Large termination fees at Braemar (NYSE: BHR) draw investor call for more disclosure

Rhea-AI Filing Summary

Zazove Associates, an investment manager holding common equity in Braemar Hotels & Resorts Inc., has written to the Board about the economics and governance of Braemar’s external management arrangements during its ongoing strategic review.

The letter notes that advisory and related fees paid to Ashford Inc. and affiliates were approximately $30.5 million in 2024, $31.1 million in 2023, and $28.8 million in 2022, while publicly reported termination amounts total about $480 million for these arrangements plus $25 million payable to Remington Hospitality. Zazove states this appears high versus customary structures at comparable externally managed REITs and may influence potential counterparties’ valuation of Braemar in a change-of-control scenario.

Zazove requests more detailed disclosure on how the independent directors evaluated these termination economics, how fees were selected for termination protection, what role independent advisors played, and what alternatives and renewal or renegotiation options were considered. The firm frames its outreach as constructive, seeking greater transparency and clarity to help shareholders assess how the Board is handling its fiduciary responsibilities in the strategic review.

Insights

Governance and REIT structures analyst

Letter flags large termination fees and seeks clearer governance disclosure.

Zazove Associates highlights that Braemar’s advisory fees to Ashford Inc. and affiliates were $30.5 million in 2024, $31.1 million in 2023, and $28.8 million in 2022. Against this, they cite publicly reported termination amounts of about $480 million plus $25 million for Remington Hospitality.

The letter argues these termination economics appear elevated versus customary arrangements for comparable externally managed REITs and could materially influence valuations in any change-of-control outcome. It also notes that advisory fees cover ancillary services that are often short term and replaceable, asking how such items were factored into termination protections.

Zazove calls for expanded disclosure on the independent directors’ process, methodologies, use of independent advisors, and consideration of renewal or renegotiation timelines. The communication does not propose specific transactions but focuses on transparency and how these arrangements might affect net proceeds to common and preferred shareholders in a strategic review.

February 5, 2026 To: Board of Directors and independent Directors of Braemar Hotels and Resorts Inc. Re: Observations regarding termination economics and fiduciary process in connection with the Company and its strategic review Members of the Board, Zazove Associates, LLC is an investment manager to multiple investment vehicles that hold common equity of Braemar Hotels & Resorts Inc. (Braemar or the Company). In that capacity, and consistent with our fiduciary obligations to our clients, we write to share certain observations regarding the Company and its disclosed termination economics and related governance considerations in the context of the ongoing strategic review. Our intent in writing is to encourage transparency, rigor, and clarity around matters that may materially affect shareholder value. We do not seek to influence control of the Company, request proxy authority, or act in concert with any other shareholder. Termination economics and potential impact on strategic outcomes Based on the Company and its public disclosures, advisory and related fees paid to Ashford Inc. and its affiliates totaled approximately $30.5 million in fiscal year 2024, $31.1 million in fiscal year 2023, and $28.8 million in fiscal year 2022. As publicly reported, the termination amount associated with the advisory and related arrangements is approximately $480 million, with an additional $25 million payable to Remington Hospitality. When compared to historical advisory fee levels, this aggregate amount represents a multiple that appears elevated relative to customary termination structures observed in comparable externally managed public REITs. Public disclosures also indicate that annual advisory fees include payments for a number of ancillary services, such as insurance brokerage, debt placement, and audiovisual services that are typically provided under short-term, replaceable, and non exclusive arrangements. As a general matter, shareholders would benefit from greater clarity regarding whether, and to what extent, such ancillary service fees were considered in the calculation of termination economics, and the rationale for including them alongside long-term advisory arrangements. In the context of a strategic review, termination economics of this magnitude may be material to potential counterparties valuation analyses and, therefore, to the range of strategic alternatives available to the Company. Governance and fiduciary process considerations The aggregate termination amounts described above are significant relative to the Company and its current equity market capitalization and, based on publicly available information, would be payable prior to any distributions to common or preferred shareholders in a change-of-control scenario. Given the scale and potential impact of these arrangements on net proceeds to shareholders, we believe it would be constructive for the Company to provide additional disclosure regarding: * the process undertaken by the independent directors in evaluating termination economics; * the methodology applied in determining which fees were subject to termination protection; * the role of independent legal and financial advisors, if any; and * the alternatives considered, including the potential effect of upcoming renewal or renegotiation timelines. Enhanced transparency on these points would, in our view, strengthen confidence in the integrity of the strategic process and help shareholders better understand how the Board is discharging its fiduciary responsibilities. Closing We appreciate the efforts of the Board and management in conducting the strategic review and recognize the complexity of the issues involved. Our observations are offered in the spirit of constructive engagement and with the objective of supporting a process that maximizes long-term value for all shareholders. We would welcome continued disclosure and engagement on these matters as the strategic review progresses. Respectfully submitted, Zazove Associates, LLC

FAQ

What is Zazove Associates’ main concern about Braemar Hotels & Resorts (BHR)?

Zazove Associates is primarily concerned about the size and structure of termination fees owed under Braemar’s advisory arrangements. They argue these amounts may significantly affect potential change-of-control valuations and net proceeds available to Braemar’s common and preferred shareholders.

How much does Braemar pay Ashford Inc. and affiliates in advisory fees?

Braemar’s advisory and related fees to Ashford Inc. and its affiliates were approximately $30.5 million in fiscal 2024, $31.1 million in 2023, and $28.8 million in 2022. Zazove uses these figures to compare ongoing fees with the much larger stated termination amounts.

What termination amounts does Zazove Associates highlight for Braemar (BHR)?

Zazove cites publicly reported termination amounts of about $480 million related to Braemar’s advisory arrangements, plus an additional $25 million payable to Remington Hospitality. They state these figures are significant relative to Braemar’s equity market capitalization and could impact strategic alternatives.

What governance disclosures does Zazove request from Braemar’s Board?

Zazove requests more detail on the independent directors’ process for evaluating termination economics, the methodology for deciding which fees receive termination protection, the role of independent advisors, and the alternatives considered, including renewal or renegotiation timelines.

How might Braemar’s termination fees affect its strategic review?

Zazove argues that large termination economics could materially influence how potential counterparties value Braemar in a change-of-control scenario. They suggest these obligations may affect the range of available strategic alternatives and net proceeds ultimately distributable to shareholders.

Does Zazove Associates seek control or proxy authority at Braemar (BHR)?

No. Zazove explicitly states it does not seek to influence control of Braemar, does not request proxy authority, and is not acting in concert with other shareholders. Its letter is framed as constructive engagement focused on transparency and fiduciary processes.