Q4 2020 Braemar Hotels & Resorts Inc Earnings Call
Greetings and welcome to the Braemar hotels, <unk> resorts incorporated fourth quarter 2020 results conference call.
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It is now my pleasure to introduce your host Jordan Jennings Investor Relations for Braemar.
MS. Janet you may begin.
Good morning, and welcome to today's call to review results for Braemar hotels, <unk> resorts for the fourth quarter and full year 2020 and to update you on recent developments.
On the call today will be Richard Stockton, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, and Jeremy Welter, Chief operating officer, the results as well as notice of the sensibility of this conference call on a listen only basis over the Internet were distributed yesterday in a press release.
At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward looking information and are being made pursuant to the safe Harbor provisions of the federal Securities regulation.
Such forward looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities Exchange Commission before looking statements included in this conference call are only made as of the day.
This call and the company is not obligated to publicly update or revise them.
Statements made during this call do not constitute an offer itself or it's all a true.
Solicitation of an offer to buy any securities Securities will be offered only by means of a registration statement.
Respect those which can be found at www Dot S E C dot up.
In addition, certain terms used in this call are non-GAAP financial measures reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on form 8-K with the SEC on February 25, 2021, and May also be accessed through the company's website at www Dot HR REIT dotcom.
Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release.
Now I'll turn the call over to Richard Stockton. Please go ahead Richard.
Good morning, and welcome to our fourth quarter 2020 earnings conference call I'll begin by providing an overview of our business and an update on our portfolio, which includes our hotels again, achieving positive hotel EBITDA for the quarter. After that Derek will provide a review of our financial results and Jeremy will provide an update on our asset management activity.
Afterward, we will open the call for Q&A.
The four key themes for today's call are luxury resort outperformance, resulting in positive portfolio wide hotel EBITDA.
Very strong forward bookings.
Significantly reduced monthly cash utilization and no near term debt maturities.
2020 was an extraordinary year.
And while the COVID-19 pandemic has created both social and economic disruption on an unprecedented level and has created a volatile landscape throughout the hospitality industry.
The rollout of vaccines gives us hope that the hospitality industry can return to a more normal environment in the near future and the mean.
In time, we.
We are proactively navigating through any potential challenges and as I have said previously our entire leadership team has been steadfast in our commitment to protect all of our stakeholders. During this unprecedented precedented time.
I am pleased to report that during the fourth quarter all of our properties remained open and we continue to achieve positive hotel EBITDA across the portfolio.
In December alone, we delivered positive hotel EBITDA of $3 3 million, our highest month since March of last year.
This solid performance in the quarter was driven by strong occupancy levels at our resort properties and a 10, 8% increase over prior year ADR.
Three luxury resorts, achieving an ADR of over $1000 during the holiday season.
While these are demand is holding up nicely, particularly on weekends any significant uptick in revpar performance is likely to rely on the recovery of corporate transient demand and ultimately group demand.
As a result of widespread vaccination or achieving herd immunity.
We are encouraged to see a significant decline in the number of daily New cases, which we believe to be a precursor to the end of the pandemic.
Overall, our resorts continue to perform well and forward bookings were solid throughout our portfolio for the month of January our Revpar was down 55 per cent to $104, which demonstrates continued improvement.
It looks like February will finish with an occupancy of close to 40% and an ADR of around $400, resulting in revpar of approximately $160.
Our current bookings for March and April looks strong with current ADR above $500 per reservations on the books for the month of March.
Many of our hotels are in drive to leisure markets and have been well positioned to benefit from the resurgence of pent up leisure demand in recent months in.
In total eight of our 13 hotels are considered resort destinations. These hotels include the Ritz Carlton Sarasota, Artesano Hotel Yountville Ritz Carlton Lake Tahoe Pier House resort.
Our Hyatt Beaver Creek, Hilton La Jolla, Torrey Pines, and Ritz Carlton St. Thomas.
We're pleased to report that this thesis has played out just as we expected as these hotels had a combined hotel EBITDA of $7 1 million for the quarter.
While it is still early in the recovery and the impact of the virus is still unpredictable. It is clear from the early feedback we're hearing from guests that day.
We are enthusiastic about traveling again.
We're also excited about the Clancy opening at the beginning of the fourth quarter located in San Francisco's vibrant Soma district, the former courtyard, San Francisco downtown underwent a rebranding and renovation in excess of $30 million to create the Clancy.
