Breaking Down Braemar Hotels & Resorts Inc. (BHR) Financial Health: Key Insights for Investors

You're looking at Braemar Hotels & Resorts Inc. (BHR) and seeing a mixed signal: strong asset performance in a luxury niche, but a balance sheet still under pressure from debt and floating-rate exposure. The third quarter of 2025 results defintely highlight this split, showing Comparable Revenue Per Available Room (RevPAR) across all hotels climbing 1.4% to $257, with the crucial resort portfolio driving a 5.5% RevPAR increase to $361. That operational strength flowed through, pushing Comparable Hotel EBITDA up 15.1% to $21.4 million for the quarter. But here's the quick math: despite that operational lift, the company still reported a net loss of $(8.2) million (or $(0.12) per diluted share) for Q3 2025, and analysts still project a full-year 2025 revenue of around $707.85 million with an estimated loss of -$1.49 per share, reflecting the high cost of capital and urban market softness. So, the core question for investors isn't just about RevPAR growth, but whether strategic asset sales-like the planned $115 million sale of The Clancy-can outpace the drag from a 43.2% net debt-to-gross assets ratio and the impact of renovations on urban properties.

Revenue Analysis

You're looking at Braemar Hotels & Resorts Inc. (BHR) right now, and the first thing to understand is that the top line is under pressure. The analyst consensus for fiscal year 2025 revenue is approximately $708.79 million, which translates to an estimated year-over-year revenue decline of about -2.69% compared to 2024. This isn't a growth story right now; it's a strategic transition story.

Braemar Hotels & Resorts Inc. is a pure-play lodging real estate investment trust (REIT), so its primary revenue comes from its portfolio of luxury hotels and resorts. The revenue streams are fundamentally split between room revenue and ancillary hotel revenue (food and beverage, meeting space, etc.). The company's strategic focus is entirely on high-RevPAR (Revenue Per Available Room) luxury assets, which is where the real value is being driven.

Here's the quick math on recent performance: The third quarter of 2025 saw total revenue of $143.56 million. While the overall revenue figure is down year-over-year, the comparable total hotel revenue for the quarter actually showed strong growth of 15.1%, which is a great sign of operational strength in the core portfolio, even as the overall asset base is being restructured.

The biggest insight for investors is the divergence between the company's two key segments-Resorts versus Urban properties. This split shows exactly where management is focusing its efforts and where the market is rewarding them.

• Luxury Resort Portfolio: This segment is the clear winner, with comparable RevPAR growth of 5.5% in Q3 2025. This performance is a direct result of the company's strategic focus on high-end leisure travel.
• Urban Hotels: This segment struggled, posting a comparable RevPAR decrease of -3.9%. This decline is largely attributed to ongoing renovations and broader city-specific occupancy issues, notably in areas like Washington, D.C., where a government pullback affected group bookings.

This tells you the company is actively shedding lower-performing or non-core assets to double down on the high-margin luxury resort business. For example, the company is executing on the sale of non-core hotels like the Marriott Seattle Waterfront and The Clancy, Autograph Collection. This strategic pruning will temporarily reduce the total revenue number, but it should improve the overall quality and profitability of the revenue base going forward. You can read more about the capital allocation strategy here: Exploring Braemar Hotels & Resorts Inc. (BHR) Investor Profile: Who's Buying and Why?

What this estimate hides is the impact of those asset sales. The estimated full-year revenue of $708.79 million for 2025 reflects a smaller portfolio. The goal isn't to maximize top-line revenue at all costs, but to maximize the quality of the cash flow, which is defintely a smarter, long-term move in this capital-intensive industry.

Here is a snapshot of the recent revenue trajectory and analyst expectations:

Next step: Look closely at the Hotel EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins for the remaining luxury resort portfolio; that's the true measure of their operational success.

Profitability Metrics

You need to know if Braemar Hotels & Resorts Inc. (BHR) is actually making money, and the short answer is: operationally, yes, but net profitability remains a challenge. The company's focus on luxury resorts is driving strong operational cash flow, but high non-operating costs like interest expense are pulling the bottom line into the red.

For the third quarter of 2025 (Q3 2025), Braemar Hotels & Resorts Inc. reported total revenue of approximately $143.56 million, but still posted a net loss attributable to common stockholders of $8.2 million. This means that for every dollar of revenue, the company lost about 5.71% after all expenses, including interest and taxes. This is defintely a key risk to monitor.

