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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________
Commission file number: 001-35972
BRAEMAR HOTELS & RESORTS INC.
(Exact name of registrant as specified in its charter)

Maryland |  | 46-2488594
(State or other jurisdiction of incorporation or organization) |  | (IRS employer identification number)
14185 Dallas Parkway |  |
Suite 1200 |  |
Dallas |  |
Texas |  | 75254
(Address of principal executive offices) |  | (Zip code)

(972) 490-9600
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☑
Non-accelerated filer | ☐ | Smaller reporting company | ☐
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock |  | BHR |  | New York Stock Exchange
Preferred Stock, Series B |  | BHR-PB |  | New York Stock Exchange
Preferred Stock, Series D |  | BHR-PD |  | New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.01 par value per share |  | 66,522,206
(Class) |  | Outstanding at November 6, 2024

BRAEMAR HOTELS & RESORTS INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2024
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION |
ITEM 1. FINANCIAL STATEMENTS (unaudited) |
Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 | 2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 | 3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2024 and 2023 | 4
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2024 and 2023 | 5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 | 7
Notes to Condensed Consolidated Financial Statements | 9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 34
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 56
ITEM 4. CONTROLS AND PROCEDURES | 56
PART II. OTHER INFORMATION |
ITEM 1. LEGAL PROCEEDINGS | 57
ITEM 1A. RISK FACTORS | 58
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 58
ITEM 3. DEFAULTS UPON SENIOR SECURITIES | 58
ITEM 4. MINE SAFETY DISCLOSURES | 58
ITEM 5. OTHER INFORMATION | 58
ITEM 6. EXHIBITS | 58
SIGNATURES | 61

2

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)

|  | September 30, 2024 |  | December 31, 2023
ASSETS |  |  |  |
Investments in hotel properties, gross |  | $ | 2,270,981 |  |  | $ | 2,382,716 |
Accumulated depreciation |  | (480,940) |  |  | (498,508) |
Investments in hotel properties, net |  | 1,790,041 |  |  | 1,884,208 |
Cash and cash equivalents |  | 168,675 |  |  | 85,599 |
Restricted cash |  | 48,461 |  |  | 80,904 |
Investment in securities |  | 41,493 |  |  | — |
Accounts receivable, net of allowance of $443 and $237, respectively |  | 32,479 |  |  | 39,199 |
Inventories |  | 4,575 |  |  | 5,003 |
Note receivable |  | 5,855 |  |  | — |
Prepaid expenses |  | 5,825 |  |  | 9,938 |
Deferred costs, net |  | 75 |  |  | 75 |
Investment in unconsolidated entity |  | 1,539 |  |  | 1,674 |
Derivative assets |  | 480 |  |  | 2,847 |
Operating lease right-of-use assets |  | 34,185 |  |  | 78,383 |
Other assets |  | 20,909 |  |  | 17,751 |
Intangible assets, net |  | 3,220 |  |  | 3,504 |
Due from third-party hotel managers |  | 19,855 |  |  | 17,739 |
Total assets |  | $ | 2,177,667 |  |  | $ | 2,226,824 |
LIABILITIES AND EQUITY |  |  |  |
Liabilities: |  |  |  |
Indebtedness, net |  | $ | 1,208,013 |  |  | $ | 1,162,444 |
Accounts payable and accrued expenses |  | 144,868 |  |  | 149,867 |
Dividends and distributions payable |  | 9,271 |  |  | 9,158 |
Due to Ashford Inc. |  | 5,489 |  |  | 1,471 |
Due to related parties, net |  | 16 |  |  | 603 |
Due to third-party hotel managers |  | 1,509 |  |  | 1,608 |
Operating lease liabilities |  | 19,149 |  |  | 60,379 |
Other liabilities |  | 23,572 |  |  | 22,756 |
Derivative liabilities |  | — |  |  | 12 |
Total liabilities |  | 1,411,887 |  |  | 1,408,298 |
Commitments and contingencies (note 17) |  |  |  |
5.50% Series B cumulative convertible preferred stock, $0.01 par value, 3,078,017 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively |  | 65,426 |  |  | 65,426 |
Series E redeemable preferred stock, $0.01 par value, 15,138,572 and 16,316,315 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively |  | 355,178 |  |  | 377,035 |
Series M redeemable preferred stock, $0.01 par value, 1,596,286 and 1,832,805 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively |  | 39,907 |  |  | 45,623 |
Redeemable noncontrolling interests in operating partnership |  | 31,336 |  |  | 32,395 |
Equity: |  |  |  |
Preferred stock, $0.01 par value, 80,000,000 shares authorized: |  |  |  |
8.25% Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at September 30, 2024 and December 31, 2023 |  | 16 |  |  | 16 |
Common stock, $0.01 par value, 250,000,000 shares authorized, 66,522,206 and 66,636,353 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively |  | 665 |  |  | 666 |
Additional paid-in capital |  | 719,110 |  |  | 718,498 |
Accumulated other comprehensive income (loss) |  | (723) |  |  | — |
Accumulated deficit |  | (442,157) |  |  | (412,199) |
Total stockholders’ equity of the Company |  | 276,911 |  |  | 306,981 |
Noncontrolling interest in consolidated entities |  | (2,978) |  |  | (8,934) |
Total equity |  | 273,933 |  |  | 298,047 |
Total liabilities and equity |  | $ | 2,177,667 |  |  | $ | 2,226,824 |

See Notes to Condensed Consolidated Financial Statements.
2

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
REVENUE |  |  |  |  |  |  |  |  |
Rooms | $ | 92,427 |  |  | $ | 100,738 |  |  | $ | 347,206 |  |  | $ | 355,402 |  |  |
Food and beverage | 34,781 |  |  | 38,537 |  |  | 135,891 |  |  | 138,541 |  |  |
Other | 21,190 |  |  | 20,526 |  |  | 71,967 |  |  | 67,866 |  |  |
Total hotel revenue | 148,398 |  |  | 159,801 |  |  | 555,064 |  |  | 561,809 |  |  |
EXPENSES |  |  |  |  |  |  |  |  |
Hotel operating expenses: |  |  |  |  |  |  |  |  |
Rooms | 25,548 |  |  | 25,899 |  |  | 81,288 |  |  | 79,962 |  |  |
Food and beverage | 31,998 |  |  | 32,750 |  |  | 109,379 |  |  | 108,854 |  |  |
Other expenses | 51,300 |  |  | 52,725 |  |  | 169,531 |  |  | 171,317 |  |  |
Management fees | 4,869 |  |  | 5,076 |  |  | 17,913 |  |  | 17,661 |  |  |
Total hotel operating expenses | 113,715 |  |  | 116,450 |  |  | 378,111 |  |  | 377,794 |  |  |
Property taxes, insurance and other | 9,985 |  |  | 10,471 |  |  | 30,740 |  |  | 27,983 |  |  |
Depreciation and amortization | 25,078 |  |  | 22,703 |  |  | 75,192 |  |  | 67,791 |  |  |
Advisory services fee | 8,627 |  |  | 7,020 |  |  | 23,155 |  |  | 23,183 |  |  |
Corporate general and administrative | 8,874 |  |  | 2,506 |  |  | 11,105 |  |  | 9,222 |  |  |
Total operating expenses | 166,279 |  |  | 159,150 |  |  | 518,303 |  |  | 505,973 |  |  |
Gain (loss) on disposition of assets and hotel property | 88,210 |  |  | — |  |  | 88,210 |  |  | — |  |  |
OPERATING INCOME (LOSS) | 70,329 |  |  | 651 |  |  | 124,971 |  |  | 55,836 |  |  |
Equity in earnings (loss) of unconsolidated entity | (80) |  |  | (60) |  |  | (214) |  |  | (208) |  |  |
Interest income | 2,660 |  |  | 986 |  |  | 4,528 |  |  | 5,389 |  |  |
Other income (expense) | — |  |  | 293 |  |  | — |  |  | 293 |  |  |
Interest expense and amortization of discounts and loan costs | (27,911) |  |  | (23,306) |  |  | (81,687) |  |  | (69,779) |  |  |
Write-off of loan costs and exit fees | (5,292) |  |  | (2,588) |  |  | (6,095) |  |  | (2,848) |  |  |
Gain (loss) on extinguishment of debt | — |  |  | — |  |  | (22) |  |  | 2,318 |  |  |
Realized and unrealized gain (loss) on derivatives | (735) |  |  | 223 |  |  | 523 |  |  | 918 |  |  |
INCOME (LOSS) BEFORE INCOME TAXES | 38,971 |  |  | (23,801) |  |  | 42,004 |  |  | (8,081) |  |  |
Income tax (expense) benefit | 864 |  |  | 1,190 |  |  | (474) |  |  | (1,064) |  |  |
NET INCOME (LOSS) | 39,835 |  |  | (22,611) |  |  | 41,530 |  |  | (9,145) |  |  |
(Income) loss attributable to noncontrolling interest in consolidated entities | (27,363) |  |  | (1,773) |  |  | (26,317) |  |  | (1,715) |  |  |
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | 124 |  |  | 2,354 |  |  | 1,747 |  |  | 3,018 |  |  |
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | 12,596 |  |  | (22,030) |  |  | 16,960 |  |  | (7,842) |  |  |
Preferred dividends | (9,857) |  |  | (10,582) |  |  | (30,593) |  |  | (31,809) |  |  |
Deemed dividends on preferred stock | (4,151) |  |  | (516) |  |  | (6,175) |  |  | (3,271) |  |  |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (1,412) |  |  | $ | (33,128) |  |  | $ | (19,808) |  |  | $ | (42,922) |  |  |
INCOME (LOSS) PER SHARE - BASIC: |  |  |  |  |  |  |  |  |
Net income (loss) attributable to common stockholders | $ | (0.02) |  |  | $ | (0.50) |  |  | $ | (0.30) |  |  | $ | (0.63) |  |  |
Weighted average common shares outstanding – basic | 66,522 |  |  | 65,825 |  |  | 66,493 |  |  | 68,010 |  |  |
INCOME (LOSS) PER SHARE - DILUTED: |  |  |  |  |  |  |  |  |
Net income (loss) attributable to common stockholders | $ | (0.02) |  |  | $ | (0.50) |  |  | $ | (0.30) |  |  | $ | (0.63) |  |  |
Weighted average common shares outstanding – diluted | 66,522 |  |  | 65,825 |  |  | 66,493 |  |  | 68,010 |  |  |

See Notes to Condensed Consolidated Financial Statements.
3

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
NET INCOME (LOSS) | $ | 39,835 |  |  | $ | (22,611) |  |  | $ | 41,530 |  |  | $ | (9,145) |  |  |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: |  |  |  |  |  |  |  |  |
Change in unrealized gain (loss) on investment in securities | (786) |  |  | — |  |  | (786) |  |  | — |  |  |
Total other comprehensive income (loss) | (786) |  |  | — |  |  | (786) |  |  | — |  |  |
TOTAL COMPREHENSIVE INCOME (LOSS) | 39,049 |  |  | (22,611) |  |  | 40,744 |  |  | (9,145) |  |  |
Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities | (27,363) |  |  | (1,773) |  |  | (26,317) |  |  | (1,715) |  |  |
Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership | 187 |  |  | 2,354 |  |  | 1,810 |  |  | 3,018 |  |  |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | $ | 11,873 |  |  | $ | (22,030) |  |  | $ | 16,237 |  |  | $ | (7,842) |  |  |

See Notes to Condensed Consolidated Financial Statements.
4

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited, in thousands except per share amounts)

| 8.25% Series D Cumulative Preferred Stock |  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Income/(loss) |  | Noncontrolling Interest in Consolidated Entities |  | Total |  | 5.50% Series B Cumulative Convertible Preferred Stock |  | Series E Redeemable Preferred Stock |  | Series M Redeemable Preferred Stock |  | Redeemable Noncontrolling Interests in Operating Partnership
| Shares |  | Amount |  | Shares |  | Amount |  |  |  |  |  | Shares |  | Amount |  | Shares |  | Amount |  | Shares |  | Amount |
Balance at June 30, 2024 | 1,600 |  |  | $ | 16 |  |  | 66,522 |  |  | $ | 665 |  |  | $ | 718,901 |  |  | $ | (437,302) |  |  | $ | — |  |  | $ | (9,980) |  |  | $ | 272,300 |  |  | 3,078 |  |  | $ | 65,426 |  |  | 16,142 |  |  | $ | 374,847 |  |  | 1,623 |  |  | $ | 40,569 |  |  | $ | 31,579 |
Equity-based compensation | — |  |  | — |  |  | — |  |  | — |  |  | 209 |  |  | — |  |  | — |  |  | — |  |  | 209 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 218 |
Issuance of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 32 |  |  | 809 |  |  | 1 |  |  | 34 |  |  | — |
Dividends declared – common stock ($0.05/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,348) |  |  | — |  |  | — |  |  | (3,348) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series B ($0.34/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,059) |  |  | — |  |  | — |  |  | (1,059) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series D ($0.52/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (825) |  |  | — |  |  | — |  |  | (825) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series E ($0.47/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (7,137) |  |  | — |  |  | — |  |  | (7,137) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series M ($0.53/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (836) |  |  | — |  |  | — |  |  | (836) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Contributions from noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,961 |  |  | 2,961 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Distributions to noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (23,322) |  |  | (23,322) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (369) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12,596 |  |  | — |  |  | 27,363 |  |  | 39,959 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (124) |
Unrealized gain (loss) on investment in securities | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (723) |  |  | — |  |  | (723) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (63) |
Redemption of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,036) |  |  | (24,629) |  |  | (28) |  |  | (696) |  |  | — |
Redemption value adjustment – preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (4,151) |  |  | — |  |  | — |  |  | (4,151) |  |  | — |  |  | — |  |  | — |  |  | 4,151 |  |  | — |  |  | — |  |  | — |
Redemption value adjustment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (95) |  |  | — |  |  | — |  |  | (95) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 95 |
Balance at September 30, 2024 | 1,600 |  |  | $ | 16 |  |  | 66,522 |  |  | $ | 665 |  |  | $ | 719,110 |  |  | $ | (442,157) |  |  | $ | (723) |  |  | $ | (2,978) |  |  | $ | 273,933 |  |  | 3,078 |  |  | $ | 65,426 |  |  | 15,138 |  |  | $ | 355,178 |  |  | 1,596 |  |  | $ | 39,907 |  |  | $ | 31,336 |

| 8.25% Series D Cumulative Preferred Stock |  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Income/(loss) |  | Noncontrolling Interest in Consolidated Entities |  | Total |  | 5.50% Series B Cumulative Convertible Preferred Stock |  | Series E Redeemable Preferred Stock |  | Series M Redeemable Preferred Stock |  | Redeemable Noncontrolling Interests in Operating Partnership |  |
| Shares |  | Amount |  | Shares |  | Amount |  |  |  |  |  | Shares |  | Amount |  | Shares |  | Amount |  | Shares |  | Amount |  |  |
Balance at December 31, 2023 | 1,600 |  |  | $ | 16 |  |  | 66,636 |  |  | $ | 666 |  |  | $ | 718,498 |  |  | $ | (412,199) |  |  | $ | — |  |  | $ | (8,934) |  |  | $ | 298,047 |  |  | 3,078 |  |  | $ | 65,426 |  |  | 16,316 |  |  | $ | 377,035 |  |  | 1,833 |  |  | $ | 45,623 |  |  | $ | 32,395 |  |  |
Purchase of common stock | — |  |  | — |  |  | (170) |  |  | (2) |  |  | (367) |  |  | — |  |  | — |  |  | — |  |  | (369) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Equity-based compensation | — |  |  | — |  |  | — |  |  | — |  |  | 977 |  |  | — |  |  | — |  |  | — |  |  | 977 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,712 |  |  |
Issuance of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 97 |  |  | 2,446 |  |  | 4 |  |  | 105 |  |  | — |  |  |
Issuance of restricted shares/units | — |  |  | — |  |  | 57 |  |  | 1 |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 32 |  |  |
Forfeiture of restricted common shares | — |  |  | — |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Dividends declared – common stock ($0.15 /share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (10,040) |  |  | — |  |  | — |  |  | (10,040) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Dividends declared – preferred stock - Series B ($1.02/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,175) |  |  | — |  |  | — |  |  | (3,175) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Dividends declared – preferred stock - Series D ($1.56/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,475) |  |  | — |  |  | — |  |  | (2,475) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Dividends declared – preferred stock - Series E ($1.41/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (22,307) |  |  | — |  |  | — |  |  | (22,307) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Dividends declared – preferred stock - Series M ($1.57/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,636) |  |  | — |  |  | — |  |  | (2,636) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Contributions from noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,961 |  |  | 2,961 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Distributions to noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (23,322) |  |  | (23,322) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,103) |  |  |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,960 |  |  | — |  |  | 26,317 |  |  | 43,277 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,747) |  |  |
Redemption of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,275) |  |  | (30,281) |  |  | (241) |  |  | (6,018) |  |  | — |  |  |
Unrealized gain (loss) on investment in securities | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (723) |  |  | — |  |  | (723) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (63) |  |  |
Redemption value adjustment – preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (6,175) |  |  | — |  |  | — |  |  | (6,175) |  |  | — |  |  | — |  |  | — |  |  | 5,978 |  |  | — |  |  | 197 |  |  | — |  |  |
Redemption value adjustment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (110) |  |  | — |  |  | — |  |  | (110) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 110 |  |  |
Balance at September 30, 2024 | 1,600 |  |  | $ | 16 |  |  | 66,522 |  |  | $ | 665 |  |  | $ | 719,110 |  |  | $ | (442,157) |  |  | $ | (723) |  |  | $ | (2,978) |  |  | $ | 273,933 |  |  | 3,078 |  |  | $ | 65,426 |  |  | 15,138 |  |  | $ | 355,178 |  |  | 1,596 |  |  | $ | 39,907 |  |  | $ | 31,336 |  |  |

5

| 8.25% Series D Cumulative Preferred Stock |  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Noncontrolling Interest in Consolidated Entities |  |  |  |  |  | Total |  | 5.50% Series B Cumulative Convertible Preferred Stock |  | Series E Redeemable Preferred Stock |  | Series M Redeemable Preferred Stock |  | Redeemable Noncontrolling Interests in Operating Partnership
| Shares |  | Amount |  | Shares |  | Amount |  |  |  |  |  |  | Shares |  | Amount |  | Shares |  | Amount |  | Shares |  | Amount |
Balance at June 30, 2023 | 1,600 |  |  | $ | 16 |  |  | 65,994 |  |  | $ | 659 |  |  | $ | 716,987 |  |  | $ | (341,210) |  |  | $ | (12,669) |  |  |  |  |  |  | $ | 363,783 |  |  | 3,078 |  |  | $ | 65,426 |  |  | 16,485 |  |  | $ | 379,403 |  |  | 1,960 |  |  | $ | 48,405 |  |  | $ | 35,174 |
Purchase of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Equity-based compensation | — |  |  | — |  |  | — |  |  | — |  |  | 577 |  |  | — |  |  | — |  |  |  |  |  |  | 577 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,050 |
Issuance of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | 36 |  |  | 813 |  |  | 3 |  |  | 56 |  |  | — |
Dividends declared – common stock ($0.05/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,335) |  |  | — |  |  |  |  |  |  | (3,335) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series B ($0.34/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,058) |  |  | — |  |  |  |  |  |  | (1,058) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock-Series D ($0.52/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (825) |  |  | — |  |  |  |  |  |  | (825) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series E ($0.47 /share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (7,710) |  |  | — |  |  |  |  |  |  | (7,710) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series M ($0.52 /share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (989) |  |  | — |  |  |  |  |  |  | (989) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Distributions to noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,740) |  |  |  |  |  |  | (2,740) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (361) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (22,030) |  |  | 1,773 |  |  |  |  |  |  | (20,257) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,354) |
Redemption of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | (111) |  |  | (2,589) |  |  | (51) |  |  | (1,268) |  |  | — |
Redemption value adjustment – preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (516) |  |  | — |  |  |  |  |  |  | (516) |  |  | — |  |  | — |  |  | — |  |  | 249 |  |  | — |  |  | 267 |  |  | — |
Redemption value adjustment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15 |  |  | — |  |  |  |  |  |  | 15 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (15) |
Balance at September 30, 2023 | 1,600 |  |  | $ | 16 |  |  | 65,994 |  |  | $ | 659 |  |  | $ | 717,564 |  |  | $ | (377,658) |  |  | $ | (13,636) |  |  |  |  |  |  | $ | 326,945 |  |  | 3,078 |  |  | $ | 65,426 |  |  | 16,410 |  |  | $ | 377,876 |  |  | 1,912 |  |  | $ | 47,460 |  |  | $ | 33,494 |

| 8.25% Series D Cumulative Preferred Stock |  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Noncontrolling Interest in Consolidated Entities |  |  |  |  |  | Total |  | 5.50% Series B Cumulative Convertible Preferred Stock |  | Series E Redeemable Preferred Stock |  | Series M Redeemable Preferred Stock |  | Redeemable Noncontrolling Interests in Operating Partnership
| Shares |  | Amount |  | Shares |  | Amount |  |  |  |  |  |  | Shares |  | Amount |  | Shares |  | Amount |  | Shares |  | Amount |
Balance at December 31, 2022 | 1,600 |  |  | $ | 16 |  |  | 69,919 |  |  | $ | 699 |  |  | $ | 734,134 |  |  | $ | (324,740) |  |  | $ | (16,346) |  |  |  |  |  |  | $ | 393,763 |  |  | 3,078 |  |  | $ | 65,426 |  |  | 12,657 |  |  | $ | 291,076 |  |  | 1,428 |  |  | $ | 35,182 |  |  | $ | 40,555 |
Purchase of common stock | — |  |  | — |  |  | (3,969) |  |  | (40) |  |  | (19,214) |  |  | — |  |  | — |  |  |  |  |  |  | (19,254) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Equity-based compensation | — |  |  | — |  |  | — |  |  | — |  |  | 2,644 |  |  | — |  |  | — |  |  |  |  |  |  | 2,644 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,210 |
Issuance of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | 3,896 |  |  | 87,557 |  |  | 540 |  |  | 13,011 |  |  | — |
Issuance of restricted shares/units | — |  |  | — |  |  | 45 |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Forfeiture of restricted common shares | — |  |  | — |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – common stock - ($0.15/share) | — |  |  |  |  | — |  |  | — |  |  | — |  |  | (10,004) |  |  | — |  |  |  |  |  |  | (10,004) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series B ($1.03/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,174) |  |  | — |  |  |  |  |  |  | (3,174) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock-Series D ($1.55/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,475) |  |  | — |  |  |  |  |  |  | (2,475) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series E ($1.44/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (23,230) |  |  | — |  |  |  |  |  |  | (23,230) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends declared – preferred stock - Series M ($1.55/share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,930) |  |  | — |  |  |  |  |  |  | (2,930) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Contributions from noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,050 |  |  |  |  |  |  | 4,050 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Distributions to noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,055) |  |  |  |  |  |  | (3,055) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,083) |
Redemption/conversion of operating partnership units | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (7,162) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (7,842) |  |  | 1,715 |  |  |  |  |  |  | (6,127) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,018) |
Redemption of preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | (143) |  |  | (3,378) |  |  | (56) |  |  | (1,383) |  |  | — |
Redemption value adjustment – preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,271) |  |  | — |  |  |  |  |  |  | (3,271) |  |  | — |  |  | — |  |  | — |  |  | 2,621 |  |  | — |  |  | 650 |  |  | — |
Redemption value adjustment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8 |  |  | — |  |  |  |  |  |  | 8 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (8) |
Balance at September 30, 2023 | 1,600 |  |  | $ | 16 |  |  | 65,994 |  |  | $ | 659 |  |  | 717,564 |  |  | $ | (377,658) |  |  | $ | (13,636) |  |  |  |  |  |  | $ | 326,945 |  |  | 3,078 |  |  | $ | 65,426 |  |  | 16,410 |  |  | $ | 377,876 |  |  | 1,912 |  |  | $ | 47,460 |  |  | $ | 33,494 |

