The buyer was to be Hedwigs Las Vegas Top Tier LLC, an affiliate of an investment group led by NTH Advisory Group LLC, which made an unsolicited offer for the property. The sale was terminated earlier this month when Hedwigs missed a required $500,000 payment. Hedwigs made a total of $5.5 million in non-refundable payments toward the purchase, according to 155 East Tropicana.
Under the terms of the purchase agreement, first announced in January, Hedwigs was to purchase essentially all of the assets of 155 East Tropicana for $98 million in cash, the payment of certain accrued royalties, and the assumption of certain outstanding liabilities, including the company's $130 million in principal amount of 8 ¾% Senior Secured Notes due 2012.
The two signed a purchase and sale agreement in May for a closing in October 207 and no later than April 2008. Hedwigs subsequently made payments to extend the closing date beyond April before missing its June 6 payment.
The strategic alternatives to be examined by 155 East Tropicana include continuing to operate the property as is, expanding and operating the property, or considering another sale. The company has not yet retained any third party to assist in the review.
Located one-half block from the intersection of Tropicana Avenue and Las Vegas Boulevard, Hooters Hotel-Casino was previously the Hotel San Remo. 155 East Tropicana agreed to acquire Hotel San Remo in 2004 for approximately $72.5 million. It then spent approximately $53 million in cash for renovations and operating equipment and an additional $10.1 million in pre-opening expenditures in 2005 and 2006.
Prior to the renovation, Hôtel San Rémo featured 711 hotel rooms, including 17 suites, and an approximately 24,000 sf casino with a sports book. The Hooters Hotel-Casino has 696 hotel rooms; a 29,000-sf casino; a Hooters restaurant; a Dan Marino's restaurant; a tropical pool area featuring beach sand, palm trees, lagoon-style waterfall and Nippers Pool Bar; the Night Owl Club; Pete & Shorty's Tavern; the Lobby Bar; and SASS, a day spa, salon and workout facility.
The property reopened as Hooters in February 2006 but has been unable to achieve the average 95% hotel occupancy rate that is typical of Strip and near-Strip resorts, although it has been on the rise. Occupancy at the property averaged 89.6% in 2007, up from 78.6% in 2006, according to the company's annual report in April. The company's annual loss also improved in 2007, to $14.1 million from $18.4 million in 2006.
In the first quarter of 2008, the company lost $2.2 million, down from $2.8 million in the first quarter of 2007. Casino revenue grew to $6.4 million from $6.1 million while revenue from food, beverage and entertainment fell to $5.6 from $5.9 and hotel revenue fell to $5.9 million from $6.6 million. Occupancy fell to 87.9% in the first quarter of 2008 from 91.3% in the first quarter of 2007, while the average daily room rate fell to $80 from $90.
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.
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