What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-08 · 317 added, 333 removed, 995 unchanged (40% of the section changed)

4 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Investments in hotel properties, gross $ 2,270,981 $ 2,382,716

3 unchanged sentences

Restricted cash 48,461 80,904

Investment in securities

Accounts receivable, net of allowance of $ 443 and $ 237 , respectively

1 unchanged sentence

Inventories 4,575 5,003

Note receivable 5,855 —

Prepaid expenses 5,825 9,938

5 unchanged sentences

Intangible assets, net 3,220 3,504

Due from related parties, net 365 —

Due from third-party hotel managers 19,855 17,739

Assets held for sale 124,931 —

Total assets $ 2,177,667 $ 2,226,824

9 unchanged sentences

Derivative liabilities — 12

Liabilities associated with assets held for sale

Total liabilities 1,411,887 1,408,298

Commitments and contingencies (note 17)

5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

5.50 % Series B cumulative convertible preferred stock, $ 0.01 par value, 3,078,017 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

65,426 65,426

Series E redeemable preferred stock, $ 0.01 par value, 16,142,351 and 16,316,315 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Series E redeemable preferred stock, $ 0.01 par value, 15,138,572 and 16,316,315 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

355,178 377,035

Series M redeemable preferred stock, $ 0.01 par value, 1,622,773 and 1,832,805 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Series M redeemable preferred stock, $ 0.01 par value, 1,596,286 and 1,832,805 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

39,907 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 June 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value, 250,000,000 shares authorized, 66,522,206 and 66,636,353 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

8.25 % Series D cumulative preferred stock, 1,600,000 shares issued and outstanding at September 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value, 250,000,000 shares authorized, 66,522,206 and 66,636,353 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 719,110 718,498

Accumulated other comprehensive income (loss)

Accumulated deficit ( 442,157 ) ( 412,199 )

8 unchanged sentences

(unaudited, in thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

14 unchanged sentences

Total operating expenses 166,279 159,150 518,303 505,973

Gain (loss) on disposition of assets and hotel property

88,210 — 88,210 —

OPERATING INCOME (LOSS) 70,329 651 124,971 55,836

1 unchanged sentence

Interest income 2,660 986 4,528 5,389

Other income (expense) — 293 — 293

Interest expense and amortization of discounts and loan costs ( 27,911 ) ( 23,306 ) ( 81,687 ) ( 69,779 )

22 unchanged sentences

(unaudited, in thousands)

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

1 unchanged sentence

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Change in unrealized gain (loss) on investment in securities ( 786 ) — ( 786 ) —

Total other comprehensive income (loss) ( 786 ) — ( 786 ) —

10 unchanged sentences

Common Stock Additional

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

Capital Accumulated Deficit Accumulated Other Comprehensive Income/(loss)

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

Preferred Stock

3 unchanged sentences

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance at March 31, 2024

Balance at June 30, 2024

1,600 $ 16 66,522 $ 665 $ 718,901 $ ( 437,302 ) $ — $ ( 9,980 ) $ 272,300 3,078 $ 65,426 16,142 $ 374,847 1,623 $ 40,569 $ 31,579

1 unchanged sentence

Issuance of preferred stock — — — — — — — — — — — 32 809 1 34 —

Issuance of restricted shares/units

— — 45 1 ( 1 ) — — — — — — — — — —

Dividends declared – common stock ($ 0.05 /share)

8 unchanged sentences

— — — — — ( 836 ) — — ( 836 ) — — — — — — —

Contributions from noncontrolling interests — — — — — — — 2,961 2,961 — — — — — — —

Distributions to noncontrolling interests — — — — — — — ( 23,322 ) ( 23,322 ) — — — — — — ( 369 )

Net income (loss) — — — — — 12,596 — 27,363 39,959 — — — — — — ( 124 )

Unrealized gain (loss) on investment in securities

— — — — — — ( 723 ) — ( 723 ) — — — — — — ( 63 )

Redemption of preferred stock — — — — — — — — — — — ( 1,036 ) ( 24,629 ) ( 28 ) ( 696 ) —

1 unchanged sentence

Redemption value adjustment — — — — — ( 95 ) — — ( 95 ) — — — — — — 95

Balance at June 30, 2024

Balance at September 30, 2024

1,600 $ 16 66,522 $ 665 $ 719,110 $ ( 442,157 ) $ ( 723 ) $ ( 2,978 ) $ 273,933 3,078 $ 65,426 15,138 $ 355,178 1,596 $ 39,907 $ 31,336

1 unchanged sentence

Common Stock Additional

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

Capital Accumulated Deficit Accumulated Other Comprehensive Income/(loss)

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

Preferred Stock

4 unchanged sentences

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

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

— — — — — ( 2,636 ) — — ( 2,636 ) — — — — — — —

Contributions from noncontrolling interests — — — — — — — 2,961 2,961 — — — — — — —

Distributions to noncontrolling interests — — — — — — — ( 23,322 ) ( 23,322 ) — — — — — — ( 1,103 )

1 unchanged sentence

Redemption of preferred stock — — — — — — — — — — — ( 1,275 ) ( 30,281 ) ( 241 ) ( 6,018 ) —

Unrealized gain (loss) on investment in securities — — — — — — ( 723 ) — ( 723 ) — — — — — — ( 63 )

Redemption value adjustment – preferred stock — — — — — ( 6,175 ) — — ( 6,175 ) — — — 5,978 — 197 —

Redemption value adjustment — — — — — ( 110 ) — — ( 110 ) — — — — — — 110

Balance at June 30, 2024

Balance at September 30, 2024

1,600 $ 16 66,522 $ 665 $ 719,110 $ ( 442,157 ) $ ( 723 ) $ ( 2,978 ) $ 273,933 3,078 $ 65,426 15,138 $ 355,178 1,596 $ 39,907 $ 31,336

