RH (NYSE: RH), the leading global design and hospitality brand,
announced its intention to reimagine and restore One Ocean Drive,
Miami Beach, submitting an RFP and formally entering the bidding
process for a long-term lease of this iconic public property.
RH Chairman & CEO Gary Friedman has outlined the Company’s
vision for this historic property in the letter below: One Ocean
Drive, Miami Beach.
Arguably one of the best addresses in the world. Undeniably the
best opportunity to make certain it becomes so.
We the people of Team RH are both humbled and inspired to be
considered. We understand the gravity of such an opportunity, and
we hope to earn the right to demonstrate our ability to create
something extraordinary on this unique piece of public land.
Something that hasn’t been seen before, because it hasn’t been done
before. Something that inspires the local community and enlightens
a global audience.
Our vision proposes:
- A dramatic reimagination and restoration of the site to its
historic origins as a public park, with two beautifully landscaped
beach promenades providing direct public beach access and opening
up significant view corridors from Ocean Drive.
- Replacing the existing 77,000 square foot surface parking lot
with a 94,000 square foot at-grade public park by building a
subterranean parking structure and an elevated podium that will
eliminate all visible surface parking.
- Creating a 17,000 square foot Public Sculpture Garden on the
elevated podium with views of the Atlantic Ocean.
- Transforming and expanding the green space from 8% of the
surface area to 82% inclusive of green roofs.
- Reducing late-night noise and traffic by offering low impact,
high end uses with limited hours of operation.
- Designing energy efficient, green roof buildings with brise
soleil non-reflective screens covering the entirety of the
project’s glazing will make a meaningful contribution to the
city-wide effort to enhance resiliency and protect the natural
habitat.
- Proposing two low rise, small building footprints that only
cover 16% of the 180,000 square foot site.
We expect to make a total capital investment in the range of
$150 to $170 million, inclusive of an estimated $50 million in
public benefits. The Company is seeking a 30-year lease term with a
starting base rent of $7 million, increasing a minimum of 3%
annually, resulting in an average base rent of $11 million, or $333
million over the term of the lease.
The estimated $50 million in capital investments toward public
benefits reflects RH’s commitment to both the local community and
to Miami Beach visitors from around the world.
Additional public benefits include our offer of a $5 million
upfront payment to the City to cover lost rent and taxes during the
two-year construction period, plus a $1 million cultural
contribution to the community, to be directed by the City.
Additionally, the City of Miami Beach can expect an incremental
$3.3 million per year on average, or a total of approximately $100
million in ad valorem, hotel occupancy, plus food and beverage
taxes over the term of the lease.
Total public benefits from lease payments and taxes are
estimated to be $465 million over the life of the lease. Of which,
$430 million directly benefiting the City of Miami Beach and $35
million going towards other governmental jurisdictions that impact
the lives of City of Miami Beach residents including, Miami-Dade
County and the Miami-Dade County Public School District. A
FIRST-IN-THE-WORLD GLOBALLY CURATED AND LOCALLY INSPIRED BEACH
EXPERIENCE
The RH Beach House at One Ocean Drive is planned to be a
first-in-the-world, globally curated and locally inspired beach
experience celebrating architecture, design, community, culture,
health, wellness, food and wine.
Programming includes a Beach Club, Palm Garden & Pool
Terrace, Bath House & Spa, three Culinary Concepts, a
Myconian-inspired Beachside Taverna, a Kyoto-style Sushi & Hand
Roll Bar facing the Sculpture Garden, a Farm to Table Live-Fire
Grill in the skylit Atrium, plus a 15-room luxury Beach House. The
property will also include a Design Studio, a world class
Architecture & Design Library, rotating Art Exhibition
Galleries and a 17,000 square foot Public Sculpture Garden.
The new Public Park, Sculpture Garden, Restaurants, Design
Studio, Architecture & Design Library, Exhibition Galleries and
Beach House will be accessible to the public, while the Beach Club,
Pool Terrace, Bath House & Spa will be available to members and
overnight guests. 50% of all memberships will be made available to
Miami Beach residents at a 50% discount. INSPIRATION &
CONCEPTUAL DESIGN
Our design is inspired by the beauty and natural form of the
Florida coastline. The shifting horizontal planes of the beaches
and ocean create a compelling juxtaposition to the vertical
high-rises surrounding the property. Most buildings along the Miami
Beach coastline are vertical because the developer sees profit. We
see opportunity for a low horizontal composition because we are
driven by purpose. We respect the hierarchy and important
relationships between the natural and built environments that
create harmony.