Gross, Operating, and Net Profit Margins

In the hotel industry, we often look at Hotel EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) as the cleanest measure of a property's operational efficiency, which is a great proxy for a high-level operating profit. The numbers show a clear split between property-level performance and corporate-level profitability:

• Gross Profit Margin: The industry uses Gross Operating Profit (GOP) Margin, which for the broader U.S. hotel industry stood at 37.7% year-to-date through Q3 2025. Braemar's Comparable Hotel EBITDA (a strong indicator of GOP) is driven by luxury properties, showing strong operational discipline.
• Operating Profit Margin: Braemar's Total Adjusted EBITDA for Q3 2025 was $16.4 million. This translates to an Adjusted EBITDA Margin of roughly 11.42% ($\text{\$16.4M} / \text{\$143.56M}$), which is a solid operational result before non-cash charges and financing costs.
• Net Profit Margin: The Q3 2025 net loss of $8.2 million on $143.56 million in revenue results in a Net Profit Margin of approximately -5.71%. This negative margin is a direct result of the company's significant debt load, with approximately 78% of its debt at floating rates, making it highly sensitive to rising interest rates.

Profitability Trends and Industry Comparison

Looking at the trend, Braemar Hotels & Resorts Inc. has been steadily narrowing its losses over the past five years at an annual rate of 7.3%. This shows management's efforts in cost control and strategic asset sales, like the $115 million sale of The Clancy in November 2025, which was used to pay down approximately $64.7 million of debt. That's a smart move to reduce interest expense.

When you compare Braemar's margins to the industry, the picture is mixed:

Here's the quick math: Braemar's operational margin (EBITDA) is close to the industry median, but its negative net margin is a major differentiator. The company's luxury-focused portfolio is driving strong comparable hotel EBITDA growth, up 15.1% year-over-year in Q3 2025, but the cost of capital is eating that profit. The consensus analyst view is that the Net Profit Margin could swing from -7.2% to a positive 3.7% over the next few years, which hinges entirely on interest rate stability and continued operational outperformance.

For a deeper dive into the company's balance sheet and valuation, check out the full post: Breaking Down Braemar Hotels & Resorts Inc. (BHR) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You need to know exactly how a Real Estate Investment Trust (REIT) like Braemar Hotels & Resorts Inc. (BHR) funds its operations, because its debt-to-equity balance is the single biggest indicator of financial risk. The quick takeaway here is that Braemar Hotels & Resorts Inc. operates with a significantly higher leverage profile than its peers, relying heavily on debt financing, which magnifies both potential returns and risks.

Looking at the September 2025 numbers, the company's reliance on debt is clear. Its total debt-the sum of short-term and long-term obligations-is substantial relative to its equity base. Specifically, as of the third quarter of 2025, Braemar Hotels & Resorts Inc. reported a Short-Term Debt & Capital Lease Obligation of just $5.36 Million, but a massive Long-Term Debt & Capital Lease Obligation of $1,179.32 Million. This structure tells you that nearly all the debt is long-term, which is typical for a REIT, but still a large absolute figure.

Here's the quick math on the leverage picture:

• Total Debt (Q3 2025): Approximately $1.18 Billion
• Total Stockholders Equity (Q3 2025): $211.89 Million
• Net Debt to Gross Assets (Q3 2025): 43.2%

This is a highly leveraged company. The high leverage is a core part of its risk profile.

Debt-to-Equity Ratio: A High-Wire Act

The Debt-to-Equity (D/E) ratio is what really puts the company's financing strategy into perspective. For the quarter ending September 2025, Braemar Hotels & Resorts Inc.'s D/E ratio stood at 5.59 (or 559.2%). To be fair, REITs generally use more debt than a typical operating company, but this is still an outlier number. The industry standard for Hotel & Resort REITs is around 1.216. That means Braemar Hotels & Resorts Inc. is carrying over four times the debt relative to equity compared to the average hotel REIT. This aggressive financing choice is why a Moody's-based analysis in July 2025 assigned Braemar Hotels & Resorts Inc. a weak Caa1 credit rating, reflecting high leverage and poor interest coverage.

The company's strategy is clearly to maximize the use of borrowed capital (debt financing) to acquire and operate its luxury hotel portfolio. This is a classic financial leverage play: when asset values and revenues rise, the returns to equity holders can be huge. But when things slow down, as they have done in the past, that same leverage can lead to volatile earnings and significant risk. The balance is definitely skewed toward debt.

Recent Deleveraging and Refinancing Actions

Management is aware of the high leverage, and they've taken clear steps in 2025 to manage the debt profile and improve liquidity. In March 2025, Braemar Hotels & Resorts Inc. closed a major refinancing deal for five hotels, securing a new $363 Million loan at a floating rate of SOFR + 2.52%. This action successfully addressed the company's final 2025 debt maturity, removing a near-term refinancing risk and securing a more favorable interest spread on those assets.

