Braemar Hotels & Resorts (BHR) Q3 2026 earnings review
Braemar's hotel sales fund its manager buyout, while room revenue jumps 14%
Braemar Hotels & Resorts grew revenue at its remaining luxury properties while selling five resorts to buy out its external manager. Revenue per available room at hotels owned a year ago rose 14%, led by city hotels and the newly rebranded Cameo Beverly Hills. However, booking the $480 million advisor exit fee pushed the real estate trust to a $241 million net loss, and cash flow per share fell deeper into negative territory.
| Comparable room revenue (RevPAR) | $284 +14.4% from a year ago (+15.9% ex-Scottsdale) |
|---|---|
| Comparable hotel EBITDA | $12.9M +20.7% from a year ago (+43.8% ex-Scottsdale) |
| Adjusted FFO per share | -$0.25 -$0.19 a year ago |
| Unpaid Ashford exit fee (Sept 30) | $179.3M $300.7M paid in Q3; Scottsdale closed Oct 28 |
⚖️ Verdict: 🟢 Bullish
The story got better because the October sale of the Four Seasons Scottsdale finishes the asset sales needed to pay off Ashford Inc. without touching the final seven hotels. In addition, refinancing the Lake Tahoe mortgage cleared the last near-term debt maturity until December 2028. One caution: the queue of preferred stockholders waiting for cash redemptions grew to $63 million, and underlying resort profits fell 38% during the seasonal lull.
The question now is how much cash flow the seven-hotel company can generate for common stockholders once it becomes self-managed in mid-November. One view is that cutting $25 million of annual manager fees and refinancing floating-rate loans will unlock substantial profit; the other is that preferred dividends, the $63 million redemption queue, and resort seasonality will absorb most of the cash. First-quarter peak winter results will settle it.
🐂 Bull Case
Scottsdale Sale Finishes the Advisor Buyout
Braemar has been selling luxury hotels to pay a $480.0 million exit fee to its external manager, Ashford Inc., and become a self-managed real estate investment trust (REIT). After closing four sales in July and August for $627.5 million, the company still owed Ashford $179.3 million on September 30.
On October 28, the hotel owner sold the Four Seasons Resort Scottsdale for $372.0 million, or $1.8 million per room. Chief executive Richard J. Stockton called Scottsdale "the final sale needed to complete our transition to self-management and pay the remaining fees owed to our external advisor, we remain on track to complete our transition to a self-managed REIT in mid-November".
- Three-hotel July sale (Sarasota, Yountville, Bardessono): $437.5 million gross cash
- Pier House Resort sale in August: $190.0 million ($1.3 million per room)
- Four Seasons Scottsdale sale in October: $372.0 million ($1.8 million per room, 15% unlevered return)
- Ashford fee paid in the third quarter: $300.7 million by our math, leaving $179.3 million before Scottsdale
This matters because the Scottsdale sale leaves about $192 million of cash after paying off its $180.0 million mortgage by our math. That covers the remaining $179.3 million Ashford balance without selling any of the seven remaining hotels. The board also plans to "nominate seven new highly qualified and independent leaders for election at the Company’s 2026 Annual Meeting of Stockholders".
What to watch: the fourth-quarter balance sheet, which will show whether the mid-November separation cleared the entire $179.3 million Ashford liability and whether any extra termination fees remained.
City Hotels and Renovated Rooms Drove 14% Growth
"Our luxury portfolio delivered another quarter of double-digit RevPAR and Hotel EBITDA growth," Stockton said. Revenue per available room (RevPAR), the standard gauge of hotel room revenue, rose 14.4% at properties owned a year ago to $284, while room rates climbed 8.6% to $419 and occupancy rose 5.3% to 67.9%.
City hotels and newly renovated properties carried the quarter. Urban RevPAR rose 23.3% to $211, and urban hotel earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 63.2% to $10.1 million. Cameo Beverly Hills grew RevPAR 82.8% after rebranding to Hilton's LXR luxury collection, while The Notary Hotel rose 33.9% and Sofitel Chicago rose 18.0%.
Excluding the sold Scottsdale resort, underlying RevPAR at the seven remaining hotels grew 15.9% to $290 and hotel EBITDA rose 43.8% to $14.0 million. What to watch: fourth-quarter revenue at Sofitel Chicago, where planned guestroom renovations will take rooms out of service and test whether the other six properties can keep growth above 10%.
Tahoe Refinancing Clears Debt Maturities Until 2028
Entering the quarter, Braemar faced a January 2027 maturity on its $43.4 million Ritz-Carlton Lake Tahoe mortgage, which carried an interest rate of the Secured Overnight Financing Rate (SOFR) plus 3.25%. After a brief extension in October, the REIT refinanced the property on October 30 into a new $60.0 million loan with up to $15.0 million more available.
The new loan cuts the interest spread by 0.6 percentage points to SOFR plus 2.65% and runs for three years with two one-year extensions. In addition, the Lake Tahoe hotel returned to positive hotel EBITDA of $4.1 million, up 11.5% from a year ago. With the refinancing and the Scottsdale mortgage payoff, "the Company’s next hard debt maturity is not until December 2028".
What to watch: progress on refinancing the $209.9 million JPMorgan loan and the $80.5 million St. Thomas loan over the next two quarters, which management previously targeted to cut average interest rates by about 1.5 percentage points.
