Q2 2023 Braemar Hotels & Resorts Inc Earnings Call
Greetings and welcome to Braemar hotels, <unk> Resorts, Inc. Second quarter 2023 results conference call. At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
Anyone shifted cloud operator assistance during the conference. Please press Star Zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Jordan Jennings manager of Investor Relations. Thank you Ms. <unk> you may begin.
Good morning, and welcome to today's call to review results for Braemar hotels <unk> resorts for the second quarter of 2023 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 Kris Smith, Executive Vice President and head of asset management.
The results as well as notice of this that's ability and this conference call on a listen only basis over the Internet were distributed yesterday in a press release.
At this time.
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 regulations, 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 and the company's filings with Securities and Exchange Commission before looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them.
Statements made during this call do not constitute constitute an offer to sell or so if a patient is an offer to buy any securities.
Securities will be offered only by means of a registration statement and prospectus, which can be found at www Dot L. P. C dot Gov.
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 August <unk> 2023, and May also be accessed through the company's website at www dot be HR, we dot.
Each listener is encouraged to review those I can filiation provided in the earnings release together with all other information provided in the release also unless otherwise stated all reported results discussed in this call compare the second quarter ended June 30th 2023, with the second quarter ended June 30th 2022.
I will now turn the call over to Richard Stockton. Please go ahead Richard.
Good morning, and welcome to our 2023 second quarter earnings Conference call.
I'll begin today's call by providing an overview of our business and an update on our portfolio.
Then Derek will provide a review of our financial results and Chris will provide an update on our asset management activity. Afterwards, we will open the call for Q&A.
We are a few key themes for today's call.
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We're pleased with the continued momentum of our urban hotels, which continue to ramp up nicely and delivered comparable hotel EBITDA of $20 million in the second quarter.
Second word.
We're very happy with the performance of the hotels, we have acquired the cycle, which continued to exceed our original underwriting.
And third we continue to make solid progress addressing loan maturities as evidenced by our recent announcement regarding the closing of our 200 million dollar corporate financing our balance sheet remains solid with ample liquidity and we remain focused on working through our liability management program during the remainder of 2023.
For the second quarter Braemar.
<unk> delivered solid performance, despite a volatile macroeconomic environment, our second quarter 2023 comparable hotel EBITDA of $53 7 million was driven by the continued strong performance at our resort properties as we've outlined on prior calls the continued momentum and strong growth from our urban hotels turning.
Turning to Revpar for all hotels in the portfolio I'm pleased to report that Revpar totaled $309 for the second quarter with solid occupancy and ADR.
Having said that given the tougher year over year comparisons. This represents a decrease of approximately four 2% for the second quarter of 2023 compared to the second quarter of 2022.
Our luxury resorts were seeing some stabilization in both demand and rate, but are still far outperforming 2019 results.
Taking a closer look at our assets are best in class luxury portfolio remains well positioned as you know many of our hotels are well located in attractive high barrier to entry leisure markets.
Of our 16 hotels are considered resort destinations and luxury resort portfolio continues to deliver strong performance with a combined hotel EBITDA of $33 million during the quarter.
Turning to our urban assets, our second quarter performance remains solid and exhibited growth for the ninth consecutive quarter. This segment generated $20 million of comparable hotel EBITDA.
We remain very encouraged by the continued momentum and ramp up of our urban hotels as demand quickly returns to large cities.
This return continues to be driven by corporate transient with recent strength in corporate group demand overall, our urban portfolio is in solid shape and as demonstrated by our second quarter performance. We continue to believe our urban hotels will be the primary driver of growth for our portfolio in the coming quarters.
Today, we are also very excited to announce that we will be rebranding our Mr. C Hotel to cameo Beverly Hills and have entered into an agreement to join the Hilton Central Reservation system and Hilton honors guest loyalty program.
This property is an iconic asset with a great location and will undergo a $25 million renovation as part of this conversion there.
The renovation will include updates to the Guestrooms guest bathrooms corridors lobby restaurant facade and meeting space will be creating a distinctive theme and style for the property that is commensurate with hilton's, Alex our brands, which it will join upon renovation completion before the end of 2025.
