Irvine Firm Loses Exclusive Right to Acquire Bordello

Seventeen months after proclaiming that it would buy the Mustang Ranch bordello for $18 million, Strong Point Inc. still is struggling to borrow the money necessary to complete the transaction. Because of the delay, the Irvine-based firm has lost the exclusive right it once had to acquire the 108-room establishment.

Mustang Ranch lawyer Peter A. Perry said that after twice agreeing to extend the escrow deadline, the current owners of the Reno, Nev., bordello, who are anxious to retire, finally told Strong Point late last month that they had begun to entertain other offers.

Perry acknowledged that financing is difficult for anyone wanting to acquire a bordello because “a lot of your normal lending sources are not available. You can’t go to S&Ls; and a lot of banks don’t want to get involved.

“We’ve just taken the attitude that anyone who comes forth with the money at this time gets it.”

He said he currently is negotiating with two other prospective buyers, although he added that Strong Point still seems to be closer to getting the elusive funding.

Strong Point opened escrow on the Mustang Ranch in August, 1985, and since then has been trying to obtain financing for the deal.

John Davis, Strong Point’s president, said that for the past six months his company has held a written commitment from an investment group “to do the deal for the full amount.” But he said there has been an unexpected delay in completing the transaction, and he would not predict when the money would be forthcoming.

Although stymied so far on the Mustang Ranch acquisition, Strong Point last year acquired the much smaller Sue’s Bordello of Elko, Nev., for about $1 million, marking what is believed to be the first time a brothel was purchased by a publicly held company. Also, Strong Point has purchased a toxic waste disposal company in Riverside County and a shopping center in Laguna Beach.