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Item 2. Management’s Discussion and Analysis

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
 
 As used in this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the references to “we,” “us,” “our,” the “Company” or “Braemar” refer to Braemar Hotels & Resorts Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Braemar Hospitality Limited Partnership, a Delaware limited partnership, which we refer to as “our operating partnership” or “Braemar OP.” “Our TRSs” refers to our taxable REIT subsidiaries, including Braemar TRS Corporation, a Delaware corporation, which we refer to as “Braemar TRS,” and its subsidiaries, together with the two taxable REIT subsidiaries that lease our one hotel held in a consolidated joint venture and is wholly owned by the joint venture and the U.S. Virgin Islands’ (“USVI”) taxable REIT subsidiary that owns The Ritz-Carlton St. Thomas hotel. “Ashford Trust” refers to Ashford Hospitality Trust, Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Limited Partnership, a Delaware limited partnership and Ashford Trust’s operating partnership, which we refer to as “Ashford Trust OP.” “Ashford Inc.” refers to Ashford Inc., a Nevada corporation and, as the context may require, its consolidated subsidiaries. “Ashford LLC” or our “Advisor” refers to Ashford Hospitality Advisors LLC, a Delaware limited liability company and a subsidiary of Ashford Inc. “Premier” refers to Premier Project Management LLC, a Maryland limited liability company and a subsidiary of Ashford LLC. “Remington Hospitality” refers to the same entity after the acquisition was completed resulting in Remington Lodging & Hospitality, LLC becoming a subsidiary of Ashford Inc. 
 This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains registered trademarks that are the exclusive property of their respective owners, which are companies other than us, including Marriott International®, Hilton Worldwide®, Sofitel®, Hyatt® and Accor®. 
 FORWARD-LOOKING STATEMENTS 
 Throughout this Form 10-Q, we make forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature: 
 
 • our business and investment strategy; 
 • anticipated or expected purchases or sales of assets; 
 • our projected operating results; 
 • completion of any pending transactions; 
 • our understanding of our competition; 
 • projected capital expenditures; and 
 • the impact of technology on our operations and business. 
 Such forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Additionally, the following factors could cause actual results to vary from our forward-looking statements: 
 
 • the factors discussed in our Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2024 (the “2023 10-K”), including those set forth under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Properties” and other filings under the Exchange Act; 
 
 • changes in interest rates and inflation; 
 • macroeconomic conditions, such as a prolonged period of weak economic growth, and volatility in capital markets; 
 • uncertainty in the business sector and market volatility due to the 2023 failures of Silicon Valley Bank, New York Signature Bank and First Republic Bank; 
 • catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine and the more recent Israel-Hamas war; 
 • extreme weather conditions, which may cause property damage or interrupt business; 
 • our ability to raise sufficient capital and/or take other actions to improve our liquidity position or otherwise meet our liquidity requirements; 
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 • general volatility of the capital markets and the market price of our common and preferred stock; 
 • general business and economic conditions affecting the lodging and travel industry; 
 • changes in our business or investment strategy; 
 • availability, terms and deployment of capital; 
 • risks associated with our ability to effectuate our dividend policy, including factors such as operating results and the economic outlook influencing our board’s decision whether to pay further dividends at levels previously disclosed or to use available cash to pay dividends; 
 • unanticipated increases in financing and other costs, including changes in interest rates; 
 • changes in our industry and the markets in which we operate, interest rates, or local economic conditions; 
 • the degree and nature of our competition; 
 • actual and potential conflicts of interest with Ashford Trust, Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hospitality and Premier), Stirling Hotels & Resorts, Inc. (“Stirling Inc.”), and our executive officers and our non-independent directors; 
 • changes in personnel of Ashford LLC or the lack of availability of qualified personnel; 
 • changes in governmental regulations, accounting rules, tax rates and similar matters; 
 • legislative and regulatory changes, including changes to the Internal Revenue Code of 1986, as amended (the “Code”) and related rules, regulations and interpretations governing the taxation of REITs; 
 • limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes; and 
 • future sales and issuances of our common stock or other securities, which might result in dilution and could cause the price of our common stock to decline. 
 
 When considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” in Part I of our 2023 10-K and this Form 10-Q, and the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Form 10-Q. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Form 10-Q to conform these statements to actual results and performance, except as may be required by applicable law. 
 
 Overview 
 We are a Maryland corporation formed in April 2013 that invests primarily in high revenue per available room (“RevPAR”), luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by STR, LLC. Two times the U.S. national average was $196 for the year ended December 31, 2023. We have elected to be taxed as a REIT under the Code. We conduct our business and own substantially all of our assets through our operating partnership, Braemar OP. 
 We operate in the direct hotel investment segment of the hotel lodging industry. As of September 30, 2024, we owned interests in 15 hotel properties in seven states, the District of Columbia, Puerto Rico and St. Thomas, U.S. Virgin Islands with 3,807 total rooms, or 3,667 net rooms, excluding those attributable to our joint venture partner. The hotel properties in our current portfolio are predominantly located in U.S. urban markets and resort locations with favorable growth characteristics resulting from multiple demand generators. We own 14 of our hotel properties directly, and the remaining one hotel property, through an investment in a majority-owned consolidated entity. 
 We are advised by Ashford LLC through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC. 
 We do not operate any of our hotel properties directly; instead, we contractually engage hotel management companies to operate them for us under management contracts. As of September 30, 2024, Remington Hospitality , a subsidiary of Ashford Inc., managed four of our 15 hotel properties. Third-party management companies managed the remaining hotel properties. 
 Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to, design and construction services, debt placement and related services, broker-dealer and distribution services, audio visual services, real estate advisory 
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 and brokerage services, insurance policies covering general liability, workers compensation and claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology and cash management services. 
 
 Mr. Monty J. Bennett, chairman and chief executive officer of Ashford Inc. and, together with Mr. Archie Bennett, Jr. (the “Bennetts”), as of September 30, 2024, hold a controlling interest in Ashford Inc. The Bennetts owned approximately 809,937 shares of Ashford Inc. common stock, which represented an approximate 38.4% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc. Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,316,632 shares of Ashford Inc. common stock, which if converted as of September 30, 2024, would have increased the Bennetts’ ownership interest in Ashford Inc. to 79.8%. The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts. 
 As of September 30, 2024, Mr. Monty J. Bennett, chairman of our board of directors, and his father, Mr. Archie Bennett, Jr., together owned approximately 3,116,271 shares of our common stock (including common units, long-term incentive plan (“LTIP”) units and performance LTIP units), which represented an approximate 4.2% ownership in the Company. 
 
 Recent Developments 
 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. 
 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 U.S. 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. 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 are 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. 
 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. Jay H. 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. 
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 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 November 6, 2024, the Company has loaned approximately $7.0 million that has been used to purchase approximately 3.0 million shares of Braemar common stock. 
 On July 17, 2024, we sold the Hilton La Jolla Torrey Pines 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. 
 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 a tranche of CMBS with a par value of $42.2 million and a rate of SOFR + 5.20%. 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. Thomas. 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. 
 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; The Clancy; 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 (a) November 15, 2025 and (b) 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); and 
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 (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. 
 Key Indicators of Operating Performance 
 We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP, as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include: 
 • Occupancy . Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period. 
 • ADR . ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate. 
 • RevPAR. RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs. RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees. 
 RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increased other operating department revenue and expense. Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs. 
 Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue is dictated by demand (as measured by occupancy), pricing (as measured by ADR) and our available supply of hotel rooms. 
 We also use funds from operations (“FFO”), Adjusted FFO, earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”) and Adjusted EBITDAre as measures of the operating performance of our business. See “Non-GAAP Financial Measures.” 
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 RESULTS OF OPERATIONS 
 
 Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023 
 The following table summarizes changes in key line items from our condensed consolidated statements of operations for three months ended September 30, 2024 and 2023 (in thousands except percentages): 
 
