LuxUrban Hotels Declares Dividend on 13.00% Series A Cumulative Redeemable Preferred Stock
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The declaration of a monthly cash dividend for LuxUrban Hotels Inc.'s Series A Cumulative Redeemable Preferred Stock is a significant event for investors, particularly those holding this type of preferred stock. The dividend rate of 13.00%, translating to $0.270833 per share, is a substantial yield, especially in comparison to common equity dividends and fixed-income securities like bonds. This high yield reflects the company's commitment to providing returns to its preferred shareholders, which is often seen as a positive signal of the company's cash flow stability and profitability.
Investors should note that preferred stocks typically have a higher claim on assets and earnings than common stock, which means dividends for these securities are often disbursed before any dividends on common shares. The record date and payment date are also crucial pieces of information for shareholders, as they determine eligibility for the dividend payout. While this news directly benefits preferred shareholders, it can also be perceived positively by potential investors and the broader market as it underscores the company's ability to generate and distribute cash.
LuxUrban Hotels Inc.'s asset-light business model, which involves leasing hotels and renting out rooms, positions the company to be nimble in the face of fluctuating real estate markets. By utilizing Master Lease Agreements (MLAs), LuxUrban can operate hotels without the capital expenditure typically associated with property ownership. The strategy to build a portfolio in destination cities by leveraging dislocations in commercial real estate markets indicates an opportunistic approach that could result in above-average growth if executed effectively.
Furthermore, the partnership with Wyndham Hotels & Resorts provides LuxUrban with a competitive edge in terms of branding, marketing and operational support. The capital allocation from Wyndham for each hotel acquisition is a strategic move that could enhance LuxUrban's expansion while mitigating some of the financial risks. This collaborative approach, combined with a focus on destination cities, may appeal to both business and leisure travelers, potentially increasing occupancy rates and revenue.
The aggressive portfolio-building strategy of LuxUrban Hotels Inc. in major metropolitan areas, by capitalizing on the dislocation in commercial real estate markets, reflects a forward-looking investment approach. The current real estate environment, characterized by debt maturity obligations and limited refinancing options for asset owners, presents unique opportunities for companies like LuxUrban. The MLA structure allows property owners to retain equity in their assets while LuxUrban secures the cash flows from operations, a win-win scenario that can provide long-term stability for the company and asset owners alike.
However, investors should be aware of the risks inherent in an aggressive expansion strategy, particularly in the hospitality sector, which is sensitive to economic cycles. LuxUrban's success will depend on its ability to maintain high occupancy rates and manage operational costs effectively. The company's performance in this regard will be a critical factor for investors to monitor, as it will impact the sustainability of the dividend payments and the overall financial health of the company.
Dividend per share |
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Record date |
February 15, 2024 |
Payment date |
February 29, 2024 |
LuxUrban Hotels Inc.
LuxUrban Hotels Inc. utilizes an asset light business model to secure the 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 aggressively 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. Through its partnership with Wyndham Hotels & Resorts, the largest hotel company in the world by rooms, LuxUrban gains several competitive advantages including joint branding for marketing, sales, and distribution, capital allocation from Wyndham for each hotel it acquires, and ongoing customer support and training across its portfolio.
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 success of the Company’s collaboration with Wyndham Hotels & Resorts, 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, 2022, 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 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/20240205428564/en/
Shanoop Kothari
President, Co-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.
