What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-09 compared with 2023-11-08 · 281 added, 424 removed, 817 unchanged (46% of the section changed)

4 unchanged sentences

(unaudited, in thousands, except share and per share amounts)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Investments in hotel properties, gross $ 2,388,484 $ 2,382,716

13 unchanged sentences

Intangible assets, net 3,409 3,504

Due from Ashford Inc.

Due from related parties, net 520 938

Due from third-party hotel managers 23,777 17,739

5 unchanged sentences

Due to Ashford Inc.

Due to related parties, net 766 603

Due to third-party hotel managers 1,993 1,608

4 unchanged sentences

Commitments and contingencies (note 15)

5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

65,426 65,426

Series E redeemable preferred stock, $ 0.01 par value, 16,409,685 and 12,656,529 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Series E redeemable preferred stock, $ 0.01 par value, 16,162,834 and 16,316,315 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

375,261 377,035

Series M redeemable preferred stock, $ 0.01 par value, 1,911,703 and 1,428,332 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Series M redeemable preferred stock, $ 0.01 par value, 1,747,771 and 1,832,805 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

43,694 45,623

1 unchanged sentence

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 September 30, 2023 and December 31, 2022

Common stock, $ 0.01 par value, 250,000,000 shares authorized, 65,993,893 and 69,919,065 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

8.25 % Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at March 31, 2024 and December 31, 2023

Common stock, $ 0.01 par value, 250,000,000 shares authorized, 66,477,431 and 66,636,353 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 718,606 718,498

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(in thousands, except per share amounts)

Three Months Ended March 31,

Rooms $ 138,552 $ 137,527

11 unchanged sentences

Advisory services fee 6,700 7,948

(Gain) loss on legal settlements — — — ( 114 )

Corporate general and administrative ( 2,226 ) 2,820

3 unchanged sentences

Interest income 796 2,108

Other income (expense) 293 27 293 27

Interest expense and amortization of discounts and loan costs ( 26,491 ) ( 22,873 )

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(in thousands)

Three Months Ended March 31,

NET INCOME (LOSS) $ 15,482 $ 16,604

18 unchanged sentences

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance at June 30, 2023 1,600 $ 16 65,994 $ 659 $ 716,987 $ ( 341,210 ) $ ( 12,669 ) $ 363,783 3,078 $ 65,426 16,485 $ 379,403 1,960 $ 48,405 $ 35,174

Equity-based compensation — — — — 577 — — 577 — — — — — — 1,050

Issuance of preferred stock — — — — — — — — — — 36 813 3 56 —

Dividends declared – common stock ($ 0.05 /share)

— — — — — ( 3,335 ) — ( 3,335 ) — — — — — — —

Dividends declared – preferred stock - Series B ($ 0.34 /share)

— — — — — ( 1,058 ) — ( 1,058 ) — — — — — — —

Dividends declared – preferred stock - Series D ($ 0.52 /share)

— — — — — ( 825 ) — ( 825 ) — — — — — — —

Dividends declared – preferred stock - Series E ($ 0.47 /share)

— — — — — ( 7,710 ) — ( 7,710 ) — — — — — — —

Dividends declared – preferred stock - Series M ($ 0.52 /share)

— — — — — ( 989 ) — ( 989 ) — — — — — — —

Distributions to noncontrolling interests — — — — — — ( 2,740 ) ( 2,740 ) — — — — — — ( 361 )

Net income (loss) — — — — — ( 22,030 ) 1,773 ( 20,257 ) — — — — — — ( 2,354 )

Redemption of preferred stock — — — — — — — — — — ( 111 ) ( 2,589 ) ( 51 ) ( 1,268 ) —

Redemption value adjustment – preferred stock — — — — — ( 516 ) — ( 516 ) — — — 249 — 267 —

Redemption value adjustment — — — — — 15 — 15 — — — — — — ( 15 )

Balance at September 30, 2023 1,600 $ 16 65,994 $ 659 $ 717,564 $ ( 377,658 ) $ ( 13,636 ) $ 326,945 3,078 $ 65,426 16,410 $ 377,876 1,912 $ 47,460 $ 33,494

8.25 % Series D Cumulative Preferred Stock

Common Stock Additional

Capital Accumulated Deficit Noncontrolling Interest in Consolidated Entities Total 5.50 % Series B Cumulative Convertible

Preferred Stock

Series E Redeemable

Preferred Stock Series M Redeemable

Preferred Stock Redeemable Noncontrolling Interests in Operating Partnership

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance at December 31, 2023

1,600 $ 16 66,636 $ 666 $ 718,498 $ ( 412,199 ) $ ( 8,934 ) $ 298,047 3,078 $ 65,426 16,316 $ 377,035 1,833 $ 45,623 $ 32,395

Purchase of common stock — — ( 170 ) ( 2 ) ( 367 ) — — ( 369 ) — — — — — — —

13 unchanged sentences

— — — — — ( 924 ) — ( 924 ) — — — — — — —

Contributions from noncontrolling interests — — — — — — 4,050 4,050 — — — — — — —

Distributions to noncontrolling interests — — — — — — — — — — — — — — ( 366 )

Redemption/conversion of operating partnership units — — — — — — — — — — — — — — ( 7,162 )

Net income (loss) — — — — — 15,929 ( 743 ) 15,186 — — — — — — 296

2 unchanged sentences

Redemption value adjustment — — — — — 7 — 7 — — — — — — ( 7 )

Balance at September 30, 2023 1,600 $ 16 65,994 $ 659 $ 717,564 $ ( 377,658 ) $ ( 13,636 ) $ 326,945 3,078 $ 65,426 16,410 $ 377,876 1,912 $ 47,460 $ 33,494

8.25 % Series D Cumulative Preferred Stock

Common Stock Additional

Capital Accumulated Deficit Noncontrolling Interest in Consolidated Entities Total 5.50 % Series B Cumulative Convertible

Preferred Stock

Series E Redeemable

Preferred Stock Series M Redeemable

Preferred Stock Redeemable Noncontrolling Interests in Operating Partnership

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance at June 30, 2022 1,600 $ 16 71,310 $ 712 $ 738,353 $ ( 290,307 ) $ ( 14,943 ) $ 433,831 3,078 $ 65,426 4,508 $ 103,697 396 $ 9,750 $ 40,291

Purchase of common stock — — ( 156 ) ( 1 ) ( 760 ) — — ( 761 ) — — — — — — —

Equity-based compensation — — — — 1,799 — — 1,799 — — — — — — 1,592

Issuance of restricted shares/units — — 304 3 2 — — 5 — — — — — — —

Forfeiture of restricted common shares — — ( 2 ) — — — — — — — — — — — —

Issuance of preferred stock — — — — — — — — — — 4,375 98,277 673 16,296 —

Dividends declared – common stock ($ 0.01 /share)

— — — — — ( 719 ) — ( 719 ) — — — — — — —

Dividends declared – preferred stock - Series B ($ 0.34 /share)

— — — — — ( 1,059 ) — ( 1,059 ) — — — — — — —

Dividends declared – preferred stock-Series D ($ 0.52 /share)

— — — — — ( 825 ) — ( 825 ) — — — — — — —

Dividends declared – preferred stock - Series E ($ 0.48 /share)

