What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-12 compared with 2024-03-14 · 516 added, 484 removed, 1371 unchanged (42% of the section changed)

34 unchanged sentences

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

Impairment of Investments in Hotel Properties

At December 31, 2023, the Company’s consolidated investments in hotel properties, net, totaled $1.9 billion.

As described in Notes 2 and 4 to the consolidated financial statements, the hotel properties are evaluated for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

Recoverability of a hotel property is measured by comparing the carrying amount of the hotel to its estimated future undiscounted cash flows.

If the carrying amount of the hotel is not recoverable, an impairment charge is recognized for the amount by which the hotel’s carrying amount exceeds its estimated fair value.

During 2023, the Company did not record any impairment charges.

We identified impairment of investments in hotel properties as a critical audit matter.

For investments in hotel properties where events or changes in circumstances indicated that the carrying amounts may not be recoverable, it is necessary for management to estimate the future undiscounted cash flows expected from the use and eventual disposition of the hotels.

Auditing the cash flows expected from the eventual disposition of the hotel properties included the involvement of professionals with specialized knowledge and skills.

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

• Evaluating the cash flows expected from the eventual disposition of the hotel properties.

Presentation of Commercial Mortgage-Backed Security

As described in Note 7 to the Company’s consolidated financial statements, on August 7, 2024, the Company refinanced two existing mortgage loans and a credit facility into a new $407 million mortgage loan.

The Company also purchased an investment in a tranche of Commercial Mortgage-Backed Securities (“CMBS”), which is secured by the five hotel properties which secure the $407 million mortgage loan.

The CMBS has a par value of $42.2 million and a rate of SOFR + 5.20%.

We identified the presentation of the mortgage loan, investment in the CMBS, as well as the corresponding interest expense and interest income, as a critical audit matter.

Auditing the presentation of the CMBS and related mortgage loan was especially challenging due to the inherent complexities of the agreements and relevant accounting literature.

Auditing the presentation

required an increased level of audit effort, including involvement of professionals with expertise in the relevant technical accounting literature.

The primary procedures we performed to address the critical audit matter included:

• Inspecting the underlying agreements for the CMBS and mortgage loan to understand the relevant terms.

• Utilizing personnel with expertise in the relevant technical accounting literature to evaluate the appropriate presentation of the mortgage loan, investment in the CMBS, interest expense and interest income.

/s/ BDO USA, P.C.

12 unchanged sentences

Restricted cash 49,592 80,904

Investment in securities (amortized cost of $ 42,279 )

Accounts receivable, net of allowance of $ 459 and $ 237 , respectively

1 unchanged sentence

Inventories 4,664 5,003

Note receivable 8,283 —

Prepaid expenses 5,116 9,938

5 unchanged sentences

Intangible assets, net 3,125 3,504

Due from related parties, net — 938

Due from third-party hotel managers 22,873 17,739

23 unchanged sentences

Additional paid-in capital 718,536 718,498

Accumulated other comprehensive income (loss)

Accumulated deficit ( 477,804 ) ( 412,199 )

24 unchanged sentences

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

Transaction costs — — 563

Corporate general and administrative 14,361 13,523 18,084

Total operating expenses 687,819 677,670 601,192

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

Gain (loss) on disposition of assets and hotel property

OPERATING INCOME (LOSS) 128,750 61,673 68,393

14 unchanged sentences

Deemed dividends on preferred stock ( 8,958 ) ( 4,719 ) ( 6,954 )

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

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 50,946 ) $ ( 74,040 ) $ ( 10,696 )

14 unchanged sentences

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Unrealized gain (loss) on investment in securities

Total other comprehensive income (loss) ( 744 ) — —

10 unchanged sentences

Preferred Stock

Accumulated Other Comprehensive Income/(loss)

Noncontrolling

7 unchanged sentences

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

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

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

2 unchanged sentences

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

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

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

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

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

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

Dividends declared – preferred stock - Series B ($ 1.38 /share)

7 unchanged sentences

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

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

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

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

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

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

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

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

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

2 unchanged sentences

Purchase of common stock — — ( 3,969 ) ( 40 ) ( 19,214 ) — — — ( 19,254 ) — — — — — — —

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

Equity-based compensation — — — — 3,564 — — — 3,564 — — — — — — 5,680

Issuance of common stock — — 6,000 60 34,944 — — 35,004 — — — — — — —

Issuance of preferred stock — — — — — — — — — — — 3,931 88,448 542 13,051 —

1 unchanged sentence

Forfeiture of restricted common shares — — ( 3 ) — — — — — — — — — — — — —

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

Dividends declared - common stock - $ 0.20 /share)

10 unchanged sentences

Distributions to noncontrolling interests — — — — — — — ( 3,724 ) ( 3,724 ) — — — — — — ( 1,444 )

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

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

Net income (loss) — — — — — ( 27,017 ) — 1,619 ( 25,398 ) — — — — — — ( 5,230 )

2 unchanged sentences

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

Balance at December 31, 2023 1,600 $ 16 66,636 $ 666 $ 718,498 $ ( 412,199 ) $ — $ ( 8,934 ) $ 298,047 3,078 $ 65,426 16,316 $ 377,035 1,833 $ 45,623 $ 32,395

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

Equity-based compensation — — — — 403 — — — 403 — — — — — — 2,208

Issuance of preferred stock — — — — — — — — — — — 130 3,260 6 143 —

8.25 % Series D Cumulative

Preferred Stock

Accumulated Other Comprehensive Income/(loss)

Noncontrolling

5 unchanged sentences

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance at December 31, 2022 1,600 $ 16 69,919 $ 699 $ 734,134 $ ( 324,740 ) $ ( 16,346 ) $ 393,763 3,078 $ 65,426 12,657 $ 291,076 1,428 $ 35,182 $ 40,555

Purchase of common stock — — ( 3,969 ) ( 40 ) ( 19,214 ) — — ( 19,254 ) — — — — — — —

Equity-based compensation — — — — 3,564 — — 3,564 — — — — — — 5,680

Issuance of preferred stock — — — — — — — — — — 3,931 88,448 542 13,051 —

Issuance of restricted shares/units — — 143 1 2 — — — 3 — — — — — — 32

12 unchanged sentences

Distributions to noncontrolling interests — — — — — — — ( 23,322 ) ( 23,322 ) — — — — — — ( 1,397 )

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

Net income (loss) — — — — — ( 1,693 ) — 25,928 24,235 — — — — — — ( 4,472 )

Redemptions of preferred stock — — — — — — — — — — — ( 1,535 ) ( 36,554 ) ( 362 ) ( 9,047 ) —

Unrealized gain (loss) on investment in securities

— — — — — — ( 684 ) — ( 684 ) — — — — — — ( 60 )

Redemption value adjustment - preferred stock — — — — — ( 8,958 ) — — ( 8,958 ) — — — 8,761 — 197 —

20 unchanged sentences

Interest expense accretion on refundable membership club deposits 616 671 723

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

(Gain) loss on disposition of assets and hotel property

( 88,165 ) — —

Realized and unrealized (gain) loss on derivatives ( 585 ) 663 ( 4,961 )

Non-cash interest income

Equity in (earnings) loss of unconsolidated entity 1,608 253 328

Deferred income tax expense (benefit) ( 96 ) 1,329 51

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

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

Accounts receivable and inventories 6,260 11,264 ( 9,088 )

11 unchanged sentences

Proceeds from property insurance 958 361 36

Net proceeds from disposition of assets — — 1,816

Proceeds from hotel management agreement amendment

Issuance of note receivable

( 8,076 ) — —

Payments for initial franchise fee — ( 75 ) —

Acquisition of hotel properties, net of cash and restricted cash acquired

— — ( 354,445 )

Net proceeds from sale of hotel property

Purchase of securities

( 42,279 ) — —

Investment in unconsolidated entity ( 79 ) ( 238 ) ( 328 )

10 unchanged sentences

Net proceeds from issuance of preferred stock — 97,862 278,621

Proceeds from issuance of common stock — — 102,461

Common stock offering costs — — ( 112 )

Contributions from noncontrolling interest in consolidated entities 2,961 9,517 164

Year Ended December 31,

2024 2023 2022

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

3 unchanged sentences

Net change in cash, cash equivalents and restricted cash

18,554 ( 149,193 ) 52,322

Cash, cash equivalents and restricted cash at beginning of period 166,503 315,696 263,374

Cash, cash equivalents and restricted cash at end of period

Year Ended December 31,

$ 185,057 $ 166,503 $ 315,696

5 unchanged sentences

Common stock purchases accrued but not paid — — 54

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

Issuance of warrants in hotel acquisition — — 1,528

Assumption of debt in hotel acquisition — — 58,601

1 unchanged sentence

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

Non-cash extinguishment of preferred stock — — 41,523

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

Issuance of common stock from preferred stock exchange — — 46,118

Accrued common stock offering expense — — 76

Accrued preferred stock offering expenses — — 23

2 unchanged sentences

Unsettled proceeds from derivatives 113 361 330

Non-cash PSU dividends

Non-cash common stock/unit dividends

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

5 unchanged sentences

Cash, cash equivalents and restricted cash at end of period

$ 185,057 $ 166,503 $ 315,696

See Notes to Consolidated Financial Statements.

