LuxUrban Hotels Launches Proposed Public Offering of Securities
LuxUrban Hotels (Nasdaq: LUXH), which secures long-term operating rights for entire hotels, announced a follow-on public offering of its common stock and pre-funded warrants. This offering is made via a shelf registration statement filed with the SEC that became effective on May 8, 2024. The sizes and terms of the offering are not yet confirmed and it is managed by Alexander Capital, L.P. Proceeds will be used for working capital and general corporate purposes. Certain key stakeholders may participate in the offering. Interested parties can access the registration documents on the SEC's website.
- Proceeds from the offering will be used for working capital and general corporate purposes.
- The offering could potentially increase liquidity and financial flexibility for LuxUrban.
- Potential dilution of existing shareholders' equity due to the issuance of new shares.
- The offering's completion is uncertain and subject to market conditions.
Insights
The announcement of LuxUrban Hotels' proposed public offering holds significant importance for investors. When a company chooses to expand its capital via a public offering, it can indicate several strategic intentions, including funding growth initiatives, paying down debt, or bolstering its balance sheet. In LuxUrban's case, the proceeds are intended for working capital and general corporate purposes.
Short-term: The immediate implication for existing shareholders is potential dilution of their shares. As new shares are issued, each existing share could represent a smaller ownership piece of the company. This could temporarily depress the stock price due to the increased supply.
Long-term: If the capital raised is efficiently utilized to improve operations or expand the business, it could enhance LuxUrban's financial position and lead to long-term growth. Investors should look into the company's historical capital management effectiveness to gauge if this new infusion will be productive.
It's important to note that the market conditions and the interest of significant shareholders in participating in the offering can provide insights into the perceived value of the deal. The involvement of key insiders, such as officers and directors, could signal confidence in LuxUrban's future prospects.
Moreover, potential investors should pay attention to the terms of the offering, including the price per share and the conditions for pre-funded warrants, which will be detailed in the prospectus supplement. These terms can affect the attractiveness of the investment.
LuxUrban Hotels operates in the hospitality sector, specifically focusing on a distinctive model involving Master Lease Agreements (MLA). By securing long-term operating rights, they can potentially mitigate some risks associated with property ownership while capitalizing on the ongoing dislocation in the commercial real estate market.
From a market perspective, leveraging MLAs allows LuxUrban to navigate financial uncertainties in the real estate sector. Given the current environment where commercial real estate faces pressures, this model might provide stability and opportunities for growth. However, the focus should be on how effectively LuxUrban can manage and optimize these assets for profitability.
The company's ability to strategically build a portfolio of hotels in destination cities is a key aspect to monitor. The hospitality industry is highly sensitive to economic fluctuations and consumer trends, so LuxUrban's performance will depend on its adaptability and market positioning.
MIAMI, July 11, 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 launch of a proposed follow-on public offering of shares of its common stock and pre-funded warrants to purchase shares of common stock.
All of the shares of common stock and pre-funded warrants are being 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. The offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering will be completed, or as to the actual size or terms of the offering.
Alexander Capital, L.P. is acting as sole book-running manager for the offering.
Certain officers, directors, and holders of
The Company intends to use the proceeds from the proposed public offering for working capital and other general corporate purposes.
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 will be filed with the Securities and Exchange Commission and, when available, copies of the preliminary prospectus supplement and accompanying base prospectus may be obtained from 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.
Before investing in this offering, interested parties should read in their entirety the preliminary prospectus supplement and the accompanying prospectus and the other documents that the Company has filed with the SEC and that are incorporated by reference in such preliminary prospectus supplement and the accompanying base prospectus, which provide more information about the Company and such offering.
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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