Next we remain very assured about our recent acquisition of a four seasons resort Scottsdale at true North which has exceeded our expectations and in the quarter delivered revpar of $415 based on 49% occupancy and an ADR of $852.
As you May recall, the 210 room luxury resort was acquired in early December 2022.
Strategically as demonstrated by our second quarter performance. It's a great addition to our portfolio and fits perfectly with our strategy of owning high Revpar luxury hotels and resorts. We also continue to analyze the optimal solution for the nearly six acre development parcel, we acquired as part of the acquisition.
Braemar as other 2022 acquisition the Ritz Carlton Reserve Dorado Beach also continues to perform very well for the second quarter Ritz Carlton reserved rather beach delivered revpar growth of seven 2% Revpar.
Revpar for the quarter was $1454 based on 64% occupancy and an outstanding ADR of 2000 and $270. This property has shown an ability to buck other prevailing trends in the luxury resort segment due to being located in a tax favorable jurisdiction of Puerto Rico.
Over the trailing 12 months, the Ritz Carlton reserved Rado Beach has achieved a nine 2% yield on cost while the four seasons Scottsdale achieved a seven 2% yield on cost. These luxury assets have significantly outpaced our underwriting and looking ahead to the balance of the year. We remain very encouraged about the prospects for these properties.
Our framework capital position, our balance sheet remains in good shape and we continue to emphasize balance sheet flexibility in early June we exercised a one year extension option on our four pack loan by paying down the loan balance by approximately $142 million that loan is secured by the notary hotel the Clancy Sofitel Chicago magnificent.
And the marriage Seattle waterfront.
We're also pleased to announce the recent closing of our $200 million corporate financing Derek will discuss that in more detail.
In summary, I'm optimistic about our future results as evidenced by our group pace being up 20% for 2023, and 16% for 2024, which is benefiting from both corporate and social groups.
As we move through the remainder of 2023 and enter 2024, we're on solid footing to perform well in both the near term and the long term as business and group travel continue to accelerate.
Further we have the highest quality hotel portfolio in the public markets and we remain well positioned with what we believe is a solid liquidity position and balance sheet with attractive debt financing in place I will now turn the call over to Derek to take you through our financials in more detail.
Thanks, Richard for the quarter, we reported net loss attributable to common stockholders of $13 million or <unk> 20 per diluted share and <unk> <unk> per diluted share of <unk> 20.
Adjusted EBITDA for the quarter was $46 $3 million at.
At quarter end, we had total assets of $2 $3 billion, we had $1 1 billion of loans of which $49 million related to our joint venture partner share of the loan on the capital Hilton and Hilton La Jolla Torrey Pines.
Our total combined loans had a blended average interest rate of 7% taking into account in the money interest rate caps.
Based on the current levels of LIBOR, and sofa, and our corresponding interest rate caps approximately 79% of our debt is effectively fixed at approximately 21% is effectively floating.
As of the end of the second quarter, we had approximately 37, 3% net debt to gross assets.
We ended the quarter with cash and cash equivalents of $128 million and restricted cash of $63 $4 million.
The vast majority of that restricted cash is comprised of lender and manager held reserve accounts.
End of the quarter, we also had $15 $4 million due from third party hotel managers.
This primarily represents cash held by one of our brand managers, which is also available to fund hotel operating costs.
With regard to dividends in December we announced a significant increase in the Companys quarterly common stock dividend to <unk> <unk> per share or <unk> 20 per diluted share on annualized basis.
This equates to an annual yield of approximately five 5% based on yesterday's closing stock price.
The board also approved the company's dividend policy for 2023.
We expect to pay a quarterly cash dividend of <unk> <unk> per share for 2023 or <unk> <unk> per share on an annualized basis.
As Richard mentioned in early June we finalized an extension of our $435 million mortgage loan secured by four properties. The notary hotel the Clancy Sofitel, Chicago magnificent mile The Marriott Seattle waterfront.
The loan was extended beyond the original initial maturity in June 2023 for an additional 12 months in conjunction with the extension, we paid down $142 million of alone utilizing corporate cash on hand, which reduced the loan balance to approximately $293 million.
