What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-10 compared with 2022-03-10 · 439 added, 445 removed, 1430 unchanged (38% of the section changed)

18 unchanged sentences

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 10, 2022 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 10, 2023 expressed an adverse opinion thereon.

Change in Accounting Principle

As discussed in Notes 2 and 6 to the consolidated financial statements, the Company changed its method of accounting for convertible debt as of January 1, 2022, due to the adoption of Accounting Standards Update 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity using the modified retrospective method .

Basis for Opinion

13 unchanged sentences

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Hotel Property Acquisition for Mr.

C Beverly Hills Hotel

As described in Note 4 to the consolidated financial statements, the Company acquired a 100% interest in the Mr.

C Beverly Hills Hotel and five luxury residences adjacent to the hotel on August 5, 2021 (“the Acquisition”).

The total consideration consisted of $10.0 million of cash, 2.5 million Braemar OP common units with a fair value of approximately $13.2 million and 500,000 warrants for the purchase of Braemar common stock with a fair value of approximately $1.5 million.

Management utilize d various estimates in the fair value assessment related to the Acquisition.

We identified the evaluation of the fair value of the investment in hotel properties acquired in the Acquisition as a critical audit matter.

Specifically, there was judgment applied by management when developing the fair value estimates used to allocate the purchase consideration to the acquired land, hotel building, residences and respective improvements, which also included

making judgments about the valuation methodologies ( e.g., market approach and cost approach) and inputs to the valuation model.

Auditing these matters involved especially challenging auditor effort due to the specialized skills and knowledge required to evaluate the valuation methodologies and the reasonableness of the inputs used to determine the fair value of the investment in hotel properties acquired.

Hotel Property Acquisitions

As described in Note 4 to the consolidated financial statements, during the year ended December 31, 2022, the Company acquired a 100% interest in the Ritz-Carlton Reserve Dorado Beach Hotel for $140.9 million, as well as a 100% interest in the

Four Seasons Resort Scottsdale at Troon North for $267.8 million (collectively, the “Acquisitions”).

Management utilized various estimates in the determination of the relative fair values for these Acquisitions.

We identified the evaluation of the relative fair values allocated to the investment in hotel properties assets acquired in the Acquisitions as a critical audit matter.

Specifically, there was judgment applied by management in determining the relative fair values of the acquired land, hotel buildings and respective improvements, as well as the furniture, fixtures, and equipment.

The valuation included making judgments about the methodologies and inputs to the valuation models.

Auditing these matters involved especially challenging auditor effort due to the specialized skills and knowledge required to evaluate the valuation methodologies and the reasonableness of the inputs used to determine the relative fair values of the acquired tangible assets.

The primary procedures we performed to address this critical audit matter utilized valuation professionals with specialized knowledge and skills, who assisted in:

• Assessing the appropriateness of the valuation methodologies utilized to allocate the purchase consideration;

• Assessing the relevance of the market comparable transactions utilized by management to determine the fair value of the acquired land, by independently reviewing similar transactions from industry sources compared to transactions used by the Company in reaching its conclusion on the fair value of the acquired elements;

• Assessing the reasonableness of the fair value of the hotel building, residences and respective improvements by comparing the replacement cost to observable market information.

• Assessing the appropriateness of the valuation methodologies utilized to determine the relative fair values;

• Evaluating the reasonableness of the assumptions utilized in developing the estimates for determining the relative fair values of the acquired land, hotel buildings and respective improvements, as well as the furniture, fixtures, and equipment;

• Verifying the mathematical accuracy of the valuation models used by the Company to determine the relative fair values of the acquired tangible assets in the Acquisitions.

/s/ BDO USA, LLP

35 unchanged sentences

Commitments and contingencies (note 16)

5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 and 5,031,473 shares issued and outstanding at December 31, 2021 and December 31, 2020

5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 shares issued and outstanding at December 31, 2022 and December 31, 2021

65,426 65,426

Series E redeemable preferred stock, $ 0.01 par value, 1,710,399 and 0 shares issued and outstanding at December 31, 2021 and December 31, 2020

Series M redeemable preferred stock, $ 0.01 par value, 29,044 and 0 shares issued and outstanding at December 31, 2021 and December 31, 2020

Series E redeemable preferred stock, $ 0.01 par value, 12,656,529 and 1,710,399 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

291,076 39,339

Series M redeemable preferred stock, $ 0.01 par value, 1,428,332 and 29,044 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

Redeemable noncontrolling interests in operating partnership 40,555 36,087

Preferred stock, $ 0.01 value, 80,000,000 shares authorized:

Preferred stock, $ 0.01 par value, 80,000,000 shares authorized:

8.25 % Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at December 31, 2022 and December 31, 2021

17 unchanged sentences

Total hotel revenue 669,585 427,542 226,974

Total revenue 427,542 226,974 487,614

Hotel operating expenses:

18 unchanged sentences

Write-off of loan costs and exit fees ( 146 ) ( 1,963 ) ( 3,920 )

Unrealized gain (loss) on investment in Ashford Inc.

Unrealized gain (loss) on derivatives 32 4,959 ( 1,103 )

Realized and unrealized gain (loss) on derivatives 4,961 32 4,959

INCOME (LOSS) BEFORE INCOME TAXES 23,391 ( 31,587 ) ( 129,083 )

5 unchanged sentences

Preferred dividends ( 21,503 ) ( 8,745 ) ( 10,219 )

Deemed dividends on preferred stock ( 6,954 ) — —

Gain (loss) on extinguishment of preferred stock — ( 4,595 ) —

35 unchanged sentences

Balance at December 31, 2019 1,600 $ 16 32,885 $ 329 $ 519,551 $ ( 150,629 ) $ ( 6,013 ) $ 363,254 5,008 $ 106,920 — $ — — $ — $ 41,570

Impact of adoption of new accounting standard — — — — — ( 103 ) — ( 103 ) — — — — — — —

Distribution of Ashford Inc.

common stock — — — — — ( 3,509 ) — ( 3,509 ) — — — — — — ( 456 )

Purchase of common stock — — ( 47 ) — ( 155 ) — — ( 155 ) — — — — — — —

3 unchanged sentences

Issuance of preferred shares — — — — — — — — 23 29 — — — — —

Preferred shares issuance costs — — — — ( 13 ) — — ( 13 ) — — — — — — —

Dividends declared – common stock ($ 0.64 /share)

— — — — — ( 21,302 ) — ( 21,302 ) — — — — — — —

Issuance of common stock — — 4,729 47 13,280 — — 13,327 — — — — — — —

PSU dividend claw back upon cancellation — — — — — 202 — 202 — — — — — — —

Dividends declared – preferred stock - Series B ($ 1.3750 /share)

3 unchanged sentences

Distributions to noncontrolling interests — — — — — — ( 2,639 ) ( 2,639 ) — — — — — — —

Performance LTIP dividend claw back upon cancellation — — — — — — — — — — — — — — 270

Redemption/conversion of operating partnership units — — 339 3 3,451 — — 3,454 — — — — — — ( 3,454 )

4 unchanged sentences

Equity-based compensation — — — — 6,891 — — 6,891 — — — — — — 3,292

Issuance of common stock — — 18,243 183 102,134 — — 102,317 — — — — — — —

Issuance of preferred stock — — — — — — — — — — 1,710 36,211 29 582 —

Issuance of restricted shares/units — — 764 8 ( 8 ) — — — — — — — — — —

Issuance of common units for hotel acquisition — — — — — — — — — — — — — — 13,175

Forfeiture of restricted common shares — — ( 26 ) — — — — — — — — — — — —

Issuance of preferred shares — — — — — — — — 23 29 — — — — —

Issuance of common stock — — 4,729 47 13,280 — — 13,327 — — — — — — —

PSU dividend claw back upon cancellation — — — — — 143 — 143 — — — — — — —

3 unchanged sentences

— — — — — ( 3,300 ) — ( 3,300 ) — — — — — — —

Distributions to noncontrolling interests — — — — — — ( 2,639 ) ( 2,639 ) — — — — — — —

Dividends declared – preferred stock - Series E ($ 1.00 /share)

— — — — — ( 683 ) — ( 683 ) — — — — — — —

Dividends declared – preferred stock - Series M ($ 0.85 /share)

— — — — — ( 15 ) — ( 15 ) — — — — — — —

Contributions from noncontrolling interests — — — — — — 1,189 1,189 — — — — — — —

Performance LTIP dividend claw back upon cancellation — — — — — — — — — — — — — — 38

1 unchanged sentence

Net income (loss) — — — — — ( 26,664 ) ( 2,650 ) ( 29,314 ) — — — — — — ( 3,597 )

Extinguishment of preferred stock — — 7,291 71 46,047 ( 4,595 ) — 41,523 ( 1,953 ) ( 41,523 ) — — — — —

Equity component of Convertible Senior Notes — — — — 6,257 — — 6,257 — — — — — — —

Redemption value adjustment - preferred stock — — — — — ( 3,261 ) — ( 3,261 ) — — — 3,128 — 133 —

Redemption value adjustment — — — — — ( 108 ) — ( 108 ) — — — — — — 108

1 unchanged sentence

Purchase of common stock — — ( 1,773 ) ( 17 ) ( 7,448 ) — — ( 7,465 ) — — — — — — —

Impact of adoption of new accounting standard — — — — ( 6,257 ) 656 — ( 5,601 ) — — — — — — —

Equity-based compensation — — — — 5,475 — — 5,475 — — — — — — 5,810

2 unchanged sentences

Issuance of restricted shares/units — — 349 3 2 — — 5 — — — — — — —

Issuance of common units for hotel acquisition — — — — — — — — — — — — — — 13,175

Forfeiture of restricted common shares — — ( 26 ) — — — — — — — — — — — —

PSU dividend claw back upon cancellation — — — — — 143 — 143 — — — — — — —

Dividends declared – preferred stock - Series B ($ 1.3750 /share)

— — — — — ( 4,747 ) — ( 4,747 ) — — — — — — —

Dividends declared – preferred stock - Series D ($ 2.0625 /share)

— — — — — ( 3,300 ) — ( 3,300 ) — — — — — — —

Dividends declared – preferred stock - Series E ($ 1.00 /share)

— — — — — ( 683 ) — ( 683 ) — — — — — — —

8.25 % Series D Cumulative

7 unchanged sentences

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Forfeiture of restricted common shares — — ( 22 ) — — — — — — — — — — — —

PSU dividend claw back upon cancellation — — — — — 7 — 7 — — — — — — —

Dividends declared - common stock - ($ 0.08 /share)

— — — — — ( 5,672 ) — ( 5,672 ) — — — — — — —

Dividends declared – preferred stock - Series B ($ 1.3750 /share)

— — — — — ( 4,233 ) — ( 4,233 ) — — — — — — —

Dividends declared – preferred stock - Series D ($ 2.0625 /share)

— — — — — ( 3,300 ) — ( 3,300 ) — — — — — — —

Dividends declared – preferred stock - Series E ($ 1.97 /share)

— — — — — ( 12,694 ) — ( 12,694 ) — — — — — — —

Dividends declared - preferred stock - Series M ($ 2.05 /share)

1 unchanged sentence

Contributions from noncontrolling interests — — — — — — 164 164 — — — — — — —

Distributions to noncontrolling interests — — — — — — ( 2,024 ) ( 2,024 ) — — — — — — ( 665 )

Performance LTIP dividend claw back upon cancellation — — — — — — — — — — — — — — 4

Redemption/conversion of operating partnership units — — 868 9 4,575 — — 4,584 — — — — — — ( 4,584 )

Net income (loss) — — — — — 17,761 2,063 19,824 — — — — — — ( 476 )

Extinguishment of preferred stock — — 7,291 71 46,047 ( 4,595 ) — 41,523 ( 1,953 ) ( 41,523 ) — — — — —

Equity component of Convertible Senior Notes — — — — 6,257 — — 6,257 — — — — — — —

Redemptions of preferred stock — — — — — — — — — — ( 14 ) ( 365 ) ( 5 ) ( 134 ) —

Redemption value adjustment - preferred stock — — — — — ( 6,954 ) — ( 6,954 ) — — — 6,275 — 679 —

20 unchanged sentences

(Gain) loss on insurance settlement and disposition of assets — ( 696 ) ( 10,149 )

Realized and unrealized (gain) loss on investment in Ashford Inc.

Realized and unrealized (gain) loss on derivatives ( 4,961 ) ( 32 ) ( 24 )

17 unchanged sentences

Net proceeds from disposition of assets — 1,816 —

Proceeds from sale of investment in Ashford Inc.

