Greetings, welcome to the Braemar Hotels & Resorts Inc. First Quarter 2023 Results Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jordan Jennings, Manager of Investor Relations. You may begin. Good morning, welcome to today's call to review results for Braemar Hotels & Resorts for the first quarter of 2023, and to update you on recent developments. On the call today will be Richard Stockton, President and Chief Executive Officer, Deric Eubanks, Chief Financial Officer, and Chris Nixon, Executive Vice President and Head of Asset Management. The results as well as notice of accessibility 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 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 in the company's filings with the Securities and Exchange Commission. The forward-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 an offer to sell or a solicitation of an offer to buy any securities. Securities will be offered by means of a registration statement and prospectus, which can be found at www.sec.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 May 2, 2023, and may also be accessed at the company's website at www.bhrreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Unless otherwise stated, all reported results discussed in this call compare the first quarter ended March 31, 2023, with the first quarter ended March 31, 2022. I will now turn the call over to Richard Stockton. Please go ahead, Richard. Good morning. Welcome to our 2023 first quarter earnings conference call. I will begin by providing an overview of our business and an update on our portfolio. Deric will provide a review of our financial results. Chris will provide an update on our asset management activity. We will open the call for Q&A. We have a few key themes for today's call. We're pleased with the continued momentum of our urban hotels, which achieved strong growth again this quarter with comparable hotel EBITDA growth of $9.2 million in the first quarter over the prior-year quarter. During the first quarter, we concluded the capital raising for our non-traded preferred stock offering. The offering has enhanced our capital position and allowed us to go on offense during an attractive time in the cycle. Third, we're pleased to note that the three hotels we have acquired this cycle are performing very well and have exceeded our original underwriting. Fourth, we continue to diligently execute and work through our refinancing program for 2023. Finally, we've said this before, and it's worth repeating, Braemar's management team has been through many economic cycles. We are delivering against our long-term strategy and remain well-positioned to capitalize on appropriate growth opportunities. Turning to our quarterly results. I'm pleased to report that Braemar delivered solid first quarter results despite a volatile macroeconomic environment. Our first quarter 2023 comparable hotel EBITDA of $72.8 million was driven by the continued strong performance at our resort properties and, as we've outlined on prior calls, the continued momentum and strong growth from our urban hotels. Looking at RevPAR for all hotels in the portfolio, RevPAR increased approximately 8% for the first quarter of 2023 compared to the first quarter of 2022. Taking a closer look at our best-in-class luxury portfolio, many of our hotels are well-situated in attractive, high barrier to entry leisure markets. 10 of our 16 hotels are considered resort destinations, and they remain extremely well-positioned to benefit from persistent leisure demand. For the quarter, we are very pleased to report that our luxury resort portfolio continues to outperform and delivered a combined hotel EBITDA of $64 million to start 2023. With respect to our urban assets, our first quarter performance was solid and exhibited strong growth for the 8th consecutive quarter. In fact, we generated $9 million comparable hotel EBITDA, and all six urban properties posted positive hotel EBITDA. We are very encouraged by the continued momentum and ramp up of our urban hotels as demand quickly returns to our 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. As demonstrated by our first quarter performance, we continue to believe our urban hotels will help drive the next phase of growth for our portfolio. We remain very excited about our recent acquisition of the Four Seasons Resort Scottsdale at Troon North, which has exceeded our expectations and delivered RevPAR growth of 25% over the prior year period. As you may recall, the 210-room luxury resort was acquired in early December 2022 with cash on hand, and no common equity was issued to fund the acquisition. Strategically, as demonstrated by its first quarter performance, it's a great addition to our portfolio and fits perfectly with our strategy of owning high RevPAR luxury hotels and resorts. The Four Seasons Scottsdale delivered RevPAR of $749 based on 53% occupancy and an ADR of $1,403. Our other acquisition from last year, The Ritz-Carlton Reserve Dorado Beach, also continues to perform very well. For the quarter, The Ritz-Carlton Reserve Dorado Beach delivered RevPAR of $1,753 based on 56% occupancy and an outstanding ADR of $3,115. Over the trailing 12 months, The Ritz-Carlton Reserve Dorado Beach has achieved an 8.6% yield