🐻 Bear Case
Resort Profits Fell 38% Behind the Headline
Stockton said growth was broad-based and highlighted resort RevPAR rising 5.9% to $457 on an 8.4% increase in daily room rates. However, the resort property table shows that underlying resort hotel EBITDA fell 38.1% from a year ago to $2.8 million, and the resort EBITDA margin shrank 3.7 percentage points to 5.2%.
- Four Seasons Scottsdale (sold in October): hotel EBITDA swung to a $1.1 million loss from a $1.0 million profit
- Ritz-Carlton St. Thomas: RevPAR fell 2.6% and hotel EBITDA loss widened to $0.9 million from $0.5 million
- Ritz-Carlton Reserve Dorado Beach: hotel EBITDA doubled to $0.7 million, but margin was only 4.4% in the off-season
- Capital Hilton (Washington, D.C.): total revenue fell 5.4% and hotel EBITDA dropped 20.6% to $1.9 million
Selling Scottsdale removes the biggest third-quarter drag, but it also leaves the company with just seven hotels. Three resorts (Dorado Beach, St. Thomas, and Lake Tahoe) now drive most of the annual profit and lose money or barely break even in the third quarter, while Capital Hilton's food and beverage revenue is shrinking.
What to watch: first-quarter peak winter EBITDA at Dorado Beach and St. Thomas, because any weather disruption or leisure slowdown at those two Caribbean resorts would hit the core of the smaller portfolio.
Exit Costs Turned Operating Gains Into Cash Losses
While hotel-level profit rose, corporate results moved the other way because Braemar recorded the $480.0 million termination fee owed to Ashford. Even with a $259.9 million accounting gain from selling hotels, the company reported a net loss to common stockholders of $240.9 million, or $3.51 per share, pushing stockholders' equity to a $105.5 million deficit.
Excluding one-offs, corporate costs still rose. Other general and administrative expenses (corporate overhead, legal, and advisory bills) jumped to $12.1 million, or 11.9% of total revenue, up 9.3 percentage points from 2.7% a year ago by our math. Adjusted EBITDAre (real estate EBITDA excluding one-offs) fell 76.3% to $3.9 million because of sold hotels and higher overhead, and adjusted funds from operations (AFFO, a REIT cash-flow measure) fell to a loss of $0.25 per share.
What to watch: quarterly corporate overhead and advisory fees in the first quarter of 2027, the first full quarter after the mid-November separation. Management previously projected annual overhead would drop to $15 million, or about $3.75 million per quarter.
Preferred Redemptions and Floating Debt Still Squeeze Common
Once Ashford is paid off, common stockholders still sit behind a large stack of preferred equity and floating-rate debt. Investors holding non-traded Series E and Series M preferred shares can ask Braemar to buy them back, and the queue of unpaid redemption requests rose to $63.5 million on September 30, up from $57.8 million in July and $30.9 million at year-end.
The company redeemed just $5.0 million of preferred stock in cash during the third quarter, down from $16.3 million in the second quarter, while preferred dividends cost $7.6 million. Meanwhile, 100% of Braemar's $624.4 million debt is floating rate with no active interest-rate caps, and its average interest rate rose to 7.25% from 6.82% last quarter as cheaper loans were paid off.
What to watch: the unpaid preferred redemption balance at year-end, because management previously stated it expected to clear the entire backlog by June 2027, which would require over $60 million of cash.
💲 Other KPIs
Interest expense plus loan-cost amortization fell 35.7% from $25.2 million a year ago and 21.0% from $20.5 million last quarter by our math. Paying off mortgages with hotel sale proceeds cut gross debt to $624.4 million from $950.9 million in June, though the average interest rate on remaining loans rose to 7.25%.
Total liquidity stood at $135.0 million by our math, down from $160.4 million in June and $183.9 million at year-end. That includes $78.9 million of unrestricted cash, $39.6 million of restricted reserves, and $16.5 million held by hotel managers available to pay operating costs.
Property upgrades totaled $5.0 million, or 4.9% of hotel revenue by our math, down from $5.8 million in the second quarter and $12.1 million in the first. Year-to-date spending is $22.9 million, tracking toward the bottom of the company's prior $25–35 million full-year plan after selling five hotels.
❓ Key Questions
Did the Scottsdale sale pay off Ashford in full?
Braemar owed Ashford $179.3 million on September 30 and raised about $192 million after debt from selling Scottsdale. Management has not disclosed the exact final payout or whether any Master Agreement Termination Fee still applies.
Did the company keep its 2027 financial targets?
In October, Braemar published 2027 targets for its seven-hotel portfolio, including $407–412 million of revenue and $85–90 million of Adjusted EBITDAre. The third-quarter release did not mention those targets or provide a fourth-quarter outlook.
How will Braemar fund the $63.5 million preferred queue?
Unpaid investor requests to redeem Series E and M preferred stock rose to $63.5 million while third-quarter redemptions slowed to $5.0 million. Fulfilling the queue by June 2027 would consume most of the company's $78.9 million unrestricted cash.
What is the forward group booking pace for 2027?
Group events make up nearly a quarter of revenue, and Washington, D.C. food and beverage sales dropped this quarter. Management has not updated its forward group booking pace in a quarterly release for over a year.