Acquisition of hotel properties ( 17,615 ) — ( 111,751 )

Proceeds from hotel management agreement amendment 1,667 — —

Acquisition of hotel properties, net of cash and restricted cash acquired ( 354,445 ) ( 17,615 ) —

Investment in unconsolidated entity ( 328 ) ( 233 ) ( 26 )

6 unchanged sentences

Payments for derivatives ( 3,030 ) ( 200 ) ( 92 )

Proceeds from derivatives 167 — —

Purchase of common stock ( 7,411 ) ( 376 ) ( 263 )

2 unchanged sentences

Proceeds from issuance of common stock — 102,461 13,259

Common stock offering costs ( 112 ) — —

Contributions from noncontrolling interest in consolidated entities 164 1,189 —

Distributions to noncontrolling interest in consolidated entities — — ( 2,639 )

Redemption of preferred stock ( 499 ) — —

Net cash provided by (used in) financing activities 345,057 127,950 49,595

14 unchanged sentences

Capital expenditures accrued but not paid 6,702 4,564 8,993

Distribution of Ashford Inc.

common stock — — 3,965

Issuance of common stock for hotel acquisition 35,040 — —

Non-cash loan proceeds associated with accrued interest — — 2,229

Distributions declared but not paid to a noncontrolling interest in a consolidated entity 2,024 — —

Non-cash loan principal associated with default interest and late charges — — 9,859

3 unchanged sentences

Unsettled common stock offering proceeds — — 68

Unsettled preferred stock offering proceeds — — 75

Accrued preferred stock offering expenses 23 101 —

Non-cash preferred stock dividends 1,050 39 —

Non-cash common stock dividends 5 — —

Unsettled proceeds from derivatives 330 — —

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

13 unchanged sentences

High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S.

national average RevPAR for all hotels as determined by Smith Travel Research.

national average RevPAR for all hotels as determined by STR, LLC.

Braemar has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”).

Braemar conducts its business and owns substantially all of its assets through its operating partnership, Braemar Hospitality Limited Partnership (“Braemar OP”).

In this report, the terms “Company,” “we,” “us” or “our” refers to Braemar Hotels & Resorts Inc.

Terms such as the “Company,” “we,” “us” or “our” refers to Braemar Hotels & Resorts Inc.

and, as the context may require, all entities included in its consolidated financial statements.

10 unchanged sentences

has an ownership interest.

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.

The accompanying consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of December 31, 2021, own 14 hotel properties in six states, the District of Columbia and the U.S.

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 and brokerage services, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services and mobile key technology.

The accompanying consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of December 31, 2022, own 16 hotel properties in seven states, the District of Columbia, Puerto Rico and the U.S.

Virgin Islands (“USVI”).

11 unchanged sentences

(“Marriott”), Hilton Management LLC (“Hilton”), Accor Management US Inc.

(“Accor”), Hyatt Corporation (“Hyatt”), Ritz-Carlton (Virgin Islands), Inc.

and The Ritz-Carlton Hotel Company, L.L.C., each of which is an affiliate of Marriott (“Ritz-Carlton”) and Remington Hotels, which are eligible independent contractors under the Code.

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 throughout the United States.

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

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.

As of December 31, 2021, the Company maintained unrestricted cash of $ 216.0 million and restricted cash of $ 47.4 million.

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

As of December 31, 2021, there

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

was also $ 27.5 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.

On March 4, 2022, our board of directors declared a quarterly cash dividend of $ 0.01 per diluted share for the Company’s common stock for the first quarter of 2022.

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.

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.

(“Accor”), Four Seasons Hotels Limited (“Four Seasons”), Hyatt Corporation (“Hyatt”), The Ritz-Carlton Hotel Company, L.L.C.

and its affiliates, each of which is also an affiliate of Marriott (“Ritz-Carlton”) and Remington Hotels, which are eligible independent contractors under the Code.

Significant Accounting Policies

3 unchanged sentences

A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE.

All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC (formerly Ashford Prime OP General Partner LLC), its general partner.

All major decisions related to Braemar OP that most significantly impact its economic performance, including but not limited to operating procedures with respect to business affairs and any

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Braemar OP General Partner LLC (formerly Ashford Prime OP General Partner LLC), its general partner.

As such, we consolidate Braemar OP.

The following items affect reporting comparability of our historical consolidated financial statements:

• on January 15, 2019, we acquired The Ritz-Carlton Lake Tahoe.

The operating results of the hotel property have been included in the results of operations as of its acquisition date;

• on August 5, 2021, we acquired the Mr.

1 unchanged sentence

The operating results of the hotel property have been included in the results of operations from its acquisition date;

• on March 11, 2022, we acquired The Ritz-Carlton Reserve Dorado Beach hotel located in Dorado, Puerto Rico.

The operating results of the hotel property have been included in the results of operations from its acquisition date;

• on December 1, 2022, we acquired the Four Seasons Resort Scottsdale.

The operating results of the hotel property have been included in the results of operations from its acquisition date.

Use of Estimates —The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

12 unchanged sentences

All improvements and additions which extend the useful life of the hotel properties are capitalized.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For property and equipment acquired in a business combination, we record the sets acquired based on their fair value as of the acquisition date.

10 unchanged sentences

Asset write-downs resulting from property damage are recorded up to the amount of the allocable property insurance deductible in the period that the property damage occurs.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Assets Held for Sale and Discontinued Operations —We classify assets as held for sale when we have obtained a firm commitment from a buyer, and consummation of the sale is considered probable and expected within one year.

21 unchanged sentences

For certain equipment leases, such as office equipment, copiers and vehicles, we account for the lease and non-lease components as a single lease component.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of January 1, 2019, we recorded operating lease liabilities as well as a corresponding operating lease ROU asset which includes deferred rent and the reclassified intangible assets and intangible liabilities associated with above/below market-rate leases where we are the lessee.

Intangible Assets, net —Intangible assets, net represents the customer relationships associated with The Ritz-Carlton Sarasota acquisition, which are amortized using the straight-line method over its expected useful life, which approximates amortization based on economic consumption.

Derivative Instruments —We use interest rate derivatives to hedge our risks and to capitalize on the historical correlation between changes in LIBOR (London Interbank Offered Rate) and RevPAR.

Derivative Instruments —We use interest rate derivatives to hedge our risks and to capitalize on the historical correlation between changes in LIBOR (London Interbank Offered Rate), SOFR (Secured Overnight Financing Rate) and RevPAR.

Interest rate derivatives could include swaps, caps, floors and flooridors.

We also use credit default swaps to hedge financial and capital market risk.

All of our derivatives are subject to master-netting settlement arrangements and the credit default swaps are subject to credit support annexes.

For credit default swaps, cash collateral is posted by us as well as our counterparty.

We offset the fair value of the derivative and the obligation/right to return/reclaim cash collateral.

All derivatives are recorded at fair value in accordance with the applicable authoritative accounting guidance.

None of our derivative instruments are designated as cash flow hedges.

Interest rate derivatives, credit default swaps and options on futures contracts are reported as “derivative assets” in our consolidated balance sheets.

For interest rate derivatives and credit default swaps changes in fair value and realized gains and losses are recognized in earnings as “unrealized gain (loss) on derivatives” and “other income (expense),” respectively, in our consolidated statements of operations.

Interest rate derivatives are reported as “derivative assets” in our consolidated balance sheets.

For interest rate derivatives and credit default swaps, changes in fair value and realized gains and losses are recognized in earnings as “realized and unrealized gain (loss) on derivatives” in our consolidated statements of operations.

Accrued interest on interest rate derivatives is included in “accounts receivable, net” in the consolidated balance sheets.

Due to/from Related Parties, net —Due to/from related parties, net, represent current receivables and payables resulting from transactions related to hotel management with a related party.

Due to/from related parties is generally settled within a period not exceeding one year .

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Due to/from Ashford Inc.

15 unchanged sentences

Advance deposits are converted to revenue when the services are provided to the customer or when the customer with a noncancellable reservation fails to arrive for part or all of the reservation.

Conversely, advance deposits are generally refundable upon guest cancellation of the related reservation within an

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

established period of time prior to the reservation.

Conversely, advance deposits are generally refundable upon guest cancellation of the related reservation within an established period of time prior to the reservation.

Our advance deposit balance as of December 31, 2022 and 2021 was $ 46.0 million and $ 31.8 million, respectively, and are generally recognized as revenue within a one-year period.

These are included in “accounts payable and accrued expenses” on the consolidated balance sheets.

Food & Beverage (“F&B”) revenue consists of revenue from the restaurants and lounges at our hotel properties, in-room dining and mini-bars revenue, and banquet/catering revenue from group and social functions.

10 unchanged sentences

They are expensed as incurred.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Advertising Costs —Advertising costs are charged to expense as incurred.

3 unchanged sentences

This results in the recording of expense, included in “advisory services fee,” “management fees” and “corporate general and administrative” expense, equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period.

PSUs and Performance LTIP units granted to certain executive officers vest based on time and market conditions and are measured at the grant date fair value based on a Monte Carlo simulation valuation model.

With respect to the 2019 and 2020 award agreements, the number of PSUs and Performance LTIP units actually earned may range from 0 % to 200 % of target based on achievement of a specific relative total stockholder return based on the formulas determined by the Company’s compensation committee on the grant date.

The performance criteria for the PSUs and Performance LTIP units are based on market conditions under the relevant literatures .

The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award, regardless of the actual outcome of the market condition.

With respect to the 2021 award agreements, the compensation committee shifted to a new performance metric, pursuant to which, the performance awards will be eligible to vest, from 0 % to 200 % of target, based on achievement of certain performance targets over the three-year performance period commencing on January 1, 2021 and ending on December 31, 2023.

The performance criteria for the 2021 performance grants are based on performance conditions under the relevant literature.

The 2020 PSU and Performance LTIP unit grants to certain executive officers vest based on time and market conditions and were measured at the grant date fair value based on a Monte Carlo simulation valuation model.

With respect to the 2021 and 2022 award agreements, the compensation committee shifted to a new performance metric, pursuant to which, the performance awards will be eligible to vest, from 0 % to 200 % of target, based on achievement of certain performance targets over the three-year performance period.

The performance criteria are based on performance conditions under the relevant literature.

The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award.

5 unchanged sentences

However, Braemar TRS and our USVI TRS are treated as TRSs for U.S.

federal income tax

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

federal income tax purposes.

In accordance with authoritative accounting guidance, we account for income taxes related to our TRSs using the asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

6 unchanged sentences

The states and cities where the partnerships operate follow the U.S.

federal income tax treatment, with the exception of the District of Columbia and the city of Philadelphia.

federal income tax treatment, with the exception of the District of Columbia, Puerto Rico and the city of Philadelphia.

Accordingly, we provide for income taxes in these jurisdictions for the partnerships.

12 unchanged sentences

Diluted income (loss) per common share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares, whereby such exercise or conversion would result in lower income per share.

Recently Adopted Accounting Standards —In January 2020, the Financial Accounting Standards Board’s (“FASB”) issued Accounting Standards Update (“ASU”) 2020-01, Investments – Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) (“ASU 2020-01”), which clarifies the interaction between the accounting for equity securities, equity method investments, and certain derivative instruments.

The ASU, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments—Equity Method and Joint Ventures , for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method.

ASU 2020-01 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years and should be applied prospectively.

Early adoption is permitted.

We adopted the standard effective January 1, 2021 and the adoption of this standard did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Standards —In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”).

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope (“ASU 2021-01”) to provide guidance and relief for transitioning to alternative reference rates.

ASU 2021-01 is effective immediately for all entities.

The Company continues to evaluate the impact of the guidance and may apply the elections as applicable as changes in the market occur.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.

(1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in Accounting Standards Codification (“ASC”) 470-20, Debt:

Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock;

(2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s

Recently Adopted Accounting Standards —In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification;

Entity’s Own Equity (Subtopic 815-40):

(1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in Accounting Standards Codification (“ASC”) 470-20, Debt:

(2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification;

and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (“EPS”) for convertible instruments by using the if-converted method.

2 unchanged sentences

Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period.

We plan to adopt ASU 2020-06 through the modified retrospective method on January 1, 2022.

Upon adoption, the Convertible Senior Notes will be recorded as a single debt instrument at amortized cost, instead of being recorded as both a liability and equity.

The Company will also cease recording non-cash interest expense associated with amortization of the debt discount associated with the conversion features.

The adoption of ASU 2020-06 will result in an adjustment to additional paid-in capital, accumulated deficit, and the carrying value of our Convertible Senior Notes.

The impact of adopting ASU 2020-06 will be an increase to “indebtedness, net” and a decrease to stockholders’ equity of approximately $ 5.6 million.

We do not expect the adoption of this standard to have a material impact on our consolidated financial statements, beyond the impact to our Convertible Senior Notes described above.

