Greetings and welcome to Braemar Hotels & Resorts Inc. Second Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Jordan Jennings, Manager, Investor Relations. Thank you. Ms. Jennings, you may begin.

Good morning and welcome to today's call to review results for Braemar Hotels & 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; Deric Eubanks, Chief Financial Officer; and Chris Nixon, Executive Vice President and Head of Asset Management. The results as well as a notice of the 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. These 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 solicitation as 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 Form 8-K with the SEC on August 2nd, 2023 and may also be accessed through the company's website at www.bhrreit.com. Each listener is encouraged to review those reconciliations provided in earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compared to 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 will begin today's call by providing an overview of our business and an update on our portfolio. 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, 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, we are very happy with the performance of the hotels we have acquired this cycle, which continue 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 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 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 to RevPAR for all hotels in the portfolio. I'm pleased to report that RevPAR totaled $309 for the second quarter with solid occupancy in ADR. Having said that, given the tougher year-over-year comparisons, this represents a decrease of approximately 4.2% for the second quarter of 2023 compared to the second quarter of 2022. Our luxury resorts are seeing some stabilization in both demand and rate, but are still far outperforming 2019 results. Taking a closer look at our assets. Our 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. Ten of our sixteen hotels are considered resort destinations. Our luxury resort portfolio continues to see strong performance with combined hotel EBITDA of $33 million during the quarter. Turning to our urban assets, our second quarter performance remained 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 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. 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. We 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. The renovation will include updates to the guest rooms, guest bathrooms, corridors, lobby, restaurant, façade, and meeting space. We will be creating a distinctive theme and style for the property that is commensurate with Hilton's LXR brands, which it will join upon renovation completion before the end of 2025. Next, we remain very assured about our recent acquisition of the Four Seasons Resort Scottsdale at Troon 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 continue to analyze the optimal solution for the nearly six-acre development parcel we acquired as part of the acquisition. Braemar's other 2022 acquisition, the Ritz-Carlton Reserve, Dorado Beach, also continues to perform very well. For the second quarter, Ritz-Carlton Reserve, Dorado Beach delivered RevPAR growth of 7.2%. RevPAR for the quarter was $1,454, based on 64% occupancy and an outstanding ADR of $2,270. This property has shown an ability to buck other prevailing trends in the luxury resort segment due to being located in the tax favorable jurisdiction of Puerto Rico. Over the trailing twelve months, the Ritz-Carlton Reserve, Dorado Beach has achieved a 9.2% yield on cost, while the Four Seasons Scottsdale achieved a 7.2% 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. Looking at Braemar's capital position, our balance sheet remains in good shape and we continue to emphasize balance sheet flexibility. In early June, we decided to exercise the 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 Mile, and The Marriott Seattle Waterfront. We're also pleased to announce the recent closing of our $200 million corporate financing. Deric 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 into 2024, we are 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 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 a net loss attributable to common stockholders of $13 million or $0.20 per diluted share and AFFO per diluted share of $0.20. Adjusted EBITDAre for the quarter was $46.3 million. 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'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 7%, taking into account the money interest rate caps. Based on the current levels of LIBOR and SOFR and our corresponding interest rate caps, approximately 79% of our debt is effectively fixed and 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. At the 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 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 5.5% based on yesterday's closing 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. 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, and Marriott Seattle Waterfront. The loan was extended beyond its original initial maturity in June 2023 for an additional 12 months. In conjunction with the extension, we paid down $142 million of the loan 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 4.69%. Earlier this week, we announced a new $200 million corporate financing that can fit of a $150 million term loan and a $50 million revolving credit facility. This financing is secured by a borrowing base of three hotels: Ritz-Carlton Sarasota, Bardessono Hotel and Spa, and Hotel Yountville. We use the proceeds from the financing to pay off the existing mortgage loans on those properties. The new financing has a three-year term with a one-year extension option subject to the satisfaction of certain conditions. The interest rate is based upon pricing grid related to our net debt to EBITDA to provide for a range of SOFR plus 2.35% to 3.1%. We anticipate that the initial interest rate will be SOFR plus 2.85%. Our next final debt maturity is the loan on The Ritz-Carlton Lake Tahoe, which matures in January 2024. As of June 30, 2023, our portfolio consisted of sixteen hotels with 3,957 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 and 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, Deric. For the quarter, comparable hotel RevPAR for our portfolio decreased 4% over the prior year quarter to $309. Our urban assets continue 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. During 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 hotel's 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 is outperforming the market is 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 to the Autograph branding and place an emphasis on the improved services, restaurant reconcept, 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 is a strong quarter for group booking activity. We started the quarter with $81 million in group room bookings for the full year 2023. During the second quarter, we added over $10 million in 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 same-year bookings. Our largest hotel, Capital Hilton, finished the quarter with approximately $5.3 million in group revenue, a 63% increase when compared to the $3.2 million in the prior year quarter. This achievement is noteworthy, considering that the hotel is under a transformative guestroom renovation throughout the entire second quarter. We attribute this success through our partnership with Premier, which has handled the renovation and a successful implementation of their stealth renovation program, which minimizes displacement. All 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 hotels 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 opportunity 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 spa revenue and 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 analysis for revenue-generating space. As part of the takeover plan, our team did a deep dive into opportunities at the spa. We recognized an opportunity in the market to satisfy local residential demand for a luxury salon, with boutique hair and nail services. We identified underutilized space in the spa, where we partnered with local vendors to accumulate inventory and build out a retail platform. These initiatives have been successful, propelling our year-to-date comparable spa revenue by 28% over the first half of last year. Moving on to capital investment. 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 are currently renovating the guestrooms 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 Bardessono Hotel & 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 million 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 whole property renovations, developing underutilized land, and key additions. 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're seeing in our hotels, emphasized by the continued recovery of our urban properties. We're 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 will now open up the call for Q&A.