See Notes to Condensed Consolidated Financial Statements.
6

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

| Nine Months Ended September 30,
| 2024 |  | 2023 |  |
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |  |  |
Net income (loss) | $ | 41,530 |  |  | $ | (9,145) |  |  |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |  |  |  |
Depreciation and amortization | 75,192 |  |  | 67,791 |  |  |
Equity-based compensation | 2,689 |  |  | 6,854 |  |  |
Bad debt expense | 351 |  |  | 592 |  |  |
(Gain) loss on extinguishment of debt | 22 |  |  | (2,318) |  |  |
Amortization of loan costs, discounts and capitalized default interest | 4,885 |  |  | 1,485 |  |  |
Write-off of loan costs and exit fees | 6,095 |  |  | 2,848 |  |  |
Amortization of intangibles | 346 |  |  | 356 |  |  |
Amortization of non-refundable membership initiation fees | (1,606) |  |  | (1,288) |  |  |
Interest expense accretion on refundable membership club deposits | 275 |  |  | 507 |  |  |
(Gain) loss on disposition of assets and hotel property | (88,210) |  |  | — |  |  |
Realized and unrealized (gain) loss on derivatives | (523) |  |  | (918) |  |  |
Non-cash interest income | (67) |  |  | — |  |  |
Equity in (earnings) loss of unconsolidated entity | 214 |  |  | 208 |  |  |
Deferred income tax expense (benefit) | 8 |  |  | 112 |  |  |
Changes in operating assets and liabilities, exclusive of disposition of assets and hotel property: |  |  |  |  |
Accounts receivable and inventories | 6,620 |  |  | 15,058 |  |  |
Prepaid expenses and other assets | 978 |  |  | (10,720) |  |  |
Accounts payable and accrued expenses | 6,828 |  |  | 784 |  |  |
Operating lease right-of-use assets | 359 |  |  | 433 |  |  |
Due to/from related parties, net | (587) |  |  | 418 |  |  |
Due to/from third-party hotel managers | (2,215) |  |  | 11,944 |  |  |
Due to/from Ashford Inc. | 4,995 |  |  | (12,795) |  |  |
Operating lease liabilities | (161) |  |  | (222) |  |  |
Other liabilities | 2,147 |  |  | 1,017 |  |  |
Net cash provided by (used in) operating activities | 60,165 |  |  | 73,001 |  |  |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |  |  |
Proceeds from property insurance | 13 |  |  | 327 |  |  |
Issuance of note receivable | (5,788) |  |  | — |  |  |
Payments for initial franchise fee | — |  |  | (75) |  |  |
Net proceeds from sale of hotel property | 155,629 |  |  | — |  |  |
Purchase of securities | (42,279) |  |  | — |  |  |
Investment in unconsolidated entity | (79) |  |  | (237) |  |  |
Improvements and additions to hotel properties | (54,825) |  |  | (55,593) |  |  |
Net cash provided by (used in) investing activities | 52,671 |  |  | (55,578) |  |  |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |  |  |
Borrowings on indebtedness | 234,000 |  |  | 236,000 |  |  |
Repayments of indebtedness | (184,100) |  |  | (390,210) |  |  |
Payments of loan costs and exit fees | (15,356) |  |  | (3,340) |  |  |
Payments for derivatives | (1,344) |  |  | (3,981) |  |  |
Proceeds from derivatives | 4,386 |  |  | 6,014 |  |  |
Purchase of common stock | (369) |  |  | (19,308) |  |  |
Payments for dividends and distributions | (39,037) |  |  | (39,431) |  |  |
Net proceeds from issuance of preferred stock | — |  |  | 97,863 |  |  |
Contributions from noncontrolling interest in consolidated entities | 2,961 |  |  | 4,050 |  |  |
Redemption of operating partnership units | — |  |  | (7,162) |  |  |
Distributions to noncontrolling interest in consolidated entities | (27,045) |  |  | (2,024) |  |  |

7

| Nine Months Ended September 30,
| 2024 |  | 2023 |  |
Redemption of preferred stock | (36,299) |  |  | (4,761) |  |  |
Net cash provided by (used in) financing activities | (62,203) |  |  | (126,290) |  |  |
Net change in cash, cash equivalents and restricted cash | 50,633 |  |  | (108,867) |  |  |
Cash, cash equivalents and restricted cash at beginning of period | 166,503 |  |  | 315,696 |  |  |
Cash, cash equivalents and restricted cash at end of period | $ | 217,136 |  |  | $ | 206,829 |  |  |
SUPPLEMENTAL CASH FLOW INFORMATION |  |  |  |  |
Interest paid | $ | 77,178 |  |  | $ | 67,345 |  |  |
Income taxes paid (refunded) | 352 |  |  | 3,129 |  |  |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES |  |  |  |  |
Dividends and distributions declared but not paid | $ | 9,271 |  |  | $ | 8,967 |  |  |
Capital expenditures accrued but not paid | 12,541 |  |  | 15,954 |  |  |
Non-cash preferred stock dividends | 2,551 |  |  | 2,682 |  |  |
Unsettled proceeds from derivatives | 197 |  |  | — |  |  |
Non-cash common stock/unit dividends | 35 |  |  | — |  |  |
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH |  |  |  |  |
Cash and cash equivalents at beginning of period | $ | 85,599 |  |  | $ | 261,541 |  |  |
Restricted cash at beginning of period | 80,904 |  |  | 54,155 |  |  |
Cash, cash equivalents and restricted cash at beginning of period | $ | 166,503 |  |  | $ | 315,696 |  |  |
Cash and cash equivalents at end of period | $ | 168,675 |  |  | $ | 149,496 |  |  |
Restricted cash at end of period | 48,461 |  |  | 57,333 |  |  |
Cash, cash equivalents and restricted cash at end of period | $ | 217,136 |  |  | $ | 206,829 |  |  |

See Notes to Condensed Consolidated Financial Statements.
8

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Organization and Description of Business
Braemar Hotels & Resorts Inc., together with its subsidiaries (“Braemar”), is a Maryland corporation that invests primarily in high revenue per available room (“RevPAR”) luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by STR, LLC. Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Braemar conducts its business and owns substantially all of its assets through its operating partnership, Braemar Hospitality Limited Partnership (“Braemar OP”). Terms such as the “Company,” “we,” “us” or “our” refer to Braemar Hotels & Resorts Inc. and, as the context may require, all entities included in its condensed consolidated financial statements.
We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC” or the “Advisor”) through an advisory agreement. Ashford LLC is a subsidiary of Ashford Inc. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.
We do not operate any of our hotel properties directly; instead, we contractually engage hotel management companies to operate them for us under management contracts. Remington Lodging & Hospitality, LLC (“Remington Hospitality”), a subsidiary of Ashford Inc., manages four of our 15 hotel properties. Third-party management companies manage the remaining hotel properties.
Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to, design and construction services, debt placement and related services, broker-dealer and distribution services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology and cash management services.
The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of September 30, 2024, own 15 hotel properties in seven states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands (“USVI”). The portfolio includes 14 wholly-owned hotel properties and one hotel property that is owned through a partnership in which Braemar OP has a controlling interest. These hotel properties represent 3,807 total rooms, or 3,667 net rooms, excluding those attributable to our partner. As a REIT, Braemar is required to comply with limitations imposed by the Code related to operating hotels. As of September 30, 2024, 14 of our 15 hotel properties were leased by wholly-owned or majority-owned subsidiaries that are treated as taxable REIT subsidiaries (“TRS”) for federal income tax purposes (collectively, the TRS entities are referred to as “Braemar TRS”). One hotel property, located in the USVI, is owned by our USVI TRS. Braemar TRS then engages third-party or affiliated hotel management companies to operate the hotel properties under management contracts. Hotel operating results related to the hotel properties are included in the condensed consolidated statements of operations.
As of September 30, 2024, 13 of the 15 hotel properties were leased by Braemar’s wholly-owned TRS, and the one hotel property majority-owned through a consolidated partnership was leased to a TRS wholly-owned by such consolidated partnership. Each leased hotel is leased under a percentage lease that provides for each lessee to pay in each calendar month the base rent plus, in each calendar quarter, percentage rent, if any, based on hotel revenues. Lease revenue from Braemar TRS is eliminated in consolidation. The hotel properties are operated under management contracts with Marriott Hotel Services, LLC (“Marriott”), Hilton Management LLC (“Hilton”), Accor Management US Inc. (“Accor”), Four Seasons Hotels Limited (“Four Seasons”), Hyatt Corporation (“Hyatt”), The Ritz-Carlton Hotel Company, L.L.C. and its affiliates, each of which is also an affiliate of Marriott (“Ritz-Carlton”), and Remington Hospitality, which are eligible independent contractors under the Code.
2. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Braemar Hotels & Resorts Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All intercompany accounts and transactions
9

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
between consolidated entities have been eliminated in these condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 14, 2024.
Braemar OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to, operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC, its general partner. As such, we consolidate Braemar OP.
The following items affect reporting comparability of our historical condensed consolidated financial statements:
•Historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
•On July 17, 2024, we sold the Hilton La Jolla Torrey Pines. The operating results of the hotel property were excluded from our results of operations as of the disposition date.
Use of Estimates—The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Investment in Securities— Investment in securities consists of mortgage-backed securities, are accounted for as available-for-sale securities and are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows and the bonds’ terms and conditions, among other things. Unrealized gain (loss) associated with these investments is reported as a component of other comprehensive income (loss).
Recently Issued Accounting Standards—In November 2023, the Financial Accounting Standards Board’s (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. As of September 30, 2024, the Company has not adopted this ASU. The adoption of this ASU is expected to only impact disclosures with respect to the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The amendments in this ASU may be applied prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or the amendments may be applied retrospectively by providing the revised disclosures for all periods presented. As of September 30, 2024, the Company has not adopted this ASU. The adoption of this ASU is expected to only impact disclosures with respect to the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses that requires more detailed
10

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the statement of operations. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact this ASU will have on our disclosures.
3. Revenue
The following tables present our revenue disaggregated by geographical areas (dollars in thousands):

|  | Three Months Ended September 30, 2024
Primary Geographical Market |  | Number of Hotels |  | Rooms |  | Food and Beverage |  | Other Hotel |  |  |  | Total
California |  | 5 |  | $ | 23,366 |  |  | $ | 7,041 |  |  | $ | 4,138 |  |  |  |  | $ | 34,545 |
Puerto Rico |  | 1 |  | 6,764 |  |  | 3,303 |  |  | 2,157 |  |  |  |  | 12,224 |
Arizona |  | 1 |  | 3,472 |  |  | 2,625 |  |  | 1,820 |  |  |  |  | 7,917 |
Colorado |  | 1 |  | 3,591 |  |  | 3,876 |  |  | 2,147 |  |  |  |  | 9,614 |
Florida |  | 2 |  | 9,844 |  |  | 4,822 |  |  | 5,586 |  |  |  |  | 20,252 |
Illinois |  | 1 |  | 9,037 |  |  | 1,972 |  |  | 662 |  |  |  |  | 11,671 |
Pennsylvania |  | 1 |  | 7,334 |  |  | 1,539 |  |  | 378 |  |  |  |  | 9,251 |
Washington |  | 1 |  | 11,224 |  |  | 1,598 |  |  | 1,061 |  |  |  |  | 13,883 |
Washington, D.C. |  | 1 |  | 9,712 |  |  | 3,595 |  |  | 949 |  |  |  |  | 14,256 |
USVI |  | 1 |  | 6,709 |  |  | 4,071 |  |  | 1,956 |  |  |  |  | 12,736 |
Sold hotel property |  | 1 |  | 1,374 |  |  | 339 |  |  | 336 |  |  |  |  | 2,049 |
Total |  | 16 |  | $ | 92,427 |  |  | $ | 34,781 |  |  | $ | 21,190 |  |  |  |  | $ | 148,398 |

|  | Three Months Ended September 30, 2023
Primary Geographical Market |  | Number of Hotels |  | Rooms |  | Food and Beverage |  | Other Hotel |  |  |  | Total
California |  | 5 |  | $ | 25,363 |  |  | $ | 7,771 |  |  | $ | 3,910 |  |  |  |  | $ | 37,044 |
Puerto Rico |  | 1 |  | 9,463 |  |  | 3,836 |  |  | 1,437 |  |  |  |  | 14,736 |
Arizona |  | 1 |  | 3,541 |  |  | 2,990 |  |  | 1,692 |  |  |  |  | 8,223 |
Colorado |  | 1 |  | 3,466 |  |  | 3,876 |  |  | 2,213 |  |  |  |  | 9,555 |
Florida |  | 2 |  | 10,348 |  |  | 5,226 |  |  | 4,441 |  |  |  |  | 20,015 |
Illinois |  | 1 |  | 7,735 |  |  | 1,767 |  |  | 633 |  |  |  |  | 10,135 |
Pennsylvania |  | 1 |  | 6,373 |  |  | 1,237 |  |  | 326 |  |  |  |  | 7,936 |
Washington |  | 1 |  | 10,454 |  |  | 1,336 |  |  | 473 |  |  |  |  | 12,263 |
Washington, D.C. |  | 1 |  | 8,264 |  |  | 3,754 |  |  | 517 |  |  |  |  | 12,535 |
USVI |  | 1 |  | 7,283 |  |  | 3,224 |  |  | 3,164 |  |  |  |  | 13,671 |
Sold hotel property |  | 1 |  | 8,448 |  |  | 3,520 |  |  | 1,720 |  |  |  |  | 13,688 |
Total |  | 16 |  | $ | 100,738 |  |  | $ | 38,537 |  |  | $ | 20,526 |  |  |  |  | $ | 159,801 |

11

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

|  | Nine Months Ended September 30, 2024
Primary Geographical Market |  | Number of Hotels |  | Rooms |  | Food and Beverage |  | Other Hotel |  |  |  | Total
California |  | 5 |  | $ | 70,756 |  |  | $ | 18,892 |  |  | $ | 11,947 |  |  |  |  | $ | 101,595 |
Puerto Rico |  | 1 |  | 35,690 |  |  | 12,528 |  |  | 7,961 |  |  |  |  | 56,179 |
Arizona |  | 1 |  | 26,320 |  |  | 16,775 |  |  | 6,748 |  |  |  |  | 49,843 |
Colorado |  | 1 |  | 18,684 |  |  | 11,297 |  |  | 7,610 |  |  |  |  | 37,591 |
Florida |  | 2 |  | 46,816 |  |  | 24,115 |  |  | 19,095 |  |  |  |  | 90,026 |
Illinois |  | 1 |  | 20,758 |  |  | 5,256 |  |  | 1,732 |  |  |  |  | 27,746 |
Pennsylvania |  | 1 |  | 20,472 |  |  | 4,446 |  |  | 995 |  |  |  |  | 25,913 |
Washington |  | 1 |  | 24,469 |  |  | 3,742 |  |  | 2,342 |  |  |  |  | 30,553 |
Washington, D.C. |  | 1 |  | 32,355 |  |  | 14,580 |  |  | 2,744 |  |  |  |  | 49,679 |
USVI |  | 1 |  | 35,385 |  |  | 15,053 |  |  | 7,600 |  |  |  |  | 58,038 |
Sold hotel property |  | 1 |  | 15,501 |  |  | 9,207 |  |  | 3,193 |  |  |  |  | 27,901 |
Total |  | 16 |  | $ | 347,206 |  |  | $ | 135,891 |  |  | $ | 71,967 |  |  |  |  | $ | 555,064 |

|  | Nine Months Ended September 30, 2023
Primary Geographical Market |  | Number of Hotels |  | Rooms |  | Food and Beverage |  | Other Hotel |  |  |  | Total
California |  | 5 |  | $ | 77,029 |  |  | $ | 22,296 |  |  | $ | 11,704 |  |  |  |  | $ | 111,029 |
Puerto Rico |  | 1 |  | 37,763 |  |  | 13,771 |  |  | 7,661 |  |  |  |  | 59,195 |
Arizona |  | 1 |  | 25,622 |  |  | 14,776 |  |  | 6,351 |  |  |  |  | 46,749 |
Colorado |  | 1 |  | 19,673 |  |  | 12,048 |  |  | 6,885 |  |  |  |  | 38,606 |
Florida |  | 2 |  | 47,287 |  |  | 24,355 |  |  | 16,777 |  |  |  |  | 88,419 |
Illinois |  | 1 |  | 19,039 |  |  | 4,697 |  |  | 1,400 |  |  |  |  | 25,136 |
Pennsylvania |  | 1 |  | 18,536 |  |  | 3,883 |  |  | 957 |  |  |  |  | 23,376 |
Washington |  | 1 |  | 22,868 |  |  | 3,373 |  |  | 1,296 |  |  |  |  | 27,537 |
Washington, D.C. |  | 1 |  | 28,474 |  |  | 14,963 |  |  | 1,376 |  |  |  |  | 44,813 |
USVI |  | 1 |  | 36,759 |  |  | 13,444 |  |  | 8,777 |  |  |  |  | 58,980 |
Sold hotel property |  | 1 |  | 22,352 |  |  | 10,935 |  |  | 4,682 |  |  |  |  | 37,969 |
Total |  | 16 |  | $ | 355,402 |  |  | $ | 138,541 |  |  | $ | 67,866 |  |  |  |  | $ | 561,809 |

4. Investments in Hotel Properties, net
Investments in hotel properties, net consisted of the following (in thousands):

|  | September 30, 2024 |  | December 31, 2023
Land |  | $ | 630,842 |  |  | $ | 630,842 |
Buildings and improvements |  | 1,429,339 |  |  | 1,535,501 |
Furniture, fixtures and equipment |  | 174,613 |  |  | 166,673 |
Construction in progress |  | 23,441 |  |  | 36,954 |
Residences |  | 12,746 |  |  | 12,746 |
Total cost |  | 2,270,981 |  |  | 2,382,716 |
Accumulated depreciation |  | (480,940) |  |  | (498,508) |
Investments in hotel properties, net |  | $ | 1,790,041 |  |  | $ | 1,884,208 |

Impairment Charges
During the nine months ended September 30, 2024 and 2023, no impairment charges were recorded.
5. Hotel Disposition
On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines for $165 million in cash, subject to customary pro-rations and adjustments. The Company owned an indirect 75% equity interest in the hotel property. Additionally, the Company repaid the $66.6 million mortgage loan secured by the hotel property.
12

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The sale resulted in a gain of approximately $88.2 million for the three and nine months ended September 30, 2024 and is included in “gain (loss) on disposition of assets and hotel property” in our condensed consolidated statements of operations. Since the sale of the hotel property did not represent a strategic shift that has (or will have) a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in our condensed consolidated financial statements.
We included the results of operations for this hotel property through the date of disposition in net income (loss) as shown in our condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023, respectively. The following table includes the condensed consolidated financial information from this hotel property (in thousands):

| Three Months Ended September 30, |  |  |  | Nine Months Ended September 30, |
| 2024 |  | 2023 |  |  |  | 2024 |  | 2023 |  |  |
Total hotel revenue | $ | 2,049 |  |  | $ | 13,688 |  |  |  |  | $ | 27,901 |  |  | $ | 37,969 |  |  |  |
Total hotel operating expenses | (1,563) |  |  | (7,959) |  |  |  |  | (17,130) |  |  | (22,939) |  |  |  |
Property taxes, insurance and other | (135) |  |  | (768) |  |  |  |  | (1,690) |  |  | (2,107) |  |  |  |
Depreciation and amortization | (179) |  |  | (1,052) |  |  |  |  | (2,328) |  |  | (3,123) |  |  |  |
Gain (loss) on disposition of assets and hotel property | 88,160 |  |  | — |  |  |  |  | 88,160 |  |  | — |  |  |  |
Operating income (loss) | 88,332 |  |  | 3,909 |  |  |  |  | 94,913 |  |  | 9,800 |  |  |  |
Interest income | 55 |  |  | 94 |  |  |  |  | 265 |  |  | 252 |  |  |  |
Interest expense and amortization of loan costs | (318) |  |  | (1,608) |  |  |  |  | (3,856) |  |  | (4,557) |  |  |  |
Write-off of loan costs and exit fees | — |  |  | — |  |  |  |  | (101) |  |  | — |  |  |  |
Income (loss) before income taxes | 88,069 |  |  | 2,395 |  |  |  |  | 91,221 |  |  | 5,495 |  |  |  |
Income from consolidated entities attributable to noncontrolling interests | (26,296) |  |  | (1,015) |  |  |  |  | (28,024) |  |  | (2,575) |  |  |  |
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership | (4,973) |  |  | (92) |  |  |  |  | (5,017) |  |  | (202) |  |  |  |
Income (loss) before income taxes attributable to the Company | $ | 56,800 |  |  | $ | 1,288 |  |  |  |  | $ | 58,180 |  |  | $ | 2,718 |  |  |  |