We adopted ASU 2020-06 through the modified retrospective method on January 1, 2022.

Upon adoption, our Convertible Senior Notes are recorded as a single debt instrument at amortized cost, instead of being recorded as both a liability and equity.

The Company ceased recording non-cash interest expense associated with amortization of the debt discount associated with the conversion features.

The adoption of ASU 2020-06 resulted in an adjustment to additional paid-in capital, accumulated deficit, and the carrying value of our Convertible Senior Notes.

The impact of adopting ASU 2020-06 includes an increase to “indebtedness, net” and a decrease to stockholders’ equity of approximately $ 5.6 million.

The adoption of this standard did not have a material impact on our consolidated financial statements, beyond the impact to our Convertible Senior Notes described above.

The impact of adoption on our consolidated statement of operations for the year ended December 31, 2022 resulted in a decrease to net interest expense by approximately $ 1.1 million relating to the non-cash interest expense associated with amortization of the debt discount.

The impact on basic and diluted net loss per share of common stock attributable to common stockholders for the year ended December 31, 2022 was $( 0.02 ).

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provides optional guidance through December 31, 2022 to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting.

In January 2021, the FASB issued 2021-01, Reference Rate Reform (Topic 848), Scope , which further clarified the scope of the reference rate reform optional practical expedients and exceptions outlined in Topic 848.

The amendments in ASU Nos.

2020-04 and 2021-01 apply to contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the measurement of hedge effectiveness in hedging relationships that have been modified to replace a reference rate.

The Company applied the optional expedient in evaluating debt modifications converting from LIBOR to SOFR.

There was no material impact as a result of this adoption.

The following tables present our revenue disaggregated by geographical areas (in thousands):

Year Ended December 31, 2022

Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Other Total

Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total

California 6 $ 134,635 $ 45,952 $ 19,152 $ 199,739

Puerto Rico 1 38,077 14,238 8,931 61,246

Arizona 1 3,107 1,430 657 5,194

Colorado 1 25,253 16,397 8,965 50,615

7 unchanged sentences

Total 16 $ 431,515 $ 159,241 $ 78,829 $ 669,585

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended December 31, 2021

Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Other Total

Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total

California 6 $ 91,283 $ 27,205 $ 12,938 $ 131,426

8 unchanged sentences

Total 14 $ 280,568 $ 90,299 $ 56,675 $ 427,542

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended December 31, 2020

Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Other Total

Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Total

California 5 $ 46,291 $ 13,573 $ 8,056 $ 67,920

7 unchanged sentences

USVI 1 16,771 6,667 8,157 31,595

Corporate entities — — — — 7 7

Total 13 $ 136,265 $ 50,263 $ 40,446 $ 226,974

For the years ended December 31, 2020 and 2019, the Company recorded revenue from business interruption losses associated with lost profits from Hurricane Irma of $ 4.0 million and $ 19.3 million, respectively.

For the year ended December 31, 2020, the Company recorded revenue from business interruption losses associated with lost profits from Hurricane Irma of $ 4.0 million.

This revenue is included in “other” hotel revenue in our consolidated statement of operations.

There was no such revenue recorded for the year ended December 31, 2021 as the insurance claim was fully settled in 2020.

There was no such revenue recorded for the years ended December 31, 2022 and 2021 as the insurance claim was fully settled in 2020.

Investments in Hotel Properties, net

9 unchanged sentences

Investments in hotel properties, net $ 1,884,601 $ 1,445,597

The cost of land and depreciable property, net of accumulated depreciation, for U.S.

federal income tax purposes was approximately $ 1.4 billion and $ 1.3 billion as of December 31, 2021 and 2020, respectively.

For the years ended December 31, 2022, 2021 and 2020, depreciation expense was $ 78.0 million, $ 73.0 million and $ 72.8 million, respectively.

Impairment Charges and Insurance Recoveries

For the years ended December 31, 2020 and 2019, the Company received proceeds of $ 14.5 million and $ 36.6 million, respectively, from our insurance carriers for property damage and business interruption from Hurricane Irma.

For the year ended December 31, 2020, the Company received proceeds of $ 14.5 million from our insurance carriers for property damage and business interruption from Hurricane Irma.

In September 2020, the Company reached a final settlement with its insurance carriers related to Hurricane Irma.

Upon settlement, the Company recorded a gain of $ 10.1 million as the proceeds received exceeded the carrying value of the hotel property at the time of the loss.

Additionally, for the year ended December 31, 2019, the Company recorded a gain of $ 26.2 million upon settlement of a portion of the insurance claim.

For the year ended December 31, 2021, we recognized a gain of $ 481,000 associated with proceeds received from an insurance claim.

During the years ended December 31, 2021, 2020 and 2019, no impairment charges were recorded.

C Beverly Hills Hotel

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

C Beverly Hills Hotel and five luxury residences adjacent to the hotel.

The total consideration consisted of $ 10.0 million of cash, 2.5 million Braemar OP common units with a fair value of approximately $ 13.2 million and 500,000 warrants for the purchase of Braemar common stock with a

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$ 6.00 strike price and a fair value of approximately $ 1.5 million.

For the year ended December 31, 2021, we recognized a gain of $ 481,000 associated with proceeds received from an insurance claim.

There was no such gain recognized for the year ended December 31, 2022.

During the years ended December 31, 2022, 2021 and 2020, no impairment charges were recorded.

The Ritz-Carlton Reserve Dorado Beach

On March 11, 2022, the Company acquired a 100 % interest in the 96 -room Ritz-Carlton Reserve Dorado Beach in Dorado, Puerto Rico.

The total consideration consisted of $ 104.0 million of cash and 6.0 million shares of the Company’s common stock with a fair value of approximately $ 35.0 million.

Additionally, the Company assumed a $ 54.0 million mortgage loan with a fair value of approximately $ 58.6 million.

Upon closing, the Company repaid $ 20.0 million of the assumed mortgage loan.

See notes 6, 7 and 11 for further discussion regarding the mortgage loan, common units and warrants.

The acquisition of the Mr.

C Beverly Hills Hotel included the hotel and the adjacent luxury residences (the “residences”).

We have accounted for the transaction as a business combination under Accounting Standards Codification (“ASC”) 805- Business Combinations.

We prepared the purchase price allocation of the assets acquired and liabilities assumed.

The final purchase price allocation was completed with the assistance of a third party appraisal firm during the year ended December 31, 2021.

This valuation is considered a Level 3 valuation technique, as noted in the following table (in thousands):

See note 6 for further discussion regarding the mortgage loan.

On March 14, 2022, the Company filed a resale registration statement on Form S-3, which was declared effective by the SEC on April 1, 2022, to register for resale the 6.0 million shares of common stock.

We accounted for this acquisition as an asset acquisition because substantially all of the fair value of the gross assets acquired were concentrated in a group of similar identifiable assets.

The cost of the acquisition including transaction costs of approximately $ 1.9 million, was allocated to the individual assets acquired and liabilities assumed on a relative fair value basis, which is considered a Level 3 valuation technique.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed in the acquisition (in thousands):

Land $ 79,711

2 unchanged sentences

Investments in hotel properties 197,221

Restricted cash 1,091

Inventories 1,184

6 unchanged sentences

Net income (loss) 7,583

Pro Forma Financial Results

The following table reflects the unaudited pro forma results of operations as if the acquisitions had occurred and the applicable indebtedness was incurred on January 1, 2020, and the removal of $ 563,000 of non-recurring transaction costs directly attributable to the acquisition for the year ended December 31, 2021 (in thousands):

Four Seasons Resort Scottsdale

On December 1, 2022, the Company acquired a 100 % interest in the 210 -room Four Seasons Resort Scottsdale at Troon North in Scottsdale, Arizona.

The total consideration for the acquisition was $ 267.8 million.

We accounted for this acquisition as an asset acquisition because substantially all of the fair value of the gross assets acquired were concentrated in a group of similar identifiable assets.

The cost of the acquisition including transaction costs of approximately $ 538,000 , was allocated to the individual assets acquired and liabilities assumed on a relative fair value basis, which is considered a Level 3 valuation technique.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed in the acquisition (in thousands):

Land $ 70,248

Buildings and improvements 181,560

Furniture, fixtures and equipment 16,050

Investments in hotel properties 267,858

Inventories 480

Net other assets (liabilities) $ ( 691 )

The results of operations of the hotel property have been included in our results of operations from the acquisition date.

The table below summarizes the total revenue and net income (loss) in our consolidated statements of operations for the year ended December 31, 2022:

Year Ended December 31, 2022

1 unchanged sentence

Net income (loss) 934

Net income (loss) attributable to common stockholders $ ( 38,334 ) $ ( 111,613 )

Pro forma income (loss) per share;

Basic $ ( 0.72 ) $ ( 3.28 )

Diluted $ ( 0.72 ) $ ( 3.28 )

Weighted average common shares outstanding (in thousands):

Basic 52,684 33,998

Diluted 52,684 33,998

Investment in Unconsolidated Entity

1 unchanged sentence

In 2018, the Company made an initial investment in OpenKey, which is controlled and consolidated by Ashford Inc., for an initial 8.2 % ownership interest.

In 2021, the Company made additional investments of $ 233,000 .

All investments were recommended by our Related Party Transactions Committee and unanimously approved by the independent members of our board of directors.

In 2022, the Company made additional investments in OpenKey of approximately $ 328,000 .

As of December 31, 2022, the Company has made investments in OpenKey totaling $ 2.9 million.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our investment is recorded as “investment in unconsolidated entity” in our consolidated balance sheets and is accounted for under the equity method of accounting as we have significant influence over the entity under the applicable accounting guidance.

11 unchanged sentences

Equity in earnings (loss) of unconsolidated entity $ ( 328 ) $ ( 252 ) $ ( 217 )

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Indebtedness, net

8 unchanged sentences

Mortgage loan (4)

The Ritz-Carlton Sarasota April 2023 April 2023 LIBOR (1) + 2.65 %

98,500 162,134 99,500 162,621

Mortgage loan (4)

Hotel Yountville May 2023 May 2023 LIBOR (1) + 2.55 %

51,000 84,180 51,000 85,847

Mortgage loan (5)

The Notary Hotel June 2023 June 2025 LIBOR (1) + 2.16 %

3 unchanged sentences

Mortgage loan (4)(6)

The Ritz-Carlton St.

Thomas August 2022 August 2024 LIBOR (1) + 3.95 %

Bardessono Hotel and Spa August 2023 August 2023 LIBOR (1) + 2.55 %

— — 40,000 53,413

Term loan (6)

Equity October 2022 October 2022 Base Rate (2) + 1.25 % to 2.65 % or LIBOR (1) + 2.25 % to 3.65 %

Mortgage loan (6)

The Ritz-Carlton Sarasota April 2023 April 2023 LIBOR (1) + 2.65 %

Bardessono Hotel and Spa August 2023 August 2023 SOFR (2) + 2.65 %

40,000 51,514 — —

Mortgage loan (7)

Hotel Yountville May 2023 May 2023 LIBOR (1) + 2.55 %

The Ritz-Carlton St.

Thomas August 2023 August 2024 LIBOR (1) + 3.95 %

42,500 119,492 42,500 124,114

Mortgage loan (4)(8)

Bardessono Hotel and Spa August 2023 August 2023 LIBOR (1) + 2.55 %

The Ritz-Carlton Lake Tahoe January 2024 January 2024 LIBOR (1) + 2.10 %

— — 54,000 112,713

Mortgage loan (8)

The Ritz-Carlton Lake Tahoe January 2024 January 2024 LIBOR (1) + 2.10 %

The Ritz-Carlton Lake Tahoe January 2024 January 2024 SOFR (2) + 2.20 %

54,000 112,777 — —

4 unchanged sentences

Mortgage loan (3)

Park Hyatt Beaver Creek Resort & Spa February 2024 February 2027 SOFR (2) + 2.86 %

70,500 139,830 — —

Mortgage loan (9)

The Ritz-Carlton Reserve Dorado Beach March 2024 March 2026 LIBOR (1) + 6.00 %

54,000 193,367 — —

Mortgage loan (10)

C Beverly Hills Hotel August 2024 August 2024 LIBOR (1) + 3.60 %

3 unchanged sentences

— — 80,000 85,281

Convertible Senior Notes (11)

Equity June 2026 June 2026 4.50 % 86,250 — — —

Mortgage loan (11)

Pier House Resort & Spa September 2024 September 2024 SOFR (2) + 1.95 %

80,000 83,361 — —

Capitalized default interest and late charges 3,904 7,304

Mortgage loan (12)

Four Seasons Resort Scottsdale December 2025 December 2027 SOFR (2) + 3.75 %

100,000 267,460 — —

Convertible Senior Notes Equity June 2026 June 2026 4.50 % 86,250 — 86,250 —

1,336,750 $ 1,884,601 1,180,750 $ 1,445,597

Capitalized default interest and late charges, net 1,934 3,904

Deferred loan costs, net ( 5,054 ) ( 3,538 )

Discounts, net ( 8,438 ) —

Premiums/(discounts), net 500 ( 8,438 )

Indebtedness, net $ 1,334,130 $ 1,172,678

1 unchanged sentence

(1) LIBOR rates were 4.392 % and 0.101 % at December 31, 2022 and December 31, 2021, respectively.