 Three Months Ended September 30, Favorable (Unfavorable) 
 2024 2023 $ Change % Change 
 Revenue 
 Rooms $ 92,427 $ 100,738 $ (8,311) (8.3) % 
 Food and beverage 34,781 38,537 (3,756) (9.7) 
 
 Other 21,190 20,526 664 3.2 
 
 
 Total revenue 148,398 159,801 (11,403) (7.1) 
 Expenses 
 Hotel operating expenses: 
 Rooms 25,548 25,899 351 1.4 
 Food and beverage 31,998 32,750 752 2.3 
 Other expenses 51,300 52,725 1,425 2.7 
 Management fees 4,869 5,076 207 4.1 
 Total hotel operating expenses 113,715 116,450 2,735 2.3 
 Property taxes, insurance and other 9,985 10,471 486 4.6 
 Depreciation and amortization 25,078 22,703 (2,375) (10.5) 
 Advisory services fee 8,627 7,020 (1,607) (22.9) 
 
 
 
 Corporate general and administrative 8,874 2,506 (6,368) (254.1) 
 Total expenses 166,279 159,150 (7,129) (4.5) 
 Gain (loss) on disposition of assets and hotel property 
 88,210 — 88,210 
 Operating income (loss) 70,329 651 69,678 10,703.2 
 Equity in earnings (loss) of unconsolidated entity (80) (60) (20) (33.3) 
 Interest income 2,660 986 1,674 169.8 
 Other income (expense) — 293 (293) (100.0) 
 Interest expense and amortization of loan costs (27,911) (23,306) (4,605) (19.8) 
 Write-off of loan costs and exit fees (5,292) (2,588) (2,704) (104.5) 
 
 
 Realized and unrealized gain (loss) on derivatives (735) 223 (958) (429.6) 
 Income (loss) before income taxes 38,971 (23,801) 62,772 263.7 
 Income tax (expense) benefit 864 1,190 (326) 27.4 
 Net income (loss) 39,835 (22,611) 62,446 (276.2) 
 (Income) loss attributable to noncontrolling interest in consolidated entities (27,363) (1,773) (25,590) (1,443.3) 
 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 124 2,354 (2,230) (94.7) 
 Net income (loss) attributable to the Company $ 12,596 $ (22,030) $ 34,626 157.2 % 

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 All hotel properties owned for the three months ended September 30, 2024 and 2023 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the three months ended September 30, 2024 and 2023. The hotel property listed below is not a comparable hotel property for the periods indicated and all other hotel properties are considered comparable hotel properties. The following disposition affects reporting comparability related to our condensed consolidated financial statements: 
 
 Hotel Property Location Type Date 
 Hilton La Jolla Torrey Pines 
 La Jolla, California 
 Disposition 
 July 17, 2024 

 The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the three months ended September 30, 2024 and 2023: 
 
 Three Months Ended September 30, 
 2024 2023 
 Occupancy 68.50 % 68.37 % 
 ADR (average daily rate) $ 376.20 $ 379.97 
 RevPAR (revenue per available room) $ 257.70 $ 259.78 
 Rooms revenue (in thousands) $ 92,427 $ 100,738 
 Total hotel revenue (in thousands) $ 148,398 $ 159,801 

 The following table illustrates the key performance indicators of the 15 hotel properties that were owned for the full three months ended September 30, 2024 and 2023: 
 
 Three Months Ended September 30, 
 2024 2023 
 Occupancy 68.22 % 66.72 % 
 ADR (average daily rate) $ 378.80 $ 393.48 
 RevPAR (revenue per available room) $ 258.41 $ 262.54 
 Rooms revenue (in thousands) $ 91,053 $ 92,290 
 Total hotel revenue (in thousands) $ 146,349 $ 146,114 

 
 Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $34.6 million, from a net loss of $22.0 million for the three months ended September 30, 2023 (the “2023 quarter”) to net income of $12.6 million for the three months ended September 30, 2024 (the “2024 quarter”), as a result of the factors discussed below. 
 Rooms Revenue . Rooms revenue decreased $8.3 million, or 8.3%, to $92.4 million during the 2024 quarter compared to the 2023 quarter. During the 2024 quarter, we experienced a 13 basis point increase in occupancy and a 1.0% decrease in room rates. 
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 Fluctuations in rooms revenue between the 2024 quarter and the 2023 quarter are a result of the changes in occupancy and ADR between the 2024 quarter and the 2023 quarter as reflected in the table below (dollars in thousands): 
 
 Hotel Property Favorable (Unfavorable) 
 Rooms Revenue Occupancy 
(change in bps) ADR (change in %) 
 Comparable 
 Capital Hilton (2) 
 $ 1,447 628 6.6 % 
 Marriott Seattle Waterfront 
 770 375 2.7 % 
 The Notary Hotel 961 798 2.0 % 
 The Clancy (1,371) (949) (4.2) % 
 Sofitel Chicago Magnificent Mile 1,302 396 11.2 % 
 Pier House Resort & Spa (770) (472) (11.2) % 
 The Ritz-Carlton St. Thomas (1) 
 (1,578) (524) (11.4) % 
 Park Hyatt Beaver Creek Resort & Spa 125 252 (0.9) % 
 Hotel Yountville (647) (701) (7.9) % 
 The Ritz-Carlton Sarasota (2) 
 266 20 4.1 % 
 Bardessono Hotel and Spa (532) (651) (2.3) % 
 The Ritz-Carlton Lake Tahoe (1) (2) 
 838 927 (2.3) % 
 Cameo Beverly Hills 
 (284) 239 (13.7) % 
 The Ritz-Carlton Reserve Dorado Beach (1,695) (815) (6.9) % 
 Four Seasons Resort Scottsdale (69) (40) (0.9) % 
 Total $ (1,237) 150 (3.7) % 
 Non Comparable 
 
