Braemar Hotels & Resorts Inc. (BHR) stock intrinsic value fair value estimate & owner earnings analysis

Braemar Hotels & Resorts owns luxury and upper-upscale hotels and resorts, including the Ritz-Carlton Sarasota, the Ritz-Carlton Reserve Dorado Beach in Puerto Rico and the Four Seasons Resort Scottsdale at Troon North. Those three produced about 37% of 2025 hotel revenue (13.3%, 12.4% and 11.3%), so results lean heavily on a few properties. The company has no employees of its own; it is run under an advisory agreement with Ashford Inc., and its hotels are managed by an Ashford affiliate. How we measure earnings: we start from cash generated by operations, remove swings in working capital, subtract stock compensation, and subtract renovation and equipment spending. Revenue growth in 2021 to 2023 was a rebound at existing hotels rather than expansion, so all improvement spending is treated as a cost of keeping the hotels competitive. A one-time $17.0 million deposit paid to Ashford Inc. in 2025 is treated as non-recurring. On that basis, owner earnings per share were about $(2.36) in 2020 (pandemic), $0.32 in 2021, $0.63 in 2022, $(0.13) in 2023, $(0.41) in 2024 and $(0.39) in 2025. We use the 2021 to 2025 window, the period after reopening, and its middle value is roughly $(0.13) per share. The 2020 pandemic year is excluded. Years before 2020 were not built into the series. The key facts: revenue slipped from $739.3 million in 2023 to $728.4 million in 2024 and $704.0 million in 2025, partly because hotels were sold. Improvement spending ran $77.1 million, $70.6 million and $77.9 million over those three years, consuming essentially all operating cash flow (2025 operating cash flow was $40.8 million). Interest paid was $88.1 million in 2025 on about $1.1 billion of debt, roughly $1.0 billion of it floating-rate. Separately, preferred stock dividends were $35.3 million in 2025 ($40.3 million in 2024), paid ahead of common holders and not included in the owner-earnings figures above. After renovation spending and preferred dividends, nothing is left over for common shareholders on these numbers. A large contractual claim also sits ahead of the shares in any sale. Under an August 2025 letter agreement, Ashford Inc. is owed a $480.0 million fee plus accrued fees if the company is sold, paid from the sale proceeds. Management is exploring a sale, but nothing in the filings says one will happen or at what price, so no sale value is included. Growth path: owner earnings changed from about $(0.41) to $(0.39) per share in 2025 (a slightly smaller loss), and year 1 of the base case assumes no improvement from that level, so there is no gap to explain. Six-month 2026 figures show operating cash flow of $42.9 million (versus $38.2 million a year earlier) and improvement spending of $17.8 million (versus $33.0 million), while revenue fell about 3.8% to $380.0 million. That is only two quarters of evidence and does not yet move our earnings level. Bear case ($0 per share): renovation spending stays near $70 to $78 million a year, revenue keeps drifting lower, the floating-rate debt keeps interest costs high, and preferred dividends continue. Owner earnings stay negative before and after preferred dividends, leaving nothing for common shareholders. Base case ($0 per share): operating cash flow near $50 million against renovation spending in the $45 to $55 million range, which roughly breaks even before preferred dividends of about $30 million or more, leaving nothing for common shareholders. Bull case ($0 per share): the first-half 2026 pattern holds for the full year (operating cash flow around $57 million, improvement spending around $36 million) and preferred dividends keep falling as they have since 2023; owner earnings would be a few million dollars positive before preferred dividends, still not enough to cover them. What we did not credit: gains from selling hotels (the company booked gains of $82.8 million in 2025 and $88.2 million in 2024, and sold $247.6 million of hotels in 2025), because sale proceeds mostly repay debt and now stand behind the Ashford fee and preferred holders, and because they are not recurring earnings; a rebound in luxury travel demand; and any turnaround in margins. Debt is not subtracted separately; its cost is already in cash flow. Real estate value may be worth more than this cash-flow view implies, and a well-priced sale of the whole company or of several hotels is the main way the shares could be worth more than we show. It would need to clear the debt, the preferred stock and the $480 million Ashford fee first. This case would be wrong if renovation spending falls durably well below the recent pace while operating cash flow holds, or if preferred stock is retired quickly.