(2) Base Rate, as defined in the secured term loan agreement, is the greater of (i) the prime rate set by Bank of America, or (ii) federal funds rate + 0.5 %, or (iii) LIBOR + 1.0 %.

(3) Effective January 9, 2021, we amended this mortgage loan.

Terms of the agreement included monthly FF&E escrow deposits being waived from January 2021 through June 2021.

This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the third was exercised in April 2021.

(4) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions, of which the second was exercised in June 2021.

(5) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the first was exercised in August 2021.

(2) SOFR rate was 4.358 % at December 31, 2022.

(3) On February 2, 2022, we refinanced this mortgage loan totaling $ 67.5 million with a new $ 70.5 million mortgage loan with a two-year initial term and three one-year extension options, subject to the satisfaction of certain conditions.

The new mortgage loan is interest only and bears interest at a rate of SOFR + 2.86 %.

(4) This mortgage loan has a LIBOR floor of 0.25 %.

(6) Effective February 22, 2021, we amended this term loan.

In conjunction with the amendment, the interest rate spread increased from a rate of Base Rate + 1.25 % - 2.50 % or LIBOR + 2.25 % - 3.50 % to a Base Rate + 1.25 % - 2.65 % or LIBOR + 2.25 % - 3.65 %, with a LIBOR floor of 0.50 %.

On May 18, 2021, we repaid this term loan in full.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(7) Effective December 31, 2020, we amended this mortgage loan.

Terms of the agreement included monthly FF&E escrow deposits being waived from January 2021 through December 2021.

(5) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions, of which the third was exercised in June 2022.

(6) On October 27, 2022, we amended this mortgage loan.

Terms of the agreement replaced the variable interest rate of LIBOR + 2.55 % with SOFR + 2.65 %.

(7) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the second was exercised in August 2022.

This mortgage loan has a LIBOR floor of 1.00 %.

(8) On September 23, 2021, we amended this mortgage loan.

Terms of the agreement included extending the current and final maturity dates by one year .

(9) Effective March 5, 2021, we amended this mortgage loan.

Terms of the agreement included monthly FF&E escrow deposits waived through July 1, 2021.

(8) On October 27, 2022, we amended this mortgage loan.

Terms of the agreement replaced the variable interest rate of LIBOR + 2.10 % with SOFR + 2.20 %.

(9) This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions.

This mortgage loan has a LIBOR floor of 0.75 %.

(11) On May 18, 2021, we executed a purchase agreement to sell convertible senior notes in a private offering.

In conjunction with the private offering, we sold convertible senior notes with an aggregate principal amount of $ 86.25 million.

(10) This mortgage loan has a LIBOR floor of 1.50 %.

(11) On September 29, 2022, we amended this mortgage loan.

Terms of the agreement replaced the variable interest rate of LIBOR + 1.85 % with SOFR + 1.95 %.

(12) On December 23, 2022, we entered into a new $ 100 million mortgage loan with a three-year initial term and two one-year extension options, subject to satisfaction of certain conditions.

The new mortgage loan is interest only and bears interest at a rate of SOFR + 3.75 %.

This mortgage loan has a SOFR floor of 1.00 %.

(13) The final maturity date assumes all available extensions options will be exercised.

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.

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

See note 15 for discussion of the loan modification agreement with Lismore Capital LLC (“Lismore”).

The Company determined that all of the forbearance and other agreements evaluated were considered troubled debt restructurings due to terms that allowed for deferred interest and the forgiveness of default interest and late charges.

No gain or loss was recognized during 2020, as the carrying amount of the original loans was not greater than the undiscounted cash flows of the modified loans.

As a result of the troubled debt restructurings, all accrued default interest and late charges were capitalized into the applicable loan balances and are being amortized over the remaining term of the loans using the effective interest method.

The amount of default interest and late charges capitalized into indebtedness for the year ended December 31, 2020 was $ 9.9 million.

The amount of principal amortization for the years ended December 31, 2021 and 2020 was $ 3.4 million and $ 2.6 million, respectively.

On August 5, 2021, in connection with the acquisition of the Mr.

C Beverly Hills Hotel and the adjacent residences, the Company assumed a $ 50 million mortgage loan and repaid $ 20 million upon closing.

This mortgage loan provides for an interest rate of LIBOR + 3.60 %.

The mortgage loan is interest only with a stated maturity in August 2024.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

amount of default interest and late charges capitalized into indebtedness for the year ended December 31, 2020 was $ 9.9 million.

The amount of principal amortization was approximately $ 2.0 million, $ 3.4 million and $ 2.6 million, respectively, for the years ended December 31, 2022, 2021 and 2020.

On March 11, 2022, in connection with the acquisition of The Ritz-Carlton Reserve Dorado Beach, the Company assumed a $ 54 million mortgage loan.

On December 23, 2022, the Company entered into a new $ 100 million mortgage loan associated with Four Seasons Resort Scottsdale with a three-year initial term and two one-year extension options, subject to satisfaction of certain conditions.

The new mortgage loan is interest only and bears interest at a rate of SOFR + 3.75 %.

This mortgage loan has a SOFR floor of 1.00 %.

Convertible Senior Notes

1 unchanged sentence

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.

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

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

The Convertible Senior Notes are governed by an indenture between the Company and U.S.

Bank National Association, as trustee.

1 unchanged sentence

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

The Company recorded coupon interest expense of $ 2.4 million for the year ended December 31, 2021.

The Company separated the Convertible Senior Notes into liability and equity components.

The Company recorded coupon interest expense of $ 3.9 million and $ 2.4 million for the years ended December 31, 2022 and 2021, respectively.

Upon issuance of the Convertible Senior Notes, the Company separated the Convertible Senior Notes into liability and equity components.

The initial carrying amount of the liability component was calculated using a discount rate of 7.1 %.

1 unchanged sentence

The $ 6.3 million carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the net proceeds of the Convertible Senior Notes.

The amount recorded in equity is not subject to remeasurement or amortization.

The initial discount of $ 9.3 million is accreted to interest expense using the effective interest rate method over the contractual term of the Convertible Senior Notes.

The Company recorded discount amortization of $ 974,000 for the year ended December 31, 2021, with the remaining discount balance to be amortized through June 2026.

The amount recorded in equity was not subject to remeasurement or amortization.

The initial discount of $ 9.3 million was accreted to interest expense using the effective interest rate method over the contractual term of the Convertible Senior Notes.

The Company recorded discount amortization of $ 553,000 and $ 974,000 related to the initial purchase discount for the years ended December 31, 2022 and 2021, with the remaining discount balance to be amortized through June 2026.

As a result of the Company's adoption of ASU 2020-06 on January 1, 2022, the Convertible Senior Notes are now recorded as a single liability with no portion recorded in equity.

The Company also ceased recording non-cash interest expense associated with the amortization of the portion of the debt discount originally reflected in equity, while the initial purchase discount remains and will continue to be amortized through June 2026.

The Convertible Senior Notes are convertible at any time prior to the close of business on the business day immediately preceding the maturity date for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the election of the Company, based on an initial conversion rate of 157.7909 shares of the Company’s common stock per $1,000 principal amount of notes (equivalent to a conversion price of approximately $ 6.34 per share of common stock), subject to adjustment of the conversion rate under certain circumstances.

In addition, following the occurrence of certain corporate events, if the Company provides notice of redemption or if it exercises its option to convert the Convertible Senior Notes, the Company will, in certain circumstances, increase the conversion rate for a holder that converts its Convertible Senior Notes in connection with such corporate event, such notice of redemption, or such issuer conversion option, as the case may be.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company may redeem the Convertible Senior Notes at the Company’s option, in whole or in part, on any business day on or after the date of issuance if the last reported sale price per share of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a notice of redemption at a redemption price equal to 100 % of the principal amount of the Convertible Senior Notes to be redeemed subject to certain adjustments, plus accrued and unpaid interest to, but excluding, the redemption date.

2 unchanged sentences

As of December 31, 2022, we were in compliance with all covenants.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Maturities and scheduled amortization of indebtedness as of December 31, 2022, assuming no extension of existing extension options for each of the following five years and thereafter are as follows (in thousands):

3 unchanged sentences

Interest Rate Derivatives —We are exposed to risks arising from our business operations, economic conditions and financial markets.

To manage these risks, we primarily use interest rate derivatives to hedge our debt and our cash flows.

The interest rate derivatives include interest rate caps and interest rate floors, which are subject to master netting settlement arrangements.

To manage these risks, we primarily use interest rate derivatives to hedge our debt and our cash flows, which include interest rate caps.

All derivatives are recorded at fair value.

Payments from counterparties on in-the money interest rate caps are recognized as realized gains on our consolidated statements of operations.

The following table summarizes the interest rate derivatives we entered into over the applicable periods:

5 unchanged sentences

Strike rate high end of range 4.50 % 4.00 % 4.00 %

Effective date range January 2021- September 2021 March 2020 - June 2020 January 2019 - December 2019

Termination date range February 2022- August 2024 April 2021 - June 2021 March 2020 -October 2021

Effective date range February 2022 - December 2022 January 2021 - September 2021 March 2020 - June 2020

Termination date range May 2023 -January 2025 February 2022 - August 2024 April 2021 - June 2021

Total cost of interest rate caps (in thousands) $ 3,030 $ 200 $ 92

Interest rate floors:

Notional amount (in thousands) $ — $ — $ 2,000,000

Strike rate low end of range 1.63 %

Strike rate high end of range 1.63 %

Effective date January 2019

Termination date March 2020

Total cost of interest rate floors (in thousands) $ — $ — $ 75

_______________

(1) No instruments were designated as cash flow hedges.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Interest rate derivatives consisted of the following:

4 unchanged sentences

Strike rate high end of range 4.50 % 4.00 %

Termination date range February 2022 - August 2024 February 2021 - October 2021

Termination date range January 2023 - January 2025 February 2022 - August 2024

Aggregate principal balance on corresponding mortgage loans (in thousands) $ 959,000 $ 857,000

3 unchanged sentences

C Beverly Hills Hotel and five adjacent luxury residences, the Company issued 500,000 warrants for the purchase of Braemar common stock with a $ 6.00 strike price on or after August 5, 2021 until August 5, 2024.

The holder can choose to exercise the warrant by cash or by net issue exercise, in which event the Company shall issue to the holder a number of warrant shares which reflects the fair market value of the Company’s common stock.

The holder can choose to exercise the warrant by cash or by net issue exercise, in which event the Company shall issue to the holder a number of warrant shares which reflect the fair market value of the Company’s common stock.

As of December 31, 2022, no warrants have been exercised.

6 unchanged sentences

The warrants are re-valued at each reporting period with the change in fair value recorded through earnings.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In applying the guidance in ASC 815, it was determined that the warrants should be classified as a liability as a result of certain settlement provisions.

The warrants are included in derivative liabilities on the consolidated balance sheet and changes in value are reported as a component of unrealized gain (loss) on derivatives on the consolidated statements of operations.

The warrants are included in derivative liabilities on the consolidated balance sheets and changes in value are reported as a component of “realized and unrealized gain (loss) on derivatives” on the consolidated statements of operations.

This is a Level 2 valuation technique.

Fair Value Measurements

Fair Value Hierarchy —Our financial instruments measured at fair value either on a recurring or a non-recurring basis are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the market place as discussed below:

Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities.

4 unchanged sentences

The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.

Fair value of interest rate caps is determined using the net present value of expected cash flows of each derivative based on the market-based interest rate curve and adjusted for credit spreads of us and our counterparties.

Fair value of credit default swaps is obtained from a third-party who publishes various information including the index composition and price data (Level 2 inputs).

The fair value of credit default swaps does not contain credit-risk-related adjustments as the change in fair value is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparty.

Fair value of interest rate floors is calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor.

The fair value of warrants is determined by using the Black-Scholes option pricing model.

The fair value of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rates of the caps.

Variable interest rates used in the calculation of projected receipts and payments on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (LIBOR/SOFR forward curves) and volatilities (Level 2 inputs).

We also incorporate credit valuation adjustments (Level 3 inputs) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk.

When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

1 unchanged sentence

Transfers of inputs between levels are determined at the end of each reporting period.

