LuxUrban Hotels Announces Full Exercise of Over Allotment Option
LuxUrban Hotels Inc. (Nasdaq: LUXH) announced the full exercise of the over-allotment option by the underwriter of its public offering. This resulted in the sale of an additional 4,500,000 shares of common stock at $0.17 per share. The total offering now comprises 34,500,000 shares, generating gross proceeds of $5,865,000. Alexander Capital, L.P. served as the sole book-running manager for the offering.
The company plans 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. LuxUrban Hotels operates by securing long-term rights to entire hotels through Master Lease Agreements and rents rooms to business and vacation travelers on a short-term basis.
- Full exercise of over-allotment option, indicating strong demand
- Additional capital raised of $765,000 from over-allotment
- Total gross proceeds of $5,865,000 from the offering
- Potential dilution of existing shareholders due to issuance of 34,500,000 new shares
- Low share price of $0.17 may indicate market concerns about the company's valuation
Insights
LuxUrban Hotels' recent announcement regarding the full exercise of the over-allotment option in its public offering presents several critical points for investors. The company offering an additional 4,500,000 shares at
For a retail investor, it's important to understand that increased share liquidity can potentially dilute existing shareholder value in the short term. However, the infusion of cash provides the company with more working capital, which can be used for operations, strategic investments, or debt reduction. The use of proceeds for working capital and other general corporate purposes typically suggests a focus on maintaining stability and possibly pursuing growth initiatives.
LuxUrban’s business model of securing long-term operating rights through Master Lease Agreements (MLAs) in the hotel industry is also worth noting. This approach allows the company to manage and profit from hotel operations without the heavy capital expenditure required to own the properties. Given the current dislocation in commercial real estate markets, LuxUrban is strategically positioning itself to benefit from the distress in this sector.
In the short term, there could be some downward pressure on the stock due to the dilution effect. However, in the long term, if LuxUrban successfully utilizes the raised capital to enhance its operational capabilities and expand its portfolio, it can lead to increased revenue and profitability, positively impacting shareholder value.
MIAMI, July 18, 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 that the underwriter of its underwritten public offering has exercised its over-allotment option in full to purchase an additional 4,500,000 shares of the Company’s common stock at the public offering price of
After giving effect to the full exercise of the over-allotment option, the Company sold 34,500,000 shares of its common stock for aggregate gross proceeds of
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
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