Braemar Hotels & Resorts is cutting ties to its external adviser, Ashford Inc., in a move toward self management.
The luxury hotel-focused real estate investment trust announced last August its intention to put itself up for sale, citing pressures from activist investors and being undervalued in the public market. In the following months, the company has sold off several of its properties, the most recent of which is the pending sale of three luxury hotels for a combined $437.5 million.
Now, the REIT plans to become a self-managed company and remain publicly traded. This move will end its long-running relationship with Ashford Inc. In 2013, Ashford Hospitality Trust spun off what was then called Ashford Hospitality Prime, later renamed Braemar. Ashford has been adviser to Braemar since 2014.
“While initially a sale of the company was explored, the special committee ultimately concluded that there was a superior value creation available by terminating the advisory agreement, spinning out management and remaining publicly listed,” according to the news release.
When announcing its initial plans to sell, Braemar executives said a sale would entail a $480 million termination fee to be paid to Ashford. In its latest release, the REIT said it planned to pay off the fee through hotel deals.
“The company does not intend to sell all or substantially all of its assets, only the approximate number necessary to satisfy the company's obligation to pay the company sale fee and master agreement termination fee,” it said in the news release.
As a self-managed REIT, Braemar plans to have a portfolio of six to eight luxury properties across the U.S. and Caribbean, which had “a gross asset value of over $1 billion and generated total annual revenue of $300 million to $350 million as of the trailing 12 months ending March 31, 2026.”
It will directly hire employees and relocate to a new headquarters in Dallas. With its own management team, Braemar expects to reduce its general and administrative costs by more than $25 million annually.
Braemar’s in-house management structure and new board are designed to improve shareholder alignment, the company said. The REIT has retained executive search firm Ferguson Partners to find five new independent board members. The current board will appoint the new board members while at the same time stepping down with the termination of the advisory agreement.
The company plans for certain members of the management team currently employed by Ashford to become employees of Braemar exclusively.
"With a streamlined portfolio, in-house management and renewed focus on operational efficiency, Braemar will be better positioned for long-term profitability, shareholder alignment and value creation,” Richard Stockton, who will remain as CEO and board member of Braemar, said in the release.
Braemar is pleased with the consideration it has received from its recently announced property sales, Stockton added. It expects to continue evaluating the sale of an additional two to three hotels to satisfy its obligations to pay the termination fee and focus on maximizing the value of its remaining portfolio.
Among the other changes Braemar will enact, the REIT will end its relationships with Premier Project Management and Remington Lodging & Hospitality, both of which are subsidies of Ashford. It will retain certain immaterial short-term contracts with Inspire Pure and RED Hospitality to avoid disrupting hotel operations.