6. Investment in Unconsolidated Entity
OpenKey, Inc. (“OpenKey”), which is controlled and consolidated by Ashford Inc., is a hospitality-focused mobile key platform that provides a universal smart phone app and related hardware and software for keyless entry into hotel guest rooms. As of September 30, 2024, the Company has made equity investments in OpenKey totaling $2.9 million. All investments were recommended by our Related Party Transactions Committee and unanimously approved by the independent members of our board of directors.
Our investment is recorded as “investment in unconsolidated entity” in our condensed consolidated balance sheets and is accounted for under the equity method of accounting as we have significant influence over the entity under the applicable accounting guidance. We review our investment in OpenKey for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of the investment. Any impairment is recorded in equity in earnings (loss) of unconsolidated entity. No such impairment was recorded for the three and nine months ended September 30, 2024 and 2023.
The following table summarizes our carrying value and ownership interest in OpenKey:

| September 30, 2024 |  | December 31, 2023
Carrying value of the investment in OpenKey (in thousands) | $ | 1,173 |  |  | $ | 1,416 |
Ownership interest in OpenKey | 7.9 | % |  | 7.9 | %

13

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table summarizes our equity in earnings (loss) in OpenKey (in thousands):

|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |  |  |  |
Line Item |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |  |
Equity in earnings (loss) of unconsolidated entity |  | $ | (91) |  |  | $ | (65) |  |  | $ | (243) |  |  | $ | (219) |  |  |  |  |

On February 2, 2023, the Company entered into a loan funding agreement with Ashford Inc. and OpenKey. Per the agreement, Ashford Inc. and the Company will provide OpenKey with a maximum loan amount of $5.0 million to be allocated on a pro-rata basis based on current ownership interests and funded quarterly. The loan bears interest at an annual rate of 15%. Additionally, repayment of the loan principal and all accrued interest is due upon certain events.
On February 27, 2024, the Company approved additional funding, together with Ashford Inc., up to $1.0 million in aggregate to OpenKey, allocated pro rata among them. As of September 30, 2024, funding of $79,000 has been made pursuant to the 2024 funding agreement. As of September 30, 2024, the Company has funded a total amount of approximately $317,000.
The following table summarizes our note receivable from OpenKey (in thousands):

Line Item |  | September 30, 2024 |  | December 31, 2023
Investment in unconsolidated entity |  | $ | 366 |  |  | $ | 258 |

The following table summarizes the interest income associated with the loan to OpenKey (in thousands):

|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |  |  |  |
Line Item |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |  |
Equity in earnings (loss) of unconsolidated entity |  | $ | 11 |  |  | $ | 5 |  |  | $ | 29 |  |  | $ | 11 |  |  |  |  |

7. Indebtedness, net
Indebtedness, net consisted of the following (dollars in thousands):

Indebtedness |  | Collateral |  | Current Maturity |  | Final Maturity (15) |  | Interest Rate |  | September 30, 2024 |  | December 31, 2023 |  |
Mortgage loan (3) |  | Cameo Beverly Hills |  | August 2024 |  | August 2024 |  | SOFR (1) + 3.66% |  | $ | — |  |  |  |  | $ | 30,000 |  |  |
Mortgage loan (4) |  | Hilton La Jolla Torrey Pines |  | August 2024 |  | August 2024 |  | 9.00% |  | — |  |  |  |  | 66,600 |  |  |
Mortgage loan (5) |  | The Ritz-Carlton Lake Tahoe |  | January 2025 |  | January 2026 |  | SOFR (1) + 3.60% |  | 53,413 |  |  |  |  | 53,413 |  |  |
Mortgage loan (6) |  | Park Hyatt Beaver Creek Resort & Spa |  | February 2025 |  | February 2027 |  | SOFR (1) + 2.86% |  | 70,500 |  |  |  |  | 70,500 |  |  |
Mortgage loan (7) |  | The Notary Hotel |  | June 2025 |  | June 2025 |  | SOFR (1) + 2.66% |  | 293,180 |  |  |  |  | 293,180 |  |  |
|  | The Clancy |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Sofitel Chicago Magnificent Mile |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Marriott Seattle Waterfront |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage loan (8)(9) |  | The Ritz-Carlton St. Thomas |  | August 2025 |  | August 2026 |  | SOFR (1) + 4.35% |  | — |  |  |  |  | 42,500 |  |  |
Mortgage loan (9)(10) |  | Pier House Resort & Spa |  | September 2025 |  | September 2026 |  | SOFR (1) + 3.60% |  | — |  |  |  |  | 80,000 |  |  |
Mortgage loan (11) |  | The Ritz-Carlton Reserve Dorado Beach |  | March 2026 |  | March 2026 |  | SOFR (1) + 4.75% |  | 62,000 |  |  |  |  | — |  |  |
Convertible Senior Notes |  | Equity |  | June 2026 |  | June 2026 |  | 4.50% |  | 86,250 |  |  |  |  | 86,250 |  |  |
BAML Credit Facility (9)(12) |  | Bardessono Hotel & Spa |  | July 2026 |  | July 2027 |  | Base Rate (2) +1.25% to 2.00% or SOFR (1) + 2.35% to 3.10% |  | — |  |  |  |  | 200,000 |  |  |
|  | Hotel Yountville |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | The Ritz-Carlton Sarasota |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage loan (9) |  | Bardessono Hotel & Spa |  | August 2026 |  | August 2029 |  | SOFR (1) + 3.24% |  | 407,000 |  |  |  |  | — |  |  |
|  | Hotel Yountville |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | The Ritz-Carlton Sarasota |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Pier House Resort & Spa |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | The Ritz-Carlton St. Thomas |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage loan (13) |  | Four Seasons Resort Scottsdale |  | December 2026 |  | December 2028 |  | SOFR (1) + 3.75% |  | 140,000 |  |  |  |  | 140,000 |  |  |
Mortgage loan (14) |  | Capital Hilton |  | December 2026 |  | December 2028 |  | SOFR (1) + 3.75% |  | 110,600 |  |  |  |  | 110,600 |  |  |
|  |  |  |  |  |  |  |  |  | 1,222,943 |  |  |  |  | 1,173,043 |  |  |
Capitalized default interest and late charges, net |  |  |  |  |  |  |  |  |  | — |  |  |  |  | 120 |  |  |
Deferred loan costs, net |  |  |  |  |  |  |  |  |  | (13,831) |  |  |  |  | (9,135) |  |  |
Premiums/(discounts), net |  |  |  |  |  |  |  |  |  | (1,099) |  |  |  |  | (1,584) |  |  |
Indebtedness, net |  |  |  |  |  |  |  |  |  | $ | 1,208,013 |  |  |  |  | $ | 1,162,444 |  |  |

__________________
(1)SOFR rates were 4.85% and 5.35% at September 30, 2024 and December 31, 2023, respectively.
14

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
(2)Base Rate, as defined in the secured credit facility agreement, is the greater of (i) the prime rate set by Bank of America, (ii) federal funds rate + 0.50%, (iii) Term SOFR + 1.00%, or (iv) 1.00%.
(3)This mortgage loan had a SOFR floor of 1.50%. On April 9, 2024, we repaid this mortgage loan.
(4)On February 5, 2024, we amended this mortgage loan. Terms of the amendment included extending the maturity date by six months from February 2024 to August 2024, and converting the interest rate from a variable rate of SOFR + 1.70% to a fixed rate of 9.00%. This mortgage loan was secured by the Hilton La Jolla Torrey Pines. On July 17, 2024, we sold this property for $165.0 million and repaid the mortgage loan.
(5)This mortgage loan has one one-year extension option, subject to satisfaction of certain conditions.
(6)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the first was exercised February 2024.
(7)This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions, of which the fifth was exercised in June 2024.
(8)On January 29, 2024, we amended this mortgage loan. Terms of the amendment included extending the current maturity date one year to August 2025, and the variable rate increased from SOFR + 4.04% to SOFR 4.35%. This amended mortgage loan has one one-year extension option, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 4.00%.
(9)On August 7, 2024, we refinanced this mortgage loan and credit facility into a new $407.0 million mortgage loan. The new mortgage loan is interest only and bears interest at a rate of SOFR + 3.24%, has a two-year initial term, and has three one-year extension options, subject to satisfaction of certain conditions. Braemar holds a tranche of Commercial Mortgage-Backed Securities (“CMBS”) that has a par value of $42.2 million and a rate of SOFR + 5.20%.
(10)On January 3, 2024, we amended this mortgage loan. Terms of the amendment included extending the current maturity date one year to September 2025, and the variable rate increased from SOFR + 1.95% to SOFR + 3.60%. This mortgage loan has one one-year extension option, subject to satisfaction of certain conditions.
(11)On March 7, 2024, we entered into a new $62.0 million mortgage loan. The new mortgage loan is interest only and bears interest at a rate of SOFR + 4.75%.
(12)This secured credit facility has one one-year extension option, subject to satisfaction of certain conditions.
(13)This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 1.00%.
(14)This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 2.00%.
(15)The final maturity date assumes all available extension options will be exercised.
On January 18, 2023, the Company repaid its $54.0 million mortgage loan secured by The Ritz-Carlton Reserve Dorado Beach, which resulted in a gain on extinguishment of debt of $2.3 million for the year ended December 31, 2023. The gain was primarily attributable to the premium that was recorded upon the assumption of the mortgage loan when the hotel was acquired.
On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines for $165 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid the $66.6 million mortgage loan secured by the hotel property.
On August 7, 2024, the Company closed on a refinancing involving five hotels. The new mortgage loan totals $407 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029. The loan is interest only and provides for a floating interest rate of SOFR + 3.24%. The loan is secured by five hotels: Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota, and The Ritz-Carlton St. Thomas. The new loan refinanced the $80.0 million loan secured by the Pier House Resort & Spa which had an interest rate of SOFR + 3.60% and had a final maturity date in September 2026, the $42.5 million loan secured by The Ritz-Carlton St. Thomas which had an interest rate of SOFR + 4.35% and had a final maturity date in August 2026, and the $200.0 million secured credit facility secured by The Ritz-Carlton Sarasota, Hotel Yountville, and Bardessono Hotel & Spa which had an interest rate of SOFR + 3.10% and had a final maturity date in July 2027.
Convertible Senior Notes
In May 2021, the Company issued $86.25 million aggregate principal amount of 4.50% Convertible Senior Notes due June 2026 (the “Convertible Senior Notes”). The net proceeds from this offering of the Convertible Senior Notes were approximately $82.8 million after deducting the underwriting fees and other expenses paid by the Company.
The Convertible Senior Notes are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Convertible Senior Notes bear interest at a rate of 4.50% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2021. The Convertible Senior Notes will mature on June 1, 2026. For the three and nine months ended September 30, 2024, the Company recorded coupon interest expense of $970,000 and $2.9 million, respectively. For the three and nine months ended September 30, 2023, the Company recorded coupon interest expense of $970,000 and $2.9 million, respectively.
For the three and nine months ended September 30, 2024, the Company recorded discount amortization of $157,000 and $463,000, respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through
15

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
June 2026. For the three and nine months ended September 30, 2023, the Company recorded discount amortization of $148,000 and $438,000, respectively.
The Convertible Senior Notes are convertible at any time prior to the close of business on the business day immediately preceding the maturity date for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the election of the Company, based on an initial conversion rate of 157.7909 shares of the Company’s common stock per $1,000 principal amount of notes (equivalent to a conversion price of approximately $6.34 per share of common stock), subject to adjustment of the conversion rate under certain circumstances. As of September 30, 2024, the conversion rate is 182.1014. In addition, following the occurrence of certain corporate events, if the Company provides notice of redemption or if it exercises its option to convert the Convertible Senior Notes, the Company will, in certain circumstances, increase the conversion rate for a holder that converts its Convertible Senior Notes in connection with such corporate event, such notice of redemption, or such issuer conversion option, as the case may be.
The Company may redeem the Convertible Senior Notes at the Company’s option, in whole or in part, on any business day on or after the date of issuance if the last reported sale price per share of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Senior Notes to be redeemed subject to certain adjustments, plus accrued and unpaid interest to, but excluding, the redemption date.
If we violate covenants in any debt agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of the consolidated group. As of September 30, 2024, we were in compliance with all covenants.
8. Note Receivable
On July 2, 2024, Braemar, Ashford Trust and Ashford Inc. (collectively with the Company, Ashford Trust and each of Ashford Inc.’s, the Company’s and Ashford Trust’s respective affiliates (including Stirling Hotels & Resorts, Inc.) and any entity advised by Ashford Inc., the “Company Group”) entered into a Cooperation Agreement (the “Agreement”) with Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co. LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Aintabi (collectively, the “Blackwells Parties”) regarding the withdrawal of the Blackwells Parties’ proxy campaign, dismissal of pending litigation involving the parties and certain other matters.
Pursuant to the Agreement, the Blackwells Parties have agreed to withdraw (i) the notice delivered to the Company on March 10, 2024 purporting to nominate four director candidates to the Company’s board of directors (the “Board”) and make certain other proposals and (ii) the definitive proxy statement filed with the SEC on April 3, 2024 to solicit proxies from stockholders of the Company to vote in favor of the Blackwells Parties’ director nominees and proposals. In connection therewith, the Blackwells Parties will cease to take any further action with respect to the Company’s 2024 Annual Meeting of Stockholders, except as otherwise provided for in the Agreement.
The Blackwells Parties have also agreed to specified standstill restrictions with respect to the Company Group, which will expire on July 2, 2034. During the standstill period, the Blackwells Parties are required to (i) appear in person or by proxy at each meeting of stockholders of the members of the Company Group in which they beneficially own shares of stock and vote any Blackwells Parties’ shares then beneficially owned by them in accordance with the recommendation of the board of directors of such member of the Company Group on any proposals considered at such meeting and (ii) deliver consents or consent revocations in any action by written consent by stockholders of any member of the Company Group in which they beneficially own shares in accordance with the recommendation of the board of directors of such member of the Company Group.
The Agreement also provides for the voluntary dismissal, with prejudice, of the consolidated action previously pending in the U.S. District Court for the Northern District of Texas to which the Company, Blackwells Capital LLC and certain of their respective related parties were parties (the “Consolidated Litigation”). Pursuant to the Agreement, the Consolidated Litigation was voluntarily dismissed, with prejudice, on July 3, 2024. The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable attorneys’ fees and expenses incurred in connection with the Consolidated Litigation and related matters.
16

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Additionally, pursuant to the Agreement, the Board was required to take steps to identify and select one additional individual to be appointed to the Board as an independent director (the “Additional Board Member”). The Board was required to promptly notify Blackwells Capital LLC of its selection of the Additional Board Member and to consider any input Blackwells Capital LLC may have with respect to the Additional Board Member. In accordance with the Cooperation Agreement, on October 4, 2024, the Board increased the number of directors of the Company from eight to nine and appointed Mr. Jay H. Shah as the Additional Board Member to serve until the Company’s next annual meeting of stockholders and until his successor is duly elected and qualified.
The Agreement contains various other obligations and provisions applicable to the Company Group and the Blackwells Parties, including a mutual release of claims and mutual non-disparagement.
Concurrently and in connection with the Agreement, certain of the parties thereto have also entered into a Share Ownership Agreement (the “Share Ownership Agreement”) and a Loan Agreement (the “Loan Agreement”), pursuant to which agreements the Company will provide to BW Coinvest I, LLC (“Borrower”) an unsecured loan (the “Loan”). The proceeds from the Loan will be used to reimburse Borrower for 70% of the amount expended by Borrower to purchase on the open market a total of 3,500,000 shares of the Company’s common stock (the “Purchased Shares”) within six months of the date of Loan Agreement, at a price per Purchased Share not to exceed $10 and subject to the other limitations set forth therein. The Loan has a term of five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co. LLC, and Blackwells Asset Management LLC and shall bear payment-in-kind interest during the Term at a rate equal to the sum of (a) Term SOFR (as defined in the Loan Agreement) and (b) 3.00% (three hundred basis points) per annum. The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable due diligence expenses incurred on or prior to the date of the Share Ownership Agreement.
As of September 30, 2024, the Company has advanced approximately $5.8 million that has been used to purchase approximately 2.5 million shares of Braemar common stock.
Note receivable is summarized in the table below (dollars in thousands):

Line Item |  | Interest Rate |  | September 30, 2024 |  | December 31, 2023
Note receivable |  | SOFR + 3.00% |  | $ | 5,855 |  |  | $ | — |

We recognized interest income as presented in the table below (in thousands):

|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |  |  |  |
Line Item |  | 2024 |  |  |  | 2024 |  |  |  |  |  |
Interest income |  | $ | 67 |  |  |  |  | $ | 67 |  |  |  |  |  |  |

We review receivables for impairment each reporting period. Under the model, the Company estimates credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument and is required to record a credit loss expense (or reversal) in each reporting period. Our assessment of impairment is based on considerable management judgment and assumptions. No impairment charges were recorded for the three and nine months ended September 30, 2024.
9. Derivative Instruments
Interest Rate Derivatives—We are exposed to risks arising from our business operations, economic conditions and financial markets. To manage these risks, we primarily use interest rate derivatives to hedge our debt and our cash flows, which include interest rate caps. All derivatives are recorded at fair value. Payments from counterparties on in-the-money interest rate caps are recognized as realized gains on our consolidated statements of operations.
17

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table summarizes the interest rate derivatives we entered into over the applicable periods:

| Nine Months Ended September 30,
Interest rate caps:(1) | 2024 |  | 2023 |  |
Notional amount (in thousands) | $ | 824,680 |  |  | $ | 576,180 |  |  |
Strike rate low end of range | 3.50 | % |  | 3.50 | % |  |
Strike rate high end of range | 8.00 | % |  | 5.25 | % |  |
Effective date range | January 2024 - August 2024 |  | January 2023 - September 2023 |  |
Termination date range | January 2025 - August 2026 |  | October 2023 - October 2024 |  |
Total cost of interest rate caps (in thousands) | $ | 1,344 |  |  | $ | 3,981 |  |  |

_______________
(1) No instruments were designated as cash flow hedges.
Interest rate derivatives consisted of the following:

Interest rate caps: (1) | September 30, 2024 |  | December 31, 2023
Notional amount (in thousands) | $ | 1,155,280 |  |  | $ | 778,280 |
Strike rate low end of range | 3.50 | % |  | 2.00 | %
Strike rate high end of range | 8.00 | % |  | 5.25 | %
Termination date range | October 2024 - August 2026 |  | June 2024- January 2025
Aggregate principal balance on corresponding mortgage loans (in thousands) | $ | 1,074,693 |  |  | $ | 777,693 |

_______________
(1)No instruments were designated as cash flow hedges.
Warrants—On August 5, 2021, as part of the consideration paid to acquire the Cameo Beverly Hills (formerly known as the Mr. C Beverly Hills Hotel) and five adjacent luxury residences, the Company issued 500,000 warrants for the purchase of Braemar common stock with a $6.00 strike price on or after August 5, 2021 until August 5, 2024. The warrants expired worthless on August 5, 2024.
10. Fair Value Measurements
Fair Value Hierarchy—Our financial instruments measured at fair value either on a recurring or a non-recurring basis are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the marketplace as discussed below:
•Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.
•Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
•Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.
The fair value of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rose above the strike rates of the caps. Variable interest rates used in the calculation of projected receipts and payments on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (SOFR forward curves) and volatilities (Level 2 inputs). We also incorporate credit valuation adjustments (Level 3 inputs) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk.
When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when the valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties, which we consider significant (10% or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels
18

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
are determined at the end of each reporting period. In determining the fair values of our derivatives at September 30, 2024, the SOFR interest rate forward curve (Level 2 inputs) assumed a downtrend from 4.846% to 3.013% for the remaining term of our derivatives. Credit spreads (Level 3 inputs) used in determining the fair values derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates.
Investment in securities includes mortgage-backed securities. These securities are classified as available for sale and are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows and the bonds’ terms and conditions, among other things.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):

| Quoted Market Prices (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  |  |  | Total |
September 30, 2024 |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Investment in securities | $ | — |  |  | $ | 41,493 |  |  | $ | — |  |  |  |  | $ | 41,493 |  |
Derivative assets: |  |  |  |  |  |  |  |  |  |
Interest rate derivatives - caps | $ | — |  |  | $ | 480 |  |  | $ | — |  |  |  |  | $ | 480 |  | (1)
Total | $ | — |  |  | $ | 41,973 |  |  | $ | — |  |  |  |  | $ | 41,973 |  |
Liabilities |  |  |  |  |  |  |  |  |  |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |
Warrants | $ | — |  |  | $ | — |  |  | $ | — |  |  |  |  | $ | — |  | (2)
Net | $ | — |  |  | $ | 41,973 |  |  | $ | — |  |  |  |  | $ | 41,973 |  |

| Quoted Market Prices (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  |  |  | Total |
December 31, 2023 |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Derivative assets: |  |  |  |  |  |  |  |  |  |
Interest rate derivatives - caps | $ | — |  |  | $ | 2,847 |  |  | $ | — |  |  |  |  | $ | 2,847 |  | (1)
| $ | — |  |  | $ | 2,847 |  |  | $ | — |  |  |  |  | $ | 2,847 |  |
Liabilities |  |  |  |  |  |  |  |  |  |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |
Warrants | $ | — |  |  | $ | (12) |  |  | $ | — |  |  |  |  | $ | (12) |  | (2)
Net | $ | — |  |  | $ | 2,835 |  |  | $ | — |  |  |  |  | $ | 2,835 |  |

__________________
(1)Reported as “derivative assets” in our condensed consolidated balance sheets.
(2)Reported as “derivative liabilities” in our condensed consolidated balance sheets.

