LuxUrban Hotels Inc. (or the “Company”) (Nasdaq: LUXH),
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, announced today its commitment to
growing the business through non-dilutive funding options. This
approach to growth is supported by several factors, including its
recent agreement with Wyndham Hotels & Resorts, the successful
completion of balance sheet initiatives that have strengthened the
Company’s financial position and enhanced liquidity, and its
ability to leverage its improving asset base to secure non-dilutive
funding.
Focus on Non-Dilutive Financing to
Support Growth
“We believe that we have created a model that offers a clear
path to funding our growth through at least the end of 2024 via
non-dilutive financing options and significant flexibility with
respect to capital allocation,” said Shanoop Kothari, President and
Chief Financial Officer. “The cash generative profile we have
created for the Company is expected to result in sustainable, free
cash flow beginning over the next few quarters driven by our
improving business operations, benefits of scale, and the
elimination of long-term debt and future payment obligations. In
addition to our internal efforts, the capital commitments
associated with our collaboration with Wyndham Hotels & Resorts
are expected to augment and accelerate our anticipated growth in a
non-dilutive manner.”
Agreement with Wyndham Hotels &
Resorts Provides Non-Dilutive Capital on Existing Portfolio and
Future Hotel Properties
As previously announced, the Company entered into an agreement
with Wyndham Hotels & Resorts under which the Company’s
existing portfolio of hotels and future properties will be added to
the Trademark Collection® by Wyndham brand.
Under the agreement, Wyndham will provide the Company with
approximately 50% or more of all capital required for new
acquisitions based on the Company’s current and historic
underwriting guidelines. As the Company opens new hotels on the
Wyndham platform, Wyndham will reimburse LuxUrban approximately 50%
of the security deposit in the form of “key money” to be used for
ongoing working capital, capital improvements, and new hotel
acquisitions. This provides LuxUrban with 150% or more of buying
power on new hotel openings and delivers capital back into the
business as it opens new hotels.
The Company expects to open at least 60% of its current hotels
under the Trademark Collection banner by September 30, 2023 with
the balance of its properties integrated by the end of the 2023
fourth quarter. This schedule would provide the Company with an
estimated additional $7.1 million of non-dilutive growth and
working capital through 2023. Any new hotels acquired by the
Company and added to the Wyndham platform would be incremental to
the estimated $7.1 million with no substantive limitations on
growth of the joint portfolio.
Expand Pipeline with Non-Dilutive
Capital
The Company continues to organically add high quality hotel
assets to its portfolio via long-term Master Lease Agreements and
reiterates that it expects to have 2,500-3,000 total short-term
stay hotel units operational by December 31, 2023. The Company’s
existing property pipeline is robust and actionable, offering the
opportunity to accelerate growth beyond its prior expectations
through 2024 with the use of non-dilutive capital via its
relationship with Wyndham Hotels & Resorts and the exploration
of other non-dilutive financing opportunities.
Greenle Partners LLC Agrees to Waive
Share Registration Rights on 12-Month Rolling Basis
In addition, Greenle Partners LLC (“Greenle”), the Company’s
second largest shareholder, has agreed to waive all registration
rights on all prior share issuances, and any new share issuances as
they occur, for a minimum of 12 months on a rolling basis from the
date of issuance assigned to each tranche of shares eligible for
registration. Under the original agreement between the Company and
Greenle, the shares covered by this waiver were eligible to be sold
at specified dates and amounts ending in 2025.
As previously announced, the shares owned and to be issued to
Greenle were acquired in exchange for the elimination of the
entirety of $9.8 million of senior secured debt and an estimated
$87.5 million in Revenue Share payment obligations. These shares
will continue to be subject to a blocker provision which restricts
Greenle’s beneficial ownership to 9.9% of the Company’s outstanding
common stock, as well as leak out provisions and certain lockups
ending in 2025.
Mr. Ferdinand commented, “In our view, Greenle’s willingness to
delay their registration rights reflects both their continuing
support of our long-term growth objectives and their belief in our
ability to deliver long-term shareholder value.”
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 the date of this release, the company has
approximately 1,625 hotel rooms 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. 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 financial and operational
guidance, 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 10-K for the year
ended December 31, 2022 and in Item 1A of our Form 10-Q for the
three months ended June 30, 2023. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230831863343/en/
Shanoop Kothari President & Chief Financial Officer LuxUrban
Hotels Inc. shanoop@luxurbanhotels.com
Devin Sullivan Managing Director The Equity Group Inc.
dsullivan@equityny.com
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