Luxury hotel REIT Braemar Hotels & Resorts' largest shareholder wants to shake up the company's board of directors, citing board actions that put the company in the position to pay almost 2.4 times its market capitalization to an outside adviser connected to Chairman Monty Bennett.

"Given the potential half-billion-dollar windfall to the Chairman's family, we believe the Company's strategic review process is rife with potential and actual conflicts of interest," majority shareholder Al Shams Investments Ltd. wrote in a letter to the independent directors on the board.

Al Shams plans to push for an election of new directors at the company's 2026 annual meeting.

In August, Braemar's board announced plans to pursue the sale of the company, but by February, the company broadened its options, hiring brokers to explore the sale of individual assets "in conjunction with the Company Sale Process," Braemar CEO Richard Stockton told investors on a February earnings call.

Progress has already been made on individual asset sales. On April 30, Braemar announced it had entered an agreement to sell a Colorado property, the Park Hyatt Beaver Creek Resort & Spa, for $176M.

Individual sales, if continued, could put the REIT in danger of having to make a huge payout of more than $480M to external adviser Ashford Inc., which is controlled by Bennett, Al Shams wrote.

"The Advisory Agreement provides that, under some circumstances, selling even a handful of hotels (e.g., three hotels within a year if they represent over 20% of the Company's gross asset value, or five hotels over three years if they exceed 30% of that value) could constitute a 'Company Change of Control,' likely causing a constructive 'termination,'" according to Al Shams' letter.

The terms of the advisory agreement say the payment would be made directly to Ashford and paid in full before any proceeds trickled down to shareholders, according to the letter.

"In our view, continuing down this path and pursuing further individual hotel divestitures will be ruinous for Braemar's public shareholders to whom you owe fiduciary duties," Al Shams wrote.

Bennett is a veteran real estate founder and operator. In his roughly 30-year commercial real estate career, he founded Braemar, Ashford Inc. and Ashford Hospitality Trust. The latter was also exploring a potential company sale as of year-end 2025.