BHR

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Braemar Hotels & Resorts Inc. fourth quarter 2025 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. To ask a question, press star then the number 1 on your telephone keypad. To withdraw your question, press star 1 again. I would now like to turn the conference over to Allison Beach, Director of Public Relations. Please go ahead.

Good morning, and welcome to today's call to review results for Braemar Hotels & Resorts Inc. for the fourth quarter and full year 2025, 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 Christopher Nixon, Executive Vice President and Head of Asset Management. The results, as well as the 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 only 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, have been filed on Form 8-Ks with the SEC on 02/26/2026, and may also be accessed through 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. Also, unless otherwise stated, all reported results discussed in this call compare the fourth quarter and full year ended 12/31/2025 with the fourth quarter and full year ended 12/31/2024. I will now turn the call over to Richard Stockton. Please go ahead, Richard.

Good morning. Welcome to our 2025 fourth quarter and full year earnings conference call. Before I begin, I would like to remind you that back in August, we announced the initiation of a sale process for Braemar Hotels & Resorts Inc. The company has engaged Robert W. Baird & Co. as its financial adviser, and the sale process has been initiated. As we highlighted in the press release, there is no deadline or definitive timetable set for completion of the sale process. There can be no assurance that this process will result in the sale of the company or its assets. In the context of evaluating all potential options to create shareholder value, we have also appointed real estate broker co-advisers to evaluate the potential for individual asset sales in conjunction with the company's sale process. We look forward to providing an update as soon as the Board of Directors has approved next steps, a specific transaction, or determines that a development warrants public disclosure. With that said, let me begin today's call by providing a brief overview. Then Deric will provide a review of our financial results, and Christopher will provide an update on our asset management activity. Afterwards, we will open the call for Q&A. We have a few key themes for today's call. First, I am pleased to report that while our comparable fourth quarter RevPAR was flat, our portfolio delivered 1.8% growth in comparable total revenue this quarter. Our resorts continue to deliver strong growth, with comparable fourth quarter RevPAR increasing 4.1% and comparable hotel EBITDA increasing 6%. Second, we had significant renovations in process at three hotels during the quarter, which significantly impacted our portfolio results. If you exclude hotels under renovation during the quarter, our RevPAR growth was 2.6%, and comparable hotel EBITDA increased 6.4%. Finally, our full year results were strong. Comparable total revenue growth was 2.8%, and comparable hotel EBITDA growth was 3.1%. I am very pleased with these results given the difficult operating environment we are currently seeing in the hospitality industry. A closer look at our fourth quarter, our portfolio delivered strong comparable RevPAR of $340, which was in line with the prior-year quarter. Importantly, renovation activity significantly impacted our portfolio results, as hotels not under renovation generated comparable RevPAR growth of 2.6%. Nine of our 13 hotels are considered resort destinations, and our luxury resort portfolio delivered strong fourth quarter performance. Our resort portfolio reported comparable RevPAR of $536, a 4.1% increase over the prior-year period, and comparable hotel EBITDA of $32,500,000, a 6% increase over the prior-year period. The brightest spots within our resort portfolio this quarter included The Ritz-Carlton, Sarasota, which delivered impressive comparable RevPAR growth of approximately 26%. Both the Four Seasons Resort Scottsdale at Troon North and the Bardessono Hotel and Spa performed exceptionally well, with each delivering comparable RevPAR growth of approximately 12%. And our Ritz-Carlton Reserve, Dorado Beach, continues to be a standout, achieving comparable RevPAR of $1,806, which reflected a 10% growth rate over the prior-year