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Related Party Transactions
 12 Months Ended
Dec. 31, 2023
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
Ashford Inc.
Advisory Agreement
Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor. Our chairman, Mr. Monty Bennett, also serves as chairman of the board of directors and chief executive officer of Ashford Inc. Under our advisory agreement, we pay advisory fees to Ashford LLC. We pay a monthly base fee equal to 1/12th of the sum of (i) 0.70% of the total market capitalization of our company for the prior month, plus (ii) the Net Asset Fee Adjustment (as defined in our advisory agreement), if any, on the last day of the prior month during which our advisory agreement was in effect; provided, however, in no event shall the base fee for any month be less than the minimum base fee as provided by our advisory agreement. The base fee is payable on the fifth business day of each month.
The minimum base fee for Braemar for each month will be equal to the greater of:
▪90% of the base fee paid for the same month in the prior year; and
▪1/12th of the G&A Ratio (as defined) multiplied by the total market capitalization of Braemar.
We are also required to pay Ashford LLC an incentive fee that is measured annually (or for a stub period if the advisory agreement is terminated at other than year-end). Each year that our annual total stockholder return exceeds the average annual total stockholder return for our peer group we pay Ashford LLC an incentive fee over the following three years, subject to the Fixed Charge Coverage Ratio (“FCCR”) Condition, as defined in the advisory agreement, which relates to the ratio of adjusted EBITDA to fixed charges. We also reimburse Ashford LLC for certain reimbursable overhead and internal audit, risk management advisory and asset management services, as specified in the advisory agreement. We also recorded equity-based compensation expense for equity grants of common stock, PSUs and LTIP units awarded to officers and employees of Ashford LLC in connection with providing advisory services.
The following table summarizes the advisory services fees incurred (in thousands):
Year Ended December 31,
202320222021
Advisory services fee
Base advisory fee$13,982 $12,790 $10,806 
Reimbursable expenses (1)
8,353 4,653 2,297 
Equity-based compensation (2)
8,754 10,601 9,538 
Incentive fee— 803 — 
Total$31,089 $28,847 $22,641 
________
(1)Reimbursable expenses include overhead, internal audit, risk management advisory, asset management services and deferred cash awards.
(2)    Equity-based compensation is associated with equity grants of Braemar’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.
On September 27, 2022, an agreement was entered into by Ashford Inc., Ashford Trust and Braemar pursuant to which the Advisor is to implement the REITs’ cash management strategies. This will include actively managing the REITs excess cash by primarily investing in short-term U.S. Treasury securities. The annual fee is equal to the lesser of (i) 20 bps of the average daily balance of the funds managed by the Advisor and (ii) the actual rate of return realized by the cash management strategies; provided that in no event will the cash management fee be less than zero. The fee is payable monthly in arrears.
On March 10, 2022, the Company entered into a Limited Waiver Under Advisory Agreement (the “2022 Limited Waiver”) with Braemar OP, Braemar TRS and its advisor. The advisory agreement: (i) allocates responsibility for certain employee costs between the Company and its advisor; and (ii) permits the Company’s board of directors to issue annual equity awards in the Company or Braemar OP to employees and other representatives of its advisor based on achievement by the Company of certain financial or other objectives or otherwise as the Company’s board of directors sees fit. Pursuant to the 2022 Limited Waiver, the Company, Braemar OP, Braemar TRS and the Company’s advisor waived the operation of any provision in the advisory agreement that would otherwise have limited our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2022 cash incentive compensation to employees and other representatives of our advisor.
On March 2, 2023, the Company entered into a second Limited Waiver Under Advisory Agreement (the “2023 Limited Waiver”) with Braemar OP, Braemar TRS and its advisor. Pursuant to the 2023 Limited Waiver, the Company, Braemar OP, Braemar TRS and the Company’s advisor waived the operation of any provision in the advisory agreement that would otherwise limit our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2023 cash incentive compensation to employees and other representatives of our advisor.