19

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Effect of Fair Value Measured Assets and Liabilities on Condensed Consolidated Statements of Operations
The following table summarizes the effect of fair value measured assets and liabilities on our condensed consolidated statements of operations (in thousands):

| Gain (Loss) Recognized in Income |
| Three Months Ended September 30, |  | Nine Months Ended September 30, |  |  |
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Derivative assets: |  |  |  |  |  |  |  |  |  |
Interest rate derivatives - caps | $ | (735) |  |  | $ | 69 |  | (1) | $ | 511 |  |  | $ | 645 |  |  |  |
Total | $ | (735) |  |  | $ | 69 |  |  | $ | 511 |  |  | $ | 645 |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |
Warrants | $ | — |  |  | $ | 154 |  |  | $ | 12 |  |  | $ | 273 |  |  |  |
Net | $ | (735) |  |  | $ | 223 |  |  | $ | 523 |  |  | $ | 918 |  |  |  |
Total combined |  |  |  |  |  |  |  |  |  |
Interest rate derivatives - caps | $ | (1,746) |  |  | $ | (1,944) |  |  | $ | (3,710) |  |  | $ | (5,517) |  |  |  |
Warrants | — |  |  | 154 |  |  | 12 |  |  | 273 |  |  |  |
Unrealized gain (loss) on derivatives | $ | (1,746) |  | (1) | $ | (1,790) |  | (1) | $ | (3,698) |  | (1) | $ | (5,244) |  | (1) |  |
Realized gain (loss) on interest rate caps | 1,011 |  | (1) (2) | 2,013 |  | (1) (2) | 4,221 |  | (1) (2) | 6,162 |  | (1) (2) |  |
Net | $ | (735) |  |  | $ | 223 |  |  | $ | 523 |  |  | $ | 918 |  |  |  |

________
(1)Reported in “realized and unrealized gain (loss) on derivatives” in our condensed consolidated statements of operations.
(2)Represents settled and unsettled payments from counterparties on interest rate caps.
The unrealized gain (loss) on investment in securities that was recognized as a change in other comprehensive income (loss) was $(786,000) for both the three and nine months ended September 30, 2024.
11. Summary of Fair Value of Financial Instruments
Determining the estimated fair values of certain financial instruments such as indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.
20

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):

|  | September 30, 2024 |  | December 31, 2023
|  | Carrying Value |  | Estimated Fair Value |  | Carrying Value |  | Estimated Fair Value
Financial assets measured at fair value: |  |  |  |  |  |  |  |
Investment in securities |  | $ | 41,493 |  |  | $ | 41,493 |  |  | $ | — |  |  | $ | — |
Derivative assets |  | 480 |  |  | 480 |  |  | 2,847 |  |  | 2,847 |
Financial liabilities measured at fair value: |  |  |  |  |  |  |  |
Derivative liabilities |  | $ | — |  |  | $ | — |  |  | $ | 12 |  |  | $ | 12 |
Financial assets not measured at fair value: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 168,675 |  |  | $ | 168,675 |  |  | $ | 85,599 |  |  | $ | 85,599 |
Restricted cash |  | 48,461 |  |  | 48,461 |  |  | 80,904 |  |  | 80,904 |
Accounts receivable, net |  | 32,479 |  |  | 32,479 |  |  | 39,199 |  |  | 39,199 |
Note receivable |  | 5,855 |  |  | 5,855 |  |  | — |  |  | — |
Due from third-party hotel managers |  | 19,855 |  |  | 19,855 |  |  | 17,739 |  |  | 17,739 |
Financial liabilities not measured at fair value: |  |  |  |  |  |  |  |
Indebtedness |  | $ | 1,221,844 |  |  | $ | 1,185,109 |  |  | $ | 1,171,459 |  |  | $ | 1,124,377 |
Accounts payable and accrued expenses |  | 144,868 |  |  | 144,868 |  |  | 149,867 |  |  | 149,867 |
Dividends and distributions payable |  | 9,271 |  |  | 9,271 |  |  | 9,158 |  |  | 9,158 |
Due to Ashford Inc. |  | 5,489 |  |  | 5,489 |  |  | 1,471 |  |  | 1,471 |
Due to related parties, net |  | 16 |  |  | 16 |  |  | 603 |  |  | 603 |
Due to third-party hotel managers |  | 1,509 |  |  | 1,509 |  |  | 1,608 |  |  | 1,608 |

Cash, cash equivalents and restricted cash. These financial assets have maturities of less than 90 days and most bear interest at market rates. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique.
Accounts receivable, net, due to/from related parties, net, accounts payable and accrued expenses, dividends and distributions payable, due to Ashford Inc and due to/from third-party hotel managers. The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.
Investment in securities. See note 10 for a complete description of the methodology and assumptions utilized in determining fair values.
Note receivable. The carrying amount of note receivable approximates its fair value. We estimate the fair value of the note receivable to approximate the carrying value of $5.9 million at September 30, 2024. This is considered a Level 2 valuation technique.
Derivative assets and derivative liabilities. See notes 9 and 10 for a complete description of the methodology and assumptions utilized in determining fair values.
Indebtedness, net. Fair value of indebtedness is determined using future cash flows discounted at current replacement rates for these instruments. Cash flows are determined using a forward interest rate yield curve. The current replacement rates are determined by using the U.S. Treasury yield curve or the index to which these financial instruments are tied, and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral. We estimated the fair value of the total indebtedness to be approximately 97.0% of the carrying value of $1.2 billion at September 30, 2024, and approximately 96.0% of the carrying value of $1.2 billion at December 31, 2023. These fair value estimates are considered a Level 2 valuation technique.
21

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
12. Income (Loss) Per Share
The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Net income (loss) attributable to common stockholders - basic and diluted: |  |  |  |  |  |  |  |  |
Net income (loss) attributable to the Company | $ | 12,596 |  |  | $ | (22,030) |  |  | $ | 16,960 |  |  | $ | (7,842) |  |  |
Less: dividends on preferred stock | (9,857) |  |  | (10,582) |  |  | (30,593) |  |  | (31,809) |  |  |
Less: deemed dividends on preferred stock | (4,151) |  |  | (516) |  |  | (6,175) |  |  | (3,271) |  |  |
Less: dividends on common stock | (3,326) |  |  | (3,291) |  |  | (9,977) |  |  | (9,871) |  |  |
Less: dividends on unvested performance stock units | (22) |  |  | (36) |  |  | (63) |  |  | (108) |  |  |
Less: dividends on unvested restricted shares | — |  |  | (8) |  |  | — |  |  | (25) |  |  |
Undistributed net income (loss) allocated to common stockholders | (4,760) |  |  | (36,463) |  |  | (29,848) |  |  | (52,926) |  |  |
Add back: dividends on common stock | 3,326 |  |  | 3,291 |  |  | 9,977 |  |  | 9,871 |  |  |
Distributed and undistributed net income (loss) - basic and diluted | $ | (1,434) |  |  | $ | (33,172) |  |  | $ | (19,871) |  |  | $ | (43,055) |  |  |
Weighted average common shares outstanding: |  |  |  |  |  |  |  |  |
Weighted average common shares outstanding – basic and diluted | 66,522 |  |  | 65,825 |  |  | 66,493 |  |  | 68,010 |  |  |
Income (loss) per share - basic and diluted: |  |  |  |  |  |  |  |  |
Net income (loss) allocated to common stockholders per share | $ | (0.02) |  |  | $ | (0.50) |  |  | $ | (0.30) |  |  | $ | (0.63) |  |  |

Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Net income (loss) allocated to common stockholders is not adjusted for: |  |  |  |  |  |  |  |  |
Income (loss) allocated to unvested restricted shares | $ | — |  |  | $ | 8 |  |  | $ | — |  |  | $ | 25 |  |  |
Income (loss) allocated to unvested performance stock units | 22 |  |  | 36 |  |  | 64 |  |  | 108 |  |  |
Income (loss) attributable to redeemable noncontrolling interests in operating partnership | (124) |  |  | (2,354) |  |  | (1,747) |  |  | (3,018) |  |  |
Dividends on preferred stock - Series B | 1,059 |  |  | 1,058 |  |  | 3,175 |  |  | 3,174 |  |  |
Interest expense on Convertible Senior Notes | 1,127 |  |  | 1,118 |  |  | 3,374 |  |  | 3,349 |  |  |
Dividends on preferred stock - Series E (inclusive of deemed dividends) | 11,288 |  |  | 7,959 |  |  | 28,285 |  |  | 25,851 |  |  |
Dividends on preferred stock - Series M (inclusive of deemed dividends) | 836 |  |  | 1,256 |  |  | 2,833 |  |  | 3,580 |  |  |
Total | $ | 14,208 |  |  | $ | 9,081 |  |  | $ | 35,984 |  |  | $ | 33,069 |  |  |
Weighted average diluted shares are not adjusted for: |  |  |  |  |  |  |  |  |
Effect of unvested performance stock units | 50 |  |  | 398 |  |  | 34 |  |  | 364 |  |  |
Effect of assumed conversion of operating partnership units | 6,558 |  |  | 5,258 |  |  | 6,275 |  |  | 5,470 |  |  |
Effect of assumed conversion of preferred stock - Series B | 4,116 |  |  | 4,116 |  |  | 4,116 |  |  | 4,116 |  |  |
Effect of assumed conversion of Convertible Senior Notes | 15,706 |  |  | 13,609 |  |  | 14,927 |  |  | 13,609 |  |  |
Effect of assumed conversion of preferred stock - Series E | 117,946 |  |  | 145,416 |  |  | 160,729 |  |  | 116,124 |  |  |
Effect of assumed conversion of preferred stock - Series M | 12,241 |  |  | 16,979 |  |  | 17,226 |  |  | 13,623 |  |  |
Total | 156,617 |  |  | 185,776 |  |  | 203,307 |  |  | 153,306 |  |  |

13. Redeemable Noncontrolling Interests in Operating Partnership
Redeemable noncontrolling interests in the operating partnership represent the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Braemar OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested. Each common unit may be redeemed, by the holder, for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either: (i) issued pursuant to an effective registration
22

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
statement; (ii) included in an effective registration statement providing for the resale of such common stock; or (iii) issued subject to a registration rights agreement.
LTIP units, which are issued to certain executives and employees of Ashford LLC as compensation, generally have vesting periods of three years. Additionally, certain independent members of the board of directors have elected to receive LTIP units as part of their compensation, which are fully vested upon grant. Upon reaching economic parity with common units, each vested LTIP unit can be converted by the holder into one common unit which can then be redeemed for cash or, at our election, settled in our common stock. An LTIP unit will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of our operating partnership at a time when our stock is trading at a level in excess of the price it was trading on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership; or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for our operating partnership.
The compensation committee of the board of directors of the Company may authorize the issuance of Performance LTIP units to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of Performance LTIP units that will be settled in common units of Braemar OP, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date. The performance awards will be eligible to vest, from 0% to 200% of target, based on achievement of certain performance targets over the three-year performance period. The performance criteria are based on performance conditions under the relevant literature. The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the applicable measurement date fair value of the award. The grant date fair value of the award may vary from period to period, as the number of performance grants earned may vary since the estimated probable achievement of certain performance targets may vary from period to period.
As of September 30, 2024, there were approximately 1.5 million unvested Performance LTIP units, representing 200% of the target, outstanding.
In May 2024, approximately 45,000 LTIP units were issued to independent directors, with a fair value of approximately $126,000, which vested immediately upon grant and have been expensed during the nine months ended September 30, 2024.
As of September 30, 2024, we have issued a total of approximately 3.0 million LTIP and Performance LTIP units, net of Performance LTIP cancellations. All LTIP and Performance LTIP units, other than approximately 659,000 LTIP units and 353,000 Performance LTIP units issued from March 2015 to May 2024, had reached full economic parity with, and are convertible into, common units.
The following table presents the redeemable noncontrolling interests in Braemar OP (in thousands) and the corresponding approximate ownership percentage of our operating partnership:

| September 30, 2024 |  | December 31, 2023
Redeemable noncontrolling interests in Braemar OP (in thousands) | $ | 31,336 |  |  | $ | 32,395 |
Adjustments to redeemable noncontrolling interests (1) (in thousands) | $ | 176 |  |  | $ | 66 |
Ownership percentage of operating partnership | 8.05 | % |  | 6.63 | %

____________________________________
(1) Reflects the excess of the redemption value over the accumulated historical cost.
We allocated net (income) loss to the redeemable noncontrolling interests as illustrated in the table below (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | $ | 124 |  |  | $ | 2,354 |  |  | $ | 1,747 |  |  | $ | 3,018 |  |  |
Distributions declared to holders of common units, LTIP units and Performance LTIP units | $ | 369 |  |  | $ | 361 |  |  | $ | 1,103 |  |  | $ | 1,083 |  |  |

23

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents the common units redeemed for cash (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30, |  |  |
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |
Units redeemed | — |  |  | — |  |  | — |  |  | 1,456 |  |  |  |
Cash value of common units redeemed | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 7,162 |  | (1) |  |

____________________________________
(1) Includes Mr. Monty J. Bennett’s 1.4 million common units redeemed for cash of approximately $7.0 million during February 2023.
14. Equity and Stock-Based Compensation
Common Stock Dividends—The following table summarizes the common stock dividends declared during the period (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Common stock dividends declared | $ | 3,348 |  |  | $ | 3,335 |  |  | $ | 10,040 |  |  | $ | 10,004 |  |  |

Performance Stock Units—The compensation committee of the board of directors of the Company may authorize the issuance of grants of performance stock units (“PSUs”) to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of PSUs that will be settled in shares of common stock of the Company, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date. The compensation committee utilizes a performance metric, pursuant to which, the performance awards will be eligible to vest, from 0% to 200% of target, based on achievement of certain performance targets over the three-year performance period. The performance criteria are based on performance conditions under the relevant literature and were issued to non-employees. The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the corresponding measurement date fair value of the award, which may vary from period to period, as the number of performance grants earned may vary since the estimated probable achievement of certain performance targets may vary from period to period.
Restricted Stock—We incur stock-based compensation expense in connection with restricted stock awarded to certain employees of Ashford LLC and its affiliates. We also issue common stock to certain of our independent directors, which vests immediately upon issuance.
In May 2024, approximately 45,000 shares of common stock were issued to independent directors with a fair value of approximately $126,000, which vested immediately upon grant and have been expensed during the nine months ended September 30, 2024.
8.25% Series D Cumulative Preferred Stock—The Series D Preferred Stock dividend for all issued and outstanding shares is set at $2.0625 per annum per share.
The following table summarizes dividends declared (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |  |  |
Series D Cumulative Preferred Stock | $ | 825 |  |  | $ | 825 |  |  | $ | 2,475 |  |  | $ | 2,475 |  |  |  |  |  |

Stock Repurchases—On May 3, 2024, the board of directors approved a new share repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share, having an aggregate value of up to $50 million. As of September 30, 2024, the Company has not repurchased any common stock pursuant to this program.
24

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
15. Redeemable Preferred Stock
5.50% Series B Cumulative Convertible Preferred Stock
Each share of our 5.50% Series B Cumulative Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at a conversion price of $18.70 (which represents a conversion rate of 1.3372 shares of our common stock, subject to certain adjustments). The Series B Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control. Holders of the Series B Convertible Preferred Stock have no voting rights, subject to certain exceptions. The Series B Convertible Preferred Stock dividend for all issued and outstanding shares is set at $1.375 per annum per share.
The Company may, at its option, cause the Series B Convertible Preferred Stock to be converted in whole or in part, on a pro-rata basis, into fully paid and nonassessable shares of the Company’s common stock at the conversion price, provided that the “Closing Bid Price” (as defined in the Articles Supplementary) of the Company’s common stock shall have equaled or exceeded 110% of the conversion price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion.
Additionally, the Series B Convertible Preferred Stock contains cash redemption features that consist of: 1) an optional redemption in which on or after June 11, 2020, the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends; 2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined in the Articles Supplementary), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share; and 3) a “REIT Termination Event” and “Listing Event Redemption,” in which at any time (i) a REIT Termination Event (as defined below) occurs or (ii) the Company’s common stock fails to be listed on the NYSE, NYSE American, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each, a “National Exchange”), the holder of Series B Convertible Preferred Stock shall have the right to require the Company to redeem any or all shares of Series B Convertible Preferred Stock at 103% of the liquidation preference ($25.00 per share, plus any accumulated, accrued, and unpaid dividends) in cash.
A “REIT Termination Event,” shall mean the earliest of:
(i) filing of a federal income tax return where the Company does not compute its income as a REIT;
(ii) stockholders’ approval on ceasing to be qualified as a REIT;
(iii) board of directors’ approval on ceasing to be qualified as a REIT;
(iv) board’s determination based on the advice of counsel to cease to be qualified as a REIT; or
(v) determination within the meaning of Section 1313(a) of the Code to cease to be qualified as a REIT.
Series B Convertible Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside our control. As such, the Series B Convertible Preferred Stock is classified outside of permanent equity.
The following table summarizes dividends declared (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |
Series B Convertible Preferred Stock | $ | 1,059 |  |  | $ | 1,058 |  |  | $ | 3,175 |  |  | $ | 3,174 |  |  |  |

Series E Redeemable Preferred Stock
On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of Series E Preferred Stock in a primary offering at a price of $25.00 per share. On February 21, 2023, the Company announced the closing of its Series E Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of the Series E Preferred Stock pursuant to a dividend reinvestment plan (the “DRIP”) at $25.00 per share (the “Stated Value”).
25

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Series E Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred stock, the Series D Preferred Stock and the Series M Preferred Stock (as defined below)) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.
Holders of the Series E Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of the Series E Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series E Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series E Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.
Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends (with no redemption fee). The Series E Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series E Preferred Stock into a maximum of 5.69476 shares of our common stock.
The redemption fee shall be an amount equal to:
•8.0% of the stated value of $25.00 per share (the “Stated Value”) beginning on the Original Issue Date (as defined in the Articles Supplementary) of the shares of the Series E Preferred Stock to be redeemed;
•5.0% of the Stated Value beginning on the second anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed; and
•0% of the Stated Value beginning on the third anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed.
The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption.
The Series E Preferred Stock cash dividends are as follows:
•8.00% per annum of the Stated Value beginning on the date of the first settlement of the Series E Preferred Stock (the “Date of Initial Closing”);
•7.75% per annum of the Stated Value beginning on the first anniversary from the Date of Initial Closing; and
•7.50% per annum of the Stated Value beginning on the second anniversary from the Date of Initial Closing.
Dividends are payable on a monthly basis in arrears on the 15th day of each month (or, if such payment date is not a business day, the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year.
The Company has a DRIP that allows participating holders to have their Series E Preferred Stock dividend distributions automatically reinvested in additional shares of the Series E Preferred Stock at a price of $25.00 per share.
The issuance activity of the Series E Preferred Stock is summarized below (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Series E Preferred Stock shares issued (1) | — |  |  | — |  |  | — |  |  | 3,798 |  |  |
Net proceeds (1) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 85,444 |  |  |

__________________
(1)Exclusive of shares issued under the DRIP.
26

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Series E Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside of the Company’s control. As such, the Series E Preferred Stock is classified outside of permanent equity.
At the date of issuance, the carrying amount of the Series E Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period.
The redemption value adjustment of Series E Preferred Stock is summarized below (in thousands):

| September 30, 2024 |  | December 31, 2023
Series E Preferred Stock | $ | 355,178 |  |  | $ | 377,035 |
Cumulative adjustments to Series E Preferred Stock (1) | $ | 19,315 |  |  | $ | 13,337 |

________
(1) Reflects the excess of the redemption value over the accumulated carrying value.
The following table summarizes dividends declared (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |
Series E Preferred Stock | $ | 7,137 |  |  | $ | 7,710 |  |  | $ | 22,307 |  |  | $ | 23,230 |  |  |  |

The redemption activities of Series E Preferred Stock is summarized below (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Series E Preferred Stock shares redeemed | 1,036 |  |  | 111 |  |  | 1,275 |  |  | 143 |  |  |
Redemption amount, net of redemption fees | $ | 24,629 |  |  | $ | 2,589 |  |  | $ | 30,281 |  |  | $ | 3,378 |  |  |

Series M Redeemable Preferred Stock
On April 2, 2021, the Company entered into equity distribution agreements with certain sales agents to sell, from time to time, shares of the Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). Pursuant to such equity distribution agreements, the Company offered a maximum of 20,000,000 shares of the Series M Preferred Stock (par value $0.01) in a primary offering at a price of $25.00 per share (or “Stated Value”). On February 21, 2023, the Company announced the closing of its Series M Preferred Stock offering. The Company is also offering a maximum of 8,000,000 shares of Series M Preferred Stock pursuant to the DRIP at $25.00 per share.
The Series M Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.
Holders of the Series M Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class. If and whenever dividends on any shares of Series M Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series M Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.
Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends, less a redemption fee. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid
27

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
dividends (with no redemption fee). The Series M Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon such change of control events, holders have the option to convert their shares of Series M Preferred Stock into a maximum of 5.69476 shares of our common stock.
The redemption fee shall be an amount equal to:
•1.5% of the Stated Value of $25.00 per share beginning on the Series M Original Issue Date (as defined in the Articles Supplementary) of the shares of Series M Preferred Stock to be redeemed; and
•0% of the Stated Value beginning on the first anniversary from the Series M Original Issue Date of the shares of Series M Preferred Stock to be redeemed.
The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption.
Holders of Series M Preferred Stock are entitled to receive cumulative cash dividends at the initial rate of 8.2% per annum of the Stated Value of $25.00 per share (equivalent to an annual dividend rate of $2.05 per share). Beginning one year from the date of original issuance of each share of Series M Preferred Stock and on each one-year anniversary thereafter for such share of Series M Preferred Stock, the dividend rate shall increase by 0.10% per annum; provided, however, that the dividend rate for any share of Series M Preferred Stock shall not exceed 8.7% per annum of the Stated Value.
Dividends are payable on a monthly basis and in arrears on the 15th day of each month (or, if such payment date is not a business day, on the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year.
The Company has a DRIP that allows participating holders to have their Series M Preferred Stock dividend distributions automatically reinvested in additional shares of the Series M Preferred Stock at a price of $25.00 per share.
The issuance activity of Series M Preferred Stock is summarized below (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Series M Preferred Stock shares issued (1) | — |  |  | — |  |  | — |  |  | 531 |  |  |
Net proceeds (1) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 12,869 |  |  |