quarter. This impressive performance was offset by some softness at hotels under renovation, including the Cameo Beverly Hills, Hotel Yountville, and Park Hyatt Beaver Creek, which impacted our overall portfolio results. During the fourth quarter, we sold the 410-room Clancy in San Francisco for $115,000,000, or $280,000 per key. The sale represents a 5.2% capitalization rate on net operating income for the trailing twelve months ended 09/30/2025. In conjunction with that sale, the company paid down approximately $65,000,000 of debt and retained approximately $44,000,000 of net proceeds after payment of transfer taxes and transaction costs. We also recently completed the rebranding and strategic repositioning of our Cameo Beverly Hills to Hilton's luxury LXR brand. This transfer reflects our commitment to delivering an elevated guest experience, aligning the property with a world-class luxury standard, and enhancing its presence in the competitive high-end hospitality market. I am also pleased to report that to date, we have redeemed $149,000,000 of our non-traded preferred stock, which represents approximately 32% of the original capital raise. We expect to continue to redeem these shares as we seek to deleverage our platform and improve our cash flow per share. We are pleased with the performance of our portfolio and believe the renovations that we have recently completed will drive strong performance going forward. 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 loss attributable to common stockholders of $46,000,000, or $0.67 per diluted share, and AFFO per diluted share of negative $0.02. For the full year, we reported a net loss attributable to common stockholders of $72,700,000, or $1.07 per diluted share, and AFFO per diluted share of $0.28. Adjusted EBITDAre for the quarter was $28,800,000. Adjusted EBITDAre for the full year was $147,000,000. At quarter end, we had total assets of $1,900,000,000. We had $1,100,000,000 of loans. Our total combined loans had a blended average interest rate of 6.7%, taking into account in-the-money interest rate caps. Based on the current level of SOFR and our corresponding interest rate caps, approximately 14% of our debt is effectively fixed, and approximately 86% is effectively floating. As of the end of the fourth quarter, we had approximately 46.7% net debt to gross assets. We ended the quarter with cash and cash equivalents of $124,400,000, plus restricted cash of $42,500,000. 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 $17,100,000 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 February 2026, we updated our preferred equity securities dividend declaration process to align the dividend cycles of our different preferred stock share classes in conjunction with the company's previously announced company sale process. To summarize, because our Series B and Series D preferred stock are pari passu with our Series E and Series M preferred stock with respect to distributions, they must receive equitable treatment regarding dividend declarations. To manage this consistently, we are moving from declaring Series B and Series D dividends at the start of the quarter to reserving them on a monthly basis alongside our other Series E and Series M monthly dividend declarations. This ensures all parity requirements with respect to distributions across all of our series of preferred stock are met, while maintaining the actual quarterly payment of our Series B and Series D preferred stock on or near the fifteenth of the month following quarter end. This also gives us flexibility in the event that we have a strategic transaction that requires a redemption or conversion of the preferred equity securities outstanding during the middle of a quarter. As for our common equity dividend policy, the Board has not declared a policy for 2026 in light of the fact that there is an ongoing company sale process, which could result in the company's assets being sold in one or more transactions with net proceeds being distributed to shareholders after satisfying the company's other obligations. As of 12/31/2025, our portfolio consisted of 13 hotels with 3,028 rooms. Our share count currently stands at 73,300,000 fully diluted shares outstanding, which is comprised of 68,200,000 shares of common stock and 5,100,000 OP units. This concludes our financial review. I would now like to turn it over to Christopher to discuss our asset management activities for the quarter.