On March 11, 2024, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc. and Ashford LLC (the “Advisory Agreement Limited Waiver”). Pursuant to the Advisory Agreement Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waive the operation of any provision in our advisory agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during calendar year 2024, cash incentive compensation to employees and other representatives of the Advisor.
Pursuant to the Company’s hotel management agreements with each hotel management company, the Company bears the economic burden for casualty insurance coverage. Under the advisory agreement, Ashford Inc. secures casualty insurance policies to cover Ashford Trust, Braemar, Stirling OP, their hotel managers, as needed, and Ashford Inc. The total loss estimates included in such policies are based on the collective pool of risk exposures from each party. Ashford Inc. has managed the casualty insurance program and beginning in December 2023, Warwick Insurance Company ("Warwick"), a subsidiary of Ashford Inc., provides and manages the general liability, workers’ compensation and business automobile insurance policies within the casualty insurance program. Each year Ashford Inc. collects funds from Ashford Trust, Braemar, Stirling OP and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis
Lismore
We engage Lismore or its subsidiaries to provide debt placement services and assist with loan modifications on our behalf.
During June 2023, we entered into various 12-month agreements with Lismore to seek modifications or refinancings of certain mortgage debt of the Company. For the year ended December 31, 2023, we incurred fees of approximately $150,000 to Lismore in nonrefundable work fees and $214,000 of success fees. The unamortized non-refundable work fees are included in “other assets” on the consolidated balance sheet, and are amortized on a straight line basis over the term of the agreements.
In addition to the fees described above, we incurred fees from Lismore or its subsidiaries of $2.1 million, $1.4 million and $491,000 for the years ended December 31, 2023, 2022 and 2021, respectively.
Ashford Securities
On December 31, 2020, an Amended and Restated Contribution Agreement (the “Amended and Restated Contribution Agreement”) was entered into by Ashford Inc., Ashford Trust and Braemar (collectively, the “Parties” and each individually a “Party”) with respect to funding certain expenses of Ashford Securities LLC, a subsidiary of Ashford Inc. (“Ashford Securities”). Beginning on the effective date of the Amended and Restated Contribution Agreement, costs were allocated based upon an allocation percentage of 50% to Ashford Inc., 50% to Braemar and 0% to Ashford Trust. Upon reaching the earlier of $400 million in aggregate capital raised, or June 10, 2023, there was to be a true up (the “Amended and Restated True-Up Date”) among Ashford Inc., Ashford Trust and Braemar whereby the actual amount contributed by each company will be based on the actual amount of capital raised by Ashford Inc., Ashford Trust and Braemar, respectively, through Ashford Securities (the resulting ratio of contributions among the Parties, the “Initial True-up Ratio”). On January 27, 2022, Ashford Trust, Braemar and Ashford Inc. entered into a Second Amended and Restated Contribution Agreement which provided for an additional $18 million in expenses to be reimbursed with all expenses allocated 45% to Ashford Trust, 45% to Braemar and 10% to Ashford Inc.
On February 1, 2023, Braemar entered into a Third Amended and Restated Contribution Agreement, which provided that after the Amended and Restated True-Up Date, capital contributions for the remainder of fiscal year 2023 would be divided between each Party based on the Initial True-Up Ratio, there would be a true up reflecting amounts raised by Ashford Securities since June 10, 2019, and thereafter, the capital contributions would be divided among each Party in accordance the cumulative ratio of capital raised by the Parties. However, effective January 1, 2024, Braemar entered into a Fourth Amended and Restated Contribution Agreement with Ashford Inc. and Ashford Trust which states that, notwithstanding anything in the prior contribution agreements: (1) the Parties equally split responsibility for all aggregate contributions made by them to Ashford Securities through September 30, 2021 and (2) thereafter, their contributions for each quarter will be based on the ratio of the amounts raised by each Party through Ashford Securities the prior quarter compared to the total aggregate amount raised by the Parties through Ashford Securities the prior quarter. To the extent contributions made by any of the Parties through December 31, 2023 differed from the amounts owed pursuant to the foregoing, the Parties shall make true up payments to each other to settle the difference.
