What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-06 compared with 2021-05-07 · 321 added, 228 removed, 425 unchanged (56% of the section changed)

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Additionally, statements regarding the following subjects are forward-looking by their nature:

• the impact of COVID-19 and numerous governmental travel restrictions and other orders on our business, including one or more possible recurrences of COVID-19 cases causing state and local governments to reinstate travel restrictions;

• the impact of COVID-19 and numerous governmental travel restrictions and other orders on our business, including one or more possible recurrences of COVID-19 case surges causing state and local governments to reinstate travel restrictions;

• our business and investment strategy;

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• the factors discussed in our Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2021 (the “2020 10-K”), including those set forth under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “Properties;” and other filings under the Exchange Act;

• adverse effects of the COVID-19 pandemic, including a significant reduction in business and personal travel and travel restrictions in regions where our hotels are located, and one or more possible recurrences of COVID-19 cases causing

a further reduction in business and personal travel and potential reinstatement of travel restrictions by state or local governments;

causing a further reduction in business and personal travel and potential reinstatement of travel restrictions by state or local governments;

• our ability to raise sufficient capital and/or take other actions to improve our liquidity position or otherwise meet our liquidity requirements;

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• limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S.

federal income tax purposes, and

federal income tax purposes;

• future sales and issuances of our common stock or other securities might result in dilution and could cause the price of our common stock to decline.

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We operate in the direct hotel investment segment of the hotel lodging industry.

As of March 31, 2021, we owned interests in thirteen hotel properties in six states, the District of Columbia and St.

As of June 30, 2021, we owned interests in thirteen hotel properties in six states, the District of Columbia and St.

Virgin Islands with 3,722 total rooms, or 3,487 net rooms, excluding those attributable to our joint venture partner.

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instead we employ hotel management companies to operate them for us under management contracts.

As of March 31, 2021, Remington Hotels, a subsidiary of Ashford Inc., managed three of our thirteen hotel properties.

As of June 30, 2021, Remington Hotels, a subsidiary of Ashford Inc., managed three of our thirteen hotel properties.

Third-party management companies managed the remaining hotel properties.

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has an ownership interest.

These products and services include, but are not limited to project management services, debt placement and related services, broker-dealer and distribution services, audio visual services, real estate advisory services, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and mobile key technology.

These products and services include, but are not limited to design and construction services, debt placement and related services, broker-dealer and distribution services, audio visual services, real estate advisory services, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and mobile key technology.

Bennett is chairman and chief executive officer of Ashford Inc.

and, together with Mr.

Archie Bennett, Jr., as of March 31, 2021, owned approximately 607,743 shares of Ashford Inc.

Archie Bennett, Jr., as of June 30, 2021, owned approximately 608,578 shares of Ashford Inc.

common stock, which represented an approximate 20.1% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc.

Series D Convertible Preferred Stock, which was exercisable (at an exercise price of $117.50 per share) into an additional approximate 3,991,191 shares of Ashford Inc.

common stock, which if exercised as of March 31, 2021 would have increased the Bennetts’ ownership interest in Ashford Inc.

common stock, which if exercised as of June 30, 2021 would have increased the Bennetts’ ownership interest in Ashford Inc.

to 65.6%, provided that prior to August 8, 2023, the voting power of the holders of the Ashford Inc.

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include 360,000 shares owned by trusts.

As of March 31, 2021, Mr.

As of June 30, 2021, Mr.

Bennett, chairman of our board of directors and his father, Mr.

Archie Bennett, Jr., together owned approximately 4,234,775 shares of our common stock (including common units, long-term incentive plan (“LTIP”) units and performance LTIP units), which represented an approximate 6.7% ownership in the Company.

Pursuant to the provisions of the Fifth Amended and Restated Advisory Agreement with Ashford LLC, as amended on January 15, 2019, the revenues and expenses used to calculate Net Earnings (as defined) for the twelve months ended March 31, 2021, are as follows (in thousands):

Revenues $ 24,005

Expenses 10,565

Net earnings $ 13,440

COVID-19, Management’s Plans and Liquidity

In December 2019, COVID-19 was identified in Wuhan, China, subsequently spread to other regions of the world, and has resulted in significant travel restrictions and extended shutdown of numerous businesses in every state in the United States.

In March 2020, the World Health Organization declared COVID-19 to be a global pandemic.

Beginning in late February 2020, we have experienced a significant decline in occupancy and RevPAR associated with COVID-19 as we experienced significant reservation cancellations as well as a significant reduction in new reservations.

Beginning in late February 2020, we experienced a significant decline in occupancy and RevPAR associated with COVID-19 as we experienced significant reservation cancellations as well as a significant reduction in new reservations.

The prolonged presence of the virus has resulted in health and other government authorities imposing widespread restrictions on travel and other businesses.

The hotel industry and our portfolio have experienced the postponement or cancellation of a significant number of business conferences and similar events.

Following the government mandates and health official orders in March 2020, the Company temporarily suspended operations at 11 of its 13 hotels and dramatically reduced staffing and expenses at its hotels that remained operational.

COVID-19 has had a significant negative impact on the Company’s operations and financial results to date.

The full financial impact of the reduction in hotel demand caused by the pandemic and suspension of operations at the Company’s hotels cannot be reasonably estimated at this time due to uncertainty as to its severity and duration.

In addition, one or more possible recurrences of COVID-19 cases could result in further reductions in business and personal travel and could cause state and local governments to reinstate travel restrictions.

The Company expects that the COVID-19 pandemic will continue to have a negative impact on the Company’s results of operations, financial position and cash flow in 2021 and potentially much longer.

As a result, in March 2020, the Company fully drew down its $75 million secured revolving credit facility, which was later converted into a term loan, suspended the quarterly cash dividend on its common stock, reduced planned capital expenditures, and, working closely with its hotel managers, significantly reduced its hotels’ operating expenses.

See note 6 to our condensed consolidated financial statements.

All of the Company’s property-level debt is non-recourse.

Beginning on April 1, 2020, we did not make at least one interest payment under nearly all of our loan agreements, which constituted an “Event of Default” as such term is defined under the applicable loan documents.

Further, the Company triggered an “Event of Default,” as defined under the secured revolving credit facility agreement as a result of the Company being in default on mortgage and mezzanine loans with an aggregate principal amount in excess of $200 million.