Thank you, Deric. During the fourth quarter, comparable hotel RevPAR was flat for the quarter, but we did achieve a 5.4% improvement in ADR compared to the prior-year period. During the fourth quarter, comparable total RevPAR increased 1.8% compared to the prior-year period. The portfolio delivered strong results despite renovation-related disruptions at the Cameo Beverly Hills, Park Hyatt Beaver Creek, and Hotel Yountville. Performance was further impacted by weather-related factors, including below-normal snowfall and delayed mountain openings at the Park Hyatt Beaver Creek and The Ritz-Carlton, Lake Tahoe. Excluding these properties, RevPAR increased 4.6% and total RevPAR increased 6.3% for the fourth quarter compared to the prior-year period, reflecting continued strength across the portfolio. Resort assets were a key driver of performance during the fourth quarter, delivering a 4.1% increase in RevPAR and a 6% increase in hotel EBITDA compared to the prior-year quarter. Four Seasons Scottsdale was a standout performer, with fourth quarter RevPAR up 12.2% and hotel EBITDA growing 21.6% compared to the prior-year period. For full year 2025, portfolio RevPAR increased 1%, and hotel EBITDA grew 3.1% compared to the prior-year period. The outsized hotel EBITDA growth was driven by increases in other revenue, which grew 10.1% on a per occupied room basis during the full year compared to the prior-year period. Our team continues to drive profitability by focusing on high-margin ancillary revenue streams at the property. We remain confident in our ability to sustain operating momentum and deliver strong results in the periods ahead. I would now like to highlight a few key accomplishments from the quarter. For full year 2025, group room revenue increased 7.1% compared to the prior-year period, with fourth quarter group room revenue up 0.4% compared to the prior-year period. The Four Seasons Scottsdale delivered one of the strongest performances in the portfolio during the quarter, with group room revenue growth of 17.7% compared to the prior-year period. During the fourth quarter, the property generated more than 600 incremental group room nights and delivered a $50 improvement in group ADR compared to the prior-year period. This was driven in part by the capture of a key group buyout, which also generated $2,400,000 in high-margin ancillary revenue. The account backfilled a historically softer demand period and meaningfully enhanced overall profitability. As a result, during the fourth quarter, catering revenue at the property increased 22.2%, contributing to a 12.4% increase in total food and beverage revenue compared to the prior-year period. Across the portfolio, catering revenue increased 10.1% on a per group room night basis during the fourth quarter compared to the prior-year period. We continue to become more selective with group business to prioritize higher-spend programs that drive incremental food and beverage revenue. Our ability to sustain momentum in capturing group demand within a competitive environment underscores the effectiveness of our targeted sales strategies and the advantages of our geographically diverse portfolio. As I mentioned earlier, our resort properties continue to be significant contributors to portfolio performance. A highlight this quarter was the Ritz-Carlton Reserve, Dorado Beach, which continues to deliver impressive results with a 10.2% increase in RevPAR during the fourth quarter compared to the prior-year period. The property delivered a record-setting performance for the full year 2025 with occupancy exceeding 63% and total revenue surpassing $91,000,000, representing a 10.8% increase compared to the prior year. To expand revenue streams for the property, our team continues to focus on optimizing and expanding the residential rental program, which currently includes 16 residences. The average daily rate for residences within the rental program exceeded $12,000 during the fourth quarter. Recent operational enhancements, including streamlined onboarding for owners and integration with Marriott Homes & Villas platform, have contributed to steady growth and improved rental performance. Turning to another standout performer, The Ritz-Carlton, Sarasota delivered strong performance during the fourth quarter, with RevPAR increasing 25.5% and hotel EBITDA improving 48% compared to the prior-year period. These improvements were driven by strength across both group and transient segments, with group room revenue increasing 46.6% and transient room revenue up 17.6% compared to the prior-year period. Festive period performance was particularly strong, supported by incremental outlet revenue generated from targeted holiday activations, including a new high tea experience featuring the local Nutcracker ballet, the annual holiday brunch, and New Year's programming, which collectively contributed to a 30.9% growth in food and beverage revenue compared to the prior-year period. Additionally, the property has expanded access to its amenities for local and outside guests, resulting in a 6.1% year-to-date increase in related revenue compared to the prior-year period. Moving on to capital expenditures. In 2025, we completed the strategic conversion of the Cameo Beverly Hills to an LXR Hotels & Resorts hotel, which included a comprehensive renovation of the guest rooms and public space. This investment meaningfully upgraded the product and positioned the hotel as a best-in-class offering in its market. We also completed several other high-impact projects across the portfolio, including guest room renovations at Park Hyatt Beaver Creek and Hotel Yountville, which materially enhanced each property's competitive position. Additionally, during the year, we delivered a refresh of the Spa Botánico at the Ritz-Carlton Reserve, Dorado Beach; converted underutilized retail space into a café and gelato shop at Four Seasons Scottsdale, driving higher food and beverage margins; and re-concepted The Ritz-Carlton, Lake Tahoe café into an elevated quick-serve outlet. In total, we invested approximately $78,000,000 in capital expenditures in 2025, and we anticipate spending between $25,000,000 and $35,000,000 in 2026. In summary, we are pleased with our solid performance and continue to see the benefits of initiatives focused on productivity and cost efficiency. Our momentum reflects the strength and resilience of our diversified portfolio and the strategic positioning that we have built over time. In addition, we are actively advancing several initiatives aimed at further enhancing our well-diversified platform. We remain optimistic about the opportunities ahead and look forward to sharing continued progress in the quarters to come. I will now turn the call back over to Richard for final remarks.