During the year ended December 31, 2022, the funding estimate was revised based on the latest capital raise estimates of the aggregate capital raised through Ashford Securities. As of December 31, 2022, Braemar had funded approximately $5.8 million and had a payable, included in “due to Ashford Inc., net” on the consolidated balance sheet, of approximately $6.6 million. In March 2023, Braemar paid Ashford Inc. $8.7 million as a result of the contribution true-up between entities described above. As of December 31, 2023, Braemar has funded approximately $20.9 million. As of December 31, 2023, Braemar has a pre-funded balance of approximately $693,000 that is included in “other assets” and a receivable of approximately $3.5 million that is included in “due to Ashford Inc., net” on the consolidated balance sheet.
The table below summarizes the amount Braemar has expensed related to reimbursed operating expenses of Ashford Securities (in thousands):
Year Ended December 31,
Line Item202320222021
Corporate, general and administrative$4,330 $9,461 $1,983 
Design and Construction Services
Premier Project Management LLC (“Premier”), a subsidiary of Ashford Inc., provides design and construction services to our hotels, including construction management, interior design, architectural services, and the purchasing, freight management and supervision of installation of FF&E and related services. Pursuant to the design and construction services agreement, we pay Premier: (a) design and construction fees of up to 4% of project costs; and (b) for the following services: (i) architectural (6.5% of total construction costs); (ii) construction management for projects without a general contractor (10% of total construction costs); (iii) interior design (6% of the purchase price of the FF&E designed or selected by Premier); and (iv) FF&E
purchasing (8% of the purchase price of FF&E purchased by Premier; provided that if the purchase price exceeds $2.0 million for a single hotel in a calendar year, then the purchasing fee is reduced to 6% of the FF&E purchase price in excess of $2.0 million for such hotel in such calendar year).
Subsequent to December 31, 2023, the agreement was amended resulting in such fees being payable monthly as the service is delivered based on percentage complete, as reasonably determined by Premier for each service, or payable as set forth in other agreements.
Hotel Management Services
At December 31, 2023, Remington Hospitality managed four of our 16 hotel properties.
We pay monthly hotel management fees equal to the greater of approximately $17,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenues as well as annual incentive management fees, if certain operational criteria were met and other general and administrative expense reimbursements primarily related to accounting services.
Summary of Transactions
In accordance with our advisory agreement, our advisor, or entities in which our advisor has an interest, has a right to provide products or services to our hotel properties, provided such transactions are evaluated and approved by our independent directors. The following tables summarize the entities in which our advisor has an interest with which we or our hotel properties contracted for products and services, the amounts recorded by us for those services and the applicable classification on our consolidated financial statements (in thousands):
Year Ended December 31, 2023
CompanyProduct or ServiceTotal
Investments in Hotel Properties, net (1)
Indebtedness, net (2)
Other Assets (3)
Preferred Stock (4)
Other Hotel RevenueOther Hotel ExpensesManagement feesProperty Taxes, Insurance and OtherAdvisory Services FeeCorporate General and AdministrativeWrite-off of Premiums, Loan Costs and Exit Fees
Ashford LLCInsurance claims services$3 $— $— $— $— $— $— $— $3 $— $— $— 
Ashford SecuritiesBroker/Dealer6,385 — — — 1,972 — — — — — 4,413 — 
INSPIREAudio visual services4,165 — — — — 4,268 — — — — 103 — 
Lismore CapitalDebt placement and related services2,426 — 987 150 — — — — — — — 1,289 