Pursuant to the terms of the applicable loan documents, such an Event of Default caused an automatic increase in the interest rate on our outstanding loan balance for the period such Event of Default remains outstanding.

Following an Event of Default, our lenders can generally elect to accelerate all principal and accrued interest payments that remain outstanding under the applicable loan agreement and foreclose on the applicable hotel properties that are security for such loans.

Such Event of Default under the secured revolving credit facility agreement was eliminated by the First Amendment to Second Amended and Restated Credit Agreement, dated June 8, 2020, which provides that defaults under mortgage and mezzanine loans wi th an aggregate principal amount in excess of $200 million do not trigger a default under the secured revolving credit agreement unless such mortgage or mezzanine loans are also accelerated, and excluding from the $200 million threshold, any default and acceleration under those certain mortgage and mezzanine loans having an aggregate principal amount of $435 million and secured by the Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, The Notary Hotel and The Clancy.

During the second and third quarters of 2020, we reached forbearance and other agreements with our lenders relating to loans secured by the Pier House Resort & Spa, The Ritz-Carlton Sarasota, The Ritz-Carlton Lake Tahoe, Hotel Yountville, Bardessono Hotel and Spa, Sofitel Chicago Magnificent Mile, The Notary Hotel, The Clancy, Marriott Seattle Waterfront, Capital Hilton and Hilton La Jolla Torrey Pines.

On June 8, 2020, the Company amended its secured revolving credit facility converting it into a $65 million secured term loan and changed the terms of certain financial covenants, including a waiver of the Consolidated Fixed Charge Coverage Ratio (as defined in the Amendment) through March 31, 2021, that the Company was subject to under the secured revolving credit facility.

On February 22, 2021, the Company further amended the term loan providing an extension of the waiver on the majority of the covenants through the fourth quarter of 2021 and a reduced fixed charge coverage ratio covenant through the end of 2022.

The first period in which covenants will be tested is for the fiscal quarter ending March 31, 2022.

As of March 31, 2021, no loans are in default.

Additionally, the Company did not make rental payments under two ground leases that are paid monthly;

however, the Company executed a forbearance agreement with the landlord of the Bardessono Hotel and Spa and executed a rent deferral letter (consistent with the terms of Ordinance Number O-21177, passed by the Council of the City of San Diego on March 25, 2020) with the landlord of the Hilton La Jolla Torrey Pines, each of which temporarily resolved any potential events of default arising out of such non-payments.

As of March 31, 2021, the Company is current on its rental payments.

The Company has taken proactive and aggressive actions to protect liquidity and reduce corporate expenses.

The Company has also significantly reduced its planned spending for capital expenditures for fiscal year 2021 to approximately $20 million to $30 million and suspended its common stock dividends conserving approximately $6 million per quarter.

The Company has also significantly reduced its planned spending for capital expenditures for fiscal year 2021 to approximately $20 million to $30 million and suspended its common stock dividends.

When preparing financial statements for each annual and interim reporting period management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

In applying the accounting guidance, the Company considers its current financial condition and liquidity sources, including current funds available, forecasted future cash flows and its unconditional obligations due over the next 12 months.

As of March 31, 2021, the Company maintained unrestricted cash of $85.7 million and restricted cash of $39.3 million.

For the three months ended March 31, 2021, cash flows provided by operating activities was approximately $12.0 million.

During the three months ended March 31, 2021, cash, cash equivalents and restricted cash increased $11.9 million.

As of June 30, 2021, the Company maintained unrestricted cash of $157.7 million and restricted cash of $57.4 million.

For the six months ended June 30, 2021, cash flows provided by operating activities was approximately $31.5 million.

The vast majority of the restricted cash is comprised of lender and manager held reserves.

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At the end of the quarter, there was also $21.5 million due to the Company from third-party hotel managers, which is primarily the Company’s cash held by one of its property managers which is also available to fund hotel operating costs.

We cannot predict when hotel operating levels will return to normalized levels after the effects of the pandemic fully subside, whether our hotels will be forced to shut down operations or whether one or more governmental entities may impose additional travel restrictions due to a resurgence of COVID-19 cases in the future.

On December 10, 2020, the Company announced that it plans to continue its suspension of the common stock dividend into 2021 to protect liquidity and will evaluate future dividend declarations on a quarterly basis going forward.

We cannot predict when hotel operating levels will return to normalized levels after the effects of the pandemic fully subside, whether our hotels will be forced to shut down operations or whether one or more possible recurrences of COVID-19 case surges could result in further reductions in business and personal travel or potentially cause state and local governments to reinstate travel restrictions.

As a result of these factors resulting from the impact of the pandemic, we are unable to estimate future financial performance with certainty.

However, based on our completed term loan amendment and forbearance and other agreements, our current unrestricted and restricted cash on hand, our current cash utilization and forecast of future operating results for the next 12 months from the date of this report, and the actions we have taken to improve our liquidity, the Company has concluded that management’s current plan alleviates the substantial doubt about its ability to continue as a going concern.

However, based on our completed Convertible Senior Notes transaction (as

described below), the corresponding repayment of our secured term loan, which eliminated financial covenants associated with it, our current unrestricted and restricted cash on hand, our current cash utilization and forecast of future operating results for the next 12 months from the date of this report, and the actions we have taken to improve our liquidity, the Company has concluded that the facts and circumstances that previously gave rise to substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued have been resolved.

Facts and circumstances could change in the future that are outside of management’s control, such as additional government mandates, health official orders, travel restrictions and extended business shutdowns due to COVID-19.

Recent Developments

On February 4, 2021, the Company entered into a Standby Equity Distribution Agreement (the “SEDA”) with YA II PN, Ltd.

(“YA”), pursuant to which the Company will be able to sell up to 7,780,786 shares of its common stock (the “Commitment Amount”) at the Company’s request any time during the commitment period commencing on February 4, 2021, and terminating on the earliest of (i) the first day of the month next following the 36-month anniversary of the SEDA or (ii) the date on which YA shall have made payment of Advances (as defined in the SEDA) pursuant to the SEDA for shares of the Company’s common stock equal to the Commitment Amount (the “Commitment Period”).