As part of this extension, we also purchased an interest rate cap through June 2024, with a strike rate of $4 six 9%.
Earlier this week, we announced a new $200 million corporate financing that consists of a $150 million term loan and a $50 million revolving credit facility. This financing is secured by a borrowing base of three hotels, the Ritz Carlton Sarasota, Barcelona Hotel, and Spa and hotel Yountville and we'll use the proceeds.
<unk> from the financing to pay off the existing mortgage loans on those properties.
The new financing has a three year term with one year extension option subject to the satisfaction of certain conditions and the interest rate is based upon a pricing grid related to our net debt to EBITDA that provides for a range of silver plus 235% to three 1%.
We anticipate that the initial interest rate will be sulfur plus 285%.
Our next final debt maturity is alone on the Ritz Carlton Lake Tahoe, which matures in January 2024.
As of June 32023, our portfolio consisted of 16 hotels with 3957 net rooms, our share count currently stands at $73 2 million fully diluted shares outstanding which is comprised of 66 million shares of common stock at $7 2 million op units.
This concludes our financial review I'd now like to turn it over to Chris to discuss our asset management activities for the quarter.
Thank you Derrick for the quarter comparable hotel Revpar for our portfolio decreased 4% over the prior year quarter to $309. Our urban assets continued to benefit from sustained demand growth with comparable total hotel revenue exceeding the prior year quarter by 13%.
While we are seeing a stabilization across our resort properties total portfolio Revpar was 8% higher than the national average for the luxury chain scale and reflects the high quality nature of our portfolio.
I would like to spend some time highlighting how our team has capitalized on the urban recovery driven performance through increased group demand and implemented successful initiatives to drive performance at our newly acquired hotels.
We continue to see strong results across our urban hotels in the portfolio.
Last year, we capitalized on the opportunity to renovate the guestrooms at Marriott Seattle waterfront, while the hotel is still ramping up.
Due to these enhancements during the second quarter Marriott, Seattle waterfront reported a comparable revpar growth of 43% over the prior year quarter, resulting in a 91% revpar premium to the entire Seattle market.
The freshly renovated guestrooms.
Including eight additional keys and the hotels unique positioning right on the water has allowed us to capture additional transient demand from the cruise lines that are near our hotel.
Another recently renovated hotel in our portfolio that it's outperforming the market as our iconic Philadelphia autograph brand hotel, the notary, which reported a comparable revpar growth of 24% over the prior year quarter, and roughly 16 percentage points higher than the Philadelphia market.
We have been working to increase exposure of the autograph up branding and place an emphasis on the improved services restaurant re concept and room renovation.
To further drive group business, our revenue optimization team has partnered with sales leaders and third party technology providers to develop best in class virtual site visit platforms, which have increased conversion rates of group leads.
We continue to see acceleration from the group segment, where group room revenue for the second quarter exceeded the prior year quarter by 9%.
This was a strong quarter for group booking activity, we started the quarter with $81 million and group room bookings for the full year 2023.
During the second quarter, we added over $10 million and additional group room bookings for 2023 as a comparison on a more stabilized basis. During the second quarter of 2019, we added just under $6 million in senior bookings.
Our largest hotel capital Hilton finished the quarter with approximately $5 $3 million in group revenue at 63% increase when compared to the $3 2 million in.
In the prior year quarter.
This achievement is noteworthy considering that the hotel was under <unk> formative guestroom renovation throughout the entire second quarter we.
We attribute this success to our partnership with Premier who is handling the renovation and the successful implementation of their stealth renovation program, which minimizes displacement.
All of these efforts and more have contributed to the overall success of the portfolio during the first half of 2023.
It is worth noting how successful this year has been in terms of hotel performance with five of our hotel setting all time year to date Records and hotel Revpar, including our two most recent acquisitions the Ritz Carlton Reserve Dorado Beach, and the four seasons Scottsdale.
Each of these hotels have a detailed takeover plan, which our team created upon acquisition to highlight strategic opportunities for creating and optimizing value.