— — — — — ( 3,697 ) — ( 3,697 ) — — — — — — —

Dividends declared – preferred stock - Series M ($ 0.52 /share)

Balance at March 31, 2024

1,600 $ 16 66,477 $ 664 $ 718,606 $ ( 412,013 ) $ ( 9,677 ) $ 297,596 3,078 $ 65,426 16,163 $ 375,261 1,748 $ 43,694 $ 33,005

Distributions to noncontrolling interests — — — — — — — — — — — — — — ( 84 )

Net income (loss) — — — — — ( 8,040 ) 823 ( 7,217 ) — — — — — — ( 1,166 )

Redemption of preferred stock — — — — — — — — — — ( 3 ) ( 84 ) ( 2 ) ( 59 ) —

Redemption value adjustment – preferred stock — — — — — ( 2,649 ) — ( 2,649 ) — — — 2,362 — 287 —

Redemption value adjustment — — — — — ( 2 ) — ( 2 ) — — — — — — 2

Balance at September 30, 2022 1,600 $ 16 71,456 $ 714 $ 739,394 $ ( 307,745 ) $ ( 14,120 ) $ 418,259 3,078 $ 65,426 8,880 $ 204,252 1,067 $ 26,274 $ 40,635

8.25 % Series D Cumulative Preferred Stock

4 unchanged sentences

Balance at December 31, 2022

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

1,600 $ 16 69,919 $ 699 $ 734,134 $ ( 324,740 ) $ ( 16,346 ) $ 393,763 3,078 $ 65,426 12,657 $ 291,076 1,428 $ 35,182 $ 40,555

Purchase of common stock — — ( 3,968 ) ( 40 ) ( 19,210 ) — — ( 19,250 ) — — — — — — —

Equity-based compensation — — — — 805 — — 805 — — — — — — 1,408

Issuance of common stock — — 6,000 60 34,981 — — 35,041 — — — — — — —

Common stock issuance costs — — — — ( 27 ) — — ( 27 ) — — — — — —

Issuance of preferred stock — — — — — — — — — — 3,828 85,916 533 12,879 —

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

Forfeiture of restricted common shares — — ( 1 ) — — — — — — — — — — — —

11 unchanged sentences

Contributions from noncontrolling interests — — — — — — 2,024 2,024 — — — — — — —

Redemption/conversion of operating partnership units — — — — — — — — — — — — — — ( 7,039 )

Net income (loss) — — — — — 16,034 309 16,343 — — — — — — 261

2 unchanged sentences

Redemption value adjustment — — — — — 4 — 4 — — — — — — ( 4 )

Balance at September 30, 2022

Balance at March 31, 2023

1,600 $ 16 65,950 $ 659 715,729 $ ( 324,840 ) $ ( 14,013 ) $ 377,551 3,078 $ 65,426 16,474 $ 378,906 1,960 $ 48,294 $ 34,820

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

13 unchanged sentences

Deferred income tax expense (benefit) 5 37

Changes in operating assets and liabilities, exclusive of the effect of hotel acquisitions:

Changes in operating assets and liabilities:

Accounts receivable and inventories ( 2,194 ) 6,473

11 unchanged sentences

Proceeds from property insurance 504 75

Payments for initial franchise fee ( 75 ) —

Acquisition of hotel properties, net of cash and restricted cash acquired — ( 86,798 )

Investment in unconsolidated entity — ( 99 )

10 unchanged sentences

Net proceeds from issuance of preferred stock — 98,009

Common stock offering costs — ( 102 )

Contributions from noncontrolling interest in consolidated entities — 2,024

6 unchanged sentences

Cash, cash equivalents and restricted cash at end of period $ 219,423 $ 344,553

Nine Months Ended September 30,

Three Months Ended March 31,

SUPPLEMENTAL CASH FLOW INFORMATION

4 unchanged sentences

Common stock purchases accrued but not paid 369 352

Assumption of debt in hotel acquisition — 58,601

Capital expenditures accrued but not paid 15,810 6,047

Issuance of common stock for hotel acquisition — 35,040

Accrued preferred stock offering expenses — 80

Non-cash preferred stock dividends 865 843

Non-cash common stock dividends — 5

Unsettled proceeds from derivatives 399 596

Non-cash common stock/unit dividends

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

23 unchanged sentences

We do not operate any of our hotel properties directly;

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

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

Remington Lodging & Hospitality, LLC (“Remington Hospitality”), a subsidiary of Ashford Inc., manages four of our 16 hotel properties.

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

The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of September 30, 2023, own 16 hotel properties in seven states, the District of Columbia, Puerto Rico 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 policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology and cash management services.

The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of March 31, 2024, own 16 hotel properties in seven states, the District of Columbia, Puerto Rico and the U.S.

Virgin Islands (“USVI”).

2 unchanged sentences

As a REIT, Braemar is required to comply with limitations imposed by the Code related to operating hotels.

As of September 30, 2023, 15 of our 16 hotel properties were leased by wholly-owned or majority-owned subsidiaries that are treated as taxable REIT subsidiaries (“TRS”) for federal income tax purposes (collectively, the TRS entities are referred to as “Braemar TRS”).

As of March 31, 2024, 15 of our 16 hotel properties were leased by wholly-owned or majority-owned subsidiaries that are treated as taxable REIT subsidiaries (“TRS”) for federal income tax purposes (collectively, the TRS entities are referred to as “Braemar TRS”).

One hotel property, located in the USVI, is owned by our USVI TRS.

1 unchanged sentence

Hotel operating results related to the hotel properties are included in the condensed consolidated statements of operations.

As of September 30, 2023, 13 of the 16 hotel properties were leased by Braemar’s wholly-owned TRS, and the two hotel properties majority-owned through a consolidated partnership were leased to a TRS wholly-owned by such consolidated partnership.

As of March 31, 2024, 13 of the 16 hotel properties were leased by Braemar’s wholly-owned TRS, and the two hotel properties majority-owned through a consolidated partnership were leased to a TRS wholly-owned by such consolidated partnership.

Each leased hotel is leased under a percentage lease that provides for each lessee to pay in each calendar month the base rent plus, in each calendar quarter, percentage rent, if any, based on hotel revenues.

6 unchanged sentences

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

These condensed consolidated financial statements include the accounts of Braemar Hotels & Resorts Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest.

All intercompany accounts and transactions between consolidated entities have been eliminated in these condensed consolidated financial statements.

We have condensed

All intercompany accounts and transactions

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements.

between consolidated entities have been eliminated in these condensed consolidated financial statements.

We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements.

We believe the disclosures made herein are adequate to prevent the information presented from being misleading.

4 unchanged sentences

As such, we consolidate Braemar OP.

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

The following item affects reporting comparability of our historical condensed consolidated financial statements:

• Historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results.

Consequently, operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023;

• 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 at Troon North located in Scottsdale, Arizona.

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

Consequently, operating results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024;

Use of Estimates —The preparation of these condensed 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.

Actual results could differ from those estimates.

Recently Adopted Accounting Standards —In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 ASU 2021-01 , Reference Rate Reform (Topic 848), 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.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848 ) (“ASU 2022-06”), which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

The Company applied the optional expedient in evaluating debt modifications converting from London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”).

The Company adopted the standards upon the respective effective dates.