OpenKeyMobile key app41 — — — — — 41 — — — — — 
PremierDesign and construction services12,652 11,618 — — — — — — — 1,034 — — 
Pure WellnessHypoallergenic premium rooms149 — — — — — 149 — — — — — 
RED LeisureWatersports activities and travel/transportation services427 — — — — 308 692 — — — 43 — 
Remington Hospitality
Hotel management services (4)
3,913 — — — — — 1,394 2,519 — — — — 
Year Ended December 31, 2022
CompanyProduct or ServiceTotal
Investments in Hotel Properties, net (1)
Indebtedness, net (2)
Other Hotel RevenueOther Hotel ExpensesManagement fees
Preferred Stock (4)
Property Taxes, Insurance and OtherAdvisory Services FeeCorporate General and Administrative
Ashford LLCInsurance claims services$3 $— $— $— $— $— $— $3 $— $— 
Ashford SecuritiesBroker/Dealer9,735 — — — — — 274 — — 9,461 
Ashford SecuritiesDealer Manager Fees5,766 — — — — — 5,766 — — — 
INSPIREAudio visual services3,800 — — 3,800 — — — — — — 
Lismore CapitalDebt placement and related services750 — 750 — — — — — — — 
Lismore CapitalBroker Services637 — 637 — — — — — — — 
OpenKeyMobile key app39 — — — 39 — — — — — 
PremierDesign and construction services9,875 9,262 — — — — — — 613 — 
Pure WellnessHypoallergenic premium rooms150 — — — 150 — — — — — 
RED LeisureWatersports activities and travel/transportation services525 — — 236 761 — — — — — 
Remington Hospitality
Hotel management services (4)
4,288 — — — 1,416 2,872 — — — — 
Year Ended December 31, 2021
CompanyProduct or ServiceTotal
Investments in Hotel Properties, net (1)
Indebtedness, net (2)
Other AssetsOther Hotel RevenueOther Hotel Expenses
Preferred Stock (4)
Management feesProperty Taxes, Insurance and OtherAdvisory Services FeeCorporate General and AdministrativeWrite-off of Premiums, Loan Costs and Exit Fees
Ashford LLCInsurance claims services$7 $— $— $— $— $— $— $— $7 $— $— $— 
Ashford SecuritiesBroker/Dealer1,983 — — — — — — — — — 1,983 — 
Ashford SecuritiesDealer Manager Fees410 — — — — — 410 — — — — — 
INSPIREAudio visual services1,001 — — — 1,001 — — — — — — — 
Lismore CapitalDebt placement and related services491 — 150 — — — — — — — — 341 
Lismore CapitalBroker services3 — — — — — — — — — — 3 
OpenKeyMobile key app38 — — — — 38 — — — — — — 
PremierDesign and construction services3,009 2,653 — — — — — — — 356 — — 
Pure WellnessHypoallergenic premium rooms141 — — — — 141 — — — — — — 
RED LeisureWatersports activities and travel/transportation services321 — — — 321 — — — — — — — 
Remington Hospitality
Hotel management services (4)
3,243 — — — — 934 — 2,309 — — — — 
________
(1)Recorded in FF&E and depreciated over the estimated useful life.
(2)Recorded as deferred loan costs, which are included in “indebtedness, net” on our consolidated balance sheets and amortized over the initial term of the applicable loan agreement.
(3)Represents the amortization of the Lismore work fees and success fees.
(4)Recorded as a reduction of Series E and Series M Redeemable Preferred Stock proceeds.
(5)Other hotel expenses include incentive hotel management fees and other hotel management costs.
The following table summarizes the components of due to Ashford Inc. (in thousands):
Due to (from) Ashford Inc.
CompanyProduct or ServiceDecember 31, 2023December 31, 2022
Ashford LLCAdvisory services$1,004 $1,576 
Ashford LLC
Casualty Insurance
608 — 
Ashford LLCInsurance claims services1 2 
INSPIREAudio visual services483 952 
OpenKeyMobile key app5 — 
Ashford Securities
Contribution Agreement
(3,522)— 
Ashford Securities
Capital raise services19 6,514 
PremierDesign and construction services2,674 829 
RED LeisureWatersports activities and travel/transportation services199 132 
$1,471 $10,005 
As of December 31, 2023, due to related parties, net included a net payable to Remington Hospitality of $603,000. As of December 31, 2022, due from related parties, net included a net receivable of $573,000. These amounts are primarily related to advances made by Braemar, accrued base and incentive management fees and casualty insurance premiums.