Thank you, Christopher. I would like to reiterate that we continue to be pleased with the performance of our hotels, in particular, the return to normalized growth for our resort assets. We look forward to updating you on our progress in the quarters ahead. This concludes our prepared remarks. We will now open for questions. Thank you.

To ask a question, press star then the number 1 on your telephone keypad. Again, that is star 1 for any question. Once again, to ask a question, simply press star 1 on your telephone keypad. We have no questions at this time. I will hand the call back to management for any closing remarks.

Thank you, everyone, for joining us on this fourth quarter earnings call, and we look forward to speaking with you next quarter.

This concludes today's call. You may now disconnect.

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Braemar Hotels & Resorts, Inc. Third Quarter 2025 Results Conference Call. [Operator Instructions]. I'd now like to turn the conference over to Allison Beach, Director of Public Relations. Please go ahead.

Good morning, and welcome to today's call to review results for Braemar Hotels & Resorts for the third quarter of 2025 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 only 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 the Form 8-K with the SEC on November 4, 2025, and may also be accessed through the company's website at www.bhrreit.com. Each listener is encouraged to review these reconciliations provided in the earnings release, together with all the other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the third quarter ended September 30, 2025 and with the third quarter ended September 30, 2024. I will now turn the call over to Richard Stockton. Please go ahead, Richard.