on cost, while the Four Seasons Scottsdale achieved a 7.4% yield on cost. I'm pleased to note that these luxury assets have significantly outpaced our underwriting. Looking ahead to the balance of the year, we remain very excited about the prospects for these properties. Looking at our capital position, Braemar's balance sheet remains in good shape, and we continue to emphasize balance sheet flexibility. Toward this end, during the first quarter, we worked through our 2023 refinancing program to further enhance our attractive maturity schedule. In April, we finalized extensions of the mortgage loans for The Ritz-Carlton, Sarasota and Hotel Yountville. Both loans were extended beyond their original maturity for an additional six months, with one additional 6-month extension also available. We're also working with our lender on a refinancing of the mortgage loan secured by the Bardessono Hotel and Spa, which has a final maturity in August 2023. This is a very low leverage loan, and we don't anticipate any challenges with extending or refinancing it. Next, on the investor relations front, we continue to be active in meeting with investors to communicate our strategy and highlight the attractiveness of an investment in Braemar. We plan to continue to get out on the road, attending investor conferences and one-on-one meetings, and we also hope to see some of you at Nareit in June. Looking ahead, 2023 is off to a solid start, and we're encouraged that our group pace is up 28% year-over-year. Our unique portfolio, which is focused on the luxury segment and with properties in both resort and urban markets, puts us on solid footing to perform well in both the near term and the long term as leisure demand remains strong and business and group travel continue to accelerate. We have the highest quality hotel portfolio in the public markets, 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 Deric to take you through our financials in more detail. Thanks, Richard. For the quarter, we reported net income attributable to common stockholders of $3.2 million or $0.05 per diluted share and AFFO per diluted share of $0.44. Adjusted EBITDAre for the quarter was $66.1 million, which reflected a growth rate of 34% over the prior- year- quarter. At quarter end, we had total assets of $2.4 billion. We had $1.3 billion of loans, of which $49 million related to our joint venture partner's 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 6.3%, taking into account in-the-money interest rate caps. Based on the current levels of LIBOR and SOFR and our corresponding interest rate caps, approximately 74% of the company's debt is effectively fixed and approximately 26% is effectively floating. As of the end of the first quarter, we had approximately 37.1% net debt to gross assets. We ended the quarter with cash and cash equivalents of $281.5 million and restricted cash of $63.1 million. 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 $19.1 million in 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 company's quarterly common stock dividend to $0.05 per share or $0.20 per diluted share on an annualized basis. This equates to an annual yield of approximately 5.3% based on yesterday's stock price. The board also approved the company's dividend policy for 2023. The company expects to pay a quarterly cash dividend of $0.05 per share for 2023, or $0.20 per share on an annualized basis. Reflecting a strong conviction in Braemar's strategy and our commitment to create long-term shareholder value, in December, we also announced a stock repurchase program of up to $25 million. During the first quarter, we completed this $25 million buyback program and acquired 5.4 million shares at an average price of $4.60 per share. On the capital markets front, subsequent to quarter end, we finalized an extension of our $98 million mortgage loan for the 276-room Ritz-Carlton Sarasota. The loan was extended beyond its original maturity in April 2023 for an additional six months, with one additional six-month extension available. As extended, the Ritz-Carlton Sarasota loan has a rate of SOFR plus 2.65% that will reset to SOFR plus 3.5% on June 1, 2023. In connection with this extension, the company purchased a SOFR interest rate cap at a strike of 5.25% with an expiration date of October 4, 2023. The loan was extended beyond its original maturity in May 2023 for an additional six months, with one additional six-month extension available. As extended, the Hotel Yountville loan has a rate of SOFR plus 2.55% that will reset to SOFR plus 3.5% on July 1, 2023. In conjunction with that extension, we purchased a SOFR interest rate cap at a strike of 5.25% with an expiration date of November 10, 2023. As of March 31, 2023, our portfolio consisted of 16 hotels with 3,957 net rooms. Our share count currently stands at 72.8 million fully diluted shares outstanding, which is comprised of 66 million shares of common stock and 6.9 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, Deric. For the quarter, comparable RevPAR for our portfolio increased 8% over the prior- year- quarter to $369. This RevPAR result is approximately 27% 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, built a foundation around group demand, and implemented successful