LuxUrban Booted From 2 Manhattan Hotels

Embattled hotel chain LuxUrban Hotels' history of withholding rent from landlords has caught up to it, as its portfolio has shrunk to just a handful of properties.

The Miami-based hotel company, which master-leases properties that were struggling during the pandemic, a year ago said it operated 18 hotels in four states. Its portfolio now stands at six properties, all in New York City. 

This month, LuxUrban relinquished Hotel 57, the 210-key hotel at 130 E. 57th St. that it had subleased from Apple Hospitality REIT, it disclosed Monday in a regulatory filing.

An affiliate of Apple Hospitality sued to eject LuxUrban from the property last year, alleging that LuxUrban had skipped $11.7M in rent and failed to pay $2.3M in union benefit funds. 

LuxUrban and Apple settled their dispute on April 3, with the Miami-based hotel chain admitting it had failed to pay rent and the REIT waiving its claims in exchange for regaining control of the property. LuxUrban said the settlement eliminates $14M in accrued liabilities and $5M in annualized losses.

Representatives for LuxUrban and Apple Hospitality REIT didn't respond to Bisnow's requests for comment.

LuxUrban has also been ejected from The Blakely, a 118-room hotel at 136 W. 55th St. in Manhattan that it leased in 2021.

The hotel’s owner, BD Hotels, sued LuxUrban over nonpayment of rent in May and alleged that LuxUrban ignored a notice that its lease had been terminated. A New York judge approved LuxUrban's eviction in October, before pausing it after LuxUrban agreed to pay $1.8M in back rent.

But it appears LuxUrban didn't hold up its end of the bargain, with another eviction filed in February, effective March 13. The hotel has stopped accepting reservations via Booking.com, and reviews on Tripadvisor from last month indicate that the hotel is closed. Its phone line appears to be disconnected.

BD Hotels owner Richard Born said LuxUrban no longer operates The Blakely but declined to comment further.

Both Hotel 57 and The Blakely are still on LuxUrban’s website.  

The hotel chain has been rocked by upheaval in its leadership ranks, a collapse in its stock price and lawsuits from its landlords and investors over the past year. 

It had been led by co-CEOs Shanoop Kothari and Brian Ferdinand, who founded the company as a short-term rental business called CorpHousing Group. It made a rocky pivot to operating hotels during the pandemic but boasted to investors that it could have a 12,000-room portfolio by the end of 2024.

But its growth stalled after a short seller targeted the company and a March 2024 Bisnow investigation revealed that two hotel leases it told investors were completed had never closed. It was also fending off lawsuits from many of its landlords, who claimed LuxUrban hadn't paid millions of dollars in rent.

Ferdinand stepped down as co-CEO following the short seller report, then Kothari was ousted as sole CEO three months later. During the first quarter of 2024, its stock price fell 74%. 

Robert Arigo, who had just been hired as chief operating officer, took over as CEO. The company also appointed three independent board directors last year, including naming Elan Blutinger nonexecutive chairman, replacing Ferdinand.

The company pledged to enhance its performance, and Arigo said he was focused on eliminating nonperforming hotels from the company’s portfolio.

The company restated its 2024 financial reports in August after an audit found that its earnings statements couldn't be relied upon. It said in an amended Securities and Exchange Commission filing that it had improperly classified certain revenue and understated its expenses and accounts receivable.

Its leadership upheaval has continued. Five board members, including Blutinger, resigned on Dec. 14, and Ferdinand was named interim CEO, with Arigo shifting back to COO.

Chief Development Officer and President Brandon Elster, The Moinian Group member Alex Moinian, sales broker Daniel Shapiro and marketer Bradley Theodore were appointed to the board as replacements at the same time. Moinian left the board last month, citing personal reasons.

LuxUrban was delisted from the Nasdaq Stock Market on Jan. 15. The company issued a press release that day announcing that it would focus on New York City exclusively, with eight hotels and 855 rooms in its long-term portfolio. Hotel 57 and The Blakely and their 326 rooms were on the list.

LuxUrban submitted a late filing notice to the SEC for its annual earnings results on April 1. In Q3 2024, its most recent quarterly filing available, the company said it had $199K in cash and $83.5M in liabilities.

More hotels could be on the chopping block. The owner of the Tuscany Hotel, a 124-room hotel at 120 E. 39th St. in Manhattan, sued LuxUrban last year, claiming it hadn't paid $4.7M in rent.

Landlord Tuscany Legacy Leasing LLC alleged that LuxUrban's checks had bounced due to insufficient funds and that the company's executives had fabricated evidence of wire transfers in an attempt to conceal that they hadn't made payments.

A Manhattan judge last month ordered LuxUrban to pay $3M.