25 unchanged sentences

Virgin Islands (“USVI”).

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

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

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

4 unchanged sentences

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

As of December 31, 2023, 13 of the 16 hotel properties were leased by Braemar’s wholly-owned TRS, and the two hotel properties majority-owned through a consolidated partnership were leased to a TRS wholly-owned by such consolidated partnership.

As of December 31, 2024, 13 of the 15 hotel properties were leased by Braemar’s wholly-owned TRS, and the one hotel property majority-owned through a consolidated partnership was leased to a TRS wholly-owned by such consolidated partnership.

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

15 unchanged sentences

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

• On August 4, 2021, we acquired the Cameo Beverly Hills (formerly known as “Mr.

Beverly Hills Hotel”) and five adjacent luxury residences.

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

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

2 unchanged sentences

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

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

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

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

11 unchanged sentences

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

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

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

Replacements and improvements and finance leases are capitalized, while repairs and maintenance are expense as incurred.

56 unchanged sentences

The carrying value of the noncontrolling interests in the operating partnership is based on the greater of the accumulated historical cost or the redemption value.

The noncontrolling interest in consolidated entities represents an ownership interest of 25 % in two hotel properties at December 31, 2023 and 2022, and is reported in equity in our consolidated balance sheets.

The noncontrolling interest in consolidated entities represents an ownership interest of 25 % in one and two hotel properties at December 31, 2024 and 2023, respectively, and is reported in equity in our consolidated balance sheets.

Net income/loss attributable to redeemable noncontrolling interests in operating partnership and income/loss from consolidated entities attributable to noncontrolling interests in our consolidated entities are reported as deductions/additions from/to net income/loss.

28 unchanged sentences

The Company recognizes forfeitures as they occur.

With respect to the 2021, 2022 and 2023 award agreements, the compensation committee utilizes a performance metric, pursuant to which, the performance awards will be eligible to vest, from 0 % to 200 % of target, based on achievement of certain performance targets over the three-year performance period.

The compensation committee utilizes a performance metric, pursuant to which, the performance awards will be eligible to vest, from 0 % to 200 % of target, based on achievement of certain performance targets over the three-year performance period.

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

35 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

The amendments in ASU Nos.

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

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

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

The Company adopted the standards upon the respective effective dates.

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

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

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

We are currently evaluating the impact that ASU 2023-07 will have on our financial statement disclosures.

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

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

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

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

Recently Issued Accounting Standards —In December 2023, the Financial Accounting Standards Board’s (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted.

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

As of December 31, 2024, the Company has not adopted this ASU.

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

In November 2024, the FASB issued ASU 2024-03 , Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses that requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the statement of operations.

In January 2025, the FASB issued ASU 2025-01 which amends the effective date of the new disaggregation of income statement expenses standard to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after Dec.

15, 2026, and interim periods within annual reporting periods beginning after Dec.

Early adoption is still permitted.

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

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

Recently Adopted Accounting Standards —In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

We adopted the standard effective for the year ended December 31, 2024.

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

2 unchanged sentences

California 5 $ 92,330 $ 25,051 $ 15,763 $ 133,144

Puerto Rico 1 50,436 18,214 11,595 80,245

Arizona 1 35,789 23,803 8,074 67,666

1 49,994 17,609 10,785 78,388

1 36,704 26,062 9,347 72,113

Colorado 1 24,067 14,084 9,756 47,907

6 unchanged sentences

USVI 1 45,042 19,476 9,857 74,375

Sold hotel property

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

Total 16 $ 452,361 $ 181,250 $ 94,793 $ 728,404

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended December 31, 2023

11 unchanged sentences

USVI 1 47,971 17,460 9,963 75,394

Sold hotel property

1 28,735 15,827 6,152 50,714

Total 16 $ 464,899 $ 185,331 $ 89,113 $ 739,343

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Year Ended December 31, 2022

1 unchanged sentence

California 5 $ 106,755 $ 30,267 $ 13,641 $ 150,663

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

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

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

6 unchanged sentences

USVI 1 58,426 18,990 10,238 87,654

Sold hotel property

1 27,880 15,685 5,511 49,076

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

13 unchanged sentences

During the years ended December 31, 2024, 2023 and 2022, no impairment charges were recorded.

Hotel Disposition

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

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

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The sale resulted in a gain of approximately $ 88.1 million for the year ended December 31, 2024 and is included in “gain (loss) on disposition of assets and hotel property” in our consolidated statements of operations.

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

We included the results of operations for this hotel property through the date of disposition in net income (loss) as shown in our consolidated statements of operations for the year ended December 31, 2024, 2023 and 2022 , respectively .

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

Year Ended December 31,

2024 2023 2022

Total hotel revenue $ 27,901 $ 50,714 $ 49,076

Total hotel operating expenses ( 17,194 ) ( 30,999 ) ( 29,336 )

Property taxes, insurance and other ( 1,704 ) ( 2,876 ) ( 2,532 )

Depreciation and amortization ( 2,328 ) ( 4,176 ) ( 4,118 )

Gain (loss) on disposition of assets and hotel property

Operating income (loss) 94,790 12,663 13,090

Interest income 273 346 73

Interest expense and amortization of loan costs ( 3,856 ) ( 6,069 ) ( 3,202 )

Write-off of loan costs and exit fees ( 101 ) — ( 21 )

Income (loss) before income taxes 91,106 6,940 9,940

Income from consolidated entities attributable to noncontrolling interests ( 27,995 ) ( 3,335 ) ( 3,419 )

(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership ( 5,028 ) ( 247 ) ( 502 )

Income (loss) before income taxes attributable to the Company $ 58,083 $ 3,358 $ 6,019

Investment in Unconsolidated Entity

4 unchanged sentences

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

We review our investment in OpenKey for impairment in each reporting period pursuant to the applicable authoritative accounting guidance.

An investment is impaired when its estimated fair value is less than the carrying amount of the investment.

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

No such impairment was recorded for the years ended December 31, 2023, 2022 and 2021.

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

2 unchanged sentences

Ownership interest in OpenKey 7.9 % 7.9 %

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

2 unchanged sentences

Equity in earnings (loss) of unconsolidated entity $ ( 297 ) $ ( 273 ) $ ( 328 )

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

On February 2, 2023, the Company entered into a loan funding agreement with Ashford Inc.

Per the agreement, Ashford Inc.

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

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

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

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

As of December 31, 2023, the Company has funded approximately $ 238,000 .

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

As of December 31, 2024, funding of $ 79,000 has been made pursuant to the 2024 funding agreement.

As of December 31, 2024, the Company has funded a total amount of approximately $ 317,000 .

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

5 unchanged sentences

Equity in earnings (loss) of unconsolidated entity $ 40 $ 20 $ —

We review our investment in OpenKey, which includes our note receivable, for impairment in each reporting period pursuant to the applicable authoritative accounting guidance.

An investment is impaired when its estimated fair value is less than the carrying amount of the investment.

