X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

LAS VEGAS-155 East Tropicana LLC, the owners of the 696-room Hooters Hotel and Casino here have signed a definitive agreement for the sale of the property and for the temporary leaseback of its casino operations. In so doing, the late-June close date announced along with the LOI in January has been pushed back to the end of October.

The buyer, Hedwigs Las Vegas Top Tier LLC, an affiliate of the investment group led by NTH Advisory Group LLC, will purchase essentially all of the assets of the seller for a purchase price of $95 million in cash, the payment of certain accrued royalties, and the assumption of certain outstanding liabilities. The buyer will also be responsible for the seller’s $130 million of 8 ¾% Senior Secured Notes due 2012. In addition, the seller has agreed to lease back the casino operations for $540,000 per month until the buyer is properly licensed.

Formerly Hotel San Remo Casino and Resort, Hooters Casino Hotel is located one-half block from the intersection of Tropicana Avenue and Las Vegas Boulevard. NTH Advisory Group LLC is a Santa Monica, CA-based casino and hotel development and advisory firm led by Richard Bosworth. 155 East Tropicana is a partnership of Florida Hooters LLC and EW Common LLC. EW Common is owned 90% by Eastern & Western and 10% by Michael J. Hessling, formerly the executive vice president and chief executive officer of Hotel San Remo, and currently the president of 155 East Tropicana.

155 East Tropicana agreed to acquire the real property and other assets of Hotel San Remo in 2004 for approximately $72.5 million. The acquisition was funded in part through a term loan totaling $48.5 million that was used to extinguish Hotel San Remo’s then existing indebtedness of $43.7 million, to pay the former owner of Hotel San Remo $1.3 million and for the issuance to EW Common LLC of a 33.3% membership interest with priority return valued at $20 million.

In March 2005, it completed the issuance of $130 million in principal amount 8¾% Senior Secured Notes due 2012 and, in August 2005, exchanged all of the old notes for new notes. Proceeds from the old notes offering were used principally to renovate the Hotel San Remo into the Hooters Casino Hotel. In October 2005, it secured its gaming and liquor licenses and on Nov. 1, 2005, assumed the operations of the hotel and casino and started renovating the property. The property opened as Hooter’s Hotel Casino in February 2006.

When the pending sale was announced in January, Neil Kiefer, the CEO of 155 East Tropicana LLC, said the offer was unsolicited and “will provide an attractive return to the company’s owners, yet allow the owners who are not interested in the transaction to maintain their ownership interests, subject to certain limitations.”

Since the re-branded hotel-casino reopened, it has been unable to achieve the plus-90% hotel occupancy that is the norm for Las Vegas hotels. For the fourth quarter of 2006, occupancy averaged 83.4% and the daily average room rate was $84. The comparable averages for all hotel properties in 2006 was 93.2% and $119.66.

The Hooters property’s net operating revenues for the final three months of 2006 were $16.8 million. Casino revenues were $6.2 million. The profit margin for casino operations was 45.6%. Food and beverage revenue was $5.7 million. The profit margin for food and beverage was 20.3%. Hotel and other revenue (which includes hotel room revenue, retail, spa, and other miscellaneous revenue) was $6.1 million. Room revenue was $4.5 million.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.