic reality rather than fee maximization.

Paying hundreds of millions of dollars to terminate services that are neither long-term nor indispensable would represent a clear failure to act in the best interests of shareholders.

What This Means for Shareholders

Braemar’s shares currently trade at approximately 30% of net asset value, based on our analysis. The termination framework is a key reason for this disconnect.

If termination economics were rationalized — and limited to true advisory services under long-term contract — the termination obligation could reasonably be reduced to no more than $150 million.

Under such a framework, we estimate that shareholders could realize up to $9.00 per common share through a combination of distributions and value realization — a transformative outcome relative to current market expectations.

Why This Matters Now

A strategic review cannot be credible if potential buyers are forced to price in termination payments that are both inflated and avoidable.

Proceeding with a sale while knowingly preserving an excessive and conflicted termination structure would suppress bids, distort negotiations, and transfer value from common shareholders to entrenched counterparties — even though those economics are imminently renegotiable.

This issue must be addressed before any transaction is concluded.

Our Position

Brancous LP1 does not oppose a strategic transaction. On the contrary, we believe Braemar’s portfolio represents extraordinary underlying value.

However, that value belongs to shareholders, not to a network of short-term service arrangements that have been improperly converted into permanent economic claims.

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We urge the Board’s independent directors to:

·Reassess the termination agreement methodology 

·Recognize that only the advisory agreement is long-term in nature 

·Exclude ancillary and conflicted subsidiary fees from termination calculations 

·Use the upcoming renewal negotiations to materially reduce termination economics 

·Ensure that any strategic outcome maximizes value for common shareholders 

We are publishing this letter to ensure transparency, accountability, and informed engagement among shareholders at a pivotal moment for the Company.

Sincerely,

Alejandro Malbran
Managing Partner
Brancous LP1

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FAQ

What is Brancous LP1 asking Braemar Hotels & Resorts (BHR) to change?

Brancous LP1 urges Braemar’s independent directors to renegotiate and narrow its management termination framework, limiting protection to the long-term advisory agreement. It wants ancillary Ashford-affiliated service fees excluded from large termination payouts before any strategic sale is completed.

How large are the termination payments highlighted for Braemar Hotels & Resorts (BHR)?

The letter states Braemar’s board approved termination payments of about $480 million to Ashford Inc. plus $25 million to Remington Hospitality. Brancous LP1 argues these figures are inflated by including short-term, replaceable service fees, not just the core advisory agreement.

Why does Brancous LP1 believe Braemar’s termination structure affects shareholder value?

Brancous LP1 links what it views as excessive termination economics to Braemar’s shares trading near 30% of estimated net asset value. It argues buyers must discount bids for large, avoidable termination payments, which could suppress sale prices and shift value from common shareholders.

What alternative termination cost does Brancous LP1 propose for Braemar Hotels & Resorts (BHR)?

Brancous LP1 suggests that if termination coverage were limited to true long-term advisory services, the obligation could be reduced to roughly $150 million. It believes this lower figure would better reflect economic reality and improve potential outcomes in any strategic transaction.

What per-share value outcome does Brancous LP1 estimate for Braemar Hotels & Resorts (BHR)?

The letter estimates shareholders could realize up to $9.00 per common share through distributions and value realization if termination economics are rationalized. This figure reflects Brancous LP1’s analysis and is presented as a potential outcome under a revised termination framework.

How does the Ashford advisory agreement timeline factor into Brancous LP1’s concerns?

Brancous LP1 notes Ashford can unilaterally extend its advisory agreement for ten years if exercised by June 2026, otherwise it expires at end of 2026. It argues this pending renewal gives Braemar leverage to renegotiate and reduce termination economics before finalizing any sale.