initiatives at our newly acquired hotels. Our urban assets continue to benefit from the acceleration of demand into their markets. For our urban assets, comparable hotel total revenue in the first quarter surpassed the prior year's first quarter by 62%. This increase was led by our largest hotel, Capital Hilton, which reported comparable RevPAR growth of 126% over the prior- year- quarter. This achievement is noteworthy for a couple of reasons. One, the hotel was under a transformative guest room renovation throughout most of the first quarter. Two, the hotel exceeded the market RevPAR growth of 73%. We attribute the success to our partnership with Premier, who is handling the renovation, and the successful implementation of their stealth renovation program, which minimizes displacement, and our overall revenue optimization strategy, which identified softness in the market and proactively focused on building a foundation of group business. That emphasis to develop a foundation of group business at our hotels, as well as the return of major events and conferences, propelled our group room revenue for the first quarter ahead of the prior year's first quarter by 57%. Comparable group room rate is up 8% relative to the prior year's first quarter. We also saw excellent signs from our group booking volume in the first quarter, where revenue placed on the books for all future dates was up approximately 16% relative to the prior year's first quarter. Our group pickup, which is defined as group room revenue booked during the quarter for stays within the same quarter, was strong. At the beginning of the quarter, we had approximately $18.5 million in group room revenue on the books and ended with approximately $26 million. That is a 41% increase in total group room revenue for the quarter based on stays booked within the same quarter. In comparison, the pickup last year was only 6%. While we are excited about the progress we are seeing in long-term group bookings, we plan to utilize our leverage throughout the current short-term booking environment to maximize our pricing strategy. All of these efforts and more have contributed to the overall success of the portfolio during the first quarter in 2023. It is worth noting just how successful the first quarter was in terms of hotel performance, with four of our hotels setting all-time first quarter records in hotel EBITDA, including our two most recent acquisitions, The Ritz-Carlton Reserve, Dorado Beach, and The Four Seasons Scottsdale. During the acquisition process, our team created detailed takeover plans for each hotel, including strategic opportunities to improve both top and bottom line. For The Ritz-Carlton Reserve, Dorado Beach, our team focused on items that would move the needle immediately, including increasing pricing at our F&B outlets, optimizing the cabana rental program, enhancing our digital marketing efforts, and implementing an ancillary sales and upsell program. Our Four Seasons in Scottsdale experienced similar successful initiatives, as well as benefited from a demand surge through Super Bowl weekend, which resulted in more than $3.2 million of room revenue over a 4-day period. That is a 427% increase year-over-year in room revenue for that period. Moving on to capital investment, we have invested heavily in our portfolio over the last several years to enhance our competitive advantage. These investments uniquely position our portfolio to benefit from the pent-up demand that we are currently seeing in our markets. As previously mentioned, we are currently renovating the guest rooms at The Capital Hilton. Later this year, we plan to start guest room renovations at Bardessono Hotel and Spa, Hotel Yountville, and The Ritz-Carlton, Lake Tahoe. We also plan to begin renovating the meeting space at Park Hyatt Beaver Creek, the spa areas at The Ritz-Carlton, Sarasota and The Ritz-Carlton, Lake Tahoe, as well as adding a lobby retail outlet at The Ritz-Carlton, Lake Tahoe. For 2023, we anticipate spending between $70 million-$80 million on capital expenditures. I would like to finish by emphasizing 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 show immense growth, and a number of our assets continue to break comparable hotel EBITDA records. We are already launching new initiatives to further enhance our portfolio. Some of these include transformative full property renovations, developing underutilized lands, and key additions, such as the recent acquisition of three keys at Park Hyatt Beaver Creek in January of 2023. With these new initiatives underway, we are confident that the portfolio will continue to outperform. Thank you, Chris. In summary, we continue to be pleased with the trends we are seeing at our hotels, driven by strong leisure demand at our luxury resort properties and the continued recovery of our urban properties. We see a clear path for continued strength in our future financial results. We are very well positioned moving forward with a solid balance sheet and the highest quality portfolio in the publicly traded hotel REIT market. We look forward to updating you on our progress in the quarters ahead. This concludes our prepared remarks, and we will now open the call for Q&A. Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from the line of Michael Bellisario with Baird. Please proceed with your question. Thanks. Good morning, everyone. Morning. Morning. Just first topic for Deric. Can you maybe talk about the conversations that you had with your lenders for those recent extensions? What are they asking for generally? What are you looking for? Maybe secondarily, where were you in the process before all the banking turmoil occurred? I assume that's what derailed a more fulsome refinancing or extension package for the two loans so far, and plus the third one coming up. Yeah. Thanks, Mike. Actually, the banking issues or crisis that we've been reading about in the headlines, we haven't seen any spillover of that into our world. You know, what you're seeing there had no impact on kind of what we're doing on the refinancing front. We're in a bit of a unique situation in that our 3 final maturities this year are all property-level mortgages with the same lender. What we did there is we did some short-term extensions, which gives us a lot of flexibility, but we're also in the process of hopefully working on a more fulsome corporate-level financing where we could use those assets as a borrowing base, get an undrawn credit facility and have, you know, more flexibility from that perspective. I think that market, you know, while... Look, none of the hotel debt markets are attractive at the moment. That is one area that is currently a little more attractive than, you know, the straight up hotel mortgage today. Ideally, that's where we'd like to end up at some point. You know, it remains to be seen when and where that would happen. Those extensions give us that flexibility and the time that we need to work on that, what I'll call a more fulsome corporate type financing. We're pleased to get the extensions completed. Those assets and those loans are at spreads that, you know, couldn't really be replicated in today's mortgage market. We were happy to get it done the way that we got it done. Yeah. I'd just add as a point is that, you know, historically, we've only really dealt with, you know, large money center banks, right? The systematically important banks. Most of our loans are with BAML, which is the second-largest bank in the country. We've been completely insulated from this volatility and pullback from lending in the small and medium-sized regional banks. We feel really, really confident about our balance sheet and what we have to do going forward shouldn't be a big lift. Got it. My follow-up on the transaction front, it sort of related to my first question, but maybe you sort of partially answered it already, Richard. Just are you seeing any opportunities emerge there? Is maybe there any reason to be a little bit more cautious or pause until maybe you have more clarity on what you're gonna do on the balance sheet side of things with the upcoming refinancings? Or do you view those as two separate avenues that are independent of one another? No, I think you hit the nail on the head. You know, we do want to, as Deric said, you know, restructure our liabilities, to minimize cost of debt. You know, without knowing precisely where that settles, you know, we're unlikely to be going hard on any acquisitions, you know, until that's done. You know, that said, the acquisitions game is a long game, right? You know, even now still having active dialogue around opportunities because, you know, many times they just take, you know, several months, if not years, to play out. So, you know, particularly in the assets that we're looking at, right, which are the much more unique luxury assets, these aren't commodities, right? You don't just decide this month we're gonna buy, you know, X number of hotels. We're still out there looking. I will make another comment on the acquisitions market to say that we're finding that sellers, frankly, are still a little bit unrealistic as to pricing, right? I've got, you know, four and five caps coming across my desk, and I just giggle, right? Because it's, this is not realistic. You know, we're out there, we're looking. We also have to maybe wait for this kind of new weighted average cost of capital to settle in and for, you know, some sellers to get, you know, more realistic about what their assets are worth. Got it. Helpful. Thank you very much. Our next question comes from the line of Chris Woronka with Deutsche Bank. Please proceed with your question. Hey, good morning, guys. Thanks for taking the question. I guess first, you know, Richard, regardless of the how the debt situation might play out in these hotels, I mean, do you view, you know, Chicago and the two, Autographs is kind of still core to the, to the long-term portfolio? Yeah. No, that's a good question. Good morning, Chris. No, I think absolutely. I think there's more room to run on each of those assets. You know, in the case of Sofitel, you know, we had a little bit of a dispute with the manager there that lasted a two years. We settled it in a place that felt was much more favorable to us, and have seen improvement in the performance of that asset and of that management team. We're still giving that time to play out and really, you know, get that asset up to its long-term potential. In the case of the 2 Autographs, you know, maybe it's just a