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

Recently Issued Accounting Standards —In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

We are currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which eliminated the historic requirement that entities disclose information concerning unrecognized tax benefits having a reasonable possibility of significantly increasing or decreasing in the 12 months following the reporting date.

For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024.

We are currently evaluating the impact that ASU 2023-09 will have on our consolidated financial statements and related disclosures.

BRAEMAR HOTELS & RESORTS INC.

2 unchanged sentences

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

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

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

11 unchanged sentences

Total 16 $ 138,552 $ 53,547 $ 26,980 $ 219,079

Three Months Ended September 30, 2022

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

California 6 $ 37,827 $ 12,045 $ 4,992 $ 54,864

Puerto Rico 1 8,190 3,659 2,462 14,311

Colorado 1 4,214 4,572 2,134 10,920

Florida 2 13,480 5,723 5,368 24,571

Illinois 1 8,165 2,371 493 11,029

Pennsylvania 1 6,023 1,026 373 7,422

Washington 1 8,239 1,223 385 9,847

Washington, D.C.

1 7,745 3,327 533 11,605

USVI 1 10,620 3,678 2,322 16,620

Total 15 $ 104,503 $ 37,624 $ 19,062 $ 161,189

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2023

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

1 unchanged sentence

Puerto Rico 1 15,430 4,875 3,137 23,442

Arizona 1 25,622 14,776 6,351 46,749

Colorado 1 19,673 12,048 6,885 38,606

Florida 2 47,287 24,355 16,777 88,419

Illinois 1 19,039 4,697 1,400 25,136

Pennsylvania 1 18,536 3,883 957 23,376

Washington 1 22,868 3,373 1,296 27,537

Washington, D.C.

1 14,157 6,518 2,616 23,291

USVI 1 36,759 13,444 8,777 58,980

Total 16 $ 355,402 $ 138,541 $ 67,866 $ 561,809

Nine Months Ended September 30, 2022

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

California 6 $ 103,111 $ 34,474 $ 14,161 $ 151,746

Puerto Rico 1 25,593 9,491 6,258 41,342

Colorado 1 14,342 6,361 2,983 23,686

7 unchanged sentences

Total 16 $ 137,527 $ 52,228 $ 25,546 $ 215,301

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Investments in Hotel Properties, net

Investments in hotel properties, net consisted of the following (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Land $ 630,842 $ 630,842

7 unchanged sentences

Impairment Charges

During the three and nine months ended September 30, 2023 and 2022, no impairment charges were recorded.

During the three months ended March 31, 2024 and 2023, no impairment charges were recorded.

Investment in Unconsolidated Entity

1 unchanged sentence

(“OpenKey”), which is controlled and consolidated by Ashford Inc., is a hospitality-focused mobile key platform that provides a universal smart phone app and related hardware and software for keyless entry into hotel guest rooms.

As of September 30, 2023, the Company has made equity investments in OpenKey totaling $ 2.9 million.

As of March 31, 2024, the Company has made equity investments in OpenKey totaling $ 2.9 million.

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our investment is recorded as “investment in unconsolidated entity” in our condensed 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.

2 unchanged sentences

Any impairment is recorded in equity in earnings (loss) of unconsolidated entity.

No such impairment was recorded for the three and nine months ended September 30, 2023 and 2022.

No such impairment was recorded for the three months ended March 31, 2024 and 2023.

The following table summarizes our carrying value and ownership interest in OpenKey:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Carrying value of the investment in OpenKey (in thousands) $ 1,358 $ 1,416

1 unchanged sentence

The following table summarizes our equity in earnings (loss) in OpenKey (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Line Item 2024 2023

2 unchanged sentences

Per the agreement, Ashford Inc.

and the Company will provide OpenKey with a maximum loan amount of $ 5.0 million to be allocated on a pro-rata basis based on current ownership interests and funded quarterly, over the course of 2023.

and the Company will provide OpenKey with a maximum loan amount of $ 5.0 million to be allocated on a pro-rata basis based on current ownership interests and funded quarterly.

The loan bears interest at an annual rate of 15 %.

Additionally, repayment of the loan principal and all accrued interest is due upon certain events.

On September 28, 2023, the Company funded approximately $ 79,000 .

As of September 30, 2023, the Company has funded approximately $ 237,000 .

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of March 31, 2024, the Company has funded approximately $ 238,000 .

On February 27, 2024, the Company approved additional funding, together with Ashford Inc., up to $ 1.0 million in aggregate to OpenKey, allocated pro rata among them.

As of March 31, 2024, no funding has been made pursuant to the 2024 funding agreement.

The following table summarizes our note receivable from OpenKey (in thousands):

Line Item September 30, 2023 December 31, 2022

Line Item March 31, 2024 December 31, 2023

Investment in unconsolidated entity $ 267 $ 258

The following table summarizes the interest income associated with the loan to OpenKey (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Line Item 2024 2023

Equity in earnings (loss) of unconsolidated entity $ 9 $ 1

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Indebtedness, net

Indebtedness, net consisted of the following (dollars in thousands):

Indebtedness Collateral Current Maturity Final

Current Maturity

Maturity (14)

Interest Rate September 30, 2023 December 31, 2022

Mortgage loan (4)

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

Mortgage loan (4)

The Ritz-Carlton Sarasota October 2023

April 2024 LIBOR (1) + 2.65 %

Interest Rate

March 31, 2024 December 31, 2023

Mortgage loan (3)

Hotel Yountville November 2023

May 2024 LIBOR (1) + 2.55 %

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

54,000 54,000

Mortgage loan Capital Hilton February 2024 February 2024 SOFR (2) + 1.70 %

The Notary Hotel June 2024 June 2025 SOFR (1) + 2.66 %

$ 293,180 $ 293,180

Hilton La Jolla Torrey Pines

Sofitel Chicago Magnificent Mile

Marriott Seattle Waterfront

Mortgage loan (4)

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

70,500 70,500

Hilton La Jolla Torrey Pines August 2024

August 2024 9.00 % 66,600 66,600

Mortgage loan (5)

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

Cameo Beverly Hills August 2024 August 2024 SOFR (1) + 3.66 %

30,000 30,000

Mortgage loan (6)

The Notary Hotel June 2024 June 2025 SOFR (2) + 2.66 %

The Ritz-Carlton Lake Tahoe January 2025

January 2026 SOFR (1) + 3.60 %

53,413 53,413

Sofitel Chicago Magnificent Mile

Marriott Seattle Waterfront

Mortgage loan (7)

Cameo Beverly Hills

August 2024 August 2024 SOFR (2) + 3.66 %

Park Hyatt Beaver Creek Resort & Spa February 2025

February 2027 SOFR (1) + 2.86 %

70,500 70,500

4 unchanged sentences

42,500 42,500

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

Mortgage loan (9)

Pier House Resort & Spa September 2025

September 2026 SOFR (1) + 3.60 %

80,000 80,000

Mortgage loan (10)

The Ritz-Carlton Reserve Dorado Beach

March 2026 March 2026 SOFR (1) + 4.75 %

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

BAML Credit Facility (11)

Bardessono Hotel and Spa

July 2027 Base Rate (3) + 1.25 % to 2.00 % or SOFR (2) + 2.35 % to 3.10 %

Bardessono Hotel and Spa July 2026 July 2027 Base Rate (2) + 1.25 % to 2.00 % or

SOFR (1) + 2.35 % to 3.10 %

200,000 200,000

Hotel Yountville

3 unchanged sentences

140,000 140,000

Mortgage loan (13)

Capital Hilton December 2026 December 2028 SOFR (1) + 3.75 %

110,600 110,600

Capitalized default interest and late charges, net 625 1,934

1,235,043 1,173,043

Capitalized default interest

and late charges, net

Deferred loan costs, net ( 10,395 ) ( 9,135 )

2 unchanged sentences

__________________

(1) LIBOR rate was 4.39 % at December 31, 2022.

