Luxury hotel REIT Braemar up for sale

The board of directors of Dallas-based Braemar Hotels & Resorts Inc. announced that it is initiating a process for the immediate sale of the REIT that includes nine resorts and five urban properties.

In addition, Braemar and its advisor, Dallas-based Ashford Inc., agreed that “while a fair and reasonable calculation of all amounts due to Ashford would be significantly higher,” Ashford will accept a $480 million termination fee for its advisory agreement. Ashford already received $17 million of the company sale fee upon the execution of the letter agreement, which will be credited against the company sale fee in the event Braemar is sold prior to July 1, 2028.

Braemar’s buyer also will be required to assume agreements with two Dallas-based Ashford subsidiaries, project manager Premier Project Management, LLC, and management firm Remington Lodging & Hospitality, LLC. But there is a $25 million cancellation fee for agreements with those companies as well.

“Historically, Braemar shares have traded at a significant NAV discount primarily due to the external advisory agreement with Ashford Inc., which has negatively impacted the company's cost of capital,” wrote R.W. Baird analyst Michael Bellisario. “Braemar has had numerous activists over the years, and the company previously has pursued strategic alternatives. This sales pursuit appears more geared toward a sale or liquidation given the agreed-upon $480 million (~$6.50/share) termination fee, in our view.”

Bellisario added, “Net, net – the termination fee clarity is a positive for prospective buyers, but the amount is a significant drag on the net per-share value that ultimately could accrue to BHR shareholders.”

At the end of the day, Bellisario said outcomes could include an outright portfolio sale or several smaller portfolio sales (including single-asset dispositions). “We believe buyer interest is relatively strong for high-RevPAR luxury hotels/resorts. We would note that Braemar has evaluated strategic alternatives previously.”

Braemar’s board formed a special committee of independent and disinterested directors to explore a range of strategic alternatives, aimed at maximizing both near- and long-term shareholder value. The board ultimately said it was in the best interests of the company and its shareholders to pursue a sale. Braemar, with its financial advisor, Milwaukee-based Robert W. Baird & Co. Inc., said it is initiating the sale process immediately.

Braemar has a predominantly luxury hotel portfolio that has seen RevPAR growth of 2.9% through the first half of the year. But the company said in the release, “It is not believed that a luxury RevPAR lodging REIT like Braemar can flourish in today’s market environment due to the historically low EBITDA multiple lodging REITs are achieving as well as the ongoing activism the company has received.”

It used the example of Strategic Hotel & Resorts, another luxury lodging REIT that, after several years of undervaluation, was ultimately sold by Blackstone to Chinese conglomerate Anbang Insurance Group in 2016.

Last year, Braemar faced a board challenge and proxy fight from an activist investor, New York City-based Blackwells Capital. Blackwells nominated new members for half of the company’s board, which the REIT rejected.

Julian West, writing for AInvest, said Braemar’s sale is exploiting a 120-basis point valuation gap between public REITs (5.77% cap rate) and private luxury hotel markets (4.57% cap rate).

“The U.S. real estate market in 2025 is marked by a stark dislocation between public and private valuations, particularly in the luxury lodging sector,” the story said. Braemar… has become a focal point for capital arbitrage opportunities. With a market capitalization of just $0.17 billion as of August 2025, Braemar’s shares trade at a significant discount to the intrinsic value of its 14-luxury hotel portfolio... This mispricing, driven by structural inefficiencies in public REIT valuation models, presents a compelling case for private buyers to capitalize on a rare convergence of asset quality, market dislocation, and strategic flexibility.”

Beyond the value of its hotels, Braemar also owns excess land at its Ritz-Carlton Sarasota, Four Seasons Resort Scottsdale, and Ritz-Carlton Lake Tahoe properties. At the time of acquisition, this excess land was attributed a value of $9.7 million at The Ritz-Carlton Sarasota, which was acquired in 2018; $8.4 million at The Ritz-Carlton Lake Tahoe, which was acquired in 2019; and $17.8 million at the Four Seasons Resort Scottsdale, which was acquired in 2022.

Braemar also had $68 million of positive net working capital through the first half of 2025 and, in early August, said it was closing the sale of the Marriott Seattle Waterfront, resulting in $50.8 million of net proceeds. The REIT also said it has recently entered into a non-binding letter of intent with a potential buyer for the sale of the 410-key Clancy hotel in San Francisco for $115 million. That transaction is expected to close in the fourth quarter, subject to customary conditions. Braemar’s current debt is approximately $1.172 billion, and the current liquidation value of its outstanding preferred stock is approximately $473 million.

“We've built a high-quality portfolio that is well-positioned to attract significant interest from private market buyers,” Braemar CEO Richard Stockton said in the release. “With improving economic conditions, continued strength in industry performance, limited new room supply and healthy consumer spending, I believe we are entering a favorable environment for a potential sale.”

Rebeca Odino-Johnson, chairperson of the board’s special committee, added, “We explored multiple alternatives for Braemar, including a potential internalization of management. However, given the sustained disconnect between our share price and our iconic portfolio’s intrinsic real estate value, the board believes pursuing a sale process is the right step at this time, The board also believes that this is the best opportunity for shareholders to realize a premium to the existing share price.”

Monty Bennett, chairman of the board of Braemar Hotels & Resorts (and CEO of Ashford) said, “When we created Braemar back in 2013, our hope was that Braemar’s high-quality portfolio and strong property performance would result in an attractive valuation giving the company an attractive cost of capital for growth. While Braemar has traded at a similar multiple to its publicly-traded lodging REIT peers, the reality is that the public markets have not been friendly to lodging REITs, including Braemar. This fact, along with the constant shareholder activism that Braemar has experienced, has led us to conclude that a sale of the company is the best way to maximize value for shareholders.

“Hotel portfolios like the Braemar portfolio do not come to the market very often, and we believe the opportunity to acquire this iconic portfolio will attract significant buyer interest from around the world and result in an attractive valuation for shareholders.”

By Rob Schneider