They also used asset sales to deleverage. Following the sale of the Marriott Seattle Waterfront for $145 Million in Q3 2025, the company paid down approximately $88.4 Million of debt. Plus, they've been actively reducing equity-like obligations by redeeming approximately $125 Million of non-traded preferred stock as of the end of the third quarter. These moves show a concerted effort to clean up the balance sheet and reduce the cost of capital.

Still, a significant risk remains: approximately 87% of the consolidated debt is effectively floating rate. If the Secured Overnight Financing Rate (SOFR) continues to climb, the company's interest expense will rise quickly, directly pressuring net income. This is a key risk for investors to monitor. You can find more detail on the company's strategic priorities in their Mission Statement, Vision, & Core Values of Braemar Hotels & Resorts Inc. (BHR).

Next Step: Check the Federal Reserve's forward guidance on SOFR to model the impact on Braemar Hotels & Resorts Inc.'s future interest expense.

Liquidity and Solvency

You're looking for a clear picture of Braemar Hotels & Resorts Inc. (BHR)'s ability to meet its near-term obligations, and honestly, the liquidity ratios tell a story of tight management, but also a strategic shift. For a Real Estate Investment Trust (REIT), especially one focused on high-RevPAR luxury hotels, the traditional current and quick ratios often run lean, but we still need to see an improving trend.

As of the most recent quarter (MRQ) in 2025, Braemar Hotels & Resorts Inc. (BHR)'s Current Ratio sits at 0.86, a definite improvement from the 0.44 reported in 2023. This ratio, which compares current assets to current liabilities, is still below the ideal 1.0, meaning current liabilities exceed current assets. The Quick Ratio (a stricter test that excludes less liquid assets like inventory) is even tighter at 0.58. This indicates a negative working capital position, which is common in the hotel industry where prepaid expenses and cash held by managers can complicate the balance sheet, but it still flags a need for careful cash management.

• Current Ratio (MRQ 2025): 0.86 (Improving from 2023).
• Quick Ratio (MRQ 2025): 0.58 (Shows tight, but manageable, short-term liquidity).
• Working Capital: Negative, but the trend is upward from 2023.

The working capital trend, while negative, is moving in the right direction. The jump from a 0.44 Current Ratio in 2023 to 0.86 in MRQ 2025 shows management is actively improving its short-term financial position. Plus, the company ended Q3 2025 with $116.3 million in cash and cash equivalents, which is a solid buffer. You also need to factor in the $23.1 million in cash held by third-party hotel managers, which is readily available to fund hotel operating costs.

Here's the quick math on the cash flow statement trends for the Trailing Twelve Months (TTM) ending Q3 2025. This is where the real story of a REIT's financial health often lies:

The $39.09 million in positive Operating Cash Flow (OCF) for the TTM is a critical strength; the core business is generating cash. The large positive $89.34 million in Investing Cash Flow is defintely a result of strategic portfolio pruning, like the sale of the Marriott Seattle Waterfront for $145 million and the planned sale of The Clancy for $115 million. This cash is being used for deleveraging, which is a clear action.

The use of cash for financing activities shows a strong commitment to improving the capital structure. Braemar Hotels & Resorts Inc. (BHR) paid down approximately $88.4 million of debt following the Marriott sale and has redeemed about $125 million of its non-traded preferred stock to improve cash flow per share. This is a proactive move to reduce long-term risk, especially since approximately 87% of their consolidated debt is effectively floating rate, making them vulnerable to interest rate hikes. The clear action here is that they are using asset sales to de-risk the balance sheet, which is a major strength that offsets the tight liquidity ratios. For more on the strategic direction driving these decisions, you can review the company's Mission Statement, Vision, & Core Values of Braemar Hotels & Resorts Inc. (BHR).

Valuation Analysis

You're looking at Braemar Hotels & Resorts Inc. (BHR) and asking the core question: is the market missing something, or is the price reflecting real risk? My take is that Braemar Hotels & Resorts Inc. is currently trading at a discount based on its asset value, suggesting it is undervalued on a Price-to-Book basis, but the market is clearly punishing its lack of profitability and high debt load, which is why the stock has struggled.

Honestly, the valuation picture is messy. For a Real Estate Investment Trust (REIT) focused on luxury hotels, the standard Price-to-Earnings (P/E) ratio is nearly useless because the company has negative earnings per share (EPS). As of November 2025, the trailing twelve months (TTM) EPS is around -$0.87, which gives you a negative P/E ratio of roughly -3.13 based on a recent stock price of $2.72. That's a flashing red light for profitability. Still, let's look at the metrics that matter more for a REIT.

