Please ensure Javascript is enabled for purposes of website accessibility

Why Braemar Hotels & Resorts Popped 18.5% Today

By Travis Hoium - May 14, 2021 at 1:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A bigger debt deal is being cheered by investors today.

What happened 

Shares of Braemar Hotels & Resorts (BHR 1.10%) jumped as much as 18.5% in trading on Friday after the company annouced details of a debt offering. Shares didn't hold their highs of the day and are up 9% at 1:20 p.m. EDT. 

So what

Management announced the pricing of a $75 million convertible debt offering of 4.5% notes due in 2026. The deal comes with an option for underwriters to purchase another $11.25 million of notes and will have an initial conversion rate of $6.34 per share. 

Bell at a hotel desk.

Image source: Getty Images.

This offering is larger than the $50 million debt offering announced earlier this week and investors were clearly pleased with the terms. If the company continues to get reasonable rates on debt it won't have to tap equity markets as it did in the first quarter when it sold $16.1 million of stock. 

Now what

The hotel business has been rocked over the past year but there's hope that demand will be strong for the rest of 2021. And investors are seeing that debt markets are at least giving companies like Braemar a lifeline until visitors return in bigger numbers. That's enough to push the stock higher today.  

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Braemar Hotels & Resorts, Inc. Stock Quote
Braemar Hotels & Resorts, Inc.
$5.50 (1.10%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.