At the Ritz Carlton Dorado Beach, we have optimized our cabana rental program increased luxury villa sales and enhanced our digital marketing strategy.
We have also completed a full menu benchmarking deep dive for all the spa services and food and beverage outlets.
These efforts have resulted in year to date comparable small revenue in food and beverage revenue increases of 15% and 10% over the first half of last year respectively.
The four seasons Scottsdale has benefited from similar initiatives as well as ancillary revenue optimization and best use analyses for revenue generating space.
As part of the takeover plan our team did a deep dive in the opportunities of the Spa, we recognized an opportunity in the market to satisfy local residential demand for our luxury salon with boutique hair and nail services.
We also identified underutilized space in the spot, where we partner with local vendors to accumulated inventory and build out our retail platform.
These initiatives have been successful propelling our year to date comparable small revenue by 28% over the first half of last year.
Moving on to capital investments, we have invested heavily in our portfolio over the last several years to enhance our competitive advantage.
We believe that those investments have resulted in a competitive edge for our portfolio.
We're currently renovating the guest rooms at the capital Hilton The Ritz Carlton Lake Tahoe as well as the lobby retail outlet at the Ritz Carlton Lake Tahoe and Spa at the Ritz Carlton Sarasota.
Later this year, we plan to start Guestroom renovations at Barcelona Hotel and Spa.
And hotel Yountville.
We also plan to begin renovating the meeting space at Park Hyatt Beaver Creek and Spa at the Ritz Carlton Lake Tahoe.
For 2023, we anticipate spending between 80 and $90 million on capital expenditures.
Lastly, I would like to emphasize how optimistic we are about the future of this portfolio as I mentioned earlier, our urban assets are experiencing strong demand group business continues to accelerate with no signs of slowing and a number of our assets continue to break records each quarter.
We are already launching new initiatives to further enhance our portfolio, which include transformative full property renovations developing underutilized land and Keith issues.
With these new initiatives underway, we are confident that the portfolio will continue to outperform.
Thank you Chris and.
In summary, we continue to be pleased with the trends, we're seeing at our hotels emphasized by the continued recovery of our urban properties were very well positioned moving forward with a solid balance sheet and the highest quality portfolio in the publicly traded REIT market. We look forward to updating you on our progress in the quarters ahead. This concludes our prepared remarks, and we'll now open up the call for Q&A.
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Yeah.
Thank you.
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The first question comes from the line of Bryan Maher with B Riley Securities. Please go ahead.
Thank you and good morning.
A couple of questions from me this morning, maybe start off with Richard.
When you look at the wide range of Revpar outcomes in the portfolio.
The past couple of quarters.
Does it give you any thoughts as it relates to capital recycling opportunities between resort and urban.
Or are you pretty happy with the lift that you have now.
Kind of a follow up to that.
Where do you think your next target lot is it in resort or would it be bourbon.
Yes, thanks, Brian Thanks for joining the call.
Yes, I would say literally if you think about capital recycling youre thinking about accessing investor.
The investment sales market and buying something.
I think for me, it's just not a great time to sell assets in general.
I think.
We're at a point with the fed interest rate hiking cycle that it's constricting liquidity so much there.
At let's just a difficult thing to consider.
I think that that's due to evolve over the next several months and so we'll be keeping an eye on that.
And if we were to do it.
I would say I wouldn't think about making a call necessarily on resort versus urban but more luxury versus upper upscale right. Our strategy is very clearly aligned with the luxury segment.
We do have some legacy upper upscale assets, who are I guess save one consider urban assets.
So it would be more along those lines that I would upgrade the quality of the portfolio rather than choosing sides. If you will between resort in urban said I do like having a bit of a balance there and it's worked well for us over the last four years, we've been able to play.
Both sides of that game as first resorts accelerated and then <unk>.
Thereafter, followed and so that's I think that served us pretty well.
Okay, and then when we think about growth and acquisitions for you.
You've kept it pretty clean with without REIT purchases, but it does come up on other call.
And in a weird market that we live in now, possibly taking down net debt with the goal of maybe taking the asset later would you explore opportunities there or do you think you just keep it real clean without re purchases.
