Movie Theater Investing
Has anyone worked on a movie theater deal before? A portfolio landed on my desk and I am trying to determine how to attack. There is a master lease in place and seems to be an Opco/Propco situation akin to a Sears.
Has anyone worked on a movie theater deal before? A portfolio landed on my desk and I am trying to determine how to attack. There is a master lease in place and seems to be an Opco/Propco situation akin to a Sears.
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Below $500,000 in revenue per screen you have to question the viability of the location and/or operator.
Seconded. Around $500,000/screen is the national average for Cinemark in the Moody's internal database. So somewhere around that number per screen is good. Also, in my experience most theaters have high occupancy costs-10-20%. Often I even see higher than 30+% occupancy cost.
Where did you find the $500,000/screen stat?
In a Moodys Presale.
The only theater deal I worked on had a bizarre rent structure in which the tenant (Regal) was paying 100% percentage rent at 15% of total sales, which supports the high occupancy costs comment made above. It also made investors and lenders very uncomfortable with the deal, as sales had gone up overall during the term but had dipped about 3% in the prior year.
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