NEW YORK - Blackwells Capital LLC, an investor in Braemar Hotels & Resorts Inc. (NYSE: BHR), has publicly contested the actions and statements of Braemar's management, particularly targeting the company's CEO, Mr. Bennett. The dispute centers around Blackwells' claims of mismanagement and calls for shareholders to vote in favor of its nominees and proposals, as stated in a recent press release.
Blackwells has criticized Mr. Bennett's track record with real estate investment trusts (REITs), suggesting that his management has led to significant share price declines. The investment firm accuses Bennett of extracting shareholder value for his benefit, particularly through a contentious advisory agreement with Ashford (NYSE:AINC) Inc. Blackwells alleges that this agreement has increased Bennett's fee stream by 600% while Braemar's shareholders have faced a 90% decrease in share value.
The conflict has escalated to the point where Blackwells has filed a lawsuit against Braemar's board, accusing them of improperly rejecting Blackwells' nomination notice and issuing false and misleading statements. The litigation, which has been consolidated, is currently stayed, with the outcome potentially affecting the proxy battle.
Blackwells urges Braemar's shareholders to support its independent director nominees, who it claims are committed to defending shareholder interests and addressing governance issues within the company. Additionally, Blackwells recommends voting against Braemar's executive compensation resolution.
The investment firm has a history of engaging with public company boards to drive value for stakeholders and holds a diverse portfolio that includes public and private market investments. The current dispute with Braemar's management reflects Blackwells' active investment approach and its willingness to challenge corporate governance practices it views as detrimental to shareholder value.
In other recent news, Braemar Hotels & Resorts Inc. has seen its stock target raised by B.Riley, which continues to maintain a Neutral rating for the company. This revision, from $2.50 to $3.50, was influenced by the company's first-quarter performance in 2024 and its strategic actions. Despite this, the analyst firm has expressed caution due to uncertainties surrounding Braemar Hotels' future plans.
In addition to the updated outlook, Braemar Hotels & Resorts reported positive Q1 growth, with notable revenue per available room (RevPAR) growth and net income attributable to common stockholders of $3.5 million. The company's financial strategies, including the sale of the Hilton La Jolla Torrey Pines for $165 million, preferred share redemption, and common share buybacks, were highlighted.
Further, the company's robust start to 2024 is supported by an acceleration in group rooms revenue and a strong performance in the Caribbean market. B.Riley's analyst expressed interest in how Braemar Hotels' valuation would evolve following further details on additional asset sales and the execution of stock buybacks. These recent developments within Braemar Hotels & Resorts Inc. will be closely monitored by the market.
InvestingPro Insights
In light of the ongoing dispute between Blackwells Capital and the management of Braemar Hotels & Resorts Inc. (NYSE: BHR), a closer look at the company's financial metrics and market performance may offer additional context to shareholders and potential investors. According to InvestingPro data, Braemar Hotels & Resorts has a market capitalization of approximately $198.27 million, with a revenue over the last twelve months as of Q1 2024 at $742.89 million, showing a modest growth of 2.8%. Despite these figures, the company's P/E ratio stands at -2.68, indicating that it has not been profitable during this period.
InvestingPro Tips suggest that BHR is trading at a low EBITDA valuation multiple and offers a significant dividend yield of 6.87%, which could be appealing to income-focused investors. The company's stock has recently experienced a large price uptick, with a total return of 47.03% over the last three months. However, analysts do not anticipate the company will be profitable this year, and the stock price has performed poorly over the last decade, reflecting some of the concerns raised by Blackwells.
For those interested in a deeper analysis, there are additional InvestingPro Tips available for Braemar Hotels & Resorts at https://www.investing.com/pro/BHR. Shareholders and potential investors may find these insights valuable as they assess the company's performance and the impact of the ongoing proxy battle. To access these insights and more, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 11 more InvestingPro Tips available that could further inform your investment decision regarding BHR.
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