Other than with respect to the Initial Advance (as defined below) the shares sold to YA pursuant to the SEDA would be purchased at 95% of the Market Price (as defined below) and would be subject to certain limitations, including that YA could not purchase any shares that would result in it owning more than 4.99% of the Company’s common stock.

“Market Price” shall mean the lowest daily VWAP (as defined below) of the Company’s common stock during the 5 consecutive trading days commencing on the trading day following the date the Company submits an advance notice to YA.

“VWAP” means, for any trading day, the daily volume weighted average price of the Company’s common stock for such date on the principal market as reported by Bloomberg L.P.

during regular trading hours.

At any time during the Commitment Period the Company may require YA to purchase shares of the Company’s common stock by delivering a written notice to YA setting forth the Advance Shares (as defined in the SEDA) that the Company desires to issue and sell to YA (the “Advance Notice”).

The Company may deliver an Advance Notice for an initial Advance for up to 1,200,000 Advance Shares (the “Initial Advance”).

The preliminary purchase price per share for such shares shall be 100% of the average daily VWAP for the 5 consecutive trading days immediately prior to the date of the Advance Notice (the “Preliminary Purchase Price”).

Pursuant to the SEDA, we currently intend to use the net proceeds from any sale of the shares for working capital purposes, including the repayment of outstanding debt.

There are no other restrictions on future financing transactions.

The SEDA does not contain any right of first refusal, participation rights, penalties or liquidated damages.

We are not required to pay any additional amounts to reimburse or otherwise compensate YA in connection with the transaction except for a $10,000 structuring fee.

As of May 2, 2021, the Company has sold approximately 1.45 million shares of common stock and received proceeds of approximately $8.4 million under the SEDA.

On February 22, 2021, the Company entered into the Second Amendment to the Second Amended and Restated Credit Agreement on its term loan.

The amendment provides an extension of the waiver on the majority of the covenants through the fourth quarter of 2021 and a reduced fixed charge coverage ratio covenant through the end of 2022.

The first period in which covenants will be tested is for the fiscal quarter ending March 31, 2022.

The amendment also allows the Company to utilize approximately $9.3 million of cash held in FF&E reserve accounts at certain properties for discretionary capital expenditures.

From March 16, 2021 through May 5, 2021, Braemar entered into privately negotiated exchange agreements with certain holders of its Series B Convertible Preferred Stock in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended.

The Company agreed to exchange a total of approximately 4.5 million shares of its common stock for approximately 1.2 million shares of its Series B Convertible Preferred Stock.

On April 21, 2021, Braemar and Lincoln Park, entered into a purchase agreement, pursuant to which the Company may sell to Lincoln Park up to $35 million of shares of its common stock, par value $0.01 per share of the Company, from time to time during the term of the purchase agreement.

On April 21, 2021, Braemar and Lincoln Park, entered into a purchase agreement, pursuant to which the Company may sell to Lincoln Park up to 8,893,565 shares of its common stock, from time to time during the term of the purchase agreement.

The issuance of the shares of common stock pursuant to the purchase agreement has been registered pursuant to the Company’s Registration Statement, and the related base prospectus included in the Registration Statement, as supplemented by a prospectus supplement filed with the SEC on April 21, 2021.

Braemar and Lincoln Park also entered into a registration rights agreement, pursuant to which the Company agreed to maintain the effectiveness of the Registration Statement.

On April 21, 2021, we issued 280,957 shares of our common stock for gross proceeds of approximately $1.5 million.

As of August 4, 2021, the Company has issued approximately 766,000 shares of common stock for gross proceeds of approximately $4.2 million u nder the purchase agreement .

In May 2021, the Company issued $86.25 million aggregate principal amount of 4.50% Convertible Senior Notes due June 2026 (the "Convertible Senior Notes").

The net proceeds from this offering of the Convertible Senior Notes were approximately $82.8 million after deducting the underwriting fees and other expenses paid by the Company.

The Convertible Senior Notes are governed by an indenture (the “Base Indenture”) between the Company and U.S.

Bank National Association, as trustee.

The Convertible Senior Notes bear interest at a rate of 4.50% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2021.

The Convertible Senior Notes will mature on June 1, 2026.

A portion of the proceeds were used to fully repay the secured term loan.

On May 25, 2021, the Company entered into an equity distribution agreement with Virtu Americas LLC (“Virtu”), to sell from time to time shares of our common stock having an aggregate offering price of up to $50 million (the “Virtu May 2021 EDA”).

We will pay Virtu a commission of approximately 1.0% of the gross sales price of the shares of our common stock sold.

The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale.

As of August 4, 2021, the Company has sold approximately 8.1 million shares of common stock under the Virtu May 2021 EDA and received gross proceeds of approximately $48.6 million.

During the second quarter of 2021, we recognized a gain of $800,000 related to the settlement of a transfer tax matter with the City of San Francisco.

On July 12, 2021, the Company entered into a second equity distribution agreement with Virtu to sell from time to time shares of our common stock having an aggregate offering price of up to $100 million (the “Virtu July 2021 EDA”).

We will pay Virtu a commission of approximately 1.0% of the gross sales price of the shares of our common stock sold.

The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale.

As of August 4, 2021, the Company has not sold any shares of common stock under the Virtu July 2021 EDA.

On July 12, 2021, the Company made an additional investment in OpenKey of approximately $117,000.

Subsequent to June 30, 2021, the Company has sold approximately 86,000 shares of Series E Preferred Stock and received net proceeds of approximately $1.9 million.

On August 5, 2021, the Company acquired a 100% interest in the 138-room Mr.

C Beverly Hills Hotel and five luxury condominium residences adjacent to the hotel for total consideration of approximately $74 million, subject to adjustments.

The consideration consisted of $10 million of cash, 2.5 million Braemar OP common units, 500,000 warrants for the purchase of Braemar common stock with a $6.00 strike price and the assumption of a $50 million mortgage loan.

Upon closing, the Company repaid $20 million of the assumed mortgage loan.