__________________
(1)Exclusive of shares issued under the DRIP.
The Series M Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside the Company’s control. As such, the Series M Preferred Stock is classified outside of permanent equity.
At the date of issuance, the carrying amount of the Series M Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period.
The redemption value adjustment of Series M Preferred stock is summarized below (in thousands):

| September 30, 2024 |  | December 31, 2023
Series M Preferred Stock | $ | 39,907 |  |  | $ | 45,623 |
Cumulative adjustments to Series M Preferred Stock (1) | $ | 1,794 |  |  | $ | 1,597 |

__________________
(1) Reflects the excess of the redemption value over the accumulated carrying value.
28

BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table summarizes dividends declared (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |
Series M Preferred Stock | $ | 836 |  |  | $ | 989 |  |  | $ | 2,636 |  |  | $ | 2,930 |  |  |  |

The redemption activities of Series M Preferred Stock is summarized below (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Series M Preferred Stock shares redeemed | 28 |  |  | 51 |  |  | 241 |  |  | 56 |  |  |
Redemption amount, net of redemption fees | $ | 696 |  |  | $ | 1,268 |  |  | $ | 6,018 |  |  | $ | 1,383 |  |  |

16. 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 1/12 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
▪1/12 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):

| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |  |
Advisory services fee |  |  |  |  |  |  |  |  |  |
Base advisory fee | $ | 3,505 |  |  | $ | 3,393 |  |  | $ | 10,168 |  |  | $ | 10,700 |  |  |  |
Reimbursable expenses (1) | 3,231 |  |  | 2,028 |  |  | 8,457 |  |  | 6,092 |  |  |  |
Equity-based compensation (2) | 427 |  |  | 1,599 |  |  | 2,418 |  |  | 6,391 |  |  |  |
Incentive fee | 1,464 |  |  | — |  |  | 2,112 |  |  | — |  |  |  |
Total | $ | 8,627 |  |  | $ | 7,020 |  |  | $ | 23,155 |  |  | $ | 23,183 |  |  |  |

________
(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.
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BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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 includes 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 2, 2023, the Company entered into a 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 the 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 or refinancings on our behalf and brokerage services. For the three and nine months ended September 30, 2024, we incurred fees of $1.8 million and $2.9 million, respectively. We incurred fees from Lismore or its subsidiaries of $1.3 million and $1.5 million for the three and nine months ended September 30, 2023.
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 was 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 with the cumulative ratio of capital raised by the Parties.
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
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BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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 in the prior quarter compared to the total aggregate amount raised by the Parties through Ashford Securities for 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 first quarter of 2024, the funding requirement was revised based on the aggregate capital raised through Ashford Securities. This resulted in Braemar receiving a payment of approximately $5.9 million from Ashford Inc., which resulted in a credit to expense of approximately $5.6 million that is included in “corporate general and administrative” on the condensed consolidated statements of operations for the nine months ended September 30, 2024.
As of September 30, 2024, Braemar has funded approximately $12.9 million and has a pre-funded balance of $1.9 million that is included in “other assets” on the condensed consolidated balance sheet.
As of December 31, 2023, Braemar had funded approximately $20.9 million and had a pre-funded balance of approximately $693,000 included in “other assets” and a receivable of approximately $3.5 million included in “due to Ashford Inc., net” on the consolidated balance sheet. During the first quarter of 2024, there was also a true-up of the capital contributions in accordance with the Third Amended and Restated Contribution Agreement made through December 31, 2023, which resulted in a payment of $3.5 million from Ashford Inc.
The table below summarizes the amount Braemar has expensed related to reimbursed operating expenses of Ashford Securities (in thousands):

|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Line Item |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Corporate, general and administrative |  | $ | — |  |  | $ | 921 |  |  | $ | (5,624) |  |  | $ | 3,140 |  |  |

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). Such fees are 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 September 30, 2024, Remington Hospitality managed four of our 15 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.
17. Commitments and Contingencies
Restricted Cash—Under certain management and debt agreements for our hotel properties existing at September 30, 2024, escrow payments are required for insurance, real estate taxes and debt service. In addition, for certain properties based on the terms of the underlying debt and management agreements, we escrow 3% to 5% of gross revenues for capital improvements.
Franchise Fees—We currently have one hotel property that operates under a franchise agreement with a 25-year term. The term begins upon the completion of conversion of the Cameo Beverly Hills. Under the terms of the agreement, we will pay (i) 3% of gross rooms revenue for the preceding calendar month during the first three years of the agreement; (ii) 4% of gross
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BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
rooms revenue for the preceding calendar month during year four; and (iii) 5% of the gross rooms revenue for the preceding calendar month for the remainder of the term. As of September 30, 2024, we are currently paying 3% of gross revenues.
The table below summarizes the franchise fees incurred (in thousands):

|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Line Item |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Other hotel expenses |  | $ | 84 |  |  | $ | — |  |  | $ | 258 |  |  | $ | — |  |  |

Management Fees—Under hotel management agreements for our hotel properties existing at September 30, 2024, we pay a monthly hotel management fee equal to the greater of approximately $17,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenues, or in some cases, 3.0% to 5.0% of gross revenues, as well as annual incentive management fees, if applicable. These management agreements expire from November 2029 through December 2065, with renewal options. If we terminate a management agreement prior to its expiration, we may be liable for estimated management fees through the remaining term, liquidated damages or, in certain circumstances, we may substitute a new management agreement.
Income Taxes—We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years 2019 through 2023 remain subject to potential examination by certain federal and state taxing authorities.
Litigation—On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt-out of the class; however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt-out period has been extended until such time that discovery has concluded. In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified. After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. The Court has ordered the parties to complete a second mediation no later than January 31, 2025. While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time. As of September 30, 2024, no amounts have been accrued.
On June 8, 2022, a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines. The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and Private Attorneys General Act (“PAGA”) claims.
On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement. At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $3.5 million, to which the parties have since agreed to. The allocation to Hilton La Jolla Torrey Pines is approximately $371,000, which has been accrued as of September 30, 2024.
We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws). The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations or cash flow.
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BRAEMAR HOTELS & RESORTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain personal information. We have completed an investigation and have identified certain information that may have been exposed and notified potentially impacted individuals pursuant to applicable state guidelines. All systems have been restored. We believe that we maintain a sufficient level of insurance coverage related to such events, and the related incremental costs incurred to date are immaterial. In February of 2024, two class action lawsuits were filed, one in the U.S. District Court for the Northern District of Texas and a second in the 68th District Court for Dallas County related to the cyber incident. The lawsuit filed in the 68th District Court was subsequently dismissed and refiled in the U.S. District Court for the Northern District of Texas. On March 12, 2024, the court ordered the two cases be consolidated. The consolidated case is currently pending in the U.S. District Court for the Northern District of Texas. On May 17, 2024, we filed a Motion to Dismiss the Consolidated Class Action Complaint, which is currently pending before the Court.
Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.
18. Segment Reporting
We operate in one business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments refers to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments have similar economic characteristics and exhibit similar long-term financial performance. As of September 30, 2024 and December 31, 2023, all of our hotel properties were in the U.S. and its territories.
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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used in this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the references to “we,” “us,” “our,” the “Company” or “Braemar” refer to Braemar Hotels & Resorts Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Braemar Hospitality Limited Partnership, a Delaware limited partnership, which we refer to as “our operating partnership” or “Braemar OP.” “Our TRSs” refers to our taxable REIT subsidiaries, including Braemar TRS Corporation, a Delaware corporation, which we refer to as “Braemar TRS,” and its subsidiaries, together with the two taxable REIT subsidiaries that lease our one hotel held in a consolidated joint venture and is wholly owned by the joint venture and the U.S. Virgin Islands’ (“USVI”) taxable REIT subsidiary that owns The Ritz-Carlton St. Thomas hotel. “Ashford Trust” refers to Ashford Hospitality Trust, Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Limited Partnership, a Delaware limited partnership and Ashford Trust’s operating partnership, which we refer to as “Ashford Trust OP.” “Ashford Inc.” refers to Ashford Inc., a Nevada corporation and, as the context may require, its consolidated subsidiaries. “Ashford LLC” or our “Advisor” refers to Ashford Hospitality Advisors LLC, a Delaware limited liability company and a subsidiary of Ashford Inc. “Premier” refers to Premier Project Management LLC, a Maryland limited liability company and a subsidiary of Ashford LLC. “Remington Hospitality” refers to the same entity after the acquisition was completed resulting in Remington Lodging & Hospitality, LLC becoming a subsidiary of Ashford Inc.
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains registered trademarks that are the exclusive property of their respective owners, which are companies other than us, including Marriott International®, Hilton Worldwide®, Sofitel®, Hyatt® and Accor®.
FORWARD-LOOKING STATEMENTS
Throughout this Form 10-Q, we make forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature:
•our business and investment strategy;
•anticipated or expected purchases or sales of assets;
•our projected operating results;
•completion of any pending transactions;
•our understanding of our competition;
•projected capital expenditures; and
•the impact of technology on our operations and business.
Such forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Additionally, the following factors could cause actual results to vary from our forward-looking statements:
•the factors discussed in our Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2024 (the “2023 10-K”), including those set forth under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Properties” and other filings under the Exchange Act;
•changes in interest rates and inflation;
•macroeconomic conditions, such as a prolonged period of weak economic growth, and volatility in capital markets;
•uncertainty in the business sector and market volatility due to the 2023 failures of Silicon Valley Bank, New York Signature Bank and First Republic Bank;
•catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine and the more recent Israel-Hamas war;
•extreme weather conditions, which may cause property damage or interrupt business;
•our ability to raise sufficient capital and/or take other actions to improve our liquidity position or otherwise meet our liquidity requirements;
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•general volatility of the capital markets and the market price of our common and preferred stock;
•general business and economic conditions affecting the lodging and travel industry;
•changes in our business or investment strategy;
•availability, terms and deployment of capital;
•risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to pay dividends;
•unanticipated increases in financing and other costs, including changes in interest rates;
•changes in our industry and the markets in which we operate, interest rates, or local economic conditions;
•the degree and nature of our competition;
•actual and potential conflicts of interest with Ashford Trust, Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hospitality and Premier), Stirling Hotels & Resorts, Inc. (“Stirling Inc.”), and our executive officers and our non-independent directors;
•changes in personnel of Ashford LLC or the lack of availability of qualified personnel;
•changes in governmental regulations, accounting rules, tax rates and similar matters;
•legislative and regulatory changes, including changes to the Internal Revenue Code of 1986, as amended (the “Code”) and related rules, regulations and interpretations governing the taxation of REITs;
•limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes; and
•future sales and issuances of our common stock or other securities, which might result in dilution and could cause the price of our common stock to decline.
When considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” in Part I of our 2023 10-K and this Form 10-Q, and the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Form 10-Q. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Form 10-Q to conform these statements to actual results and performance, except as may be required by applicable law.
Overview
We are a Maryland corporation formed in April 2013 that invests primarily in high revenue per available room (“RevPAR”), luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by STR, LLC. Two times the U.S. national average was $196 for the year ended December 31, 2023. We have elected to be taxed as a REIT under the Code. We conduct our business and own substantially all of our assets through our operating partnership, Braemar OP.
We operate in the direct hotel investment segment of the hotel lodging industry. As of September 30, 2024, we owned interests in 15 hotel properties in seven states, the District of Columbia, Puerto Rico and St. Thomas, U.S. Virgin Islands with 3,807 total rooms, or 3,667 net rooms, excluding those attributable to our joint venture partner. The hotel properties in our current portfolio are predominantly located in U.S. urban markets and resort locations with favorable growth characteristics resulting from multiple demand generators. We own 14 of our hotel properties directly, and the remaining one hotel property, through an investment in a majority-owned consolidated entity.
We are advised by Ashford LLC through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.
We do not operate any of our hotel properties directly; instead, we contractually engage hotel management companies to operate them for us under management contracts. As of September 30, 2024, Remington Hospitality, a subsidiary of Ashford Inc., managed four of our 15 hotel properties. Third-party management companies managed the remaining hotel properties.
Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to, design and construction services, debt placement and related services, broker-dealer and distribution services, audio visual services, real estate advisory
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and brokerage services, insurance policies covering general liability, workers compensation and claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology and cash management services.
Mr. Monty J. Bennett, chairman and chief executive officer of Ashford Inc. and, together with Mr. Archie Bennett, Jr. (the “Bennetts”), as of September 30, 2024, hold a controlling interest in Ashford Inc. The Bennetts owned approximately 809,937 shares of Ashford Inc. common stock, which represented an approximate 38.4% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc. Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,316,632 shares of Ashford Inc. common stock, which if converted as of September 30, 2024, would have increased the Bennetts’ ownership interest in Ashford Inc. to 79.8%. The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts.
As of September 30, 2024, Mr. Monty J. Bennett, chairman of our board of directors, and his father, Mr. Archie Bennett, Jr., together owned approximately 3,116,271 shares of our common stock (including common units, long-term incentive plan (“LTIP”) units and performance LTIP units), which represented an approximate 4.2% ownership in the Company.
Recent Developments
In February 2024, the Company and Ashford Inc. approved funding up to an additional $1.0 million, in the aggregate, for OpenKey, allocated pro rata among them. On July 1, 2024, the Company funded $79,000.
On July 2, 2024, Braemar, Ashford Trust and Ashford Inc. (collectively with the Company, Ashford Trust and each of Ashford Inc.’s, the Company’s and Ashford Trust’s respective affiliates (including Stirling Hotels & Resorts, Inc.) and any entity advised by Ashford Inc., the “Company Group”) entered into a Cooperation Agreement (the “Agreement”) with Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co. LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Aintabi (collectively, the “Blackwells Parties”) regarding the withdrawal of the Blackwells Parties’ proxy campaign, dismissal of pending litigation involving the parties and certain other matters.
Pursuant to the Agreement, the Blackwells Parties have agreed to withdraw (i) the notice delivered to the Company on March 10, 2024 purporting to nominate four director candidates to the Company’s board of directors (the “Board”) and make certain other proposals and (ii) the definitive proxy statement filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 3, 2024 to solicit proxies from stockholders of the Company to vote in favor of the Blackwells Parties’ director nominees and proposals. In connection therewith, the Blackwells Parties will cease to take any further action with respect to the Company’s 2024 Annual Meeting of Stockholders, except as otherwise provided for in the Agreement.
The Blackwells Parties have also agreed to specified standstill restrictions with respect to the Company Group, which will expire on July 2, 2034. During the standstill period, the Blackwells Parties are required to (i) appear in person or by proxy at each meeting of stockholders of the members of the Company Group in which they beneficially own shares of stock and vote any Blackwells Parties’ shares then beneficially owned by them in accordance with the recommendation of the board of directors of such member of the Company Group on any proposals considered at such meeting and (ii) deliver consents or consent revocations in any action by written consent by stockholders of any member of the Company Group in which they beneficially own shares in accordance with the recommendation of the board of directors of such member of the Company Group.
The Agreement also provides for the voluntary dismissal, with prejudice, of the consolidated action previously pending in the U.S. District Court for the Northern District of Texas to which the Company, Blackwells Capital LLC and certain of their respective related parties are parties (the “Consolidated Litigation”). Pursuant to the Agreement, the Consolidated Litigation was voluntarily dismissed, with prejudice, on July 3, 2024. The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable attorneys’ fees and expenses incurred in connection with the Consolidated Litigation and related matters.
Additionally, pursuant to the Agreement, the Board was required to take steps to identify and select one additional individual to be appointed to the Board as an independent director (the “Additional Board Member”). The Board was required to promptly notify Blackwells Capital LLC of its selection of the Additional Board Member and to consider any input Blackwells Capital LLC may have with respect to the Additional Board Member. In accordance with the Cooperation Agreement, on October 4, 2024, the Board increased the number of directors of the Company from eight to nine and appointed Mr. Jay H. Shah as the Additional Board Member to serve until the Company’s next annual meeting of stockholders and until his successor is duly elected and qualified.
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The Agreement contains various other obligations and provisions applicable to the Company Group and the Blackwells Parties, including a mutual release of claims and mutual non-disparagement.
Concurrently and in connection with the Agreement, certain of the parties thereto have also entered into a Share Ownership Agreement (the “Share Ownership Agreement”) and a Loan Agreement (the “Loan Agreement”), pursuant to which agreements the Company will provide to BW Coinvest I, LLC (“Borrower”) an unsecured loan (the “Loan”). The proceeds from the Loan will be used to reimburse Borrower for 70% of the amount expended by Borrower to purchase on the open market a total of 3,500,000 shares of the Company’s common stock (the “Purchased Shares”) within six months of the date of Loan Agreement, at a price per Purchased Share not to exceed $10 and subject to the other limitations set forth therein. The Loan has a term of five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co. LLC, and Blackwells Asset Management LLC and shall bear payment-in-kind interest during the Term at a rate equal to the sum of (a) Term SOFR (as defined in the Loan Agreement) and (b) 3.00% (three hundred basis points) per annum. The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable due diligence expenses incurred on or prior to the date of the Share Ownership Agreement. As of November 6, 2024, the Company has loaned approximately $7.0 million that has been used to purchase approximately 3.0 million shares of Braemar common stock.
On July 17, 2024, we sold the Hilton La Jolla Torrey Pines pursuant to an Agreement of Purchase and Sale, entered into effective May 6, 2024, for $165 million in cash, subject to customary pro-rations and adjustments. The Company owned an indirect 75% equity interest in the hotel property. Additionally, the Company repaid the $66.6 million mortgage loan secured by the hotel property.
On August 7, 2024, the Company closed on a refinancing involving five hotels. The new loan totals $407 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029. The loan is interest only and provides for a floating interest rate of SOFR + 3.24%. As part of this financing, the Company acquired a tranche of CMBS with a par value of $42.2 million and a rate of SOFR + 5.20%. The loan is secured by five hotels: Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota, and The Ritz-Carlton St. Thomas. The new loan refinanced the $80.0 million loan secured by the Pier House Resort & Spa which had an interest rate of SOFR + 3.60% and had a final maturity date in September 2026, the $42.5 million loan secured by The Ritz-Carlton St. Thomas which had an interest rate of SOFR + 4.35% and had a final maturity date in August 2026, and the $200.0 million secured credit facility secured by The Ritz-Carlton Sarasota, Hotel Yountville, and Bardessono Hotel & Spa which had an interest rate of SOFR + 3.10% and had a final maturity date in July 2027.
The Company, Braemar OP, Braemar TRS, Ashford Inc. and Ashford Hospitality Advisors LLC (together with Ashford Inc., the “Advisor”), are parties to that certain Fifth Amended and Restated Advisory Agreement, dated as of April 23, 2018 (as amended, the “Advisory Agreement”).
The Company has a mortgage loan maturing in June 2025 with an outstanding principal balance of approximately $293 million (the “Loan”) secured by four hotel properties: The Notary Hotel; The Clancy; Sofitel Chicago Magnificent Mile; and Marriott Seattle Waterfront (the “Hotel Properties”). On August 8, 2024, the parties to the Advisory Agreement entered into a Limited Waiver Under Advisory Agreement (the “Waiver Agreement”) that provides, among other things, as follows:
(i) From August 8, 2024 until the earlier of (a) November 15, 2025 and (b) the refinancing of the Loan (the “Loan Outside Date”), the Advisor waives the operation of Section 12.4(a) of the Advisory Agreement that would permit the Advisor to terminate the Advisory Agreement occurring solely as a result from the sale or disposition of one or more of the Hotel Properties as a result of a mortgage foreclosure, deed-in-lieu of mortgage foreclosure, mezzanine loan foreclosure or an assignment in-lieu of a mezzanine loan foreclosure following the failure of the Company to pay, upon the maturity of the Loan, all amounts due and payable thereunder (the “Limited Waiver”);
(ii) Upon the satisfaction of certain conditions, the Company may request the Advisor agree to amend the Waiver Agreement to extend the Loan Outside Date for a period not to exceed ninety (90) days from November 15, 2025 and if the Advisor agrees to such amendment, the Advisor shall not be entitled to any further consideration in respect thereof;
(iii) If the members of the Board of Directors of the Company (the “Board”) change such that members who constitute the Board as of August 8, 2024 (the “Incumbent Board”) no longer constitute at least a majority of the Board (other than those whose election to the Board is approved or recommended to stockholders of the Company by a vote of at least a majority of the Incumbent Board), the Limited Waiver shall be null and void ab initio (but the consideration provided by the Company to the Advisor as described in item (iv) below shall remain in force); and
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(iv) In exchange for the Limited Waiver and the other agreements provided by the Advisor in the Waiver Agreement, the Company agrees to pay the Advisor an amount equal to the Advisor’s obligation under the Advisor’s current employment agreement with Richard J. Stockton, the Company’s President and Chief Executive Officer (the “Stockton Employment Agreement”), to pay Mr. Stockton a multiple of his Base Salary (as defined in the Stockton Employment Agreement) that becomes payable by the Advisor to Mr. Stockton as the result of the occurrence of certain events as more fully described in the Waiver Agreement.
Key Indicators of Operating Performance
We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP, as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include:
•Occupancy. Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period.
•ADR. ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate.
•RevPAR. RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs. RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees.
RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increased other operating department revenue and expense. Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs.
Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue is dictated by demand (as measured by occupancy), pricing (as measured by ADR) and our available supply of hotel rooms.
We also use funds from operations (“FFO”), Adjusted FFO, earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”) and Adjusted EBITDAre as measures of the operating performance of our business. See “Non-GAAP Financial Measures.”
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RESULTS OF OPERATIONS
Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023
The following table summarizes changes in key line items from our condensed consolidated statements of operations for three months ended September 30, 2024 and 2023 (in thousands except percentages):

| Three Months Ended September 30, |  | Favorable (Unfavorable)
| 2024 |  | 2023 |  | $ Change |  | % Change
Revenue |  |  |  |  |  |  |
Rooms | $ | 92,427 |  |  | $ | 100,738 |  |  | $ | (8,311) |  |  | (8.3) | %
Food and beverage | 34,781 |  |  | 38,537 |  |  | (3,756) |  |  | (9.7) |
Other | 21,190 |  |  | 20,526 |  |  | 664 |  |  | 3.2 |
Total revenue | 148,398 |  |  | 159,801 |  |  | (11,403) |  |  | (7.1) |
Expenses |  |  |  |  |  |  |
Hotel operating expenses: |  |  |  |  |  |  |
Rooms | 25,548 |  |  | 25,899 |  |  | 351 |  |  | 1.4 |
Food and beverage | 31,998 |  |  | 32,750 |  |  | 752 |  |  | 2.3 |
Other expenses | 51,300 |  |  | 52,725 |  |  | 1,425 |  |  | 2.7 |
Management fees | 4,869 |  |  | 5,076 |  |  | 207 |  |  | 4.1 |
Total hotel operating expenses | 113,715 |  |  | 116,450 |  |  | 2,735 |  |  | 2.3 |
Property taxes, insurance and other | 9,985 |  |  | 10,471 |  |  | 486 |  |  | 4.6 |
Depreciation and amortization | 25,078 |  |  | 22,703 |  |  | (2,375) |  |  | (10.5) |
Advisory services fee | 8,627 |  |  | 7,020 |  |  | (1,607) |  |  | (22.9) |
Corporate general and administrative | 8,874 |  |  | 2,506 |  |  | (6,368) |  |  | (254.1) |
Total expenses | 166,279 |  |  | 159,150 |  |  | (7,129) |  |  | (4.5) |
Gain (loss) on disposition of assets and hotel property | 88,210 |  |  | — |  |  | 88,210 |  |  |
Operating income (loss) | 70,329 |  |  | 651 |  |  | 69,678 |  |  | 10,703.2 |
Equity in earnings (loss) of unconsolidated entity | (80) |  |  | (60) |  |  | (20) |  |  | (33.3) |
Interest income | 2,660 |  |  | 986 |  |  | 1,674 |  |  | 169.8 |
Other income (expense) | — |  |  | 293 |  |  | (293) |  |  | (100.0) |
Interest expense and amortization of loan costs | (27,911) |  |  | (23,306) |  |  | (4,605) |  |  | (19.8) |
Write-off of loan costs and exit fees | (5,292) |  |  | (2,588) |  |  | (2,704) |  |  | (104.5) |
Realized and unrealized gain (loss) on derivatives | (735) |  |  | 223 |  |  | (958) |  |  | (429.6) |
Income (loss) before income taxes | 38,971 |  |  | (23,801) |  |  | 62,772 |  |  | 263.7 |
Income tax (expense) benefit | 864 |  |  | 1,190 |  |  | (326) |  |  | 27.4 |
Net income (loss) | 39,835 |  |  | (22,611) |  |  | 62,446 |  |  | (276.2) |
(Income) loss attributable to noncontrolling interest in consolidated entities | (27,363) |  |  | (1,773) |  |  | (25,590) |  |  | (1,443.3) |
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | 124 |  |  | 2,354 |  |  | (2,230) |  |  | (94.7) |
Net income (loss) attributable to the Company | $ | 12,596 |  |  | $ | (22,030) |  |  | $ | 34,626 |  |  | 157.2 | %

