It's probably worth $12-$14M, but RICK is afraid the lease will run out in 10 years ... so they want to pay $23M now to buy it. But here's the problem: No one is going to finance it based on that logic. So I don't think RICK has the $18M.
You got to read the conference call transcript on why RICK is concerned the lease will run out.
On valuation, there are a lot of formulas tied to gross revenues and rents. But here's the catch: it's very difficult to get zoning for an adult business in NYC. So no doubt this property should sell at a premium - but everything has its limits. The CEO said in the CC that NY grosses $14.8M annually. So you run all your formulas, try to figure out what rent they are paying or could pay at market (maybe they got a good deal on the lease), and you can back into a value for the property. It's hard to see it over $14.99M max. So who's going to lend them $18M on property worth something in the $12-$14M range? If they close this, then it's a "game changer." This is huge. If they don't close it, then the CEO sort of misled everyone in the CC - that's not a little matter either.