Key Indicators of Operating Performance

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RESULTS OF OPERATIONS

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

The following table summarizes changes in key line items from our condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020 (in thousands except percentages):

Three Months Ended March 31, Favorable (Unfavorable)

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

The following table summarizes changes in key line items from our condensed consolidated statements of operations for the three months ended June 30, 2021 and 2020 (in thousands except percentages):

Three Months Ended June 30, Favorable (Unfavorable)

2021 2020 $ Change % Change

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Other 13,420 4,285 9,135 213.2

Total hotel revenue 83,848 117,520 (33,672) (28.7)

Total revenue 97,110 12,895 84,215 653.1

Hotel operating expenses:

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Depreciation and amortization 18,244 18,553 309 1.7

Gain on legal settlement (989) — 989

Advisory services fee 6,739 4,901 (1,838) (37.5)

Transaction costs 296 — (296)

Corporate general and administrative 2,383 1,513 (870) (57.5)

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Net income (loss) attributable to the Company $ (9,233) $ (47,931) $ 38,698 80.7 %

The following table illustrates the key performance indicators of all hotel properties for the periods indicated:

Three Months Ended March 31,

All hotel properties owned for the three months ended June 30, 2021 and 2020 have been included in our results of operations during the respective periods in which they were owned.

The following table illustrates the key performance indicators of all hotel properties owned for the periods indicated:

Three Months Ended June 30,

Occupancy 49.18 % 6.81 %

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Net Income (Loss) Attributable to the Company.

Net loss attributable to the Company decreased $4.2 million, from $12.9 million for the three months ended March 31, 2020 (the “2020 quarter”), to $8.7 million for the three months ended March 31, 2021 (the “2021 quarter”), as a result of the factors discussed below.

Net loss attributable to the Company decreased $38.7 million, from $47.9 million for the three months ended June 30, 2020 (the “2020 quarter”) to $9.2 million for the three months ended June 30, 2021 (the “2021 quarter”), as a result of the factors discussed below.

Rooms Revenue .

Rooms revenue decreased $16.1 million, or 22.9%, to $54.3 million during the 2021 quarter compared to the 2020 quarter.

During the 2021 quarter, we experienced a 2,276 basis point decrease in occupancy and a 25.5% increase in room rates compared to the 2020 quarter.

The decrease in rooms revenue is due to the COVID-19 pandemic.

Rooms revenue increased $57.3 million, or 877.1%, to $63.8 million during the 2021 quarter compared to the 2020 quarter.

During the 2021 quarter, we experienced a 4,237 basis point increase in occupancy and a 35.2% increase in room rates.

The increase in rooms revenue is due to the hotel properties recovering from the COVID-19 pandemic.

Fluctuations in rooms revenue is a result of the changes in occupancy and ADR as reflected in the table below (dollars in thousands):

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Capital Hilton (1)

$ 1,213 1,797 n/a

Marriott Seattle Waterfront 3,109 4,657 (7.6) %

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_______________

(1) The hotel was closed the entire 2020 quarter.

(2) The hotel was being renovated through September 30, 2020.

Food and Beverage Revenue .

Food and beverage revenue decreased $12.2 million, or 42.3%, to $16.6 million during the 2021 quarter compared to the 2020 quarter.

This decrease is primarily attributable to the impact of the COVID-19 pandemic.

We experienced an aggregate decrease in food and beverage revenue of $12.9 million at twelve hotel properties, partially offset by an increase of $702,000 at The Ritz-Carlton St.

Food and beverage revenue increased $17.8 million, or 855.8%, to $19.9 million during the 2021 quarter compared to the 2020 quarter.

This increase is attributable to increases at all hotel properties as they are recovering from the COVID-19 pandemic.

Other Hotel Revenue .

Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking, rentals and business interruption revenue, decreased $5.4 million, or 29.3%, to $12.9 million during the 2021 quarter compared to the 2020 quarter.

The decrease is attributable to $3.6 million of business interruption revenue recorded in the 2020 quarter, an aggregate decrease in other hotel revenue of $3.5 million at ten hotel properties, partially offset by higher other hotel revenue of $1.7 million at The Ritz-Carlton Sarasota, The Ritz-Carlton St.

Thomas and Pier House Resort & Spa.

During the 2020 quarter, we recognized business interruption revenue of $3.6 million at The Ritz-Carlton St.

Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals and business interruption revenue, increased $9.1 million, or 213.2%, to $13.4 million during the 2021 quarter compared to the 2020 quarter.

The increase is attributable to an aggregate increase in other hotel revenue of $9.7 million at twelve hotel properties, partially offset by a decrease of $126,000 at Capital Hilton and lower business interruption revenue of $390,000.

During the 2020 quarter, we recognized business interruption revenue of $390,000 at The Ritz-Carlton St.

Thomas as a result of Hurricane Irma.

There was no such revenue recorded in the 2021 quarter as the insurance claim was fully settled in 2020.

There was no business interruption revenue during the 2021 quarter as the insurance claim was fully settled in 2020.

Rooms Expense .

Rooms expense decreased $6.9 million, or 38.4%, to $11.0 million in the 2021 quarter compared to the 2020 quarter.

The decrease is attributable to an aggregate decrease in rooms expense of $6.9 million at eleven hotel properties, partially offset by an increase of $54,000 at The Ritz-Carlton St.

Thomas and Pier House Resort & Spa.

Rooms expense increased $10.0 million, or 291.3%, to $13.5 million in the 2021 quarter compared to the 2020 quarter.

This increase is attributable to increases at all hotel properties as they are recovering from the COVID-19 pandemic.

Food and Beverage Expense .

Food and beverage expense decreased $9.9 million, or 41.6%, to $14.0 million during the 2021 quarter compared to the 2020 quarter.

The decrease is attributable to an aggregate decrease of $10.0 million at twelve hotel properties, partially offset by an increase of $54,000 at The Ritz-Carlton St.

Food and beverage expense increased $12.7 million, or 347.3%, to $16.3 million during the 2021 quarter compared to the 2020 quarter.

This increase is attributable to an aggregate increase of $12.9 million at all but two hotel properties.

The increase was partially offset by an aggregate decrease in food and beverage expense of $177,000 at Capital Hilton and The Notary Hotel.

Other Operating Expenses .

Other operating expenses decreased $13.5 million, or 32.2%, to $28.5 million in the 2021 quarter compared to the 2020 quarter.

Other operating expenses increased $20.5 million, or 157.9%, to $33.5 million in the 2021 quarter compared to the 2020 quarter.

Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.

We experienced a decrease of $704,000 in direct expenses and $12.8 million in indirect expenses and incentive management fees in the 2021 quarter compared to the 2020 quarter.

We experienced an increase of $3.9 million in direct expenses and $16.6 million in indirect expenses and incentive management fees in the 2021 quarter as compared to the 2020 quarter as the hotel properties are recovering from the COVID-19 pandemic.

Direct expenses were 5.3% of total hotel revenue in the 2021 quarter and 10.3% in the 2020 quarter.

The decrease in direct expenses is attributable to the COVID-19 pandemic.

The decrease in indirect expenses is attributable to decreases in (i) marketing costs of $3.3 million;

(ii) general and administrative costs of $8.9 million;

(iii) repairs and maintenance of $810,000;

(v) energy costs of $96,000 and (vi) lease expense of $261,000.

The decreases are partially offset by an increase of $532,000 in incentive management fee.

The increase in direct expenses is attributable to higher occupancy levels at our hotel properties as they are recovering from the COVID-19 pandemic.

The increase in indirect expenses is comprised of increases in (i) general and administrative costs of $6.3 million;

(ii) marketing costs of $3.2 million;

(iii) repairs and maintenance of $2.3 million;

(iv) lease expense of $102,000;

(v) energy costs of $1.4 million;

and (vi) incentive management fees of $3.3 million.

Management Fees .

Base management fees decreased $1.3 million, or 34.7%, to $2.5 million in the 2021 quarter compared to the 2020 quarter.

Management fees decreased $1.5 million at ten hotel properties, partially offset be an aggregate increase of $156,000 at The Ritz-Carlton St.

Thomas, Pier House Resort & Spa and The Ritz-Carlton Sarasota.

Base management fees increased $2.5 million, or 533.5%, to $3.0 million in the 2021 quarter compared to the 2020 quarter at all of our hotel properties as a result of the recovery from the COVID-19 pandemic.

Property Taxes, Insurance and Other .

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Depreciation and Amortization .

Depreciation and amortization increased $15,000, or 0.1%, to $18.4 million for the 2021 quarter compared to the 2020 quarter.

Depreciation and amortization decreased $309,000, or 1.7%, to $18.2 million in the 2021 quarter compared to the 2020 quarter.

Advisory Services Fee.

Advisory services fee decreased $274,000, or 5.4%, to $4.8 million in the 2021 quarter compared to the 2020 quarter due to decreases in the base advisory fee of $76,000, reimbursable expenses of $52,000, and equity-based compensation of $517,000, partially offset by an increase in incentive fee of $371,000.

In the 2021 quarter, we recorded an advisory services fee of $4.8 million, which included a base advisory fee of $2.5 million, reimbursable expenses of $492,000, $1.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

and an incentive fee of $371,000.

Advisory services fee increased $1.8 million, or 37.5%, to $6.7 million in the 2021 quarter compared to the 2020 quarter due to increases in the base advisory fee of $106,000, reimbursable expenses of $98,000, incentive fee of $1.3 million, and equity-based compensation of $368,000.

In the 2021 quarter, we recorded an advisory services fee of $6.7 million, which included a base advisory fee of $2.7 million, reimbursable expenses of $510,000, incentive fee of $1.3 million and $2.3 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

In the 2020 quarter, we recorded an advisory services fee of $4.9 million, which included a base advisory fee of $2.6 million, reimbursable expenses of $412,000 and $1.9 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

Gain on legal settlements .

In the 2021 quarter, we recognized a gain of $800,000 related to the settlement of a transfer tax matter with the City of San Francisco and a gain of $189,000 related to a billing dispute.

In the 2020 quarter, there was no such gain recognized.

Transaction costs.

In the 2021 quarter, we recognized $296,000 of transaction costs associated with the pending acquisition of the Mr.

C Beverly Hills hotel.

There were no transaction costs in the 2020 quarter.

Corporate General and Administrative .

Corporate general and administrative expense was $2.4 million in the 2021 quarter and $1.5 million in the 2020 quarter.

The decrease in corporate general and administrative expenses is primarily due to lower professional fees of $427,000, lower miscellaneous expenses of $80,000, partially offset by higher reimbursed operating expenses of Ashford Securities of $108,000 and higher public company costs of $67,000.

The increase in corporate general and administrative expense is due to higher miscellaneous expenses of $301,000, higher public company costs of $165,000 and an increase of $425,000 related to our share of the reimbursed operating expenses of Ashford Securities, partially offset by lower professional fees of $23,000.

Gain (Loss) on Insurance Settlement and Disposition of Assets.

In the 2021 quarter, we recognized a gain of $481,000 associated with proceeds received from an insurance claim and a gain of $18,000 upon disposition of certain fixed assets.

In the 2021 quarter, we recognized a gain of $197,000 associated with the sale of certain ERFP assets to Ashford Inc.

Equity in Earnings (Loss) of Unconsolidated Entity .

In the 2021 quarter and the 2020 quarter, we recorded equity in loss of unconsolidated entity of $64,000 and $40,000, respectively, related to our investment in OpenKey.

In the 2021 quarter and 2020 quarter, we recorded equity in loss of unconsolidated entity of $66,000 and $40,000, respectively, related to our investment in OpenKey.

Interest Income .

Interest income decreased $120,000, or 93.0%, to $9,000 for the 2021 quarter compared to the 2020 quarter.

Interest income decreased $12,000, or 50.0%, to $12,000 for the 2021 quarter.

Other Income (Expense) .

Other expense decreased $138,000, or 100.0% to $0 in the 2021 quarter compared to the 2020 quarter.

In the 2020 quarter, we recorded expense of $63,000 related to CMBX premiums and interest paid on collateral and a realized loss of $75,000 on interest rate floors.

There was no such expenses in the 2021 quarter.

Other expense was $64,000 in 2020 quarter as compared to $0 in the 2021 quarter.

In the 2020 quarter, we recorded expense of $64,000 related to CMBX premiums and interest paid on collateral.

Interest Expense and Amortization of Loan Costs .

Interest expense and amortization of loan costs decreased $5.1 million, or 43.2%, to $6.8 million for the 2021 quarter compared to the 2020 quarter.

