Braemar Hotels & Resorts is officially for sale. The Dallas-based luxury hotel REIT announced in late August that it had formed a special committee of independent directors to evaluate “strategic alternatives,” including a potential sale of the company, after months of shareholder pressure.
Richard Stockton, the REIT’s president and CEO, said the sale process is meant to address investor concerns and unlock shareholder value.
“Braemar initiated a sale process to end shareholder activism, believing it's the best way for investors to get a premium for their shares,” he said. “Braemar’s luxury portfolio has achieved the highest revpar among its peers, and its strong performance, along with favorable market conditions, positions the company well to attract a premium valuation."
Braemar’s decision comes at a time when lodging REITs are transacting at some of the steepest discounts in the public markets. S&P Global Market Intelligence notes that as of June 30, U.S. hotel REITs were trading at 35.5 percent below their net asset values – the deepest discount of any REIT sector. Higher interest rates, rising operating costs and looming property improvement plan obligations have only deepened the divide between Wall Street’s perception of these companies and the private market’s appetite for the assets they own.
“The public markets aren’t saying hotels are bad assets,” explained Ryan Bosch, principal at Arriba Capital. “They’re saying the REIT structure doesn’t work right now. When your stock trades 30 percent to 50 percent below asset value, issuing equity is off the table. REITs end up shrinking instead of growing.”
Alan X. Reay, president of Atlas Hospitality Group, believes Braemar’s announcement may be a warning shot for the entire sector.
“Wall Street is telling hotel REITs they have more value if broken up and sold off based on current share prices,” he said.
Reay points to Braemar’s recent letter of intent to sell the Clancy in San Francisco at a 4.5 percent cap rate, compared to the REIT trading in the public markets at the equivalent of an 8 percent cap.
“The public markets value cash flow and not real estate value, which has led to a disconnect between the share prices and what the hotels are worth if sold on an individual basis,” he continued.
Lodging REITS in Deeply Discounted Territory
Braemar isn’t the only one caught in the disconnect between stock market pricing and private-market valuations. Chad Cooley, co-founder and partner of AWH Partners, believes some of this drag is coming from higher interest rates, which have reshaped how investors underwrite real estate.
“Because real estate is a levered business, when rates are up, values go down,” he said, adding that both public and private institutional capital has pulled back, taking on a wait-and-see approach. “Instead of a healthy market of transactions at lower valuations, owners have been holding on, waiting for a better environment to sell. So, while values are technically down, there are not a lot of willing sellers at today’s valuations.”
This stalemate has limited transaction flow and reinforced the divide between public REIT valuations and private-market appetite for one-off assets. Nareit reports that lodging and resort REITs delivered a negative 13.6 percent total return through July 31, 2025, with an average dividend yield of 5.46 percent.
STR and CoStar have also trimmed their U.S. hotel forecast for 2025 and 2026, citing slower growth ahead. Key metrics like demand, ADR and RevPAR were revised down, with Amanda Hite, president of STR, pointing to a mix of macro and industry-specific pressures as the culprits that are weighing down hotel performance.
“Unrelenting uncertainty and inflation, coupled with tough calendar comps and changing travel patterns, have caused lower demand,” she said.
For investors, the combination of steeper cap rates, higher operating costs and limited deal flow has made hotel REIT shares less attractive than the properties themselves. As a result, the market continues to value these companies well below the underlying assets they own.
Braemar’s Broader Implications for Lodging REITs
Braemar’s decision to explore a sale has implications far beyond its own balance sheet. Of course it does. A move like this by the publicly traded owner of luxury assets like the Ritz-Carlton, Park Hyatt and Four Seasons – with some of the highest RevPAR in the hospitality REIT space – is certain to turn a few heads.
It also highlights a familiar dynamic: that when a REIT with strong assets continues to trade at a steep discount, pressure will mount for boards to weigh alternatives like a sale, merger or portfolio breakup.
These options and the ultimate fallout from Braemar’s sale process will undoubtedly be closely followed by other lodging REITs. Bosch admits that while Braemar’s circumstances are distinct, the underlying issue of how long a REIT can operate at a steep discount before investors demand another course of action isn’t.
“Braemar had to renegotiate their advisory agreement to even consider a sale, but they’re not the only ones with this valuation gap,” he explained. “Other boards are looking at the same math: if your shares are at half of asset value, should you be a buyer, a seller or a target?”
Bosch predicts the market will see selective sale processes, mergers or portfolio sales…but not a flood of them. Still, he relents that the longer these discounts persist, the more pressure there will be for boards to pursue strategic alternatives.
Cooley acknowledges that this pressure is real, but he also expects patience to be part of many companies’ strategies.
“We believe there is investor appetite to take more REITs private,” he said. “But many REITs will continue to manage their balance sheets well and endure the market turmoil.”
For now, all eyes are on Braemar. The REIT’s portfolio of high-end assets and its willingness to test the private market make it a high-profile case study of what happens when persistent discounts collide with shareholder pressure. Wherever the process lands, it may provide some insight into how much value public hotel companies can realistically unlock in today’s environment.
Braemar’s move may also hint at the uncomfortable truth facing the lodging REIT sector: that strong hotel fundamentals aren’t always enough to overcome the weight of higher rates, capital costs and investor skepticism. Until that dynamic shifts, boards may keep weighing their exit strategies.