I think one of our.
Great strengths frankly lies within our asset management capability.
Yes, I would just question our ability to have the right level of influence through a mezz position versus equity ownership I think we.
We believe we can bring significant value both to the top line and on the on the expense side of things and the best way to.
Right that is through equity ownership.
So we really haven't looked at any type of mezz debt I suppose there could be.
Unique type of preferred equity investment, where we also separately entered into an asset management agreement, but that would be critical to us in order to get the assurance that we drive the most out of that asset.
Got it. Thank you that's all for me.
Thank you next question comes from the line of Chris <unk> with Deutsche Bank. Please go ahead.
Hey, good morning, guys.
Richard maybe we get a little more color on the Hilton cameo planned conversion.
Is there.
Any anticipated disruption there this year next year, and then I'm not sure if the press release mentioned anything with the.
Yes, the residential I think theres four or five units that you were considering what you might do with any any comments on that thanks.
Okay.
Yes, Chris Thanks for dialing in.
Thanks for that question, we're Super excited about what we have planned for Mr. <unk>.
I love, the new branding I love the cameo name.
It speaks to Beverly Hills that speaks to the legacy and history of the film industry in.
In la as well as all types of celebrity and so thats a great positioning for that property.
Yes, we have entered into this partnership with Hilton, which I think will do great things for that hotel being part of the Central reservation system. It's something that we just did it benefit from I think we'll be able to drive a lot more group business as a result.
So that's all that's all really positive and we're putting a lot of money into this property. So there there will be some disruption I'll, let Chris comment in a second but but.
There will be an extensive two year renovation program.
And I think we get to the other side of it we're going to have one of the best assets in that market, but Chris you want to.
Chris we're really excited about that.
The opportunity to rebrand this hotel I think we are.
With the conversion.
As Richard said touching nearly every part of the property and so there is going to be some disruption with that with the amount of money.
We're putting into the asset I think we're really excited coming out the other end to have as Richard said.
Incredible brand new product in the Beverly Hills market.
We're really excited about getting on the Hilton distribution platform, we think there's immense upside for the property there.
Joining the honors loyalty program is going to really help us on weekend. So right now the hotel runs at pretty high occupancy on weekends and just the increased demand from that program and the distribution network is going to help us drive weekend rates.
Where we've got.
Opportunity for occupancy this hotel's weekday and Hilton has got a great presence in the market with with corporate customers and we think we're going to be able to tap into their their corporate accounts in their corporate production and thats going to drive weekday business and so whether or not.
The Hilton distribution engine and in the interim offsets the disruption from the renovation is still to be seen we've been very strategic in.
Renovation schedule to minimize displacement, but we're most excited about kind of the long term outlook and potential for this hotel with us being aligned with the Hilton branded on their distribution system.
Okay very helpful. Thanks, Thanks for the color on that.
Another question I guess for Richard.
With the dividend.
No. It's a small absolute dollar amount right, it's less than $15 billion per year, but it doesn't I don't know I guess do you think youre getting enough credit for it and even though it's a small amount.
Think stock buyback is something that you might put back on the table.
Yeah.
Not necessarily suggesting instead of the dividend, possibly an addition, too but just any any updated thoughts on capital allocation.
Sure sure Yeah look I agree that the dividend.
Yield I believe is the second highest in the sector now at five 5%.
Its way too high.
But we have we have the liquidity and available cash flow to continue to pay it.
So that is definitely our strategy.
In terms of buyback, yes, I don't know I don't know that that's the right use of our capital right now.
We have been working through.
Various liability management.
Strategies this year.
<unk>.
Yes, the extent that you're taking on less debt for liquidity. That's also a big savings right. If you think about.
Buyback as a source of savings right.
Our debt is priced today.
The less that you have kind of the better.
So I.
I think that's how we're thinking about capital allocation. This is definitely a year for us about liability management, we've got refinancings.
<unk> next year and as I said, if I can.
Take on less debt those refinancing that would probably rather do that then.
Pursue a buyback right now.