(2) SOFR rates were 5.32 % and 4.30 % at September 30, 2023 and December 31, 2022, respectively.

(1) SOFR rates were 5.33 % and 5.35 % at March 31, 2024 and December 31, 2023, respectively.

(2) Base Rate, as defined in the secured credit facility agreement, is the greater of (i) the prime rate set by Bank of America, (ii) federal funds rate + 0.50 %, (iii) Term SOFR + 1.00 %, or (iv) 1.00 %.

(4) On July 31, 2023, we entered into a new $ 200.0 million secured credit facility comprised of a $ 150.0 million term loan and a $ 50.0 million secured revolving credit facility with a three-year initial term and one one-year extension option, subject to satisfaction of certain conditions.

The new facility is interest only and bears interest at a rate of SOFR + 2.35 % to 3.10 %.

Proceeds from the facility were used to repay the mortgage loans secured by Bardessono Hotel & Spa, Hotel Yountville, and The Ritz-Carlton Sarasota.

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

(6) On January 18, 2023, we repaid this mortgage loan.

(3) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions, of which the fourth was exercised in June 2023.

In accordance with exercising the fourth one-year extension option, we repaid $ 142.0 million of principal and the variable interest rate increased from LIBOR + 2.16 % to LIBOR + 2.61 %.

This loan transitioned from LIBOR to SOFR in July and the variable interest rate increased from LIBOR + 2.61 % to SOFR + 2.66 %.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(8) This loan transitioned from LIBOR to SOFR in July and the variable interest rate increased from LIBOR + 3.60 % to SOFR + 3.66 %.

(4) On February 5, 2024, we amended this mortgage loan.

Terms of the amendment included extending the maturity date by six months from February 2024 to August 2024, and converting the interest rate from a variable rate of SOFR + 1.70 % to a fixed rate of 9.00 %.

(5) This mortgage loan has a SOFR floor of 1.50 %.

(9) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the third was exercised in August 2023.

This loan transitioned from LIBOR to SOFR in July and the variable interest rate increased from LIBOR + 3.95 % to SOFR + 4.04 %.

On April 9, 2024, we repaid this mortgage loan.

(6) This mortgage loan has one one-year extension option, subject to satisfaction of certain conditions.

(7) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the first was exercised February 2024.

(8) On January 29, 2024, we amended this mortgage loan.

Terms of the amendment included extending the current maturity date one year to August 2025, and the variable rate increased from SOFR + 4.04 % to SOFR 4.35 %.

This amended mortgage loan has one one-year extension option, subject to satisfaction of certain conditions.

This mortgage loan has a SOFR floor of 4.00 %.

(10) On September 29, 2023, we amended this mortgage loan.

Terms of the amendment included increasing the outstanding principal from $ 100.0 million to $ 140.0 million, and extending the current maturity date by one year to December 2026.

(9) On January 3, 2024, we amended this mortgage loan.

Terms of the amendment included extending the current maturity date one year to September 2025, and the variable rate increased from SOFR + 1.95 % to SOFR + 3.60 %.

This amended mortgage loan has one one-year extension option, subject to satisfaction of certain conditions.

(10) On March 7, 2024, we entered into a new $ 62.0 million mortgage loan.

The new loan is interest only and bears interest at a rate of SOFR + 4.75 %.

(11) This secured credit facility has one one-year extension option, subject to satisfaction of certain conditions.

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

This mortgage loan has a SOFR floor of 1.00 %.

(11) 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 certain of our hotels.

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.

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 principal that was amortized was approximately $ 421,000 and $ 1.3 million, respectively, for the three and nine months ended September 30, 2023.

For the three and nine months ended September 30, 2022, the amount of principal amortization was $ 481,000 and $ 1.5 million, respectively.

On January 18, 2023, the Company repaid its $ 54.0 million mortgage loan secured by The Ritz-Carlton Reserve Dorado Beach, which resulted in a gain on extinguishment of debt of $ 2.3 million for the nine months ended September 30, 2023.

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

This mortgage loan has a SOFR floor of 2.00 %.

(14) The final maturity date assumes all available extension options will be exercised.

The gain was primarily attributable to the premium that was recorded upon the assumption of the mortgage loan when the hotel was acquired.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Convertible Senior Notes

5 unchanged sentences

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

For the three and nine months ended September 30, 2023, the Company recorded coupon interest expense of $ 970,000 and $ 2.9 million, respectively.

For the three and nine months ended September 30, 2022, the Company recorded coupon interest expense of $ 970,000 and $ 2.9 million, respectively.

For the three and nine months ended September 30, 2023, the Company recorded discount amortization of $ 148,000 and $ 438,000 , respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through June 2026.

For the three and nine months ended September 30, 2022, the discount amortization was $ 140,000 and $ 411,000 , respectively.

For the three months ended March 31, 2024 and 2023, the Company recorded coupon interest expense of $ 970,000 and $ 970,000 , respectively.

For the three months ended March 31, 2024 and 2023, the Company recorded discount amortization of $ 152,000 and $ 144,000 , respectively, related to the initial purchase discount, with the remaining discount balance 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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.

Credit Facility

3 unchanged sentences

Syndicate bank participants include TBK Bank and MidFirst Bank.

The Credit Agreement evidences a $ 200 million secured credit facility (the “Facility”) comprised of a secured term loan facility of $ 150 million (the “Term Loan Facility”) and a secured revolving credit facility of $ 50 million (the “Revolving Credit Facility”).

Upon satisfaction of certain conditions, including the addition of new Borrowing Base Properties (as defined in the Credit Agreement), the Facility may be increased to a size of not more than $ 400 million in the aggregate.

The Credit Agreement, as amended by the First Amendment to Credit Agreement, dated as of February 21, 2024, evidences a $ 200 million secured credit facility (the “Facility”) comprised of a secured term loan facility of $ 150 million (the “Term Loan Facility”) and a secured revolving credit facility of $ 50 million (the “Revolving Credit Facility”).

Upon satisfaction of certain conditions, including the addition of new Borrowing Base Properties (as defined in the Credit Agreement), the Facility may be increased to an amount of not more than $ 400 million in the aggregate.

The maximum availability under the Facility is determined on a quarterly basis and limited to the lesser of (i) $ 200 million (subject to increase of up to $ 400 million in the aggregate);

6 unchanged sentences

and (ii) a minimum debt service coverage of 1.55 to 1.00.

The proceeds of the Term Loan Facility were used to repay the mortgage debt associated with The Ritz-Carlton Sarasota, Bardessono Hotel and Spa and Hotel Yountville, which serve as the Initial Borrowing Base Properties for the financing.