The dec rease is primarily due to a lower average LIBOR rate and the amortization of default interest and late charges recorded on loans that were previously in default, partially

offset by higher interest expense associated with our corporate term loan.

The average LIBOR rates for the 2021 quarter and the 2020 quarter were 0.12% and 1.40%, respectively.

Interest expense and amortization of loan costs decreased $10.2 million, or 58.5%, to $7.2 million in the 2021 quarter compared to the 2020 quarter.

The decrease is primarily due to a lower average LIBOR rate and the amortization of default interest and late charges recorded on loans that were previously in default, partially offset by higher interest expense associated with our secured term loan as well as the interest on our Convertible Senior Notes.

The average LIBOR rates in the 2021 quarter and the 2020 quarter were 0.10% and 0.35%, respectively.

Write-off of Loan Costs and Exit Fees.

Write-off of loan costs and exit fees was $351,000 in the 2021 quarter, resulting from several amendments executed with various lenders, which included deferral of debt service payments and allowed the use of reserves for property-level operating shortfalls and/or to cover debt service payments.

Write-off of loan costs and exit fees was $1.2 million in the 2021 quarter, primarily associated with the $1.2 million write-off of unamortized loan costs upon the payoff of our secured term loan.

Write-off of loan costs and exit fees was $2.2 million in the 2020 quarter, resulting from several amendments executed with various lenders, which included deferral of debt service payments and allowed the use of reserves for property-level operating shortfalls and/or to cover debt service payments.

Third-party fees incurred in conjunction with these amendments, totaling $2.2 million, were expensed in accordance with applicable accounting guidance.

Unrealized Gain (Loss) on Derivatives .

Unrealized loss on derivatives of $58,000 in the 2021 quarter consisted of unrealized loss on interest rate caps.

Unrealized loss on derivatives of $969,000 in the 2020 quarter consisted of a $925,000 unrealized loss on CMBX credit default swaps and a $44,000 unrealized loss on interest rate caps.

Income Tax (Expense) Benefit .

Income tax (expense) benefit changed $4.5 million, from income tax benefit of $4.4 million in the 2020 quarter to income tax expense of $61,000 in the 2021 quarter.

This change was primarily due to an increase in the profitability of our TRS entities in the 2021 quarter compared to the 2020 quarter.

(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities.

Our noncontrolling interest partner in consolidated entities was allocated a loss of $849,000 and $2.4 million in the 2021 quarter and the 2020 quarter, respectively.

At both June 30, 2021 and 2020, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership.

Noncontrolling interests in operating partnership were allocated a net loss of $1.3 million and $5.8 million in the 2021 quarter and the 2020 quarter, respectively.

Redeemable noncontrolling interests in Braemar OP represented ownership interests of 7.62% and 10.26% as of June 30, 2021 and 2020, respectively.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

The following table summarizes changes in key line items from our condensed consolidated statements of operations for the six months ended June 30, 2021 and 2020 (in thousands except percentages):

Six Months Ended June 30, Favorable (Unfavorable)

2021 2020 $ Change % Change

Rooms $ 118,160 $ 77,001 $ 41,159 53.5 %

Food and beverage 36,482 30,880 5,602 18.1

Other 26,316 22,534 3,782 16.8

Total hotel revenue 180,958 130,415 50,543 38.8

Hotel operating expenses:

Rooms 24,497 21,325 (3,172) (14.9)

Food and beverage 30,274 27,550 (2,724) (9.9)

Other expenses 62,019 55,069 (6,950) (12.6)

Management fees 5,484 4,343 (1,141) (26.3)

Total hotel operating expenses 122,274 108,287 (13,987) (12.9)

Property taxes, insurance and other 14,454 14,904 (450) 3.0

Depreciation and amortization 36,597 36,891 (294) 0.8

Gain on legal settlement (989) — 989

Advisory services fee 11,534 9,970 (1,564) (15.7)

Transaction costs 296 — (296)

Corporate general and administrative 3,983 3,445 (538) (15.6)

Total expenses 188,149 173,497 (14,652) (8.4)

Gain (loss) on insurance settlement and disposition of assets 696 — 696

Operating income (loss) (6,495) (43,082) 36,587 84.9

Equity in earnings (loss) of unconsolidated entity (130) (80) (50) (62.5)

Interest income 21 153 (132) (86.3)

Other income (expense) — (202) 202 100.0

Interest expense and amortization of loan costs (13,982) (29,308) 15,326 52.3

Write-off of loan costs and exit fees (1,528) (2,237) 709 31.7

Unrealized gain (loss) on derivatives (78) 187 (265) (141.7)

Income (loss) before income taxes (22,192) (74,569) 52,377 70.2

Income tax (expense) benefit (206) 3,077 (3,283) (106.7)

Net income (loss) (22,398) (71,492) 49,094 68.7

(Income) loss attributable to noncontrolling interest in consolidated entities 2,096 2,976 880 29.6

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 2,361 7,655 5,294 69.2

Net income (loss) attributable to the Company $ (17,941) $ (60,861) $ 42,920 70.5 %

The following table illustrates the key performance indicators of all hotel properties for the periods indicated:

Six Months Ended June 30,

Occupancy 43.13 % 33.25 %

ADR (average daily rate) $ 405.58 $ 341.44

RevPAR (revenue per available room) $ 174.92 $ 113.53

Rooms revenue (in thousands) $ 118,160 $ 77,001

Total hotel revenue (in thousands) $ 180,958 $ 130,415

Net Income (Loss) Attributable to the Company.

Net loss attributable to the Company decreased $42.9 million, from $60.9 million for the six months ended June 30, 2020 (the “the 2020 period”), to $17.9 million for the six months ended June 30, 2021 (the “the 2021 period”), as a result of the factors discussed below.

Rooms Revenue .

Rooms revenue increased $41.2 million, or 53.5%, to $118.2 million during the 2021 period compared to the 2020 period.

During the 2021 period, we experienced a 988 basis point increase in occupancy and a 18.8% increase in room rates compared to the 2020 period.

The increase in rooms revenue is due to the hotel properties recovering from the COVID-19 pandemic.