In determining the fair values of our derivatives at December 31, 2021, the LIBOR interest rate forward curve (Level 2 inputs) assumed an uptrend from 0.101 % to 1.500 % for the remaining term of our

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In determining the fair values of our derivatives at December 31, 2022, the LIBOR/SOFR interest rate forward curve (Level 2 inputs) assumed an uptrend from 4.392 % to 4.790 % for the remaining term of our derivatives.

Credit spreads (Level 3 inputs) used in determining the fair values derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates.

12 unchanged sentences

Net $ — $ 6,198 $ — $ 6,198

__________________

(1) Reported as “derivative assets” in our consolidated balance sheet.

(2) Reported as “derivative liabilities” in our consolidated balance sheet.

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Quoted Market Prices (Level 1) Significant Other

Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

December 31, 2021

Derivative assets:

Interest rate derivatives - caps $ — $ 139 $ — $ 139

$ — $ 139 $ — $ 139 (1)

Derivative liabilities:

Warrants — ( 1,435 ) — ( 1,435 ) (2)

Net $ — $ ( 1,296 ) $ — $ ( 1,296 )

__________________

(1) Reported as “derivative assets” in our consolidated balance sheets.

(2) Reported as “derivative liabilities” in our consolidated balance sheets.

Effect of Fair Value Measured Assets and Liabilities on Consolidated Statements of Operations

4 unchanged sentences

Derivative assets:

Interest rate derivatives - floors $ — $ — $ ( 152 )

Interest rate derivatives - caps $ 3,810 $ ( 62 ) $ ( 93 )

Credit default swaps — — 117 (2)

( 1,095 ) (1)

Total derivative assets $ 3,810 $ ( 62 ) $ 24

Non-derivative assets:

Investment in Ashford Inc.

$ — $ — $ ( 5,552 )

Total $ 3,810 $ ( 62 ) $ 24

8 unchanged sentences

Unrealized gain (loss) on derivatives $ 4,464 (1)

Realized gain (loss) on interest rate caps 497 (1) (4)

Realized gain (loss) on credit default swaps — — ( 1,320 ) (3)

Realized gain (loss) on interest rate floors — — ( 3,615 ) (3)

Unrealized gain (loss) on investment in Ashford Inc.

Realized gain (loss) on investment in Ashford Inc.

Net $ 4,961 $ 32 $ 24

_______________

(1) Excludes costs associated with credit default swaps of $ 191 and $ 253 for the years ended December 31, 2020 and 2019, respectively, which is included in “other income (expense)” in our consolidated statements of operations.

(1) Reported in “realized and unrealized gain (loss) on derivatives” in our consolidated statements of operations.

(2) Excludes costs associated with credit default swaps of $ 191,000 for the year ended December 31, 2020, which is included in “other income (expense)” in our consolidated statements of operations.

(3) Included in “other income (expense)” in our consolidated statements of operations.

(4) Represents settled and unsettled payments from counterparties on interest rate caps.

Summary of Fair Value of Financial Instruments

Determining the estimated fair values of certain financial instruments such as indebtedness requires considerable judgment to interpret market data.

The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.

The use of different market assumptions and/or estimation methodologies may have a material effect

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

on the estimated fair value amounts.

Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.

The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):

3 unchanged sentences

Value Estimated

Financial assets and liabilities measured at fair value:

Financial assets measured at fair value:

Derivative assets $ 6,482 $ 6,482 $ 139 $ 139

Financial liabilities measured at fair value:

Derivative liabilities $ 284 $ 284 $ 1,435 $ 1,435

10 unchanged sentences

Dividends and distributions payable 8,184 8,184 2,173 2,173

Due to Ashford Inc.

1,474 1,474 2,772 2,772

Due to Ashford Inc., net 10,005 10,005 1,474 1,474

Due to third-party hotel managers 2,096 2,096 610 610

27 unchanged sentences

Dividends on preferred stock ( 21,503 ) ( 8,745 ) ( 10,219 )

Deemed dividends on preferred stock ( 6,954 ) — —

Dividends on common stock ( 5,598 ) — —

22 unchanged sentences

Interest expense on Convertible Senior Notes 4,435 3,378 —

Dividends on preferred stock - Series E 683 — —

Dividends on preferred stock - Series M 15 — —

Dividends on preferred stock - Series E (inclusive of deemed dividends) 18,969 683 —

Dividends on preferred stock - Series M (inclusive of deemed dividends) 1,955 15 —

Total $ 29,184 $ 9,821 $ ( 6,060 )

5 unchanged sentences

Effect of assumed conversion of exchanged preferred stock - Series B — 364 —

Effect of contingently issuable shares 1 — —

Effect of assumed conversion of Convertible Senior Notes 13,609 8,450 —

15 unchanged sentences

An LTIP unit will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of our operating partnership at a time when our stock is trading at a level in excess of the price it was trading on the date of the LTIP issuance.

More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for our operating partnership.

More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership;

or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for our operating partnership.

The compensation committee of the board of directors of the Company may authorize the issuance of Performance LTIP units to certain executive officers and directors from time to time.

The award agreements provide for the grant of a target number of Performance LTIP units that will be settled in common units of Braemar OP, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date.

With respect to the 2019 and 2020 award agreements, the number of Performance LTIP units actually earned may range from 0 % to 200 % of target based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s compensation committee on the grant date.

As of December 31, 2022, there were approximately 2.0 million Performance LTIP units, representing 200 % of the target, outstanding.

With respect to the 2020 award agreements, the number of Performance LTIP units to be earned ranged from 0 % to 200 % of target based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s compensation committee on the grant date.

The performance criteria for the Performance LTIP units are based on market conditions under the relevant literature.

During the years ended December 31, 2021 and 2020, approximately 60,000 performance-based LTIP units granted in 2019, and 211,000 performance-based LTIP units granted in 2018, were canceled due to the market condition criteria not being met.

As a result there was a claw back of the previously declared dividends in the amount of $ 38,000 and $ 270,000 , respectively.

The performance criteria for the 2021 performance grants are based on performance conditions under the relevant literature.

During the year end December 31, 2022, approximately 113,000 Performance LTIP units granted in 2020 were canceled due to the market conditions criteria not being met.

The performance criteria for the 2021 and 2022 performance grants are based on performance conditions under the relevant literature.

The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award.

15 unchanged sentences

The unamortized cost of the unvested LTIP units of approximately $ 1.3 million at December 31, 2022, will be amortized over a period of 1.2 years with a weighted average period of 1.2 years.

On August 5, 2021, we issued 2.5 million common units in our operating partnership in conjunction with the acquisition of the Mr.

C Beverly Hills Hotel.

A summary of the activity of the units in our operating partnership is as follows (in thousands):

22 unchanged sentences

Performance LTIP dividend claw back upon cancellation ( 4 ) ( 38 ) ( 270 )

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents the common units redeemed and the fair value at redemption (in thousands):

8 unchanged sentences

The historical cost of the converted units was $ 4.6 million.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Common Stock Dividends —The following table summarizes the common stock dividends declared during the period (in thousands):

18 unchanged sentences

Series D Cumulative Preferred Stock $ 3,300 $ 3,300 $ 3,300

Stock Repurchases —On October 27, 2014, our board of directors approved a share repurchase program under which the Company may purchase up to $ 100 million of the Company’s common stock from time to time.

The repurchase program does not have an expiration date.

The specific timing, manner, price, amount and other terms of the repurchases is at management’s discretion and depends on market conditions, corporate and regulatory requirements and other factors.

The Company is not required to repurchase shares under the repurchase program, and may modify, suspend or terminate the repurchase program at any time for any reason.

On December 5, 2017, our board of directors reapproved the stock repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $ 0.01 per share having an aggregate value of up to $ 50 million.

Stock Repurchases —On December 7, 2022, our board of directors approved a new stock repurchase program pursuant to which the board granted a repurchase authorization to acquire shares of the Company’s common stock, par value $ 0.01 per share, having an aggregate value of up to $ 25 million.

The board of directors’ authorization replaced any previous repurchase authorizations.

No shares were repurchased during the years ended December 31, 2021, 2020 and 2019.

During the year ended December 31, 2022, we repurchased 1.5 million shares of our common stock for approximately $ 6.1 million .

No shares were repurchased under any stock repurchase program during the years ended December 31, 2021 and 2020.

As of December 31, 2022, $ 18.9 million remains authorized by the board of directors pursuant to the December 7, 2022 approval.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

See note 22 .

We repurchased approximately 262,000 , 50,000 and 47,000 shares of our common stock in 2022, 2021 and 2020, respectively, to satisfy employees’ statutory minimum U.S.

2 unchanged sentences

As of December 31, 2022, the Company has sold approximately 7.4 million shares of common stock and received net proceeds of approximately $ 30.5 million under this program.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The issuance activity is summarized below (in thousands):

6 unchanged sentences

Standby Equity Distribution Agreement —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”).

(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.

9 unchanged sentences

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 December 31, 2022, the Company has sold approximately 1.7 million shares of common stock and received proceeds of approximately $ 10.0 million under the SEDA.

The issuance activity under the SEDA is summarized below (in thousands):

3 unchanged sentences

Common Stock Resale Agreement —On April 21, 2021, the Company entered into a purchase agreement (the “Lincoln Park Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company may issue or sell to Lincoln Park up to 8,893,565 shares of the Company’s common stock from time to time during the term of the Lincoln Park Purchase Agreement.

The issuance of the shares of common stock pursuant to the Lincoln Park Purchase Agreement has been registered pursuant to the Company’s shelf registration statement on Form S-3 (the “Registration Statement”), and the related base prospectus included in the Registration Statement, as supplemented by a prospectus

Upon entering into the Lincoln Park Purchase Agreement, the Company issued 15,000 shares of the Company’s common stock as consideration for Lincoln Park’s execution and delivery of the Lincoln Park Purchase Agreement.

As of December 31, 2022, the Company has issued approximately 766,000 shares of common stock for gross proceeds of approximately $ 4.2 million under the Lincoln Park Purchase Agreement.

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

supplement filed with the SEC on April 21, 2021.

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

The issuance activity under the Lincoln Park agreement is summarized below (in thousands):

The issuance activity under the Lincoln Park Purchase Agreement is summarized below (in thousands):

Year Ended December 31,

6 unchanged sentences

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 December 31, 2022, all shares of common stock under the Virtu May 2021 EDA have been sold.

The issuance activity under the Virtu May 2021 EDA is summarized below (in thousands):

4 unchanged sentences

Net proceeds $ — $ 49,500

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

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

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 December 31, 2022, the Company has sold approximately 4.7 million shares of common stock under the Virtu July 2021 EDA and received gross proceeds of approximately $ 24.0 million.

The issuance activity under the Virtu July 2021 EDA is summarized below (in thousands):

4 unchanged sentences

Net proceeds $ — $ 23,780

Noncontrolling Interest in Consolidated Entities —A partner had noncontrolling ownership interests of 25 % in two hotel properties with a total carrying value of $( 16.5 ) million and $( 15.1 ) million at December 31, 2021 and 2020, respectively.

The following table summarizes the (income) loss allocated to noncontrolling interest in consolidated entities (in thousands):

Noncontrolling Interest in Consolidated Entities —A partner has a noncontrolling ownership interest of 25 % in two hotel properties with a total carrying value of $( 16.3 ) million and $( 16.5 ) million at December 31, 2022 and 2021, respectively.

The following table summarizes the (income) loss allocated to the noncontrolling interest in consolidated entities (in thousands):

Year Ended December 31,

1 unchanged sentence

(Income) loss from consolidated entities attributable to noncontrolling interests $ ( 2,063 ) $ 2,650 $ 6,436

Preferred Stock

5.50 % Series B Cumulative Convertible Preferred Stock

Each share of our 5.50 % Series B Cumulative Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at a conversion price of $ 18.70 (which represents a conversion rate of 1.3372 shares of our common stock, subject to certain adjustments).

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control.

Redeemable Preferred Stock

5.50 % Series B Cumulative Convertible Preferred Stock

The Series B Convertible Preferred Stock is also subject to conversion upon certain events constituting a change of control.

Holders of the Series B Convertible Preferred Stock have no voting rights, subject to certain exceptions.

22 unchanged sentences

Net proceeds $ — $ — $ 432

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Series B Convertible Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside our control.

4 unchanged sentences

Series B Convertible Preferred Stock $ 4,233 $ 4,747 $ 6,919

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During 2021, Braemar entered into privately negotiated exchange agreements with certain holders of the Series B Convertible Preferred Stock, in reliance on Section 3(a)(9) of the Securities Act.

During the year ended December 31, 2021, Braemar entered into privately negotiated exchange agreements with certain holders of the Series B Convertible Preferred Stock, in reliance on Section 3(a)(9) of the Securities Act.