<unk> Marriott International's autograph collection hotels, and the property features 410, Guestrooms and over 11000 square feet of modern meeting space throughout 16 event rooms, while construction restrictions delayed the Clancy is reopening by several months and we expect that occupancy levels will be challenged in the near term given COVID-19 negative impact.
On group and business transient demand in this market, we look forward to realizing enhanced financial performance from this property over the long term as a result of the rebranding and renovation.
While we continue to face the challenges of the pandemic and the uncertainty that go with it we have taken proactive and aggressive actions to protect and enhance our corporate liquidity. This includes cutting expenses at the corporate level and significantly reducing our planned capex spend for the year.
We'll continue to preserve cash until we have more clarity on the recovery and the direction of the lodging industry.
Our focus on the luxury segment with many properties in drive to markets positions us to perform well in the near term as well as for the ultimate recovery in our industry looking.
Looking forward, we continue to believe that Braemar presents a compelling opportunity in the lodging REIT space, where our unique story with the majority of our assets in very desirable resort locations a portfolio that is generating positive hotel EBITDA and what we believe is a solid liquidity position and balance sheet with attractive debt financing in place as we come out of this pandemic.
I will now turn the call over to Derek.
Thanks Richard.
For the fourth quarter of 2020, we reported a net loss attributable to common stockholders of $28 3 million or <unk> 77 per diluted share.
For the quarter, we reported <unk> per diluted share of negative <unk> <unk>.
Adjusted EBITDA for the quarter was negative $1 $4 million.
At quarter end, we had total assets of $1 7 billion.
We had $1 1 billion of mortgage loans of which $49 million related to our joint venture partner share of alone on the capital Hilton and Hilton La Jolla Torrey Pines.
Our total combined loans had a blended average interest rate of two 5%.
Our loans are entirely floating rate.
As of the end of the fourth quarter, we had approximately 54% net debt to gross assets and our next final debt maturity is in April 2022.
We ended the quarter with cash and cash equivalents of $78 6 million and restricted cash of $34 $5 million <unk>.
The vast majority of that restricted cash is comprised of lender and manager held reserve accounts.
At the end of the quarter, we also had $12 $3 million and due from third party hotel managers.
This primarily represents cash held by one of our property managers, which is also available to fund hotel operating costs.
All of our loans are current and out of default.
As we highlighted with our positive hotel EBITDA for the quarter are mostly our monthly cash burn at our hotels has been reduced to close to zero.
Richard mentioned that our hotel EBITDA in December was positive $3 $3 million.
There are some additional items that are below the line at the properties. So hotel operating cash flow was approximately $3 million.
Our current monthly run rate for debt service is approximately $2 $6 million.
Our current monthly run rate per corporate G&A and advisory fees is approximately $1 5 million.
That equates to a monthly cash utilization of approximately $1 million.
If you were to take into account our preferred dividends it would bring our monthly cash utilization to $2 million.
With all of our hotels currently open and operating.
$78 million of cash and cash equivalents at the end of the quarter and based on realistic yet conservative assumptions for future Hotel operations. We believe we have sufficient liquidity to outlast the COVID-19 related downturn in our business.
During the quarter and subsequent to the end of the quarter, we issued approximately $2 7 million shares under our ATM raising approximately $12 million in gross proceeds.
Subsequent to the end of the quarter. We also entered into a standby equity distribution agreement or Cedar with Yorkville advisors pursuant to which we were able to sell up to approximately seven 8 million shares of our common stock to yorkville at any time during a 36 month commitment period.
We view these capital raising transactions as an important way to improve our liquidity in an uncertain time in our industry.
Earlier this week, we completed an amendment to our term loan that extended our covenant waiver period through the fourth quarter of 2021 and reduced our fixed charge covenant through the end of 2022.
As of December 31, 2020, our portfolio consisted of 13 hotels.
From 87 net rooms, our share count currently stands at $44 7 million fully diluted shares outstanding which is comprised of $40 5 million common shares of common stock and $4 3 million op units.
In our financial results. We include approximately $6 7 million shares and our fully diluted share count associated with our series B convertible preferred stock.