little bit personal for me, but I got very excited about those renovations. I believe the quality of those properties has been enhanced, very, very significantly, since they were both, you know, Courtyards some four years ago. I do think we still have time to realize the potential in those assets. I would just add to that, you know, the time that we converted those hotels and we renovated those hotels at the end of 2019 and into 2020, we have not yet realized the upside from the up-branding, and so we're very excited about that. I think as we look at our Notary Hotel in Philadelphia, the hotel is significantly outperforming the market, and we attribute that largely to the brand as well as some of the strategies that we've implemented there. I think when you look at The Clancy in San Francisco, you know, we've kind of lived through the worst of that market, and now it's on a significant upswing, with very high trajectory, very strong year-over-year growth. We're starting to see encouraging signs from citywides coming back into the market. They had two very successful citywides, American Society of Clinical Oncology and a game developer citywide. you know, J.P. Morgan was canceled last year and has come back. When we look at that hotel, we found some value add opportunities. We've added some meeting space to the hotel that we haven't realized the upside on. It's got a brand new fitness center. We're excited, and we feel like both of the properties have significant runway ahead of them that we haven't realized yet. Okay, great. Appreciate all the detail. I don't know, Richard or Chris. You know, I know, you guys have a lot of, I guess, excess real estate opportunities that you've talked about development potential, or I guess could always look to sell them. I think we're talking about Scottsdale and Beverly Hills, and maybe even still something in Sarasota. Can you give us a quick rundown of where you are on some of those things and what you might like to do or look to do in the next year or so? Yeah. Yeah, sure. We have a couple of different things in what you've asked. One is we do have three development parcels in the portfolio. We have some condominiums that are available for kind of midterm rental at Beverly Hills. To start with the condominiums first, we have five condominiums that were restricted at a minimum 30-day stay. We are evaluating whether or not it would be a good time to sell one or more of those to an owner-occupier. You know, unfortunately, we're still in a, in a, in a period of very high mortgage rates, which is probably putting a little bit of a damper on the residential market. It could make a little bit of sense to wait until, you know, that trajectory reverses for the inevitable Fed pivot, which we are all looking forward to in the next, you know, however many months. Ultimately, yeah, they will be monetized. In terms of the development parcels, there's three. We have three and a half acres at The Ritz-Carlton, Lake Tahoe. We are well advanced with Placer County on getting entitlements to build 18 townhomes there. We're hoping to have a sales center up and running by the end of the year to be able to pre-sell those into the ski season. That project's moving along, you know, very favorably. The idea would be to break ground next May when there's a construction window in that region, when the window opens for construction and for grading. Excited about that one. That's the first development parcel. Second development parcel is The Ritz-Carlton, Sarasota, where we're working through a plan to develop 50 branded residences, single-family homes. We are pretty advanced in the concept planning for that, and we'll be finalizing, you know, the budgets for that probably in the second half of this year. That's something that you'll see us break ground on probably in end of 2024 or 2025. You know, things just take a lot of time in terms of getting the requisite approvals. Lastly, we're at the early stages of assessing the almost six-acre parcel at the Four Seasons Scottsdale. There, we do have a commercial zoning available to us that would allow us to build additional hotel keys. We believe that the hotel is under-suited, and so that could be an option to build some additional suites there. There's also a pretty strong market for additional spa and wellness activities and facilities. That's something else that we're working on. You know, we did inherit a plan from the seller around that Four Seasons has been very heavily involved in as well. We've got a little momentum behind that initiative as well. I'd say that, you know, the timing on that is a little less certain at this point, given we don't have a final conceptual plan yet. That's kind of where we are. Okay. Yeah. Very good. Very helpful. Thanks. Thanks, Richard. Sure. Our next question comes from the line of Bryan Maher with B. Riley Securities. Please proceed with your question. Yeah. Good morning. Kind of circling back to the refinancing that you did and the comment on moving towards more of a fulsome solution, you know, is there a strategy shift here at Braemar to move from kind of non-recourse mortgage debt, similar to what Ashford Trust has done forever, to more of a holistic approach? When you think about how in the past you've