The table below summarizes the activity (in thousands):

2 unchanged sentences

Series B Convertible Preferred Stock

There were no preferred stock exchanges for the year ended December 31, 2022.

Series E Redeemable Preferred Stock

13 unchanged sentences

• 0 % of the Stated Value beginning on the third anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption.

3 unchanged sentences

• 7.5 % per annum of the Stated Value beginning on the second anniversary from the Date of Initial Closing.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Dividends will be authorized and declared on a monthly basis and payable in arrears on the 15th of each month to holders of record at the close of business on the last business day of each month immediately preceding the applicable thereafter dividend payment date.

Dividends will be authorized and declared on a monthly basis and payable in arrears on the 15th day of each month to holders of record at the close of business on the last business day of each month immediately preceding the applicable thereafter dividend payment date.

Dividends will be computed on the basis of twelve 30-day months and a 360-day year.

14 unchanged sentences

Adjustments to Series E Preferred Stock (1)

$ 9,403 $ 3,128

(1) Reflects the excess of the redemption value over the accumulated carrying value.

2 unchanged sentences

Series E Preferred Stock $ 12,694 $ 683

The redemption activities of Series E Preferred Stock is summarized below (in thousands):

Year Ended December 31,

Series E Preferred Stock shares redeemed 14 —

Redemption amount, net of redemption fees $ 365 $ —

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Series M Redeemable Preferred Stock

5 unchanged sentences

If and whenever dividends on any shares of Series E Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Each share is redeemable at any time, at the option of the holder, at a redemption price of $ 25.00 per share, plus any accumulated, accrued, and unpaid dividends, less a redemption fee.

Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $ 25.00 per share, plus any accumulated, accrued, and unpaid dividends (with no redemption fee).

The Series M Preferred Stock is also subject to conversion upon certain events constituting a change of control.

Upon such change of control events, holders have the option to convert their shares of Series M Preferred Stock into a maximum of 5.69476 shares of our common stock.

The redemption fee shall be an amount equal to:

1 unchanged sentence

• 0 % of the Stated Value beginning on the first anniversary from the Series M Original Issue Date of the shares of Series M Preferred Stock to be redeemed.

The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption.

Holders of Series M Preferred Stock are entitled to receive cumulative cash dividends at the initial rate of 8.2 % per annum of the Stated Value of $ 25.00 per share (equivalent to an annual dividend rate of $ 2.05 per share).

1 unchanged sentence

provided, however, that the dividend rate for any share of Series M Preferred Stock shall not exceed 8.7 % per annum of the Stated Value.

Dividends will be computed on the basis of twelve 30-day months and a 360-day year.

The Company has a DRIP that allows for participating holders to have their Series M Preferred Stock dividend distributions automatically reinvested in additional shares of the Series M Preferred Stock at a price of $ 25.00 per share.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The issuance activity of Series M Preferred Stock is summarized below (in thousands):

2 unchanged sentences

Net proceeds $ 34,009 $ 704

__________________

(1) Exclusive of shares issued under the dividend reinvestment plan.

The Series M Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside the Company’s control.

6 unchanged sentences

Adjustments to Series M Preferred Stock (1)

__________________

(1) Reflects the excess of the redemption value over the accumulated carrying value.

2 unchanged sentences

Series M Preferred Stock $ 1,276 $ 15

The redemption activities of Series M Preferred Stock is summarized below (in thousands):

Year Ended December 31,

Series M Preferred Stock shares redeemed 5 —

Redemption amount, net of redemption fees $ 134 $ —

Stock-Based Compensation

Under the 2013 Equity Incentive Plan, as amended, we are authorized to grant 7.0 million restricted stock or performance stock units of our common stock as incentive stock awards.

At December 31, 2021, approximately 774,000 shares were available for future issuance under the 2013 Equity Incentive Plan.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At December 31, 2022, approximately 1.5 million shares were available for future issuance under the 2013 Equity Incentive Plan.

Restricted Stock —We incur stock-based compensation expense in connection with restricted stock awarded to certain employees of Ashford LLC and its affiliates.

1 unchanged sentence

At December 31, 2022, the unamortized cost of unvested shares of restricted stock was $ 1.5 million, which is expected to be recognized over a period of 1.2 years with a weighted average period of 1.0 years.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the stock-based compensation expense for restricted stock (in thousands):

21 unchanged sentences

The award agreements provide for the grant of a target number of PSUs that will be settled in shares of common stock of the Company, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period, which is generally three years from the grant date.

With respect to the 2019 and 2020 award agreements, the number of PSUs actually earned may range from 0 % to 200 % of target based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s compensation committee on the grant date.

With respect to the 2020 award agreements, the number of PSUs to be earned ranged from 0 % to 200 % of target based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s compensation committee on the grant date.

The performance criteria for the PSUs are based on market conditions under the relevant literature.

The performance criteria for the 2021 performance grants are based on performance conditions under the relevant literature, and the 2021 performance grants were issued to non-employees.

The performance criteria for the 2021 and 2022 performance grants are based on performance conditions under the relevant literature, and the 2021 and 2022 performance grants were issued to non-employees.

The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award, which may vary from period to period, as the number of performance grants earned may vary since the estimated probable achievement of certain performance targets may vary from period to period.

During the years ended December 31, 2022, 2021 and 2020, approximately 225,000 PSUs granted in 2020, 223,000 PSUs granted in 2019 and 197,000 PSUs granted in 2018, were canceled due to the market condition criteria not being met.

As a result there was a claw back of the previously declared dividends in the amount of $ 7,000 , $ 143,000 and $ 202,000 , respectively.

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the years ended December 31, 2021 and 2020, approximately 223,000 PSUs granted in 2019, and 197,000 PSUs granted in 2018, respectively, were canceled due to the market condition criteria not being met.

As a result there was a claw back of the previously declared dividends in the amount of $ 143,000 and $ 202,000 , respectively.

The following table summarizes the compensation expense for PSUs (in thousands):

9 unchanged sentences

PSUs granted 41 5.63 446 7.01 225 3.51

PSUs vested ( 152 ) 4.69 — — — —

PSUs canceled ( 225 ) 3.51 ( 223 ) 19.96 ( 197 ) 13.43

30 unchanged sentences

Total $ 28,847 $ 22,641 $ 18,486

(1) Reimbursable expenses include overhead, internal audit, risk management advisory and asset management services.

(1) Reimbursable expenses include overhead, internal audit, risk management advisory, asset management services and deferred cash awards.

(2) Equity-based compensation is associated with equity grants of Braemar’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.

2 unchanged sentences

Under the advisory agreement, Ashford Inc.

secures casualty insurance policies to cover Braemar, Ashford Trust, their hotel managers, as needed, and Ashford Inc.

secures casualty insurance policies to cover Braemar, Ashford Hospitality Trust, Inc.

(“Ashford Trust”), their hotel managers, as needed, and Ashford Inc.

The total loss estimates included in such policies are based on the collective pool of risk exposures from each party.

Ashford Inc.'s risk management department manages the casualty insurance program.

At the beginning of each year, Ashford Inc.'s risk management department collects funds from Braemar, Ashford Trust and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis.

Each year Ashford Inc.'s risk management department collects funds from Braemar, Ashford Trust and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis.

On March 10, 2022, the Company entered into a Limited Waiver Under Advisory Agreement (the “Limited Waiver”) with Braemar OP, Braemar TRS and its advisor.

The advisory agreement (i) allocates responsibility for certain employee costs between the Company and its advisor and (ii) permits the Company’s board of directors to issue annual equity awards in the Company or Braemar OP to employees and other representatives of its advisor based on achievement by the Company of certain financial or other objectives or otherwise as the Company’s board of directors sees fit.

Pursuant to the Limited Waiver, the Company, Braemar OP, Braemar TRS and the Company’s advisor waived the operation of any provision in the advisory agreement that would otherwise limit its ability, in its discretion and at the Company’s cost and expense, to award during the first and second fiscal quarters of calendar year 2022 cash incentive compensation to employees and other representatives of its advisor.

On March 20, 2020, the Company entered into an agreement with Lismore, a subsidiary of Ashford Inc., to engage Lismore to seek modifications, forbearances or refinancings of the Company’s loans (the “Lismore Agreement”).

The Lismore Agreement was terminated effective March 20, 2021.

Upon entering into the agreement with Lismore, the Company made an initial payment of approximately $ 1.4 million.

The Company paid approximately $ 1.4 million related to periodic installments of which $ 683,000 was expensed in accordance with the agreement.

The remaining $ 681,000 was set off against the cash payment of the base advisory fee per the agreement upon contract termination in March 2021.

Further, the Company paid approximately $ 1.4 million in success fees in connection with signed forbearance or other agreements.

In total, the Company paid approximately $ 4.1 million under the Lismore Agreement.

For the years ended December 31, 2021 and 2020, the Company recognized expense of $ 341,000 and $ 3.1 million, respectively.

These expenses are included in “write-off of loan costs and exit fees” in the consolidated statements of operations.

For the years ended December 31, 2021 and 2020, the Company recognized expense of $ 341,000 and $ 3.1 million.

These expenses are included in “write-off of loan costs and exit fees” in the consolidated statement of operations.

On August 25, 2020, in light of the fact that Lismore negotiated access to the FF&E reserves but no forbearance on debt service for the $ 435 million mortgage loan secured by the Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, The Notary Hotel and The Clancy, the independent members of the board of directors of Ashford Inc.

waived $ 1.6 million of Lismore success fees associated with items (ii) and (iii) above.

waived $ 1.6 million of Lismore success fees.

The Company engaged Lismore to negotiate, on the Company’s behalf, one or more modifications to the terms of the mortgage loan assumed in connection with the acquisition of the Mr.

C Beverly Hills Hotel.

Upon closing of the hotel, the Company paid Lismore a fee of $ 150,000 .

Ashford Securities

On September 25, 2019, Ashford Inc.

announced the formation of Ashford Securities LLC (“Ashford Securities”) to raise retail capital in order to grow its existing and future platforms.

In conjunction with the formation of Ashford Securities, Braemar has entered into a contribution agreement (the “Initial Contribution Agreement”) with Ashford Inc.

pursuant to which Braemar has agreed to contribute, with Ashford Trust, up to $ 15.0 million to fund the operations of Ashford Securities.

Costs for all operating expenses of Ashford Securities that were contributed by Ashford Trust and Braemar will be expensed as incurred.

These costs were allocated initially to Ashford Trust and Braemar based on an allocation percentage of 75 % to Ashford Trust and 25 % Braemar.

Upon reaching the earlier of $ 400 million in aggregate non-listed preferred equity offerings

Upon closing of the hotel on August 5, 2021, the Company paid Lismore a fee of $ 150,000 .

In connection with the refinancing of the Park Hyatt Beaver Creek mortgage loan in February 2022, the Company paid an affiliate of Lismore a fee of approximately $ 637,000 .

Additionally, in connection with the closing of the Four Seasons Resort Scottsdale mortgage loan in December 2022, the Company paid Lismore a fee of approximately $ 750,000 .

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

raised or June 10, 2023, there will be a true up (the “Initial True-Up Date”) between Ashford Trust and Braemar, whereby the actual capital contributions contributed by each company will be based on the actual amount of capital raised by Ashford Trust and Braemar, respectively.

After the Initial True-Up Date, the capital contributions will be allocated between Ashford Trust and Braemar quarterly based on the actual capital raised through Ashford Securities.

On December 31, 2020, an Amended and Restated Contribution Agreement (the “Amended and Restated Contribution Agreement”) was entered into by Ashford Inc., Ashford Trust and Braemar with respect to expenses to be reimbursed by Ashford Securities.

The Initial True-Up Date did not occur, and beginning on the effective date of the Amended and Restated Contribution Agreement, costs will be allocated based upon an allocation percentage of 50 % to Ashford Inc., 50 % to Braemar and 0 % to Ashford Trust.

Upon reaching the earlier of $ 400 million in aggregate non-listed preferred equity offerings raised, or June 10, 2023, there will be an amended and restated true up (the “Amended and Restated True-Up Date”) among Ashford Inc., Ashford Trust and Braemar whereby the actual expense reimbursement paid by each company will be based on the actual amount of capital raised by Ashford Inc., Ashford Trust and Braemar, respectively, through Ashford Securities.

After the Amended and Restated True-Up Date, the expense reimbursements will be allocated among Ashford Inc., Ashford Trust and Braemar quarterly based on the actual capital raised through Ashford Securities.

Additionally, Braemar’s aggregate Capital Contributions under the Initial Contribution Agreement and the Amended and Restated Contribution Agreement shall not exceed $ 3.75 million unless otherwise agreed to in writing by Braemar.