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

As of December 31, 2024, we determined that the estimated fair value of the investment in OpenKey was less than our carrying amount.

During the year ended December 31, 2024, we recorded an impairment charge of $ 1.1 million associated with the equity investment in OpenKey and an impairment charge of $ 232,000 associated with the note receivable from OpenKey.

The impairment charges are included in “equity in earnings (loss) of unconsolidated entity” in our consolidated statements of operations.

There were no impairment charges recorded for the years ended December 31, 2023 and 2022.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Indebtedness, net

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

Current Maturity

Indebtedness Collateral Current Maturity Final

Maturity (15)

Interest Rate

December 31, 2023 December 31, 2022

Book Value of Collateral

Mortgage loan (4)

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

$ — — $ 40,000 51,514

Mortgage loan (4)

The Ritz-Carlton Sarasota October 2023 April 2024 LIBOR (1) + 2.65 %

— — 98,500 162,134

Interest Rate December 31, 2024 December 31, 2023

Debt Balance Book Value of Collateral Debt Balance Book Value of Collateral

Mortgage loan (3)

Hotel Yountville November 2023 May 2024 LIBOR (1) + 2.55 %

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

$ — — $ 30,000 71,196

Mortgage loan (4)

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

— — 195,000 194,770

Hilton La Jolla Torrey Pines

Hilton La Jolla Torrey Pines August 2024 August 2024 9.00 % — — 66,600 66,947

Mortgage loan (5)

Hilton La Jolla Torrey Pines February 2024 February 2024 SOFR (2) + 1.70 %

The Ritz-Carlton Lake Tahoe January 2025 January 2026 SOFR (1) + 3.60 %

53,413 135,287 53,413 132,467

3 unchanged sentences

Mortgage loan (7)

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

— — 54,000 193,367

Mortgage loan (9)

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

3 unchanged sentences

Mortgage loan (8)(9)

Cameo Beverly Hills August 2024 August 2024 SOFR (2) + 3.66 %

30,000 71,196 30,000 71,820

Mortgage loan (11) (12)

The Ritz-Carlton St.

5 unchanged sentences

Mortgage loan (11)

The Ritz-Carlton Lake Tahoe January 2025

January 2026 SOFR (2) + 3.60 %

The Ritz-Carlton Reserve Dorado Beach March 2026 March 2026 SOFR (1) + 4.75 %

62,000 186,539 — —

1 unchanged sentence

BAML Credit Facility (9)(12)

Bardessono Hotel and Spa July 2026 July 2027 Base Rate (3) + 1.25 % to 2.00 % or

SOFR (2) + 2.35 % to 3.10 %

Bardessono Hotel & Spa July 2026 July 2027 Base Rate (2) + 1.25 % to 2.00 % or SOFR (1) + 2.35 % to 3.10 %

— — 200,000 303,405

2 unchanged sentences

Mortgage loan (9)

Bardessono Hotel & Spa August 2026 August 2029 SOFR (1) + 3.24 %

407,000 496,223 — —

Hotel Yountville

The Ritz-Carlton Sarasota

Pier House Resort & Spa

The Ritz-Carlton St.

Mortgage loan (13)

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

4 unchanged sentences

1,222,943 1,707,293 1,173,043 1,694,923

Capitalized default interest

and late charges, net

Capitalized default interest and late charges, net — 120

Deferred loan costs, net ( 11,985 ) ( 9,135 )

2 unchanged sentences

__________________

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

(1) SOFR rates were 4.33 % and 5.35 % at December 31, 2024 and December 31, 2023, respectively.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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

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

(5) On December 22, 2023, we entered into a new $ 110.6 million loan secured by Capital Hilton.

The new mortgage loan is interest only and bears interest at a rate of SOFR + 3.75 %, has a three-year initial term and two one-year extension options, subject to satisfaction of certain conditions, and has a SOFR floor of 2.00 %.

The Hilton La Jolla Torrey Pines remains encumbered by the original mortgage loan, which was partially paid down to a remaining balance of $ 66.6 million.

(3) This mortgage loan had a SOFR floor of 1.50 %.

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

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

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

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

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

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

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

This loan transitioned from LIBOR to SOFR in July 2023 and the variable interest rate increased from LIBOR + 2.61 % to SOFR + 2.66 %.

(10) This loan transitioned from LIBOR to SOFR in July 2023 and the variable interest rate increased from LIBOR + 3.60 % to SOFR + 3.66 %.

This mortgage loan has a SOFR floor of 1.50 %.

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

This loan transitioned from LIBOR to SOFR in July 2023 and the variable interest rate increased from LIBOR + 3.95 % to SOFR + 4.04 %.

This mortgage loan has a SOFR floor of 1.00 %.

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

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

(5) On January 14, 2025, we amended this mortgage loan.

Terms of the amendment included a $ 10.0 million principal pay-down, current maturity date extension to July 2025, interest rate reduction to SOFR + 3.25 %, and one six-month extension option subject to satisfaction of certain conditions.

(6) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the second was exercised February 2025.

(7) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions, of which the fifth was exercised in June 2024.

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

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

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

This mortgage loan has a SOFR floor of 4.00 %.

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

This mortgage loan had a SOFR floor of 4.00 %.

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

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

Braemar holds a tranche of Commercial Mortgage-Backed Securities (“CMBS”), which is secured by the five hotel properties that serve as collateral for the new mortgage loan and has a par value of $ 42.2 million and a rate of SOFR + 5.20 %.

The CMBS is reported as “investment in securities” on the consolidated balance sheet.

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

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

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

(14) On October 31, 2023, we amended this mortgage loan.

Terms of the amendment included extending the current maturity date one year to January 2025, and the variable interest rate increased from SOFR + 2.20 % to SOFR + 3.60 %.

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

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

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

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

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

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

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

This mortgage loan has a SOFR floor of 1.00 %.

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

This mortgage loan has a SOFR floor of 2.00 %.

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

During the second and third quarters of 2020, we reached forbearance and other agreements with our lenders relating to loans secured by certain of our hotels.

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

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

The amount of amortized principal was approximately $ 1.7 million, $ 2.0 million and $ 3.4 million, respectively, for the years ended December 31, 2023, 2022 and 2021.

On January 18, 2023, the Company repaid its $ 54.0 million mortgage loan secured by The Ritz-Carlton Reserve Dorado Beach, which resulted in a gain on extinguishment of debt of $ 2.3 million for the year ended December 31, 2023.

8 unchanged sentences

For the years ended December 31, 2024, 2023 and 2022, the Company recorded coupon interest expense of $ 3.9 million, $ 3.9 million and $ 3.9 million, respectively.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the years ended December 31, 2024, 2023 and 2022, the Company recorded discount amortization of $ 621,000 , $ 589,000 and $ 553,000 respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through June 2026.

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

As of December 31, 2024, the conversion rate is 182.1014 shares.

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

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

Credit Facility

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

Bank of America, N.A.

acted as administrative agent and lead arranger on the transaction.

Syndicate bank participants include TBK Bank and MidFirst Bank.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

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

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

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

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

(i) a Consolidated Leverage Ratio (i.e., Consolidated Net Debt to the Consolidated Total Asset Value) of not more than 55 %;

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

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

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

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

Not all lenders executed loan amendment documents and instead deferred to original loan documents that dictate changes in index rates.

Maturities and scheduled amortization of indebtedness as of December 31, 2024, assuming no extension of existing extension options for each of the following five years and thereafter are as follows (in thousands):

2025 $ 417,093

Total $ 1,222,943

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

1 unchanged sentence

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

Maturities and scheduled amortization of indebtedness as of December 31, 2023, assuming no extension of existing extension options for each of the following five years and thereafter are as follows (in thousands):

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Note Receivable

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

(“Ashford Trust”) and Ashford Inc.

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

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

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

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

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

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

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

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

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

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 December 31, 2024, the Company has advanced approximately $ 8.1 million that has been used to purchase 3.5 million shares of Braemar common stock.

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

Interest Rate

December 31, 2024 December 31, 2023

Note receivable SOFR + 3.00 %

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

Year Ended December 31,

Line Item 2024 2023 2022

Interest income

$ 207 $ — $ —

Total $ 1,173,043

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We review receivables for impairment each reporting period.

