Document

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 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

(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.

(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

(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.