This concludes our financial review I would now like to turn it over to Jeremy to discuss our asset management activities for the quarter. Thank you Derrick comparable revpar for our portfolio decreased 59, 8% during the fourth quarter, and we were able to generate hotel EBITDA flow through of 59%.
As Richard mentioned, our hotel EBITDA in December was solid driven by our resorts, which saw strong demand over the holiday season.
Despite all of the closures and travel restrictions our resort hotels actually did quite well in 2020 relative to our urban assets.
Fourth quarter comparable hotel EBITDA for resorts was $7 1 million compared to negative $5 5 million of comparable hotel EBITDA for our urban hotels.
When you look at full year 2020 results. The story is the same.
$31 million of comparable hotel EBITDA for our resorts and negative $17 $5 million per comparable hotel EBITDA for our urban hotels.
We expect our resorts to continue to outperform our urban hotels for some time.
While we are optimistic the demand at our urban properties will continue to accelerate as we progress through 2021.
Our Ritz Carlton Sarasota.
It is an excellent example of the outperformance we're seeing from our resort.
Property had ADR growth of seven 3%.
In the fourth quarter over the prior year quarter.
And had the highest total room revenue in the resort's history during the festive season, which is what we call the period from December 23rd until right after new year's day.
The property generated nearly $100000 more than rooms revenue during that time than in any previous year and its ADR achieved.
$200.
Another resort that has outperformed.
Extremely well is our Ritz Carlton St Thomas.
Each had a revpar increase of 18, 5% during the fourth quarter compared to the year prior and hotels strong continued.
Entity into this year.
Over Valentine's day weekend was over $3500.
There are now direct flights to St. Thomas from 12 major metro areas in the U S and airlines continue to increase capacity with.
With the recent requirement to have a negative COVID-19 test to return to the U S. We believe the USPI will benefit as Vaccinators change plans to stay within the U S.
The property is ramping up faster than we expected after the recent renovation and the team there is doing a fantastic job.
That property has become one of the top performing rich Carlton and the world.
The rest of our resort hotels also finished the year strong.
For the full year 2020, the Pier House resort had $6 $7 million in comparable hotel EBITDA and the park Hyatt Beaver Creek had $5 million of comparable hotel EBITDA, Our California properties Artesano Hotel Yountville.
From a jolla, Torrey pines, and the Ritz Carlton Lake Tahoe, collectively generated $3 2 million and comparable hotel EBITDA for the year.
Moving to capital investment in 2019, we invested heavily in our portfolio to enhance our competitive positioning.
These investments include the conversion of the courtyard, Philadelphia downtown to the notary hotel.
The completion of the three suite presidential Villa at the <unk> Hotel.
And value add projects during the rebuild of the Ritz Carlton St. Thomas.
These initiatives have allowed us to dramatically limit capital spend during the COVID-19 pandemic.
In 2020, despite curtailing our capital expense expenditures significantly.
We completed the conversion of the courtyard, San Francisco downtown to the Clancy as well as the renovation of the Guestrooms at the Pier House resort in key West.
In total we spent $25 6 million in capital expenditures in 2020 and.
In 2021, we are planning to spend between 20% to $24 million and capital expenditures.
As we enter 2020, we were optimistic about the performance of our portfolio given the recent capital investments and disruption that we had experienced.
While we started the year off strong depend NAMIC Delta a significant below that we are still recovering from that.
That being said we are already seeing incredible potential this portfolio has as we look for.
Even though occupancy was negatively impacted the ADR of our portfolio grew by an impressive 11% in 2020.
The Park Hyatt Beaver Creek, Ritz, Carlton Sarasota, and Ritz Carlton Saint Thomas all generated growth in ADR over 2019.
But the notary and a Clancy completed pier house's Guestrooms now complete and BARDA zone on his new Villa this portfolio is well positioned to significantly outperform as we emerge from this pandemic I.
I will now turn the call back over to Richard for final remarks. Thank.
Thank you Jeremy.
In summary, we are in early stages of the recovery, but we can now see a clear path to normalcy.
It sets us up nicely for a slow but steady recovery in our financial results. We have taken decisive actions to navigate the near term challenges of this crisis and we are well positioned moving forward with a solid balance sheet and unique diversified portfolio. We are encouraged as we look ahead that we have in place the appropriate runway to get back to positive cash flow this year.
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I'm proud of our efforts to protect our assets and maintain financial flexibility to position us for future success. We look forward to updating you on our progress as we move through 2021.