But look I think our shares are undervalued in our dividends.
Emblematic of that.
I don't know if you tried to calculate a discount to NAV, but it would be extraordinarily wide right now so for.
For now we're going to keep our head down and keep <unk> on the portfolio delivering results and hopefully that will be reflected in an appropriate multiple over time.
Okay very good thanks, guys.
Thank you next question comes from the line of tightened up but Tony but Oppenheimer <unk> co. Please go ahead.
Good morning, Thank you.
Wanted to focus on the resort properties for a second here.
The number of Crosscurrents I think would then within leisure travel in your portfolio you have some resort assets that are performing better than others in terms of the hotels, where revpar was down a little bit more significantly I mean, how much of that is just tougher comps versus something more significant.
Going on for some of these assets or some of these markets.
Can you speak to your.
Guest behavior, especially that luxury chain scale as it pertains to the leisure travel.
Yes, thanks for the question Tyler.
So I would say we are seeing.
Kind of a broad stabilization of our resort hotels.
Broadly we were down year over year at our resorts, but.
<unk> got to look at kind of where we're at versus historical our resorts were up 55% and revpar to 2019, and so overall, we're seeing a slight pullback kind of broadly we're still very very happy with the performance of these hotels and then when you've got 10 resort hotels in our portfolio, there's going to be nuances as I think you alluded to.
Within within some of the properties. So some of the properties where were seeing the biggest year over year declines within the resorts are impacted by air lift into the markets.
So we've seen a reduction in air lift both in St Thomas and in key West.
Seats are down about 20% to last year at St Thomas and at key west or down about 10% to last year. So as airlines.
Other destinations and markets are kind of ramping up.
We're seeing airlines shifts kind of their travel patterns to accommodate that.
We're also seeing a number of our resort hotels that are impacted by in Q2, the year over year Omicron impact where they had a lot of group cancellations in Q1, and then they were rebooked into Q2, and so that's creating some tougher comparables from a group standpoint.
Park Hyatt Beaver Creek was affected by that.
In terms of significant group declines due to the omicron bookings.
So that's playing into it as well I think with that said within resorts. We still have a number of hotels that are setting all time Q2 records.
Ritz Carlton Reserve Dorado Beach have just an incredible Q2, and it's been insulated by some of that softness.
So we're still really happy with the performance of select assets that continue to set records.
It's very market specific it's nuanced I think I'm a whole we're seeing some leisure softening some leisure stabilization.
But there really are.
And market specific things kind of kind of either either.
Highlighting that or offsetting that.
Okay and then similar line of question just in terms of.
The margin for the for the portfolio and you'll understand it this quarter or Q2, so some very challenging comps.
I think out of the ordinary in terms of expense or cost inflation.
And kind of when you look at the comparison versus the prior year.
Are these declines a reasonable run rate to be thinking about going forward.
Yes, there is some anomalies in the year over year comparable our Sofitel hotel in Chicago.
Last year in Q2 realized a tax assessment savings of $2 $4 million and so that's playing into it. We've currently filed our appeal on the 2022 valuation, but that's still pending and so we're hopeful at some point.
And the remainder of the year, we will realize another another savings there.
As you look at kind of our margins.
Its tied most closely to ADR and <unk>.
Additional rate flows very well for us and flows all the way down and so when you look at ADR for the portfolio.
<unk> got some of the resort and urban dynamics, there, where our resort hotels declined.
And revenue.
And that's had a 681 average rate our urban hotels, which are growing in occupancy and an ADR is at.
$280 average rate and so just those dynamics is going to is going to impact ADR for the whole portfolio, which is what happened in Q2.
We expect urban to continue to ramp and we expect.
The resort properties to somewhat stabilize and be a little more consistent and so we believe in the long term that would help margin.
Okay.
That's all from me very good. Thank you. Thank you.
Thank you before we take the next question a reminder to all the participants that do Memphis Star then one to ask a question.
Next question comes from the line of Michael Bellisario with Baird. Please go ahead.
Good morning, guys.
Mike.
Can we go.
Probably for Derrick here can we go to the corporate financing just maybe big picture I don't need to get into the Nitty gritty of what's exactly in.