There is a logic to creating harmony, one that dates back to the
1st century BC and the writings of Marcus Vitruvius, architect and
author of De Architectura (The Ten Books on Architecture), the
first modern printing of which is the centerpiece of our
Architecture & Design Library at RH England. Vitruvius
professed that perfect proportions exist in human design, and
beauty is produced by the pleasing appearance and good taste of the
whole. His discussions of human proportions and holistic design
were referenced in his drawing of a man standing in a circle and a
square. The drawing, made famous 1,500 years later by Leonardo da
Vinci’s illustration of the Vitruvian Man, serves as the foundation
for the RH Design Ethos, and many of the great architectural
structures and spaces still standing and being built to this
day.
As we walked up and down South Beach looking at building after
building for inspiration, we realized that we were looking in the
wrong direction. The inspiration wasn’t in the other buildings. It
was on that beach, in that ocean, out on the horizon. It became
clear to us that our project needed to reflect the shifting
horizontal planes to create harmony between the natural and built
environments, and by doing so, celebrate the natural beauty of the
Florida coastline.
It’s hard to argue with logic that dates back to the 1st century
BC. If you believe in creating harmony as much as we do, it’s even
harder to ignore it. RFP BID PROCESS FOR ONE OCEAN DRIVE
As previously announced by the City of Miami Beach, there is an
ongoing RFP process with respect to One Ocean Drive. On September
1, the City revealed certain information about the bid procedures
including the identity of RH and other participants. Following the
City’s disclosures, media coverage has developed over the weekend
that provides further details concerning the status of the RFP
including the possibility that one of the potential participants
may pursue additional litigation against the City of Miami
Beach.
Given that selective information about RH’s involvement in the
bid process is being disclosed by the City and/or other bid
participants, RH is making a public disclosure to investors of the
key aspects of its proposal including a summary of financial terms.
This disclosure will ensure that investors have accurate
information about RH’s involvement and its bid terms. The key
financial terms of RH’s concept are outlined above.
The RFP criteria for evaluation of bids also includes other
requirements including (i) public benefits of the development
proposal, (ii) compatibility with the surrounding neighborhood, and
(iii) revenue and financial details for the City. RH is offering a
substantial financial commitment in its proposal in order to meet
these criteria including meaningful public benefits and high
compatibility with the concerns of the neighborhood through among
other features the large amount of public park space where there is
none today.
RH looks forward to the opportunity to fully present its
approach to enhancing One Ocean Drive to the City and ultimately to
the public as we believe the City and the public will find our
redevelopment concept compelling. PASSION, EXPERIENCE AND
PURPOSE
RH is a publicly traded, global design and hospitality brand
with $3.6 billion is fiscal 2022 revenues, $930 million in adjusted
EBITDA and a market value of $7 billion. We have invested $1.4
billion developing over 40 design and hospitality projects over the
past 10 years ranging from 30,000 to 90,000 square feet, with many
in historically listed buildings, such as The Historic Museum of
Natural History in Boston, The Historic 3 Arts Club in Chicago, The
Historic Post Office in Greenwich, The Historic Bethlehem Steel
Building in San Francisco, and the Grade 1 Listed Aynho Park, a
17th-century, 73 acre estate in the English Countryside.
We currently operate 18 restaurants, including two new live-fire
concepts, plus a new Champagne & Caviar Bar opening at the New
York Guesthouse in September. Concurrently we have 24 design and 26
hospitality projects in our development pipeline, including
locations in Paris, London, Milan, Madrid, Montreal, Munich and
Sydney opening over the next several years.
Our first RH Guesthouse, a new hotel concept for travelers
seeking privacy and luxury opened last year in New York, with our
second location currently under construction in Aspen, Colorado,
which will include our first RH Bath House and Spa. Additionally,
we have two private jets for global charter, RH1 a Gulfstream G650
and RH2 a Gulfstream G550, plus RH3, our luxury yacht that is
available for charter in the Mediterranean and Caribbean.
