LuxUrban Hotels Announces Pricing of Public Offering of Securities

Rhea-AI Summary

LuxUrban Hotels, a hospitality company listed on Nasdaq under the symbol LUXH, announced the pricing of a public offering of 30.5 million shares at $0.25 each, potentially raising $7.6 million. An additional 4.575 million shares may be sold within 45 days if the underwriters exercise their option. Roth Capital Partners and Alexander Capital are managing the offering, expected to close by May 23, 2024. Proceeds are intended for working capital and general corporate purposes. The offering is conducted under an effective shelf registration with the SEC.

Positive

• Pricing of 30.5 million shares at $0.25 each could raise $7.6 million.
• Underwriters have a 45-day option to purchase an additional 4.575 million shares.
• Intended use of proceeds includes working capital and general corporate purposes.
• Offering managed by reputable firms: Roth Capital Partners and Alexander Capital.

Negative

• Dilution risk for existing shareholders due to the large number of shares issued.
• Stock price set at $0.25 per share may indicate undervaluation.
• Potential dependency on favorable market conditions for the offering to close as expected.

Financial Analyst

LuxUrban Hotels Inc. has recently announced the pricing of its public offering of 30.5 million shares at $0.25 per share, aiming to raise roughly $7.6 million in gross proceeds. The use of proceeds is earmarked for working capital and other general corporate purposes. This move is significant as it reflects the company’s strategy to bolster its financial position and liquidity in the short term, which is important for operational stability.

From an investor’s perspective, it’s important to scrutinize the offering price, which at $0.25 per share may indicate the company’s current valuation and market sentiment. The relatively low price point could be interpreted as a signal of the company’s need for immediate capital, which may raise concerns about its current financial health. However, for investors with a higher risk tolerance, this offering could present a buying opportunity if they believe in the company’s long-term growth potential.

Another aspect to consider is the potential dilution of existing shares. The issuance of new shares will dilute the ownership percentage of existing shareholders, which could impact the stock’s price negatively in the short term. Investors should weigh this against the potential benefits of improved liquidity and financial stability for the company.

Market Research Analyst

The decision to raise capital by issuing new shares comes against the backdrop of LuxUrban's strategy to secure long-term operating rights for entire hotels in prime destination cities through Master Lease Agreements (MLA). This model allows the company to manage and generate cash flows from the hotel operations while the original property owners retain equity value.

In the current commercial real estate market, characterized by high debt maturity obligations and limited refinancing options, LuxUrban’s approach can be seen as opportunistic. The company is effectively positioning itself to capitalize on market dislocations, potentially acquiring valuable assets at favorable terms.

For retail investors, understanding the implications of this strategic move is crucial. If LuxUrban successfully deploys the raised capital to secure more lucrative MLAs, it could enhance its revenue streams and market position. However, investors should monitor how efficiently the company utilizes the new funds and whether it can achieve the anticipated growth and profitability.

MIAMI--(BUSINESS WIRE)-- LuxUrban Hotels Inc. (“LuxUrban” or the “Company”) (Nasdaq: LUXH), a hospitality company which leases entire existing hotels on a long-term basis and rents rooms in its hotels to business and vacation travelers, today announced the pricing of its public offering of 30,500,000 shares of common stock at a price of $0.25 per share. In addition, the Company has granted the underwriters a 45-day option to purchase up to an additional 4,575,000 shares of common stock at the offering price. Roth Capital Partners is acting as sole book-running manager for the offering. Alexander Capital, L.P. is acting as the co-manager for the offering. The offering is expected to close on or about May 23, 2024, subject to the satisfaction of customary closing conditions.

The gross proceeds from the offering, before deducting the underwriters’ fees and other offering expenses payable by the Company, are expected to be approximately $7.6 million. 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 has been filed, and a final prospectus supplement will be filed, with the SEC and, when available, copies of the preliminary and final prospectus supplement and accompanying base prospectus may be obtained from Roth Capital Partners, LLC, 888 San Clemente, Suite 400, Newport Beach, CA 92660, (800) 678-9147 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240521435881/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.

FAQ

What is the stock symbol for LuxUrban Hotels?

The stock symbol for LuxUrban Hotels is LUXH.

How much is LuxUrban Hotels raising through this public offering?

LuxUrban Hotels is expected to raise approximately $7.6 million through this public offering.

What is the price per share for the LuxUrban Hotels public offering?

The price per share for the LuxUrban Hotels public offering is $0.25.

When is the closing date for the LuxUrban Hotels public offering?

The closing date for the LuxUrban Hotels public offering is expected on or about May 23, 2024.

What are the proceeds from the LuxUrban Hotels offering intended for?

The proceeds from the LuxUrban Hotels offering are intended for working capital and other general corporate purposes.

Who are the managers for the LuxUrban Hotels public offering?

Roth Capital Partners is the sole book-running manager, and Alexander Capital is the co-manager for the LuxUrban Hotels public offering.

Is there an option for underwriters to purchase additional shares in the LuxUrban Hotels offering?

Yes, underwriters have a 45-day option to purchase up to an additional 4.575 million shares.