UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION
13 OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest
event reported): March 13, 2020
BRAEMAR HOTELS & RESORTS
INC.
(Exact name of registrant
as specified in its charter)
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Maryland
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001-35972
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46-2488594
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(State or other jurisdiction of
incorporation or organization)
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(Commission file number)
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(I.R.S. Employer Identification
Number)
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14185 Dallas Parkway, Suite 1100
Dallas, Texas
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75254
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(Address of principal executive
offices)
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(Zip Code)
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Registrant’s telephone number, including
area code: (972) 490-9600
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
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Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ¨
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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BHR
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New York Stock Exchange
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Preferred Stock, Series B
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BHR-PB
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New York Stock Exchange
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Preferred Stock, Series D
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BHR-PD
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New York Stock Exchange
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Item 1.01. Entry into a Material Definitive Agreement.
Hotel Management Letter Agreement
Pursuant to
the Amended and Restated Braemar Hotel Master Management Agreement dated August 8, 2018, by and among Braemar TRS Corporation,
CHH III Tenant Parent Corp., RC Hotels (Virgin Islands), Inc. and Remington Lodging & Hospitality, LLC (“Remington”)
(the “hotel management agreement”) we pay to Remington, a subsidiary of Ashford Inc. (“AINC”),
a monthly hotel management fee equal to the greater of $14,000 (increased annually based on consumer price index adjustments)
or 3% of gross revenues (the “base fee”) as well as annual incentive hotel management fees, if certain
operational criteria are met and other general and administrative expense reimbursements. Under the original terms of the
hotel management agreement, we paid Remington on the fifth day of each month for the base fees in the preceding month. Pursuant
to the terms of the Letter Agreement dated March 13, 2020 (the “Hotel Management Letter Agreement”), in order
to allow Remington to better manage its corporate working capital and to ensure the continued efficient operation of our hotels,
we agreed to pay the base fee and to reimburse all expenses on a weekly basis for the preceding week, rather than on a monthly
basis. The Hotel Management Letter Agreement went into effect on March 13, 2020 and will continue until terminated by us.
This summary
description of the Hotel Management Letter Agreement is qualified in its entirety by the Hotel Management Letter Agreement, a copy
of which is included as Exhibit 10.2 to this Report and is incorporated herein by reference.
Item 2.03. Creation of a
Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On March
10, 2020, we borrowed $25.0 million on our Second Amended and Restated Credit Agreement, dated as of October 25, 2019,
by and among Braemar Hotels & Resorts Inc. (the “Company”), Braemar Hospitality Limited Partnership, Bank
of America, N.A. and the other lenders party thereto (the “secured revolving credit facility”) for general corporate
purposes. On March 13, 2020, we borrowed an additional $50.0 million under the secured revolving credit facility. As a result,
we have borrowed, in the aggregate, $75.0 million under this facility and there is no additional capacity remaining.
Item 7.01. Regulation FD
Disclosure.
Reduction in Base Salary
of Executive Officers
On March
16, 2020, AINC announced that, in light of the uncertainty created by the effects of the COVID-19 novel coronavirus, the base
salary paid by AINC for certain of our officers, including our Chief Executive Officer, Chief Financial Officer and our other
named executive officers, will be temporarily reduced by 15%. These reductions will be effective until such time as
AINC’s Chief Executive Officer, Mr. Monty J. Bennett, determines in his discretion that the effects of the COVID-19
novel coronavirus have subsided and it has been determined that the Company is in a healthy financial position. Any amounts
relinquished pursuant to the temporary reduction may be paid by AINC in the future, as AINC’s Chief Executive Officer,
Mr. Monty J. Bennett, determines in his discretion. The reductions in base salaries will be effective as of March 21,
2020.
Reduction in Annual Retainers
for the Company’s Board of Directors (the “Board”)
On March
16, 2020, the Company announced that, effective immediately, in light of the uncertainty created by the effects of the COVID-19
novel coronavirus, the annual cash retainer for each non-employee director serving on the Company’s Board will be temporarily
reduced by 25%. This reduction will be effective until such time as the Board determines in its discretion that such effects of
COVID-19 novel coronavirus have subsided. Any amounts relinquished pursuant to the temporary reduction in fees may be paid in the
future, as determined by the Board in its discretion.
Dividend Policy
On March
16, 2020, the Company and its Board announced a suspension of its previously disclosed 2020 common stock dividend policy and that
the Company will not pay a dividend on its common stock for the first quarter ended March 31, 2020. Our Board will continue
to review our dividend policy and make future announcements with respect thereto.
On March
16, 2020, the Company issued a press release relating to dividends for the first quarter ended March 31, 2020, a copy of which
is included as Exhibit 99.1 to this Report.
Item
7.01 of this Current Report on Form 8-K is being furnished and shall not be deemed to be “filed” for purposes
of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liabilities of that Section.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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BRAEMAR HOTELS & RESORTS INC.
