Chicago's VIP's Gentlemen's Club Sells for $10.5 Million

Chicago's VIP's Gentlemen's Club Sells for $10.5 Million

CHICAGO — VIP's Gentlemen's Club, one of only three gentlemen's clubs in Chicago, has been sold for $10.5 million.

The parent company of Rick’s Cabaret said it was paying $6.5 million for VIP's, which is the only Chicago gentlemen’s club with a full liquor license. The 10,000-square-foot club has been one of the most popular in the Midwest since opening in 1993.

Rick’s Cabaret’s parent, RCI Hospitality Holdings Inc., also announced an agreement to acquire the club's real estate for $4 million.

VIP’s principal owner, Perry Mandera, is providing $4.5 million in seller financing for the deal.

Mandera also owns a Chicago trucking and distribution business, Custom Cos., a business he founded at age 23, and the Herbal Care Center, a medical marijuana dispensary.

VIP's is located near Chicago's tony Lincoln Park neighborhood and is only minutes away from the city’s renowned North Michigan Avenue and Gold Coast.

"We're excited about VIP's joining our portfolio of high-quality clubs in top 20 metropolitan markets," said Eric Langan, RCI’s president and CEO. "VIP's fits perfectly in line with our goal of acquiring profitable, cash-flowing number one locations. With its ability to generate $2 million annually in Adjusted EBITDA, the acquisition also fits our capital allocation strategy in terms of valuation and cash on cash return."

The VIP's deal comes just one month after RCI struck a deal for Blush Gentlemen's Club, one of Pittsburgh’s oldest and most popular strip clubs.

In that deal, RCI paid $15 million for the club and $5 million for its real estate.

To help fund both deals, RCI took out a $5 million unsecured loan and additional third-party debt financing.

"Along with cash on hand, these commitments will ensure there is adequate capital to fund recent expansion announcements without the need to issue new equity or equity-linked debt," Langan said.

RCI through its subsidiaries operates 40 clubs in New York, Miami, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, St. Louis and other markets under brand names such as Rick's Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars, Tootsie's Cabaret and Scarlett's Cabaret. It also operates sports bars and restaurants under the brand name Bombshells Restaurant & Bar.

Typically, sales figures for adult entertainment clubs go undisclosed. Rick's Cabaret's parent company, however, trades on the Nasdaq as a public company and is required to disclose transactions to shareholders.