Ashford Securities

On December 31, 2020, an Amended and Restated Contribution Agreement (the “Amended and Restated Contribution Agreement”) was entered into by Ashford Inc., Ashford Trust and Braemar (collectively, the “Parties” and each individually a “Party”) with respect to funding certain expenses of Ashford Securities LLC, a subsidiary of Ashford Inc.

(“Ashford Securities”).

Beginning on the effective date of the Amended and Restated Contribution Agreement, costs will be allocated based upon an allocation percentage of 50 % to Ashford Inc., 50 % to Braemar and 0 % to Ashford Trust.

Upon reaching the earlier of $ 400 million in aggregate capital raised, or June 10, 2023, there will be a true up (the “Amended and Restated True-Up Date”) among Ashford Inc., Ashford Trust and Braemar whereby the actual amount contributed by each company will be based on the actual amount of capital raised by Ashford Inc., Ashford Trust and Braemar, respectively, through Ashford Securities (the resulting ratio of contributions among the Parties, the “Initial True-up Ratio”).

On January 27, 2022, Ashford Trust, Braemar and Ashford Inc.

entered into a Second Amended and Restated Contribution Agreement which provided for an additional $ 18 million in expenses to be reimbursed with all expenses allocated 45 % to Ashford Trust, 45 % to Braemar and 10 % to Ashford Inc.

On February 1, 2023, Braemar entered into a Third Amended and Restated Contribution Agreement with Ashford Inc.

and Ashford Trust.

The Third Amended and Restated Contribution Agreement states that after the Amended and Restated True-Up Date occurs, capital contributions for the remainder of fiscal year 2023 will be divided between each Party based on the Initial True-Up Ratio.

Thereafter on a yearly basis at year-end, starting with the year-end of 2023, there will be a true-up between the Parties whereby there will be adjustments so that the capital contributions made by each Party will be based on the cumulative amount of capital raised by each Party through Ashford Securities as a percentage of the total amount raised by the Parties collectively through Ashford Securities since June 10, 2019 (the resulting ratio of capital contributions among Braemar, Ashford Inc.

and Ashford Trust following this true-up, the “Cumulative Ratio”).

Thereafter, the capital contributions will be divided among each Party in accordance with the Cumulative Ratio, as recalculated at the end of each year.

As of December 31, 2022, Braemar has funded approximately $ 5.6 million.

Additionally, as of December 31, 2021, $ 338,000 of the pre-funded amount was included in “other assets” on our consolidated balance sheets.

During the year ended December 31, 2022, the funding estimate was revised based on the latest capital raise estimates of the aggregate capital raised through Ashford Securities.

This resulted in additional expense of approximately $ 7.2 million for the year ended December 31, 2022.

As of December 31, 2022, the payable amount that is included in “due to Ashford Inc., net” on the consolidated balance sheet is $ 6.6 million.

As of December 31, 2021, $ 338,000 of the pre-funded amount was included in “other assets” on the consolidated balance sheet.

The table below summarizes the amount Braemar has expensed related to reimbursed operating expenses of Ashford Securities (in thousands):

11 unchanged sentences

or any of its subsidiaries.

The independent members of our board of directors and the independent members of the board of directors of Ashford Inc., with the assistance of separate and independent legal counsel, engaged to negotiate the ERFP Agreement on behalf of Ashford Inc.

and Braemar, respectively.

The ERFP Agreement generally provides that Ashford LLC will provide funding to facilitate the acquisition of properties by Braemar OP that are recommended by Ashford LLC, in an aggregate amount of up to $ 50 million (subject to increase to up to $ 100 million by mutual agreement).

2 unchanged sentences

At the end of the Initial Term, the ERFP Agreement automatically renewed for one year and shall automatically renew for successive one-year periods (each such period a “Renewal Term”) unless either Ashford Inc.

or Braemar provides written notice to the other at least sixty days in advance of the expiration of the Initial Term or Renewal Term, as applicable, that such notifying party intends not to renew the ERFP Agreement.

As a result of The Ritz-Carlton Lake Tahoe acquisition, Braemar was entitled to receive $ 10.3 million from Ashford LLC in the form of future purchases of FF&E at Braemar hotel properties that will be leased to us by Ashford LLC rent-free.

As of December 31, 2021, Ashford LLC has remitted payments of $ 10.3 million to the Company as further described below.

On June 26, 2019 and July 1, 2019, the Company sold $ 1.4 million and $ 8.9 million, respectively, of hotel FF&E from Braemar hotel properties to Ashford LLC which was subsequently leased back to the Company rent-free.

In accordance with ASC 842, the Company evaluated the transactions and concluded that the transaction qualified as a sale.

As a result, the Company recorded gains of $ 9,000 and $ 23,000 , respectively, for the year ended December 31, 2019.

The gains are recorded in

or Braemar provides written notice to the other at least 60 days in advance of the

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

“gain (loss) on insurance settlement, disposition of assets and sale of hotel property” in our consolidated statements of operations.

Under the applicable accounting guidance in ASC 842, the Company has not recorded an operating lease right-of-use asset, an operating lease liability or lease expense for rents as the related party lease has no economic substance because the related party lease is provided rent-free.

In 2015, prior to the inception of the ERFP program, $ 2.0 million of key money consideration was invested in FF&E by Ashford LLC to be used by Braemar, which represented all of the key money consideration for the Bardessono Hotel and Spa.

Upon adoption of ASC 842, we evaluated this arrangement, which was accounted for as a lease that expired in 2020.

Under the applicable guidance in ASC 842, as the related party lease is provided rent-free, there is no economic substance related to the lease which results in not recording an operating lease right-of-use asset, an operating lease liability or lease expense for rents.

Upon expiration of the lease the underlying FF&E was purchased from Ashford Inc.

for $ 200,000 .

In 2021, the Company sold approximately $ 1.6 million of hotel FF&E from Braemar hotel properties to Ashford LLC, which was subsequently leased back to the Company rent-free.

In accordance with ASC 842, the Company evaluated the transactions and concluded that the transactions qualified as sales.

As a result, the Company recorded an aggregate gain of $ 197,000 for the year ended December 31, 2021.

The gains are recorded in “gain (loss) on insurance settlement, disposition of assets and sale of hotel properties” in our consolidated statements of operations.

Upon expiration of an ERFP lease, the Company purchased the underlying FF&E from Ashford Inc.

at fair value for $ 144,000 , which was paid during the third quarter of 2021.

expiration of the Initial Term or Renewal Term, as applicable, that such notifying party intends not to renew the ERFP Agreement.

On November 8, 2021, the Company received written notice from the Advisor of its intention not to renew the ERFP program.

12 unchanged sentences

Hotel Management Services

On November 6, 2019, Ashford Inc.

completed the acquisition of Remington Lodging’s hotel management business.

Following the acquisition, hotel management services are provided by Remington Hotels, a subsidiary of Ashford Inc., under the respective hotel management agreement with each customer, including Ashford Trust and Braemar.

At December 31, 2022, Remington Hotels managed four of our 16 hotel properties.

2 unchanged sentences

The Hotel Management Letter Agreement went into effect on March 13, 2020 and will continue until terminated by us.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We also have a mutual exclusivity agreement with Remington Hotels, pursuant to which:

7 unchanged sentences

The transfer taxes were initially paid by Braemar at the time of the spin-off.

The $ 728,000 gain is included in “(gain) loss on legal settlements” on the consolidated statements of operations.

In January 2022, the City of San Francisco remitted payment to Ashford Trust, which subsequently remitted payment to Braemar.

Remington Lodging (prior to Ashford Inc.

Remington Lodging was a hotel and design and construction company, wholly owned by our chairman, Mr.

Bennett and Mr.

Archie Bennett, Jr.

who is Ashford Trust’s chairman emeritus.

We had master hotel and design and construction services agreements and hotel and design and construction services mutual exclusivity agreements with Remington Lodging.

On November 6, 2019, Ashford Inc.

completed the acquisition of Remington Lodging’s hotel management business.

As a result of the acquisition, hotel management services that were previously provided by Remington Lodging are now be provided by a subsidiary of Ashford Inc.

under the respective hotel management agreement with each customer, including Ashford Trust and Braemar under the Remington Hotels name.

Between January 1, 2019 and November 5, 2019, we paid Remington Lodging monthly hotel management fees equal to the greater of approximately $ 14,000 (increased annually based on consumer price index adjustments) or 3 % of gross revenues as well as annual incentive hotel management fees, if certain operational criteria were met and other general and administrative expense reimbursements primarily related to accounting services.

The following table presents the fees related to our hotel and design and construction services agreements with Remington Lodging prior to its transactions with Ashford Inc.

(in thousands):

Year Ended December 31,

Hotel management fees, including incentive hotel management fees $ 1,738

Corporate general and administrative 297

Total $ 2,035

During the second quarter of 2022 the Company received an additional payment of approximately $ 114,000 related to accrued interest on the initial settlement amount, which is included in “(gain) loss on legal settlements” on the consolidated statements of operations for the year ended December 31, 2022.

BRAEMAR HOTELS & RESORTS INC.

7 unchanged sentences

Indebtedness, net (2)

Other Assets Other Hotel Revenue Other Hotel Expenses Preferred Stock (3)

Management fees Property Taxes, Insurance and Other Advisory Services Fee Corporate General and Administrative Write-off of Premiums, Loan Costs and Exit Fees

Other Hotel Revenue Other Hotel Expenses Management fees Preferred Stock (3)

Property Taxes, Insurance and Other Advisory Services Fee Corporate General and Administrative

Ashford LLC Insurance claims services $ 3 $ — $ — $ — $ — $ — $ — $ 3 $ — $ —

12 unchanged sentences

Company Product or Service Total Investments in Hotel Properties, net (1)

Other Assets Other Hotel Revenue Other Hotel Expenses Management fees Property Taxes, Insurance and Other Advisory Services Fee Write-off of Premiums, Loan Costs and Exit Fees

Ashford LLC FF&E purchases $ 1,816 $ 1,816 $ — $ — $ — $ — $ — $ — $ —

Indebtedness, net (2)

Other Assets Other Hotel Revenue Other Hotel Expenses Preferred Stock (3)

Management fees Property Taxes, Insurance and Other Advisory Services Fee Corporate General and Administrative Write-off of Premiums, Loan Costs and Exit Fees

Ashford LLC Insurance claims services $ 7 $ — $ — $ — $ — $ — $ — $ — $ 7 $ — $ — $ —

Ashford Securities Broker/Dealer 1,983 — — — — — — — — — 1,983 —

Ashford Securities Dealer Manager Fees 410 — — — — — 410 — — — — —

INSPIRE Audio visual services 1,001 — — — 1,001 — — — — — — —

Lismore Capital Debt placement and related services 491 — 150 — — — — — — — — 341

Lismore Capital Broker services 3 — — — — — — — — — — 3

OpenKey Mobile key app 38 — — — — 38 — — — — — —

6 unchanged sentences

Company Product or Service Total Investments in Hotel Properties, net (1)

Indebtedness, net (2)

Other Hotel Revenue Other Hotel Expenses Management fees Property Taxes, Insurance and Other Advisory Services Fee Corporate General and Administrative Write-off of Premiums, Loan Costs and Exit Fees

Other Assets Other Hotel Revenue Other Hotel Expenses Management fees Property Taxes, Insurance and Other Advisory Services Fee Write-off of Premiums, Loan Costs and Exit Fees

Ashford LLC FF&E purchases $ 1,816 $ 1,816 $ — $ — $ — $ — $ — $ — $ —

Ashford LLC Insurance claims services 108 — — — — — 108 — —

23 unchanged sentences

OpenKey Mobile key app — —

Ashford securities Capital raise services 6,514 —

Premier Design and construction services 829 470

2 unchanged sentences

As of December 31, 2022 and 2021, due from related parties, net included a net receivable from Remington Hotels of $ 573,000 and $ 677,000 , respectively, primarily related to advances made by Braemar and accrued base and incentive management fees.

As of December 31, 2021 and 2020, due from related parties, net included a $ 365,000 security deposit paid to Remington Hotel Corporation, an entity indirectly owned by Mr.

As of December 31, 2022 and December 31, 2021, due from related parties, net included a $ 365,000 security deposit paid to Remington Hotel Corporation, an entity indirectly owned by Mr.

Bennett and Mr.

14 unchanged sentences

The table below summarizes the licensing fees incurred (in thousands):

Line Item Year Ended December 31, 2021

Year Ended December 31,

Line Item 2022 2021

Other hotel expenses $ 467 $ 133

5 unchanged sentences

Litigation —On October 24, 2019, the Company provided notice to Accor of the material breach of Accor’s responsibilities under the Accor management agreement for the Sofitel Chicago Magnificent Mile at 20 East Chestnut Street in Chicago, Illinois.

