LuxUrban Hotels Announces Closing of Public Offering of Securities

Rhea-AI Summary

LuxUrban Hotels Inc. (Nasdaq: LUXH) has successfully closed its underwritten public offering of 30,000,000 shares of common stock at $0.17 per share, raising approximately $5,100,000 in gross proceeds. The company, which operates hotels through Master Lease Agreements, has granted underwriters a 45-day option to purchase up to 4,500,000 additional shares at the same price. Alexander Capital, L.P. acted as the sole book-running manager for the offering.

LuxUrban intends to use the proceeds for working capital and general corporate purposes. The offering was made pursuant to a shelf registration statement on Form S-3 (No. 333-278883) filed with the SEC. This public offering strengthens LuxUrban's financial position as it continues to build its portfolio of hotel properties in destination cities.

Positive

• Successful closing of public offering, raising approximately $5.1 million in gross proceeds
• Potential for additional capital through the 45-day option granted to underwriters
• Strengthened financial position to support working capital and general corporate purposes

Negative

• Significant dilution of existing shareholders due to the large number of new shares issued
• Low offering price of $0.17 per share may indicate market concerns or undervaluation
• Potential further dilution if underwriters exercise their option to purchase additional shares

Financial Analyst

LuxUrban Hotels Inc. (Nasdaq: LUXH) has successfully closed a public offering, raising approximately $5,100,000. This is significant as it enables the company to bolster its working capital and fund general corporate purposes. The offering price of $0.17 per share is relatively low, which might indicate the company's current valuation and market sentiment.

From a financial perspective, investors should note that additional shares might be issued if the underwriters' option is exercised, potentially leading to further dilution. The total gross proceeds could increase if the full 4,500,000 additional shares are sold. Dilution can impact existing shareholders as it often leads to a decrease in the value of each share.

On the positive side, the successful offering reflects the market's willingness to provide liquidity to LuxUrban. These funds could enhance operational stability, especially in strategic acquisitions or expansions. Considering LuxUrban's business model, which involves securing long-term operational rights through Master Lease Agreements (MLA), the fresh capital can serve to strengthen its position in the commercial real estate market.

Market Research Analyst

LuxUrban’s strategy of leveraging Master Lease Agreements (MLA) in the hotel sector is interesting, especially in the context of dislocated commercial real estate markets. By securing long-term operating rights and renting out rooms on a short-term basis, LuxUrban can potentially tap into high-margin segments of business and vacation travel. An offering like this could enable them to capitalize on current market conditions where property owners face debt maturity challenges.

The injection of $5,100,000 could help LuxUrban stabilize or even expand its portfolio, but the relatively low offering price might also signal caution. For investors, it’s essential to monitor how efficiently LuxUrban deploys this capital and whether the market conditions will positively respond to their business model.

Given the niche business model and current economic landscape, the raised capital has strategic importance, but the long-term success will heavily depend on execution and market response.

MIAMI, July 16, 2024 (GLOBE NEWSWIRE) -- LuxUrban Hotels Inc. (“LuxUrban” or the “Company”) (Nasdaq: LUXH), which secures long-term operating rights for entire hotels through Master Lease Agreements (MLA) under which it manages the hotel and rents out, on a short-term basis, rooms to business and vacation travelers, today announced the closing of its underwritten public offering of 30,000,000 shares of common stock at a public offering price of $0.17 per share. The gross proceeds from the offering, before underwriting discounts and commissions and estimated offering expenses payable by the Company, are approximately $5,100,000. In addition, the Company has granted the underwriters a 45-day option to purchase up to 4,500,000 additional shares of common stock at the public offering price, less the underwriting discounts.

Alexander Capital, L.P. acted as sole book-running manager for the offering.

The Company intends to use the proceeds from the offering for working capital and other general corporate purposes.

All of the shares of common stock were offered by the Company pursuant to a shelf registration statement on Form S-3 (No. 333-278883) (the “Registration Statement”) filed with the Securities and Exchange Commission (“SEC”) and declared effective on May 8, 2024 and which is available through the SEC's website at www.sec.gov.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the applicable securities laws of such state or jurisdiction.

A preliminary prospectus supplement and a final prospectus supplement have been filed with the SEC. Copies of the preliminary prospective supplement and final prospectus may be obtained Alexander Capital, L.P., 10 Drs James Parker Boulevard #202, Red Bank, New Jersey 07701 Attention: Equity Capital Markets, Phone: (212) 687-5650, Email: info@alexandercapitallp.com or by accessing the SEC's website, www.sec.gov.

LuxUrban Hotels Inc.
LuxUrban Hotels Inc. secures long-term operating rights for entire hotels through Master Lease Agreements (MLA) and rents out, on a short-term basis, hotel rooms to business and vacation travelers. The Company is strategically building a portfolio of hotel properties in destination cities by capitalizing on the dislocation in commercial real estate markets and the large amount of debt maturity obligations on those assets coming due with a lack of available options for owners of those assets. LuxUrban’s MLA allows owners to hold onto their assets and retain their equity value while LuxUrban operates and owns the cash flows of the operating business for the life of the MLA.

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 the Company’s ability to successfully de-platform its properties from its former franchise partner and operate independently, its ability to improve its working capital and cash flow profiles, enhance its balance sheet and deliver organic revenue growth, 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 belief 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, 2023 filed with the SEC on April 15, 2024, 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 base prospectus comprising part of the Registration Statement and when filed, the prospectus supplement filed with respect thereto. 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.

Contact
Devin Sullivan
Managing Director
The Equity Group Inc.
dsullivan@equityny.com

Conor Rodriguez, Analyst
crodriguez@equityny.com

FAQ

How much did LuxUrban Hotels (LUXH) raise in its recent public offering?

LuxUrban Hotels (LUXH) raised approximately $5,100,000 in gross proceeds from its public offering of 30,000,000 shares of common stock at $0.17 per share.

What is the purpose of LuxUrban Hotels' (LUXH) recent public offering?

LuxUrban Hotels (LUXH) intends to use the proceeds from the public offering for working capital and other general corporate purposes.

Who was the book-running manager for LuxUrban Hotels' (LUXH) public offering?

Alexander Capital, L.P. acted as the sole book-running manager for LuxUrban Hotels' (LUXH) public offering.

What additional option did LuxUrban Hotels (LUXH) grant to underwriters in its public offering?

LuxUrban Hotels (LUXH) granted the underwriters a 45-day option to purchase up to 4,500,000 additional shares of common stock at the public offering price, less underwriting discounts.