Fluctuations in rooms revenue is a result of the changes in occupancy and ADR as reflected in the table below (dollars in thousands):

Hotel Property Favorable (Unfavorable)

Rooms Revenue Occupancy

(change in bps) ADR (change in %)

Capital Hilton $ (3,291) (690) (35.1) %

Marriott Seattle Waterfront 309 588 (11.0) %

The Notary Hotel (1,343) (604) (9.5) %

The Clancy (1)

(3,569) 480 (53.9) %

Sofitel Chicago Magnificent Mile 1,442 320 35.0 %

Pier House Resort & Spa 5,926 4,001 5.7 %

The Ritz-Carlton St.

Thomas 21,246 5,314 37.8 %

Park Hyatt Beaver Creek Resort & Spa (332) 1,529 (34.3) %

Hotel Yountville 2,664 2,348 36.3 %

The Ritz-Carlton Sarasota 11,002 3,114 24.5 %

Hilton La Jolla Torrey Pines 285 1,014 (17.1) %

Bardessono Hotel and Spa 3,972 2,690 41.0 %

The Ritz-Carlton Lake Tahoe 2,848 2,341 (20.3) %

Total $ 41,159 988 18.8 %

_______________

(1) The hotel was being renovated through September 30, 2020.

Food and Beverage Revenue .

Food and beverage revenue increased $5.6 million, or 18.1%, to $36.5 million during the 2021 period compared to the 2020 period.

This increase is primarily driven by the gradual recovery from the COVID-19 pandemic.

We experienced an aggregate increase in food and beverage revenue of $12.0 million at The Ritz-Carlton St.

Thomas, The Ritz-Carlton Sarasota, The Ritz-Carlton Lake Tahoe, Pier House Resort & Spa, Bardessono Hotel and Spa and Hotel Yountville.

The increases were partially offset by an aggregate decrease of $6.4 million at Capital Hilton, Hilton La Jolla Torrey Pines, The Notary Hotel, Marriott Seattle Waterfront, Park Hyatt Beaver Creek Resort & Spa, The Clancy and Sofitel Chicago Magnificent Mile.

Other Hotel Revenue .

Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking, rentals and business interruption revenue, increased $3.8 million, or 16.8%, to $26.3 million during the 2021 period compared to the 2020 period.

The increase is attributable to higher other hotel revenue of $8.8 million at eight hotel properties, partially offset by an aggregate decrease of $1.1 million at The Clancy, Capital Hilton, Hilton La Jolla Torrey Pines and The Notary Hotel and lower business interruption revenue of $4.0 million.

During the 2020 period, we recognized business interruption revenue of $4.0 million at The Ritz-Carlton St.

Thomas as a result of Hurricane Irma.

There was no such revenue recorded in the 2021 period.

Rooms Expense .

Rooms expense increased $3.2 million, or 14.9%, to $24.5 million in the 2021 period compared to the 2020 period.

The increase is attributable to an aggregate increase in rooms expense of $5.7 million at nine hotel properties, partially offset by a decrease of $2.5 million at the Capital Hilton, The Notary Hotel, Marriott Seattle Waterfront and Hilton La Jolla Torrey Pines.

Food and Beverage Expense .

Food and beverage expense increased $2.7 million, or 9.9%, to $30.3 million during the 2021 period compared to the 2020 period.

The increase is attributable to an aggregate increase of $8.6 million at seven hotel properties, partially offset by an aggregate decrease of $5.8 million at Capital Hilton, The Notary Hotel, Hilton La Jolla Torrey Pines, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile and Park Hyatt Beaver Creek Resort & Spa.

Other Operating Expenses .

Other operating expenses increased $7.0 million, or 12.6%, to $62.0 million in the 2021 period compared to the 2020 period.

Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees.

We experienced an increase of $3.1 million in direct expenses and $3.8 million in indirect expenses and incentive management fees in the 2021 period compared to the 2020 period.

Direct expenses were 5.6% of total hotel revenue in the 2021 period and 5.4% in the 2020 period.

The increase in direct expenses is associated with higher revenues as hotel properties are recovering from the COVID-19 pandemic.

The increase in indirect expenses is attributable to increases in (i) incentive management fees of $3.8 million;

(ii) repairs and maintenance of $1.5 million;

and (iii) energy costs of $1.3 million.

The increases were partially offset by decreases in (i) general and administrative costs of $2.6 million;

(ii) lease expense of $159,000;

and (iii) marketing costs of $65,000.

Management Fees .

Base management fees increased $1.1 million, or 26.3%, to $5.5 million in the 2021 period compared to the 2020 period.

Management fees increased $1.9 million at eight hotel properties, partially offset be an aggregate decrease of $728,000 at the Capital Hilton, Hilton La Jolla Torrey Pines and Park Hyatt Beaver Creek Resort & Spa, The Notary Hotel and The Clancy.

Property Taxes, Insurance and Other .

Property taxes, insurance and other decreased $450,000, or 3.0%, to $14.5 million in the 2021 period compared to the 2020 period.

Depreciation and Amortization .

Depreciation and amortization decreased $294,000, or 0.8%, to $36.6 million for the 2021 period compared to the 2020 period.

Advisory Services Fee.

Advisory services fee increased $1.6 million, or 15.7%, to $11.5 million in the 2021 period compared to the 2020 period due to increases in the base advisory fee of $30,000, reimbursable expenses of $46,000, and incentive fee of $1.6 million, partially offset by a decrease in equity-based compensation of $149,000.

In the 2021 period, we recorded an advisory services fee of $11.5 million, which included a base advisory fee of $5.2 million, reimbursable expenses of $1.0 million, $3.7 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

and an incentive fee of $1.6 million.

In the 2020 period, we recorded an advisory services fee of $10.0 million, which included a base advisory fee of $5.2 million, reimbursable expenses of $956,000 and $3.8 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

Gain on legal settlement .

In the 2021 period, we recognized a gain of $800,000 related to the settlement of a transfer tax matter with the City of San Francisco and $189,000 related to a billing dispute.

In the 2020 period, there was no such gain recognized.

Transaction costs.

In the 2021 period, we recognized $296,000 of transaction costs associated with the pending acquisition of the Mr.

C Beverly Hills Hotel.

There were no transaction costs in the 2020 period.

Corporate General and Administrative .

Corporate general and administrative expense was $4.0 million in the 2021 period and $3.4 million in the 2020 period.