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

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

No impairment charges were recorded for the year ended December 31, 2024.

Derivative Instruments

3 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

6 unchanged sentences

Effective date range January 2024 - December 2024

February 2022-December 2022 January 2021 - September 2021

Termination date range January 2024 - January 2026

May 2023- January 2025 February 2022 - August 2024

January 2023 - December 2023

February 2022 - December 2022

Termination date range January 2025 - August 2026 January 2024 - January 2026

May 2023 - January 2025

Total cost of interest rate caps (in thousands) $ 1,592 $ 5,051 $ 3,030

7 unchanged sentences

Strike rate high end of range 8.00 % 5.25 %

Termination date range January 2024 - January 2025

January 2023- January 2025

Termination date range January 2025 - August 2026

June 2024- January 2025

Aggregate principal balance on corresponding mortgage loans (in thousands) $ 1,074,693 $ 777,693

3 unchanged sentences

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

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

As of December 31, 2023, no warrants have been exercised.

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

three -year contractual term;

97.93 % volatility;

0 % dividend rate;

and a risk-free interest rate of 0.38 %.

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

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

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

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

This is a Level 2 valuation technique.

The warrants expired worthless on August 5, 2024.

Fair Value Measurements

4 unchanged sentences

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Fair value measurements based on valuation techniques that use significant inputs that are unobservable.

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

BRAEMAR HOTELS & RESORTS INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fair value measurements based on valuation techniques that use significant inputs that are unobservable.

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

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

6 unchanged sentences

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

Investment in securities includes mortgage-backed securities.

These securities are classified as available for sale and are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an external pricing vendor.

Prices received from the vendor are analyzed based on various sources of observable market data.

If prices are not within certain tolerance levels that are based on the asset type’s characteristics, the exception is researched and, if the price is not able to be validated, an alternate pricing vendor is utilized.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

5 unchanged sentences

December 31, 2024

$ — $ 41,535 $ — $ 41,535 (1)

Derivative assets:

1 unchanged sentence

Total $ — $ 41,891 $ — $ 41,891

Derivative liabilities:

Warrants $ — $ ( 12 ) $ — $ ( 12 ) (2)

Net $ — $ 2,835 $ — $ 2,835

Quoted Market Prices (Level 1) Significant Other

10 unchanged sentences

__________________

(1) Reported as “investment in securities” in our consolidated balance sheet.

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

18 unchanged sentences

Unrealized gain (loss) on derivatives $ ( 4,071 ) (1)

$ ( 8,413 ) (1)

Realized gain (loss) on interest rate caps 4,656 (1) (2)

7,750 (1) (2)

Net $ 585 $ ( 663 ) $ 4,961

1 unchanged sentence

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

At December 31, 2024, the amortized cost of the CMBS was $ 42.3 million.

The unrealized gain (loss) that was recognized as a change in other comprehensive income (loss) was $( 744,000 ) for the year ended December 31, 2024.

Summary of Fair Value of Financial Instruments

2 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

4 unchanged sentences

Financial assets measured at fair value:

Investment in securities

$ 41,535 $ 41,535 $ — $ —

Derivative assets 356 356 2,847 2,847

3 unchanged sentences

Cash and cash equivalents

$ 135,465 $ 135,465 $ 85,599 $ 85,599

Restricted cash

49,592 49,592 80,904 80,904

Accounts receivable, net

Due from related parties, net — — 938 938

31,754 31,754 39,199 39,199

Note receivable 8,283 8,283 — —

Due from third-party hotel managers 22,873 22,873 17,739 17,739

Financial liabilities not measured at fair value:

Indebtedness $ 1,171,459 $ 1,124,377 $ 1,337,250 $ 1,294,391

$ 1,222,003 $ 1,207,420 $ 1,171,459 $ 1,124,377

Accounts payable and accrued expenses

143,566 143,566 149,867 149,867

Dividends and distributions payable 9,255 9,255 9,158 9,158

3 unchanged sentences

Due to third-party hotel managers

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1,476 1,476 1,608 1,608

Cash, cash equivalents and restricted cash .

5 unchanged sentences

This is considered a Level 1 valuation technique.

Investment in securities .

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

Note receivable.

The carrying amount of note receivable approximates its fair value.

We estimate the fair value of the note receivable to approximate the carrying value of $ 8.3 million at December 31, 2024.

This is considered a Level 2 valuation technique.

Derivative assets and derivative liabilities .

8 unchanged sentences

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

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Income (Loss) Per Share

7 unchanged sentences

dividends on common stock ( 13,302 ) ( 13,164 ) ( 5,598 )

loss on extinguishment of preferred stock - Series B — — ( 4,595 )

dividends on unvested performance stock units ( 99 ) ( 226 ) ( 36 )

6 unchanged sentences

Weighted average common shares outstanding:

Weighted average common shares outstanding – basic 65,989 69,687 52,684

Weighted average common shares outstanding – diluted 65,989 69,687 52,684

Income (loss) per share - basic:

Net income (loss) allocated to common stockholders per share $ ( 1.13 ) $ ( 0.15 ) $ ( 0.76 )

Income (loss) per share - diluted:

Weighted average common shares outstanding – basic and diluted

66,500 65,989 69,687

Income (loss) per share - basic and diluted:

Net income (loss) allocated to common stockholders per share $ ( 0.77 ) $ ( 1.13 ) $ ( 0.15 )

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

6 unchanged sentences

Dividends on preferred stock - Series B 4,233 4,233 4,233

Loss on extinguishment of preferred stock - Series B — — 4,595

Interest expense on Convertible Senior Notes 4,503 4,470 4,435

7 unchanged sentences

Effect of assumed conversion of preferred stock - Series B 4,116 4,116 4,116

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

Effect of contingently issuable shares — — 1

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Redeemable Noncontrolling Interests in Operating Partnership

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

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

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

Each common unit may be redeemed, by the holder, for either cash or, at our

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sole discretion, up to one share of our REIT common stock, which is either:

(i) issued pursuant to an effective registration statement;

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

As of December 31, 2023, there were approximately 1.5 million unvested Performance LTIP units, representing 200 % of the target, outstanding.

With respect to the 2021, 2022 and 2023 award agreements, the compensation committee shifted to a new performance metric, pursuant to which, the performance awards will be eligible to vest, from 0 % to 200 % of target, based on achievement of certain performance targets over the three-year performance period.

The performance criteria for the 2021, 2022 and 2023

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performance grants are based on performance conditions under the relevant literature.

The performance awards will be eligible to vest, from 0 % to 200 % of target, based on achievement of certain performance targets over the three-year performance period.

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

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

The grant date fair value of the award may vary from period to period, as the number of performance grants earned may vary since the estimated probable achievement of certain performance targets may vary from period to period.

As of December 31, 2023, approximately 840,000 Performance LTIP units granted in 2021, deemed to have met the performance conditions, became fully vested at 200 % of the target.

During the year ended 2024, Performance LTIPs granted in 2022, vested at 174 % of target based on the performance conditions met over the performance period.

As of December 31, 2024, there were approximately 353,000 unvested Performance LTIP units, representing 200 % of the target, outstanding.

As of December 31, 2024, we have issued a total of approximately 1.8 million LTIP and Performance LTIP units, net of Performance LTIP cancellations.

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

All LTIP and Performance LTIP units, other than approximately 623,000 LTIP units and 353,000 Performance LTIP units issued from March 2015 to December 2024, had reached full economic parity with, and are convertible into, common units.

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

December 31, 2024 December 31, 2023

Redeemable noncontrolling interests in Braemar OP (in thousands) $ 29,964 $ 32,395

Adjustments to redeemable noncontrolling interests (1) (in thousands)

Ownership percentage of operating partnership 8.05 % 6.63 %

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

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

Year Ended December 31,

2024 2023 2022

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership $ 4,472 $ 5,230 $ 476

Distributions declared to holders of common units, LTIP units and Performance LTIP units 1,397 1,444 665

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

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The following table presents compensation expense for Performance LTIP units and LTIP units (in thousands):

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Total $ 2,208 $ 5,680 $ 5,810

The unamortized cost of the unvested Performance LTIP units of approximately $ 2.7 million at December 31, 2023 will be expensed over a period of 2.0 years with a weighted average period of 1.2 years.

