To bring an end to an activist investor's attempts to end its management agreement with Ashford Inc. and change up its board of directors, Braemar Hotels & Resorts has entered into a cooperation agreement with Blackwells Capital.
Under the terms of the agreement, Blackwells will withdraw its director nomination notice and proposals, stop soliciting proxies and vote in favor of Braemar's directors and proposals at the 2024 annual meeting of stockholders, according to a news release. The two companies will also release all legal claims that arose before the settlement and dismiss their respective actions.
In return, Blackwells committed to buying 3.5 million shares of Braemar's stock in the open market, partly paid for by Braemar. Braemar will also add an independent director to its board and will consider Blackwells' input during the selection process. Blackwells is a multi-strategy alternative asset management firm.
"We look forward to supporting Braemar's board and leadership team, and to becoming one of Braemar's largest shareholders," said Jason Aintabi, chief investment officer at Blackwells, in the release. "We believe Braemar will execute their strategy to maximize the value of the company's high-quality assets, and we look forward to continuing to build a constructive relationship with the company moving forward."
Blackwells has been a critic of the management agreements between Ashford Inc. and the hotel real estate trusts Braemar and Ashford Hospitality Trust, arguing the fees extracted for Ashford Inc.'s advisory role has benefited Ashford Inc. and its chairman and CEO, Monty Bennett, to the detriment of shareholders.
The company had focused its ire on Bennett in particular, accusing him of "corporate piracy" by pointing to declining share prices while growing his fee stream. Along with releasing presentations titled "The Continued Buffoonery of Monty Bennett" and creating the website www.nomoremonty.com — which appears to no longer be functioning — Blackwells successfully forced Bennett and Kamal Jafarnia to resign from their seats on Ashford Hospitality Trust's board of directors through a campaign that led to the two not receiving enough votes during the REIT's 2024 annual stockholder meeting in May. The board of directors, however, refused Bennett's and Jararnia's resignation, so they continued to serve on the board.
Ashford Hospitality Trust is also externally advised by Ashford Inc.
"We are pleased to have reached this outcome, which we believe is in the best interests of all our shareholders," said Richard Stockton, president and CEO of Braemar, in the news release. "We can now return our full focus to optimally managing our unique portfolio of world-class assets, enhancing our capital structure and financial flexibility, and maximizing shareholder value. We are extremely excited for Braemar's future, and look forward to working with Blackwells as a significant shareholder."