Braemar Hotels & Resorts changing course from a planned sale of the company to become self-managed came as a surprise to both shareholders and industry analysts.
Braemar shared late last week it was no longer pursuing a sale of the company as it announced in August 2025. Instead, it plans to cut ties with its external adviser, Ashford Inc., and pay off its $480 million advisory agreement termination fee and $25 million master agreement termination fee through selling two to three more of its hotels. It intends to go forward as a publicly traded hotel REIT with a portfolio of six to eight high-end properties.
The market was already pricing in that the luxury hotel-focused real estate investment trust sale would happen, said Michael Bellisario, senior research analyst at Baird. Baird acted as the financial adviser to Braemar’s special committee during its strategic review process.
“Based on the stock reaction, I think that’s true, that people assumed the liquidation would occur,” he said. Braemar’s stock is currently trading at $2.07 per share, down from $2.53 at closing on June 11, the day before the news broke.
The hotel transaction market has been “pretty robust” lately, and luxury resorts and other high-end performing hotels have been attracting buyers, Bellisario said. The pricing Braemar has achieved in recent hotel sales was solid. His team expected Braemar would continue down the sales path and potentially turn into a liquidating trust.
The news of the new direction is still fresh, and it will take time for Braemar's plans to transition into action. In the meantime, there are many yet-to-be answered questions, including whether this will be the right move for the REIT and its shareholders.
Analyzing the play
Just because a plan is announced doesn’t mean that’s the way it’s going to go. Braemar’s August sell-off plan is one such example.
To move toward self-management, Braemar has to sell off a few more hotels to generate enough cash to pay off its termination fees, Bellisario said. On top of that, there are processes that need to be figured out. All of these things take time.
“What does the balance sheet look like of a six- to eight-hotel REIT?” he asked. “What does the [general and administrative costs] look like? When does the board get picked? When does the shareholder meeting occur?”
This sort of transition doesn’t happen in a week or two, Bellisario said. It will be months before there’s any form of finality.
Since its August announcement, Braemar has closed on or made moves toward selling six hotels: the Marriott Seattle Waterfront, the Clancy in San Francisco, the Park Hyatt Beaver Creek Resort & Spa, the Ritz-Carlton Sarasota, the Hotel Yountville and the Bardessono Resort & Spa. To pay off its termination fees, the REIT will need to sell more hotels to cover the $480 million and $25 million required.
The wrinkle is that with the exception of Braemar's hotel in Beverly Hills, each hotel deal following its sale of the Beaver Creek property has mortgage debt attached to them, Bellisario said. The most recent deal, the three-hotel portfolio selling for $437.5 million, will result in about $330 million cash after accounting for their respective debt loads.
“Which is why they still need to sell a couple more hotels,” he said. “When they sell one or two or three more hotels, each of those hotels also has debt that needs to get repaid, too.”
The detachment of Braemar from Ashford will benefit the REIT, Bellisario said. A lot of the company’s stock performance can be attributed to the dollars it’s paying Ashford. Similarly, if it weren’t for the termination fees, in theory, the stock trading at about $2 a share could be up to $9 a share and its market cap would be 4.5 times its current size.
Moving forward as a self-managed REIT without an external adviser or termination fees hanging over it makes Braemar a smaller, more bite-sized target for acquisition, he said. The challenge for the buyer, though, is that all of the REIT’s properties that are easiest to sell will likely be sold to pay off the termination fees. The remaining hotels, though higher-end, are in challenging markets.
Braemar's Beverly Hills hotel has negative cash flow because it’s a tough market, Bellisario said. Chicago is generally viewed as a lower-value, tougher market with less buyer interest. Washington, D.C., is another challenged market.
“It would be very interesting if there were a couple Ritz-Carltons left and a Four Seasons, but that stuff has been sold,” he said.
Another potential wrinkle: unhappy shareholders. Al Shams Investments, a Bermuda-based private investment company and the REIT’s largest shareholder, wrote a letter to Braemar’s outside members of its board of directors, accusing them and Ashford Inc. Chairman and CEO Monty Bennett of “one of the most brazen acts of self-dealing” by moving forward with its recent three-hotel deal that he said triggered the termination fees requirement.
“Braemar was already among the most leveraged lodging REITs in the sector,” Wafic Rida Said, owner of Al Shams, said in the letter. “You have now saddled the company with an obligation that exceeds the net proceeds of the very sales that triggered it. This is not a business decision; it is, in our view, an act of financial recklessness carried out for Mr. Bennett's personal gain.”
Al Shams said it will pursue all available legal remedies against the board members, Bennett and other parties involved. It will also nominate a full slate of new, independent directors at the company’s annual meeting this year.
In response to the letter, a Braemar spokesperson shared a statement calling the letter an attempt to mislead shareholders and that the company has since its initial investment in Braemar tried to push the REIT to breach its advisory agreement with Ashford.
The company has implemented suggestions Al Shams has made, including refreshing the board, installing an independent chairman, becoming a self-managed REIT and separating from Ashford, it said. The company is using an independent third-party search firm to select new board members without any involvement from Bennett.