7 unchanged sentences

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

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

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

Purchase of common stock — — — — — — — — — — — — — — —

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

Issuance of restricted shares/units — — 45 — — — — — — — — — — — —

Forfeiture of restricted common shares — — — — — — — — — — — — — — —

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

9 unchanged sentences

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

Contributions from noncontrolling interests — — — — — — 2,026 2,026 — — — — — — —

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

Redemption/conversion of operating partnership units — — — — — — — — — — — — — — ( 123 )

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

2 unchanged sentences

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

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

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

7 unchanged sentences

Equity-based compensation — — — — 2,644 — — 2,644 — — — — — — 4,210

Common stock issuance costs — — — — — — — — — — — — — —

Issuance of preferred stock — — — — — — — — — — 3,896 87,557 540 13,011 —

18 unchanged sentences

Redemption value adjustment — — — — — 8 — 8 — — — — — — ( 8 )

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

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

See Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

(unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

10 unchanged sentences

Interest expense accretion on refundable membership club deposits 275 507

(Gain) loss on disposition of assets and hotel property

Realized and unrealized (gain) loss on derivatives ( 523 ) ( 918 )

Non-cash interest income

Equity in (earnings) loss of unconsolidated entity 214 208

Deferred income tax expense (benefit) 8 112

Changes in operating assets and liabilities:

Changes in operating assets and liabilities, exclusive of disposition of assets and hotel property:

Accounts receivable and inventories 6,620 15,058

11 unchanged sentences

Proceeds from property insurance 13 327

Issuance of note receivable

Payments for initial franchise fee — ( 75 )

Net proceeds from sale of hotel property

Purchase of securities

Investment in unconsolidated entity ( 79 ) ( 237 )

13 unchanged sentences

Distributions to noncontrolling interest in consolidated entities ( 27,045 ) ( 2,024 )

Nine Months Ended September 30,

Redemption of preferred stock ( 36,299 ) ( 4,761 )

Net cash provided by (used in) financing activities ( 62,203 ) ( 126,290 )

Net change in cash, cash equivalents and restricted cash (including cash, cash equivalents and restricted cash held for sale)

Net change in cash, cash equivalents and restricted cash

50,633 ( 108,867 )

Cash, cash equivalents and restricted cash at beginning of period 166,503 315,696

Cash, cash equivalents and restricted cash at end of period (including cash, cash equivalents and restricted cash held for sale)

Cash, cash equivalents and restricted cash at end of period

$ 217,136 $ 206,829

Six Months Ended June 30,

SUPPLEMENTAL CASH FLOW INFORMATION

4 unchanged sentences

Capital expenditures accrued but not paid 12,541 15,954

Distributions declared but not paid to a noncontrolling interest in a consolidated entity 3,723 315

Non-cash preferred stock dividends 2,551 2,682

9 unchanged sentences

$ 217,136 $ 206,829

Cash and cash equivalents at end of period included in assets held for sale 5,711 —

Restricted cash at end of period included in assets held for sale

Cash, cash equivalents and restricted cash at end of period (including cash, cash equivalents and restricted cash held for sale)

$ 181,059 $ 191,464

See Notes to Condensed Consolidated Financial Statements.

22 unchanged sentences

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 June 30, 2024, own 16 hotel properties in seven states, the District of Columbia, Puerto Rico and the U.S.

The accompanying condensed consolidated financial statements include the accounts of wholly-owned and majority-owned subsidiaries of Braemar OP that as of September 30, 2024, own 15 hotel properties in seven states, the District of Columbia, Puerto Rico and the U.S.

Virgin Islands (“USVI”).

The portfolio includes 14 wholly-owned hotel properties and two hotel properties that are owned through a partnership in which Braemar OP has a controlling interest.

The portfolio includes 14 wholly-owned hotel properties and one hotel property that is owned through a partnership in which Braemar OP has a controlling interest.

These hotel properties represent 3,807 total rooms, or 3,667 net rooms, excluding those attributable to our partner.

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

As of June 30, 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”).

As of September 30, 2024, 14 of our 15 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 June 30, 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.

As of September 30, 2024, 13 of the 15 hotel properties were leased by Braemar’s wholly-owned TRS, and the one hotel property majority-owned through a consolidated partnership was 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.

20 unchanged sentences

As such, we consolidate Braemar OP.

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

The following items affect 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 six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Consequently, operating results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

• On July 17, 2024, we sold the Hilton La Jolla Torrey Pines.

The operating results of the hotel property were excluded from our results of operations as of the disposition date.

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.

Investment in Securities — Investment in securities consists of mortgage-backed securities, are accounted for as available-for-sale securities and are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows and the bonds’ terms and conditions, among other things.

Unrealized gain (loss) associated with these investments is reported as a component of other comprehensive income (loss).

Recently Issued Accounting Standards —In November 2023, the Financial Accounting Standards Board’s (“FASB”) issued Accounting Standards Update (“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.

As of June 30, 2024, the Company has not adopted this ASU.

As of September 30, 2024, the Company has not adopted this ASU.

The adoption of this ASU is expected to only impact disclosures with respect to the Company’s consolidated financial statements.

3 unchanged sentences

The amendments in this ASU may be applied prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or the amendments may be applied retrospectively by providing the revised disclosures for all periods presented.

As of June 30, 2024, the Company has not adopted this ASU.

As of September 30, 2024, the Company has not adopted this ASU.

The adoption of this ASU is expected to only impact disclosures with respect to the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 , Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses that requires more detailed

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the statement of operations.

This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements.

We are currently evaluating the impact this ASU will have on our disclosures.