In addition, at closing, the Company drew down approximately $ 46 million under the Revolving Credit Facility.

The Facility is a three-year , interest-only facility with all outstanding principal due at maturity, with a one-year extension option, subject to the satisfaction of certain conditions, including the payment of an Extension Fee (as defined in the Credit Agreement) equal to 20 basis points ( 0.20 %) of the outstanding Facility amount.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Credit Agreement is guaranteed by the Company, the Borrower and certain other eligible subsidiaries of the Company and secured by:

13 unchanged sentences

The Credit Agreement includes customary events of default, and the occurrence of an event of default will permit the Lenders to terminate commitments to lend under the Credit Agreement and accelerate payments of all amounts outstanding thereunder.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Effective June 30, 2023, LIBOR is no longer published.

Accordingly, all variable interest rate mortgage loans held by the Company that used the LIBOR index transitioned to SOFR beginning on July 1, 2023.

Not all lenders will execute loan amendment documents and instead will defer to original loan documents that dictate changes in index rates.

If we violate covenants in any debt agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all.

The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of the consolidated group.

As of September 30, 2023, we were in compliance with all covenants.

As of March 31, 2024, we were in compliance with all covenants.

Derivative Instruments

4 unchanged sentences

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

Nine Months Ended September 30,

Three Months Ended March 31,

Interest rate caps:

2 unchanged sentences

Strike rate high end of range 5.25 % 3.50 %

Effective date range January 2023 - September 2023

February 2022-September 2022

Termination date range October 2023 - October 2024

May 2023- February 2024

Effective date range January 2024

Termination date range January 2025 - February 2025

Total cost of interest rate caps (in thousands) $ 991 $ 755

1 unchanged sentence

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Interest rate derivatives consisted of the following:

Interest rate caps:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Notional amount (in thousands) $ 778,280 $ 778,280

1 unchanged sentence

Strike rate high end of range 5.25 % 5.25 %

Termination date range October 2023 - January 2025

Termination date range June 2024 - January 2026

January 2024- January 2025

5 unchanged sentences

The holder can choose to exercise the warrants 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 September 30, 2023, no warrants have been exercised.

As of March 31, 2024, no warrants have been exercised.

The initial fair value of the warrants was calculated using a Black-Scholes option pricing model with the following assumptions:

5 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 CONDENSED 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.

15 unchanged sentences

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

In determining the fair values of our derivatives at September 30, 2023, the SOFR interest rate forward curve (Level 2 inputs) assumed a downtrend from 5.320 % to 4.220 % for the remaining term of our derivatives.

In determining the fair values of our derivatives at March 31, 2024, the

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

SOFR interest rate forward curve (Level 2 inputs) assumed a downtrend from 5.329 % to 3.686 % 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.

5 unchanged sentences

(Level 3) Total

September 30, 2023

March 31, 2024

Derivative assets:

4 unchanged sentences

Net $ — $ 3,087 $ — $ 3,087

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Quoted Market Prices (Level 1) Significant Other

12 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

1 unchanged sentence

Gain (Loss) Recognized in Income

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Derivative assets:

Interest rate derivatives - caps $ 920 $ ( 437 )

$ 645 $ 3,024 (1)

Total $ 920 $ ( 437 )

10 unchanged sentences

Net $ 932 $ ( 334 )

(1) Excludes income of $ 27,000 for both the three and nine months ended September 30, 2022, associated with payments received from counterparties on interest rate caps, which is included in “other income (expense)” in our condensed consolidated statements of operations.

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

4 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Value Estimated

9 unchanged sentences

Accounts receivable, net 41,001 41,001 39,199 39,199

Due from Ashford Inc.

1,538 1,538 — —

Due from related parties, net 520 520 938 938

Due from third-party hotel managers 23,777 23,777 17,739 17,739

Financial liabilities not measured at fair value:

Indebtedness $ 1,185,686 $ 1,089,720 to $ 1,204,427

$ 1,337,250 $ 1,229,671 to $ 1,359,110

Indebtedness $ 1,233,620 $ 1,184,388 $ 1,171,459 $ 1,124,377

Accounts payable and accrued expenses 144,240 144,240 149,867 149,867

2 unchanged sentences

3,728 3,728 1,471 1,471

Due to related parties, net 766 766 603 603

Due to third-party hotel managers 1,993 1,993 1,608 1,608

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Cash, cash equivalents and restricted cash .

2 unchanged sentences

This is considered a Level 1 valuation technique.

Accounts receivable, net, due from related parties, net, accounts payable and accrued expenses, dividends and distributions payable, due to/from Ashford Inc.

and due to/from third-party hotel managers .

Accounts receivable, net, due to/from related parties, net, accounts payable and accrued expenses, dividends and distributions payable, due to Ashford Inc and due to/from third-party hotel managers .

The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments.

8 unchanged sentences

Credit spreads take into consideration general market conditions, maturity and collateral.

We estimated the fair value of the total indebtedness to be approximately 91.9 % to 101.6 % of the carrying value of $ 1.2 billion at September 30, 2023, and approximately 92.0 % to 101.6 % of the carrying value of $ 1.3 billion at December 31, 2022.

We estimated the fair value of the total indebtedness to be approximately 96.0 % of the carrying value of $ 1.2 billion at March 31, 2024, and approximately 96.0 % of the carrying value of $ 1.2 billion at December 31, 2023.

These fair value estimates are considered a Level 2 valuation technique.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Income (Loss) Per Share

The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Net income (loss) attributable to common stockholders - basic and diluted:

6 unchanged sentences

net (income) loss allocated to performance stock units ( 2 ) —

net (income) loss allocated to unvested restricted shares — — — ( 49 )

Undistributed net income (loss) allocated to common stockholders 177 ( 104 )

dividends on common stock 3,324 3,289

Distributed and undistributed net income (loss) - basic and diluted

Distributed and undistributed net income (loss) - basic

$ 3,501 $ 3,185

Income (loss) attributable to redeemable noncontrolling interest in operating partnership — 261

Dividends on preferred stock - Series E (inclusive of deemed dividends) 9,401 —

Distributed and undistributed net income (loss) - diluted $ 12,902 $ 3,446

Weighted average common shares outstanding:

Weighted average common shares outstanding – basic 66,455 66,498

Effect of assumed exercise of warrants — — — 1

Effect of assumed conversion of operating partnership units — 5,980

Effect of assumed conversion of preferred stock - Series E 202,061 —

Weighted average common shares outstanding – diluted 268,516 72,478

3 unchanged sentences

Net income (loss) allocated to common stockholders per share $ 0.05 $ 0.05

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Net income (loss) allocated to common stockholders is not adjusted for:

8 unchanged sentences

Weighted average diluted shares are not adjusted for:

Effect of unvested restricted shares — 47 — 33

Effect of unvested performance stock units 13 353

5 unchanged sentences

Total 45,980 129,954

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Redeemable Noncontrolling Interests in Operating Partnership

12 unchanged sentences

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.

As of September 30, 2023, there were approximately 2.4 million Performance LTIP units, representing 200 % of the target, outstanding.

With respect to the 2021, 2022 and 2023 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 for the 2021, 2022 and 2023 performance grants are based on performance conditions under the relevant literature.

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 applicable measurement date fair value of the award.