This concludes our prepared remarks, and we will now open the call for Q&A.
Thank you.
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Okay.
Our first question comes from Alex Kubicek with Baird. Please proceed with your question.
Good morning.
Good morning.
Richard I wanted to start with to start with just a high level question for you how do you position yourself today to be in a better place to be a potential acquirer down the road, whether it's 12 to 24 months, obviously fundamentals improving its a big help but just curious.
Maybe before you can turn to offense.
Yes, thanks for that question Alex.
Look I think in order to beyond the front foot in terms of acquisitions.
And I look at acquisitions, either as for cash or via <unk>.
<unk> unit acquisition, which is something that we've kind of thought about in the past, but still a possibility, but if it if it's a cash type acquisition.
I think we need to get to a place with our balance sheet that we feel.
It's very comfortable and very comfortable for investors.
Right now we have certainly ample liquidity, but we're still.
Using <unk> cash on a monthly basis, I think we have to get to cash.
Cash flow positive.
And then I think we have to stick by our leverage policy and what thats been historically and historically.
We've sought to maintain 10%.
Our gross debt balance as cash on the balance sheet.
We've also sought to have our leverage be 45% net debt to gross assets. So we're going to have to let those assets returned to cash flow positive and view if you will fill the coffers.
Before I think we're getting very aggressive on the acquisitions front.
So we.
We're having the financial discipline, and Luckily and I'm sure we'll get many questions about this we're not seeing a ton of opportunities in the luxury hotels space and.
Frankly, I'm not sure we will see a lot of hotels of opportunities at very attractive prices.
There's been so much capital raised out there to our.
Target on hotel acquisitions that.
The weight of capital will likely keep prices elevated rather than allowing there to be some sort of a feeding frenzy. So I'm not I'm not really anticipating that.
So we're kind of sticking to our knitting.
Sure.
Repairing the company and we are clearly on the back end of.
The crisis, if you will.
And then that will set us up ultimately to pursue new acquisitions.
And then as a follow up just you spoke to cash.
Cash to LP units to equity just wondering if you have an updated view on preferred today given that the bees are trading a lot closer to par just where does that rank on the capital hierarchy you guys have today.
In terms of issuing preferred.
Correct, Yeah, so our preferred pricing.
Is.
They're about a little bit wider than where it was when we issued the preferred DS perpetual preferred.
<unk>.
Some of our peers youll have issued convertible instruments.
Yes, that's something that.
I wouldn't rule out.
Forward I think there's certainly benefits to long term.
Our balance sheet stability to the extent that that is convertible.
Net debt anything that.
We're looking to do.
We'd obviously have to announce but.
I can tell you that the pricing is getting increasingly attractive and you've picked up on that trend.
Our preferreds at the height of the pandemic, we're treating it trading at over 20% yields the cash.
Hung around 10% there for a while now we're sub nine so.
Clearly heading in the right direction.
Well one thing I would add to that is if you look back to pre pandemic, we would add a filing.
Our non traded preferred offering at Braemar that we were planning to do it through Ashford Securities.
We obviously put that on ice during the pandemic, but one of the things that we do plan to do is.
As utilized our broker dealer network through Ashford Securities.
Do you believe we have a very attractive.
Source of capital that could be beneficial to braemar, which is a traditional retail investor and that tends to be resilient in terms of.
Being available during all stages of all cycles, even during the pandemic.
This market. This alternative investment space was resilient in raising capital. So thats something that is out there and hopefully we'd be able to share more with you in the future on it.
Yeah. Thanks from the color and then just one quick housekeeping question. It looks like there is a small reversal in the incentive fee. This quarter can you remind us of the moving parts there and should we expect any reversals in 2021.
Yes. This is Derek so the reversal of that is.
As you recall there is an incentive fee that can be paid over a three year period.
Under the advisory agreement, but those each of those three payments is subject to and a net.
CCR calculation and just given the.
Drop in our earnings that.
That last tranche of that payment was not was not triggered so that's why you saw the reversal of that.
It had previously been recorded in our earnings a few years ago. So we reversed that out.
So there shouldn't be any in 2021, given that there wasn't any in 2019 net wells at the day each year. There is a test for the incentive fee and so that that related to an incentive fee from a few years ago. So there could be if theres outperformance thats based on a total shareholder return outperformance calculation. So it's.