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

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

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

10 unchanged sentences

USVI 1 6,709 4,071 1,956 12,736

Sold hotel property

1 1,374 339 336 2,049

Total 16 $ 92,427 $ 34,781 $ 21,190 $ 148,398

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

10 unchanged sentences

USVI 1 7,283 3,224 3,164 13,671

Sold hotel property

1 8,448 3,520 1,720 13,688

Total 16 $ 100,738 $ 38,537 $ 20,526 $ 159,801

Six Months Ended June 30, 2024

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Nine Months Ended September 30, 2024

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

10 unchanged sentences

USVI 1 35,385 15,053 7,600 58,038

Sold hotel property

1 15,501 9,207 3,193 27,901

Total 16 $ 347,206 $ 135,891 $ 71,967 $ 555,064

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

10 unchanged sentences

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

Sold hotel property

1 22,352 10,935 4,682 37,969

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

1 unchanged sentence

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Land $ 630,842 $ 630,842

6 unchanged sentences

Investments in hotel properties, net $ 1,790,041 $ 1,884,208

Assets Held For Sale

On May 6, 2024, the Company entered into a purchase and sale agreement for the Hilton La Jolla Torrey Pines.

As of June 30, 2024, the Hilton La Jolla Torrey Pines was classified as held for sale.

Depreciation and amortization ceased as of the date the assets were deemed held for sale.

Since the sale of this hotel did not represent a strategic shift that has (or will have) a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in the consolidated financial statements.

The Hilton La Jolla Torrey Pines sale closed on July 17, 2024.

The major classes of assets and liabilities related to assets held for sale included in the consolidated balance sheet at June 30, 2024 were as follows:

June 30, 2024

Investments in hotel properties, net $ 65,156

Cash and cash equivalents 5,711

Restricted cash 8,402

Accounts receivable, net 1,586

Inventories 61

Prepaid expenses 373

Operating lease right-of-use assets 43,538

Other assets 104

Assets held for sale $ 124,931

Indebtedness, net $ 66,482

Accounts payable and accrued expenses 5,114

Due to Ashford Inc., net 173

Due to third-party hotel managers, net

Operating lease liabilities 41,112

Liabilities related to assets held for sale $ 113,460

Impairment Charges

During the nine months ended September 30, 2024 and 2023, no impairment charges were recorded.

Hotel Disposition

On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines for $ 165 million in cash, subject to customary pro-rations and adjustments.

The Company owned an indirect 75 % equity interest in the hotel property.

Additionally, the Company repaid the $ 66.6 million mortgage loan secured by the hotel property.

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Impairment Charges

During the six months ended June 30, 2024 and 2023, no impairment charges were recorded.

The sale resulted in a gain of approximately $ 88.2 million for the three and nine months ended September 30, 2024 and is included in “gain (loss) on disposition of assets and hotel property” in our condensed consolidated statements of operations.

Since the sale of the hotel property did not represent a strategic shift that has (or will have) a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in our condensed consolidated financial statements.

We included the results of operations for this hotel property through the date of disposition in net income (loss) as shown in our condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023 , respectively .

The following table includes the condensed consolidated financial information from this hotel property (in thousands):

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

2024 2023 2024 2023

Total hotel revenue $ 2,049 $ 13,688 $ 27,901 $ 37,969

Total hotel operating expenses ( 1,563 ) ( 7,959 ) ( 17,130 ) ( 22,939 )

Property taxes, insurance and other ( 135 ) ( 768 ) ( 1,690 ) ( 2,107 )

Depreciation and amortization ( 179 ) ( 1,052 ) ( 2,328 ) ( 3,123 )

Gain (loss) on disposition of assets and hotel property

88,160 — 88,160 —

Operating income (loss) 88,332 3,909 94,913 9,800

Interest income 55 94 265 252

Interest expense and amortization of loan costs ( 318 ) ( 1,608 ) ( 3,856 ) ( 4,557 )

Write-off of loan costs and exit fees — — ( 101 ) —

Income (loss) before income taxes 88,069 2,395 91,221 5,495

Income from consolidated entities attributable to noncontrolling interests ( 26,296 ) ( 1,015 ) ( 28,024 ) ( 2,575 )

(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership ( 4,973 ) ( 92 ) ( 5,017 ) ( 202 )

Income (loss) before income taxes attributable to the Company $ 56,800 $ 1,288 $ 58,180 $ 2,718

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 June 30, 2024, the Company has made equity investments in OpenKey totaling $ 2.9 million.

As of September 30, 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.

3 unchanged sentences

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

No such impairment was recorded for the six months ended June 30, 2024 and 2023.

No such impairment was recorded for the three and nine months ended September 30, 2024 and 2023.

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Carrying value of the investment in OpenKey (in thousands) $ 1,173 $ 1,416

Ownership interest in OpenKey 7.9 % 7.9 %

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Three Months Ended June 30, Six Months Ended June 30,

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

Line Item 2024 2023 2024 2023

5 unchanged sentences

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

As of June 30, 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 June 30, 2024, no funding has been made pursuant to the 2024 funding agreement.

As of September 30, 2024, funding of $ 79,000 has been made pursuant to the 2024 funding agreement.

As of September 30, 2024, the Company has funded a total amount of approximately $ 317,000 .

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

Line Item June 30, 2024 December 31, 2023

Line Item September 30, 2024 December 31, 2023

Investment in unconsolidated entity $ 366 $ 258

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

Three Months Ended June 30, Six Months Ended June 30,

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

Line Item 2024 2023 2024 2023

Equity in earnings (loss) of unconsolidated entity $ 11 $ 5 $ 29 $ 11

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Indebtedness, net

3 unchanged sentences

Interest Rate

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Mortgage loan (3)

21 unchanged sentences

August 2026 SOFR (1) + 4.35 %

42,500 42,500

Mortgage loan (9)(10)

1 unchanged sentence

September 2026 SOFR (1) + 3.60 %

80,000 80,000

Mortgage loan (11)

3 unchanged sentences

BAML Credit Facility (9)(12)

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

Bardessono Hotel & 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

1 unchanged sentence

Mortgage loan (9)

Bardessono Hotel & Spa

August 2026 August 2029 SOFR (1) + 3.24 %

Hotel Yountville

The Ritz-Carlton Sarasota

Pier House Resort & Spa

The Ritz-Carlton St.