The grant date fair value of the award 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.

In March 2023, the Company granted approximately 353,000 Performance LTIP units, representing 200 % of the target, with an initial grant date fair value of $ 3.86 per share and a vesting period of approximately three years .

During the second quarter, the Company’s stockholders approved an increase to the stock incentive plan, which is sufficient to cover the expected settlements as of June 30, 2023.

The 2023 awards, which were originally classified as liability awards, are now classified as equity awards, within temporary equity, which resulted in a remeasurement of the award at a new fair value of $ 4.07 per share.

On May 10, 2023, approximately 45,000 LTIP units were issued to independent directors, with a fair value of approximately $ 182,000 , which vested immediately upon grant and have been expensed during the nine months ended September 30, 2023.

As of September 30, 2023, we have issued a total of approximately 3.8 million LTIP and Performance LTIP units, net of Performance LTIP cancellations.

All LTIP and Performance LTIP units, other than approximately 614,000 LTIP units and 1.2 million Performance LTIP units issued from March 2015 to May 2023, had reached full economic parity with, and are convertible into, common units.

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents the redeemable noncontrolling interests in Braemar OP and the corresponding approximate ownership percentage of our operating partnership:

September 30, 2023 December 31, 2022

As of March 31, 2024, there were approximately 1.5 million unvested Performance LTIP units, representing 200 % of the target, outstanding.

As of March 31, 2024, we have issued a total of approximately 3.0 million LTIP and Performance LTIP units, net of Performance LTIP cancellations.

All LTIP and Performance LTIP units, other than approximately 614,000 LTIP units and 353,000 Performance LTIP units issued from March 2015 to May 2023, had reached full economic parity with, and are convertible into, common units.

The following table presents the redeemable noncontrolling interests in Braemar OP (in thousands) and the corresponding approximate ownership percentage of our operating partnership:

March 31, 2024 December 31, 2023

Redeemable noncontrolling interests in Braemar OP (in thousands) $ 33,005 $ 32,395

4 unchanged sentences

We allocated net (income) loss to the redeemable noncontrolling interests as illustrated in the table below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership $ ( 296 ) $ ( 261 )

Distributions declared to holders of common units, LTIP units and Performance LTIP units $ 366 $ 361

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.

On May 12, 2023, the Company received a Notice of Redemption with respect to 32,500 vested common units, and such redemption was settled in cash at the Company’s election for approximately $ 123,000 .

The following table presents the common units redeemed for cash (in thousands):

Three Months Ended March 31,

Units redeemed

Cash value of common units redeemed

$ — $ 7,039 (1)

____________________________________

Bennett’s 1.4 million common units redeemed for cash of approximately $ 7.0 million during February 2023.

Equity and Stock-Based Compensation

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Common stock dividends declared $ 3,345 $ 3,334

1 unchanged sentence

We also issue common stock to certain of our independent directors, which vests immediately upon issuance.

In May 2023, approximately 45,000 shares of common stock were issued to independent directors with a fair value of approximately $ 182,000 , which vested immediately upon grant and have been expensed during the nine months ended September 30, 2023.

Performance Stock Units —The compensation committee of the board of directors of the Company may authorize the issuance of grants of performance stock units (“PSUs”) to certain executive officers and directors from time to time.

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.

The compensation committee utilizes a 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 and 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 corresponding measurement date fair value of the

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The performance criteria for the 2021, 2022 and 2023 performance grants are based on performance conditions under the relevant literature, and the 2021, 2022 and 2023 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 corresponding measurement 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.

In March 2023, 383,000 PSUs with a vesting period of approximately three years were granted.

The 2023 awards may be settled in cash or shares of the Company’s common stock solely at the option of the Company.

During the second quarter, the Company’s stockholders approved an increase to the stock incentive plan, which is sufficient to cover the expected settlements as of June 30, 2023.

The 2023 awards, which were originally classified as liability awards, are now classified as equity awards, which resulted in a remeasurement of the award at a new fair value of $ 1.6 million.

8.25 % Series D Cumulative Preferred Stock —The dividend for all issued and outstanding shares of the Company’s Series D Cumulative Preferred Stock (the “Series D Preferred Stock”) is set at $ 2.0625 per annum per share.

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.

8.25 % Series D Cumulative Preferred Stock- The Series D Preferred Stock dividend for all issued and outstanding shares is set at $ 2.0625 per annum per share.

The following table summarizes dividends declared (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Series D Cumulative Preferred Stock $ 825 $ 825

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.

During the nine months ended September 30, 2023, we repurchased 3.9 million shares of our common stock for approximately $ 18.9 million.

As of September 30, 2023, the Company has completed the $ 25.0 million repurchase authorization .

Redeemable Preferred Stock

8 unchanged sentences

2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined in the Articles Supplementary), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $ 25.00 per share;

and 3) a “REIT Termination Event” and “Listing Event Redemption,” in which at any time (i) a REIT Termination Event (as defined below) occurs or (ii) the Company’s common stock fails to be listed on the NYSE, NYSE American, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each, a “National Exchange”), the holder of Series B Convertible Preferred Stock shall have the right to require the Company to

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

redeem any or all shares of Series B Convertible Preferred Stock at 103 % of the liquidation preference ($ 25.00 per share, plus any accumulated, accrued, and unpaid dividends) in cash.

A “REIT Termination Event,” shall mean the earliest of:

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The following table summarizes dividends declared (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Series B Convertible Preferred Stock $ 1,058 $ 1,058

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Series E Redeemable Preferred Stock

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• 5.0 % of the Stated Value beginning on the second anniversary from the Original Issue Date of the shares of the Series E Preferred Stock to be redeemed;

BRAEMAR HOTELS & RESORTS INC.

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• 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.

7 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Series E Preferred Stock shares issued (1)

— 4,362 3,798 7,151

Net proceeds (1)

6 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Series E Preferred Stock $ 375,261 $ 377,035

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The following table summarizes dividends declared (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Series E Preferred Stock $ 7,600 $ 7,534

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Series E Preferred Stock shares redeemed 186 11

7 unchanged sentences

Holders of the Series M Preferred Stock shall have the right to vote for the election of directors of the Company and on all other matters requiring stockholder action by the holders of the common stock, each share being entitled to vote to the same extent as one share of the Company’s common stock, and all such shares voting together as a single class.

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 (voting together as a single class with all other classes or series of capital stock ranking on a parity with the 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.

If and whenever dividends on any shares of Series M Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such

BRAEMAR HOTELS & RESORTS INC.

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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 (voting together as a single class with all other classes or series of capital stock ranking on a parity with the 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.

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.

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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 are payable on a monthly basis and in arrears on the 15th day of each month (or, if such payment date is not a business day, on the next succeeding business day) to holders of record at the close of business on the last business day of each

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month immediately preceding the applicable dividend payment date.

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

1 unchanged sentence

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Series M Preferred Stock shares issued (1)

— 673 531 1,040

Net proceeds (1)

5 unchanged sentences

As a result of the Company’s determination that redemption is probable, the carrying value will be adjusted to the redemption amount each reporting period.

BRAEMAR HOTELS & RESORTS INC.