Here's the quick math on key valuation multiples as of November 2025:

The Price-to-Book (P/B) ratio of just 0.87x tells you the market values the company at less than its net asset value. That's a classic sign of a deep-value opportunity, but it often hides underlying issues like high debt or poor asset quality. Plus, the Enterprise Value-to-EBITDA (EV/EBITDA) multiple of 9.10x is relatively low for the luxury hotel sector, indicating the market is pricing in risk to future operating cash flow (EBITDA).

Stock Performance and Dividend Reality

The market has defintely shown its skepticism over the last year. Braemar Hotels & Resorts Inc.'s stock price has decreased by 18.83% over the last 12 months, trading near the lower end of its 52-week range of $1.80 to $3.82. The recent closing price around $2.72 (as of mid-November 2025) reflects this downward pressure, even with a strong Q3 2025 Hotel EBITDA growth reported.

For income investors, the dividend looks tempting, but you need to look closer. The TTM annual dividend of $0.20 per share translates to a high dividend yield of about 7.22%. However, the dividend payout ratio is negative-around -26%-because the company is not generating positive net income. This means the dividend is currently being paid out of capital or debt, which is simply not sustainable long-term without a return to profitability. It's a key risk to monitor.

• Stock is down 18.83% over the last 12 months.
• Dividend yield is a high 7.22%, but the payout is not covered by earnings.
• The low P/B ratio suggests asset value is discounted.

Analyst Consensus and the Path Forward

The analyst community is split, which is why the stock price is stuck in this range. The consensus rating is a cautious Hold, reflecting the tug-of-war between cheap valuation and operational risk. One recent analyst rating places a price target at $2.50, while another consensus target is higher, around $4.00. The current price of $2.72 sits right in the middle, showing the market's wait-and-see stance.

The opportunity here is a potential rerating if the company executes its plan to boost margins through property renovations and technology upgrades, as analysts expect. But the massive debt exposure, with 78% of debt at floating rates, raises interest cost volatility and refinancing risks, especially in the current rate environment. That's the biggest headwind. For a deeper dive into the institutional interest, you should read Exploring Braemar Hotels & Resorts Inc. (BHR) Investor Profile: Who's Buying and Why?

Finance: Track the Debt/EBITDA ratio quarterly to ensure it trends down from the current 8.50x, as that's the real measure of risk right now.

Risk Factors

You're looking at Braemar Hotels & Resorts Inc. (BHR) because the luxury resort portfolio is performing well, but honestly, the risks tied to their capital structure and operations are defintely worth your attention. The direct takeaway is that while management is executing a smart strategy of asset sales and debt reduction, the exposure to rising interest rates is a massive headwind that could wipe out operational gains.

We need to map the near-term risks to clear actions, and for Braemar Hotels & Resorts Inc., those risks fall into three buckets: financial, operational, and external.

Financial and Interest Rate Exposure

The single biggest financial risk is the company's high proportion of floating-rate debt. As of the third quarter of 2025, approximately 87% of their consolidated debt is effectively floating. This means every hike in the Secured Overnight Financing Rate (SOFR) directly hits the bottom line, increasing interest expense. For context, their total combined loans had a blended average interest rate of 6.9% as of September 30, 2025.

This interest rate sensitivity is why the company reported a net loss attributable to common stockholders of $8.2 million, or $0.12 per diluted share, for Q3 2025. It's a profitability challenge, plus the net debt to gross assets ratio remains at a notable 43.2% at the end of the third quarter.

Operational and Strategic Execution Risks

Braemar Hotels & Resorts Inc. is actively refining its portfolio, which is a good strategic move, but it introduces near-term operational risk. Ongoing, significant renovations at several properties are temporarily impacting results. For example, comparable Revenue Per Available Room (RevPAR) for urban hotels decreased by 3.9% in Q3 2025, partly due to these renovations and citywide occupancy declines.

The good news is that management is acting on this. Here's the quick math on their deleveraging and asset-sharpening strategy:

• Sold The Clancy hotel in November 2025 for $115.0 million.
• Used the proceeds to pay down approximately $64.7 million of debt.
• Retained roughly $43.7 million after costs for future use.

They are selling non-core assets to focus on their higher-performing luxury resorts, which saw a 5.5% increase in comparable RevPAR in Q3 2025. They also redeemed approximately $125 million of non-traded preferred stock to date, which is 27% of the original capital raise, improving cash flow per share. That's a clear action plan.