Mortgage loan (13)

Four Seasons Resort Scottsdale December 2026 December 2028 SOFR (1) + 3.75 %

4 unchanged sentences

1,222,943 1,173,043

Capitalized default interest

and late charges, net

Capitalized default interest and late charges, net

Deferred loan costs, net ( 13,831 ) ( 9,135 )

1 unchanged sentence

Indebtedness, net $ 1,208,013 $ 1,162,444

Indebtedness related to assets held for sale, net (4)

Hilton La Jolla Torrey Pines August 2024

August 2024 9.00 % 66,482 —

__________________

(1) SOFR rates were 5.34 % and 5.35 % at June 30, 2024 and December 31, 2023, respectively.

(1) SOFR rates were 4.85 % and 5.35 % at September 30, 2024 and December 31, 2023, respectively.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(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 %.

3 unchanged sentences

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 %.

This mortgage is secured by the Hilton La Jolla Torrey Pines and is held for sale as of June 30, 2024.

On July 17, 2024, we sold this property for $ 165.0 million.

This mortgage loan was secured by the Hilton La Jolla Torrey Pines.

On July 17, 2024, we sold this property for $ 165.0 million and repaid the mortgage loan.

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

5 unchanged sentences

This mortgage loan has a SOFR floor of 4.00 %.

(9) On August 7, 2024, we refinanced this mortgage loan and credit facility into a new $ 407.0 million mortgage loan.

The new mortgage loan is interest only and bears interest at a rate of SOFR + 3.24 %, has a two-year initial term, and has three one-year extension options, subject to satisfaction of certain conditions.

Braemar holds a tranche of Commercial Mortgage-Backed Securities (“CMBS”) that has a par value of $ 42.2 million and a rate of SOFR + 5.20 %.

(10) 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.

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

(11) 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 %.

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

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

6 unchanged sentences

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)

On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines for $ 165 million in cash, subject to customary pro-rations and adjustments.

Additionally, the Company repaid the $ 66.6 million mortgage loan secured by the hotel property.

On August 7, 2024, the Company closed on a refinancing involving five hotels.

The new mortgage loan totals $ 407 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029.

The loan is interest only and provides for a floating interest rate of SOFR + 3.24 %.

The loan is secured by five hotels:

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

The new loan refinanced the $ 80.0 million loan secured by the Pier House Resort & Spa which had an interest rate of SOFR + 3.60 % and had a final maturity date in September 2026, the $ 42.5 million loan secured by The Ritz-Carlton St.

Thomas which had an interest rate of SOFR + 4.35 % and had a final maturity date in August 2026, and the $ 200.0 million secured credit facility secured by The Ritz-Carlton Sarasota, Hotel Yountville, and Bardessono Hotel & Spa which had an interest rate of SOFR + 3.10 % and had a final maturity date in July 2027.

Convertible Senior Notes

5 unchanged sentences

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

For the three and six months ended June 30, 2024, the Company recorded coupon interest expense of $ 970,000 and $ 1.9 million, respectively.

For the three and six months ended June 30, 2023, the Company recorded coupon interest expense of $ 970,000 and $ 1.9 million, respectively.

For the three and six months ended June 30, 2024, the Company recorded discount amortization of $ 154,000 and $ 306,000 , respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through June 2026.

For the three and six months ended June 30, 2023, the Company recorded discount amortization of $ 146,000 and $ 290,000 , respectively.

For the three and nine months ended September 30, 2024, 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 coupon interest expense of $ 970,000 and $ 2.9 million, respectively.

For the three and nine months ended September 30, 2024, the Company recorded discount amortization of $ 157,000 and $ 463,000 , respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the three and nine months ended September 30, 2023, the Company recorded discount amortization of $ 148,000 and $ 438,000 , respectively.

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.

As of June 30, 2024, the conversion rate is 179.2962.

As of September 30, 2024, the conversion rate is 182.1014.

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.

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

On July 31, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”) with Braemar OP (the “Borrower”), the lenders party thereto (the “Lenders”) and Bank of America, N.A., as administrative agent and L/C Issuer (as defined in the Credit Agreement).

Bank of America, N.A.

acted as administrative agent and lead arranger on the transaction.

Syndicate bank participants include TBK Bank and MidFirst Bank.

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);

(ii) 55 % of the appraised value of all Borrowing Base Properties;

and (iii) the DSC Amount (as defined below).

The initial Borrowing Base Properties include the Company’s Ritz-Carlton Sarasota, Bardessono Hotel and Spa and Hotel Yountville properties (the “Initial Borrowing Base Properties”).

The “DSC Amount” means the maximum principal amount that can be supported from the Adjusted NOI (as defined in the Credit Agreement) from the Borrowing Base Properties assuming:

(i) a 30-year amortization and an interest rate which is the greater of (a) the ten ( 10 ) year U.S.

Treasury Rate plus 2.50 % and (b) 7.50 %;

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

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.

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, 2024, we were in compliance with all covenants.

Note Receivable

On July 2, 2024, Braemar, Ashford Trust and Ashford Inc.

(collectively with the Company, Ashford Trust and each of Ashford Inc.’s, the Company’s and Ashford Trust’s respective affiliates (including Stirling Hotels & Resorts, Inc.) and any entity advised by Ashford Inc., the “Company Group”) entered into a Cooperation Agreement (the “Agreement”) with Blackwells Capital LLC, Blackwells Onshore I LLC, Blackwells Holding Co.

