LuxUrban Hotels Responds to Inaccurate and Misleading Short Seller Report
January 17 2024 - 5:12PM
Business Wire
LuxUrban Hotels Inc. (“LuxUrban” 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, today provided
the following response to allegations included in a short sale
report issued on January 17, 2024. The author of this report has
disclosed an economic incentive to negatively influence the
Company’s stock price.
In the Company’s estimation, the so-called report reflects a
fundamental lack of understanding of its operations and industry,
contains unsubstantiated claims from anonymous sources,
regurgitates dated and previously disclosed information that the
Company believes is not germane to the current state of its
business and outlook, and relies heavily on speculation and
mischaracterizations.
The Company believes that the publication of this report is an
attempt by the short seller to create a fog of misinformation that
masks the value-creating initiatives well underway at LuxUrban, and
to manipulate the Company’s stock price to financially benefit the
short seller at the expense of LuxUrban’s stakeholders. The report
itself states that the author and other parties have a short
position in the Company’s securities and would realize “significant
gains” in the event that the price of the Company’s securities
decline.
While there are multiple inaccuracies contained in the report,
the Company offers the below to address what it believes to be
among the most glaring:
- As previously announced, the Company is scheduled to begin
welcoming guests on or before January 30, 2024 at The Royalton by
LuxUrban, Trademark Collection® by Wyndham and has a set date with
the property’s ownership to be delivered possession of the
asset.
- The Company prepares and files its periodic and current reports
with the Securities and Exchange Commission (“SEC”) in compliance
with applicable law. Consistent with the Company’s prior
disclosures, all litigation involving the Company as of the date of
this release is considered by the Company to be ordinary course and
immaterial.
- All litigation risks & liabilities have been accrued for in
the Company’s financial statements and are primarily related to the
Company’s legacy apartment rental business.
- The Company takes particular exception to the libelous,
gratuitous commentary included in the short seller’s report with
respect to Grassi & Co., CPAs, P.C., the 56th-largest
accounting firm in the United States1 and the Company’s independent
outside auditor.
- The Company believes that it has very good working
relationships with its landlords, as evidenced by additional deal
flow originating from these landlords and multiple hotel
transactions with the same landlords.
- Consistent with industry practice, and as all sophisticated
investors in the hospitality space are aware, the Company’s
calculation of RevPAR includes a variety of components in addition
to posted rental revenue, such as ancillary revenue, fees, and
expenses.
The Company is transparent and consistent in discussing its
growth and operating strategies and remains optimistic about its
prospects and the strength of its evolving business profile. The
Company has adopted a conservative posture with respect to
guidance, reflecting the inherent complexity of its operations. The
Company believes that this approach is responsible and in the best
interests of its shareholders. To that end, the Company has
reiterated its Net Rental Revenue and EBITDA guidance for full year
2023 and full year 2024 as well as its forecasts for hotel rooms
under long-term Master Lease Agreement (MLA). These expected
increases are being driven by a variety of factors, including the
financial, brand and operating support provided by Wyndham Hotels
& Resorts that allows LuxUrban to, among other things, pursue
larger (200+ room) hotel properties.
The Company will continue to assess this report, intends to
evaluate its legal remedies to any inaccurate misinformation
disseminated by third parties, and appreciates the continued
support of its stakeholders.
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 November 30, 2023 the Company had 2,032
hotel rooms under lease, including properties not yet 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 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.
1 According to Insider Public Accounting
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version on businesswire.com: https://www.businesswire.com/news/home/20240117267169/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
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