LuxUrban Hotels announces commitment to non-dilutive funding

LuxUrban Hotels announced its commitment to growing the business through non-dilutive funding options. 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 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 $7.1M 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 $7.1M with no substantive limitations on growth of the joint portfolio. 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. In addition, Greenle Partners, 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 $9.8M of senior secured debt and an estimated $87.5M 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.