 Hilton La Jolla Torrey Pines (7,074) (3) (6.4) % 
 

 ________ 
 (1) This hotel was under renovation during the 2024 quarter. 
 (2) This hotel was under renovation during the 2023 quarter. 
 Food and Beverage Revenue . Food and beverage revenue decreased $3.8 million, or 9.7%, to $34.8 million during the 2024 quarter compared to the 2023 quarter. This decrease is attributable to a decrease of $1.9 million at nine comparable hotel properties and a decrease of $3.2 million at the Hilton La Jolla Torrey Pines as a result of its sale on July 17, 2024. These decreases were partially offset by an aggregate increase of $1.3 million at The Ritz-Carlton St. Thomas, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, Pier House Resort & Spa and Hotel Yountville. 
 Other Hotel Revenue . Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, increased $664,000, or 3.2%, to $21.2 million during the 2024 quarter compared to the 2023 quarter. This increase is attributable to an aggregate increase in other hotel revenue of $2.6 million at 11 comparable hotel properties, partially offset by an aggregate decrease of $583,000 at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton St. Thomas, Park Hyatt Beaver Creek Resort & Spa, and Pier House Resort & Spa, as well as a decrease of $1.4 million at Hilton La Jolla Torrey Pines. 
 Rooms Expense . Rooms expense decreased $351,000, or 1.4%, to $25.5 million in the 2024 quarter compared to the 2023 quarter. This decrease is primarily attributable to an aggregate decrease of $665,000 at five comparable hotel properties as well as a decrease of $1.1 million at Hilton La Jolla Torrey Pines, partially offset by an aggregate increase of $1.4 million at The Ritz-Carlton Lake Tahoe, Capital Hilton, Marriott Seattle Waterfront, The Notary Hotel, Sofitel Chicago Magnificent Mile, Park Hyatt Beaver Creek Resort & Spa, The Ritz-Carlton St. Thomas, Cameo Beverly Hills, Four Seasons Resort Scottsdale, and Pier House Resort & Spa. 
 Food and Beverage Expense . Food and beverage expense decreased $752,000, or 2.3%, to $32.0 million during the 2024 quarter compared to the 2023 quarter. This decrease is attributable to an aggregate decrease of $306,000 at six comparable hotel properties as well as a decrease of $1.7 million at Hilton La Jolla Torrey Pines, partially offset by an aggregate increase of $1.2 million at the Marriott Seattle Waterfront, The Ritz-Carlton St. Thomas, Capital Hilton, The Ritz-Carlton Sarasota, Sofitel Chicago Magnificent Mile, Park Hyatt Beaver Creek Resort & Spa, The Notary Hotel, The Clancy, and Pier House Resort & Spa. 
 Other Operating Expenses . Other operating expenses decreased $1.4 million, or 2.7%, to $51.3 million in the 2024 quarter compared to the 2023 quarter. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees. 
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 We experienced an increase of $219,000 in direct expenses and a decrease of $1.6 million in indirect expenses and incentive management fees in the 2024 quarter as compared to the 2023 quarter. Direct expenses were 4.9% of total hotel revenue in the 2024 quarter and 4.4% in the 2023 quarter. 
 The decrease in indirect expenses comprises decreases in: (i) general and administrative costs of $540,000 comprising an aggregate increase of $71,000 at our 15 comparable hotel properties and a decrease of $611,000 at the one disposed hotel property; (ii) repairs and maintenance of $109,000 comprising an aggregate increase of $147,000 at our 15 comparable hotel properties and a decrease of $256,000 at the one disposed hotel property; (iii) lease expense of $903,000 comprising an aggregate increase of $60,000 at our 15 comparable hotel properties and a decrease of $963,000 at the one disposed hotel property; (iv) incentive management fees of $252,000 comprising an aggregate decrease of $140,000 at our 15 comparable hotel properties and a decrease of $112,000 at the one disposed hotel property; and (v) energy costs of $293,000 comprising an aggregate increase of $185,000 at our 15 comparable hotel properties and a decrease of $478,000 at the one disposed hotel property. The decreases were partially offset by an increase in marketing costs of $448,000 comprising an aggregate increase of $1.0 million at our 15 comparable hotel properties and a decrease of $600,000 at the one disposed hotel property. 
 Management Fees . Base management fees decreased $207,000, or 4.1%, to $4.9 million in the 2024 quarter compared to the 2023 quarter. Base management fees decreased by $249,000 at seven comparable hotel properties and by $349,000 at the one disposed hotel property. These decreases were partially offset by an aggregate increase of $391,000 at The Notary Hotel, Capital Hilton, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, The Ritz-Carlton Sarasota, Four Seasons Resort Scottsdale, and Park Hyatt Beaver Creek Resort & Spa. 
 Property Taxes, Insurance and Other . Property taxes, insurance and other decreased $486,000, or 4.6%, to $10.0 million in the 2024 quarter compared to the 2023 quarter. The decrease is primarily attributable to an aggregate decrease of approximately $1.1 million at eight comparable hotel properties as well as a decrease of $634,000 at the one disposed hotel property. These increases were partially offset by an aggregate increase of approximately $1.2 million primarily at the Sofitel Chicago Magnificent Mile, The Clancy, Cameo Beverly Hills, Marriott Seattle Waterfront, Four Seasons Resort Scottsdale, Capital Hilton, and Hotel Yountville. 
 Depreciation and Amortization . Depreciation and amortization increased $2.4 million, or 10.5%, to $25.1 million in the 2024 quarter compared to the 2023 quarter. There was an aggregate increase of $4.3 million at 12 comparable hotel properties, partially offset by an aggregate decrease of $1.0 million at The Notary Hotel, The Clancy, and Pier House Resort & Spa, primarily due to fully depreciated assets, as well as a decrease of $873,000 at the one disposed hotel property. 
 Advisory Services Fee. Advisory services fee increased $1.6 million, or 22.9%, to $8.6 million in the 2024 quarter compared to the 2023 quarter due to increases of $1.5 million in the incentive fee, $1.2 million in reimbursable expenses, and $112,000 in the base advisory fee, partially offset by a decrease of $1.2 million in equity-based compensation. 
 In the 2024 quarter, we recorded an advisory services fee of $8.6 million, which included a base advisory fee of $3.5 million, reimbursable expenses of $3.2 million, incentive fee of $1.5 million and equity-based compensation of $427,000. 
 In the 2023 quarter, we recorded an advisory services fee of $7.0 million, which included a base advisory fee of $3.4 million, reimbursable expenses of $2.0 million and $1.6 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. 
 Corporate General and Administrative . Corporate general and administrative expense was $8.9 million in the 2024 quarter as compared to $2.5 million in the 2023 quarter. The increase in corporate general and administrative expense is due to increases of professional fees of $776,000, miscellaneous expenses of $415,000, public company costs of $97,000 and reimbursed legal costs of $6.0 million recorded in the 2024 quarter, partially offset by a decrease of reimbursed operating expenses of Ashford Securities of $921,000. 
 Gain (loss) on disposition of assets and hotel property . In the 2024 quarter, we recorded a gain of approximately $88.2 million related to the sale of Hilton La Jolla Torrey Pines. There was no such gain (loss) recorded for 2023 quarter. 
 Equity in Earnings (Loss) of Unconsolidated Entity . In the 2024 quarter and 2023 quarter, we recorded equity in loss of unconsolidated entity of $80,000 and $60,000, respectively, related to our investment in OpenKey. 
 Interest Income . Interest income was $2.7 million and $1.0 million in the 2024 quarter and 2023 quarter, respectively. The increase in interest income in the 2024 quarter was primarily attributable to higher cash balances in the 2024 quarter compared to the 2023 quarter as well as interest income associated with a tranche of CMBS included in investment in securities. 
 Other Income (Expense). In the 2023 quarter, we recorded $293,000 of miscellaneous income. 
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 Interest Expense and Amortization of Loan Costs . Interest expense and amortization of loan costs increased $4.6 million, or 19.8%, to $27.9 million in the 2024 quarter compared to the 2023 quarter. This increase is primarily due to higher interest expense from higher average interest rates. The average SOFR rates for the 2024 quarter and the 2023 quarter were 5.17% and 5.08%, respectively. 
 Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $5.3 million in the 2024 quarter, primarily related to various loan refinances and modifications. Write-off of loan costs and exit fees was $2.6 million in the 2023 quarter, primarily related to various loan modifications and costs associated with the $200 million secured credit facility. 
 Realized and Unrealized Gain (Loss) on Derivatives . Realized and unrealized loss on derivatives of $735,000 for 2024 quarter consisted of an unrealized loss on interest rate caps of approximately $1.7 million, partially offset by a realized gain of $1.0 million associated with payments received from counterparties on in-the-money interest rate caps. 
 Realized and unrealized gain on derivatives of $223,000 for 2023 quarter consisted of an unrealized gain on warrants of approximately $154,000 and a realized gain of $2.0 million associated with payments received from counterparties on in-the-money interest rate caps. These gains were partially offset by an unrealized loss on interest rate caps of approximately $1.9 million. 
 Income Tax (Expense) Benefit . Income tax benefit decreased $326,000, from $1.2 million in the 2023 quarter to $864,000 in the 2024 quarter. This decrease was primarily due to an increase in the valuation allowance on certain of our TRS deferred tax assets in the 2024 quarter compared to the 2023 quarter. 
 (Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities. Our noncontrolling interest partner in consolidated entities was allocated income of $27.4 million and $1.8 million in the 2024 quarter and the 2023 quarter, respectively. The allocated income for the 2024 quarter includes our partner’s share of gain on the sale of the Hilton La Jolla Torrey Pines. At September 30, 2024, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity. At September 30, 2023, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity. 
 Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $124,000 and $2.4 million in the 2024 quarter and the 2023 quarter, respectively. Redeemable noncontrolling interests in Braemar OP represented ownership interests of 8.05% and 6.63% as of September 30, 2024 and 2023, respectively. 
 43 

