Officials with hotel real estate investment trust Braemar Hotels & Resorts announced plans to sell their entire portfolio of luxury hotels, setting a termination fee with external advisor Ashford Inc. at $480 million.
Braemar currently owns 14 properties under luxury brands such as Ritz-Carlton, Four Seasons and Park Hyatt across the U.S. and Caribbean, but executives have consistently complained their stock price was severely disconnected from their internally calculated net asset value. The company is already under contract to sell The Clancy in San Francisco for $115 million and completed the $145 million sale of the Marriott Seattle Waterfront earlier this month.
A news release detailing plans to seek a sale stated: "The high-quality nature of the company's portfolio has attracted multiple activist investors over the years. It is not believed that a luxury [revenue per available room] lodging REIT like Braemar can flourish in today's market environment due to the historically low [earnings before interest, taxes, depreciation and amortization] multiple lodging REITs are achieving as well as the ongoing activism the company has received. This same dynamic occurred with Strategic Hotel & Resorts, another luxury lodging REIT that after several years of undervaluation and activism, explored strategic alternatives and ultimately was sold in an all-cash transaction."
Strategic sold to Chinese company Anbang Insurance Group for $6.5 billion in early 2016.
Braemar has established a special committee of "independent and disinterested directors to explore a range of strategic alternatives, aimed at maximizing both near- and long-term shareholder value," and has retained Robert W. Baird & Co. Inc. as financial advisors with White & Case LLP as legal advisor.
In a note to investors, Michael Bellisario, senior research analyst and managing director at Baird, pointed to the disconnect on valuations as a key part of plans to sell.
"Noteworthy is that many of Braemar's assets (especially if they were to transact individually) likely would command low cap rates and high per-key valuations — a 'market' cap rate of 8% does not apply here," he wrote. "The public market values cash flow, not real estate value, which has led to a valuation disconnect across all hotel REITs' portfolios."
Bellisario also noted Braemar's external management structure with Ashford Inc. as having "negatively impacted the company's cost of capital," but the agreement in place for a $480 million termination fee comes in higher than Baird's estimate of roughly $283 million.
"The termination fee clarity is a positive for prospective buyers, but the amount is a significant drag on the net per-share value that ultimately could accrue to BHR shareholders," Bellisario wrote.
The likely outcomes of Braemar putting itself on the market are "an outright portfolio sale or several smaller portfolio sales, including single-asset dispositions," Bellisario wrote, noting there is high interest in luxury properties in the private market.
As of press time, Braemar's stock was trading at $3.04 a share, representing a market cap of $208.1 million.
Braemar has existed as a standalone REIT focused on luxury hotels and resorts since it was spun off from Ashford Inc.'s other affiliate REIT Ashford Hospitality Trust in 2013. The company was originally called Ashford Prime but was renamed Braemar Hotels & Resorts in 2018 to avoid investor confusion between the two REITs and their external management company.
Braemar has announced plans to look at strategic alternatives multiple times throughout its existence but this is the first time company officials have publicly committed to a full sale.
In the news release, Braemar CEO Richard Stockton said he believes the portfolio will be attractive to private equity hotel investors.
"We've built a high-quality portfolio that is well-positioned to attract significant interest from private market buyers," he said. "With improving economic conditions, continued strength in industry performance, limited new room supply, and healthy consumer spending, I believe we are entering a favorable environment for a potential sale."
Company executives noted the Braemar portfolio has seen strong performance even amid a weak summer travel season, noting first half of 2025 RevPAR growth of 2.9% has outpaced the industry average of 0.8%.
Monty Bennett, who is chairman of Braemar's board along with CEO and chairman of Ashford Inc., said the need to sell is indicative of problems faced by all publicly traded hotel REITs.
"While Braemar has traded at a similar multiple to its publicly-traded lodging REIT peers, the reality is that the public markets have not been friendly to lodging REITs, including Braemar," he said in the news release. "This fact, along with the constant shareholder activism that Braemar has experienced, has led us to conclude that a sale of the company is the best way to maximize value for shareholders. Hotel portfolios like the Braemar portfolio do not come to the market very often, and we believe the opportunity to acquire this iconic portfolio will attract significant buyer interest from around the world and result in an attractive valuation for shareholders."