favored floating rate debt versus fixed rate debt, you know, we keep hearing everybody's got to keep, you know, buying these caps, you know, on extensions and what have you. How do you think about the cost of those caps when making that decision on the floating rate debt versus the fixed rate debt? Yeah, thanks, Bryan. It's Eric. On your first question in terms of strategy shift, I mean, I wouldn't say it's a significant strategy shift, but we had a corporate credit facility at Braemar prior to the pandemic, and, you know, we drew it down, and we then converted it into a term loan, and then we ultimately paid it off with the senior notes that we issued. It's kind of going back to where we were pre-COVID. There's not a significant strategy shift. I think we'll still utilize a mix of property level mortgage debt as well as corporate level debt at Braemar. You know, as you know, Braemar's a little bit lower leverage strategy than Ashford Trust, which you referenced. We think it makes sense to utilize a little bit more of a mix in terms of the financing that we utilize at Braemar. In terms of the caps and the cost of the caps and how do we take that into account when we're looking at fixed rate financing versus floating rate financing, you're right, we do have a preference for floating rate financing. There's multiple reasons why we do that. Obviously, right now we're in this period of time where, you know, if you've been a floating rate borrower, you've seen rates go up quite a bit, and we've had caps in place, and those caps have kicked in. You know, rates go up, rates go down, and we view it as a natural hedge to our business that the profitability of hotels tends to go up and down with the economy, and we also like the flexibility that floating rate debt provides versus fixed rate debt. There's a lot of reasons why we tended to focus on floating rate financing. I think you'll continue to see us have a mix. We've got a mix right now. I think we'll continue to have a mix going forward. So I don't think we'll be 100% one way or the other. If you look at the forward curve of interest rates, it shows rates dropping pretty significantly over the next couple of years. You know, now really wouldn't be an ideal time to lock in fixed rate debt. Although, having said that, I think you'll also see us kind of do a little bit of both. I wouldn't say we wouldn't go do a fixed rate loan at the moment with some of the maturities that we have coming up just because the floating rate market is really not attractive. There's just a lot of factors that go into play when we're making those decisions. Obviously the cost of caps is something that is very volatile. It changes. They can go from being very, very cheap to being very, very expensive. Kind of that's where we are right now, that the caps have tended to be a little bit more expensive. that's kind of my comment there. Okay. Just kind of shifting gears to the acquisition front, and I heard Richard what you said about, you know, laughing at some of these four and five caps, and we would agree. To the extent that the prognosticators are correct and we see, you know, I don't want to say a tsunami, but, you know, a large amount of, you know, kind of larger gateway type properties that just can't get financing or have difficulty getting financing later this year, is there the ability to like reopen or start a new non-traded preferred issuance, you know, to tap into that, you know, kind of 8-ish, 8.5% money should you be able to find something, you know, that is, you know, from a value standpoint, you know, too good to turn down? Bryan, thanks for that question. There is always the ability to file for a new non-traded preferred equity offering. You know, kind of given that we've already done it before, it would probably be able to happen relatively quickly within a matter of a few months. At the cost that you referenced, you know, I think if we were to do it, we would want to do it at a cost that is below where our inaugural issue came out. What we understand from our friends in the broker-dealer community is that this retail market is a little bit less sensitive to rates than maybe the institutional market. We may be able to do that. you know, that said, the other thing we're keeping a very close eye on is our capital structure. you know, with, you know, something like 25% of our capital structure in preferred equity right now, you know, is that enough? you know, for personally, I believe it is, at least for now. I hear you that there may be some good opportunities that we want to avail ourselves of in the future. We'll definitely keep an eye on that, rest assured we can quickly pivot to access that market if the opportunities are there. Okay. Thank you. As a reminder, if you have any questions, you may press star one on your telephone keypad to join the question and answer queue. Our next question comes from the line of Tyler Batory with Oppenheimer. Please proceed with your question. Good morning. Thanks for taking my questions. Couple on just trends in the portfolio and what you're seeing out there. Can you talk about how April is shaping up perhaps compared to March? I know there's concern out there in the market about demand slowing, especially, you know, the high-end