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The redemption value adjustment of Series M Preferred stock is summarized below (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Series M Preferred Stock $ 43,694 $ 45,623

4 unchanged sentences

The following table summarizes dividends declared (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Series M Preferred Stock $ 924 $ 932

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Series M Preferred Stock shares redeemed 87 1

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We pay a monthly base fee equal to 1/12 th of the sum of (i) 0.70 % of the total market capitalization of our company for the prior month, plus (ii) the Net Asset Fee Adjustment (as defined in our advisory agreement), if any, on the last day of the prior month during which our advisory agreement was in effect;

provided, however, in no event shall the base fee for

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any month be less than the minimum base fee as provided by our advisory agreement.

provided, however, in no event shall the base fee for any month be less than the minimum base fee as provided by our advisory agreement.

The base fee is payable on the fifth business day of each month.

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We also recorded equity-based compensation expense for equity grants of common stock, PSUs and LTIP units awarded to officers and employees of Ashford LLC in connection with providing advisory services.

BRAEMAR HOTELS & RESORTS INC.

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The following table summarizes the advisory services fees incurred (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Advisory services fee

1 unchanged sentence

Reimbursable expenses (1)

2,028 1,191 6,092 3,460

Equity-based compensation (2)

1,599 3,346 6,391 8,293

Incentive fee — 1,048 — 1,294

Total $ 6,700 $ 7,948

1 unchanged sentence

(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.

Pursuant to the Company’s hotel management agreements with each hotel management company, the Company bears the economic burden for casualty insurance coverage.

Under the advisory agreement, 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.

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 September 27, 2022, an agreement was entered into by Ashford Inc., Ashford Trust and Braemar pursuant to which the Advisor is to implement the REITs’ cash management strategies.

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The fee is payable monthly in arrears.

As of September 30, 2023, “due from Ashford Inc.” includes a $ 365,000 security deposit paid to Remington Hotel Corporation (“RHC”) for office space allocated to us under our advisory agreement.

It will be held as security for the payment of our allocated share of the office space rental.

If unused, it will be returned to us upon lease expiration or earlier termination.

On March 2, 2023, the Company entered into a Limited Waiver Under Advisory Agreement (the “2023 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 2022 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 have limited our ability, in our discretion and at our cost and expense, to award during

BRAEMAR HOTELS & RESORTS INC.

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the first and second fiscal quarters of calendar year 2022 cash incentive compensation to employees and other representatives of our advisor.

On March 2, 2023, the Company entered into a second Limited Waiver Under Advisory Agreement (the “2023 Limited Waiver”) with Braemar OP, Braemar TRS and its advisor.

Pursuant to the 2023 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 our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2023 cash incentive compensation to employees and other representatives of our advisor.

We engage Lismore or its subsidiaries to provide debt placement services and assist with loan modifications on our behalf.

In June 2023, we entered into various 12-month agreements with Lismore to seek modifications or refinancings of certain mortgage debt of the Company.

For the three and nine months ended September 30, 2023 , we incurred fees of approximately $ 0 and $ 150,000 to Lismore in nonrefundable work fees.

The unamortized fees are included in “other assets” on the condensed consolidated balance sheet, and are amortized on a straight line basis over the term of the agreement.

In addition to the fees described above, we incurred fees from Lismore or its subsidiaries of $ 1.1 million and $ 1.2 million for the three and nine months ended September 30, 2023 and $ 0 and $ 637,000 for the three and nine months ended September 30, 2022.

Pursuant to the 2023 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 our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2023, cash incentive compensation to employees and other representatives of the Advisor.

On March 11, 2024, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc.

and Ashford LLC (the “Advisory Agreement Limited Waiver”).

Pursuant to the Advisory Agreement Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waive the operation of any provision in our advisory agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during calendar year 2024, cash incentive compensation to employees and other representatives of the Advisor.

Pursuant to the Company’s hotel management agreements with each hotel management company, the Company bears the economic burden for casualty insurance coverage.

Under the advisory agreement, Ashford Inc.

secures casualty insurance policies to cover Ashford Trust, Braemar, Stirling OP, 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.

has managed the casualty insurance program and beginning in December 2023, Warwick Insurance Company (“Warwick”), a subsidiary of Ashford Inc., provides and manages the general liability, workers’ compensation and business automobile insurance policies within the casualty insurance program.

Each year Ashford Inc.

collects funds from Ashford Trust, Braemar, Stirling OP and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis .

We engage Lismore or its subsidiaries to provide debt placement services and assist with loan modifications or refinancings our behalf.

For the three months ended March 31, 2024 and 2023, we incurred fees of $ 1.1 million and $ 0 , respectively.

Ashford Securities

2 unchanged sentences

Beginning on the effective date of the Amended and Restated Contribution Agreement, costs were 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.

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.

As of December 31, 2022, Braemar had funded approximately $ 5.8 million and had a payable, included in “due to Ashford Inc., net” on the condensed consolidated balance sheet, of approximately $ 6.6 million.

In March 2023, Braemar paid Ashford Inc.

$ 8.7 million as a result of the contribution true-up between entities described above.

As of September 30, 2023, Braemar has funded approximately $ 19.4 million.

As of September 30, 2023, Braemar has a pre-funded balance of approximately $ 1.2 million that is included in “other assets” and approximately $ 2.7 million that is included in “due from Ashford Inc., net” on the condensed consolidated balance sheet.

Upon reaching the earlier of $ 400 million in aggregate capital raised, or June 10, 2023, there was to 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 was based on the actual amount of capital raised by Ashford Inc., Ashford Trust and Braemar, respectively, through Ashford Securities (the

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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, which provided that after the Amended and Restated True-Up Date, capital contributions for the remainder of fiscal year 2023 would be divided between each Party based on the Initial True-Up Ratio, there would be a true up reflecting amounts raised by Ashford Securities since June 10, 2019, and thereafter, the capital contributions would be divided among each Party in accordance with the cumulative ratio of capital raised by the Parties.

Effective January 1, 2024, Braemar entered into a Fourth Amended and Restated Contribution Agreement with Ashford Inc.

and Ashford Trust, which states that, notwithstanding anything in the prior contribution agreements:

(1) the Parties equally split responsibility for all aggregate contributions made by them to Ashford Securities through September 30, 2021 and (2) thereafter, their contributions for each quarter will be based on the ratio of the amounts raised by each Party through Ashford Securities in the prior quarter compared to the total aggregate amount raised by the Parties through Ashford Securities the prior quarter.

To the extent contributions made by any of the Parties through December 31, 2023 differed from the amounts owed pursuant to the foregoing, the Parties shall make true up payments to each other to settle the difference.

The terms of this agreement included a life-to-date true-up based on the new terms of the agreement and a new funding schedule for ongoing funding of the broker dealer.

Going forward, each capital call will be funded according to the percentages of the discrete raises accomplished in the prior quarter.

During the first quarter of 2024, the funding requirement was revised based on the aggregate capital raised through Ashford Securities.

This resulted in Braemar receiving a payment of approximately $ 5.9 million from Ashford Inc., which resulted in a credit to expense of approximately $ 5.6 million that is included in “corporate general and administrative” on the condensed consolidated statements of operations for the three months ended March 31, 2024.

As of March 31, 2024, Braemar has funded approximately $ 13.0 million and has a pre-funded balance of $ 1.9 million that is included in “other assets” on the condensed consolidated balance sheet.