On November 7, 2019, Accor filed a complaint against Ashford TRS Chicago II in the Supreme Court of the State of New York, New York County, seeking a declaratory judgment that no breach under the management agreement has occurred and an injunction to prevent Ashford TRS Chicago II form terminating the management agreement.

On November 7, 2019, Accor filed a complaint against Ashford TRS Chicago II in the Supreme Court of the State of New York, New York County, seeking a declaratory judgment that no breach under the Accor management agreement has occurred and an injunction to prevent Ashford TRS Chicago II from terminating the Accor management agreement.

Accor’s complaint was dismissed on or about February 27, 2020.

On January 6, 2020, Ashford TRS Chicago II filed a complaint against Accor in the Supreme Court of the State of New York, New York County, alleging breach of the Accor management agreement and seeking damages and a declaration of its right to terminate the Accor management agreement.

On July 20, 2020, Accor filed an Amended Answer and Counterclaims against Ashford TRS Chicago II, in which Accor asserts two causes of action:

First, Accor asserts a counterclaim for declaratory judgment that Accor correctly calculated the amount payable to Ashford TRS

On July 20, 2020, Accor filed an Amended Answer and Counterclaims against Ashford TRS Chicago II, in which Accor asserted two causes of

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Chicago II under the management agreement to “cure” Accor’s performance test failure (the “Cure Amount”).

Second, Accor asserts a counterclaim for breach of contract alleging that Ashford TRS Chicago II breached the management agreement by wrongfully maintaining that the Cure Amount for the 2018 and 2019 Performance Test failure is $ 1,031,549 instead of $ 535,120 .

As of December 31, 2021, no amounts have been accrued.

First, Accor asserted a counterclaim for declaratory judgment that Accor correctly calculated the amount payable to Ashford TRS Chicago II under the Accor management agreement to “cure” Accor’s performance test failure (the “Cure Amount”).

Second, Accor asserted a counterclaim for breach of contract alleging that Ashford TRS Chicago II breached the Accor management agreement by wrongfully maintaining that the Cure Amount for the 2018 and 2019 Performance Test failure is $ 1,031,549 instead of $ 535,120 .

On February 16, 2022, the parties entered into a settlement agreement agreeing to:

1) amend the management agreement;

1) amend the Accor management agreement;

2) dismiss the lawsuit and counterclaims;

2 unchanged sentences

On February 23, 2022, Ashford TRS Chicago II and Accor filed a stipulation of discontinuance dismissing all claims, counterclaims, and cross-claims in the January 6, 2020 action with prejudice.

One of the Company’s hotel management companies is currently involved in litigation regarding its employment policies and practices at multiple California hotels, including one of the Company’s hotels.

On January 28, 2022, the Court approved a settlement of this litigation.

The resulting loss to the Company is approximately $ 448,000 ;

although it is entitled to indemnification in the amount of approximately $ 291,000 , based on the respective periods of ownership of the Company’s hotel.

As of December 31, 2021, approximately $ 500,000 was accrued.

Arbitration occurred on October 12 and 13, 2022.

The arbitrator returned his decision on November 21, 2022, and the decision did not result in any additional amounts being owed to, or payable by, the Company.

As a result of the settlement related to the 2018 performance test failure, the Company recorded a gain of approximately $ 868,000 in 2022, that is recorded as a reduction of management fees and included in “management fees” on the Company’s consolidated statement of operations.

On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company.

20 unchanged sentences

Capital Commitments —At December 31, 2022, we had capital commitments of $ 39.4 million, including commitments that will be satisfied with insurance proceeds, relating to general capital improvements that are expected to be paid in the next twelve months .

On January 1, 2019, we adopted ASC 842 on a modified retrospective basis.

We elected the practical expedients which allowed us to apply the new guidance at its effective date on January 1, 2019 without adjusting the comparative prior period financial statements.

The package of practical expedients also allowed us to carry forward the historical lease classification.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Additionally, we elected the practical expedients allowing us not to separate lease and non-lease components and not record short-term leases on the balance sheet across all existing asset classes.

The adoption of this standard resulted in the recognition of operating lease ROU assets and lease liabilities primarily related to our ground lease arrangements for which we are the lessee.

As of January 1, 2019, we recorded operating lease liabilities of $ 60.6 million as well as a corresponding operating lease ROU assets of $ 82.5 million, which includes, among other things, the reclassified intangible assets of $ 22.3 million.

The standard did not have a material impact on our consolidated statements of operations and statements of cash flows.

The majority of our leases are operating ground leases.

4 unchanged sentences

We have no finance leases as of December 31, 2022.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The discount rate used to calculate the lease liability and ROU asset related to our ground leases is based on our incremental borrowing rate (“IBR”), as the rate implicit in each lease is not readily determinable.

10 unchanged sentences

_______________________________________

(1) For the years ended December 31, 2021, 2020 and 2019, operating lease cost includes approximately $ 954,000 , $( 305,000 ) and $ 1.4 million, respectively, of variable lease cost associated with the ground leases, with the credit in 2020 primarily caused by the ground lease percentage rent true-up for fiscal year 2019-2020 at Hilton La Jolla Torrey Pines.

(1) For the years ended December 31, 2022, 2021 and 2020, operating lease cost includes approximately $ 2.2 million, $ 954,000 and $( 305,000 ), respectively, of variable lease cost associated with the ground leases, with the credit in 2020 primarily caused by the ground lease percentage rent true-up for fiscal year 2019-2020 at Hilton La Jolla Torrey Pines.

Additionally, we recorded $ 474,000 , $ 512,000 and $ 834,000 , respectively, of amortization costs related to the intangible assets that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842.

14 unchanged sentences

(1) Calculated using the lease term, excluding extension options, and discount rates of the ground leases.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Future minimum lease payments due under non-cancellable leases as of December 31, 2022 were as follows (in thousands):

6 unchanged sentences

(1) Based on payment amounts as of December 31, 2022 .

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

federal income tax purposes, we elected to be taxed as a REIT under the Code.

16 unchanged sentences

Benefit of USVI Economic Development Commission credit 3,358 3,346 783

Benefits of Puerto Rico tax incentives 1,474 — —

Other 126 ( 251 ) 311

1 unchanged sentence

Total income tax (expense) benefit $ ( 4,043 ) $ ( 1,324 ) $ 4,406

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The components of income tax expense are as follows (in thousands):

10 unchanged sentences

At December 31, 2022 and 2021, we determined that there were no amounts to accrue for interest and penalties due to taxing authorities.

At December 31, 2021 and 2020, our net deferred tax asset, included in “other assets,” and net deferred tax liability, included in “accounts payable and accrued expenses,” respectively, on our consolidated balance sheets, consisted of the following (in thousands):

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At December 31, 2022 and 2021, our net deferred tax asset, included in “other assets,” on our consolidated balance sheets, consisted of the following (in thousands):

Deferred tax assets (liabilities):

12 unchanged sentences

At December 31, 2022 and 2021, we recorded a valuation allowanc e of $ 18.6 million and $ 17.3 million, res pectively, to partially reserve the deferred tax assets of our TRSs.

Primarily as a result of the limitation imposed by the Code on the utilization of net operating losses of acquired subsidiaries and the history of losses of our USVI TRS, we believe it is more likely than not that $ 17.3 million of our deferred tax assets will not be realized, and therefore, have provided a valuation allowance to reserve against the balances.

Primarily as a result of the limitation imposed by the Code on the utilization of net operating losses of acquired subsidiaries, we believe it is more likely than not that $ 18.6 million of our deferred tax assets will not be realized, and therefore, have provided a valuation allowance to reserve against the balances.

At December 31, 2022, we had TRSs net operating loss carryforwards for U.S.

2 unchanged sentences

$ 50.0 million of net operating loss carryforwards are attributable to acquired subsidiaries and are subject to substantial limitation on their use.

At December 31, 2022, Braemar Hotels & Resorts Inc., our REIT, had net operating loss carryforwards for U.S.

federal income tax purposes of $ 109.7 million based on the latest filed tax return.

Of this amount, $ 2.2 million is subject to expiration in 2033.

The remainder is not subject to expiration under the Tax Cuts and Jobs Act.

We do not recognize deferred tax assets and a valuation allowance for the REIT since the REIT distributes its taxable income as dividends to stockholders, and in turn, the stockholders incur income taxes on those dividends.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the changes in the valuation allowance (in thousands):

8 unchanged sentences

The tax holiday is conditional upon our meeting certain employment and investment thresholds.

The impact of this tax holiday decreased current foreign taxes by $ 907,000 , $ 0 and $ 807,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

The impact of this tax holiday decreased current foreign taxes by $ 3.4 million, $ 907,000 and $ 0 for the years ended December 31, 2022, 2021 and 2020, respectively.

The benefit of the tax holiday on net income (loss) per share was approximately, $ 0.05 , $ 0.02 and $ 0.00 for the years ended December 31, 2022, 2021 and 2020, respectively.

In 2022, we acquired the Ritz-Carlton Reserve Dorado Beach in Dorado, Puerto Rico.

Our taxable entities in Puerto Rico operate under a tax holiday which is effective through April 2, 2028.

The tax holiday is conditional upon meeting certain employment and investment thresholds.

The impact of this tax holiday decreased current foreign taxes by $ 2.5 million for the year ended December 31, 2022.

The benefit of this tax holiday on net income (loss) per share was approximately $ 0.04 for the year ended December 31, 2022.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and includes certain income tax provisions relevant to businesses.

1 unchanged sentence

For the year ended December 31, 2020, the CARES Act allowed us to record a tax benefit of $ 3.4 million for the 2020 net operating loss at our TRS that was carried back to prior tax years.

On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law, and extended several COVID-19 tax related measures passed as part of the “CARES Act.” The Company is required to recognize the effect on the consolidated financial statements in the period the law was enacted, which was the period ended December 31, 2020.

The Consolidated Appropriations Act, 2021 did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2020.

Intangible Assets, net

6 unchanged sentences

For the years ended December 31, 2022, 2021 and 2020, amortization related to intangible assets was $ 378,000 , $ 379,000 and $ 379,000 , respectively.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Estimated future amortization expense for intangible assets, net for each of the next five years and thereafter is as follows (in thousands):

6 unchanged sentences

and its territories.

For the year ended December 31, 2021, three of our hotel properties generated revenues in excess of 10% of total hotel revenue amounting to 48 % of total hotel revenue.

For the year ended December 31, 2022, the Ritz-Carlton St.

Thomas and the Ritz-Carlton Sarasota generated revenues in excess of 10% of total hotel revenue amounting to 28 % of total hotel revenue.

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents.

8 unchanged sentences

and its territories.

Subsequent Event

On February 2, 2022, the Company refinanced its mortgage loan secured by the Park Hyatt Beaver Creek Resort & Spa, which had a final maturity date in April 2022.

The new, non-recourse mortgage loan totals $ 70.5 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions.

The mortgage loan is interest only and provides for a floating interest rate of SOFR + 2.86 %.

Subsequent Events

On January 18, 2023, the Company repaid its $ 54.0 million mortgage loan secured by The Ritz-Carlton Reserve Dorado Beach.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Subsequent to December 31, 2022, the Company issued approximately 3.8 million shares of Series E Preferred Stock and received net proceeds of approximately $ 85.4 million and issued approximately 533,000 shares of Series M Preferred Stock and received net proceeds of approximately $ 12.9 million.

On February 21, 2023, the Company announced the closing of its offering of the Series E Preferred Stock and Series M Preferred Stock.

Subsequent to December 31, 2022, the Company repurchased approximately 3.9 million shares of its common stock for approximately $ 18.9 million.

The Company has repurchased approximately 5.4 million shares of its common stock for approximately $ 25.0 million and has completed the $ 25.0 million repurchase authorization authorized by the board of directors on December 7, 2022.

On February 24, 2023, at the option of Mr.

Bennett’s 169,523 vested LTIP units that achieved economic parity with his common units were redeemed for common units on a one -for-one basis.

On February 24, 2023, the Company received a Notice of Exercise of Redemption Right (the “Redemption Notice”), pursuant to which Mr.

Bennett elected to redeem the common units and such redemption was settled in cash at the Company’s election based on the average of the closing price of the Company’s common stock for the ten consecutive trading days ending on February 23, 2023.

Additionally, on February 24, 2023, Mr.

Bennett elected to redeem an additional 1,254,254 common units and following receipt of the Redemption Notice, such redemption was settled in cash at the Company’s election at a price per common unit based on the average of the closing price of the Company’s common stock for the ten consecutive trading days ending on February 23, 2023.

The cash redemption for the 1,423,777 common units totaled approximately $ 7.0 million.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data