Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Braemar Hotels & Resorts, Inc. First Quarter 2025 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Deric Eubanks, Chief Financial Officer. Please go ahead.

Good morning, and welcome to today's call to review results for Braemar Hotels & Resorts for the first quarter of 2025 and to update you on recent developments. On the call today will also be Richard Stockton, President and Chief Executive Officer; and Chris Nixon, Executive Vice President and Head of Asset Management. The results as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were distributed yesterday in a press release. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the federal securities regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or a solicitation of an offer to buy any securities. Securities will be offered only by means of a registration statement and prospectus, which can be found at www.sec.gov. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on Form 8-K with the SEC on May 7, 2025, and may also be accessed through the company's website at www.bhrreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the first quarter ended March 31, 2025, with the first quarter ended March 31, 2024. I will now turn the call over to Richard Stockton. Please go ahead, Richard.

Good morning. Welcome to our first quarter earnings conference call. I'll begin today's call by providing an overview of our recent results and our strategic priorities for 2025. Then Deric will provide a review of our financial results, and Chris will provide an update on our asset management activity. Afterwards, we will open the call for Q&A. We have a few key themes for today's call. First, I'm pleased to report that our portfolio achieved 4.2% comparable RevPAR growth in the first quarter when we saw growth in both our urban markets and hotels and resorts. Second, during the quarter, we addressed our final 2025 debt maturity, which not only resulted in lower cost of capital for the debt on these assets, but also improved our maturity schedule by extending our weighted average maturity. And third, while there has been some rhetoric about economic uncertainty that seems to have dissipated, our booking pace continues to be strong, and we believe our portfolio is well positioned to outperform. Turning to our first quarter results. I'm excited to report that our portfolio delivered solid results with comparable RevPAR of $404, reflecting an increase of 4.2% over the prior year quarter. This is the highest quarterly RevPAR Braemar has ever achieved and remains the portfolio in the lodging REIT sector with the highest RevPAR. This marks our second consecutive quarter of RevPAR growth, which I believe reflects an important inflection point in our performance. Additionally, comparable total hotel revenue increased by 4.4% over the prior year period and comparable hotel EBITDA was $70.8 million, which represents a 5.3% increase over the prior year quarter. 9 of our 15 hotels are considered resort destinations, and this luxury resort portfolio delivered solid first quarter performance. Returning to a more normalized growth trajectory, our resort portfolio…

Thanks, Richard. For the quarter, we reported a net loss attributable to common stockholders of $2.5 million or $0.04 per diluted share and AFFO per diluted share of $0.40. Adjusted EBITDAre for the quarter was $63 million. At quarter end, we had total assets of $2.1 billion. We had $1.2 billion of loans, of which $27.7 million related to our joint venture partner share of the loan on the Capital Hilton. Our total combined loans had a blended average interest rate of 7.1%, taking into account in-the-money interest rate caps. Based on the current level of SOFR and our corresponding interest rate caps, approximately 23% of our debt is effectively fixed and approximately 77% is effectively floating. As of the end of the first quarter, we had approximately 42.3% net debt to gross assets. We ended the quarter with cash and cash equivalents of $81.7 million plus restricted cash of $54.5 million. The vast majority of that restricted cash is comprised of lender and manager held reserve accounts. At the end of the quarter, we also had $25.5 million in due from third-party hotel managers. This primarily represents cash held by one of our brand managers, which is also available to fund hotel operating costs. With regard to dividends, we again announced a quarterly common stock dividend of $0.05 per share or $0.20 per diluted share on an annualized basis. This equates to an annual yield of approximately 10.4% based on yesterday's stock price. Our Board of Directors will continue to review the company's dividend policy on a quarter-to-quarter basis. Regarding capital markets, during the quarter, we closed on a refinancing involving 5 hotels. The new loan totals $363 million and has a 2-year initial term with three 1-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2030. The loan is interest only and provides for a floating interest rate of SOFR plus 2.52%. The loan is secured by 5 hotels, the Clancy, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile and the Ritz-Carlton Reserve Dorado Beach. The $363 million loan amount represents a 48.9% loan-to-value based on third-party appraisals completed by the lender. This loan replaced higher cost loans that were priced at SOFR plus 2.66% and SOFR plus 4.75%. As of March 31, 2025, our portfolio consisted of 15 hotels with 3,667 net rooms. Our share count currently stands at 73.9 million fully diluted shares outstanding, which is comprised of 67 million shares of common stock and 6.9 million OP units. This concludes our financial review. I'd now like to turn it over to Chris to discuss our asset management activities for the quarter.