Good morning. Welcome to our third quarter earnings conference call. Before I begin, I'd like to remind you that back in August, we announced the initiation of a sale process for Braemar. The company has engaged Robert W. Baird & Co as its financial adviser and the sale process has been initiated. On today's call, we will not be providing any update on that process or be able to address any questions about that process. As we highlighted in the press release, there's no deadline or definitive timetable set for completion of the sale process and there can be no assurance that this process will result in the sale of the company. Additionally, we do not expect to disclose or provide any update concerning developments related to this process unless until the Board of Directors has approved a specific transaction or other course of action requiring disclosure. With that said, let me begin today's call by providing an overview of our recent results and our strategic priorities for the remainder of 2025, then Deric 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 have a few key themes for today's call. First, I'm excited to report that our portfolio achieved 1.4% growth in comparable RevPAR in the third quarter and total comparable hotel EBITDA growth of 15.1%. Importantly, our resorts continue to show strong growth with comparable RevPAR growth of 5.5% for the quarter. Second, we have significant renovations in process at 3 hotels, which significantly impacted our portfolio results. If you exclude hotels under renovation during the quarter, our RevPAR growth was 3.4%. Third, from a liquidity perspective, we remain very well positioned having addressed our final 2025 debt maturity earlier this year, completing the sale of the Mariott Seattle Waterfront in August and announcing the planned sale of the Clancy, which we expect to close shortly. Turning to our third quarter results. Our portfolio delivered solid results with comparable RevPAR of $257, reflecting an increase of 1.4% over the prior year quarter. This marks our fourth consecutive quarter of RevPAR growth, which I believe reflects an important inflection point in our performance. Additionally, comparable total hotel revenue increased by 3.9% over the prior year period, and comparable hotel EBITDA was $21.4 million, which reflected a 15.1% increase over the prior year quarter. 9 of our 14 hotels are considered resort destinations. And our luxury resort portfolio continues to return to a more normalized growth trajectory, delivering a strong third quarter performance. Our resort portfolio reported comparable RevPAR of $361 a 5.5% increase over the prior year period and combined comparable hotel EBITDA of $13.1 million, a 58% increase over the prior year period. The brightest spots within our resort portfolio this quarter included the Four Seasons Resort Scottsdale at True North, which delivered an impressive comparable RevPAR growth of approximately 25%. The Ritz-Carlton Lake Tahoe also performed exceptionally well with total revenue up roughly 32% year-over-year, reflecting strong group demand and the benefits from the recently completed renovation. And our Ritz-Carlton reserves Toronto Beach continue to be a standout, achieving approximately 20% growth in comparable RevPAR. This impressive performance was slightly offset by some near-term softness in our urban hotels we saw comparable RevPAR decreased 3.9% during the quarter. This reflects the extensive renovation of the Cameo Beverly Hills as well as citywide occupancy declines in Philadelphia, which created headwinds this quarter for the Notary Hotel. Looking ahead, our booking base continues to be strong, and we believe our portfolio is well positioned outperforming. As a reminder, on the capital markets front, in March of this year, we closed on a refinancing across 5 hotels at a very competitive spread. Importantly, this financing addressed our only remaining final debt maturity for 2025. In August, we capitalized on the strong credit market for lodging assets by refinancing the mortgage loan secured by the Four Seasons Resort Scottsdale True North. During the quarter, we sold the 369-room Marriott Seattle Waterfront for $145 million or $393,000 per key. The transaction aligns nicely with our strategic objectives to deleverage the portfolio while sharpening our focus on the luxury hotel sector. Additionally, subsequent to quarter end, we entered into a definitive agreement to sell the 410-room Clancy in San Francisco for $115 million or approximately $280,000 per key. The transaction is expected to close this month. Of note, we received a $3.5 million nonrefundable earnest money deposit, and the buyer has the right to extend the closing for 30 days with an incremental $1 million nonrefundable deposit. The sale price represents a 5.2% capitalization rate on net operating income for the trailing 12 months ended September 2025. We are strategically refining our portfolio is one clear objective to maximize its value for our shareholders, and this divestiture will help us to ensure that a future sale of the company results in the best possible outcome for our investors. Next, I'm pleased to report that to date, we have redeemed approximately $125 million of our nontraded preferred stock, which represents approximately 27% of the original capital raise. We expect to continue to redeem these shares as we seek to deleverage our platform and improve our cash flow per share. We are pleased with the performance of our portfolio and believe the renovations we are completing will drive strong performance going forward. I will now turn the call over to Deric to take you through our financials in more detail.

