Agreement Expected to Significantly
Improve Cash Position, Access to Growth
Capital, Increase Margins, and Future Cash
Flows
Company Increases 2023 EBITDA
Guidance and Initiates 2024 Net Rental Revenue
and EBITDA Guidance
LuxUrban Hotels Inc. (Nasdaq: LUXH) (or “the Company”),
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 that on May 21,
2023 it entered into an agreement with its pre-IPO investors that
will eliminate an estimated $87.5million in Revenue Share payments
in exchange for a one-time issuance of 6,740,000 shares (the
“Agreement Shares”) of the Company’s common stock subject to an
extended lock up agreement.
As a result of the agreement, the Company is increasing its
EBITDA forecast for 2023 to $25 to $30 million from its previous
estimate of $21 to $25 million. The Company is also initiating 2024
net rental revenue and EBITDA guidance of $220 to $240 Million and
$48 to $60 million, respectively.
“This agreement closes the chapter related to our pre-IPO debt
arrangements and, we believe, accelerates margin expansion removing
a long-term drag on our financial results,” said Brian Ferdinand,
Chairman and Chief Executive Officer. “We view this agreement as an
accretive investment with the ability to deliver value in the
near-term and over-time by significantly increasing future cash
flows and profitability while enhancing our access to growth
capital.”
The Company will issue the Agreement Shares to Greenle Partners
LLC Series Alpha P.S and Greenle Partners LLC Series Beta P.S
(collectively, “Greenle”) in exchange for the termination of any
and all rights of Greenle to receive any future Revenue Share and
any related payments with respect to any property or operations of
the Company. These Revenue Share payments would have been payable
by the Company to Greenle through December 31, 2038. The Agreement
Shares will be initially unregistered and, following their
registration, may only be sold at specified dates and amounts
ending 2025. The Agreement Shares include a blocker provision which
restricts Greenle’s beneficial ownership to 9.9% of the Company’s
outstanding common stock. The issuance of the Agreement Shares is
subject to, among other things, the approval of the Company’s
shareholders at the next Annual Meeting.
“We are grateful for the early support provided by our pre-IPO
lenders,” said Shanoop Kothari, President and Chief Financial
Officer. “However, as we have matured as an organization and
demonstrated the validity of the business model, the time is right
to eliminate these legacy obligations. The elimination of these
Revenue Share payments will allow us to direct cash towards growth,
enhance our margins, and afford us the opportunity to design and
implement a long-term capital allocation strategy that more
accurately reflects the evolving profile of our Company.”
Mr. Kothari concluded, “We believe that the willingness of our
pre-IPO lenders to accept shares with an extended lock-up in lieu
of cash payments throughout the life of the selective leases
reflects their confidence in our abilities and outlook.”
The Company’s guidance is based on current plans and assumptions
and subject to the risks and uncertainties more fully described in
the Company’s filings with the United States Securities and
Exchange Commission. This 2023 and 2024 guidance provided by the
Company is based on, among other factors, current business,
economic, and public health conditions; the status of its
acquisition pipeline and its ability to close on these potential
acquisitions; and its current view of forward-looking unit
operating metrics. The Company reminds investors that the impacts
of inflation and general market conditions are uncertain and
impossible to predict. See “Forward-looking Statements” below.
The foregoing summary of the agreement and the conditions to the
issuance of the Agreement Shares is not complete and is qualified
by the full text of the agreement, which will be included in the
Company’s filings with the Securities and Exchange Commission.
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 March 31, 2023, the company has 1,034 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 forward-looking statements,
including with respect to the anticipated success of the
transactions contemplated by this press release, the Company’s
expectations regarding its financial performance, market rental
rates, national or local economic growth, including the impact of
inflation, occupancy levels, and the Company’s ability to
commercialize efficiently and profitably the properties it leases
and will lease in the future. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions,
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. Generally, such forward-looking
information or forward-looking statements can be identified by the
use of forward-looking terminology such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or may contain statements that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "will
continue", "will occur" or "will be achieved". Forward-looking
information may relate to anticipated events or results including,
but not limited to business strategy, leasing terms, high-level
occupancy rates, and sales and growth plans. The financial
projections provided herein are based on certain assumptions and
existing and anticipated market, travel and public health
conditions, all of which may change. 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/20230522005274/en/
LuxUrban Hotels Inc. Shanoop Kothari President & Chief
Financial Officer shanoop@luxurbanhotels.com
The Equity Group Inc. Devin Sullivan, Managing Director
dsullivan@equityny.com
LuxUrban Hotels (NASDAQ:LUXH)
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