LLC, Vandewater Capital Holdings, LLC, Blackwells Asset Management LLC, BW Coinvest Management I LLC and Jason Aintabi (collectively, the “Blackwells Parties”) regarding the withdrawal of the Blackwells Parties’ proxy campaign, dismissal of pending litigation involving the parties and certain other matters.

Pursuant to the Agreement, the Blackwells Parties have agreed to withdraw (i) the notice delivered to the Company on March 10, 2024 purporting to nominate four director candidates to the Company’s board of directors (the “Board”) and make certain other proposals and (ii) the definitive proxy statement filed with the SEC on April 3, 2024 to solicit proxies from stockholders of the Company to vote in favor of the Blackwells Parties’ director nominees and proposals.

In connection therewith, the Blackwells Parties will cease to take any further action with respect to the Company’s 2024 Annual Meeting of Stockholders, except as otherwise provided for in the Agreement.

The Blackwells Parties have also agreed to specified standstill restrictions with respect to the Company Group, which will expire on July 2, 2034.

During the standstill period, the Blackwells Parties are required to (i) appear in person or by proxy at each meeting of stockholders of the members of the Company Group in which they beneficially own shares of stock and vote any Blackwells Parties’ shares then beneficially owned by them in accordance with the recommendation of the board of directors of such member of the Company Group on any proposals considered at such meeting and (ii) deliver consents or consent revocations in any action by written consent by stockholders of any member of the Company Group in which they beneficially own shares in accordance with the recommendation of the board of directors of such member of the Company Group.

The Agreement also provides for the voluntary dismissal, with prejudice, of the consolidated action previously pending in the U.S.

District Court for the Northern District of Texas to which the Company, Blackwells Capital LLC and certain of their respective related parties were parties (the “Consolidated Litigation”).

Pursuant to the Agreement, the Consolidated Litigation was voluntarily dismissed, with prejudice, on July 3, 2024.

The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable attorneys’ fees and expenses incurred in connection with the Consolidated Litigation and related matters.

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

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:

(i) perfected lien mortgages or deeds of trust and security interests in the Borrowing Base Properties (as defined in the Credit Agreement);

(ii) assignments of leases and rents with respect to the Borrowing Base Properties;

(iii) assignments of all management agreements, franchise agreements, licenses and other material agreements relating to the Borrowing Base Properties;

(iv) perfected first priority liens on all reserve accounts and all operating accounts related to each Borrowing Base Property;

and (v) perfected first priority liens on and security interests in each subsidiary guarantor owning a Borrowing Base Property.

Borrowings under the Credit Agreement will bear interest at Daily SOFR or Term SOFR plus 10 basis points (with a 0 % floor) plus the applicable margin.

Depending on the Company’s Net Debt to EBITDA ratio, the applicable margin for SOFR ranges from 2.25 % to 3.00 %.

Default interest would accrue at the applicable rate plus 2.0 %.

The Facility contains customary terms, covenants, negative covenants, events of default, limitations and other conditions for credit facilities of this type.

Subject to certain exceptions, the Company and the Borrower are subject to restrictions on incurring additional indebtedness and liens, investments, mergers and fundamental changes, sales or other dispositions of property, dividends and stock redemptions, changes in the nature of the Borrower’s business, transactions with affiliates and burdensome agreements.

Financial covenants are generally based on the financial condition and results of operations of the Company and its consolidated subsidiaries and include, among others, the following:

(i) a Consolidated Leverage Ratio ( i.e.

, Consolidated Net Debt to the Consolidated Total Asset Value) of not more than 55 %;

(ii) a Consolidated Fixed Charge Coverage Ratio (“FCCR”) (i.e ., the ratio of Consolidated Adjusted EBITDA to Consolidated Fixed Charges) of not less than (i) prior to December 31, 2024, 1.1 to 1.0 and (ii) thereafter, 1.25 to 1.0.

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.

On August 7, 2024 the Facility was repaid and the Company is no longer subject to any covenants.

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 June 30, 2024, we were in compliance with all covenants.

Additionally, pursuant to the Agreement, the Board was required to take steps to identify and select one additional individual to be appointed to the Board as an independent director (the “Additional Board Member”).

The Board was required to promptly notify Blackwells Capital LLC of its selection of the Additional Board Member and to consider any input Blackwells Capital LLC may have with respect to the Additional Board Member.

In accordance with the Cooperation Agreement, on October 4, 2024, the Board increased the number of directors of the Company from eight to nine and appointed Mr.

Shah as the Additional Board Member to serve until the Company’s next annual meeting of stockholders and until his successor is duly elected and qualified.

The Agreement contains various other obligations and provisions applicable to the Company Group and the Blackwells Parties, including a mutual release of claims and mutual non-disparagement.

Concurrently and in connection with the Agreement, certain of the parties thereto have also entered into a Share Ownership Agreement (the “Share Ownership Agreement”) and a Loan Agreement (the “Loan Agreement”), pursuant to which agreements the Company will provide to BW Coinvest I, LLC (“Borrower”) an unsecured loan (the “Loan”).

The proceeds from the Loan will be used to reimburse Borrower for 70 % of the amount expended by Borrower to purchase on the open market a total of 3,500,000 shares of the Company’s common stock (the “Purchased Shares”) within six months of the date of Loan Agreement, at a price per Purchased Share not to exceed $ 10 and subject to the other limitations set forth therein.

The Loan has a term of five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co.

LLC, and Blackwells Asset Management LLC and shall bear payment-in-kind interest during the Term at a rate equal to the sum of (a) Term SOFR (as defined in the Loan Agreement) and (b) 3.00 % (three hundred basis points) per annum.