The loan docs, but what are the restrictive covenants of this new secured facility.
Maybe what can and can't you do know that that this facility is in place.
Yes happy to address that so the corporate financing was something that we've been thinking about for a while we had wanted to get to.
Our borrowing base of assets that we could use.
Have a secured revolver and term loan.
It's the cheapest source of debt capital Thats available in the market today.
And so what we did is we took three of our kind of near term debt maturities.
Refinance that into a corporate <unk>.
Term loan secured by those those three assets as the borrowing base, we have the ability to add additional assets to that borrowing base over time.
Obviously, a challenging time in the bank market to run a bank syndication, but we're very very happy with how it turned out.
The banks that ended up participating.
In the line so we're.
We're happy to have all of those on board.
In terms of restrictive covenants.
There is typical corporate covenants in terms of.
Max leverage and FCC are.
There's caps on the amount of recourse debt that we can have and there are some availability covenants that relate to the performance of the borrowing base assets.
But there is nothing nothing in the covenant package that gives us any concern at all and in fact, we are we're very happy to have the line in place.
I think it was a very.
Attractive financing for us given the current state of the hotel debt markets.
Got it helpful. And then just along those same lines, what's the current thinking around the hard debt maturities that you guys have upcoming in early 2024.
Obviously, you can add them to the borrowing base at the corporate facility, but I think the.
Principal amount there was greater than what you can get on the accordion, if im correct, yes, yes, thankfully and we do have a decent number of 2024 debt maturities.
Really all of those assets and loans are easily re financeable based on the performance of the assets and what's available in todays market spreads spreads are higher than when we did put those loans in place. So we've just been pretty patient in terms of refinancing those and keep the attractive existing debt that we have in place as long as we.
Possibly can but.
We are starting to talk to lenders on a few of those in.
The one that I would say would probably be a more challenging refinancing would be the Mr. C that the late 'twenty four final maturity for us, it's a relatively small loan.
We could we could use aligned to pay it all ultimately.
Or use some excess proceeds somewhere else else to pay it off or we could refinance it it just be a little bit more challenging of a refinancing given the performance of that asset and you can see all of that on the on the debt Worksheet, our earnings release, where we show the debt yield for each of the loans and you can see how.
Low leverage each of those loans are.
Got it and then just.
Last one from me for Chris maybe could you talk a little bit about just booking patterns and.
Group pace for the portfolio into the second half of the year <unk> for 24, and then maybe if you could provide some color around booking windows and pace between urban and resort to.
That would be helpful. Thank you.
Yeah, Thanks, Michael so.
We're really really happy with the group pace outlook and kind of just the continued acceleration from that segment.
We cited.
Q2 finished up 9% year on year and the full year is pacing ahead, 20%.
We did benefit from some omicron comparables year over year, but when you look at kind of how each quarter is positioned Q3's flat and then Q4 is ahead, 23% to prior year.
So we are positioned well for the back half of the year and then 2024 is up 16% year on year.
So again, a really strong group base that we're confident will insulate us from any continued softness.
And with that will allow us to drive rate and so that's the other thing paces up and a lot of it's rate driven so we've got high single digit rate growth in both years.
In terms of booking windows, the booking window relative to historic for both urban and resorts remains much shorter, but we're seeing it increase and so now we're seeing an increase beyond that kind of four to six weeks in the group segment, we're seeing stuff thats booking six months out a year out.
And from a leisure standpoint.
We're seeing at the resorts.
Short term demand is softening a little bit so we're not getting as much in the month for the month pick up as we've historically done at our resorts. So you've got kind of leisure.
Leisure is experiencing a little bit softer short term and in the group booking windows extending.
And at a pretty rapid rate, which we're very happy with.
Thanks for that.
Thank you.
There are no further questions at this time I would like to turn the floor back over to management for closing comments.
Thanks, everyone for joining us on our second quarter earnings call and we look forward to speaking with you again on our Q3 call have a good day.
Thank you.
This concludes today's teleconference. You may disconnect your lines at this time.
Thank you for your participation.
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