Thanks, Richard. It's important to remember that the third quarter is the weakest quarter for our portfolio from a seasonality perspective. For the quarter, we reported a net loss attributable to common stockholders of $8.2 million or $0.12 per diluted share and AFFO per diluted share of negative $0.19. Adjusted EBITDA for the quarter was $16.4 million. At quarter end, we had total assets of $2 billion. We had $1.2 billion of loans, of which $27.7 million related to our joint venture partner's share of the loan on the Capital Hilton. Our total combined loans at a blended average interest rate of 6.9%, taking into account in the money interest rate caps. Based on the current level of SOFR and our corresponding interest rate caps, approximately 13% of our debt is effectively fixed and approximately 87% is effectively floating. As of the end of the third quarter, we had approximately 43.2% net debt to gross assets. We ended the quarter with cash and cash equivalents of $116.3 million plus restricted cash of $47.7 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 $23.1 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, we again announced a quarterly common stock dividend of $0.05 per share or $0.20 per diluted share on an annualized basis. This equates to an annual yield of approximately 8% based on yesterday's stock price. As of September 30, 2025, our portfolio consisted of 14 hotels with 3,298 net rooms. Our share count currently stands at 73.6 million fully diluted shares outstanding, which is comprised of 68.2 million shares of common stock and 5.4 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. Despite temporary headwinds from ongoing renovations at several properties, our portfolio continued to demonstrate resilience during the third quarter. Comparable hotel RevPAR increased 1.4% and driven by a 4.7% improvement in ADR compared to the same period last year. During the third quarter, our portfolio GOP margin expanded by 160 basis points compared to the prior year period. During the third quarter, our resort properties were a key driver of performance, delivering a 5.5% increase in comparable RevPAR and a 57.7% increase in comparable hotel EBITDA. The Four Seasons Resort in Scottsdale was a standout with third quarter RevPAR up 24.9% and GOP growing 231.6% compared to the prior year period. The portfolio delivered strong third quarter results despite temporary disruption from ongoing renovations at Cameo Beverly Hills, Park Hyatt Beaver Creek and Hotel Yountville. Excluding these properties, RevPAR increased 3.4% for the third quarter compared to the prior year period. We remain confident in our ability to sustain operating momentum and deliver strong results in the periods ahead. I would now like to highlight a few of the key accomplishments achieved during the quarter. Group room revenue remained strong across the portfolio despite softening trends industry-wide. Group room revenue pace for the full year 2025 is up 9.1% compared to the prior year. For the third quarter, group room revenue finished 1.3% above the prior year period. The Ritz-Carlton Lake Tahoe was a standout during the third quarter, delivering exceptional group room revenue growth of 80.2% compared to the prior year period, driven by a sharp increase in group demand following its extensive 2024 renovation. The property realized more than 2,400 additional room nights during the period and achieved a $30 improvement in ADR compared to the prior year period. This momentum supported not only growth in rooms revenue, but also strong food and beverage performance as catering revenue increased 80.7% during the third quarter compared to the prior year period, further enhancing overall profitability. Recent property enhancements such as cabanas, fire pits, swing suites and new food and beverage outlets have further contributed to food and beverage revenue growth during the third quarter, which increased 43.3% compared to the prior year period. Portfolio-wide, catering revenue finished ahead by 31% in the third quarter compared to the prior year period, and we are becoming increasingly selective with group business to further capitalize on food and beverage opportunities associated with higher spend events. The remainder of the year reflects continued strength in the group segment with fourth quarter group room revenue currently pacing ahead 1.7% compared to the prior year period. Our ability to sustain momentum in capturing group demand within a competitive environment underscores the effectiveness of our targeted sales strategies and the advantages of our geographically diverse portfolio. As I mentioned earlier, our resort properties continue to be significant contributors to portfolio performance. A highlight this quarter was the Ritz-Carlton Dorado Beach, which continues to deliver impressive results with a 20.4% increase in RevPAR during the third quarter compared to the prior year period. reflecting strong demand and sustained rate growth at this premier Caribbean destination. During the third quarter, the property capitalized on 2 back-to-back buyouts, which helped drive group room revenue growth of 353% compared to the prior year period. In an effort to expand revenue streams for the property, our team continues to focus on optimizing and expanding the residential rental program, which currently includes 16 residences. During the third quarter, residents revenue increased 11.8% compared to the prior year period. The average daily rate for residences within the rental program exceeded $7,900 during the quarter. Recent operational enhancements including streamlined onboarding for owners and integration with the Marriott Homes and villa platform have contributed to steady growth and improved rental performance. Additionally, the Ritz-Carlton Sarasota delivered strong performance with total revenue increasing 5.2% compared to the prior year period, driven by a 15.5% increase in other revenue. The property has expanded access to its amenities for local and outside gas, resulting in a 38% year-to-date increase in related revenue compared to the prior year period. The previously underutilized kid space was converted into a commission-based arcade, which is outperforming expectations and plans are underway to further expand this offering to capture additional demand and enhance ancillary revenue. Moving on to capital expenditures. In the third quarter of 2025, we completed the conversion of underutilized space at Four Seasons Scottsdale into a new Gelato shop in Cafe and an epicurean market, enhancing the guest experience and creating new revenue streams. We also added 5 new luxury beach a cabana, the Ritz-Carlton St. Thomas, further elevating the resorts feedfront offering and driving incremental revenue. We made substantial progress with guestroom renovations at both Hotel Yountville and the Park Hyatt Beaver Creek. These projects are designed to capitalize on the luxury positioning within their respective markets with completion of both expected later this year. Additionally, we began the renovation at Cameo Beverly Hills to support its strategic conversion to Hilton's LXR luxury portfolio with completion planned for later this year. We also initiated multiple enhancements at the Ritz-Carlton Reserve Toronto Beach including beach-side cabanas and creation of a new event line to attract incremental group business. Later this year, we plan to commence the renovation of the pool deck and fitness center at Bardessono Hotel & Spa a project designed to further elevate the resorts wellness and leisure offerings and reinforce its positioning as one of Napa Valley's premier luxury destinations. These initiatives reflect our disciplined capital deployment strategy and continued focus on long-term value creation through portfolio quality and brand alignment. For 2025, we continue to anticipate spending between $75 million and $85 million on capital expenditures. In summary, we are pleased with our solid year-to-date performance and continue to see the benefits of operating initiatives focused on productivity and cost efficiencies. We are particularly encouraged by the return of normalized growth within our resort segment. Our momentum reflects the strength and resilience of our diversified portfolio and the strategic positioning we've built over time. In addition, we are actively advancing several initiatives aimed at further enhancing our well-diversified platform. We remain optimistic about the opportunities ahead and look forward to sharing continued progress in the quarters to come. I will now turn the call back over to Richard for final remarks.