We'll just have to see how the year plays out.
That's very helpful. Thanks for the time guys.
Thank you.
Our next question comes from Tyler <unk> with Janney Capital markets. Please proceed with your question.
Hey, good morning, Thanks for taking my questions first question I have is on ADR.
The second quarter in a row that it's been quite.
Quite strong and the commentary for January and February was also positive as well. So can you touch a little bit more on revenue management.
Net sales strategies in place in terms of driving that strength.
Sure sure well I think ADR you have to dissect it and look at it by demand segment.
And there's kind of two things I would note there one is.
If you look at our our segmentation group business is way down right in group business generally comes at a discount to.
Retail and transient business.
Now.
That's really helped us in terms of ADR.
No.
ADR just by virtue of.
Segmentation would be naturally up okay. So that's kind of first first trends.
Actually there's three.
Second one is that if you look at our retail demand.
And in other transient demand Thats way up.
So just kind of give you a sense if we look at our our pays for February.
Retail demand.
A 50%.
So this is driven by.
Pent up demand.
Mongst.
Leisure travelers.
That have been locked up in their homes per year and can't wait to get out to spend some time at a luxury resort.
So that is helping and then the third thing I would say if you look across portfolio wide. It's down to what is the composition of the hotels driving your ADR and whereas historically it was more balanced between our luxury resorts in urban.
We've got our luxury resorts firing on all cylinders and Thats eight properties in our urban.
Ah down, but comparatively not down enough to be offset by the composition of our luxury resort ADR contribution.
So those three trends are really serving to provide a lot of fuel to our ADR growth.
And it has really Senate soaring and we're looking at $400 or more ADR across the portfolio for February.
March is currently booked at over $500.
So really really the ADR that we've never seen before in the first quarter, we will have the highest ADR in the history of the company.
And one of the things you got to look at Tyler is from a revenue management perspective is that.
Most of our resorts that are open are uniquely position you look at Ritz St. Thomas.
A lot of a lot of individuals don't want to go to travel outside the U S. But they want to go the Caribbean and so we're getting a lot of first time guests and so being the one they only resource it essentially is opened for U S travel.
Same thing with some of our Florida markets, we know the high end travelers going to be there.
And they are willing to travel and they want to spend money and so we've been pushing rate because we just don't have as much competition than what we've had maybe.
When all of the resorts are open and so I think we're uniquely positioned to do that and and as Richard mentioned it is definitely a change in segments with <unk> going out.
We've also done a good job.
Marketing, our suite inventory and Theres been an increased demand for suites for COVID-19 and that in.
Travelers want to have more space and bring their families. So we've been able to do that and I think we'll continue to do that and I think that Youll see continued desire for resort travel.
Great.
Specific question on.
St Thomas fourth quarter first quarter.
I was hoping to take a vacation down there, but I noticed the rates are well over $1000. Most of the Knights are sold out.
Great for U leftover from my vacation plans, but interested if you could just talk more about the demand in St. Thomas what Youre seeing in the Q you mentioned that the new guests that are coming as well. So I'm just wondering how the mix of business is looking.
New versus repeat guests than maybe you had in the past and then any comments just in terms about the guest feedback.
And then also how beneficial it is right now just in terms of what's going on with limits on international travel.
Yeah, I'm happy to take that question.
It is.
Very fortuitous because.
When you look specifically at M resort and you've been there and you saw the capital improvements, we made which I think are phenomenal I think it's exceeded our expectations in terms of the outcome with the settlement with the insurance companies and the.
The quality and the design and the level of improvements were able to make.
And all of that was done pre pandemic and we've just completed as you know.
Pretty much I think November of 2019 and so.
If you look at where we were pre pandemic we were having.
Significant year over year growth in January February and the portfolio of Braemar and a lot of that was through St. Thomas as Youre aware, but this was a great opportunity with us having made those improvements and then also improvements that we did outside of the insurance proceeds which is we added that kids pool on the slide.
And so this was a good opportunity as there are an incredible amount of first time guests and that's definitely been the case there is a lot of.
Individuals that certainly from the northeast that typically would go to maybe came in or or other islands within the within the Caribbean. They chose to travel to the U S and stay within the U S and they've been incredibly pleased with the resort when we bought this resort. It was one of the lowest Ritz Carlton in terms of guest satisfaction.
