LuxUrban Hotels and Company’s Chairman and Co-CEO Mutually Agree to Cancel $10 Million Financing Arrangement in Light of Ongoing Discussions to Enhance Access to Non-Dilutive Capital

Rhea-AI Summary

LuxUrban Hotels Inc. (Nasdaq: LUXH) has announced the cancellation of a financing arrangement and is in active discussions with its partner, Wyndham Hotels & Resorts, Inc., regarding Development Incentive Advances. The Chairman and Co-CEO has ceased further sales of the company's common stock, and the company is focusing on expanding its industry presence and portfolio of hotel rooms.

Positive

• Active discussions with partner Wyndham Hotels & Resorts, Inc. regarding Development Incentive Advances
• Cancellation of previously disclosed promissory note dated November 17, 2023
• Onboarding 27 hotels to the Wyndham brand and operating platform
• Focus on growth via non-dilutive financing options

Negative

• Closed, underwritten public offering of its 13.00% Series A Cumulative Redeemable Preferred Stock
• Winding down of legacy business of leasing and re-leasing multifamily residential units

Chairman and Co-CEO has Ceased Further Sales of the Company’s Common Stock Associated with the Now Cancelled Financing Arrangement

MIAMI--(BUSINESS WIRE)-- LuxUrban Hotels Inc. (or the “Company”) (Nasdaq: LUXH), which utilizes an asset-light business model to lease entire hotels on a long-term basis and rent out hotel rooms in these properties in key major metropolitan cities, today announced that the Company is in active late stage discussions with its partner, Wyndham Hotels & Resorts, Inc. (“Wyndham”), on various aspects of Development Incentive Advances (“Key Money”), which include accelerating the timing and increasing the amounts of these funds on new property acquisitions.

As a result of this anticipated positive development, on December 3, 2023, the Company and Brian Ferdinand, the Company’s Chairman and Co-CEO, mutually agreed to cancel the previously disclosed promissory note dated November 17, 2023. Therefore, Mr. Ferdinand will cease, for the foreseeable future, further sales of common stock of the Company that were to have been used to fund amounts borrowable under the promissory note. An amount equal to the proceeds resulting from recent sales by Mr. Ferdinand in the amount of approximately $500,000 will be gifted to the Company.”

“We have onboarded or are in the process of onboarding 27 hotels to the Wyndham brand and operating platform and continue to pursue a pipeline of opportunities to further expand our industry presence,” said Shanoop Kothari, the Company’s President, Co-CEO, and Chief Financial Officer. “We believe that this new Key Money model, once consummated, would allow us to accelerate the pace at which we can finance new lease transactions while adhering to our focus on growth via non-dilutive financing options. We appreciate Wyndham’s continuing collaboration and support of our shared vision. We reiterate all previous financial and unit guidance under this updated financing plan.”

As previously disclosed, on October 24, 2023, in connection with the Company’s closed, underwritten public offering of its 13.00% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), the Company granted the underwriter a 45-day option to purchase up to an additional 15% of Series A Preferred Stock to cover over-allotments, if any. The Underwriter partially exercised this option to purchase additional shares on December 1, 2023. The Underwriter may elect to make additional exercises of this option from time to time through December 8, 2023. Net proceeds, if any, from additional exercises will be used to lease additional accommodation units and for general corporate purposes.

LuxUrban Hotels Inc.

LuxUrban Hotels Inc. utilizes an asset-light business model to lease entire hotels on a long-term basis and rent out hotel rooms in the properties it leases to business and vacation travelers through the Company’s online portal and third-party sales and distribution channels. The Company currently manages a portfolio of hotel rooms in New York, Washington D.C., Miami Beach, New Orleans and Los Angeles. As of November 30, 2023, the Company had 2,032 hotel rooms under lease, including properties not yet available for rent, and seeks to rapidly build its portfolio on favorable economics through the acquisition of additional accommodations that were dislocated or are underutilized as a result of the pandemic and current economic conditions. In late 2021, the Company commenced the process of winding down its legacy business of leasing and re-leasing multifamily residential units, as it pivoted toward its new strategy of leasing hotels. This transition has been substantially completed.

Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). The statements contained in this release that are not purely historical are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this release may include, for example, statements with respect to financial and operational guidance, the success of the Company’s collaboration with Wyndham Hotels & Resorts, scheduled property openings, expected closing of noted lease transactions, the Company’s ability to continue closing on additional leases for properties in the Company’s pipeline, as well the Company’s anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future. The forward-looking statements contained in this release are based on current expectations and beliefs concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements are subject to a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results of performance to be materially different from those expressed or implied by these forward-looking statements, including those set forth under the caption “Risk Factors” in our public filings with the SEC, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, and any updates to those factors as set forth in subsequent Quarterly Reports on Form 10-Q or other public filings with the SEC. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231204391724/en/

Shanoop Kothari

President, Co-Chief Executive Officer and Chief Financial Officer

LuxUrban Hotels Inc.

shanoop@luxurbanhotels.com

Devin Sullivan

Managing Director

The Equity Group Inc.

dsullivan@equityny.com

Conor Rodriguez, Analyst

crodriguez@equityny.com

Source: LuxUrban Hotels Inc.

FAQ

What is the ticker symbol for LuxUrban Hotels Inc.?

The ticker symbol for LuxUrban Hotels Inc. is LUXH on the Nasdaq.

What is the recent announcement made by LuxUrban Hotels Inc.?

The recent announcement by LuxUrban Hotels Inc. includes the cancellation of a financing arrangement and active discussions with Wyndham Hotels & Resorts, Inc. regarding Development Incentive Advances.

How many hotels is LuxUrban Hotels Inc. onboarding to the Wyndham brand?

LuxUrban Hotels Inc. is onboarding 27 hotels to the Wyndham brand and operating platform.

What is the focus of LuxUrban Hotels Inc. regarding financing options?

LuxUrban Hotels Inc. is focusing on growth via non-dilutive financing options.

What is the negative aspect of the recent announcement by LuxUrban Hotels Inc.?

The winding down of the legacy business of leasing and re-leasing multifamily residential units is a negative aspect of the recent announcement.