LuxUrban Hotels Announces Closing of Public Offering of Securities
LuxUrban Hotels closed its public offering of 35,075,000 shares of common stock, including the full exercise of the underwriters' over-allotment option, at $0.25 per share. The gross proceeds totaled approximately $8.8 million, before deducting underwriters' fees and expenses. Roth Capital Partners acted as the sole book-running manager, and Alexander Capital, L.P. was the co-manager. The proceeds will be used for working capital and general corporate purposes. The offering was conducted under a shelf registration statement declared effective on May 8, 2024, available on the SEC's website.
- Completed public offering of 35,075,000 shares.
- Full exercise of the underwriters' over-allotment option.
- Raised approximately $8.8 million in gross proceeds.
- Funds will be used for working capital and general corporate purposes.
- Share price set at $0.25 per share, which may indicate low market valuation.
- Potential shareholder dilution due to the large number of shares issued.
- Expenses and fees deducting from the gross proceeds, reducing net gain.
Insights
LuxUrban Hotels' recent public offering of 35,075,000 shares of common stock at
From a financial perspective, this capital injection will enable LuxUrban to strengthen its liquidity position, ensuring they have the necessary resources to manage operational costs and potentially expand their portfolio in high-demand destination cities. Raising capital via public offering can be both beneficial and risky. On the one hand, it provides immediate funds without increasing debt levels. On the other, it can dilute existing shareholders' equity, which may affect the stock's market perception, especially with the offering price set relatively low at
It’s important to monitor how effectively LuxUrban utilizes these funds. Effective deployment into high ROI projects could enhance profitability, while inefficient use could strain resources further. Additionally, the participation of notable underwriters like Roth Capital and Alexander Capital implies confidence in LuxUrban’s business model.
LuxUrban's strategy of leasing entire existing hotels on a long-term basis and then renting out rooms short-term is an interesting approach to capitalize on current market conditions, particularly the dislocated commercial real estate markets. By securing Master Lease Agreements (MLAs), LuxUrban mitigates some of the risks associated with direct property ownership, such as maintenance and capital expenditures, while retaining control over the cash flows.
In the current market, characterized by a glut of commercial real estate properties and looming debt maturities, LuxUrban’s business model allows property owners to hold onto their assets while generating revenue through leases. This can be a compelling value proposition in the present economic climate, where traditional hotel ownership and operations are under pressure.
Investors should consider the potential risks involved with this model, including the volatility in the hospitality industry and the possible impact of economic downturns on travel demand. However, if LuxUrban can effectively navigate these challenges, their approach could yield significant benefits.
Roth Capital Partners acted as sole book-running manager for the offering. Alexander Capital, L.P. acted as the co-manager for the offering.
The gross proceeds from the offering, before deducting the underwriters’ fees and other offering expenses payable by the Company, were approximately
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”). The Registration Statement was declared effective on May 8, 2024 and 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 from Roth Capital Partners, LLC, 888 San Clemente, Suite 400,
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 the prospectus supplement and final 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240523818741/en/
Shanoop Kothari
Chief Executive Officer & 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.
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