On a percentile ranking within within the risk brand.
And we had a plan to continue to upgrade that and against comments. The guest feedback has been great.
And Thats why Youre seeing a lot we're actually not only seen the first time guests at standard resort, but theyre coming back.
Months' layer.
And returning back to the resorts. So I think that this was a unique opportunity for us to showcase this resort.
And that and we're doing a good job I think the team's done a great job, we've got a great team.
With Marriott, we've worked with Marriott to develop I think a great team.
Within that property and <unk>.
And everybody was just anxious all the associates because they've been through so much going through Irma then this pandemic.
And I think that that property is as energized as it's ever ever been and we're very excited.
<unk> of that property.
Okay very helpful and the last question for me there was a story out there about assets and one of your markets.
Rumored to be per se for $2 million per key which I think is a copper really supports the value of your real estate. It appears thus far that theres been a lot less distress out there in terms of assets than perhaps everybody expected. So if you could just talk a little bit more about.
Bass back, what's what's contributing to that.
Essentially if you think there might be a way whether it's from Cvs or.
Other things happening in the future and interest rates you can share there could be more opportunities on the on the luxury side of things just in terms of assets on the market at favorable valuations. Thank you.
Yes, Thanks, Tyler well I think theres really two things driving the pricing support in the market.
One is as you know.
For the period between kind of March and November.
Generally forbearance from lenders was widely available it.
It doesn't apply to the.
Four seasons, and Calistoga Youre talking about.
Happy to mention.
But but generally theres been forbearance, so banks have been in special services to some degree have been somewhat accommodating I think that is going to change in the forbearance to point a world where the problem has become <unk>.
<unk> in such a way that.
Banks can be a little bit more aggressive.
And entertain the idea of ownership foreclosure indoor sale.
So, whereas we haven't had much distress yet.
You could see more distress sales start to come this year really kind of starting a couple of months maybe in the second half of this year.
The second.
A second factor that supporting prices.
Is the weight of capital there is there has been.
Hundreds of billions of dollars raised in private equity formats to acquire real estate.
And then even more specifically hotel real estate over the last 12 months and that competition for deals is something that we haven't seen for years and that's capital it needs to be deployed and so that's also providing a lot of pricing support in these situations. So.
I don't I don't necessarily and I think the way to that capital is going to be.
So much that I don't think we're going to see deeply discounted hotel sales, where you really see that as when you don't have adequate supply of capital.
The other thing that obviously from a macroeconomic perspective, that's driving all of this is we are in an era of increased money supply.
So there is a lot of.
Asset.
High asset valuations out there and that's providing liquidity to the entire system.
No.
We're going to continue to assess acquisition opportunities.
But I really don't think we're planning on deeply discounted.
Acquisitions, I think one of the things.
We do believe is you may get an opportunity to acquire things that wouldn't otherwise come to the market just kind of based on the dynamics of the pandemic and how things shake out.
But but not necessarily at.
A generational type attractive pricing.
Thank you.
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Our next question comes from Bryan Maher with B Riley. Please proceed with your question.
Good morning, guys and thanks for those comments so far.
We all know that the resort business has been doing pretty well and you guys commented that bookings remained strong but can you give us a little bit of color on the five urban assets.
Are those just kind of dead in the water for a while are you seeing a pick up there at all is there any inbound calls for the second half of this year just can you give us a little more color there.
Sure Brian It's it continues to be a very short booking window without a lot of visibility I don't think theres anything we can say that we've seen any.
Trends that are meaningful at this point.
We continue to outpace our internal forecast, which tend to be pretty pessimistic, because we want to manage towards very low cost structures.
And assume basically the worst and try to drive better performance from a liquidity and a performance perspective.
But it just tends to be still very very short term in nature, but we are seeing.
Yes.
We go through and look at our forecast lets just say in January or February.
We are seeing pace of our bookings increase where we stand like in the month for the month and that's not that's not just for the resort location. So there is there is an acceleration of demand I wish I could say that it's a significant snapback, but I can't say that as we stand here today.
But there.
As you see the case those are coming down pretty significantly you can see that the vaccinations are getting out and they seem to be working incredibly well.
And seemed to be very very safe.
And so as that continues to be.
Disseminated across population.
We know that people are going to travel again.
And it's just a matter of.