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All hotel properties owned for the three months ended September 30, 2024 and 2023 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the three months ended September 30, 2024 and 2023. The hotel property listed below is not a comparable hotel property for the periods indicated and all other hotel properties are considered comparable hotel properties. The following disposition affects reporting comparability related to our condensed consolidated financial statements:

Hotel Property |  | Location |  | Type |  | Date
Hilton La Jolla Torrey Pines |  | La Jolla, California |  | Disposition |  | July 17, 2024

The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the three months ended September 30, 2024 and 2023:

| Three Months Ended September 30,
| 2024 |  | 2023
Occupancy | 68.50 | % |  | 68.37 | %
ADR (average daily rate) | $ | 376.20 |  |  | $ | 379.97 |
RevPAR (revenue per available room) | $ | 257.70 |  |  | $ | 259.78 |
Rooms revenue (in thousands) | $ | 92,427 |  |  | $ | 100,738 |
Total hotel revenue (in thousands) | $ | 148,398 |  |  | $ | 159,801 |

The following table illustrates the key performance indicators of the 15 hotel properties that were owned for the full three months ended September 30, 2024 and 2023:

| Three Months Ended September 30,
| 2024 |  | 2023
Occupancy | 68.22 | % |  | 66.72 | %
ADR (average daily rate) | $ | 378.80 |  |  | $ | 393.48 |
RevPAR (revenue per available room) | $ | 258.41 |  |  | $ | 262.54 |
Rooms revenue (in thousands) | $ | 91,053 |  |  | $ | 92,290 |
Total hotel revenue (in thousands) | $ | 146,349 |  |  | $ | 146,114 |

Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $34.6 million, from a net loss of $22.0 million for the three months ended September 30, 2023 (the “2023 quarter”) to net income of $12.6 million for the three months ended September 30, 2024 (the “2024 quarter”), as a result of the factors discussed below.
Rooms Revenue. Rooms revenue decreased $8.3 million, or 8.3%, to $92.4 million during the 2024 quarter compared to the 2023 quarter. During the 2024 quarter, we experienced a 13 basis point increase in occupancy and a 1.0% decrease in room rates.
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Fluctuations in rooms revenue between the 2024 quarter and the 2023 quarter are a result of the changes in occupancy and ADR between the 2024 quarter and the 2023 quarter as reflected in the table below (dollars in thousands):

Hotel Property |  | Favorable (Unfavorable) |  |  |  |
| Rooms Revenue |  | Occupancy (change in bps) |  | ADR (change in %) |  |  |  |
Comparable |  |  |  |  |  |  |  |  |  |
Capital Hilton (2) |  | $ | 1,447 |  |  | 628 |  |  | 6.6 | % |  |  |  |
Marriott Seattle Waterfront |  | 770 |  |  | 375 |  |  | 2.7 | % |  |  |  |
The Notary Hotel |  | 961 |  |  | 798 |  |  | 2.0 | % |  |  |  |
The Clancy |  | (1,371) |  |  | (949) |  |  | (4.2) | % |  |  |  |
Sofitel Chicago Magnificent Mile |  | 1,302 |  |  | 396 |  |  | 11.2 | % |  |  |  |
Pier House Resort & Spa |  | (770) |  |  | (472) |  |  | (11.2) | % |  |  |  |
The Ritz-Carlton St. Thomas (1) |  | (1,578) |  |  | (524) |  |  | (11.4) | % |  |  |  |
Park Hyatt Beaver Creek Resort & Spa |  | 125 |  |  | 252 |  |  | (0.9) | % |  |  |  |
Hotel Yountville |  | (647) |  |  | (701) |  |  | (7.9) | % |  |  |  |
The Ritz-Carlton Sarasota (2) |  | 266 |  |  | 20 |  |  | 4.1 | % |  |  |  |
Bardessono Hotel and Spa |  | (532) |  |  | (651) |  |  | (2.3) | % |  |  |  |
The Ritz-Carlton Lake Tahoe (1) (2) |  | 838 |  |  | 927 |  |  | (2.3) | % |  |  |  |
Cameo Beverly Hills |  | (284) |  |  | 239 |  |  | (13.7) | % |  |  |  |
The Ritz-Carlton Reserve Dorado Beach |  | (1,695) |  |  | (815) |  |  | (6.9) | % |  |  |  |
Four Seasons Resort Scottsdale |  | (69) |  |  | (40) |  |  | (0.9) | % |  |  |  |
Total |  | $ | (1,237) |  |  | 150 |  |  | (3.7) | % |  |  |  |
Non Comparable |  |  |  |  |  |  |  |  |  |
Hilton La Jolla Torrey Pines |  | (7,074) |  |  | (3) |  |  | (6.4) | % |  |  |  |

________
(1)This hotel was under renovation during the 2024 quarter.
(2)This hotel was under renovation during the 2023 quarter.
Food and Beverage Revenue. Food and beverage revenue decreased $3.8 million, or 9.7%, to $34.8 million during the 2024 quarter compared to the 2023 quarter. This decrease is attributable to a decrease of $1.9 million at nine comparable hotel properties and a decrease of $3.2 million at the Hilton La Jolla Torrey Pines as a result of its sale on July 17, 2024. These decreases were partially offset by an aggregate increase of $1.3 million at The Ritz-Carlton St. Thomas, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, Pier House Resort & Spa and Hotel Yountville.
Other Hotel Revenue. Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, increased $664,000, or 3.2%, to $21.2 million during the 2024 quarter compared to the 2023 quarter. This increase is attributable to an aggregate increase in other hotel revenue of $2.6 million at 11 comparable hotel properties, partially offset by an aggregate decrease of $583,000 at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton St. Thomas, Park Hyatt Beaver Creek Resort & Spa, and Pier House Resort & Spa, as well as a decrease of $1.4 million at Hilton La Jolla Torrey Pines.
Rooms Expense. Rooms expense decreased $351,000, or 1.4%, to $25.5 million in the 2024 quarter compared to the 2023 quarter. This decrease is primarily attributable to an aggregate decrease of $665,000 at five comparable hotel properties as well as a decrease of $1.1 million at Hilton La Jolla Torrey Pines, partially offset by an aggregate increase of $1.4 million at The Ritz-Carlton Lake Tahoe, Capital Hilton, Marriott Seattle Waterfront, The Notary Hotel, Sofitel Chicago Magnificent Mile, Park Hyatt Beaver Creek Resort & Spa, The Ritz-Carlton St. Thomas, Cameo Beverly Hills, Four Seasons Resort Scottsdale, and Pier House Resort & Spa.
Food and Beverage Expense. Food and beverage expense decreased $752,000, or 2.3%, to $32.0 million during the 2024 quarter compared to the 2023 quarter. This decrease is attributable to an aggregate decrease of $306,000 at six comparable hotel properties as well as a decrease of $1.7 million at Hilton La Jolla Torrey Pines, partially offset by an aggregate increase of $1.2 million at the Marriott Seattle Waterfront, The Ritz-Carlton St. Thomas, Capital Hilton, The Ritz-Carlton Sarasota, Sofitel Chicago Magnificent Mile, Park Hyatt Beaver Creek Resort & Spa, The Notary Hotel, The Clancy, and Pier House Resort & Spa.
Other Operating Expenses. Other operating expenses decreased $1.4 million, or 2.7%, to $51.3 million in the 2024 quarter compared to the 2023 quarter. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.
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We experienced an increase of $219,000 in direct expenses and a decrease of $1.6 million in indirect expenses and incentive management fees in the 2024 quarter as compared to the 2023 quarter. Direct expenses were 4.9% of total hotel revenue in the 2024 quarter and 4.4% in the 2023 quarter.
The decrease in indirect expenses comprises decreases in: (i) general and administrative costs of $540,000 comprising an aggregate increase of $71,000 at our 15 comparable hotel properties and a decrease of $611,000 at the one disposed hotel property; (ii) repairs and maintenance of $109,000 comprising an aggregate increase of $147,000 at our 15 comparable hotel properties and a decrease of $256,000 at the one disposed hotel property; (iii) lease expense of $903,000 comprising an aggregate increase of $60,000 at our 15 comparable hotel properties and a decrease of $963,000 at the one disposed hotel property; (iv) incentive management fees of $252,000 comprising an aggregate decrease of $140,000 at our 15 comparable hotel properties and a decrease of $112,000 at the one disposed hotel property; and (v) energy costs of $293,000 comprising an aggregate increase of $185,000 at our 15 comparable hotel properties and a decrease of $478,000 at the one disposed hotel property. The decreases were partially offset by an increase in marketing costs of $448,000 comprising an aggregate increase of $1.0 million at our 15 comparable hotel properties and a decrease of $600,000 at the one disposed hotel property.
Management Fees. Base management fees decreased $207,000, or 4.1%, to $4.9 million in the 2024 quarter compared to the 2023 quarter. Base management fees decreased by $249,000 at seven comparable hotel properties and by $349,000 at the one disposed hotel property. These decreases were partially offset by an aggregate increase of $391,000 at The Notary Hotel, Capital Hilton, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, The Ritz-Carlton Sarasota, Four Seasons Resort Scottsdale, and Park Hyatt Beaver Creek Resort & Spa.
Property Taxes, Insurance and Other. Property taxes, insurance and other decreased $486,000, or 4.6%, to $10.0 million in the 2024 quarter compared to the 2023 quarter. The decrease is primarily attributable to an aggregate decrease of approximately $1.1 million at eight comparable hotel properties as well as a decrease of $634,000 at the one disposed hotel property. These increases were partially offset by an aggregate increase of approximately $1.2 million primarily at the Sofitel Chicago Magnificent Mile, The Clancy, Cameo Beverly Hills, Marriott Seattle Waterfront, Four Seasons Resort Scottsdale, Capital Hilton, and Hotel Yountville.
Depreciation and Amortization. Depreciation and amortization increased $2.4 million, or 10.5%, to $25.1 million in the 2024 quarter compared to the 2023 quarter. There was an aggregate increase of $4.3 million at 12 comparable hotel properties, partially offset by an aggregate decrease of $1.0 million at The Notary Hotel, The Clancy, and Pier House Resort & Spa, primarily due to fully depreciated assets, as well as a decrease of $873,000 at the one disposed hotel property.
Advisory Services Fee. Advisory services fee increased $1.6 million, or 22.9%, to $8.6 million in the 2024 quarter compared to the 2023 quarter due to increases of $1.5 million in the incentive fee, $1.2 million in reimbursable expenses, and $112,000 in the base advisory fee, partially offset by a decrease of $1.2 million in equity-based compensation.
In the 2024 quarter, we recorded an advisory services fee of $8.6 million, which included a base advisory fee of $3.5 million, reimbursable expenses of $3.2 million, incentive fee of $1.5 million and equity-based compensation of $427,000.
In the 2023 quarter, we recorded an advisory services fee of $7.0 million, which included a base advisory fee of $3.4 million, reimbursable expenses of $2.0 million and $1.6 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.
Corporate General and Administrative. Corporate general and administrative expense was $8.9 million in the 2024 quarter as compared to $2.5 million in the 2023 quarter. The increase in corporate general and administrative expense is due to increases of professional fees of $776,000, miscellaneous expenses of $415,000, public company costs of $97,000 and reimbursed legal costs of $6.0 million recorded in the 2024 quarter, partially offset by a decrease of reimbursed operating expenses of Ashford Securities of $921,000.
Gain (loss) on disposition of assets and hotel property. In the 2024 quarter, we recorded a gain of approximately $88.2 million related to the sale of Hilton La Jolla Torrey Pines. There was no such gain (loss) recorded for 2023 quarter.
Equity in Earnings (Loss) of Unconsolidated Entity. In the 2024 quarter and 2023 quarter, we recorded equity in loss of unconsolidated entity of $80,000 and $60,000, respectively, related to our investment in OpenKey.
Interest Income. Interest income was $2.7 million and $1.0 million in the 2024 quarter and 2023 quarter, respectively. The increase in interest income in the 2024 quarter was primarily attributable to higher cash balances in the 2024 quarter compared to the 2023 quarter as well as interest income associated with a tranche of CMBS included in investment in securities.
Other Income (Expense). In the 2023 quarter, we recorded $293,000 of miscellaneous income.
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Interest Expense and Amortization of Loan Costs. Interest expense and amortization of loan costs increased $4.6 million, or 19.8%, to $27.9 million in the 2024 quarter compared to the 2023 quarter. This increase is primarily due to higher interest expense from higher average interest rates. The average SOFR rates for the 2024 quarter and the 2023 quarter were 5.17% and 5.08%, respectively.
Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $5.3 million in the 2024 quarter, primarily related to various loan refinances and modifications. Write-off of loan costs and exit fees was $2.6 million in the 2023 quarter, primarily related to various loan modifications and costs associated with the $200 million secured credit facility.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized loss on derivatives of $735,000 for 2024 quarter consisted of an unrealized loss on interest rate caps of approximately $1.7 million, partially offset by a realized gain of $1.0 million associated with payments received from counterparties on in-the-money interest rate caps.
Realized and unrealized gain on derivatives of $223,000 for 2023 quarter consisted of an unrealized gain on warrants of approximately $154,000 and a realized gain of $2.0 million associated with payments received from counterparties on in-the-money interest rate caps. These gains were partially offset by an unrealized loss on interest rate caps of approximately $1.9 million.
Income Tax (Expense) Benefit. Income tax benefit decreased $326,000, from $1.2 million in the 2023 quarter to $864,000 in the 2024 quarter. This decrease was primarily due to an increase in the valuation allowance on certain of our TRS deferred tax assets in the 2024 quarter compared to the 2023 quarter.
(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities. Our noncontrolling interest partner in consolidated entities was allocated income of $27.4 million and $1.8 million in the 2024 quarter and the 2023 quarter, respectively. The allocated income for the 2024 quarter includes our partner’s share of gain on the sale of the Hilton La Jolla Torrey Pines. At September 30, 2024, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity. At September 30, 2023, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $124,000 and $2.4 million in the 2024 quarter and the 2023 quarter, respectively. Redeemable noncontrolling interests in Braemar OP represented ownership interests of 8.05% and 6.63% as of September 30, 2024 and 2023, respectively.
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Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
The following table summarizes changes in key line items from our condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 (in thousands except percentages):

| Nine Months Ended September 30, |  | Favorable (Unfavorable)
| 2024 |  | 2023 |  | $ Change |  | % Change
Revenue |  |  |  |  |  |  |
Rooms | $ | 347,206 |  |  | $ | 355,402 |  |  | $ | (8,196) |  |  | (2.3) | %
Food and beverage | 135,891 |  |  | 138,541 |  |  | (2,650) |  |  | (1.9) |
Other | 71,967 |  |  | 67,866 |  |  | 4,101 |  |  | 6.0 |
Total hotel revenue | 555,064 |  |  | 561,809 |  |  | (6,745) |  |  | (1.2) |
Expenses |  |  |  |  |  |  |
Hotel operating expenses: |  |  |  |  |  |  |
Rooms | 81,288 |  |  | 79,962 |  |  | (1,326) |  |  | (1.7) |
Food and beverage | 109,379 |  |  | 108,854 |  |  | (525) |  |  | (0.5) |
Other expenses | 169,531 |  |  | 171,317 |  |  | 1,786 |  |  | 1.0 |
Management fees | 17,913 |  |  | 17,661 |  |  | (252) |  |  | (1.4) |
Total hotel operating expenses | 378,111 |  |  | 377,794 |  |  | (317) |  |  | (0.1) |
Property taxes, insurance and other | 30,740 |  |  | 27,983 |  |  | (2,757) |  |  | (9.9) |
Depreciation and amortization | 75,192 |  |  | 67,791 |  |  | (7,401) |  |  | (10.9) |
Advisory services fee | 23,155 |  |  | 23,183 |  |  | 28 |  |  | 0.1 |
Corporate general and administrative | 11,105 |  |  | 9,222 |  |  | (1,883) |  |  | (20.4) |
Total expenses | 518,303 |  |  | 505,973 |  |  | (12,330) |  |  | (2.4) |
Gain (loss) on disposition of assets and hotel property | 88,210 |  |  | — |  |  | 88,210 |  |  |
Operating income (loss) | 124,971 |  |  | 55,836 |  |  | 69,135 |  |  | 123.8 |
Equity in earnings (loss) of unconsolidated entity | (214) |  |  | (208) |  |  | (6) |  |  | (2.9) |
Interest income | 4,528 |  |  | 5,389 |  |  | (861) |  |  | (16.0) |
Other income (expense) | — |  |  | 293 |  |  | (293) |  |  | (100.0) |
Interest expense and amortization of discounts and loan costs | (81,687) |  |  | (69,779) |  |  | (11,908) |  |  | (17.1) |
Write-off of loan costs and exit fees | (6,095) |  |  | (2,848) |  |  | (3,247) |  |  | (114.0) |
Gain (loss) on extinguishment of debt | (22) |  |  | 2,318 |  |  | (2,340) |  |  | (100.9) |
Realized and unrealized gain (loss) on derivatives | 523 |  |  | 918 |  |  | (395) |  |  | (43.0) |
Income (loss) before income taxes | 42,004 |  |  | (8,081) |  |  | 50,085 |  |  | 619.8 |
Income tax (expense) benefit | (474) |  |  | (1,064) |  |  | 590 |  |  | 55.5 |
Net income (loss) | 41,530 |  |  | (9,145) |  |  | 50,675 |  |  | 554.1 |
(Income) loss attributable to noncontrolling interest in consolidated entities | (26,317) |  |  | (1,715) |  |  | (24,602) |  |  | (1,434.5) |
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | 1,747 |  |  | 3,018 |  |  | (1,271) |  |  | (42.1) |
Net income (loss) attributable to the Company | $ | 16,960 |  |  | $ | (7,842) |  |  | $ | 24,802 |  |  | 316.3 | %

All hotel properties owned for the nine months ended September 30, 2024 and 2023 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the nine months ended September 30, 2024 and 2023. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following disposition affects reporting comparability related to our condensed consolidated financial statements:

Hotel Property |  | Location |  | Type |  | Date
Hilton La Jolla Torrey Pines |  | La Jolla, California |  | Disposition |  | July 17, 2024

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The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the nine months ended September 30, 2024 and 2023:

| Nine Months Ended September 30,
| 2024 |  | 2023
Occupancy | 68.91 | % |  | 68.06 | %
ADR (average daily rate) | $ | 446.95 |  |  | $ | 453.87 |
RevPAR (revenue per available room) | $ | 308.00 |  |  | $ | 308.88 |
Rooms revenue (in thousands) | $ | 347,206 |  |  | $ | 355,402 |
Total hotel revenue (in thousands) | $ | 555,064 |  |  | $ | 561,809 |

The following table illustrates the key performance indicators of the 15 hotel properties that were owned for the full nine months ended September 30, 2024 and 2023:

| Nine Months Ended September 30,
| 2024 |  | 2023
Occupancy | 68.16 | % |  | 66.77 | %
ADR (average daily rate) | $ | 463.81 |  |  | $ | 478.22 |
RevPAR (revenue per available room) | $ | 316.13 |  |  | $ | 319.31 |
Rooms revenue (in thousands) | $ | 331,705 |  |  | $ | 333,050 |
Total hotel revenue (in thousands) | $ | 527,163 |  |  | $ | 523,840 |

Net Income Attributable to the Company. Net income (loss) attributable to the Company changed $24.8 million from a net loss of $7.8 million for the nine months ended September 30, 2023 (the “2023 period”) to net income of $17.0 million for the nine months ended September 30, 2024 (the “2024 period”), as a result of the factors discussed below.
Rooms Revenue. Rooms revenue decreased $8.2 million to $347.2 million during the 2024 period compared to the 2023 period. During the 2024 period, we experienced a 85 basis point increase in occupancy and a decrease of 1.5% in room rates compared to the 2023 period.
Fluctuations in rooms revenue between the 2024 period and the 2023 period are a result of the changes in occupancy and ADR between the 2024 period and the 2023 period as reflected in the table below (dollars in thousands):