leisure customer or perhaps softer pricing power as well. Just kinda interested what you're seeing, you know, real time and also just what you're seeing in terms of bookings for the rest of Q2. Yeah. Thanks for your question, Tyler Batory. This is Chris Nixon. I'll take this. You know, we're largely seeing the trends that we experienced in Q1 kind of pulling forward and continuing. Our urban hotels continue to perform very well. They're pacing very well relative to last year. Our resorts continue to stabilize, and we see a lot of those trends kind of pulling forward. As I think Richard Stockton cited in his comments, group pace is very strong for the entire year, so we're encouraged by that. We're seeing great strength out of our short-term group bookings, so the fact that that pace for the full- year is well ahead of prior year, and we're seeing continued short-term strength, is a great sign. BT is improving. That's showing no signs of slowing down. I think as we look to Q2, you know, some of the comparables will be at play. This portfolio had a very strong March and April of 2022. Just coming out of Omicron, there was a lot of pent-up demand, and the incredible hotels in this portfolio is where folks wanted to travel to first, and we saw a huge surge in bookings last year for March and April. There's also gonna be some kind of tax anomalies. You know, we realized a significant tax assessment last year in April that'll play into the comparables. We've got some tough comparables as we kind of look ahead into Q2, but with that said, in terms of the business and the trends we're seeing, they're still very, very favorable. From a margin standpoint, we're happy with margin performance at our portfolio. You know, ADR is up in our luxury resorts 50% to pre-COVID, with that comes very, very high expectations from the consumer. We're very pleased that we continue up as a portfolio as a whole to run more efficient operations. For the first quarter, our departmental expenses were down 5% on a POR basis to prior year. There's a lot of efficiencies there that we believe we're gonna be able to pull forward. On the whole, again, a continuation of kind of what we've seen. Urban will continue to be strong. Resorts will continue to stabilize and the segments group and business transient continue to improve. Yeah. I would just add to that, Chris. you know, one of the things that's unique about our portfolio due to its composition is we recovered much more quickly than our peers, and I feel like we're at least a year ahead in terms of the recovery. Meaning that, you know, we had an outstanding year last year, yeah, it does make... As Chris said, it makes for tough comps, you know. It's difficult to then, you know, feel that, you know, we should be penalizing ourselves for that, right, 'cause we had such a fantastic year. That's why I look at things like yield on cost, right? How are assets yielding? What is the cash flow generation looking like? It's very, very strong. You know, we started publishing that information in our company presentation, and it continues to be strong. You know, we have a very strong base of what I would call, kind of plateauing resort demand, resort properties and a growing urban segment. That puts us in a great position to generate lots of excess cash flow. Okay. follow-up on some of the commentary there. I'm interested specifically on the EBITDA margin side of things. I mean, how did margins come in in Q1 versus your budgets, versus your expectations? And when we look at the performance in 2022, you know, do you think it's reasonable to be ballpark around the same level in 2023, or do you kind of look at 2022 overall, you know, perhaps a little bit of an extra benefit there just given the rates were so strong? You know, perhaps earlier in the year, you know, didn't have full labor base at some of your properties? Yeah. That's a great question, Tyler. Our EBITDA margins were down 11 basis points to last year, and some of the dynamics that are at play there, ADR was down 8% to prior year. When you look at our composition of revenues, we had F&B revenues that grew at 16% to prior year and rooms revenue that grew at 8% to prior year. F&B revenues typically run a significantly lower margin than rooms, and so there were a couple dynamics there that were impacting that. Then, we had a big win from a property tax standpoint. At our Sofitel Chicago, they realized a 2022 tax reduction in February 2023 that was over $2 million, and that certainly played in and helped our margins. There's gonna be some noise as I mentioned, as it relates to EBITDA margin as we realized a significant tax reduction in Q2 2022. On the whole, as we look at it, we're running more efficient operations. We're seeing improved productivity across our hotels. You know, when we look at EBITDA margins to prior year, I think what's happening on the aggregate of the portfolio will be at play. A lot of our urban hotels that carry a lower RevPAR are growing significantly, and our highest RevPAR hotels are stabilizing. The weighted impact of that is, you know, could be a decline in RevPAR for the portfolio as a whole, could be a decline in ADR as kind of those weightings are shifting based on the composition changes within the portfolio. That's