EX-99.2 4 bhrrcdoradobeachproforma12.htm EX-99.2

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EXHIBIT 99.2

On March 11, 2022, Braemar Hotels & Resorts Inc. (“Braemar” or the “Company”) and the Company’s wholly-owned subsidiary, BHR Dorado LLC, as the purchaser completed the acquisition of the 96-room Ritz-Carlton Reserve Dorado Beach from DBR Hotel Owner LLC, as the seller. The fair value of The Ritz-Carlton Reserve Dorado Beach was approximately $197.2 million. The following unaudited pro forma financial information of the Company, as of and for the year ended December 31, 2021, has been prepared for informational purposes only and does not purport to be indicative of what would have resulted had the acquisition and related transactions occurred on the date indicated or what may result in the future. The unaudited pro forma condensed consolidated balance sheet assumes the transaction closed on December 31, 2021. The unaudited pro forma condensed consolidated statement of operations assumes the transaction closed on January 1, 2021.

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

December 31, 2021

(in thousands, except share amounts)

			Braemar Consolidated Historical (A)						Ritz-Carlton Reserve Dorado Beach (B)						Adjustments						Braemar Consolidated Pro Forma
ASSETS
Investment in hotel properties, gross			$	1,845,078					$	149,122					$	197,221		(C) (i)			$	2,042,299
															(149,122)			(C) (ii)
Accumulated depreciation			(399,481)						(87,542)						87,542			(C) (ii)			(399,481)
Investment in hotel properties, net			1,445,597						61,580						135,641						1,642,818
Cash and cash equivalents			215,998						13,026						(105,855)			(C) (i)			132,975
															9,806			(C) (iii)
Restricted cash			47,376						1,091						1,091			(C) (i)			48,467
															(1,091)			(C) (ii)
Accounts receivable, net of allowance			23,701						3,284						—						26,985
Inventories			3,128						1,245						1,184			(C) (i)			4,312
															(1,245)			(C) (ii)
Prepaid expenses			4,352						744						—						5,096
Investment in unconsolidated entity			1,689						—						—						1,689
Derivative assets			139						—						—						139
Operating lease right-of-use assets			80,462						—						—						80,462
Other assets			23,588						—						—						23,588
Intangible assets, net			4,261						—						—						4,261
Due from related parties, net			1,770						—						—						1,770
Due from third-party hotel managers			27,461						—						—						27,461
Total assets			$	1,879,522					$	80,970					$	39,531					$	2,000,023
LIABILITIES AND EQUITY
Liabilities:
Indebtedness, net			$	1,172,678					$	51,774					$	58,601		(C) (i)			$	1,231,279
															(51,774)			(C) (ii)
Accounts payable and accrued expenses			96,316						15,982						—						112,298
Dividends and distributions payable			2,173						—						—						2,173
Due to Ashford Inc.			1,474						—						—						1,474
Due to third-party hotel managers			610						—						—						610
Operating lease liabilities			60,937						—						—						60,937
Other liabilities			20,034						1,828						(1,828)			(C) (iv)			20,034
Derivative liabilities			1,435						—						—						1,435
Total liabilities			1,355,657						69,584						4,999						1,430,240
5.50% Series B cumulative convertible preferred stock, $.01 par value, 3,078,017 shares issued and outstanding at December 31, 2021			65,426						—						—						65,426
Series E redeemable preferred stock, $0.01 par value, 1,710,399 shares issued and outstanding at December 31, 2021			39,339						—						—						39,339
Series M redeemable preferred stock, $0.01 par value, 29,044 shares issued and outstanding at December 31, 2021			715						—						—						715
Redeemable noncontrolling interests in operating partnership			36,087						—						—						36,087
Equity:
Preferred stock, $0.01 value, 80,000,000 shares authorized:
8.25% Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at December 31, 2021			16						—						—						16
Common stock, $0.01 par value, 250,000,000 shares authorized, 65,365,470 and, 71,365,470 shares issued and outstanding and as adjusted at December 31, 2021, respectively			653						—						60			(C) (i)			713
Additional paid-in capital			707,418						11,386						34,980			(C) (i)			753,276
															(12,142)			(C) (ii)
															9,806			(C) (iii)
															1,828			(C) (iv)
Accumulated deficit			(309,240)						—						—						(309,240)
Total stockholders’ equity of the Company			398,847						11,386						34,532						444,765
Noncontrolling interest in consolidated entities			(16,549)						—						—						(16,549)
Total equity			382,298						11,386						34,532						428,216
Total liabilities and equity			$	1,879,522					$	80,970					$	39,531					$	2,000,023

See accompanying notes.

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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(A)Represents the historical consolidated balance sheet of Braemar as of December 31, 2021, as reported in its Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 10, 2022.

(B)Represents the historical balance sheet of The Ritz-Carlton Reserve Dorado Beach as of December 31, 2021, as included in Exhibit 99.1 of this Current Report on Form 8-K/A.

(C)Represents adjustments for Braemar's purchase of The Ritz-Carlton Reserve Dorado Beach as of December 31, 2021, which includes (i) the cash consideration and fair value of 6.0 million shares of Braemar common stock paid for the acquisition of the The Ritz-Carlton Reserve Dorado Beach as well as the fair value of the hotel property, restricted cash, inventories and the fair value of the debt assumed with the acquisition. This is inclusive of capitalized acquisition costs of approximately $1.9 million; (ii) the removal of the historical cost of the investment in hotel property, restricted cash, inventories and loan assumed; (iii) reduction of cash consideration paid for negative working capital assumed; and (iv) the removal of the key money liability not assumed.