Hotel Property |  | Favorable (Unfavorable) |
| Rooms Revenue |  | Occupancy (change in bps) |  | ADR (change in %) |
Comparable |  |  |  |  |  |  |
Capital Hilton (1) (2) |  | $ | 3,881 |  |  | 471 |  |  | 5.0 | % |
Marriott Seattle Waterfront |  | 1,601 |  |  | 193 |  |  | 3.9 | % |
The Notary Hotel |  | 1,936 |  |  | 501 |  |  | 1.7 | % |
The Clancy |  | (1,307) |  |  | (299) |  |  | (1.5) | % |
Sofitel Chicago Magnificent Mile |  | 1,718 |  |  | 238 |  |  | 5.0 | % |
Pier House Resort & Spa |  | (1,240) |  |  | (308) |  |  | (3.1) | % |
The Ritz-Carlton St. Thomas |  | (2,378) |  |  | (262) |  |  | (3.0) | % |
Park Hyatt Beaver Creek Resort & Spa |  | (989) |  |  | 144 |  |  | (7.9) | % |
Hotel Yountville |  | (809) |  |  | 3 |  |  | (9.1) | % |
The Ritz-Carlton Sarasota (1) (2) |  | 769 |  |  | 285 |  |  | (2.1) | % |
Bardessono Hotel and Spa (1) |  | (1,439) |  |  | (482) |  |  | (4.9) | % |
The Ritz-Carlton Lake Tahoe (1) (2) |  | (933) |  |  | (270) |  |  | — | % |
Cameo Beverly Hills |  | (1,784) |  |  | (498) |  |  | (13.9) | % |
The Ritz-Carlton Reserve Dorado Beach |  | (1,069) |  |  | (311) |  |  | 2.1 | % |
Four Seasons Resort Scottsdale |  | 698 |  |  | 634 |  |  | (10.1) | % |
Total |  | $ | (1,345) |  |  | 139 |  |  | (3.0) | % |
Non-comparable |  |  |  |  |  |  |
Hilton La Jolla Torrey Pines |  | (6,851) |  |  | (148) |  |  | (2.6) | % |

________
(1)This hotel was under renovation during the 2024 period.
(2)This hotel was under renovation during the 2023 period.
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Food and Beverage Revenue. Food and beverage revenue decreased $2.7 million, or 1.9%, to $135.9 million during the 2024 period compared to the 2023 period. We experienced an aggregate decrease in food and beverage revenue of $6.1 million at seven comparable hotel properties as well as a decrease of $1.7 million at Hilton La Jolla Torrey Pines. These decreases were partially offset by an aggregate increase of approximately $5.2 million at Four Seasons Resort Scottsdale, The Ritz-Carlton St. Thomas, The Notary Hotel, Sofitel Chicago Magnificent Mile, Marriott Seattle Waterfront, The Clancy, Hotel Yountville, and Pier House Resort & Spa.
Other Hotel Revenue. Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, increased $4.1 million, or 6.0%, to $72.0 million during the 2024 period compared to the 2023 period. This increase is attributable to higher other hotel revenue of $6.8 million at 12 comparable hotel properties. These increases were partially offset by an aggregate decrease of approximately $1.3 million at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton Lake Tahoe, and The Ritz-Carlton St. Thomas, as well as a decrease of $1.5 million at Hilton La Jolla Torrey Pines.
Rooms Expense. Rooms expense increased $1.3 million, or 1.7%, to $81.3 million in the 2024 period compared to the 2023 period. This increase is attributable to an aggregate increase in rooms expense of $2.9 million at nine comparable hotel properties. These increases were partially offset by an aggregate decrease of approximately $669,000 at the Hotel Yountville, The Ritz-Carlton St. Thomas, The Clancy, Park Hyatt Beaver Creek Resort & Spa, Bardessono Hotel and Spa, and Cameo Beverly Hills, as well as a decrease of $951,000 at Hilton La Jolla Torrey Pines.
Food and Beverage Expense. Food and beverage expense increased $525,000, or 0.5%, to $109.4 million during the 2024 period compared to the 2023 period. This increase is attributable to higher food and beverage expense of $3.9 million at ten comparable hotel properties. These increases were partially offset by an aggregate decrease of approximately $2.2 million at The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, Bardessono Hotel and Spa, Park Hyatt Beaver Creek Resort & Spa, and The Ritz-Carlton Reserve Dorado Beach, as well as a decrease of $1.2 million at Hilton La Jolla Torrey Pines.
Other Operating Expenses. Other operating expenses decreased $1.8 million, or 1.0%, to $169.5 million in the 2024 period compared to the 2023 period. Other operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.
We experienced an increase of $808,000 in direct expenses and a decrease of $2.6 million in indirect expenses and incentive management fees in the 2024 period compared to the 2023 period. Direct expenses were 4.5% of total hotel revenue in the 2024 period and 4.3% in the 2023 period.
The increase in direct expenses is associated with higher direct expenses of approximately $1.5 million at eight comparable hotel properties. These increases were partially offset by lower direct expenses of $434,000 at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, Hotel Yountville, The Clancy, The Notary Hotel, and Capital Hilton, as well as $238,000 at Hilton La Jolla Torrey Pines.
The decrease in indirect expenses comprises decreases in: (i) incentive management fees of $1.4 million comprising an aggregate decrease of $1.4 million at our 15 comparable hotel properties and an increase of $3,000 at the one disposed hotel property; (ii) lease expense of $1.4 million comprising an aggregate decrease of $35,000 at our 15 comparable hotel properties and a decrease of $1.3 million at the one disposed hotel property; (iii) general and administrative costs of $1.1 million comprising an aggregate decrease of $536,000 at our 15 comparable hotel properties and a decrease of $529,000 at the one disposed hotel property; and (iv) energy costs of $812,000 comprising an aggregate decrease of $318,000 at our 15 comparable hotel properties and a decrease of $494,000 at the one disposed hotel property. These decreases were partially offset by increases in: (i) repairs and maintenance of $1.0 million comprising an aggregate increase of $1.2 million at our 15 comparable hotel properties and a decrease of $206,000 at the one disposed hotel property; and (ii) marketing costs of $989,000 comprising an aggregate increase of $1.6 million at our 15 comparable hotel properties and a decrease of $583,000 at the one disposed hotel property.
Management Fees. Base management fees increased $252,000, or 1.4%, to $17.9 million in the 2024 period compared to the 2023 period. Management fees increased $1.0 million at six comparable hotel properties. These increases were partially offset by an aggregate decrease of $486,000 at The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton St. Thomas, Bardessono Hotel and Spa, The Clancy, Pier House Resort & Spa, Park Hyatt Beaver Creek Resort & Spa, and Hotel Yountville, as well as a decrease of $302,000 at Hilton La Jolla Torrey Pines.
Property Taxes, Insurance and Other. Property taxes, insurance and other increased $2.8 million, or 9.9%, to $30.7 million in the 2024 period compared to the 2023 period. This increase is primarily attributable to an increase of $2.4 million at the Sofitel Chicago Magnificent Mile related to a property tax refund received in the 2023 quarter and an aggregate increase of
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$2.6 million at 12 hotel properties. These increases were partially offset by an aggregate decrease of approximately $1.8 million at two hotel properties, as well as a decrease of $417,000 at Hilton La Jolla Torrey Pines.
Depreciation and Amortization. Depreciation and amortization increased $7.4 million, or 10.9%, to $75.2 million for the 2024 period compared to the 2023 period. This increase is comprised of an aggregate increase of $11.0 million at 11 comparable hotel properties. These increases were partially offset by an aggregate decrease of $2.8 million at The Notary Hotel, The Clancy, Pier House Resort & Spa, and Sofitel Chicago Magnificent Mile, primarily due to fully depreciated assets, as well as a decrease of $795,000 at Hilton La Jolla Torrey Pines.
Advisory Services Fee. Advisory services fee decreased $28,000, or 0.1%, to $23.2 million in the 2024 period compared to the 2023 period due to lower equity-based compensation of $4.0 million and base advisory fee of $532,000, partially offset by higher reimbursable expenses of $2.4 million and a higher incentive fee of $2.1 million.
In the 2024 period, we recorded an advisory services fee of $23.2 million, which included a base advisory fee of $10.2 million, reimbursable expenses of $8.5 million, $2.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and an incentive fee of $2.1 million.
In the 2023 period, we recorded an advisory services fee of $23.2 million, which included a base advisory fee of $10.7 million, $6.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc, and reimbursable expenses of $6.1 million.
Corporate General and Administrative. Corporate general and administrative expense was $11.1 million in the 2024 period compared to expense of $9.2 million in the 2023 period. The increase in corporate general and administrative expenses is primarily attributable to higher professional fees of $5.1 million and $6.0 million of reimbursed legal costs in the 2024 period. These increases were partially offset by lower miscellaneous expenses of $268,000, lower public company costs of $215,000. and lower reimbursed operating expenses of Ashford Securities of $8.8 million. The decrease in Ashford Securities reimbursed operations expenses was related to a revision to the estimated contribution amount associated with the Fourth Amended and Restated Contribution Agreement with Ashford Securities that resulted in a $5.6 million credit to expense in 2024.
Gain (loss) on disposition of assets and hotel property. In the 2024 period, we recorded a gain of approximately $88.2 million related to the sale of Hilton La Jolla Torrey Pines. There was no such gain (loss) recorded for the 2023 period.
Equity in Earnings (Loss) of Unconsolidated Entity. In the 2024 period and the 2023 period, we recorded equity in loss of unconsolidated entity of $214,000 and $208,000, respectively, related to our investment in OpenKey.
Other Income (Expense). In the 2023 period, we recorded $293,000 of miscellaneous income.
Interest Income. Interest income was $4.5 million and $5.4 million in the 2024 period and the 2023 period, respectively. The decrease in interest income in the 2024 period was primarily attributable to lower average excess cash balances in the 2024 period compared to the 2023 period, partially offset by interest income associated with a tranche of CMBS included in investment in securities.
Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs increased $11.9 million, or 17.1%, to $81.7 million for the 2024 period compared to the 2023 period. The increase is primarily due to higher interest expense from higher average interest rates in the 2024 period. The average SOFR rates for the 2024 period and the 2023 period were 5.27% and 4.78%, respectively.
Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $6.1 million in the 2024 period related to various loan refinances and modifications. Write-off of loan costs and exit fees was $2.8 million in the 2023 period related to related to various loan modifications.
Gain (loss) on Extinguishment of Debt. In the 2024 period, we recognized a loss of $22,000 attributable to the discount associated with the Cameo Beverly Hills mortgage loan that was repaid on April 9, 2024. Gain on extinguishment of debt was $2.3 million in the 2023 period due to the payoff of The Ritz-Carlton Reserve Dorado Beach mortgage loan. The gain was primarily attributable to the premium that was recorded upon the assumption of the mortgage loan when the hotel was acquired.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain on derivatives of $523,000 for the 2024 period consisted of an unrealized gain on warrants of $12,000 and a realized gain of $4.2 million associated with payments received from counterparties on in-the-money interest rate caps, partially offset by an unrealized loss on interest rate caps of approximately $3.7 million.
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Realized and unrealized gain on derivatives of $918,000 for the 2023 period consisted of unrealized gain on warrants of $273,000 and a realized gain of $6.2 million associated with payments received from counterparties on in-the-money interest rate caps. These gains were partially offset by an unrealized loss on interest rate caps of approximately $5.5 million.
Income Tax (Expense) Benefit. Income tax expense decreased $590,000, from $1.1 million in the 2023 period to $474,000 in the 2024 period. This decrease was primarily due to a decrease in the taxable income of certain of our TRS entities in the 2024 period compared to the 2023 period.
(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities. Our noncontrolling interest partner in consolidated entities was allocated income of $26.3 million and $1.7 million in the 2024 period and the 2023 period, respectively. The allocated income for the 2024 period includes our partner’s share of gain on the sale of the Hilton La Jolla Torrey Pines. At September 30, 2024, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity. At September 30, 2023, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $1.7 million in the 2024 period and $3.0 million in the 2023 period. Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 8.05% and 6.63% as of September 30, 2024 and 2023, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our hotel properties, including:
•advisory fees payable to Ashford LLC;
•recurring maintenance necessary to maintain our hotel properties in accordance with brand standards;
•interest expense and scheduled principal payments on outstanding indebtedness;
•dividends on our common stock;
•dividends on our preferred stock; and
•capital expenditures to improve our hotel properties.
We expect to meet our short-term liquidity requirements generally through net cash provided by operations, capital market activities, asset sales and existing cash balances.
Pursuant to the advisory agreement between us and our Advisor, we must pay our Advisor on a monthly basis a base advisory fee, subject to a minimum base advisory fee. The minimum base advisory fee is equal to the greater of: (i) 90% of the base fee paid for the same month in the prior fiscal year; and (ii) 1/12 th of the “G&A Ratio” for the most recently completed fiscal quarter multiplied by our total market capitalization on the last balance sheet date included in the most recent quarterly report on Form 10-Q or annual report on Form 10-K that we file with the SEC. Thus, even if our total market capitalization and performance decline, we will still be required to make payments to our Advisor equal to the minimum base advisory fee, which could adversely impact our liquidity and financial condition.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotel properties and redevelopments, renovations, expansions and other capital expenditures that need to be made periodically with respect to our hotel properties and scheduled debt payments. We expect to meet our long-term liquidity requirements through various sources of capital, including future common and preferred equity issuances, existing working capital, net cash provided by operations, hotel mortgage indebtedness and other secured and unsecured borrowings. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity and market perceptions about us. The success of our business strategy will depend, in part, on our ability to access these various capital sources. While management cannot provide any assurances, management believes that our cash flow from operations and our existing cash balances will be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity principal payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes.
Our hotel properties will require periodic capital expenditures and renovation to remain competitive. In addition, acquisitions, redevelopments or expansions of hotel properties may require significant capital outlays. We may not be able to
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fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions or hotel redevelopment through retained earnings is very limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations and prospects could be materially and adversely affected.
Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotel properties declines. When these provisions are triggered, substantially all of the profit generated by the hotel properties securing such loan is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders. This could affect our liquidity and our ability to make distributions to our stockholders until such time that a cash trap is no longer in effect for such loan. These cash trap provisions have been triggered on one mortgage loan, as discussed below. Our loan that is in a cash trap may remain subject to the cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT. As of September 30, 2024, the mortgage loan secured by The Ritz-Carlton Lake Tahoe was in a cash trap. The amount of cash in the cash trap as of September 30, 2024 was $0.
As of September 30, 2024, the Company held cash and cash equivalents of $168.7 million and restricted cash of $48.5 million, the vast majority of which is comprised of lender and manager-held reserves. As of September 30, 2024, $19.9 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. At September 30, 2024, our net debt to gross assets was 41.0%.
The Company’s cash and cash equivalents are primarily comprised of corporate cash invested in short-term U.S. Treasury securities with maturity dates of less than 90 days and corporate cash held at commercial banks in Insured Cash Sweep (“ICS”) accounts, which are fully insured by the FDIC. The Company’s cash and cash equivalents also includes property-level operating cash deposited with commercial banks that have been designated as a Global Systemically Important Bank (“G-SIB”) by the Financial Stability Board (“FSB”) and a small amount deposited with other commercial banks.
Equity Transactions
On November 13, 2019, we filed an initial registration statement with the SEC, as amended on January 24, 2020, for shares of our non-traded Series E Redeemable Preferred Stock (the “Series E Preferred Stock”) and our non-traded Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). The registration statement became effective on February 21, 2020, and contemplates the issuance and sale of up to 20,000,000 shares of Series E Preferred Stock or Series M Preferred Stock in a primary offering and up to 8,000,000 shares of Series E Preferred Stock or Series M Preferred Stock pursuant to a dividend reinvestment plan. On February 25, 2020, we filed our prospectus with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager and wholesaler of the Series E Preferred Stock and Series M Preferred Stock. On April 2, 2021, the Company filed with the State Department of Assessments and Taxation of the State of Maryland (the “SDAT”) articles supplementary to the Company’s Articles of Amendment and Restatement that provided for: (i) reclassifying the existing 28,000,000 shares of Series E Preferred Stock and 28,000,000 shares of Series M Preferred Stock as unissued shares of preferred stock; (ii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series E Preferred Stock (the “Series E Articles Supplementary”); and (iii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series M Preferred Stock (the “Series M Articles Supplementary”). The Series E Articles Supplementary and Series M Articles Supplementary were filed to revise the preferred stock terms related to the dividend rate, our optional redemption right and certain other voting rights. The Company also caused its operating partnership to execute Amendment No. 5 to the Third Amended and Restated Agreement of Limited Partnership to amend the terms of its operating partnership agreement to conform to the terms of the Series E Articles Supplementary and Series M Articles Supplementary. The Company issued approximately 16.4 million shares of Series E Preferred Stock and received net proceeds of approximately $369.5 million and issued approximately 2.0 million shares of Series M Preferred Stock and received net proceeds of approximately $47.6 million. On February 21, 2023, the Company announced the closing of its offering of the Series E Preferred Stock and Series M Preferred Stock.
On July 12, 2021, the Company entered into an equity distribution agreement (the “Virtu July 2021 EDA”) with Virtu to sell from time to time shares of our common stock having an aggregate offering price of up to $100 million. We will pay Virtu a commission of approximately 1.0% of the gross sales price of the shares of our common stock sold. The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale. As of November 6, 2024, the Company has sold approximately 4.7 million shares of common stock under the Virtu July 2021 EDA and received gross proceeds of approximately $24.0 million.
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On May 3, 2024, our board of directors approved a new share repurchase program, pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share, having an aggregate value of up to $50 million. The Company intends to begin share repurchases as soon as practicable and may repurchase shares through open market transactions, privately negotiated transactions or other means. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice. The board of directors’ authorization replaced any previous repurchase authorizations. As of September 30, 2024, the Company has not repurchased any common stock pursuant to the plan.
Debt Transactions
On January 3, 2024, the Company extended the mortgage loan secured by the Pier House Resort & Spa in Key West, Florida. The mortgage loan has an initial maturity date of September 2025 with one one-year extension option, subject to the satisfaction of certain conditions, continues to have a balance of $80.0 million, and bears interest at a floating interest rate of SOFR + 3.60%.
On January 29, 2024, the Company extended the mortgage loan secured by The Ritz-Carlton St. Thomas in St. Thomas, USVI. The mortgage loan has an initial maturity date of August 2025 with one one-year extension option, subject to the satisfaction of certain conditions, continues to have a balance of $42.5 million, and bears interest at a floating interest rate of SOFR + 4.35%.
On February 5, 2024, the Company amended the mortgage loan secured by the Hilton La Jolla Torrey Pines. At the time, the hotel property remained encumbered by the original mortgage loan, which had been partially paid down to a remaining balance of $66.6 million. The lender also provided a six-month extension. The mortgage loan bore an annual fixed interest rate of 9.0%.
On March 7, 2024, the Company closed on a $62.0 million non-recourse loan secured by the Ritz-Carlton Reserve Dorado Beach. The mortgage loan has a two-year term, is interest only and provides for a floating interest rate of SOFR + 4.75%.
In April 2024, the Company repaid the $30.0 million mortgage loan secured by the Cameo Beverly Hills hotel.
On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines pursuant to an Agreement of Purchase and Sale, entered into effective May 6, 2024, for $165 million in cash, subject to customary pro-rations and adjustments. The Company owned an indirect 75% equity interest in the hotel property. Additionally, the Company repaid the $66.6 million mortgage loan secured by the hotel property.
On August 7, 2024, the Company closed on a refinancing involving five hotels. The new loan totals $407 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029. The loan is interest only and provides for a floating interest rate of SOFR + 3.24%. As part of this financing, the Company acquired a tranche of CMBS with a par value of $42.2 million and a rate of SOFR + 5.20%. The loan is secured by five hotels: Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota, and The Ritz-Carlton St. Thomas. The new loan refinanced the $80.0 million loan secured by the Pier House Resort & Spa which had an interest rate of SOFR + 3.60% and had a final maturity date in September 2026, the $42.5 million loan secured by The Ritz-Carlton St. Thomas which had an interest rate of SOFR + 4.35% and had a final maturity date in August 2026, and the $200.0 million secured credit facility secured by The Ritz-Carlton Sarasota, Hotel Yountville, and Bardessono Hotel & Spa which had an interest rate of SOFR + 3.10% and had a final maturity date in July 2027.
Sources and Uses of Cash
We had approximately $168.7 million and $85.6 million of cash and cash equivalents at September 30, 2024 and December 31, 2023, respectively. We anticipate that our principal sources of funds to meet our cash requirements will include cash on hand, positive cash flow from operations and capital market activities.
Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows provided by operating activities were $60.2 million and $73.0 million for the nine months ended September 30, 2024 and 2023, respectively. Cash flows from operations were impacted by changes in hotel operations and the disposition of a hotel property. Cash flows from operations are also impacted by the timing of working capital cash flows, such as collecting receivables from hotel guests, paying vendors, settling with derivative counterparties, settling with related parties and settling with hotel managers.
Net Cash Flows Provided by (Used in) Investing Activities. For the nine months ended September 30, 2024, net cash flows provided by investing activities were $52.7 million. The cash inflows were primarily attributable to $155.6 million from the
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sale of Hilton La Jolla Torrey Pines, partially offset by cash outflows of $42.3 million from the purchase of securities, $54.8 million of capital improvements made to various hotel properties, $5.8 million from the issuance of a note receivable and a $79,000 loan to OpenKey. Our capital improvements consisted of approximately $39.3 million of return on investment capital projects and approximately $15.5 million of renewal and replacement capital projects.
For the nine months ended September 30, 2023, net cash flows used in investing activities were $55.6 million. These cash outflows were primarily attributable to $55.6 million of capital improvements made to various hotel properties and a $237,000 loan to OpenKey partially offset by cash inflows of $327,000 related to proceeds from property insurance. Our capital improvements consisted of approximately $36.8 million of return on investment capital projects and approximately $18.8 million of renewal and replacement capital projects.
Return on investment capital projects are designed to improve the positioning of our hotel properties within their markets and competitive sets. Renewal and replacement capital projects are designed to maintain the quality and competitiveness of our hotels.
Net Cash Flows Provided by (Used in) Financing Activities. For the nine months ended September 30, 2024, net cash flows used in financing activities were $62.2 million. Cash outflows primarily consisted of $184.1 million of repayments of indebtedness, $39.0 million of dividend and distribution payments, $1.3 million to purchase interest rate caps, $15.4 million of payments of loan costs and exit fees, $27.0 million distributions to noncontrolling interest in consolidated entities, and $36.3 million for cash redemptions of Series E and Series M preferred stock. These cash outflows were partially offset by cash inflows of $234.0 million from borrowings on indebtedness, $4.4 million of proceeds from in-the-money interest rate caps and $3.0 million of contributions from noncontrolling interest in consolidated entities.
For the nine months ended September 30, 2023, net cash flows used in financing activities were $126.3 million. Cash outflows primarily consisted of repayments of indebtedness of $390.2 million, $39.4 million of dividend and distribution payments, $19.3 million of payments to repurchase common stock, payments of $7.2 million for the redemption of operating partnership units, $4.0 million to purchase interest rate caps, $2.0 million of distributions to a noncontrolling interest in consolidated entities, $3.3 million payments of loan costs and exit fees, and $4.8 million for cash redemptions of Series E and Series M preferred stock. These cash outflows were partially offset by cash inflows of $236.0 million from borrowings on indebtedness, $97.9 million from the issuance of preferred stock, $4.1 million of contributions from a noncontrolling interest in consolidated entities and $6.0 million of proceeds from in-the-money interest rate caps.
Dividend Policy
On December 5, 2023, our board of directors approved the Company’s dividend policy for 2024. The Company expects to pay a quarterly cash dividend of $0.05 per share for the Company’s common stock for 2024, or $0.20 per share on an annualized basis. On July 10, 2024, our board of directors declared a quarterly cash dividend of $0.05 per diluted share, for the third quarter of 2024. On October 3, 2024, our board of directors declared a quarterly cash dividend of $0.05 per diluted share, for the fourth quarter of 2024. The approval of our dividend policy does not commit our board of directors to declare future dividends with respect to any quantity or the amount thereof. The board of directors will continue to review our dividend policy on a quarter-to-quarter basis and make announcements with respect thereto. For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof.
Seasonality
Our properties’ operations historically have been seasonal as certain properties maintain higher occupancy rates during the summer months and some during the winter months. This seasonality pattern can cause fluctuations in our quarterly lease revenue under our percentage leases. Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as pandemics, extreme weather conditions, natural disasters, terrorist attacks or alerts, civil unrest, government shutdowns, airline strikes or reduced airline capacity, economic factors and other considerations affecting travel. To the extent that cash flows from operations and cash on hand are insufficient during any quarter due to temporary or seasonal fluctuations in lease revenue, we expect to utilize borrowings to fund distributions required to maintain our REIT status. However, we cannot make any assurances that we will make distributions in the future.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Our accounting policies that are critical
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or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K. There have been no material changes in these critical accounting policies.
Non-GAAP Financial Measures
The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO are presented to help our investors evaluate our operating performance.
EBITDA is defined as net income (loss) before interest expense and amortization of loan costs, depreciation and amortization, income taxes, equity in (earnings) loss of unconsolidated entity and after the Company’s portion of EBITDA of OpenKey. In addition, we exclude impairment on real estate, (gain) loss on disposition of assets and hotel property and the Company’s portion of EBITDAre of OpenKey from EBITDA to calculate EBITDA for real estate, or EBITDAre, as defined by NAREIT.
We then further adjust EBITDAre to exclude certain additional items such as amortization of favorable (unfavorable) contract assets (liabilities), transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, gain/loss on insurance settlements, advisory and settlement costs, advisory services incentive fee, gain/loss on extinguishment of debt, stock/unit-based compensation and the Company’s portion of adjustments to EBITDAre of OpenKey and non-cash items such as unrealized gain/ loss on derivatives.
We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they are useful to an investor in evaluating our operating performance because they provide investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe they help investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions. EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define the terms. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity.
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The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) (unaudited):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Net income (loss) | $ | 39,835 |  |  | $ | (22,611) |  |  | $ | 41,530 |  |  | $ | (9,145) |  |  |
Interest expense and amortization of loan costs | 27,911 |  |  | 23,306 |  |  | 81,687 |  |  | 69,779 |  |  |
Depreciation and amortization | 25,078 |  |  | 22,703 |  |  | 75,192 |  |  | 67,791 |  |  |
Income tax expense (benefit) | (864) |  |  | (1,190) |  |  | 474 |  |  | 1,064 |  |  |
Equity in (earnings) loss of unconsolidated entity | 80 |  |  | 60 |  |  | 214 |  |  | 208 |  |  |
Company’s portion of EBITDA of OpenKey | (76) |  |  | (63) |  |  | (215) |  |  | (220) |  |  |
EBITDA | 91,964 |  |  | 22,205 |  |  | 198,882 |  |  | 129,477 |  |  |
(Gain) loss on disposition of assets and hotel property | (88,210) |  |  | — |  |  | (88,210) |  |  | — |  |  |
EBITDAre | 3,754 |  |  | 22,205 |  |  | 110,672 |  |  | 129,477 |  |  |
Amortization of favorable (unfavorable) contract assets (liabilities) | 109 |  |  | 119 |  |  | 346 |  |  | 356 |  |  |
Transaction and conversion costs | 50 |  |  | 978 |  |  | (5,524) |  |  | 3,229 |  |  |
Write-off of premiums, loan costs and exit fees | 5,292 |  |  | 2,588 |  |  | 6,095 |  |  | 2,848 |  |  |
Realized and unrealized (gain) loss on derivatives | 735 |  |  | (223) |  |  | (523) |  |  | (918) |  |  |
Stock/unit-based compensation | 427 |  |  | 1,627 |  |  | 2,689 |  |  | 6,854 |  |  |
Legal, advisory and settlement costs | 6,539 |  |  | — |  |  | 11,356 |  |  | 81 |  |  |
Advisory services incentive fee | 1,464 |  |  | — |  |  | 2,112 |  |  | — |  |  |
(Gain) loss on extinguishment of debt | — |  |  | — |  |  | 22 |  |  | (2,318) |  |  |
Other (income) expense | — |  |  | (293) |  |  | — |  |  | (293) |  |  |
Severance | 102 |  |  | — |  |  | 102 |  |  | — |  |  |
Company’s portion of adjustments to EBITDAre of OpenKey | — |  |  | — |  |  | 3 |  |  | — |  |  |
Adjusted EBITDAre | $ | 18,472 |  |  | $ | 27,001 |  |  | $ | 127,350 |  |  | $ | 139,316 |  |  |