Our strategy is to move the RH brand beyond curating and selling
product to conceptualizing and selling spaces, by building an
ecosystem of Products, Places, Services and Spaces that establishes
the RH brand as a global thought leader, taste and place maker. The
ecosystem is inclusive of the Company’s Galleries, Guesthouses,
Restaurants and fully furnished luxury Residences. Our ecosystem
enables customers to dream, design, dine, travel and live in a
world thoughtfully curated by RH.
While RH certainly has the qualifications, experience and
financial resources to bring our vision for One Ocean Drive, Miami
Beach to life, we believe there is something meaningfully more
important than merely being able to check the boxes on a 398-page
RFP. Something you can’t see in all those pages, something that
doesn’t show up on our balance sheet, and might not be obvious in a
30-minute Zoom presentation.
It’s our vision, values, beliefs and culture that bind us and
drive us to think until it hurts, until we can see what others
can’t see, so we can do what others can’t do. Those things we live
for, would fight for and die for. One Ocean Drive, Miami Beach is
not a financial choice for this team, it’s an emotional one. Born
from imagination, passion and purpose. Those same things that
enabled a nearly bankrupt business with a $20 million market value
20 years ago to become the leading design and hospitality brand in
the world today.
One Ocean Drive, Miami Beach.
Arguably one of the best addresses in the world. Undeniably the
best opportunity to make certain it becomes so.
If given the opportunity, we will leave no doubt.
Carpe Diem,
Gary
Gary Friedman, Chairman & CEO RH ABOUT RH
RH (NYSE: RH) is a curator of design, taste and style in the
luxury lifestyle market. The company offers collections through its
retail galleries, source books and online at RH.com,
RHContemporary.com, RHModern.com, RHBabyandChild.com, RHTEEN.com,
and Waterworks.com
NON-GAAP FINANCIAL MEASURES
To supplement our condensed consolidated financial statements,
which are prepared and presented in accordance with Generally
Accepted Accounting Principles (“GAAP”), we use the following
non-GAAP financial measures: adjusted net revenues, adjusted
operating income, adjusted net income, adjusted diluted net income
per share, free cash flow, adjusted free cash flow, adjusted
operating margin, adjusted gross margin, adjusted gross profit,
adjusted selling, general and administrative expenses, adjusted
selling, general and administrative expenses margin, adjusted
capital expenditures, EBITDA, adjusted EBITDA, EBITDA margin,
adjusted EBITDA margin, trailing twelve months EBITDA and trailing
twelve months adjusted EBITDA (collectively, “non-GAAP financial
measures”). We compute these measures by adjusting the applicable
GAAP measures to remove the impact of certain recurring and
non-recurring charges and gains and the tax effect of these
adjustments. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP. We use these non-GAAP financial measures for
financial and operational decision making and as a means to
evaluate period-to-period comparisons. We believe that they provide
useful information about operating results, enhance the overall
understanding of past financial performance and future prospects,
and allow for greater transparency with respect to key metrics used
by senior leadership in its financial and operational decision
making. The non-GAAP financial measures we use in this release may
be different from the non-GAAP financial measures, including
similarly titled measures, used by other companies.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the
meaning of the federal securities laws, including without
limitation, statements regarding the opportunity to make One Ocean
Drive, Miami Beach one of the best addresses in the world; our
ability to create something extraordinary on One Ocean Drive that
hasn’t been seen or done before and that inspires the local
community and enlightens a global audience; our intention to
reimagine and restore One Ocean Drive; our vision of a dramatic
reimagination and restoration of One Ocean Drive to its historic
origins as a public park, with two beautifully landscaped beach
promenades providing direct public beach access and opening up
significant view corridors from One Ocean Drive; our plan to
replace the existing parking lot with a 94,000 square foot at-grade
public park by building a subterranean parking structure and an
elevated podium that will eliminate all visible parking; our plan
to transform and expand the green space at One Ocean Drive from 8%
of the surface area to 82%, inclusive of green roofs; our plan to
reduce late-night noise and traffic at One Ocean Drive by offering
low-impact, high end uses with limited hours of operation; our plan
to design energy efficient, green roof buildings with brise soleil
non-reflective screens covering the entirety of the project’s
glazing and the potential contribution of the project to the
city-wise effort to enhance resiliency and protect the natural
habitat; our proposal for two low rise, small building footprints
that only cover 16% of the site; our expectations regarding capital