The Company has agreed to reimburse Blackwells Capital LLC, in an amount agreed upon by the parties, for the Blackwells Parties’ reasonable due diligence expenses incurred on or prior to the date of the Share Ownership Agreement.

As of September 30, 2024, the Company has advanced approximately $ 5.8 million that has been used to purchase approximately 2.5 million shares of Braemar common stock.

Note receivable is summarized in the table below (dollars in thousands):

Interest Rate

September 30, 2024 December 31, 2023

Note receivable SOFR + 3.00 %

We recognized interest income as presented in the table below (in thousands):

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

Line Item 2024 2024

Interest income

We review receivables for impairment each reporting period.

Under the model, the Company estimates credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument and is required to record a credit loss expense (or reversal) in each reporting period.

Our assessment of impairment is based on considerable management judgment and assumptions.

No impairment charges were recorded for the three and nine months ended September 30, 2024.

Derivative Instruments

3 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Six Months Ended June 30,

Nine Months Ended September 30,

Interest rate caps:

2 unchanged sentences

Strike rate high end of range 8.00 % 5.25 %

Effective date range January 2024 - June 2024

January 2023 - June 2023

Termination date range January 2025 - June 2025

October 2023 - June 2024

Effective date range January 2024 - August 2024

January 2023 - September 2023

Termination date range January 2025 - August 2026

October 2023 - October 2024

Total cost of interest rate caps (in thousands) $ 1,344 $ 3,981

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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Notional amount (in thousands) $ 1,155,280 $ 778,280

1 unchanged sentence

Strike rate high end of range 8.00 % 5.25 %

Termination date range August 2024 - January 2026

Termination date range October 2024 - August 2026

June 2024- January 2025

4 unchanged sentences

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

The holder can choose to exercise the 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 June 30, 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:

three -year contractual term;

97.93 % volatility;

0 % dividend rate;

and a risk-free interest rate of 0.38 %.

The estimated fair value of the warrants was approximately $ 1.5 million on the date of issuance.

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

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

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

This is a Level 2 valuation technique.

The warrants expired worthless on August 5, 2024.

Fair Value Measurements

11 unchanged sentences

However, when the valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties, which we consider significant ( 10 % or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy.

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

In determining the fair values of our derivatives at June 30, 2024, the SOFR interest rate forward curve (Level 2 inputs) assumed a downtrend from 5.340 % to 3.877 % for the remaining term of our

Transfers of inputs between levels

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

are determined at the end of each reporting period.

In determining the fair values of our derivatives at September 30, 2024, the SOFR interest rate forward curve (Level 2 inputs) assumed a downtrend from 4.846 % to 3.013 % 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.

Investment in securities includes mortgage-backed securities.

These securities are classified as available for sale and are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows and the bonds’ terms and conditions, among other things.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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(Level 3) Total

June 30, 2024

September 30, 2024

Investment in securities $ — $ 41,493 $ — $ 41,493

Derivative assets:

24 unchanged sentences

Gain (Loss) Recognized in Income

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

1 unchanged sentence

Interest rate derivatives - caps $ ( 735 ) $ 69 (1)

$ 1,246 $ 576

Total $ ( 735 ) $ 69 $ 511 $ 645

16 unchanged sentences

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

The unrealized gain (loss) on investment in securities that was recognized as a change in other comprehensive income (loss) was $( 786,000 ) for both the three and nine months ended September 30, 2024.

Summary of Fair Value of Financial Instruments

2 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):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Value Estimated

2 unchanged sentences

Financial assets measured at fair value:

Investment in securities $ 41,493 $ 41,493 $ — $ —

Derivative assets 480 480 2,847 2,847

8 unchanged sentences

32,479 32,479 39,199 39,199

Note receivable 5,855 5,855 — —

Due from third-party hotel managers 19,855 19,855 17,739 17,739

Financial liabilities not measured at fair value:

Indebtedness (1)

$ 1,221,844 $ 1,185,109 $ 1,171,459 $ 1,124,377

7 unchanged sentences

1,509 1,509 1,608 1,608

(1) Includes balances associated with assets held for sale and liabilities associated with assets held for sale as of June 30, 2024.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Cash, cash equivalents and restricted cash .

5 unchanged sentences

This is considered a Level 1 valuation technique.

Investment in securities .

See note 10 for a complete description of the methodology and assumptions utilized in determining fair values.

Note receivable.

The carrying amount of note receivable approximates its fair value.

We estimate the fair value of the note receivable to approximate the carrying value of $ 5.9 million at September 30, 2024.

This is considered a Level 2 valuation technique.

Derivative assets and derivative liabilities .

6 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 96.8 % of the carrying value of $ 1.2 billion at June 30, 2024, and approximately 96.0 % of the carrying value of $ 1.2 billion at December 31, 2023.

We estimated the fair value of the total indebtedness to be approximately 97.0 % of the carrying value of $ 1.2 billion at September 30, 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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

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Net income (loss) allocated to common stockholders per share $ ( 0.02 ) $ ( 0.50 ) $ ( 0.30 ) $ ( 0.63 )

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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

17 unchanged sentences

Redeemable Noncontrolling Interests in Operating Partnership

Redeemable noncontrolling interests in the operating partnership represents the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Braemar OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested.

Redeemable noncontrolling interests in the operating partnership represent the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Braemar OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested.

Each common unit may be redeemed, by the holder, for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either:

(i) issued pursuant to an effective registration statement;

(i) issued pursuant to an effective registration

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(ii) included in an effective registration statement providing for the resale of such common stock;

11 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

As of June 30, 2024, there were approximately 1.5 million unvested Performance LTIP units, representing 200 % of the target, outstanding.

In May 2024, approximately 45,000 LTIP units were issued to independent directors, with a fair value of approximately $ 126,000 , which vested immediately upon grant and have been expensed during the three and six months ended June 30, 2024.