Of time, not not not assets and so.
We're seeing some increased demand, but it's not it's not a snapback yet and it's still tends to be very very short term.
I'll put some more numbers around that for you Brian.
No.
Our urban portfolio was running in kind of the mid to high teens occupancy in the fourth quarter.
Whereas as of last week were at 30% occupancy.
So that's.
Thats.
That's a good trend right. So we're definitely in fact, a little over 30% occupancy so.
It's a slow grind back.
And I think we're going to get there in the second half of the year and have those properties.
Even as the plan and that way, we'll get to our corporate cash.
Cash flow positive.
But look with cases dropping the way they are.
I think people are gearing up to start taking some business trips.
And that's what we're going to need and that's that's going to be how we get those properties to breakeven and I think thereafter, it's the return of citywide some big conferences that will really start to propelled our results.
Just keep in mind as you look at our seasonality of our business.
The urban hotels are counter seasonal to our resort properties. So the resort properties tend to do better this time of year Irvine's tend to underperform and so hopefully as.
As there is.
An increased appetite to travel for business will start to see that more in the second as early as the second quarter and certainly the third quarter of next year.
This year this year.
Great.
And the one.
Resort hotel.
That you have that did not perform well, but boy I think revpar was down 73%, we were a bit surprised that property given its kind of drive.
San Diego and L. A was there something specific going on there that would have caused that.
Yes.
It's.
A tricky one to pigeon hole, if you will reclassify.
Called it a resort property historically it's.
Form somewhere in between there is a lot of.
Biotech business that comprises it's demand mix.
So it's really what do you want to call. It kind of sits on defense, we throw it into the resort category due to its proximity to the famous Torrey Pines golf course, but but yes. It does.
<unk> is performing a little bit differently than the rest of the resort portfolio.
That's the recovery and return of the performance of that property will be.
Based on the same trends that we see in the urban portfolio I think if we were to extricate that from.
Resorts.
I'd call it urban or resort portfolio would be zooming high even higher.
But that's still the case and one thing about Torrey Pines is it traditionally is.
One of our few properties, where group ADR actually outperforms transient ADR. So it does really well with group business. Historically in that group. Obviously has just not been nonexistent and if you look through the government and restrictions in November.
November 14th 2020, San Diego moved into more restrictive what they call the purple tier and then early December they exited the stay at home order and that increased restrictions of travel restrictions and then.
And then add to it.
Another stay at home or on the fifth of December those restrictions Werent released until after the the fourth quarter. So I think a lot of it has to do with not only that there is good about our corporate business and group business. But then also just the the heavy restrictions of California has put in place relative to other states.
Across the U S.
And just two quick ones for me why did you guys do the standby equity distribution agreement to seven 8 million shares instead of a regular ATM.
Hey, Brian.
We do have our ATM in place and Thats something that we.
We've got capacity on.
The standby equity distribution, it's something that we did years ago at HP and there are certain periods of time when you've got to have your ATM turned off and we just thought it was smart capital management to have another option that's available to us.
If and when we need it and so we thought it just made sense to have that put in place. It is kind of like an ATM to some extent, but it is a little more flexibility. So we just thought it was smart capital management to put that in place.
Okay. Thanks, and then just quickly you know the Waldorf Astoria in Chicago, just traded from $54 million, which just screams of a buy is that something that you guys did on or did you pass because it's Chicago in Chicago's top and you know our U C.
Seeing anything else out there like that word.
You can get a huge discount and you're willing to wait 12 months to 24 months Youre going to have love doing that deal later.
Yes right.
We did look at it we saw.
The hotels not profitable enough for us.
So that's a very very competitive luxury market right within that kind of a two mile radius, where you've got not only silver channel, but you've got the peninsula, you've got the four seasons, you've got the park Hyatt.
And then that that property struggles to get adequate share to be profitable.
And so while the headline on a dollars per key.
It does look attractive and we see that.
For a company that like ours is interested in generating.
Generating cash flow for the benefit of our shareholders.
It wasn't the right fit for us.
Okay. Thank you for all those comments I appreciate it.
Thanks, Brian.
Thank you.
There are no further questions at this time I'd like to turn the floor back over to management for any closing remarks.
Sure well. Thank you all for joining us on our fourth quarter earnings call and we look forward to speaking with you again on the next call. Thank you.
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