Thank you, Chris. In summary, I'd like to reiterate that we continue to be pleased with the performance of our hotels, in particular, the return to normalized growth for our resort assets. We also remain well positioned with a solid balance sheet and promising outlook. 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.

[Operator Instructions]. Our first question will come from the line of Tyler Batory with Oppenheimer.

A portfolio question for you first in terms of CapEx. Just a multipart question. What do you think is a good maintenance run rate CapEx number to think about for your portfolio, whether that's a dollar number or a percentage of revenue? And given some of the CapEx projects you completed over the past few years. Just talk about the overall quality of the portfolio as it stands today, if there's anything deferred or any sort of catch-up CapEx that might potentially be contemplated in the next couple of years?

Yes, Tyler. I'll take that. So in terms of maintenance CapEx, we typically target a percentage of revenue, I would say it's low single digits, in terms of maintenance and mechanical. In addition to that, we've got ROI CapEx and some of these larger renovations and repositionings. From a deferred standpoint, we've got a process by which the properties put in capital requests, and we've got an engineering team within our Ashford CapEx team that works with our property engineers to make sure that any mechanical or maintenance projects are being addressed appropriately. So we review those. We prioritize them. We'll will then deploy capital against the ones that we think are high priority. But there's nothing, I would say, significant or out of the ordinary that's been deferred.

Okay. Great. And then my other question on RevPAR and portfolio performance. Obviously, you initiated the sales process at the end of the summer, and that was made public. Is that something that you think is weighed on results at all? Or maybe it's not that much of a distraction in the hotel level employees perhaps aren't really thinking about that?

Yes. I don't think it's affected anything at the property level or in terms of how our asset management team is working with the hotels. We were actually quite pleased with the results given some of the headwinds that we mentioned in our prepared remarks. We've got 3 significant hotels that are under major renovations. We've got a major repositioning. We've got some impact from government and some other segments. And with all -- despite all that, the portfolio grew RevPAR, we grew EBITDA. We grew EBITDA margin. We're still finding efficiencies. We're still finding controlling labor, controlling expenses, how is profit margin expanded within the quarter to last year. And so I think from a property level, as it rolls up to the portfolio, I think performance was quite strong in the quarter, and I don't think the sales process has impacted our approach at all.