As of June 30, 2024, we have issued a total of approximately 3.0 million LTIP and Performance LTIP units, net of Performance LTIP cancellations.

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.

As of September 30, 2024, there were approximately 1.5 million unvested Performance LTIP units, representing 200 % of the target, outstanding.

As of September 30, 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 659,000 LTIP units and 353,000 Performance LTIP units issued from March 2015 to May 2024, 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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Redeemable noncontrolling interests in Braemar OP (in thousands) $ 31,336 $ 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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

1 unchanged sentence

Distributions declared to holders of common units, LTIP units and Performance LTIP units $ 369 $ 361 $ 1,103 $ 1,083

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

7 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

Common stock dividends declared $ 3,348 $ 3,335 $ 10,040 $ 10,004

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

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In May 2024, approximately 45,000 shares of common stock were issued to independent directors with a fair value of approximately $ 126,000 , which vested immediately upon grant and have been expensed during the three and six months ended June 30, 2024.

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.

3 unchanged sentences

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.

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

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

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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

1 unchanged sentence

Stock Repurchases —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.

As of June 30, 2024, the Company has not repurchased any common stock.

As of September 30, 2024, the Company has not repurchased any common stock pursuant to this program.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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:

7 unchanged sentences

The following table summarizes dividends declared (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

5 unchanged sentences

The Company is also offering a maximum of 8,000,000 shares of the Series E Preferred Stock pursuant to a dividend reinvestment plan (the “DRIP”) at $ 25.00 per share (the “Stated Value”).

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Series E Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (the Series B Convertible Preferred stock, the Series D Preferred Stock and the Series M Preferred Stock (as defined below)) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.

8 unchanged sentences

• 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

• 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.

8 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

4 unchanged sentences

(1) Exclusive of shares issued under the DRIP.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

3 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Series E Preferred Stock $ 355,178 $ 377,035

3 unchanged sentences

The following table summarizes dividends declared (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

Series E Preferred Stock $ 7,137 $ 7,710 $ 22,307 $ 23,230

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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

10 unchanged sentences

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

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

Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

dividends (with no redemption fee).

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

7 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

9 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Series M Preferred Stock $ 39,907 $ 45,623

3 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes dividends declared (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

1 unchanged sentence

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

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

8 unchanged sentences

We pay a monthly base fee equal to 1/12 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

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

7 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

9 unchanged sentences

(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.

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

15 unchanged sentences

Each year Ashford Inc.

collects funds from Ashford Trust, Braemar,

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Stirling OP and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis .

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 on our behalf and brokerage services.

For the three and six months ended June 30, 2024, we incurred fees of $ 50,000 and $ 1.1 million, respectively.

We incurred fees from Lismore or its subsidiaries of $ 98,000 for both three and six months ended June 30, 2023.

For the three and nine months ended September 30, 2024, we incurred fees of $ 1.8 million and $ 2.9 million, respectively.

We incurred fees from Lismore or its subsidiaries of $ 1.3 million and $ 1.5 million for the three and nine months ended September 30, 2023.

Ashford Securities

8 unchanged sentences

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.

(1) the Parties equally

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 for 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.

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 six months ended June 30, 2024.

As of June 30, 2024, Braemar has funded approximately $ 12.9 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 September 30, 2024, Braemar has funded approximately $ 12.9 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 included in “other assets” and a receivable of approximately $ 3.5 million included in “due to Ashford Inc., net” on the consolidated balance sheet.

1 unchanged sentence

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

Three Months Ended June 30, Six Months Ended June 30,

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

Line Item 2024 2023 2024 2023

Corporate, general and administrative $ — $ 921 $ ( 5,624 ) $ 3,140

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Design and Construction Services

10 unchanged sentences

Hotel Management Services

At June 30, 2024, Remington Hospitality managed four of our 16 hotel properties.

At September 30, 2024, Remington Hospitality managed four of our 15 hotel properties.

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 June 30, 2024, 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 September 30, 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.

2 unchanged sentences

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;

(ii) 4 % of gross

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

rooms revenue for the preceding calendar month during year four;

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

As of June 30, 2024, we are currently paying 3 % of gross revenues.

As of September 30, 2024, we are currently paying 3 % of gross revenues.

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

Three Months Ended June 30, Six Months Ended June 30,

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

Line Item 2024 2023 2024 2023

Other hotel expenses $ 84 $ — $ 258 $ —

Management Fees —Under hotel management agreements for our hotel properties existing at June 30, 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.

Management Fees —Under hotel management agreements for our hotel properties existing at September 30, 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 November 2029 through December 2065, with renewal options.

7 unchanged sentences

Notices to potential class members were sent out on February 2, 2021.

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Potential class members had until April 4, 2021 to opt-out of the class;

4 unchanged sentences

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

The Court has ordered the parties to complete a second mediation no later than January 31, 2025.

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 June 30, 2024, no amounts have been accrued.

As of September 30, 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.

1 unchanged sentence

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 have since agreed to.

The allocation to Hilton La Jolla Torrey Pines is approximately $ 371,000 , which has been accrued as of June 30, 2024.

At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $ 3.5 million, to which the parties have since agreed to.

The allocation to Hilton La Jolla Torrey Pines is approximately $ 371,000 , which has been accrued as of September 30, 2024.

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

4 unchanged sentences

Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations or cash flow.

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 that may have been exposed, but we have not identified that any customer information was exposed.

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

We have completed an investigation and have identified certain information that may have been exposed and notified potentially impacted individuals pursuant to applicable state guidelines.

All systems have been restored.

8 unchanged sentences

On May 17, 2024, we filed a Motion to Dismiss the Consolidated Class Action Complaint, which is currently pending before the Court.

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.

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 June 30, 2024 and December 31, 2023, all of our hotel properties were in the U.S.

