What a REIT here can look like, and RICK's actual value
Eric Langan said that the real estate alone was worth 70-80 million, and only about half the debt is real-state related. So we'll say there's $40M in equity + the lease income.
I think they could sell 10M shares at $10-$12 easily in an IPO. Let's go with $12. And lets say the current shareholders get 60% because of their equity in the real-estate. So 40% of 10M is 4M shares x $12 is $48M. Rick shareholders get 6M shares divided by the current 9.53M shares, or .63 REIT shares per 1 RICK share owned. That's about $7.56 if one choses to sell it rather than enjoy the future growth and dividend.
So the REIT would have about $45M cash (after expenses) and $75M worth of real estate plus the lease income, minus the $35M in debt or so. They could put $7.25M down and borrow $15M on the NYC property. Now they have $100M worth of real estate, $37M in cash with the 50M in debt that the lease income is easily paying for.
RICK would have it's debt cut in half. It could easily be earning $1.25/sh, with close to $10M cash on hand and only $35M in debt. The stock should rise based on earnings and future expansion that the REIT will allow. It's a huge cash generator. The current share price is probably half of what is should be right now!
That $7.56 is per RICK share. One could opt to keep the REIT shares, which is what Eric and the real investors will likely do. So if yo have 5000 RICK shares, you could end up with 3150 REIT shares as well worth $12 each! Anf the RICK shares are undervalued at current price. They deserve at least a 15x multiple and should pull in $1.10+/sh in 2013 and probably $1.40ish/share next year. So $1.40 x 15 = $21
It's not hard to imagine that 1 current RICK share could be worth about $28 next year when you figure in the REIT value. 3x current valuation. This would be very fair figuring on Erics numbers and growth asumptions and the REIT spun off. This is how you get the value out of this stock quickly. Hottie could be right 5-10 years down the road, but Wall Street wants cash pronto.
What a silly concept. All real estate is NOT created equal. Do yourself a favor. Go to the area where most strip clubs operate. Not exactly "prime" real estate. And what of the zoning of the area which is the foundation of these properties? Not exactly residential.
So if there's ever a rush to build smoke shops, or liquor stores, or chinesse all-you-can-eat buffets, there really isn't a market for a property that housed a strip club. (What is the current use of the old Vegas property?)
Heck. The only one buying these properties is RICK.
Land is not land.
Property is not property.
Real estate is not real estate.
It's all a lot more envolved than the silliness that's being thrown around on this board.
Call me when RICK gets a zoning OK on Venice Beach or the Island that homes the Statue of Liberty. Now THAT'S "property".