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By:
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/s/ Deric S. Eubanks
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Deric S. Eubanks
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Chief Financial Officer
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Date: March 16, 2020
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Exhibit 10.2
March 13, 2020
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Braemar TRS Corporation
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14185 Dallas Parkway, Suite 1100
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Dallas, Texas 75254
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Attention: Chief Financial Officer
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Re:
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Amended and Restated Braemar Hotel Master Management Agreement (the “Management Agreement”)
dated August 8, 2018, by and among Braemar TRS Corporation, CHH III Tenant Parent Corp., RC Hotels (Virgin Islands), Inc. and Remington
Lodging & Hospitality, LLC
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To the Chief Financial Officer:
Capitalized terms used, but not defined,
herein shall have the meanings given to them in the Management Agreement.
With regard to each Hotel that is subject
to the Management Agreement, Section 16.01 of the Management Agreement provides that Manager shall be paid its monthly Base Management
Fee on the fifth (5th) day of each month for the preceding Accounting Period. As you are no doubt aware, the spread of the novel
coronavirus (Covid-19) is having a significant impact on the travel and hospitality industry. In order for Manager to better manage
its corporate working capital to ensure the continued efficient operation of the Hotels, we request that you agree to permit: (i)
payment of the Base Management Fee to Manager; and (ii) reimbursement to Manager of all expenses for which Manager is entitled
to be reimbursed under the Management Agreement, in each case, on a weekly rather than monthly basis (the “Proposal”).
If approved, the timing of payments contemplated by the Proposal will begin immediately and will continue until terminated by Owner.
Please indicate your agreement to the Proposal
by your signature below. Should you have any questions, please do not hesitate to contact me.
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REMINGTON LODGING & HOSPITALITY, LLC, a Delaware
limited liability company
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By:
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/s/ Sloan Dean
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Name:
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Sloan Dean
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Title:
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Chief Executive Officer
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APPROVED AND AGREED:
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Braemar TRS Corporation, on behalf of itself and
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all New Lessees under the Management Agreement,
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hereby agrees to Proposal
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BRAEMAR TRS CORPORATION
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By:
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/s/ Deric Eubanks
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Name:
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Deric Eubanks
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Title:
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President
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cc:
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Braemar Hospitality Limited Partnership
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14185 Dallas Parkway, Suite 1100
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Dallas, Texas 75254
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Attention: General Counsel
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Exhibit 99.1
NEWS RELEASE
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Contact:
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Deric Eubanks
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Jordan Jennings
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Joseph Calabrese
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Chief Financial Officer
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Investor Relations
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Financial Relations Board
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(972) 490-9600
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(972) 778-9487
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(212) 827-3772
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BRAEMAR HOTELS & RESORTS Declares
PREFERRED
Dividends
For FIRST QUARTER OF 2020
DALLAS, March xx, 2020 – Braemar
Hotels & Resorts Inc. (NYSE: BHR) (“Braemar” or the “Company”) announced today that its Board of Directors
declared a quarterly cash dividend of $0.3438 per diluted share for the Company’s 5.5% Series B Cumulative Convertible Preferred
Stock for the first quarter ending March 31, 2020. The dividend, which equates to an annual rate of $1.375 per share, is payable
on April 15, 2020, to shareholders of record as of March 31, 2020.
The Board declared a quarterly cash dividend
of $0.5156 per diluted share for the Company’s 8.25% Series D Cumulative Preferred Stock for the first quarter ending March
31, 2020. The dividend, which equates to an annual rate of $2.0625 per share, is payable on April 15, 2020, to shareholders of
record as of March 31, 2020.
The Company and its Board announced a suspension
of its previously announced 2020 common stock dividend policy and the Company will not pay a dividend on the common stock for the
first quarter ending March 31, 2020. The Board will continue to monitor the situation and assess future quarterly common dividend
declarations and usage of excess cash accordingly.
* * * * *
Braemar Hotels & Resorts is a real
estate investment trust (REIT) focused on investing in luxury hotels and resorts.
Ashford has created an Ashford App for
the hospitality REIT investor community. The Ashford App is available for free download at Apple’s App Store and the Google
Play Store by searching “Ashford.”
Certain statements and assumptions
in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe
harbor provisions of the federal securities regulations. Forward-looking statements in this press release may include, among others,
statements about the implied share price for the Company's common stock. When we use the words "will likely result,"
"may," "anticipate," "estimate," "should," "expect," "believe," "intend,"
or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and
uncertainties, many of which are outside Braemar’s control.
These forward-looking statements
are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated,
including, without limitation: the impact of the novel strain of coronavirus (COVID-19) on our business; general conditions of
the capital markets and the market price of our common stock and preferred stock; changes in our business or investment strategy;
availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which
we operate, interest rates or the general economy; our ability to successfully complete and integrate acquisitions, and manage
our planned growth, and the degree and nature of our competition. These and other risk factors are more fully discussed in Braemar’s
filings with the Securities and Exchange Commission.
The
forward-looking statements included in this press release are only made as of the date of this press release. The Company can
give no assurance that these forward-looking statements will be attained or that any deviation will not occur. We are not obligated
to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances,
changes in expectations or otherwise.