The move follows a review conducted by a special committee composed of independent directors. The company said the committee initially explored a potential sale of Braemar but ultimately determined that terminating the advisory agreement, spinning out management and remaining public offered greater value creation opportunities.
As part of the transition, Braemar plans to maintain a portfolio of approximately six to eight luxury properties in the U.S. and Caribbean. The company said those assets had a gross asset value of more than $1 billion and generated between $300 million and $350 million in annual revenue for the trailing 12 months ended March 31.
Braemar expects the new structure to reduce general and administrative expenses by more than $25 million annually. Following the termination of the advisory agreement, the company will employ its management team directly, including President/CEO Richard Stockton.
“The steps we are announcing today are the result of the special committee’s thorough review of strategic alternatives and represent what the board believes is the best outcome for Braemar’s shareholders,” said Rebeca Odino-Johnson, chairperson of the special committee. “Braemar’s self-management will create meaningful value, and shareholders will benefit from a new, purpose-built Board.”
The company has retained Ferguson Partners to identify five new independent directors. Upon their appointment, all current directors, including Chairman Monty Bennett, will step down from the board, with Stockton remaining as a director. The reconstituted board will be led by an independent chairman.
Braemar said it is also reviewing its bylaws, corporate governance guidelines, code of ethics and board committee charters as part of a broader governance overhaul.
Stockton said the company will continue evaluating the sale of two or three additional assets to satisfy obligations related to terminating its relationship with Ashford and to focus on its remaining luxury portfolio.
“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,” he said.
The company also plans to terminate contractual relationships with Premier Project Management LLC and Remington Lodging & Hospitality LLC, both subsidiaries of Ashford. Certain short-term contracts with Inspire, Pure and RED Hospitality will remain in place to avoid disrupting hotel operations.
Braemar said it does not intend to sell all or substantially all of its assets, only the number necessary to satisfy obligations associated with the company sale fee and master agreement termination fee tied to its agreements with Ashford.
Robert W. Baird & Co. Inc. acted as financial advisor, White & Case LLP acted as legal counsel and Longacre Square Partners acted as strategy and communications advisor to Braemar.
Tags: Rebeca Odino-Johnson Braemar Hotels & Resorts Ashford Inc.