investments, leases, payments and contributions with respect to One
Ocean Drive; our expectations regarding incremental ad valorem,
hotel occupancy, plus food & beverage taxes to the City of
Miami Beach over the term of the lease; our estimate of total
public benefits from lease payments and taxes; our expectations
regarding RH Beach House at One Ocean Drive, including a Beach
Club, Palm Garden & Pool Terrace, Bath House & Spa, three
Culinary Concepts, a Myconian inspired Beachside Taverna, a Kyoto
style Sushi & Hand Roll Bar facing the Sculpture Garden, a Farm
to Table Live-Fire Grill in the skylit Atrium, a 15 room luxury
Beach House, a Design Studio, a world class Architecture &
Design Library, rotating Art Exhibition Galleries, and a 17,000
square foot Public Sculpture Garden; our expectations with respect
to access of the new Public Park, Sculpture Garden, Restaurants,
Design Studio, Architecture & Design Library, Exhibition
Galleries and Beach House to the public, members and overnight
guests; our beliefs regarding the design of RH Beach House at One
Ocean Drive, including the opportunity for a low horizontal
composition that creates harmony between the natural and built
environment; our belief that the public will find that our
redevelopment concept compelling; our expectations regarding the 24
design and 26 hospitality projects in our development pipeline,
including locations in Paris, London, Milan, Madrid, Montreal,
Munich and Sydney opening over the next several years; our strategy
to move the RH brand beyond curating and selling product to
conceptualizing and selling spaces, by building an ecosystem of
Products, Places, Services and Spaces that establishes the RH brand
as a global thought leader, taste and place maker; and any
statements or assumptions underlying any of the foregoing.
You can identify forward-looking statements by the fact that
they do not relate strictly to historical or current facts. These
statements may include words such as “anticipate,” “estimate,”
“expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,”
“should,” “likely” and other words and terms of similar meaning in
connection with any discussion of the timing or nature of future
events. We cannot assure you that future developments affecting us
will be those that we have anticipated. All discussions of new
developments are subject to inherent uncertainty as to timing and
the manner in which a new development may ultimately be launched
including that certain new concepts may be canceled prior to
introduction. Important risks and uncertainties that could cause
actual results to differ materially from our expectations include,
among others, risks related to our dependence on key personnel and
any changes in key personnel; successful implementation of our
growth strategy; uncertainties in the current and long-term
performance of our business including a range of risks related to
our operations as well as external economic factors; general
economic conditions and the impact on consumer confidence and
spending; changes in customer demand for our products; decisions
concerning the allocation of capital including the extent to which
we repurchase additional shares of our common stock which will
affect shares outstanding and EPS; factors affecting our
outstanding indebtedness; our ability to anticipate consumer
preferences and buying trends, and maintain our brand promise to
customers; changes in consumer spending based on weather and other
conditions beyond our control; risks related to the number of new
business initiatives we are undertaking including international
expansion, our real estate and Gallery development strategy and our
expansion into new business areas such as hospitality; strikes and
work stoppages affecting port workers and other industries involved
in the transportation of our products; our ability to obtain our
products in a timely fashion or in the quantities required; risks
related to our sourcing and supply chain including our dependence
on imported products produced by foreign manufacturers and risks
related to importation of such products, risks related to the
operations of our vendors, risks related to tariffs and risks
related to the impact of COVID on our business; and those other
risks and uncertainties disclosed under the sections entitled “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in RH’s Annual Report on Form
10-K most recently filed with the Securities and Exchange
Commission, and similar disclosures in subsequent reports filed
with the SEC, which are available on our investor relations website
at ir.rh.com and on the SEC website at www.sec.gov. You should not
place undue reliance on these forward-looking statements. Any
forward-looking statement made by us in this release speaks only as
of the date on which we make it. RH expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to such statements to reflect any change in its
expectations with regard thereto or any changes in the events,
conditions or circumstances on which any such statement is
based.
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PRESS CONTACT TruthGroup@RH.com
INVESTOR RELATIONS CONTACT InvestorRelations@RH.com
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