some of the challenges with this particular portfolio looking year-over-year. As we compare to kind of pre-COVID levels and, even a margin and rooms margin to 2019, we're significantly ahead. I do think there's gonna be some noise as we kind of go quarter-to-quarter. On the whole, we're very happy with kind of our labor models, the efficiencies of our hotels, and how we're staffing and running the hotels. Yeah. Tyler, I would add to that, you know, we hear people comment on the impact of COVID and on your labor model and labor structure and all of that. You know, I do subscribe to the belief that we have found 100 to 200 basis points of permanent margin improvement. That's how, you know, we think about the business moving forward. You know, we're running at a little over 10% lower number of FTEs than we did pre-pandemic. You know, I'd say that we are, you know, basically fully staffed up. I mean, there might be some pockets where we can add some people, but that's really gonna be more converting contract labor to full-time, which would result in, you know, additional cost savings. You know, I think in terms of lessons from COVID, I think, we've come out of, out of it in a better place, and, longer term it's gonna, you know, benefit shareholders. Okay. A few other follow-up questions. You know, the urban improvement, urban strategy, it's nice to, it's nice to see that. I mean, is that kind of... Is that being driven by leisure? Is that corporate travel? Is it kind of midweek? Then I'm interested, you know, your perspective on San Francisco specifically. Seem to be, you know, a wide variety of different headlines out there, in terms of the outlook for real estate in San Francisco broadly. You know, tech layoffs, regional banking issues, et cetera. Just kind of curious what your perspective is on San Francisco and the outlook, you know, this year and the next couple of years there. Yeah, Tyler, I can shed some color on that. I mean, broadly across our urban hotels, we're seeing, I mean, the improvements are significant. You know, we were up 60% year-on-year, and that's really coming from all segments. The biggest recovery segments are group and corporate transient. With our portfolio, you know, and the size of the portfolio, it really is market by market, you know. In Philadelphia, our The Notary Hotel outperformed the broader market because they were able to land one of the largest accounts in the market, Comcast, and they got significant corporate production out of them. You know, Capital Hilton was under renovation, and March was actually the second highest revenue month in the history of the hotel. That was due to strong group production. Our team went out and proactively sourced self-contained and in-house groups and really built a strong group base to kind of overcome some of that market softness. It really is, you know, kind of market specific. We're doing a lot of remixing in Chicago at our Sofitel hotel. We've gone away from some wholesale business because we've seen strong group demand. I think group at that hotel was up 1,500 room nights year-on-year. We're seeing strong corporate and consortia, it's allowing us to mix away from some of the lower business. It really is all segments. Specifically in San Francisco, you know, our Clancy Hotel, while we were down 22% to 2019, they were up over 70% to last year. The market continues to lag, but again, we're seeing very strong signs of recovery year-over-year. I mentioned, you know, kind of the citywide production that was fairly strong in Q1. We're also seeing some great signs out of corporate production, specifically consulting group firms and financial services. Tech is definitely lagging. We're seeing there are some effects from the layoffs in terms of travel from those large accounts. We remain optimistic in terms of what we're seeing in our single hotel in San Francisco. I think the last topic, you know, the share repurchase, I know you bought back some stock in Q1 here. You've, you know, used up that authorization. I mean, any thoughts on kinda, you know, extending that or increasing that in the future? I mean, how do repurchases fit into how you're thinking about capital? Yeah. Tyler Batory, good question. We're always assessing it. We're always evaluating. It's clearly a board decision. That's about all I can tell you is that we'll continue to look at it. You know, I think suffice to say that we're very disappointed with the multiple we're getting on our stock right now. It is a very attractive investment. We see that. As we said in the past, it's kind of this fighting conflicting priorities, right? If we do buybacks, we're increasing leverage and reducing our market cap. Look, it's a fair question, and we'll continue to evaluate, you know, whether or not we want to do share buyback. Okay. That's all for me. Thank you very much for the detail. We have reached the end of the question and answer session. I'll now turn the call back over to management for closing remarks. Thanks everyone for joining us on our first quarter earnings call. We look forward to speaking with you on our next call. Hope to see many of you at the Nareit conference in New York in June. Have a good day. This concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.