Thank you, Deric. We are pleased to report a strong start to the year. As Richard mentioned, in the first quarter, comparable hotel RevPAR across our portfolio was $404, up 4% over the prior year period. Our urban assets continue to show strong growth with steady demand returning to downtown locations. During the first quarter, RevPAR for our urban portfolio increased 11% over the prior year period. Our resort properties also continued to grow during the first quarter, posting a 2% increase in RevPAR over the prior year period, supported by strong leisure demand and healthy rate growth. Guests spending on food and beverage, spa and recreation remained strong, supporting higher total revenue per available room. Additionally, our property managers aggressively rolled out a number of initiatives at the beginning of the year focused on cost control, resulting in an improvement of 34 basis points in hotel EBITDA margin compared to the prior year period. While overall performance was strong, we did face some headwinds. For example, the California wildfires disrupted the Los Angeles market with our Cameo Beverly Hills experiencing some displacement in group room revenue in January and February. Despite some challenges, total portfolio hotel EBITDA increased 5% during the first quarter compared to the prior year period. This growth notably outpaced our 4% increase in comparable total revenue, reflecting the success our property managers have had with their cost containment efforts and enhanced operational efficiency and driving margin expansion. With that, I would now like to highlight several of the key wins we achieved during the first quarter. First quarter group revenue increased 31% compared to the prior year period, underscoring the effectiveness of our property sales strategies. This performance reflects the results of an exhaustive sales and marketing deep dive conducted during the hotel budgeting process.…

Thank you, Chris. In summary, I'd like to reiterate that we continue to be pleased with the performance of our hotels, in particular, the continued strong performance of our urban properties. We also remain well positioned with a solid balance sheet and promising outlook. We look forward to updating you on our progress in the quarters ahead. This concludes our prepared remarks, and we will now open the call for Q&A. Thank you.

[Operator Instructions] Our first question comes from the line of Jonathan Jenkins with Oppenheimer.

First one for me, maybe for Chris. On the group side, is there anything worth calling out in terms of the shortening booking window, increased cancellations or attrition? Any trends or variability worth calling out outside of pace in light of that macroeconomic volatility that's out there. A – Chris Nixon : Yes. This portfolio seems to be very well insulated from kind of those macro headwinds and challenges that we're seeing. While the booking window is shortening slightly, we're not seeing much impact to group across the portfolio. So we're not seeing the deceleration that others in the industry are seeing. Q1, as you heard in my remarks, finished very strong, up 31%. Q1 only decelerated by 100 basis points in the quarter, which is common when you're ahead by that much. And we actually saw acceleration in group pace as we look ahead to 2026, where 2026 pace started ahead. And then as we finished Q1, it was even further ahead. We're not seeing any major impact to leads. Lead volume was roughly flat, down slightly year-over-year. Conversion remaining strong. So there is a slight shortening of the booking window, but resilience broadly across this portfolio.

Okay. That's great to hear. And then maybe on a similar line, can you help us think about how much inbound international exposure you have in the portfolio and if you're seeing any impact there?

Yes. The international inbound is a very small part of this portfolio's makeup. It's mid-single digits in total. What we're seeing broadly is very market specific. St. Thomas, for instance, their international inbound was down. However, they had 30 fewer international inbound arrivals in Q1 than they did last year. So it's still roughly 2% of their business. It's very small and the declines are minimal. We saw the inverse in Puerto Rico, where their international inbound actually grew year-over-year. It increased from 3.9% of total arrivals last year to 4.1% of total arrivals this year. And you're talking about 18 to 20 additional arrivals. And so there's very little impact. The impact, I would say, is muted. It's market specific, but it's nothing material that we're seeing pull through in the data broadly.

Okay. I appreciate the color. And then switching gears to expenses. The EBITDA margin was better than we were thinking. I'm curious how you think about the opportunity in the near term to grow margin? Does it necessitate an environment with rate-driven RevPAR growth? Or can you do that if RevPAR is flat? And maybe as a follow-on, any color on kind of what the opportunity is or how you think about the opportunity to further reduce costs and manage margins back to 2018, 2019 levels?