 
 
 

 Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023 
 The following table summarizes changes in key line items from our condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 (in thousands except percentages): 
 
 Nine Months Ended September 30, Favorable (Unfavorable) 
 2024 2023 $ Change % Change 
 Revenue 
 Rooms $ 347,206 $ 355,402 $ (8,196) (2.3) % 
 Food and beverage 135,891 138,541 (2,650) (1.9) 
 
 Other 71,967 67,866 4,101 6.0 
 Total hotel revenue 555,064 561,809 (6,745) (1.2) 
 
 
 Expenses 
 Hotel operating expenses: 
 Rooms 81,288 79,962 (1,326) (1.7) 
 Food and beverage 109,379 108,854 (525) (0.5) 
 Other expenses 169,531 171,317 1,786 1.0 
 Management fees 17,913 17,661 (252) (1.4) 
 Total hotel operating expenses 378,111 377,794 (317) (0.1) 
 Property taxes, insurance and other 30,740 27,983 (2,757) (9.9) 
 Depreciation and amortization 75,192 67,791 (7,401) (10.9) 
 Advisory services fee 23,155 23,183 28 0.1 
 
 
 
 Corporate general and administrative 11,105 9,222 (1,883) (20.4) 
 Total expenses 518,303 505,973 (12,330) (2.4) 
 Gain (loss) on disposition of assets and hotel property 
 88,210 — 88,210 
 Operating income (loss) 124,971 55,836 69,135 123.8 
 Equity in earnings (loss) of unconsolidated entity (214) (208) (6) (2.9) 
 Interest income 4,528 5,389 (861) (16.0) 
 Other income (expense) — 293 (293) (100.0) 
 Interest expense and amortization of discounts and loan costs (81,687) (69,779) (11,908) (17.1) 
 Write-off of loan costs and exit fees (6,095) (2,848) (3,247) (114.0) 
 
 Gain (loss) on extinguishment of debt (22) 2,318 (2,340) (100.9) 
 Realized and unrealized gain (loss) on derivatives 523 918 (395) (43.0) 
 Income (loss) before income taxes 42,004 (8,081) 50,085 619.8 
 Income tax (expense) benefit (474) (1,064) 590 55.5 
 Net income (loss) 41,530 (9,145) 50,675 554.1 
 (Income) loss attributable to noncontrolling interest in consolidated entities (26,317) (1,715) (24,602) (1,434.5) 
 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 1,747 3,018 (1,271) (42.1) 
 Net income (loss) attributable to the Company $ 16,960 $ (7,842) $ 24,802 316.3 % 

 
 All hotel properties owned for the nine months ended September 30, 2024 and 2023 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the nine months ended September 30, 2024 and 2023. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following disposition affects reporting comparability related to our condensed consolidated financial statements: 
 
 Hotel Property Location Type Date 
 
 Hilton La Jolla Torrey Pines 
 La Jolla, California 
 Disposition 
 July 17, 2024 

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 The following table illustrates the key performance indicators of all hotel properties that were included in our results of operations during the nine months ended September 30, 2024 and 2023: 
 
 Nine Months Ended September 30, 
 2024 2023 
 Occupancy 68.91 % 68.06 % 
 ADR (average daily rate) $ 446.95 $ 453.87 
 RevPAR (revenue per available room) $ 308.00 $ 308.88 
 Rooms revenue (in thousands) $ 347,206 $ 355,402 
 Total hotel revenue (in thousands) $ 555,064 $ 561,809 

 The following table illustrates the key performance indicators of the 15 hotel properties that were owned for the full nine months ended September 30, 2024 and 2023: 
 
 Nine Months Ended September 30, 
 2024 2023 
 Occupancy 68.16 % 66.77 % 
 ADR (average daily rate) $ 463.81 $ 478.22 
 RevPAR (revenue per available room) $ 316.13 $ 319.31 
 Rooms revenue (in thousands) $ 331,705 $ 333,050 
 Total hotel revenue (in thousands) $ 527,163 $ 523,840 

 
 Net Income Attributable to the Company. Net income (loss) attributable to the Company changed $24.8 million from a net loss of $7.8 million for the nine months ended September 30, 2023 (the “2023 period”) to net income of $17.0 million for the nine months ended September 30, 2024 (the “2024 period”), as a result of the factors discussed below. 
 Rooms Revenue . Rooms revenue decreased $8.2 million to $347.2 million during the 2024 period compared to the 2023 period. During the 2024 period, we experienced a 85 basis point increase in occupancy and a decrease of 1.5% in room rates compared to the 2023 period. 
 Fluctuations in rooms revenue between the 2024 period and the 2023 period are a result of the changes in occupancy and ADR between the 2024 period and the 2023 period as reflected in the table below (dollars in thousands): 
 
 Hotel Property Favorable (Unfavorable) 
 Rooms Revenue Occupancy 
(change in bps) ADR
(change in %) 
 Comparable 
 Capital Hilton (1) (2) 
 $ 3,881 471 5.0 % 
 Marriott Seattle Waterfront 
 1,601 193 3.9 % 
 The Notary Hotel 1,936 501 1.7 % 
 The Clancy 
 (1,307) (299) (1.5) % 
 Sofitel Chicago Magnificent Mile 1,718 238 5.0 % 
 Pier House Resort & Spa (1,240) (308) (3.1) % 
 The Ritz-Carlton St. Thomas (2,378) (262) (3.0) % 
 Park Hyatt Beaver Creek Resort & Spa (989) 144 (7.9) % 
 Hotel Yountville (809) 3 (9.1) % 
 The Ritz-Carlton Sarasota (1) (2) 
 769 285 (2.1) % 
 Bardessono Hotel and Spa (1) 
 (1,439) (482) (4.9) % 
 The Ritz-Carlton Lake Tahoe (1) (2) 
 (933) (270) — % 
 Cameo Beverly Hills 
 (1,784) (498) (13.9) % 
 The Ritz-Carlton Reserve Dorado Beach (1,069) (311) 2.1 % 
 Four Seasons Resort Scottsdale 698 634 (10.1) % 
 Total $ (1,345) 139 (3.0) % 
 Non-comparable 
 Hilton La Jolla Torrey Pines (6,851) (148) (2.6) % 
 