Thank you. We will now be conducting a question-and-answer session. The first question comes from the line of Bryan Maher with B. Riley Securities. Please go ahead.

Thank you. Good morning. Just a couple of questions for me this morning. Maybe start off with Richard. When you look at the wide range of RevPAR outcomes in the portfolio over 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 split that you have now? And kind of a follow-up to that, where do you think your next target lies? Is it in resort or would it be urban?

Yes, thank you for joining the call. When considering capital recycling, which involves the investment sales market, I believe it's not an ideal time to sell assets in general. We are currently in a phase of rising interest rates from the Fed, which is significantly constraining liquidity, making it a challenging consideration. This situation is likely to evolve over the next few months, and we will be monitoring it closely. If we were to proceed, I would focus more on upgrading the quality of our portfolio in the luxury versus upper upscale segments rather than choosing between resort and urban areas. Our strategy is clearly aligned with the luxury segment, although we do have some legacy upper upscale assets that are primarily urban. I prefer maintaining a balance between the two, which has benefited us over the past four years, especially as resorts gained traction followed by urban areas. This approach has worked well for us.

Okay. And then when we think about growth and acquisitions for you, you've kept it pretty clean with outright purchases, but it does come up on other calls. And in the 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 rent purchases?

I think one of our great strengths, frankly, lies within our asset management capability. I would just question our ability to have the right level of influence through a mezz position versus equity ownership. I think we believe we can bring significant value both to the top line and on the expense side of things. The best way to effectuate that is through equity ownership. So we really haven't looked at any type of mezz data. I suppose there could be a 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 Woronka 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 or next year? And then I'm not sure if the press release mentioned anything with the residential, I think, there's four or five units that you were considering what you might do with. Any comments on that? Thanks.

Yes, Chris, thanks for dialing in. Thanks for that question. We're super excited about what we have planned for Mr. C. I love the new branding. I love the Cameo name; it speaks to Beverly Hills. It speaks to the legacy and history of the film industry in LA as well as all types of celebrity. So that's a great positioning for that property. 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 didn't benefit from. I think we'll be able to drive a lot more group business as a result. So that's all really positive and we're putting a lot of money into this property right. So there will be some disruption, I'll let Chris comment in a second. But this 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 do you want to talk about that?

Yes, Chris, we are very enthusiastic about the chance to rebrand this hotel. With the upcoming conversion, we will touch nearly every aspect of the property, which will cause some disruption given the level of investment we are making. However, we are looking forward to emerging with an impressive new product in the Beverly Hills market. We are eager to join the Hilton distribution platform, as we see significant potential for the property there. Being part of the Honors loyalty program will greatly benefit us on weekends. Currently, the hotel enjoys high weekend occupancy, and the added demand from that program and the distribution network should help us boost weekend rates. We see an opportunity for occupancy during weekdays as well, given Hilton's strong presence with corporate customers, and we believe we will be able to tap into their corporate accounts and production. It remains to be seen whether the Hilton distribution will offset the disruption caused by the renovation, but we have strategically planned the renovation schedule to minimize any displacements. Overall, we are most excited about the long-term outlook and potential for this hotel aligned with the Hilton brand and its distribution system.

Thank you for the information. I have another question for Richard. Regarding the dividend, I understand it's a small amount, less than $15 million a year, but do you feel that it is receiving enough recognition? Given its size, do you think a stock buyback could be considered again, either as an alternative to the dividend or in addition to it? I'm looking for any updates on your thoughts about capital allocation.

Sure. Sure. Yes. Look, I agree that the dividend yield I believe is the second highest in the sector, now as 5.5%, it's way too high. But we have the liquidity and available cash flow to continue to pay. So that's definitely our strategy. In terms of buyback, yes, 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. I think to the extent that you're taking on less debt for liquidity that's also a big savings, right? Think about buyback as the source of savings, right? Because we're where debt is priced today, the less debt you have is kind of better. So 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 happening next year. As I said, if I can take on less debt as refinancing, we'd probably rather do that than pursue a buyback right now. But look, I think our shares are undervalued. Our dividend is emblematic of that. I don't know if you try to calculate a discount to NAV, but it would be extraordinarily wide right now. So for now, we're going to keep our head down and keep working on the portfolio, delivering results. And hopefully, that will be reflected in appropriately multiple over time.

Okay. Very good. Thanks, guys.