The unamortized cost of the unvested LTIP units of approximately $ 211,000 at December 31, 2023, will be amortized over a period of 0.2 years with a weighted average period of 0.2 years.

The unamortized cost of the unvested Performance LTIP units of approximately $ 77,000 at December 31, 2024 will be expensed over a period of 1.0 year with a weighted average period of 1.0 year.

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

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Performance LTIP units issued — 353 1,194

Common units issued for hotel acquisition — — 2,500

Units redeemed for shares of common stock — ( 1,456 ) —

Units redeemed for cash ( 1,456 ) — —

Performance LTIP units cancelled ( 155 ) — ( 113 )

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Units convertible/redeemable at end of year 6,244 4,292 5,841

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

December 31, 2023 December 31, 2022

Redeemable noncontrolling interests in Braemar OP (in thousands) $ 32,395 $ 40,555

Adjustments to redeemable noncontrolling interests (1) (in thousands)

Ownership percentage of operating partnership 6.63 % 7.69 %

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

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

Year Ended December 31,

2023 2022 2021

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership $ 5,230 $ 476 $ 3,597

Distributions declared to holders of common units, LTIP units and Performance LTIP units $ 1,444 $ 665 —

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

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

Year Ended December 31,

2023 2022 2021

Common units converted to common stock — — 868

Fair value of common units converted $ — $ — $ 4,122 (1)

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(1) The redemption value is the greater of historical cost or fair value.

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

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

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$ — $ 7,162 (1)

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(1) Includes Mr.

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Each share of Series D cumulative preferred stock is convertible into a maximum 5.12295 shares of our common stock.

The actual number is based on a formula as defined in the Series D cumulative preferred stock agreement (unless the Company exercises its right to redeem the Series D cumulative preferred shares for cash, for a limited period upon a change in control).

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change in control).

The necessary conditions to convert the Series D cumulative preferred stock to common stock have not been met as of period end.

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In general, Series D cumulative preferred stockholders have no voting rights.

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

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

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

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

During the year ended December 31, 2023, we repurchased 3.9 million shares of our common stock for approximately $ 18.9 million.

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

As of December 31, 2023, the Company has completed the $ 25 million repurchase authorization.

Stock Repurchases —On May 3, 2024, the board of directors approved a new share repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock, par value $ 0.01 per share, having an aggregate value of up to $ 50 million.

As of December 31, 2024, the Company has not repurchased any common stock pursuant to this program.

We repurchased approximately 170,000 , 83,000 and 262,000 shares of our common stock in 2024, 2023 and 2022, respectively, to satisfy employees’ statutory minimum U.S.

federal income tax obligations in connection with vesting of equity grants issued under our stock-based compensation plan.

At-the-Market Common Stock Equity Distribution Program —On December 11, 2017, the Company established an “at-the-market” equity distribution program pursuant to which it may, from time to time, sell shares of its common stock having an aggregate offering price of up to $ 50 million.

As of December 31, 2023, the Company has sold approximately 7.4 million shares of common stock and received net proceeds of approximately $ 30.5 million under this program.

The issuance activity is summarized below (in thousands):

Year Ended December 31,

2023 2022 2021

Common shares issued — — 2,711

Gross proceeds received $ — $ — $ 16,119

Commissions — — 202

Net proceeds $ — $ — $ 15,917

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

(“YA”), pursuant to which the Company will be able to sell up to 7,780,786 shares of its common stock (the “Commitment Amount”) at the Company’s request any time during the commitment period commencing on February 4, 2021, and terminating on the earliest of:

(i) the first day of the month next following the 36 -month anniversary of the SEDA;

or (ii) the date on which YA shall have made payment of Advances (as defined in the SEDA) pursuant to the SEDA for shares of the Company’s common stock equal to the Commitment Amount (the “Commitment Period”).

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

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

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

during regular trading hours.

The agreement terminated on February 4, 2024.

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

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

The preliminary purchase price per share for such shares shall be 100 % of the average daily VWAP for the five consecutive trading days immediately prior to the date of the Advance Notice.

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

There are no other restrictions on future financing transactions.

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

We are not required to pay any

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additional amounts to reimburse or otherwise compensate YA in connection with the transaction except for a $ 10,000 structuring fee.

As of December 31, 2023, the Company has sold approximately 1.7 million shares of common stock and received proceeds of approximately $ 10.0 million under the SEDA.

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

Year Ended December 31,

2023 2022 2021

Common shares sold to YA — — 1,700

Proceeds received $ — $ — $ 10,000

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

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

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

As of December 31, 2023, the Company has sold approximately 4.7 million shares of common stock under the Virtu July 2021 EDA and received gross proceeds of approximately $ 24.0 million.

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

Year Ended December 31,

2023 2022 2021

Common shares issued — — 4,712

Gross proceeds received $ — $ — $ 24,020

Commissions — — 240

Net proceeds $ — $ — $ 23,780

Noncontrolling Interest in Consolidated Entities —A partner has a noncontrolling ownership interest of 25 % in two hotel properties with a total carrying value of $( 8.9 ) million and $( 16.3 ) million at December 31, 2023 and 2022, respectively.

Noncontrolling Interest in Consolidated Entities —A partner has a noncontrolling ownership interest of 25 % in one hotel property with a total carrying value of $( 3.4 ) million and two hotel properties with a total carrying value of $( 8.9 ) million at December 31, 2024 and 2023, respectively.

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

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1) an optional redemption in which on or after June 11, 2020, the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $ 25.00 per share, plus any accumulated, accrued and unpaid dividends;

2) a special optional redemption, in which on or prior to the occurrence of a Change of Control (as defined in the Articles

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Supplementary), the Company may redeem shares of the Series B Convertible Preferred Stock, in whole or in part, for cash at a redemption price of $ 25.00 per share;

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

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

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Series B Convertible Preferred Stock $ 4,233 $ 4,233 $ 4,233

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

The table below summarizes the activity (in thousands):

Year Ended December 31, 2021

Preferred Shares Tendered Common Shares Issued

Series B Convertible Preferred Stock

There were no preferred stock exchanges for the years ended December 31, 2023 and 2022.

Series E Redeemable Preferred Stock

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

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the Series D Preferred Stock and the Series M Preferred Stock (as defined below)) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.

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

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

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

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

The Series E Preferred Stock is also subject to conversion upon certain events constituting

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a change of control.

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

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As such, the Series E Preferred Stock is classified outside of permanent equity.

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At the date of issuance, the carrying amount of the Series E Preferred Stock was less than the redemption value.

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

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The following table summarizes dividends declared (in thousands):

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

If and whenever dividends on any shares of Series E Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series M Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.

If and whenever dividends on any shares of Series M Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series M Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series M Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.

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

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

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The redemption fee shall be an amount equal to:

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

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

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Series M Preferred Stock $ 3,434 $ 3,888 $ 1,276

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

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Under the 2013 Equity Incentive Plan, as amended, we are authorized to grant 8.2 million restricted stock or performance stock units of our common stock as incentive stock awards.

At December 31, 2023, approximately 1.6 million shares were available for future issuance under the 2013 Equity Incentive Plan.

At December 31, 2024, approximately 920,000 shares were available for future issuance under the 2013 Equity Incentive Plan.

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

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

At December 31, 2023, the unamortized cost of unvested shares of restricted stock was $ 236,000 , which is expected to be recognized over a period of 0.2 years with a weighted average period of 0.2 years.

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

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Outstanding at end of year — $ — 167 $ 7.02 437 $ 6.46

The fair value of restricted stock vested during the years ended December 31, 2023, 2022 and 2021 was approximately $ 1.3 million, $ 3.1 million and $ 2.1 million, respectively.

The fair value of restricted stock vested during the years ended December 31, 2024, 2023 and 2022 was approximately $ 452,000 , $ 1.3 million and $ 3.1 million, respectively.

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

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

The performance criteria for the 2021, 2022 and 2023 performance grants are based on performance conditions under the relevant literature, and the 2021, 2022 and 2023 performance grants were issued to non-employees.