 ________ 
 (1) This hotel was under renovation during the 2024 period. 
 (2) This hotel was under renovation during the 2023 period. 
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 Food and Beverage Revenue . Food and beverage revenue decreased $2.7 million, or 1.9%, to $135.9 million during the 2024 period compared to the 2023 period. We experienced an aggregate decrease in food and beverage revenue of $6.1 million at seven comparable hotel properties as well as a decrease of $1.7 million at Hilton La Jolla Torrey Pines. These decreases were partially offset by an aggregate increase of approximately $5.2 million at Four Seasons Resort Scottsdale, The Ritz-Carlton St. Thomas, The Notary Hotel, Sofitel Chicago Magnificent Mile, Marriott Seattle Waterfront, The Clancy, Hotel Yountville, and Pier House Resort & Spa. 
 Other Hotel Revenue . Other hotel revenue, which consists mainly of condo management fees, health center fees, resort fees, golf, telecommunications, parking and rentals, increased $4.1 million, or 6.0%, to $72.0 million during the 2024 period compared to the 2023 period. This increase is attributable to higher other hotel revenue of $6.8 million at 12 comparable hotel properties. These increases were partially offset by an aggregate decrease of approximately $1.3 million at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton Lake Tahoe, and The Ritz-Carlton St. Thomas, as well as a decrease of $1.5 million at Hilton La Jolla Torrey Pines. 
 Rooms Expense . Rooms expense increased $1.3 million, or 1.7%, to $81.3 million in the 2024 period compared to the 2023 period. This increase is attributable to an aggregate increase in rooms expense of $2.9 million at nine comparable hotel properties. These increases were partially offset by an aggregate decrease of approximately $669,000 at the Hotel Yountville, The Ritz-Carlton St. Thomas, The Clancy, Park Hyatt Beaver Creek Resort & Spa, Bardessono Hotel and Spa, and Cameo Beverly Hills, as well as a decrease of $951,000 at Hilton La Jolla Torrey Pines. 
 Food and Beverage Expense . Food and beverage expense increased $525,000, or 0.5%, to $109.4 million during the 2024 period compared to the 2023 period. This increase is attributable to higher food and beverage expense of $3.9 million at ten comparable hotel properties. These increases were partially offset by an aggregate decrease of approximately $2.2 million at The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, Bardessono Hotel and Spa, Park Hyatt Beaver Creek Resort & Spa, and The Ritz-Carlton Reserve Dorado Beach, as well as a decrease of $1.2 million at Hilton La Jolla Torrey Pines. 
 Other Operating Expenses . Other operating expenses decreased $1.8 million, or 1.0%, to $169.5 million in the 2024 period compared to the 2023 period. Other operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees. 
 We experienced an increase of $808,000 in direct expenses and a decrease of $2.6 million in indirect expenses and incentive management fees in the 2024 period compared to the 2023 period. Direct expenses were 4.5% of total hotel revenue in the 2024 period and 4.3% in the 2023 period. 
 The increase in direct expenses is associated with higher direct expenses of approximately $1.5 million at eight comparable hotel properties. These increases were partially offset by lower direct expenses of $434,000 at The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, Hotel Yountville, The Clancy, The Notary Hotel, and Capital Hilton, as well as $238,000 at Hilton La Jolla Torrey Pines. 
 The decrease in indirect expenses comprises decreases in: (i) incentive management fees of $1.4 million comprising an aggregate decrease of $1.4 million at our 15 comparable hotel properties and an increase of $3,000 at the one disposed hotel property; (ii) lease expense of $1.4 million comprising an aggregate decrease of $35,000 at our 15 comparable hotel properties and a decrease of $1.3 million at the one disposed hotel property; (iii) general and administrative costs of $1.1 million comprising an aggregate decrease of $536,000 at our 15 comparable hotel properties and a decrease of $529,000 at the one disposed hotel property; and (iv) energy costs of $812,000 comprising an aggregate decrease of $318,000 at our 15 comparable hotel properties and a decrease of $494,000 at the one disposed hotel property. These decreases were partially offset by increases in: (i) repairs and maintenance of $1.0 million comprising an aggregate increase of $1.2 million at our 15 comparable hotel properties and a decrease of $206,000 at the one disposed hotel property; and (ii) marketing costs of $989,000 comprising an aggregate increase of $1.6 million at our 15 comparable hotel properties and a decrease of $583,000 at the one disposed hotel property. 
 Management Fees . Base management fees increased $252,000, or 1.4%, to $17.9 million in the 2024 period compared to the 2023 period. Management fees increased $1.0 million at six comparable hotel properties. These increases were partially offset by an aggregate decrease of $486,000 at The Ritz-Carlton Lake Tahoe, Cameo Beverly Hills, The Ritz-Carlton Reserve Dorado Beach, The Ritz-Carlton St. Thomas, Bardessono Hotel and Spa, The Clancy, Pier House Resort & Spa, Park Hyatt Beaver Creek Resort & Spa, and Hotel Yountville, as well as a decrease of $302,000 at Hilton La Jolla Torrey Pines. 
 Property Taxes, Insurance and Other . Property taxes, insurance and other increased $2.8 million, or 9.9%, to $30.7 million in the 2024 period compared to the 2023 period. This increase is primarily attributable to an increase of $2.4 million at the Sofitel Chicago Magnificent Mile related to a property tax refund received in the 2023 quarter and an aggregate increase of 
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 $2.6 million at 12 hotel properties. These increases were partially offset by an aggregate decrease of approximately $1.8 million at two hotel properties, as well as a decrease of $417,000 at Hilton La Jolla Torrey Pines. 
 Depreciation and Amortization . Depreciation and amortization increased $7.4 million, or 10.9%, to $75.2 million for the 2024 period compared to the 2023 period. This increase is comprised of an aggregate increase of $11.0 million at 11 comparable hotel properties. These increases were partially offset by an aggregate decrease of $2.8 million at The Notary Hotel, The Clancy, Pier House Resort & Spa, and Sofitel Chicago Magnificent Mile, primarily due to fully depreciated assets, as well as a decrease of $795,000 at Hilton La Jolla Torrey Pines. 
 Advisory Services Fee. Advisory services fee decreased $28,000, or 0.1%, to $23.2 million in the 2024 period compared to the 2023 period due to lower equity-based compensation of $4.0 million and base advisory fee of $532,000, partially offset by higher reimbursable expenses of $2.4 million and a higher incentive fee of $2.1 million. 
 In the 2024 period, we recorded an advisory services fee of $23.2 million, which included a base advisory fee of $10.2 million, reimbursable expenses of $8.5 million, $2.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and an incentive fee of $2.1 million. 
 In the 2023 period, we recorded an advisory services fee of $23.2 million, which included a base advisory fee of $10.7 million, $6.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc, and reimbursable expenses of $6.1 million. 
 Corporate General and Administrative . Corporate general and administrative expense was $11.1 million in the 2024 period compared to expense of $9.2 million in the 2023 period. The increase in corporate general and administrative expenses is primarily attributable to higher professional fees of $5.1 million and $6.0 million of reimbursed legal costs in the 2024 period. These increases were partially offset by lower miscellaneous expenses of $268,000, lower public company costs of $215,000. and lower reimbursed operating expenses of Ashford Securities of $8.8 million. The decrease in Ashford Securities reimbursed operations expenses was related to a revision to the estimated contribution amount associated with the Fourth Amended and Restated Contribution Agreement with Ashford Securities that resulted in a $5.6 million credit to expense in 2024. 
 Gain (loss) on disposition of assets and hotel property . In the 2024 period, we recorded a gain of approximately $88.2 million related to the sale of Hilton La Jolla Torrey Pines. There was no such gain (loss) recorded for the 2023 period. 
 Equity in Earnings (Loss) of Unconsolidated Entity . In the 2024 period and the 2023 period, we recorded equity in loss of unconsolidated entity of $214,000 and $208,000, respectively, related to our investment in OpenKey. 
 Other Income (Expense). In the 2023 period, we recorded $293,000 of miscellaneous income. 
 Interest Income . Interest income was $4.5 million and $5.4 million in the 2024 period and the 2023 period, respectively. The decrease in interest income in the 2024 period was primarily attributable to lower average excess cash balances in the 2024 period compared to the 2023 period, partially offset by interest income associated with a tranche of CMBS included in investment in securities. 
 Interest Expense and Amortization of Discounts and Loan Costs . Interest expense and amortization of discounts and loan costs increased $11.9 million, or 17.1%, to $81.7 million for the 2024 period compared to the 2023 period. The increase is primarily due to higher interest expense from higher average interest rates in the 2024 period. The average SOFR rates for the 2024 period and the 2023 period were 5.27% and 4.78%, respectively. 
 Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees was $6.1 million in the 2024 period related to various loan refinances and modifications. Write-off of loan costs and exit fees was $2.8 million in the 2023 period related to related to various loan modifications. 
 Gain (loss) on Extinguishment of Debt. In the 2024 period, we recognized a loss of $22,000 attributable to the discount associated with the Cameo Beverly Hills mortgage loan that was repaid on April 9, 2024. Gain on extinguishment of debt was $2.3 million in the 2023 period due to the payoff of The Ritz-Carlton Reserve Dorado Beach mortgage loan. The gain was primarily attributable to the premium that was recorded upon the assumption of the mortgage loan when the hotel was acquired. 
 Realized and Unrealized Gain (Loss) on Derivatives . Realized and unrealized gain on derivatives of $523,000 for the 2024 period consisted of an unrealized gain on warrants of $12,000 and a realized gain of $4.2 million associated with payments received from counterparties on in-the-money interest rate caps, partially offset by an unrealized loss on interest rate caps of approximately $3.7 million. 
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 Realized and unrealized gain on derivatives of $918,000 for the 2023 period consisted of unrealized gain on warrants of $273,000 and a realized gain of $6.2 million associated with payments received from counterparties on in-the-money interest rate caps. These gains were partially offset by an unrealized loss on interest rate caps of approximately $5.5 million. 
 Income Tax (Expense) Benefit . Income tax expense decreased $590,000, from $1.1 million in the 2023 period to $474,000 in the 2024 period. This decrease was primarily due to a decrease in the taxable income of certain of our TRS entities in the 2024 period compared to the 2023 period. 
 (Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities . Our noncontrolling interest partner in consolidated entities was allocated income of $26.3 million and $1.7 million in the 2024 period and the 2023 period, respectively. The allocated income for the 2024 period includes our partner’s share of gain on the sale of the Hilton La Jolla Torrey Pines. At September 30, 2024, noncontrolling interest in consolidated entities represented an ownership interest of 25% in one hotel property held by one entity. At September 30, 2023, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity. 
 Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $1.7 million in the 2024 period and $3.0 million in the 2023 period. Redeemable noncontrolling interests represented ownership interests in Braemar OP of approximately 8.05% and 6.63% as of September 30, 2024 and 2023, respectively. 
 