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FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on insurance settlement and disposition of assets, plus impairment charges on real estate, depreciation and amortization of real estate assets, and after redeemable noncontrolling interests in the operating partnership and adjustments for unconsolidated entities. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. Our calculation of Adjusted FFO excludes transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, legal, advisory and settlement costs, advisory services incentive fee, stock/unit-based compensation, severance, gain/loss on insurance settlements, gain/loss on extinguishment of debt, and non-cash items such as deemed dividends on redeemable preferred stock, interest expense accretion on refundable membership club deposits, amortization of loan costs, unrealized gain/loss on derivatives and the Company’s portion of adjustments to FFO of OpenKey. FFO and Adjusted FFO exclude amounts attributable to the portion of a partnership owned by the third party. We present FFO and Adjusted FFO because we consider FFO and Adjusted FFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and Adjusted FFO when reporting their results. FFO and Adjusted FFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and Adjusted FFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and Adjusted FFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. We consider FFO and Adjusted FFO to be appropriate measures of our ongoing normalized operating performance as a REIT. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than us. FFO and Adjusted FFO do not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to GAAP net income or loss as an indication of our financial performance or GAAP cash flows from operating activities as a measure of our liquidity. FFO and Adjusted FFO are also not indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in our condensed consolidated financial statements.
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The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands) (unaudited):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Net income (loss) | $ | 39,835 |  |  | $ | (22,611) |  |  | $ | 41,530 |  |  | $ | (9,145) |  |  |
(Income) loss attributable to noncontrolling interest in consolidated entities | (27,363) |  |  | (1,773) |  |  | (26,317) |  |  | (1,715) |  |  |
Net (Income) loss attributable to redeemable noncontrolling interests in operating partnership | 124 |  |  | 2,354 |  |  | 1,747 |  |  | 3,018 |  |  |
Preferred dividends | (9,857) |  |  | (10,582) |  |  | (30,593) |  |  | (31,809) |  |  |
Deemed dividends on preferred stock | (4,151) |  |  | (516) |  |  | (6,175) |  |  | (3,271) |  |  |
Net income (loss) attributable to common stockholders | (1,412) |  |  | (33,128) |  |  | (19,808) |  |  | (42,922) |  |  |
Depreciation and amortization on real estate (1) | 24,255 |  |  | 21,886 |  |  | 72,131 |  |  | 65,434 |  |  |
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership | (124) |  |  | (2,354) |  |  | (1,747) |  |  | (3,018) |  |  |
Equity in (earnings) loss of unconsolidated entity | 80 |  |  | 60 |  |  | 214 |  |  | 208 |  |  |
(Gain) loss on disposition of assets and hotel property (1) | (61,970) |  |  | — |  |  | (61,970) |  |  | — |  |  |
Company’s portion of FFO of OpenKey | (91) |  |  | (71) |  |  | (253) |  |  | (234) |  |  |
FFO available to common stockholders and OP unitholders | (39,262) |  |  | (13,607) |  |  | (11,433) |  |  | 19,468 |  |  |
Deemed dividends on preferred stock | 4,151 |  |  | 516 |  |  | 6,175 |  |  | 3,271 |  |  |
Transaction and conversion costs | 50 |  |  | 978 |  |  | (5,524) |  |  | 3,229 |  |  |
Write-off of premiums, loan costs and exit fees | 5,292 |  |  | 2,588 |  |  | 6,095 |  |  | 2,848 |  |  |
Unrealized (gain) loss on derivatives | 1,746 |  |  | 1,790 |  |  | 3,698 |  |  | 5,244 |  |  |
Stock/unit-based compensation | 427 |  |  | 1,627 |  |  | 2,689 |  |  | 6,854 |  |  |
Legal, advisory and settlement costs | 6,539 |  |  | — |  |  | 11,356 |  |  | 81 |  |  |
Interest expense accretion on refundable membership club deposits | 151 |  |  | 165 |  |  | 466 |  |  | 507 |  |  |
Amortization of loan costs (1) | 1,741 |  |  | 858 |  |  | 4,268 |  |  | 2,258 |  |  |
Advisory services incentive fee | 1,464 |  |  | — |  |  | 2,112 |  |  | — |  |  |
(Gain) loss on extinguishment of debt | — |  |  | — |  |  | 22 |  |  | (2,318) |  |  |
Other (income) expense | — |  |  | (293) |  |  | — |  |  | (293) |  |  |
Severance | 102 |  |  | — |  |  | 102 |  |  | — |  |  |
Company’s portion of adjustments to FFO of OpenKey | — |  |  | — |  |  | 3 |  |  | — |  |  |
Adjusted FFO available to common stockholders and OP unitholders | $ | (17,599) |  |  | $ | (5,378) |  |  | $ | 20,029 |  |  | $ | 41,149 |  |  |

____________________
(1)Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for noncontrolling interests for each line item:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Depreciation and amortization on real estate | $ | (823) |  |  | $ | (817) |  |  | $ | (3,061) |  |  | $ | (2,357) |  |  |
Amortization of loan costs | (38) |  |  | (23) |  |  | (273) |  |  | (70) |  |  |
Gain (loss) on disposition of assets and hotel property | 26,240 |  |  | — |  |  | 26,240 |  |  | — |  |  |

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The following table presents certain information related to our hotel properties as of September 30, 2024:

Hotel Property |  | Location |  |  |  | Total Rooms |  | % Owned |  | Owned Rooms |  |  |  |  |  |
Fee Simple Properties |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital Hilton |  | Washington, D.C. |  |  |  | 559 |  |  | 75 | % |  | 419 |  |  |  |  |  |  |
Marriott Seattle Waterfront |  | Seattle, WA |  |  |  | 369 |  |  | 100 | % |  | 369 |  |  |  |  |  |  |
The Notary Hotel |  | Philadelphia, PA |  |  |  | 499 |  |  | 100 | % |  | 499 |  |  |  |  |  |  |
The Clancy |  | San Francisco, CA |  |  |  | 410 |  |  | 100 | % |  | 410 |  |  |  |  |  |  |
Sofitel Chicago Magnificent Mile |  | Chicago, IL |  |  |  | 415 |  |  | 100 | % |  | 415 |  |  |  |  |  |  |
Pier House Resort & Spa |  | Key West, FL |  |  |  | 142 |  |  | 100 | % |  | 142 |  |  |  |  |  |  |
The Ritz-Carlton St. Thomas |  | St. Thomas, USVI |  |  |  | 180 |  |  | 100 | % |  | 180 |  |  |  |  |  |  |
Park Hyatt Beaver Creek Resort & Spa |  | Beaver Creek, CO |  |  |  | 193 |  |  | 100 | % |  | 193 |  |  |  |  |  |  |
Hotel Yountville |  | Yountville, CA |  |  |  | 80 |  |  | 100 | % |  | 80 |  |  |  |  |  |  |
The Ritz-Carlton Sarasota |  | Sarasota, FL |  |  |  | 276 |  |  | 100 | % |  | 276 |  |  |  |  |  |  |
The Ritz-Carlton Lake Tahoe (1) |  | Truckee, CA |  |  |  | 170 |  |  | 100 | % |  | 170 |  |  |  |  |  |  |
Cameo Beverly Hills (2) |  | Los Angeles, CA |  |  |  | 143 |  |  | 100 | % |  | 143 |  |  |  |  |  |  |
The Ritz-Carlton Reserve Dorado Beach (3) |  | Dorado, Puerto Rico |  |  |  | 96 |  |  | 100 | % |  | 96 |  |  |  |  |  |
Four Seasons Resort Scottsdale |  | Scottsdale, AZ |  |  |  | 210 |  |  | 100 | % |  | 210 |  |  |  |  |  |
Ground Lease Property (4) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bardessono Hotel and Spa (5) |  | Yountville, CA |  |  |  | 65 |  |  | 100 | % |  | 65 |  |  |  |  |  |  |
Total |  |  |  |  |  | 3,807 |  |  |  |  | 3,667 |  |  |  |  |  |  |

________
(1) The above information does not include the operations of the voluntary rental program with respect to condominium units not owned by the Company.
(2) Includes 138 hotel rooms and five residences adjacent to the hotel. On August 1, 2023, the Company announced the rebranding and planned conversion of its Mr. C Beverly Hills in Los Angeles, California to the Cameo Beverly Hills. Following an extensive renovation, which is expected to be completed by the end of 2025, the hotel will join LXR Hotels & Resorts.
(3) The above information does not include the operations of the voluntary rental program with respect to residential units not owned by the Company.
(4) Some of our hotel properties are on land subject to ground leases, one of which covers the entire property.
(5) The initial ground lease expires in 2065. The ground lease contains two 25-year extension options, at our election.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Our primary market risk exposure consists of changes in interest rates on borrowings under our debt instruments that bear interest at variable rates that fluctuate with market interest rates. To the extent that we acquire assets or conduct operations in an international jurisdiction, we will also have currency exchange risk. We may enter into certain hedging arrangements in order to manage interest rate and currency fluctuations. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.
At September 30, 2024, our total indebtedness of approximately $1.2 billion included approximately $1.1 billion of variable-rate debt. The impact on the results of operations of a 25-basis point change in the interest rate on the outstanding balance of variable-rate debt at September 30, 2024, would be approximately $2.8 million per year. However, we currently have various interest rate caps in place that limit this exposure. Interest rate changes have no impact on the remaining $86.3 million of fixed-rate debt.
The above amounts were determined based on the impact of hypothetical interest rates on our borrowings and assume no changes in our capital structure. The information presented above includes those exposures that existed at September 30, 2024, but it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies at the time, and the related interest rates.
ITEM 4.CONTROLS AND PROCEDURES
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2024. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures are effective to ensure that (i) information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and
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communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
There have been no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt out of the class; however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt-out period has been extended until such time that discovery has concluded. In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified. After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon. On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks. The Court has ordered the parties to complete a second mediation no later than January 31, 2025. While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time. As of September 30, 2024, no amounts have been accrued.
On June 8, 2022 a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines. The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and Private Attorneys General Act (“PAGA”) claims.
On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement. At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $3.5 million, which the parties have since agreed to. The allocation to Hilton La Jolla Torrey Pines is approximately $371,000, which has been accrued as of September 30, 2024.
We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws). The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations, or cash flow.
During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain personal information. We have completed an investigation and have identified certain information that may have been exposed and notified potentially impacted individuals pursuant to applicable state guidelines. All systems have been restored. We believe that we maintain a sufficient level of insurance coverage related to such events, and the related incremental costs incurred to date are immaterial. In February of 2024, two class action lawsuits were filed, one in the U.S. District Court for the Northern District of Texas and a second in the 68th District Court for Dallas County related to the cyber incident. The lawsuit filed in the 68th District Court was subsequently dismissed and refiled in the U.S. District Court for the Northern District of Texas. On March 12, 2024, the court ordered the two cases be consolidated. The consolidated case is currently pending in the U.S. District Court for the Northern District of Texas. On May 17, 2024, we filed a Motion to Dismiss the Consolidated Class Action Complaint, which is currently pending before the Court.
Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty. If we ultimately do not prevail in one or more of these legal
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matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.
ITEM 1A.RISK FACTORS
The discussion of our business and operations should be read together with the risk factors contained in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. As of September 30, 2024, there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Equity Securities by the Issuer
On May 3, 2024, our board of directors approved a new share repurchase program, pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $0.01 per share, having an aggregate value of up to $50 million. The Company intends to begin share repurchases as soon as practicable and may repurchase shares through open market transactions, privately negotiated transactions or other means. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice. The board of directors’ authorization replaced any previous repurchase authorizations.
The following table provides the information with respect to purchases and forfeitures of our common stock during each of the months in the third quarter of 2024:

Period |  | Total Number of Shares Purchased |  | Average Price Paid Per Share |  | Total Number of Shares Purchased as Part of a Publicly Announced Plan |  | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan
Common stock: |  |  |  |  |  |  |  |
July 1 to July 31 |  | — |  |  | $ | — |  |  | — |  |  |
August 1 to August 31 |  | — |  |  | $ | — |  |  | — |  |  | $ | 50,000,000 |
September 1 to September 30 |  | — |  |  | $ | — |  |  | — |  |  | $ | 50,000,000 |
Total |  | — |  |  | $ | — |  |  | — |  |  |

ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.OTHER INFORMATION
Rule 10b5-1 Trading Agreements
During the three months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading agreement” or “non-Rule 10b5-1 trading agreement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM 6.EXHIBITS

Exhibit |  | Description
3.1 |  | Articles of Amendment and Restatement of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 29, 2016) (File No. 001-35972).
3.2 |  | Articles Supplementary of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on May 18, 2015) (File No. 001-35972).
3.3 |  | Articles of Amendment of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on April 29, 2016) (File No. 001-35972).

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Exhibit |  | Description
3.4 |  | Amendment Number One to the Articles of Amendment and Restatement of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on December 8, 2017) (File No. 001-35972).
3.5 |  | Amendment Number Two to Articles of Amendment and Restatement of Braemar Hotels & Resorts Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 23, 2018) (File No. 001-35972).
3.6 |  | Articles of Amendment of Braemar Hotels & Resorts Inc., accepted for record and certified by the SDAT on January 23, 2020 (incorporated by reference to Exhibit 3.13 to Amendment No. 1 to the Registration Statement on Form S-3 filed with the SEC on January 24, 2020) (File No. 333-234663).
3.7 |  | Fifth Amended and Restated Bylaws, as amended by Amendment No.1 on February 27, 2024, adopted on February 27,2024 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on March 1, 2024) (File No. 001-35972).
10.1 |  | Cooperation Agreement, dated July 2, 2024, by and among Braemar Hotels & Resorts Inc., Ashford Hospitality Trust, Inc., Ashford Inc., Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co. LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Ainta b i (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed on July 2, 2024) (File No. 001-35972).
10.2 |  | Share Ownership Agreement, dated July 2, 2024, by and among Braemar Hotels & Resorts Inc., Ashford Hospitality Trust, Inc., Ashford Inc., Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co. LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Aintabi (incorporated by reference to Exhibit 10.2 to the Current Report on 8-K filed on July 2, 2024) (File No. 001-35972)
10.3 |  | Loan Agreement, dated July 2, 2024, by and between BW Coinvest I, LLC, Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co. LLC, Blackwells Asset Management LLC and Braemar Hospitality Limited Partnership (incorporated by reference to Exhibit 10.3 to the Current Report on 8-K filed on July 2, 2024) (File No. 001-35972).
10.4 |  | Limited Waiver Under Advisory Agreement, dated August 8, 2024, by and among Braemar Hotels & Resorts Inc., Braemar Hospitality Limited Partnership, Braemar TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q filed on August 8, 2024 (File No. 001-35972).
31.1* |  | Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended.
31.2* |  | Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended.
32.1** |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2** |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 are formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements Comprehensive Income; (iv) Consolidated Statements of Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
101.INS |  | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document | Submitted electronically with this report.
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Submitted electronically with this report.
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document | Submitted electronically with this report.
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document. | Submitted electronically with this report.
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | Submitted electronically with this report.
104 |  | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |

___________________________________
* Filed herewith.
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** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BRAEMAR HOTELS & RESORTS INC.

Date: | November 8, 2024 | By: | /s/ RICHARD J. STOCKTON |
|  |  | Richard J. Stockton |
|  |  | President and Chief Executive Officer |
Date: | November 8, 2024 | By: | /s/ DERIC S. EUBANKS |
|  |  | Deric S. Eubanks |
|  |  | Chief Financial Officer |

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