The increase in corporate general and administrative expenses is primarily due to higher miscellaneous expenses of $221,000, an increase of $533,000 related to our share of the reimbursed operating expenses of Ashford Securities and higher public company costs of $233,000, partially offset by lower professional fees of $450,000.

Gain (loss) on insurance settlement and disposition of assets .

In the 2021 period, we recognized a gain of $481,000 associated with proceeds received from an insurance claim, a gain of $18,000 upon disposition of certain fixed assets as well as a gain of $197,000 associated with the sale of certain ERFP assets to Ashford Inc.

Equity in Earnings (Loss) of Unconsolidated Entity .

In the 2021 period and the 2020 period, we recorded equity in loss of unconsolidated entity of $130,000 and $80,000, respectively, related to our investment in OpenKey.

Interest Income .

Interest income decreased $132,000, or 86.3%, to $21,000 for the 2021 period compared to the 2020 period.

Other Income (Expense) .

Other expense decreased $202,000, or 100.0% to $0 in the 2021 period compared to the 2020 period.

In the 2020 period, we recorded expense of $127,000 related to CMBX premiums and interest paid on collateral and a realized loss of $75,000 on interest rate floors.

Interest Expense and Amortization of Loan Costs .

Interest expense and amortization of loan costs decreased $15.3 million, or 52.3%, to $14.0 million for the 2021 period compared to the 2020 period.

The dec rease is primarily due to a lower average LIBOR rate and the amortization of default interest and late charges recorded on loans that were previously in default, partially offset by higher interest expense on our Convertible Senior Notes .

The average LIBOR rates for the 2021 period and the 2020 period were 0.11% and 0.89%, respectively.

Write-off of Loan Costs and Exit Fees.

Write-off of loan costs and exit fees was $1.5 million in the 2021 period, primary associated with a $1.2 million write-off of unamortized loan costs upon the payoff of our secured term loan payoff and $351,000 from several amendments executed with various lenders, which included deferral of debt service payments and allowed the use of reserves for property-level operating shortfalls and/or to cover debt service payments.

Third-party fees incurred in conjunction with these amendments, totaling $351,000, were expensed in accordance with applicable accounting guidance.

There was no write-off of loan costs and exit fees during the 2020 quarter.

Write-off of loan costs and exit fees was $2.2 million in the 2020 period, resulting from several amendments executed with various lenders, which included deferral of debt service payments and allowed the use of reserves for property-level operating shortfalls and/or to cover debt service payments.

Third-party fees incurred in conjunction with these amendments, totaling $2.2 million, were expensed in accordance with applicable accounting guidance.

Unrealized Gain (Loss) on Derivatives .

Unrealized loss on derivatives of $20,000 for the 2021 quarter consisted of a $20,000 unrealized loss on interest rate caps.

Unrealized gain on derivatives of $1.2 million in the 2020 quarter consisted of a $1.1 million unrealized gain on CMBX credit default swaps and a $75,000 unrealized gain on interest rate floors associated with the recognition of a realized loss from the termination of interest rate floors, partially offset by a $19,000 unrealized loss on interest rate caps.

Unrealized loss on derivatives of $78,000 for the 2021 period consisted of unrealized loss on interest rate caps.

Unrealized gain on derivatives of $187,000 for the 2020 period consisted of a $175,000 unrealized gain on CMBX credit default swaps and a $75,000 unrealized gain on interest rate floors, partially offset by an unrealized loss of $63,000 on interest rate caps.

Income Tax (Expense) Benefit .

Income tax expense decreased $1.2 million, from $1.4 million in the 2020 quarter to $145,000 in the 2021 quarter.

This change was primarily due to a decrease in the profitability of our TRS entities in the 2021 quarter compared to the 2020 quarter.

Income tax expense changed $3.3 million, from an income tax benefit of $3.1 million in the 2020 period to income tax expense of $206,000 in the 2021 period.

This change was primarily due to an increase in the profitability of our TRS entities in the 2021 period compared to the 2020 period.

(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities .

Our noncontrolling interest partner in consolidated entities was allocated a loss of $1.2 million and $572,000 for the 2021 quarter and the 2020 quarter, respectively.

At both March 31, 2021 and 2020, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

Our noncontrolling interest partner in consolidated entities was allocated a loss of $2.1 million and $3.0 million for the 2021 period and the 2020 period, respectively.

At both June 30, 2021 and 2020, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership.

Noncontrolling interests in operating partnership were allocated a net loss of $1.1 million and $1.9 million for the 2021 quarter and the 2020 quarter, respectively.

Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 8.87% and 10.85% as of March 31, 2021 and 2020, respectively.

Noncontrolling interests in operating partnership were allocated a net loss of $2.4 million and $7.7 million for the 2021 period and the 2020 period, respectively.

Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 7.62% and 10.26% as of June 30, 2021 and 2020, respectively.

LIQUIDITY AND CAPITAL RESOURCES

COVID-19, Management’s Plans and Liquidity

In March 2020, the World Health Organization declared COVID-19 to be a global pandemic.

1 unchanged sentence

The prolonged presence of the virus has resulted in health and other government authorities imposing widespread restrictions on travel and other businesses.

The hotel industry and our portfolio have experienced the postponement or cancellation of a significant number of business conferences and similar events.

COVID-19 has had a significant negative impact on the Company’s operations and financial results to date.

The Company expects that the COVID-19 pandemic will continue to have a negative impact on the Company’s results of operations, financial position and cash flow in 2021 and potentially much longer.

See note 6 to our condensed consolidated financial statements for term loan details.

All of the Company’s property-level debt is non-recourse.

Following an Event of Default, our lenders can generally elect to accelerate all principal and accrued interest

payments that remain outstanding under the applicable loan agreement and foreclose on the applicable hotel properties that are security for such loans.

The Company amended its secured revolving credit facility converting it into a $65 million secured term loan and changed the terms of certain financial covenants, including a waiver of the Consolidated Fixed Charge Coverage Ratio (as defined in the Amendment) through March 31, 2021, that the Company was subject to under the secured revolving credit facility.

On February 22, 2021, the Company further amended the term loan providing an extension of the waiver on the majority of the covenants continuing through the fourth quarter of 2021 and a reduced fixed charge coverage ratio covenant through the end of 2022.