 LIQUIDITY AND CAPITAL RESOURCES 
 Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our hotel properties, including: 
 • advisory fees payable to Ashford LLC; 
 • recurring maintenance necessary to maintain our hotel properties in accordance with brand standards; 
 • interest expense and scheduled principal payments on outstanding indebtedness; 
 • dividends on our common stock; 
 • dividends on our preferred stock; and 
 • capital expenditures to improve our hotel properties. 
 We expect to meet our short-term liquidity requirements generally through net cash provided by operations, capital market activities, asset sales and existing cash balances. 
 Pursuant to the advisory agreement between us and our Advisor, we must pay our Advisor on a monthly basis a base advisory fee, subject to a minimum base advisory fee. The minimum base advisory fee is equal to the greater of: (i) 90% of the base fee paid for the same month in the prior fiscal year; and (ii) 1/12 th of the “G&A Ratio” for the most recently completed fiscal quarter multiplied by our total market capitalization on the last balance sheet date included in the most recent quarterly report on Form 10-Q or annual report on Form 10-K that we file with the SEC. Thus, even if our total market capitalization and performance decline, we will still be required to make payments to our Advisor equal to the minimum base advisory fee, which could adversely impact our liquidity and financial condition. 
 Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotel properties and redevelopments, renovations, expansions and other capital expenditures that need to be made periodically with respect to our hotel properties and scheduled debt payments. We expect to meet our long-term liquidity requirements through various sources of capital, including future common and preferred equity issuances, existing working capital, net cash provided by operations, hotel mortgage indebtedness and other secured and unsecured borrowings. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity and market perceptions about us. The success of our business strategy will depend, in part, on our ability to access these various capital sources. While management cannot provide any assurances, management believes that our cash flow from operations and our existing cash balances will be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity principal payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes. 
 Our hotel properties will require periodic capital expenditures and renovation to remain competitive. In addition, acquisitions, redevelopments or expansions of hotel properties may require significant capital outlays. We may not be able to 
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 fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions or hotel redevelopment through retained earnings is very limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations and prospects could be materially and adversely affected. 
 Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotel properties declines. When these provisions are triggered, substantially all of the profit generated by the hotel properties securing such loan is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders. This could affect our liquidity and our ability to make distributions to our stockholders until such time that a cash trap is no longer in effect for such loan. These cash trap provisions have been triggered on one mortgage loan, as discussed below. Our loan that is in a cash trap may remain subject to the cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT. As of September 30, 2024, the mortgage loan secured by The Ritz-Carlton Lake Tahoe was in a cash trap. The amount of cash in the cash trap as of September 30, 2024 was $0. 
 
 As of September 30, 2024, the Company held cash and cash equivalents of $168.7 million and restricted cash of $48.5 million, the vast majority of which is comprised of lender and manager-held reserves. As of September 30, 2024, $19.9 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. At September 30, 2024, our net debt to gross assets was 41.0%. 
 The Company’s cash and cash equivalents are primarily comprised of corporate cash invested in short-term U.S. Treasury securities with maturity dates of less than 90 days and corporate cash held at commercial banks in Insured Cash Sweep (“ICS”) accounts, which are fully insured by the FDIC. The Company’s cash and cash equivalents also includes property-level operating cash deposited with commercial banks that have been designated as a Global Systemically Important Bank (“G-SIB”) by the Financial Stability Board (“FSB”) and a small amount deposited with other commercial banks. 
 
 Equity Transactions 
 On November 13, 2019, we filed an initial registration statement with the SEC, as amended on January 24, 2020, for shares of our non-traded Series E Redeemable Preferred Stock (the “Series E Preferred Stock”) and our non-traded Series M Redeemable Preferred Stock (the “Series M Preferred Stock”). The registration statement became effective on February 21, 2020, and contemplates the issuance and sale of up to 20,000,000 shares of Series E Preferred Stock or Series M Preferred Stock in a primary offering and up to 8,000,000 shares of Series E Preferred Stock or Series M Preferred Stock pursuant to a dividend reinvestment plan. On February 25, 2020, we filed our prospectus with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager and wholesaler of the Series E Preferred Stock and Series M Preferred Stock. On April 2, 2021, the Company filed with the State Department of Assessments and Taxation of the State of Maryland (the “SDAT”) articles supplementary to the Company’s Articles of Amendment and Restatement that provided for: (i) reclassifying the existing 28,000,000 shares of Series E Preferred Stock and 28,000,000 shares of Series M Preferred Stock as unissued shares of preferred stock; (ii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series E Preferred Stock (the “Series E Articles Supplementary”); and (iii) reclassifying and designating 28,000,000 shares of the Company’s authorized capital stock as shares of the Series M Preferred Stock (the “Series M Articles Supplementary”). The Series E Articles Supplementary and Series M Articles Supplementary were filed to revise the preferred stock terms related to the dividend rate, our optional redemption right and certain other voting rights. The Company also caused its operating partnership to execute Amendment No. 5 to the Third Amended and Restated Agreement of Limited Partnership to amend the terms of its operating partnership agreement to conform to the terms of the Series E Articles Supplementary and Series M Articles Supplementary. The Company issued approximately 16.4 million shares of Series E Preferred Stock and received net proceeds of approximately $369.5 million and issued approximately 2.0 million shares of Series M Preferred Stock and received net proceeds of approximately $47.6 million. On February 21, 2023, the Company announced the closing of its offering of the Series E Preferred Stock and Series M Preferred Stock. 
 On July 12, 2021, the Company entered into an equity distribution agreement (the “Virtu July 2021 EDA”) with Virtu to sell from time to time shares of our common stock having an aggregate offering price of up to $100 million. We will pay Virtu a commission of approximately 1.0% of the gross sales price of the shares of our common stock sold. The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale. As of November 6, 2024, the Company has sold approximately 4.7 million shares of common stock under the Virtu July 2021 EDA and received gross proceeds of approximately $24.0 million. 
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 On May 3, 2024, our 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. The Company intends to begin share repurchases as soon as practicable and may repurchase shares through open market transactions, privately negotiated transactions or other means. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions, and the program may be suspended or terminated at any time by the Company at its discretion without prior notice. The board of directors’ authorization replaced any previous repurchase authorizations. As of September 30, 2024, the Company has not repurchased any common stock pursuant to the plan. 
 