The corresponding compensation cost is recognized ratably over the service period for the award as

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the service is rendered, based on the corresponding measurement date fair value of the award, which may vary from period to period, as the number of performance grants earned may vary since the estimated probable achievement of certain performance targets may vary from period to period.

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

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

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

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

During the year ended December 31, 2024, PSUs granted in 2022, vested at 174 % of target based on the performance conditions met over the performance period.

During the year ended December 31, 2023, PSUs granted in 2021, vested at 200 % of target based on the performance conditions met over the performance period.

During the year ended December 31, 2022, 225,000 PSUs granted in 2020, were canceled due to the market condition criteria not being met.

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

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

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Advisory services fee $ 27 $ 2,108 2,876

At December 31, 2023, the unamortized cost of unvested PSUs was $ 1.1 million, which is expected to be recognized over a period of 2.0 years with a weighted average period of 1.9 years.

At December 31, 2024, the unamortized cost of unvested PSUs was $ 168,000 , which is expected to be recognized over a period of 1.0 year with a weighted average period of 1.0 year.

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A summary of our PSU activity is as follows (shares in thousands):

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Outstanding at beginning of year 424 $ 4.22 335 $ 5.84 671 $ 5.84

PSUs granted 383 4.07 41 5.63 446 7.01

PSUs vested ( 294 ) 7.01 ( 152 ) 4.69 — —

PSUs granted (at target)

— — 383 4.07 41 5.63

PSUs vested (at target)

( 41 ) 5.63 ( 294 ) 7.01 ( 152 ) 4.69

PSUs canceled — — — — ( 225 ) 3.51

Outstanding at end of year 424 $ 4.22 335 $ 5.84 671 $ 5.84

Outstanding at end of year (at target)

383 $ 4.07 424 $ 4.22 335 $ 5.84

Related Party Transactions

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Under our advisory agreement, we pay advisory fees to Ashford LLC.

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

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

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

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▪ 90 % of the base fee paid for the same month in the prior year;

▪ 1/12 th of the G&A Ratio (as defined) multiplied by the total market capitalization of Braemar.

▪ 1/12 of the G&A Ratio (as defined) multiplied by the total market capitalization of Braemar.

We are also required to pay Ashford LLC an incentive fee that is measured annually (or for a stub period if the advisory agreement is terminated at other than year-end).

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

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

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

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

This will include actively managing the REITs excess cash by primarily investing in short-term U.S.

This includes actively managing the REITs excess cash by primarily investing in short-term U.S.

Treasury securities.

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

The advisory agreement:

(i) allocates responsibility for certain employee costs between the Company and its advisor;

and (ii) permits the Company’s board of directors to issue annual equity awards in the Company or Braemar OP to employees and other representatives of its advisor based on achievement by the Company of certain financial or other objectives or otherwise as the Company’s board of directors sees fit.

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

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

Pursuant to the 2023 Limited Waiver, the Company, Braemar OP, Braemar TRS and the Company’s advisor waived the operation of any provision in the advisory agreement that would otherwise limit our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2023 cash incentive compensation to employees and other representatives of our advisor.

Pursuant to the 2023 Limited Waiver, the Company, Braemar OP, Braemar TRS and the Company’s Advisor waived the operation of any provision in the advisory agreement that would otherwise limit our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2023, cash incentive compensation to employees and other representatives of the Advisor.

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

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

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

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

For the year ended December 31, 2023, we incurred fees of approximately $ 150,000 to Lismore in nonrefundable work fees and $ 214,000 of success fees.

The unamortized non-refundable work fees are included in “other assets” on the consolidated balance sheet, and are amortized on a straight line basis over the term of the agreements.

In addition to the fees described above, we incurred fees from Lismore or its subsidiaries of $ 2.1 million, $ 1.4 million and $ 491,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

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

For the year ended December 31, 2024, 2023 and 2022, we incurred fees from Lismore or its subsidiaries of $ 2.8 million, $ 2.4 million and $ 1.4 million, respectively.

Ashford Securities

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

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

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

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

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

On February 1, 2023, Braemar entered into a Third Amended and Restated Contribution Agreement, which provided that after the Amended and Restated True-Up Date, capital contributions for the remainder of fiscal year 2023 would be divided between each Party based on the Initial True-Up Ratio, there would be a true up reflecting amounts raised by Ashford Securities since June 10, 2019, and thereafter, the capital contributions would be divided among each Party in accordance the cumulative ratio of capital raised by the Parties.

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

On February 1, 2023, Braemar entered into a Third Amended and Restated Contribution Agreement, which provided that after the Amended and Restated True-Up Date, capital contributions for the remainder of fiscal year 2023 would be divided between each Party based on the Initial True-Up Ratio, there would be a true up reflecting amounts raised by Ashford Securities since June 10, 2019, and thereafter, the capital contributions would be divided among each Party in accordance with the cumulative ratio of capital raised by the Parties.

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

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

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

(1) the Parties equally

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split responsibility for all aggregate contributions made by them to Ashford Securities through September 30, 2021;

and (2) thereafter, their contributions for each quarter will be based on the ratio of the amounts raised by each Party through Ashford Securities in the prior quarter compared to the total aggregate amount raised by the Parties through Ashford Securities for the prior quarter.

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

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

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

In March 2023, Braemar paid Ashford Inc.

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

As of December 31, 2023, Braemar has funded approximately $ 20.9 million.

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

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

This resulted in Braemar receiving a payment of approximately $ 5.9 million from Ashford Inc., which resulted in net credit to expense of approximately $ 4.5 million that is included in “corporate general and administrative” on the consolidated statements of operations for the year ended December 31, 2024.

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

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

As of December 31, 2024, Braemar has funded approximately $ 12.9 million and has a pre-funded balance of $ 797,000 that is included in “other assets” on the consolidated balance sheet.

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

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(iii) interior design ( 6 % of the purchase price of the FF&E designed or selected by Premier);

and (iv) FF&E

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purchasing ( 8 % of the purchase price of FF&E purchased by Premier;

and (iv) FF&E purchasing ( 8 % of the purchase price of FF&E purchased by Premier;

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

Subsequent to December 31, 2023, the agreement was amended resulting in such fees being payable monthly as the service is delivered based on percentage complete, as reasonably determined by Premier for each service, or payable as set forth in other agreements.

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

Hotel Management Services

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

Our hotel management agreement also requires that we fund property-level operating costs including the hotel manager's payroll and related costs.

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Summary of Transactions

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Indebtedness, net (2)

Other Assets (3)

Preferred Stock (4)

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

Other Hotel Revenue Other Hotel Expenses Management fees Property Taxes, Insurance and Other Advisory Services Fee Interest Income

Corporate General and Administrative Write-off of Premiums, Loan Costs and Exit Fees

Ashford LLC Insurance claims services $ 2 $ — $ — $ — $ — $ — $ 2 $ — $ — $ — $ —

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RED Leisure Watersports activities and travel/transportation services 1,119 — — — 336 713 — — — — 70 —

1,291 — — — — 50 — 1,241 — — — —

Cash management services

( 91 ) — — — — — — — — ( 91 ) — —

Remington Hospitality Hotel management services (5)

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Indebtedness, net (2)

Other Hotel Revenue Other Hotel Expenses Management fees Preferred Stock (4)

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

Other Assets (3)

Preferred Stock (4)

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

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

Ashford Securities Broker/Dealer 6,385 — — — 1,972 — — — — — 4,413 —

Ashford Securities Dealer Manager Fees 5,766 — — — — — 5,766 — — —

INSPIRE Audio visual services 4,165 — — — — 4,268 — — — — 103 —

Lismore Capital Debt placement and related services 2,426 — 987 150 — — — — — — — 1,289

Lismore Capital Broker Services 637 — 637 — — — — — — —

OpenKey Mobile key app 41 — — — — — 41 — — — — —

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3,913 — — — — — 1,394 2,519 — — — —

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Year Ended December 31, 2022

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Indebtedness, net (2)

Other Assets Other Hotel Revenue Other Hotel Expenses Preferred Stock (4)

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

Other Hotel Revenue Other Hotel Expenses Management fees Preferred Stock (4)

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

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

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RED Leisure Watersports activities and travel/transportation services 525 — — 236 761 — — — — —

Remington Hospitality Hotel management services (4)

Remington Hospitality

Hotel management services (5)

4,288 — — — 1,416 2,872 — — — —

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(2) Recorded as deferred loan costs, which are included in “indebtedness, net” on our consolidated balance sheets and amortized over the initial term of the applicable loan agreement.