Yes. I'm very optimistic about the outlook for margin within this portfolio. Our team got ahead of it. We had fairly aggressive budgets coming into the year. And at the end of last year, we implemented some aggressive cost containment plans across the portfolio to give us the best opportunity to achieve those budgets. And it was very timely. So when I look, we're still improving productivity. Productivity improved 1% year-over-year. So we're doing more with less labor. We're reducing our contract labor exposure. Contract labor was only 2% of total labor in Q1, and that was down significantly to last year. We're seeing that wages are stabilizing within this portfolio. The wage growth in March was less than February, which was less than January. And so I think when you look at all those things, how this portfolio is positioned in terms of revenue pace and revenue on the books, when you look at the cost containment measures, the productivity improvements we've driven, the reduction in contract labor, all those things make me very optimistic that we'll continue to see EBITDA growth.

Excellent. And then maybe last one for me, if I could. On the Magnificent Mile conversion, can you just provide some additional color on the conversion, why it makes sense, the immediate uplift opportunity that was talked about and also maybe too early to tell, but what kind of CapEx spend we should expect on that?

Yes, I'll let Chris talk a little bit about the CapEx plans there. But this is Richard. Yes, it's just very simple. Unencumbered assets trade at lower cap rates typically versus encumbered assets, right? That's what we've observed in looking at multiple examples of both. And so if you're able to cancel a long-term management contract and instead put in a contract that is terminable on sale, we believe that, that would enable the asset to trade at a higher value if and when we ever chose to sell it. So that's kind of what sits behind that comment that we made. In addition to that, we also believe there's upside in the performance, right? We think that Remington is a very good operator, and they'll be able to operate the property very leanly.

In terms of the CapEx to convert, we're looking at a public space and a meeting space renovation, which we'll look to execute next year. That was kind of in our plans either way. The property needs it. And so that will be part of it, I would say, minimal CapEx.

Our next question comes from the line of Michael Bellisario with Baird.

First question is just on the preferred redemptions, probably for Deric here. But I mean how much can you buy back? Do you have to wait for shareholders to put in for redemptions? Can you actively seek out shareholders through your broker-dealer network? Just trying to understand the mechanics there and maybe what the limiting factor is in terms of how much you can actually repurchase?

Yes. The nature of the security is that it's redeemable by the company after it's been outstanding for 2 years, and it's redeemable by the holder at par after it's been outstanding for 3 years. So that's the structure of the security.

Yes. And I'll just add to that, what Deric said. And so the issuance occurred over time. And so you've got different buyers that are at different stages of that period, that initial 3-year period. It is possible for the holders also to redeem immediately upon purchase, but then there's a redemption fee that has to be paid that burns off over a 3-year period. So that's how that works.

Got it. So it seems like your limiting factor is more just sort of timing and sequencing of when the issuance occurred relative to when you can maybe repurchase it 2 or 3 years down. Okay. Understood. And then a separate topic, just on asset sales, Richard, maybe can you just provide an update on what you're seeing in the marketplace and how you expect asset sale proceeds to be utilized?

Yes, I'll tell you, I've been pleasantly surprised at the amount of increased buyer activity that's out there. We are testing the market with a couple of assets right now. I know I've been talking about this process for a while. It does take a long time. But we are having buyers toured our assets. We're getting LOIs. So we're seeing a fair amount of activity. I think that's really being bolstered by more constructive debt markets, right? You've seen spreads come in quite a lot relative to maybe a year ago in the CMBS market, but also from some of the debt funds who have more attractive warehouse line financing. So that's what's driving it. And I think you're also seeing more predictable growth patterns. We're seeing it in our resort portfolio, of course. But on the urban side, there's even a better story to tell. I would say that the assets that we would consider selling comprise the upper upscale assets of the portfolio, 3 or 4 of those. We would consider them -- I haven't officially designated them as noncore, but clearly, our strategy is to own luxury assets. So that's how we think about those. And I think we'll probably get to closing on 1 or 2 hotels this year. And as and when we have a buyer where we've gone hard and have a clear line to a closing, we'll make that announcement. In terms of use of proceeds, you asked about, I mean, we have a couple of different uses of proceeds that we've talked about in terms of the shareholder value creation plan, including preferred equity redemptions, possible share buybacks, which we do have authorization for, but we haven't executed on yet. But then also, in your recent note, Michael, you correctly identified that we have a corporate convertible note maturing next year and proceeds from asset sales could be utilized to retire that as well.

That will conclude our question-and-answer session. I'll turn the call back over to management for any closing remarks.

Thank you all for joining us on our first quarter earnings call. We look forward to speaking to you again next quarter.

That does conclude today's call. Thank you all for joining. You may now disconnect.