 Debt Transactions 
 On January 3, 2024, the Company extended the mortgage loan secured by the Pier House Resort & Spa in Key West, Florida. The mortgage loan has an initial maturity date of September 2025 with one one-year extension option, subject to the satisfaction of certain conditions, continues to have a balance of $80.0 million, and bears interest at a floating interest rate of SOFR + 3.60%. 
 On January 29, 2024, the Company extended the mortgage loan secured by The Ritz-Carlton St. Thomas in St. Thomas, USVI. The mortgage loan has an initial maturity date of August 2025 with one one-year extension option, subject to the satisfaction of certain conditions, continues to have a balance of $42.5 million, and bears interest at a floating interest rate of SOFR + 4.35%. 
 On February 5, 2024, the Company amended the mortgage loan secured by the Hilton La Jolla Torrey Pines. At the time, the hotel property remained encumbered by the original mortgage loan, which had been partially paid down to a remaining balance of $66.6 million. The lender also provided a six-month extension. The mortgage loan bore an annual fixed interest rate of 9.0%. 
 On March 7, 2024, the Company closed on a $62.0 million non-recourse loan secured by the Ritz-Carlton Reserve Dorado Beach. The mortgage loan has a two-year term, is interest only and provides for a floating interest rate of SOFR + 4.75%. 
 In April 2024, the Company repaid the $30.0 million mortgage loan secured by the Cameo Beverly Hills hotel. 
 On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines 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. 
 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 a tranche of CMBS with a par value of $42.2 million and a rate of SOFR + 5.20%. 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. Thomas. 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. 
 
 Sources and Uses of Cash 
 We had approximately $168.7 million and $85.6 million of cash and cash equivalents at September 30, 2024 and December 31, 2023, respectively. We anticipate that our principal sources of funds to meet our cash requirements will include cash on hand, positive cash flow from operations and capital market activities. 
 Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows provided by operating activities were $60.2 million and $73.0 million for the nine months ended September 30, 2024 and 2023, respectively. Cash flows from operations were impacted by changes in hotel operations and the disposition of a hotel property. Cash flows from operations are also impacted by the timing of working capital cash flows, such as collecting receivables from hotel guests, paying vendors, settling with derivative counterparties, settling with related parties and settling with hotel managers. 
 Net Cash Flows Provided by (Used in) Investing Activities . For the nine months ended September 30, 2024, net cash flows provided by investing activities were $52.7 million. The cash inflows were primarily attributable to $155.6 million from the 
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 sale of Hilton La Jolla Torrey Pines, partially offset by cash outflows of $42.3 million from the purchase of securities, $54.8 million of capital improvements made to various hotel properties, $5.8 million from the issuance of a note receivable and a $79,000 loan to OpenKey. Our capital improvements consisted of approximately $39.3 million of return on investment capital projects and approximately $15.5 million of renewal and replacement capital projects. 
 For the nine months ended September 30, 2023, net cash flows used in investing activities were $55.6 million. These cash outflows were primarily attributable to $55.6 million of capital improvements made to various hotel properties and a $237,000 loan to OpenKey partially offset by cash inflows of $327,000 related to proceeds from property insurance. Our capital improvements consisted of approximately $36.8 million of return on investment capital projects and approximately $18.8 million of renewal and replacement capital projects. 
 Return on investment capital projects are designed to improve the positioning of our hotel properties within their markets and competitive sets. Renewal and replacement capital projects are designed to maintain the quality and competitiveness of our hotels. 
 Net Cash Flows Provided by (Used in) Financing Activities. For the nine months ended September 30, 2024, net cash flows used in financing activities were $62.2 million. Cash outflows primarily consisted of $184.1 million of repayments of indebtedness, $39.0 million of dividend and distribution payments, $1.3 million to purchase interest rate caps, $15.4 million of payments of loan costs and exit fees, $27.0 million distributions to noncontrolling interest in consolidated entities, and $36.3 million for cash redemptions of Series E and Series M preferred stock. These cash outflows were partially offset by cash inflows of $234.0 million from borrowings on indebtedness, $4.4 million of proceeds from in-the-money interest rate caps and $3.0 million of contributions from noncontrolling interest in consolidated entities. 
 For the nine months ended September 30, 2023, net cash flows used in financing activities were $126.3 million. Cash outflows primarily consisted of repayments of indebtedness of $390.2 million, $39.4 million of dividend and distribution payments, $19.3 million of payments to repurchase common stock, payments of $7.2 million for the redemption of operating partnership units, $4.0 million to purchase interest rate caps, $2.0 million of distributions to a noncontrolling interest in consolidated entities, $3.3 million payments of loan costs and exit fees, and $4.8 million for cash redemptions of Series E and Series M preferred stock. These cash outflows were partially offset by cash inflows of $236.0 million from borrowings on indebtedness, $97.9 million from the issuance of preferred stock, $4.1 million of contributions from a noncontrolling interest in consolidated entities and $6.0 million of proceeds from in-the-money interest rate caps. 
 
 Dividend Policy 
 On December 5, 2023, our board of directors approved the Company’s dividend policy for 2024. The Company expects to pay a quarterly cash dividend of $0.05 per share for the Company’s common stock for 2024, or $0.20 per share on an annualized basis. On July 10, 2024, our board of directors declared a quarterly cash dividend of $0.05 per diluted share, for the third quarter of 2024. On October 3, 2024, our board of directors declared a quarterly cash dividend of $0.05 per diluted share, for the fourth quarter of 2024. The approval of our dividend policy does not commit our board of directors to declare future dividends with respect to any quantity or the amount thereof. The board of directors will continue to review our dividend policy on a quarter-to-quarter basis and make announcements with respect thereto. For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof. 
 
 Seasonality 
 Our properties’ operations historically have been seasonal as certain properties maintain higher occupancy rates during the summer months and some during the winter months. This seasonality pattern can cause fluctuations in our quarterly lease revenue under our percentage leases. Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as pandemics, extreme weather conditions, natural disasters, terrorist attacks or alerts, civil unrest, government shutdowns, airline strikes or reduced airline capacity, economic factors and other considerations affecting travel. To the extent that cash flows from operations and cash on hand are insufficient during any quarter due to temporary or seasonal fluctuations in lease revenue, we expect to utilize borrowings to fund distributions required to maintain our REIT status. However, we cannot make any assurances that we will make distributions in the future. 
 
 Critical Accounting Policies and Estimates 
 The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us 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. Our accounting policies that are critical 
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 or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K. There have been no material changes in these critical accounting policies. 
 
 Non-GAAP Financial Measures 
 The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO are presented to help our investors evaluate our operating performance. 
 EBITDA is defined as net income (loss) before interest expense and amortization of loan costs, depreciation and amortization, income taxes, equity in (earnings) loss of unconsolidated entity and after the Company’s portion of EBITDA of OpenKey. In addition, we exclude impairment on real estate, (gain) loss on disposition of assets and hotel property and the Company’s portion of EBITDAre of OpenKey from EBITDA to calculate EBITDA for real estate, or EBITDAre, as defined by NAREIT. 
 We then further adjust EBITDAre to exclude certain additional items such as amortization of favorable (unfavorable) contract assets (liabilities), transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, gain/loss on insurance settlements, advisory and settlement costs, advisory services incentive fee, gain/loss on extinguishment of debt, stock/unit-based compensation and the Company’s portion of adjustments to EBITDAre of OpenKey and non-cash items such as unrealized gain/ loss on derivatives. 
 We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they are useful to an investor in evaluating our operating performance because they provide investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe they help investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions. EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define the terms. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity. 
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 The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) (unaudited): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2024 2023 2024 2023 
 Net income (loss) $ 39,835 $ (22,611) $ 41,530 $ (9,145) 
 Interest expense and amortization of loan costs 27,911 23,306 81,687 69,779 
 Depreciation and amortization 25,078 22,703 75,192 67,791 
 Income tax expense (benefit) (864) (1,190) 474 1,064 
 Equity in (earnings) loss of unconsolidated entity 80 60 214 208 
 Company’s portion of EBITDA of OpenKey (76) (63) (215) (220) 
 EBITDA 
 91,964 22,205 198,882 129,477 
 