(3) Represents the amortization of the Lismore work fees and success fees.

(3) Represents nonrefundable work fees.

(4) Recorded as a reduction of Series E and Series M Redeemable Preferred Stock proceeds.

(5) Other hotel expenses include incentive hotel management fees and other hotel management costs.

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The following table summarizes the components of due to Ashford Inc.

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$ 4,267 $ 1,471

As of December 31, 2023, due to related parties, net included a net payable to Remington Hospitality of $ 603,000 .

As of December 31, 2022, due from related parties, net included a net receivable of $ 573,000 .

As of December 31, 2024, due to related parties, net included a net payable to Remington Hospitality of $ 1.1 million.

As of December 31, 2023, due from related parties, net included a net payable to Remington Hospitality of $ 603,000 .

These amounts are primarily related to advances made by Braemar, accrued base and incentive management fees and casualty insurance premiums.

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

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

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

C brand name.

In return, we paid licensing fees of:

(i) 1 % of total operating revenue;

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

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

The agreement expired on August 5, 2023.

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

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

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

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

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

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

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

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

Year Ended December 31,

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Other hotel expenses $ 340 $ — $ —

Management Fees —Under hotel management agreements for our hotel properties existing at December 31, 2023, we pay a monthly hotel management fee equal to the greater of approximately $ 17,000 per hotel (increased annually based on

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consumer price index adjustments) or 3 % of gross revenues, or in some cases 3.0 % to 5.0 % of gross revenues, as well as annual incentive management fees, if applicable.

These management agreements expire from December 2027 through December 2065, with renewal options.

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

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

If we terminate a management agreement prior to its expiration, we may be liable for estimated management fees through the remaining term, liquidated damages or, in certain circumstances, we may substitute a new management agreement.

Our hotel management agreements also require that we fund property-level operating costs including the hotel manager's payroll and related costs.

Income Taxes —We and our subsidiaries file income tax returns in the federal jurisdiction and various states.

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The opt-out period has been extended until such time that discovery has concluded.

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

In May 2023, the trial court requested additional briefing from the parties to

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determine whether the case should be maintained, dismissed, or the class de-certified.

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

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

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

As of December 31, 2023, no amounts have been accrued.

A tentative settlement has been reached subject to the respective parties obtaining various approvals.

As of December 31, 2024, the estimated settlement liability amount has been accrued.

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

The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and PAGA claims.

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

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

The allocation to Hilton La Jolla Torrey Pines would be approximately $ 371,000 , which has been accrued as of December 31, 2023.

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

The allocation to Hilton La Jolla Torrey Pines is approximately $ 401,000 , which was accrued as of December 31, 2024.

On August 4, 2020, a lawsuit, Benjamin Zermeno v.

Beverly Hills Marriott, was filed in Alameda County Superior Court as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties.

The plaintiff’s individual claims were compelled to arbitration.

On August 18, 2022, another lawsuit, Cristina Catalano v.

Beverly Hills Marriott and Mr.

C, was filed as a PAGA representative action alleging various wage and hour violations of all Remington Hospitality managed California properties.

The co-defendant separately settled and the individual arbitration has also settled.

A private mediation was held on December 27, 2024 to globally resolve the three outstanding matters.

A tentative settlement was reached subject to the parties finalizing the agreement and court approval.

As of December 31, 2024, the estimated settlement liability amount has been accrued.

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

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

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

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

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

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

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

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

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

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

All systems have been restored.

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

In February of 2024, two class action lawsuits were filed related to the cyber incident.

The suits are currently pending in the U.S.

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

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

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

District Court for the Northern District of Texas.

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

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

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

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

District Court for the Northern District of Texas.

The parties have reached an agreement, subject to final Court approval, to resolve the class action suit.

The amount of the class settlement is approximately $ 485,000 .

The hearing for final Court approval of the settlement is scheduled for August 27, 2025.

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

If we ultimately do not prevail in one or more of these legal

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matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.

Leases —We lease land under two non-cancelable operating ground leases, which expire in 2067 and 2065, related to our hotel properties in La Jolla, California and Yountville, California, respectively.

The lease in La Jolla, California contains one extension option of either 10 or 20 years dependent upon capital investment spend during the lease term.

If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.

Leases —We lease land under one non-cancelable operating ground lease, which expires in 2065, related to our hotel property in Yountville, California.

The lease in Yountville, California contains two 25 -year extension options.

These leases are subject to base rent plus contingent rent based on each hotel property’s financial results and escalation clauses.

The lease is subject to base rent plus contingent rent based on the hotel property’s financial results and escalation clauses.

Capital Commitments —At December 31, 2024, we had capital commitments of $ 29.1 million, including commitments that will be satisfied with insurance proceeds, relating to general capital improvements that are expected to be paid in the next twelve months .

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Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years.

The exercise of lease renewal options is at our sole discretion.

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exercise of lease renewal options is at our sole discretion.

Some leases have variable payments, however, if variable payments are contingent, they are not included in the ROU assets and liabilities.

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_______________________________________

(1) For the years ended December 31, 2023, 2022 and 2021, operating lease cost includes approximately $ 2.3 million, $ 2.2 million and $ 954,000 , respectively, of variable lease cost associated with the ground leases.

(1) For the years ended December 31, 2024, 2023 and 2022, operating lease cost includes approximately $ 934,000 , $ 2.3 million and $ 2.2 million, respectively, of variable lease cost associated with the ground leases.

Additionally, we recorded $ 451,000 , $ 474,000 and $ 474,000 , respectively, of amortization costs related to the intangible assets that were reclassified to “operating lease right-of-use assets” upon adoption of ASC 842.

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

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Future minimum lease payments due under non-cancellable leases as of December 31, 2024 were as follows (in thousands):

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(1) Based on payment amounts as of December 31, 2024 .

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

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The TRS entities recognized net book income (loss) before income taxes of $ 9.6 million, $ 17.9 million and $ 25.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table reconciles the income tax expense at statutory rates to the actual income tax expense recorded (in thousands):

The following table reconciles the income tax expense of the TRS entities at applicable statutory rates to the actual income tax expense recorded (in thousands):

Year Ended December 31,

2024 2023 2022

Income tax (expense) benefit at federal statutory income tax rate of 21% $ ( 5,180 ) $ ( 6,463 ) $ ( 2,652 )

Income tax (expense) benefit of the TRS entities at federal statutory income tax rate of 21%

$ ( 2,040 ) $ ( 5,180 ) $ ( 6,463 )

State income tax (expense) benefit, net of U.S.

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Effect of permanent differences

( 412 ) ( 229 ) —

Other 39 ( 46 ) 126

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Total income tax (expense) benefit $ ( 842 ) $ ( 2,689 ) $ ( 4,043 )

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

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$ 20,605 $ ( 27,939 ) $ 23,391

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For the years ended December 31, 2024, 2023 and 2022, income tax expense included interest and penalties paid to/(received from) taxing authorities of $ 4,000 , $( 11,000 ) and $ 1,000 , respectively.

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( 6,160 ) ( 5,932 )

Prepaid expenses — ( 59 )

Total deferred tax liability

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Net deferred tax asset (liability) $ ( 1,225 ) $ ( 1,321 )

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At December 31, 2024 and 2023, we have reserved certain deferred tax assets of our TRS entities and recorded a valuation allowanc e of $ 16.5 million and $ 16.2 million, respectively .

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The tax holiday is conditional upon our meeting certain employment and investment thresholds.

The impact of this tax holiday decreased current foreign taxes by $ 2.7 million, $ 3.4 million and $ 907,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

The benefit of the tax holiday on net income (loss) per share was approximately, $ 0.04 , $ 0.05 and $ 0.02 for the years ended December 31, 2023, 2022 and 2021, respectively.