As of September 30, 2024 and December 31, 2023, all of our hotel properties were in the U.S.

and its territories.

BRAEMAR HOTELS & RESORTS INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Subsequent Events

In February 2024, the Company and Ashford Inc.

approved funding up to an additional $ 1.0 million, in the aggregate, for OpenKey, allocated pro rata among them.

On July 1, 2024, the Company funded $ 79,000 .

Blackwells Capital

On July 2, 2024, Braemar, Ashford Trust and Ashford Inc.

Securities and Exchange Commission (the “SEC”) on April 3, 2024 to solicit proxies from stockholders of the Company to vote in favor of the Blackwells Parties’ director nominees and proposals.

The Blackwells Parties have also agreed to specified standstill restrictions with respect to the Company Group, which will expire on July 2, 2034.

The Agreement also provides for the voluntary dismissal, with prejudice, of the consolidated action pending in the U.S.

District Court for the Northern District of Texas to which the Company, Blackwells Capital LLC and certain of their respective related parties are parties (the “Consolidated Litigation”).

Additionally, pursuant to the Agreement, the Board will take steps to identify and select one additional individual to be appointed to the Board as an independent director (the “Additional Board Member”).

The Board is required to promptly notify Blackwells Capital LLC of its selection of the Additional Board Member and to consider any input Blackwells Capital LLC may have with respect to the Additional Board Member.

The Agreement contains various other obligations and provisions applicable to the Company Group and the Blackwells Parties, including a mutual release of claims and mutual non-disparagement.

The Loan has a term of five years (the “Term”), is guaranteed by Jason Aintabi, Vandewater Capital Holdings, LLC, Blackwells Holding Co.

As of August 7, 2024, the Company has loaned approximately $ 4.1 million that has been used to purchase approximately 1.7 million shares of Braemar common stock.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Hilton La Jolla Torrey Pines

On July 17, 2024, we sold the Hilton La Jolla Torrey Pines hotel pursuant to an Agreement of Purchase and Sale, entered into effective May 6, 2024, for $ 165 million in cash, subject to customary pro-rations and adjustments.

The Company owned an indirect 75 % equity interest in the hotel property.

Additionally, the Company repaid the $ 66.6 million mortgage loan secured by the hotel property.

The net carrying value of the building and furniture, fixtures and equipment was approximately $ 65.2 million as of June 30, 2024.

Limited Waiver Under Advisory Agreement

The Company, Braemar OP, Braemar TRS, Ashford Inc.

and Ashford Hospitality Advisors LLC (together with Ashford Inc., the “Advisor”), are parties to that certain Fifth Amended and Restated Advisory Agreement, dated as of April 23, 2018 (as amended, the “Advisory Agreement”).

The Company has a mortgage loan maturing in June 2025 with an outstanding principal balance of approximately $ 293 million (the “Loan”) secured by four hotel properties:

The Notary Hotel;

Sofitel Chicago Magnificent Mile;

and Marriott Seattle Waterfront (the “Hotel Properties”).

On August 8, 2024, the parties to the Advisory Agreement entered into a Limited Waiver Under Advisory Agreement (the “Waiver Agreement”) that provides, among other things, as follows:

(i) From August 8, 2024 until the earlier of (i) November 15, 2025 and (ii) the refinancing of the Loan (the “Loan Outside Date”), the Advisor waives the operation of Section 12.4(a) of the Advisory Agreement that would permit the Advisor to terminate the Advisory Agreement occurring solely as a result from the sale or disposition of one or more of the Hotel Properties as a result of a mortgage foreclosure, deed-in-lieu of mortgage foreclosure, mezzanine loan foreclosure or an assignment in-lieu of a mezzanine loan foreclosure following the failure of the Company to pay, upon the maturity of the Loan, all amounts due and payable thereunder (the “Limited Waiver”);

(ii) Upon the satisfaction of certain conditions, the Company may request the Advisor agree to amend the Waiver Agreement to extend the Loan Outside Date for a period not to exceed ninety (90) days from November 15, 2025 and if the Advisor agrees to such amendment, the Advisor shall not be entitled to any further consideration in respect thereof;

(iii) If the members of the Board of Directors of the Company (the “Board”) change such that members who constitute the Board as of August 8, 2024 (the “Incumbent Board”) no longer constitute at least a majority of the Board (other than those whose election to the Board is approved or recommended to stockholders of the Company by a vote of at least a majority of the Incumbent Board), the Limited Waiver shall be null and void ab initio (but the consideration provided by the Company to the Advisor as described in item (iv) below shall remain in force);

(iv) In exchange for the Limited Waiver and the other agreements provided by the Advisor in the Waiver Agreement, the Company agrees to pay the Advisor an amount equal to the Advisor’s obligation under the Advisor’s current employment agreement with Richard J.

Stockton, the Company’s President and Chief Executive Officer (the “Stockton Employment Agreement”), to pay Mr.

Stockton a multiple of his Base Salary (as defined in the Stockton Employment Agreement) that becomes payable by the Advisor to Mr.

Stockton as the result of the occurrence of certain events as more fully described in the Waiver Agreement.

Mortgage Loan Refinance

On August 7, 2024, the Company closed on a refinancing involving five hotels.

The new loan totals $ 407 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029.

The loan is interest only and provides for a floating interest rate of SOFR + 3.24 %.

As part of this financing, the Company acquired $ 42.2 million of the most junior tranche of the loan, which lowered its net spread on the $ 364.8 million remaining loan amount to SOFR + 3.01 %.

The loan is secured by five hotels:

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

The new loan refinanced the $ 80.0 million loan secured by the Pier House Resort & Spa which had an interest rate of SOFR + 3.60 % and had a final maturity date in September 2025, the $ 42.5 million loan secured by The Ritz-Carlton St.

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