RCI Hospitality Holdings of Houston, which runs a national chain of strip clubs, wants to shower the owners of Centerfolds with $15 million to acquire the Lagrange Street club and to convert it into one of its Rick's Cabarets.
Centerfolds, in business since 2000 with liquor and entertainment licenses its owners transferred over from the fabled Naked i, is now one of just two strip clubs left from the Combat Zone; it huddles next door to the other one, the Glass Slipper.
Before RCI, a publicly traded company, can finalize the purchase, it has to win approval from both the Boston Licensing Board and the state Alcoholic Beverages Control Commission. The licensing board will hold its hearing on Jan. 8 in City Hall on whether to allow the sale of the three-story club.
In a statement, RCI said:
Under the terms of the agreements, RCI subsidiaries will pay $7.2 million for the club and $7.8 million for the real estate using $4.0 million in seller financing at 6.0% for the club with the balance of cash from an anticipated $11.0 million bank loan at a blended rate of 6.25%. ...
"This club fits perfectly with our goal of acquiring profitable number one locations with a long history of cash flow," said Eric Langan, President & CEO, of RCI. "As a $2.4 million EBITDA club, the 100% financed acquisition is clearly in line with our capital allocation strategy in terms of valuation and cash on cash return."
12-18 Lagrange is currently assessed at $2.75 million, according to assessors' records.
In the statement, RCI described Boston as "a top 10 metro and sports market that is also known for being a major business, financial and convention center."
Centerfolds' owners - now William Deyesso and Joshua Horowitz - initially had to fight just to open, or rather, stay open after changing the club's initial location and then deciding to change the name from the Naked i to Centerfolds.
In 1996, as part of its efforts to shrink the Combat Zone, the Menino administration tried to block the Naked i from moving from Washington Street around the corner to the Lagrange Street location now occupied by Centerfolds. A Suffolk Superior Court judge said the city couldn't do that.
In 2000, the city tried again, this time by blocking the transfer of an entertainment license from the Naked i to the newly named Centerfolds and owner Geoffrey Horowitz's desire to make Deyesso a part owner.
The city said both Deyesso and proposed manager Steve Hurd were unsuitable, Deyesso because of a criminal record, Hurd because he was already running Centerfolds locations in Worcester and Providence, which the city said meant he couldn't give the Boston location the attention it would need. The city lost in court again. Hurd is still the club's manager of record.