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BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Year Ended December 31, 2021

(in thousands, except share and per share amounts)

			Braemar Consolidated Historical (A)						Ritz-Carlton Reserve Dorado Beach (B)						Adjustments																								Braemar Consolidated Pro Forma
REVENUE
Rooms			$	280,568					$	49,783					$	—																							$	330,351
Food and beverage			90,299						15,329						—																								105,628
Other			56,675						9,026						—																								65,701
Total hotel revenue			427,542						74,138						—																								501,680
EXPENSES
Hotel operating expenses:
Rooms			59,818						9,884						—																								69,702
Food and beverage			75,177						13,963						—																								89,140
Other expenses			138,914						27,246						—																								166,160
Management fees			13,117						1,062						1,302			(C) (i)																					15,481
Total hotel operating expenses			287,026						52,155						1,302																								340,483
Property taxes, insurance and other			34,997						4,900						—																								39,897
Depreciation and amortization			73,762						4,537						1,700			(C) (ii)																					79,999
Advisory services fee			22,641						—						—																								22,641
(Gain) loss on legal settlements			(917)						—						—																								(917)
Transaction costs			563						—						—																								563
Corporate general and administrative			8,717						—						—																								8,717
Total expenses			426,789						61,592						3,002																								491,383
Gain (loss) on insurance settlement and disposition of assets			696						446						—																								1,142
OPERATING INCOME (LOSS)			1,449						12,992						(3,002)																								11,439
Equity in earnings (loss) of unconsolidated entity			(252)						—						—																								(252)
Interest income			48						—						—																								48
Other income (expense)			—						5,569						—																								5,569
Interest expense and amortization of premiums and loan costs			(30,901)						(3,865)						2,845			(C) (iii)																					(31,921)
Write-off of loan costs and exit fees			(1,963)						—						—																								(1,963)
Unrealized gain (loss) on derivatives			32						—						—																								32
INCOME (LOSS) BEFORE INCOME TAXES			(31,587)						14,696						(157)																								(17,048)
Income tax (expense) benefit			(1,324)						—						(341)			(C) (iv)																					(1,665)
NET INCOME (LOSS)			(32,911)						14,696						(498)																								(18,713)
(Income) loss from consolidated entities attributable to noncontrolling interests			2,650						—						—																								2,650
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership			3,597						—						(1,445)			(C) (v)																					2,152
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY			(26,664)						14,696						(1,943)																								(13,911)
Preferred dividends			(8,745)						—						—																								(8,745)
Gain (loss) on extinguishment of preferred stock			(4,595)						—						—																								(4,595)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMMON STOCKHOLDERS			$	(40,004)					$	14,696					$	(1,943)																							$	(27,251)
INCOME (LOSS) PER SHARE - BASIC:
Net income (loss) attributable to common stockholders			$	(0.76)																																			$	(0.46)
Weighted average common shares outstanding—basic			52,684												6,000			(C) (vi)																					58,684
INCOME (LOSS) PER SHARE - DILUTED:
Net income (loss) attributable to common stockholders			$	(0.76)																																			$	(0.46)
Weighted average common shares outstanding—diluted			52,684												6,000			(C) (vi)																					58,684

See accompanying notes.

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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(A)Represents the historical consolidated statement of operations of Braemar for the year ended December 31, 2021, as reported in its Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 10, 2022.

(B)Represents the historical consolidated statement of operations of The Ritz-Carlton Reserve Dorado Beach for the year ended December 31, 2021, as reported in this Current Report on Form 8-K/A.

(C)Represents adjustments for Braemar’s purchase of the The Ritz-Carlton Reserve Dorado Beach for the year ended December 31, 2021, which include; (i) an adjustment to management fees related to the amortization credit of the key money liability that was not assumed; (ii) an adjustment to the depreciation expense based on Braemar's new cost basis in the acquired hotel. The estimated useful lives are 39 years for buildings, 10 years for land improvements and five years for furniture, fixtures and equipment; (iii) an adjustment to reflect only the interest expense associated with the $54.0 million of indebtedness assumed and the amortization of the associated premium; (iv) adjustment to income tax expense to reflect total income tax expense as if the consolidated group filed its tax returns including The Ritz-Carlton Reserve Dorado Beach; (v) an adjustment to net loss attributable to redeemable noncontrolling interests in operating partnership for the incremental operating results of The Ritz-Carlton Reserve Dorado Beach; and (vi) an adjustment to basic and diluted weighted average shares outstanding for the year ended December 31, 2021 of 6.0 million shares of Braemar common stock issued as partial consideration for the acquisition of The Ritz-Carlton Reserve Dorado Beach. The adjustment assumes the shares were outstanding for the entire period.

(D)The historical results of The Ritz-Carlton Reserve Dorado Beach include a gain of $446,000 related to the disposition of certain assets sold by the previous owner as well as a gain of $5.6 million related to the forgiveness of a loan held by the previous owner. For additional information please see the notes to the financial statements of The Ritz-Carlton Reserve Dorado Beach as of December 31, 2021, as included in Exhibit 99.1 of this Current Report on Form 8-K/A.

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