Okay. Then moving on, just a couple of strategic questions quickly here. Obviously, the company is externally advised was there plans or have ever been planned, discussions in terms of an internalization process? And just kind of wondering if you could unpack behind the scenes, if you did look at that and just kind of what you thought about it?

Yes. Tyler, it's Richard Stockton. So yes, no, this is something that the Board has considered. When we announced that we're looking at various strategic alternatives. That was one of them. And so that was something that was thoroughly vetted by the Board. Ultimately, the conclusion was to opt for a company sale instead. And so that's the route that was chosen for various reasons.

Okay. And then more broadly, Richard, I'll try to keep this question general here, but just any commentary or perspective you could provide on the acquisition backdrop for hotels, the appetite out there, availability of capital, things like that. Just interested to some of the larger entities, perhaps what they're view is on your portfolio of transactions and just kind of the overall environment out there and the desire to own hotels.

Yes. That's a good question. I'd say it continues to improve. We saw the debt capital markets become much more favorable earlier this year. There is a widespread debt availability A lot of that is being provided through either the CMBS market or through private credit markets. That's a good thing. But also the big private equity funds and a lot of the private players are getting more interested in deploying equity capital into the sector. And that's something that we're seeing with some of our discussions and we're seeing that interest in size. So it does feel that whereas a lot of buyers have been on the sidelines, they're coming off the sidelines. Now I also think that our portfolio is pretty unique. Dare I say, it's the most attractive hotel portfolio on the market, for sure. And it's just the opportunity to acquire and own this kind of portfolio doesn't come around that long. So I think for that reason, I think people are certainly more interested than otherwise. But the general trend is very positive in terms of private capital looking at hotel assets. And so more to come on that.

Our next question will come from the line of Michael Bellisario with Baird.

Thanks. Good morning, everyone. Two questions probably both for Chris here. But just first on D.C., can you just give us an overview of what you're seeing on the ground, how the government pullback affected the third quarter results? And then what the shutdown might do to near-term performance at the property?

Yes. I'd be happy to speak to that. So the government will primarily impact our asset in BC, which is Cap Hilton. Luckily for that asset, because of its location and the ADRs and demand, we're able to command, it doesn't have a lot of exposure to the government segment, government transient. It does single digits as a percentage of its mix in government transient business. And so we haven't seen a significant impact there. We are seeing some group cancellations, some negative rebounds where group sizes are shrinking and some catering impact from some programs in D.C. Besides that hotel, the impact of -- that we've kind of seen the government is fairly muted. We're seeing a little bit in Philly and some other markets. But in those other markets outside of D.C., the corporate business has been strong and it's been able to offset that. So again, in D.C., at capelin, has been primarily in the group segment. I cited for the portfolio group pace is up significantly for 2025. And Q3 and Q4 are up. And so on the whole, we've been able to mitigate that impact in government that's primarily come through group at cap.

Got it. That's helpful. And then just on leisure trends more broadly, what did you see in the third quarter relative to your expectations? Any change in consumer spending, out of room spend, booking channels? Are you having to discount more or less offer more promotions? Any commentary there would be helpful.

Yes, Michael. Leisure overall, revenue was up in the third quarter. So we're seeing leisure strength Occupancy was down slightly and ADR was very strong. And so what we're seeing from that luxury consumer is less price sensitivity. So they still want to travel. They're willing to pay a premium for the experience when they travel. We saw increased ancillary spend when they're on property, both in F&B and other departments. And so when they're there, they're willing to spend more. So overall, it was kind of -- it was what we expected. I think we've been pleasantly surprised with just the lack of price sensitivity to that customer and how resilient they are and wanting to travel and wanting to pay for experiences. So on the whole, the leisure segment has been a standout for us.

And that will conclude our question-and-answer session. I'll turn the call back to management for any closing comments.

Thank you for joining us on our third quarter earnings call, and we look forward to speaking with you again next quarter.

This concludes our call today. Thank you all for joining. You may now disconnect.