As of December 31, 2023, Braemar had funded approximately $ 20.9 million and had a pre-funded balance of approximately $ 693,000 that is included in “other assets” and a receivable of approximately $ 3.5 million that is included in “due to Ashford Inc., net” on the consolidated balance sheet.

During the first quarter of 2024 there was also a true-up of the capital contributions in accordance with the Third Amended and Restated Contribution Agreement made through December 31, 2023, which resulted in a payment of $ 3.5 million from Ashford Inc.

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Line Item 2024 2023

10 unchanged sentences

provided that if the purchase price exceeds $ 2.0 million for a single hotel in a calendar year, then the purchasing fee is reduced to 6 % of the FF&E purchase price in excess of $ 2.0 million for such hotel in such calendar year).

Such fees are payable monthly as the service is delivered based on percentage complete, as reasonably determined by Premier for each service, or payable as set forth in other agreements.

Hotel Management Services

At September 30, 2023, Remington Hospitality managed four of our 16 hotel properties.

At March 31, 2024, Remington Hospitality managed four of our 16 hotel properties.

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

We pay monthly hotel management fees equal to the greater of approximately $ 17,000 per hotel (increased annually based on consumer price index adjustments) or 3 % of gross revenues, as well as annual incentive management fees, if certain operational criteria were met, and other general and administrative expense reimbursements primarily related to accounting services.

Commitments and Contingencies

Restricted Cash —Under certain management and debt agreements for our hotel properties existing at September 30, 2023, escrow payments are required for insurance, real estate taxes and debt service.

Restricted Cash —Under certain management and debt agreements for our hotel properties existing at March 31, 2024, escrow payments are required for insurance, real estate taxes and debt service.

In addition, for certain properties based on the terms of the underlying debt and management agreements, we escrow 3 % to 5 % of gross revenues for capital improvements.

Licensing Fees —In conjunction with the Cameo Beverly Hills (formerly known as “Mr.

Beverly Hills Hotel”) acquisition on August 5, 2021, we entered into an Intellectual Property Sublicense Agreement, which allowed us to continue to use certain proprietary marks associated with the Mr.

C brand name.

In return, we paid licensing fees of:

(i) 1 % of total operating revenue;

(ii) 2 % of gross food and beverage revenues;

and (iii) 25 % of food and beverage profits.

The agreement expired on August 5, 2023.

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

Three Months Ended September 30, Nine Months Ended September 30,

Franchise Fees —We currently have one hotel property that operates under a franchise agreement with a 25-year term.

The term begins upon the completion of conversion of the Cameo Beverly Hills.

Under the terms of the agreement we will pay (i) 3 % of gross rooms revenue for the preceding calendar month during the first three years of the agreement;

(ii) 4 % of gross rooms revenue for the preceding calendar month during year 4;

and (iii) 5 % of the gross rooms revenue for the preceding calendar month for the remainder of the term.

As of March 31, 2024, we are currently paying 3 % of gross revenues.

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

Three Months Ended March 31,

Line Item 2024 2023

Other hotel expenses $ 80 $ —

Management Fees —Under hotel management agreements for our hotel properties existing at September 30, 2023, we pay a monthly hotel management fee equal to the greater of approximately $ 17,000 per hotel (increased annually based on consumer price index adjustments) or 3 % of gross revenues, or in some cases 3.0 % to 5.0 % of gross revenues, as well as annual incentive management fees, if applicable.

Management Fees —Under hotel management agreements for our hotel properties existing at March 31, 2024, we pay a monthly hotel management fee equal to the greater of approximately $ 17,000 per hotel (increased annually based on consumer price index adjustments) or 3 % of gross revenues, or in some cases 3.0 % to 5.0 % of gross revenues, as well as annual incentive management fees, if applicable.

These management agreements expire from December 2029 through December 2065, with renewal options.

2 unchanged sentences

Tax years 2019 through 2023 remain subject to potential examination by certain federal and state taxing authorities.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Litigation —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.

7 unchanged sentences

In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified.

The trial court set a due date of August 7, 2023 for the briefs.

After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon.

If this litigation goes to trial, we expect that the earliest the trial would occur is the last quarter of 2023, based on various extensions to which the parties have agreed.

On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks.

While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time.

As of September 30, 2023, no amounts have been accrued.

As of March 31, 2024, no amounts have been accrued.

On June 8, 2022, a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines.

The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and Private Attorneys General Act (“PAGA”) claims.

BRAEMAR HOTELS & RESORTS INC.

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On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement.

At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $ 3.5 million, which the parties are still considering.

The allocation to Hilton La Jolla Torrey Pines would be approximately $ 371,000 , which has been accrued as of March 31, 2024.

We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated.

To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims:

employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disability Act and similar state laws).

employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disabilities Act and similar state laws).

The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature.

2 unchanged sentences

During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain employee personal information.

We have completed an investigation and have identified certain employee information may have been exposed, but we have not identified that any customer information was exposed.

Systems have been substantially restored with minimal effect on certain hotel operations.

We have completed an investigation and have identified certain employee information that may have been exposed, but we have not identified that any customer information was exposed.

All systems have been restored.

We believe that we maintain a sufficient level of insurance coverage related to such events, and the related incremental costs incurred to date are immaterial.

In February of 2024, two class action lawsuits were filed, one in the U.S.

District Court for the Northern District of Texas and a second in the 68th District Court for Dallas County related to the cyber incident.

The lawsuit filed in the 68th District Court was subsequently dismissed and refiled in the U.S.

District Court for the Northern District of Texas.

On March 12, 2024, the court ordered the two cases be consolidated.

The consolidated case is currently pending in the U.S.

District Court for the Northern District of Texas.

We intend to vigorously defend this matter and do not believe that any potential loss is reasonably estimable at this time.

It is reasonably possible that the Company may incur additional costs related to the matter, but we are unable to predict with certainty the ultimate amount or range of potential loss.

At this time, no litigation has been filed nor has any been threatened.

Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty.

5 unchanged sentences

We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments have similar economic characteristics and exhibit similar long-term financial performance.

As of September 30, 2023 and December 31, 2022, all of our hotel properties were in the U.S.

As of March 31, 2024 and December 31, 2023, all of our hotel properties were in the U.S.

and its territories.

Subsequent Event

On October 31, 2023, the Company amended its $ 54.0 million mortgage loan secured by The Ritz-Carlton Lake Tahoe.

Terms of the amendment included extending the maturity date by one year to January 2025, with a one-year extension option, amending the interest rate to SOFR + 3.60 % and making a pay down of $ 587,000 .

Subsequent Events

On May 3, 2024, the board of directors approved a new share 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.

On May 6, 2024, CHH Torrey Pines Hotel Partners, LP and CHH Torrey Pines Tenant Corp.

(together, “Seller”), indirect subsidiaries of the Company, entered into an Agreement of Purchase and Sale with JRK Torrey Pines Hotel Owner LLC, for the sale of the Hilton La Jolla Torrey Pines hotel for $ 165 million in cash, subject to customary pro-rations and adjustments.

The Company owns an indirect 75 % equity interest in Seller.

The sale of the hotel is expected to close in the second quarter of 2024, subject to customary closing conditions.

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-Q

Item 1. Financial Statements