External and Market Condition Risks

The luxury lodging sector is not immune to economic shifts. While the resort portfolio is strong, the urban hotels face external competition and market-specific issues.

• Competition: The luxury segment is fiercely competitive, and maintaining premium pricing requires constant capital expenditure (CapEx) to keep properties like the Ritz-Carlton Lake Tahoe and Four Seasons Resort Scottsdale at the highest standard.
• Group Bookings: The company specifically cited a government pullback affecting group bookings and catering at certain properties, particularly in Washington, D.C.. This is a micro-market risk to watch.
• Economic Downturn: A broader economic slowdown would immediately impact demand for luxury travel, which is their core focus.

The strategic move to sell urban assets like the Marriott Seattle Waterfront and The Clancy for a total of $260 million ($145 million and $115 million, respectively) is a direct mitigation strategy against these urban and non-core market risks.

For a full breakdown of the company's valuation and strategic frameworks, you can read the rest of the post here: Breaking Down Braemar Hotels & Resorts Inc. (BHR) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at Braemar Hotels & Resorts Inc. (BHR) and trying to map out a path to real value, which is smart because the narrative is complex: strong asset performance but a challenging bottom line. The near-term growth story is defintely not about massive acquisitions; it's about surgical asset management and doubling down on their core strength: luxury resorts.

The clear growth driver is the outperformance of their luxury resort portfolio. For the third quarter of 2025, comparable RevPAR (Revenue Per Available Room)-the key metric for hotel health-increased 1.4% across the entire portfolio, but their resort segment saw a much stronger 5.5% comparable RevPAR growth. That's where the high-margin business is living. This focus aligns with their long-term strategy of investing in luxury properties expected to generate RevPAR at least twice the U.S. average. You can see their guiding principles here: Mission Statement, Vision, & Core Values of Braemar Hotels & Resorts Inc. (BHR).

Future Revenue and Earnings Estimates

Analysts are realistic about the short-term financial picture, which is heavily influenced by high leverage and portfolio refinement. The consensus full-year 2025 revenue estimate is around $707.85 million. Here's the quick math on profitability: the full-year 2025 earnings are expected to be a loss of approximately -$1.49 per share. Still, the underlying operational efficiency is improving. In Q3 2025, comparable Hotel EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) jumped by a significant 15.1% to $21.4 million, showing they are translating modest revenue growth into stronger cash flow.

The management is confident about sustaining momentum, especially in the group segment. Group room revenue pace for the full year 2025 is up a healthy 9.1% compared to the prior year, a sign that corporate and event demand is strong for their high-end properties.

Strategic Initiatives and Portfolio Refinement

Braemar Hotels & Resorts Inc. is executing a clear, two-pronged strategy: enhance the best assets and sell the non-core ones. This is a capital-disciplined approach to de-leveraging the balance sheet and sharpening the luxury focus.

• Asset Enhancement: They anticipate spending between $75 million and $85 million on capital expenditures in 2025. This cash is going into high-return projects like guestroom renovations at Hotel Yountville and Park Hyatt Beaver Creek, and converting the Cameo Beverly Hills to Hilton's LXR luxury portfolio.
• Product Innovations: They are adding high-margin ancillary services, such as a new Gelato shop and Cafe at Four Seasons Resort Scottsdale, and luxury beach cabanas at The Ritz-Carlton St. Thomas, which create new revenue streams.
• Portfolio Optimization: The company is actively selling non-core urban assets to reduce debt and focus on luxury. They closed the sale of the Marriott Seattle Waterfront for $145 million and announced the planned sale of The Clancy in San Francisco for $115 million.

The biggest strategic initiative, of course, is the ongoing process to explore strategic alternatives, including a potential sale of the entire company, which could unlock significant shareholder value if a buyer is found at an attractive valuation.

Competitive Advantages in Luxury Lodging

The company's primary competitive edge lies in its portfolio of iconic, high-barrier-to-entry assets, often managed by premier brands like The Ritz-Carlton and Four Seasons. This brand alignment and irreplaceable real estate allow them to command premium pricing.

The market is seeing the luxury segment outperform other hotel categories, and Braemar Hotels & Resorts Inc. is positioned perfectly to capture that demand. Their resort properties continue to drive higher ADR (Average Daily Rate) and RevPAR, which is a key differentiator. The focus on high-quality assets means they are less exposed to the volatility of the lower-end hospitality market. This is a quality-over-quantity play.

Next Step: Finance should model the impact of the planned sale of The Clancy on the Q4 2025 debt-to-asset ratio by the end of the week.