The impact of this tax holiday decreased current foreign taxes by $ 2.0 million, $ 2.7 million and $ 3.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The benefit of the tax holiday on

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net income (loss) per share was approximately, $ 0.03 , $ 0.04 and $ 0.05 for the years ended December 31, 2024, 2023 and 2022, respectively.

In 2022, we acquired The Ritz-Carlton Reserve Dorado Beach in Dorado, Puerto Rico.

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The tax holiday is conditional upon meeting certain employment and investment thresholds.

The impact of this tax holiday decreased current foreign taxes by $ 4.0 million and $ 2.5 million for the years ended December 31, 2023 and 2022, respectively.

The impact of this tax holiday decreased current foreign taxes by $ 1.7 million, $ 4.0 million and $ 2.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The benefit of this tax holiday on net income (loss) per share was approximately $ 0.02 , $ 0.06 and $ 0.04 for the years ended December 31, 2024, 2023 and 2022, respectively.

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For the years ended December 31, 2024, 2023 and 2022, amortization expense related to intangible assets was $ 379,000 , $ 379,000 and $ 378,000 , respectively.

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Estimated future amortization expense for intangible assets, net for each of the next five years and thereafter is as follows (in thousands):

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For the year ended December 31, 2024, The Ritz-Carlton St.

Thomas, The Ritz-Carlton Sarasota and The Ritz-Carlton Reserve Dorado Beach generated revenues in excess of 10% of total hotel revenue amounting to 33 % of total hotel revenue.

Thomas, The Ritz-Carlton Sarasota and The Ritz-Carlton Reserve Dorado Beach generated revenues in excess of 10% of total hotel revenue amounting to approximately 33 % of total hotel revenue.

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents.

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Segment Reporting

We operate in one business segment within the hotel lodging industry:

We operate in one reportable business segment within the hotel lodging industry:

direct hotel investments.

Direct hotel investments refers to owning hotel properties through either acquisition or new development.

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

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

We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments;

(i) offer similar products and services to their customers in the form of hotel rooms, food and beverage, and ancillary services;

(ii) utilize third-party hotel management companies to deliver its products and services to its customers;

(iii) are designed and operated to appeal to similar individuals, groups, leisure, and business customers;

and (iv) third-party hotel managers utilize the same methods (direct hotel sales and various online booking portals) to distribute the Company’s products and services.

As of December 31, 2024 and

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023, all of our hotel properties were in the U.S.

and its territories.

The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer.

Each hotel property derives revenue primarily from guestroom sales, food and beverage sales, and revenues from other lodging services and amenities.

The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies in note 2.

The CODM reviews and makes decisions on all aspects of the Company’s business using all available financial and non-financial data for each hotel individually.

Capital allocation decisions to acquire, sell, enhance, redevelop, or perform renewal and replacement expenditures are determined on a hotel-by-hotel basis.

Specifically, the CODM reviews the results of each hotel to assess the hotel’s profitability.

The key measure the CODM uses to allocate resources and assess performance is individual hotel net income (loss) before interest expense, income taxes, depreciation, and amortization, adjusted to exclude certain items determined by management to not be reflective of its ongoing operating performance or incurred in the normal course of business (Hotel Adjusted EBITDA).

The adjustments include gains and losses on hotel dispositions, impairment charges, pre-opening costs associated with extensive renovation projects, property-level legal settlements, restructuring, severance, and management transition costs, and other expenses identified by management to be non-recurring.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following tables include revenues, significant hotel operating expenses, and Hotel Adjusted EBITDA for the Company’s hotels, reconciled to the consolidated amounts included in the Company’s consolidated statements of operations (in thousands):

Year Ended December 31,

2024 2023 2022

Rooms $ 452,361 $ 464,899 $ 431,515

Food and beverage 181,250 185,331 159,241

Other hotel revenue 94,793 89,112 78,829

Total hotel revenue $ 728,404 $ 739,342 $ 669,585

Rooms $ 106,465 $ 105,439 $ 94,410

Food and beverage 145,901 144,544 125,555

Direct expenses 32,824 31,887 28,842

Indirect expenses:

Property, general and administration 62,214 59,714 53,412

Sales and marketing 49,331 48,998 40,078

Information and telecommunications systems 8,331 8,159 6,521

Repairs and maintenance 30,732 29,587 25,509

Energy 23,696 24,603 22,205

Lease expense 4,052 6,283 6,190

Ownership expenses 3,765 3,912 3,575

Incentive management fee 8,037 9,935 12,466

Management fees 22,837 22,839 19,950

Property taxes 23,745 21,343 19,236

Other taxes 1,571 1,171 677

Insurance 16,766 14,489 10,454

540,267 532,903 469,080

Hotel adjusted EBITDA

$ 188,137 $ 206,439 $ 200,505

Reconciliation of hotel operating income (loss) to net income (loss)

Year Ended December 31,

2024 2023 2022

Hotel adjusted EBITDA $ 188,137 $ 206,439 $ 200,505

Ownership expenses included in other hotel expenses ( 2,882 ) ( 4,834 ) ( 6,575 )

Ownership expenses included in property taxes, insurance and other ( 426 ) ( 1,626 ) ( 399 )

Management fees ( 663 ) ( 422 ) ( 199 )

Depreciation and amortization ( 98,733 ) ( 93,272 ) ( 78,122 )

Advisory services fee ( 30,487 ) ( 31,089 ) ( 28,847 )

Gain (loss) on legal settlements — — 114

Corporate, general and administrative ( 14,361 ) ( 13,523 ) ( 18,084 )

Gain (loss) on disposition of assets and hotel properties 88,165 — —

Equity in earnings (loss) of unconsolidated entities ( 1,608 ) ( 253 ) ( 328 )

Interest income 7,135 6,401 2,677

Other income (expense) — 293 —

Interest expense and amortization of discounts and loan costs ( 108,124 ) ( 94,219 ) ( 52,166 )

Write-off of loan costs and exit fees ( 6,111 ) ( 3,489 ) ( 146 )

Gain (loss) on extinguishment of debt ( 22 ) 2,318 —

Realized and unrealized gain (loss) on derivatives 585 ( 663 ) 4,961

Income tax (expense) benefit ( 842 ) ( 2,689 ) ( 4,043 )

Net income (loss) $ 19,763 $ ( 30,628 ) $ 19,348

The CODM does not receive asset information by segment.

BRAEMAR HOTELS & RESORTS INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Subsequent Events

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.

It remains encumbered by the original mortgage loan, which now has been partially paid down to a remaining balance of $ 66.6 million.

While the Company considers its alternatives regarding refinancing the loan or potentially selling the asset, the lender has provided a six month forbearance agreement.

The Company paid approximately $ 692,000 upon extension.

During this time, the mortgage loan bears an annual fixed interest rate of 9.0 %.

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

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 %.

On March 7, 2025, the Company refinanced its $ 293.2 million mortgage loan secured by The Clancy, The Notary Hotel, Marriott Seattle Waterfront, and Sofitel Chicago Magnificent Mile, which had an interest rate of SOFR + 2.66 % and a final maturity date in June of 2025 and its $ 62.0 million mortgage loan secured by The Ritz-Carlton Reserve Dorado Beach, which had an interest rate of SOFR + 4.75 % and a final maturity date in March of 2026.

The new $ 363.0 million mortgage loan bears interest at a floating interest rate of SOFR + 2.52 % and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions.

The mortgage loan is secured by five hotels:

The Clancy, The Notary Hotel, Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, and The Ritz-Carlton Reserve Dorado Beach.

On March 10, 2025, we entered into a Limited Waiver Under Advisory Agreement with Ashford Inc.

and Ashford LLC (the “2025 Advisory Agreement Limited Waiver”).

Pursuant to the 2025 Advisory Agreement Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waive the operation of any provision in our advisory agreement that would otherwise limit the ability of the Company in its discretion, at the Company’s cost and expense, to award during the first and second fiscal quarters of calendar year 2025, cash incentive compensation to employees and other representatives of the Advisor.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data