HOUSTON, May 9, 2017 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today announced the $25.95 million acquisition of Scarlett's Cabaret Miami, considered one of the best gentlemen's clubs in the country.
The 25,000 square foot Scarlett's is located between Fort Lauderdale and Miami in a high visibility location right off the Hallandale Beach exit of Interstate 95, the major north south highway through Miami-Dade, Broward, and Palm Beach counties.
Eric Langan, RCI President and CEO, said, "We're excited about Scarlett's Cabaret Miami joining our portfolio of high quality clubs in key markets.
"It is a different kind of venue, combining a high-energy Miami/Las Vegas style nightclub that attracts both male and female customers for drinks, dining and dancing, with a high-end gentlemen's club, featuring beautiful entertainers every night. Scarlett's also tends to attract a different clientele from our 74,000 square foot Tootsie's Cabaret, which is five miles south, making the two clubs complementary to each other.
"Scarlett's is generating about $13 million in trailing 12 months revenues, producing an estimated Adjusted EBITDA of more than $6 million. Based on these results and how we have structured the transaction, the club should yield an initial cash-on-cash return in line with our capital allocation strategy."
Key Terms
- Total consideration of $25.952 million for an RCI subsidiary to acquire 100% of the stock of JW Lee, Inc., which owns Scarlett's Cabaret Miami and has a 21-year lease on the property.
- Immediate payment of $5.4 million, payment of $5.0 million in six months, and a $15.552 million 12-year amortizing note at 8.00% in seller financing.
- The acquisition includes the Scarlett's Cabaret name, which RCI plans to license nationally to other cabarets.
- For tax purposes, the parties have elected to treat the transaction as an asset purchase, which would enable RCI to use straight line depreciation on the goodwill for 15 years, under current law, lowering future tax costs and enhancing cash flow.
- Closing took place yesterday.
"Scarlett's has a long, successful track record," Mr. Langan said. "Along with Tootsie's, it has consistently ranked as one of the best clubs in Florida as well as nationally.
"Geographically, it expands our presence in the attractive South Florida market, enabling us to own two of the best and largest venues, with close to 100,000 square feet combined. Having them in relatively close proximity is expected to enhance and improve the cost effectiveness of our marketing, purchasing and operations.
"Compared to other clubs in our portfolio, in physical size, Scarlett's is second to our largest club, Tootsie's Cabaret, while its revenues rival Rick's Cabaret New York, our second largest revenue generating unit.
"Scarlett's has seasoned local management who will remain and report to Ed Anakar, President of RCI Management Services Inc. Ed, who is based in Miami, will supervise Scarlett's integration into our organization. Ed was instrumental in bringing Rick's New York and Tootsie's into the fold after they were acquired, and building them into RCI's top contributors."
Scarlett's Cabaret Miami—More Details
- State of the art light show, décor and dance floor
- Full liquor, five bars, eight stages, sky boxes, and abundant VIP seating
- Open Sunday from 5 PM to 6 AM, Monday-Wednesday 12 PM to 6 AM, Thursday 12 PM to 7 AM, and Friday-Saturday 12 PM-8 AM
- Lunch, late night dining, and breakfast menu
- Visit http://scarlettscabaret.com/
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK)
With 44 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in gentlemen's clubs and sports bars/restaurants. Clubs in New York City, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis and other cities operate under brand names, such as "Rick's Cabaret," "XTC," "Club Onyx," "Vivid Cabaret," "Jaguars" and "Tootsie's Cabaret." Sports bars/restaurants operate under the brand name "Bombshells." Please visit http://www.rcihospitality.com/
Forward-Looking Statements
This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the company's actual results to differ materially from those indicated in this press release, including the risks and uncertainties associated with operating and managing an adult business, the business climates in cities where it operates, the success or lack thereof in launching and building the company's businesses, risks and uncertainties related to cybersecurity, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.
Media & Investor Contacts
Gary Fishman and Steven Anreder at 212-532-3232 or [email protected] and [email protected]
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SOURCE RCI Hospitality Holdings, Inc.