 (Gain) loss on disposition of assets and hotel property 
 (88,210) — (88,210) — 
 
 EBITDAre 3,754 22,205 110,672 129,477 
 Amortization of favorable (unfavorable) contract assets (liabilities) 109 119 346 356 
 Transaction and conversion costs 50 978 (5,524) 3,229 
 Write-off of premiums, loan costs and exit fees 5,292 2,588 6,095 2,848 
 Realized and unrealized (gain) loss on derivatives 735 (223) (523) (918) 
 Stock/unit-based compensation 427 1,627 2,689 6,854 
 Legal, advisory and settlement costs 6,539 — 11,356 81 
 Advisory services incentive fee 1,464 — 2,112 — 
 (Gain) loss on extinguishment of debt — — 22 (2,318) 
 Other (income) expense 
 — (293) — (293) 
 
 Severance 
 102 — 102 — 
 
 
 Company’s portion of adjustments to EBITDAre of OpenKey — — 3 — 
 Adjusted EBITDAre $ 18,472 $ 27,001 $ 127,350 $ 139,316 

 
 
 
 
 
 
 
 
 

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 FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on insurance settlement and disposition of assets, plus impairment charges on real estate, depreciation and amortization of real estate assets, and after redeemable noncontrolling interests in the operating partnership and adjustments for unconsolidated entities. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. Our calculation of Adjusted FFO excludes transaction and conversion costs, other income/expense, write-off of loan costs and exit fees, legal, advisory and settlement costs, advisory services incentive fee, stock/unit-based compensation, severance, gain/loss on insurance settlements, gain/loss on extinguishment of debt, and non-cash items such as deemed dividends on redeemable preferred stock, interest expense accretion on refundable membership club deposits, amortization of loan costs, unrealized gain/loss on derivatives and the Company’s portion of adjustments to FFO of OpenKey. FFO and Adjusted FFO exclude amounts attributable to the portion of a partnership owned by the third party. We present FFO and Adjusted FFO because we consider FFO and Adjusted FFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and Adjusted FFO when reporting their results. FFO and Adjusted FFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and Adjusted FFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and Adjusted FFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. We consider FFO and Adjusted FFO to be appropriate measures of our ongoing normalized operating performance as a REIT. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than us. FFO and Adjusted FFO do not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to GAAP net income or loss as an indication of our financial performance or GAAP cash flows from operating activities as a measure of our liquidity. FFO and Adjusted FFO are also not indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in our condensed consolidated financial statements. 
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 The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands) (unaudited): 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2024 2023 2024 2023 
 Net income (loss) $ 39,835 $ (22,611) $ 41,530 $ (9,145) 
 (Income) loss attributable to noncontrolling interest in consolidated entities (27,363) (1,773) (26,317) (1,715) 
 Net (Income) loss attributable to redeemable noncontrolling interests in operating partnership 124 2,354 1,747 3,018 
 Preferred dividends (9,857) (10,582) (30,593) (31,809) 
 Deemed dividends on preferred stock 
 (4,151) (516) (6,175) (3,271) 
 
 Net income (loss) attributable to common stockholders (1,412) (33,128) (19,808) (42,922) 
 Depreciation and amortization on real estate (1) 
 24,255 21,886 72,131 65,434 
 Net income (loss) attributable to redeemable noncontrolling interests in operating partnership (124) (2,354) (1,747) (3,018) 
 Equity in (earnings) loss of unconsolidated entity 80 60 214 208 
 
 (Gain) loss on disposition of assets and hotel property (1) 
 (61,970) — (61,970) — 
 Company’s portion of FFO of OpenKey (91) (71) (253) (234) 
 FFO available to common stockholders and OP unitholders (39,262) (13,607) (11,433) 19,468 
 Deemed dividends on preferred stock 
 4,151 516 6,175 3,271 
 
 Transaction and conversion costs 50 978 (5,524) 3,229 
 Write-off of premiums, loan costs and exit fees 5,292 2,588 6,095 2,848 
 Unrealized (gain) loss on derivatives 1,746 1,790 3,698 5,244 
 Stock/unit-based compensation 427 1,627 2,689 6,854 
 Legal, advisory and settlement costs 6,539 — 11,356 81 
 Interest expense accretion on refundable membership club deposits 151 165 466 507 
 Amortization of loan costs (1) 
 1,741 858 4,268 2,258 
 Advisory services incentive fee 1,464 — 2,112 — 
 (Gain) loss on extinguishment of debt — — 22 (2,318) 
 Other (income) expense 
 — (293) — (293) 
 
 
 Severance 
 102 — 102 — 
 
 
 Company’s portion of adjustments to FFO of OpenKey — — 3 — 
 Adjusted FFO available to common stockholders and OP unitholders $ (17,599) $ (5,378) $ 20,029 $ 41,149 

 ____________________ 
 (1) Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for noncontrolling interests for each line item: 
 
 Three Months Ended September 30, Nine Months Ended September 30, 
 2024 2023 2024 2023 
 Depreciation and amortization on real estate $ (823) $ (817) $ (3,061) $ (2,357) 
 
 Amortization of loan costs (38) (23) (273) (70) 
 Gain (loss) on disposition of assets and hotel property 
 26,240 — 26,240 — 

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 The following table presents certain information related to our hotel properties as of September 30, 2024: 
 
 
 
 Hotel Property Location Total Rooms % Owned Owned Rooms 
 Fee Simple Properties 
 Capital Hilton Washington, D.C. 559 75 % 419 
 Marriott Seattle Waterfront Seattle, WA 369 100 % 369 
 The Notary Hotel Philadelphia, PA 499 100 % 499 
 The Clancy San Francisco, CA 410 100 % 410 
 Sofitel Chicago Magnificent Mile Chicago, IL 415 100 % 415 
 Pier House Resort & Spa Key West, FL 142 100 % 142 
 The Ritz-Carlton St. Thomas St. Thomas, USVI 180 100 % 180 
 Park Hyatt Beaver Creek Resort & Spa Beaver Creek, CO 193 100 % 193 
 Hotel Yountville Yountville, CA 80 100 % 80 
 The Ritz-Carlton Sarasota Sarasota, FL 276 100 % 276 
 The Ritz-Carlton Lake Tahoe (1) 
 Truckee, CA 170 100 % 170 
 Cameo Beverly Hills (2) 
 Los Angeles, CA 143 100 % 143 
 The Ritz-Carlton Reserve Dorado Beach (3) 
 Dorado, Puerto Rico 96 100 % 96 
 Four Seasons Resort Scottsdale Scottsdale, AZ 210 100 % 210 
 Ground Lease Property (4) 
 
 
 
 Bardessono Hotel and Spa (5) 
 Yountville, CA 65 100 % 65 
 Total 3,807 3,667 

 ________ 
 (1) The above information does not include the operations of the voluntary rental program with respect to condominium units not owned by the Company. 
 (2) Includes 138 hotel rooms and five residences adjacent to the hotel. On August 1, 2023, the Company announced the rebranding and planned conversion of its Mr. C Beverly Hills in Los Angeles, California to the Cameo Beverly Hills. Following an extensive renovation, which is expected to be completed by the end of 2025, the hotel will join LXR Hotels & Resorts. 
 (3) The above information does not include the operations of the voluntary rental program with respect to residential units not owned by the Company. 
 (4) Some of our hotel properties are on land subject to ground leases, one of which covers the entire property. 
 (5) The initial ground lease expires in 2065. The ground lease contains two 25-year extension options, at our election.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Braemar Hotels & Resorts Inc. 10-Q

Item 2. Management’s Discussion and Analysis
