LuxUrban Hotels Launches Proposed Public Offering of Securities

Rhea-AI Summary

LuxUrban Hotels Inc. (Nasdaq: LUXH) has announced a proposed follow-on public offering of common stock. The company, which operates hotels through Master Lease Agreements, intends to use the proceeds for working capital and general corporate purposes. Alexander Capital, L.P. is acting as the sole book-running manager for the offering.

Key points:

• Underwriters will have a 45-day option to purchase up to an additional 15% of shares
• Offering is subject to market conditions
• Company officers, directors, and major shareholders may participate
• A preliminary prospectus supplement will be filed with the SEC

LuxUrban's business model involves securing long-term operating rights for entire hotels and renting rooms on a short-term basis to business and vacation travelers.

Positive

• Potential increase in working capital for business operations
• Opportunity for expansion and growth through additional funding
• Possible strengthening of the company's financial position

Negative

• Potential dilution of existing shareholders' equity
• Uncertainty regarding the size and terms of the offering
• Market risks associated with the timing of the public offering

Insights

Financial Analyst

LuxUrban Hotels Inc.'s proposed follow-on public offering of common stock is a significant development that warrants close attention. This move suggests the company is seeking to bolster its capital position, likely to fuel growth or strengthen its balance sheet. Here are key points to consider:

• The offering's size and pricing are yet to be determined, which leaves uncertainty about the potential dilution for existing shareholders.
• The company's intention to grant underwriters a 45-day option for an additional 15% of shares indicates flexibility in the offering size, potentially allowing for increased capital raise if demand is strong.
• The use of proceeds for "working capital and other general corporate purposes" is quite broad. Investors should look for more specific details in the prospectus to understand how the company plans to utilize the funds.
• Participation of insiders (officers, directors and 5%+ holders) in the offering could be seen as a vote of confidence, but it's essential to monitor the extent of their participation.
• The company's business model of securing long-term operating rights for hotels through Master Lease Agreements (MLAs) is capital-intensive. This offering could be important for expanding their portfolio in destination cities.

Investors should carefully review the preliminary prospectus supplement when available to assess the offering's terms and potential impact on their investment thesis. The market's reaction to this announcement and the success of the offering will be telling indicators of investor confidence in LuxUrban's growth strategy and business model.

Real Estate Investment Analyst

LuxUrban's proposed public offering is intriguing from a real estate investment perspective, particularly given their unique business model. Here's my analysis:

• The company's strategy of capitalizing on distressed commercial real estate, especially hotels, is timely. With $1.5 trillion of commercial real estate debt maturing by 2025, LuxUrban is positioning itself to benefit from potential market dislocations.
• Their Master Lease Agreement (MLA) approach is innovative, allowing property owners to retain equity while LuxUrban operates the asset. This could be attractive in a market where traditional sales might be challenging.
• The focus on "destination cities" suggests a bet on the recovery and growth of urban tourism and business travel. This strategy could pay off if these markets rebound strongly post-pandemic.
• However, the capital-intensive nature of this model explains the need for additional funding. Investors should consider how quickly LuxUrban can scale and achieve profitability with this approach.
• The success of this offering could indicate market appetite for alternative real estate investment models, potentially influencing broader trends in the hospitality and commercial real estate sectors.

While the offering presents opportunities for expansion, it's important to monitor how efficiently LuxUrban deploys the capital raised and whether their MLA model can deliver sustainable returns in various market conditions. The company's ability to select prime properties and effectively manage them will be key to long-term success.

MIAMI, July 26, 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. The Company also intends to grant the underwriters a 45-day option to purchase up to an additional 15% of the shares of common stock sold in this offering.

All of the shares of common stock 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 5% or more of the Company’s common stock and affiliates thereof may participate in the offering.

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

FAQ

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

LuxUrban Hotels (LUXH) intends to use the proceeds from the proposed public offering for working capital and other general corporate purposes, potentially supporting the company's growth and operations.

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

Alexander Capital, L.P. is acting as the sole book-running manager for LuxUrban Hotels' (LUXH) proposed public offering of common stock.

Will LuxUrban Hotels (LUXH) grant underwriters an option to purchase additional shares?

Yes, LuxUrban Hotels (LUXH) intends to grant the underwriters a 45-day option to purchase up to an additional 15% of the shares of common stock sold in the offering.

When was LuxUrban Hotels' (LUXH) shelf registration statement declared effective?

LuxUrban Hotels' (LUXH) shelf registration statement on Form S-3 (No. 333-278883) was declared effective by the SEC on May 8, 2024.