The statement also pointed to questions raised about Said's compliance with United Kingdom campaign finance rules and investigations by the government into an arms deal transaction in the 1980s.
"The bottom line is we do not believe this is an individual with the best interests of all shareholders at heart,” the statement concludes.
The move isn’t up for a shareholder vote, but litigation could delay this transition process, Bellisario said. Other shareholders could oppose the transition as well. There are a lot of questions about how this could play out without any answers yet and none coming soon.
Though publicly traded hotel REITs have not exactly been hot tickets in recent years, there is still some value in this type of business. A public company has a certain amount of fixed costs regardless of whether it has five or 25 hotels, Bellisario said. Presumably, the G&A load will be somewhat efficient.
Still, the cost of capital will be higher because Braemar will be a smaller company. It has geographic and concentration risks for any problems that arise at one of its hotels or markets. It’s too soon to know who will be on the new board and who will be the new management team.
“The one way to think about it is are they hitting the reset button here and saying, ‘We're starting over. We're going to have six to eight hotels, and we're going to do it right,’” Bellisario said. “But … does the market have an appetite for a ‘new hotel REIT?’”
A hotel REIT’s ability to grow its portfolio through acquisitions and issuing equity is dictated by the market, the cost of capital and how receptive investors are to the strategy and capital allocation, he said. That’s a high bar because there are multiple other hotel REITs to choose from that now have a much-improved cost of capital, a longer track record and larger hotel portfolios.
There was some talk in August after Braemar made its initial announcement that maybe someone would take the REIT private, but that didn’t happen, and it’s likely because that was too big a check to write and too complicated a situation, Bellisario said.
“Maybe there's an appetite for that after the fact, when it is cleaned up and it is six to eight hotels, and it is internally advised and maybe the stock doesn't perform well,” he said.
That’s when a take-private deal becomes an option, but even then the motivation would be different, Bellisario said. The REIT wouldn’t have its Remington Hospitality contracts or Premier Project Management contracts to maintain, so it would be almost the same as buying hotels. The synergy wouldn’t necessarily be there.
“The moral of the story is, it’s been complicated. It remains a little complicated and, frankly, a little uncertain, too,” he said.
The current REIT environment
When there are a number of paths forward for a small hotel REIT, what exactly is the value in staying a publicly traded hotel REIT?
“Hotel REITs are having a moment,” said C. Patrick Scholes, managing director of lodging and leisure equity research at Truist, who does not cover Braemar as a company. He added that the sector in general is seeing a bit of a sunnier outlook lately.
Year to date, hotel REITs generally have seen some of the best stock performance in a six-month period that he can recall, Scholes said. Excluding the post-pandemic and Great Recession bounces, the only other time outside of their normal periods in which the segment's stocks were doing this well was in the leadup to the Great Recession when there were a lot of private equity buyouts.
In the current environment, the hotel REIT sector isn’t exactly well-liked by investors, Scholes said. The top reason is that revenue per available room has been lethargic at best over the past couple of years, and that coupled with higher costs means lower margins.
“With decent RevPAR now, you might actually see some margin expansion here for the first time in a number of years, at least since those easy COVID comparisons,” he said.
The transaction market isn’t hot, but it is warmer than what it has been, Scholes said. Buyers have accepted the interest rate environment for what it is, and they’re not waiting for rates to go down further.
“There might actually be thinking interest rates might actually go up slightly, so maybe that gives you a little bit of a sense of urgency,” he said.
On the seller’s side, there are hotel owners out there who have delayed capital expenditure projects and would rather part ways with the property than invest further into it, he added.
One reason many investors have had a less favorable view of the sector is that some hotel REITs made diluted acquisitions or chased markets that struggled after the pandemic, Scholes said. That has changed somewhat as more REITs have turned to selling properties or paying dividends instead of buying a hotel.
Even so, activist investors have become more vocal with their grievances, including those diluted trophy acquisitions, he said.
“I do think as the activists were heard, and given where the share prices and valuations were, I think management teams heard that as well,” he said.
What’s helping hotel REITs now is that the decoupling of GDP growth and RevPAR growth seems to be ending, Scholes said. Typically, those two move in the same direction, but over the past couple of years, the mid-single-digit GDP growth wasn’t matched by any RevPAR growth.
“Now it seems to actually get some pretty strong RevPAR growth here in similar real GDP environment here,” he said.
The publicly traded hotel brand companies such as Hilton or Marriott International are seeing high valuations, by comparison, and that’s no surprise, Scholes said. However, if investors are looking for out-of-favor sub-sectors, the hotel REITs do check that box. That hotel REITs’ revenues are doing better than expected is helpful.
“What are you buying here for? You're buying that investors will look more favorable on the sector, give it a bit of a better multiple and also raise your revenue numbers,” he said. “So, you have those two powerful drivers to stock price: Give it a better valuation multiple and potentially raise your revenue numbers.”
Editor's note, June 16, 2026: This article has been updated to include a statement from Braemar Hotels & Resorts about the Al Sham letter.