LuxUrban Hotels Declares Dividend on 13.00% Series A Cumulative Redeemable Preferred Stock

Rhea-AI Summary

LuxUrban Hotels Inc. (Nasdaq: LUXH, LUXHP) announces monthly cash dividend for its 13.00% Series A Cumulative Redeemable Preferred Stock. Dividend per share $0.270833. The company utilizes an asset-light business model to lease entire hotels on a long-term basis and rent out hotel rooms in key major metropolitan cities. As of November 30, 2023, the Company had 2,032 hotel rooms under lease in cities like New York, Washington D.C., Miami Beach, New Orleans, and Los Angeles.

Insights

Financial Analyst

The declaration of a monthly cash dividend for LuxUrban Hotels Inc.'s preferred stock is a significant move that signals the company's confidence in its current and future cash flows. The 13.00% Series A Cumulative Redeemable Preferred Stock is a high-yield investment, often appealing to income-focused investors. The specified dividend of $0.270833 per share reflects a substantial annualized yield that is considerably higher than average market dividends, which could indicate a risk premium associated with the company's asset-light business model.

Preferred stock dividends are typically a fixed expense and the ability to maintain such payments can be indicative of financial health. However, investors should be aware that high dividend yields can also reflect higher risk. In LuxUrban's case, the asset-light model, which involves leasing hotels rather than owning them, may introduce variability in costs and revenues, potentially affecting dividend sustainability in the long term. Investors would be wise to analyze the company's occupancy rates, revenue per available room (RevPAR) and lease obligations to assess the long-term viability of these dividends.

Market Research Analyst

LuxUrban Hotels Inc.'s strategic shift from leasing multifamily residential units to focusing on leasing hotels in metropolitan areas is a response to market dislocations caused by the pandemic and current economic conditions. This pivot towards an asset-light model allows the company to be more agile, with potentially lower capital expenditures compared to traditional hotel ownership. However, it also means that LuxUrban's success is highly dependent on its ability to secure favorable lease terms and maintain high occupancy rates.

As the company expands its portfolio, the selection of cities such as New York, Washington D.C. and Los Angeles suggests a focus on high-demand urban centers. The rapid build-up of their hotel room portfolio post-pandemic could position LuxUrban favorably if the travel and hospitality sector continues to recover. Yet, the market should monitor the balance between the growth of their portfolio and the potential oversupply in the market, which could depress room rates and occupancy levels.

Hospitality Industry Expert

The hotel industry has been significantly impacted by the COVID-19 pandemic, with many properties experiencing dislocation or underutilization. LuxUrban Hotels Inc.'s strategy to acquire accommodations under these conditions could allow the company to capitalize on lower lease costs and potentially higher margins. However, this strategy also comes with risks associated with the economic recovery and travel demand.

The company's focus on key metropolitan areas could be advantageous due to their traditionally higher demand for accommodations. However, the reliance on third-party sales and distribution channels, as well as their online portal, will require effective marketing strategies and a strong value proposition to maintain high occupancy levels and compete with established hotel brands. The performance of LuxUrban's portfolio in these competitive markets will be a key determinant of its financial outcomes and its ability to sustain dividend payments to preferred shareholders.

MIAMI--(BUSINESS WIRE)-- LuxUrban Hotels Inc. (or the “Company”) (Nasdaq: LUXH, LUXHP), 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 its Board of Directors has declared a monthly cash dividend for the Company’s 13.00% Series A Cumulative Redeemable Preferred Stock.

Dividend per share	$0.270833
Record date	January 16, 2024
Payment date	January 31, 2024

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. 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/20240104996638/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 symbols for LuxUrban Hotels Inc. are LUXH and LUXHP.

What is the dividend per share for the 13.00% Series A Cumulative Redeemable Preferred Stock?

The dividend per share for the 13.00% Series A Cumulative Redeemable Preferred Stock is $0.270833.

How many hotel rooms does LuxUrban Hotels Inc. have under lease as of November 30, 2023?

As of November 30, 2023, LuxUrban Hotels Inc. had 2,032 hotel rooms under lease.

In which cities does LuxUrban Hotels Inc. have hotel rooms under lease?

LuxUrban Hotels Inc. has hotel rooms under lease in cities like New York, Washington D.C., Miami Beach, New Orleans, and Los Angeles.

What is the business model of 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 key major metropolitan cities.