DALLAS, June 1, 2021 /PRNewswire/ --
Acquisition Highlights:
- Luxury hotel ideally located in close proximity to high-end
shopping on Rodeo Drive and business demand from Century City and Culver City.
- The Company will issue 2.5 million units in its Operating
Partnership ("OP units") and 500,000 warrants to the seller as part
of the consideration for this acquisition, in addition to
$30 million of cash (the majority of
which will be used to paydown existing debt).
- Attractive price per key of $474,000 for fee simple ownership of a luxury
hotel.
- Revenue per available room (RevPAR) of $251.14 for the 12 months ended December 31, 2019.
- Remington will take over hotel management
post-acquisition.
- The acquisition also includes five luxury condominium
residences.
Braemar Hotels & Resorts Inc. (NYSE: BHR) ("Braemar" or the
"Company") today announced it has entered into a definitive
agreement to acquire the 138-room Mr. C Beverly Hills Hotel in
Los Angeles, California (the "Mr.
C" or the "Property"). In addition, the Company is also
acquiring five luxury condominium residences adjacent to the
hotel. The acquisition is expected to close on or prior to
July 9, 2021, subject to customary
closing conditions. Because the acquisition is subject to customary
closing conditions, the Company can give no assurance that the
transaction will be consummated by such date or at all.
"The acquisition of the Mr. C is an opportunity for us to
acquire an irreplaceable luxury property in a premier location in
the heart of West Los Angeles,"
said Richard J. Stockton, Braemar's
President and Chief Executive Officer. "This property fits
perfectly with our strategy of owning high RevPAR luxury hotels and
resorts and further diversifies our portfolio. We are excited
to announce our first acquisition in the midst of the current
industry recovery cycle. This is a complicated transaction
that involves OP units, warrants, and mortgage debt. I'm
proud of our entire team's effort. Also, with Remington's
proven ability to maximize operating performance, we are excited
about the future prospects for this renowned Los Angeles mainstay. Our prior
corporate term loan had restrictive covenants that not only
severely limited our capital expenditure program, prohibited
property dispositions, and disallowed common dividends, but also
would not have allowed us to complete this acquisition. By
repaying that loan with the proceeds from our recent convertible
notes offering, we have not only eliminated these constraints, but
are now also able to pursue this acquisition."
With its premier location in the heart of West Los Angeles, the Property is in the
middle of over 45 million sq. ft. of office space, supporting
substantial corporate demand and a wide array of world-renowned
leisure demand generators, including unrivaled shopping with
high-end retailers, vibrant restaurants and various art and
cultural attractions. Beverly
Hills, just to the north of the Property, contains 4.5
million sq. ft. of Class A office space and houses some of the most
famous tenants on the West Coast, including Google, Apple, Live
Nation, and the Academy of Motion Picture Arts and Sciences.
Additionally, the Property is just minutes from Century City, Los
Angeles' largest collection of upscale Class A office space
containing over 8.2 million sq. ft. of space and housing companies
like Creative Artists Associates, 21st Century Fox
Studios, and AECOM's worldwide headquarters. Beyond the
first-class hotel experience, guests have easy access to the
Los Angeles area's many amenities
and activities, including world-class beaches, amusement parks,
sporting events, boating, fishing, hiking, golfing, and
skiing.
The Mr. C was built in 1965 and underwent an extensive
renovation in 2011. It has 138 luxurious and spacious rooms,
including 22 suites. The hotel offers an array of amenities,
including a full-service spa, and three food and beverage outlets
(in addition to in-room dining). The property also boasts the
acclaimed The Restaurant at Mr. C, over 24,000 sq. ft. of flexible
indoor/outdoor meeting space, a 4,500 sq. ft. outdoor pool terrace
with daybeds and cabanas, state-of-the-art fitness center with
personal fitness training, and a business center. Additionally, the
Property includes five newly-constructed and fully-furnished
residences offering the hotel's personalized services and
luxurious, world-class amenities. These residences blend
contemporary architecture with elegant, minimalistic design and
range in size from 2,000 to 3,400 sq. ft. The residences are
currently offered for extended-stay rental.
The Mr. C has been the recipient of the following awards:
- AAA Four Diamond Lodging Award
- Forbes Travel Guide Four-Star Award - Hotel
- Conde Nast Traveler – Reader's Choice Award
The total consideration for the acquisition is $77.9 million and consists of $65.4 million for the hotel ($474,000 per key) and an allocated price of
$12.5 million for the five adjacent
condominium units. The acquisition will be funded with
approximately $30 million of cash
(the majority of which will be used to paydown existing debt), 2.5
million OP units, 500,000 warrants at a strike price of
$6.00, and a $30 million mortgage loan. The purchase
price for the Mr. C represents, as of December 31, 2019, a trailing 12-month
capitalization rate of 5.0% on hotel net operating income of
$3.9 million and a trailing 12-month
16.5x hotel EBITDA multiple, according to the Company's preliminary
estimates based on unaudited operating financial data provided by
the sellers. The Company expects to realize a stabilized
yield of over 8% on its investment in the next three to five
years. On a trailing 12-month basis as of December 31, 2019, the Property achieved RevPAR
of $251.14, with 75% occupancy and an
average daily rate (ADR) of $334.40,
according to unaudited operating financial data provided by the
sellers.
Braemar Hotels & Resorts is a real estate investment trust
(REIT) focused on investing in luxury hotels and resorts.
EBITDA is defined as net income (loss), computed in
accordance with generally accepted accounting principles ("GAAP"),
before interest, taxes, depreciation and amortization. Hotel
EBITDA multiple is defined as the purchase price divided by the
trailing 12 month EBITDA. A capitalization rate is determined
by dividing the property's annual net operating income by the
purchase price. Net operating income is the property's hotel
EBITDA minus a capital expense reserve of either 4% or 5% of gross
revenues.
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 Private
Securities Litigation Reform Act of 1995. Forward-looking
statements in this press release include, among others, statements
about the Company's strategy and future plans. These
forward-looking statements are subject to risks and uncertainties.
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 COVID-19, and the rate of adoption and
efficacy of vaccines to prevent COVID-19, on our business and
investment strategy; the timing and outcome of the Securities and
Exchange Commission's investigation; our ability to repay,
refinance or restructure our debt and the debt of certain of our
subsidiaries; anticipated or expected purchases or sales of
assets; our projected operating results; completion of any pending
transactions; our understanding of our competition; market trends;
projected capital expenditures; the impact of technology on our
operations and business; general volatility of the capital
markets and the market price of our common stock and preferred
stock; availability, terms and deployment of capital; availability
of qualified personnel; changes in our industry and the markets in
which we operate, interest rates or the general economy; 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. Such
forward-looking statements are based on our beliefs, assumptions,
and expectations of our future performance taking into account all
information currently known to us. These beliefs, assumptions, and
expectations can change as a result of many potential events or
factors, not all of which are known to us. If a change occurs, our
business, financial condition, liquidity, results of operations,
plans, and other objectives may vary materially from those
expressed in our forward-looking statements. You should carefully
consider this risk when you make an investment decision concerning
our securities. Investors should not place undue reliance on
these forward-looking statements. 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, except to the extent required by
law.
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SOURCE Braemar Hotels & Resorts Inc.