Thank you. Next question comes from the line of Tyler Batory with Oppenheimer & Co. Please go ahead.

Good morning. Thank you. I want to focus on the resort properties for a second here. And there are a number of cross currents I think 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? And can you speak to guest behavior especially that luxury chain scale as it pertains to leisure travel?

Thanks for the question, Tyler. We are observing a general stabilization of our resort hotels. Overall, our resorts saw a year-over-year decline, but when you compare to historical performance, we're up 55% in RevPAR compared to 2019. There’s been a slight pullback, but we're pleased with how these hotels are performing. With ten resort hotels in our portfolio, there are specific nuances among the properties. Some of the resorts experiencing the largest declines are affected by reduced airlift to the markets. We have seen a 20% decrease in airlift to St. Thomas and a 10% decrease to Key West compared to last year. This shift in airline travel patterns is influencing our resorts. Additionally, some properties faced year-over-year impacts from Omicron, resulting in group cancellations in Q1 that were then rebooked for Q2, leading to challenges in our group business. For instance, Park Hyatt Beaver Creek saw significant declines in group bookings due to these Omicron-related factors. Nevertheless, many of our resorts are achieving all-time Q2 records. Ritz-Carlton Reserve Dorado Beach had an outstanding Q2, showing resilience despite some market softness. We are still very satisfied with the performance of certain properties that are setting records. Overall, we're witnessing some stabilization in leisure travel, but specific market dynamics are either enhancing or countering this trend.

Okay. And then similar line of questioning, just in terms of the margin for the portfolio and you understanding this quarter, or in Q2 some very challenging comps. I mean, anything out of the ordinary in terms of expense or cost inflation? And kind of when you look at the comparison versus the prior year, I mean, are these declines a reasonable run rate to be thinking about going forward?

Yeah. There are some anomalies in the year-over-year comparables. Our Sofitel Hotel in Chicago last year in Q2 realized a tax assessment savings of $2.4 million. That's playing into it. We currently filed an appeal on the 2022 valuation, but that's still pending. We're hopeful at some point in the remainder of the year that we'll realize another savings there. I think as you look at kind of our margins, it's tied most closely to ADR. Additional rate flows very well for us and flows all the way down. When you look at ADR for the portfolio you've got some of the resort and urban dynamics there where our resort hotels declined in revenue and that's at a $681 average rate. Our urban hotels, which are growing in occupancy and ADR had a $280 average rate. Just those dynamics are 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. We believe in the long term that would help margin.

That's all for me. Very good detail. Thank you.

Thank you. Next question comes from the line of Michael Bellisario with Baird. Please go ahead.

Good morning, guys.

Hey, Mike.

Can we discuss the corporate financing from a big picture perspective before we delve into the specifics of the loan documents? What are the restrictive covenants of this new secured facility? What actions are now permitted or prohibited with this facility in place?

Yeah, Mike, 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 having a borrowing base of assets that we could use to have a secured revolver and term loan. It's the cheapest source of debt capital that's available in the market today. And so what we did, we took three of our near-term debt maturities, refinance that into a corporate term loan that's secured by 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 were very, very happy with how it turned out and the banks that ended up participating in the line. We're happy to have all those on board. In terms of restrictive covenants, I mean there's typical corporate covenants in terms of max leverage and FCCR. There's a cap 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's nothing in the covenant package that gives us any concern at all. In fact, we're very happy to have the line in place and 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 is greater than what you can get on the according if I'm correct?

Yeah. Thankfully, we do have a decent number of 2024 debt maturities. Thankfully, all those assets and loans are easily refinanceable based on the performance of the assets and what's available in today's market. Spreads are higher than when we did put those loans in place. 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 with lenders on a few of those. There is the one that I would say would probably be a more challenging refinancing would be the Mr. C property. That's a late 2024 final maturity for us. It's a relatively small loan. We could use the lines to pay it off ultimately, or use some excess proceeds somewhere else to pay it off, or we could refinance it. It would just be a little more challenging of a refinancing given the performance of that asset. You can see all of that on the debt worksheet in 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 for 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 and/or for 2024? And then maybe if you could provide some color around booking windows and pace between urban and resort too that would be helpful. Thank you.

We're really pleased with the group pace outlook and the continued acceleration in that segment. We saw a 9% year-on-year increase in Q2, and the full year is currently pacing ahead by 20%. While we did benefit from some Omicron comparisons, quarter by quarter, Q3 is flat, and Q4 is 23% ahead of the previous year. We're well-positioned for the latter half of the year, and 2024 shows a 16% year-on-year increase. This strong group base gives us confidence that it will protect us from any ongoing softness. Additionally, we're driving rate growth, which is significant as pace has increased largely due to rate. We are experiencing high single-digit rate growth in both years. Regarding booking windows, they remain shorter compared to historical trends for both urban areas and resorts, but we're noticing an increase with bookings occurring six months to a year in advance. From a leisure perspective, demand at resorts is softening somewhat in the short term, and we're not seeing much month-over-month pickup as we usually do. While leisure is facing slightly softer short-term demand, the group booking window is extending rapidly, which is encouraging.

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 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.