Observations & Conversations
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Movie Mania a Big Bust! Looking for most of the players in the movie theater business... |
you can find them in bankruptcy court. Edwards filed Chapter 11 and disavowed 28 leases, pulled out of several deals with cinemas under construction and backed out of ten or so new leases, plus Bank of America is owed $215 million. Last year, Edwards lost $40 million, closed 23 theaters, spent the better part of this year renegotiating rents with landlords and hopes to emerge from bankruptcy with 60 locations or a new owner. Carmike, WestStar, Silver Cinema, United Artist and Regal also filed. Carmike owes $209 million to Bank of New York and $263 million to Wachovia Bank. Regal expects to close 1,200 screens by the end of next year. United Artist plans to close 1,000 screens. A glimpse of the first part of this year over $100 million was lost; $54 million in six months for Carmike, Lowe’s lost $31.5 million in the first quarter, Carmike lost $7.4 million in the first quarter, Regal lost $29 million in the second quarter, Cinemark lost $3.9 million in the second quarter and United Artist lost $19 million in the first quarter. Lowe’s is talking to lenders to shuffle its debt. AMC plans to continue opening screens, but it too is strapped for cash.
So what’s a landlord to do? There are a couple of small, privately held players that could come to your rescue and some of them will pay rent and operate while the landlord markets the site for another use. Harkins Theatres (480-627-7777) plans to open 400 screens with $160 million earmarked for expansion and will entertain sites outside of their existing markets. Standard Theater Management (310-410-2300) is always in the market to take over second generation space. Wallace Theaters (808-524-4042) and Goodrich (616-698-7733) still plan to open more screens. It’s perfect timing for the smaller theater chains to grow and for the big boys to clean house.
The glass is always half full or half empty depending on what side of the fence you’re leaning on. Even though many of the larger theater chains are in DIP status, most landlords that aren’t on the disavow list will continue to get paid promptly and the deals that do get signed are protected at least until there is new ownership or when the statute of limitations to file 11 again is met. If your project is a few years away from breaking ground and the site warrants a theater, it won’t hurt to talk to theater chains, but for the next month or two their plates will be full with landlords calling every five minutes to see if their location is on the hit list of closures.
Onward... I got a lot of calls on last month’s column about developers whining because they can’t find small shops. Most of you agreed with me and those that didn’t... America’s a free country, but to prove my point, this issue has two retailers that are anxious to grow and their beginnings come from push carts and catalogs. Del Sol is a perfect example of a small store concept that was probably overlooked by numerous developers, because they were pigeon holed as a cart operator. J. Jill, another up and coming retail chain, started as a catalog. Again, if you’re in need of new blood in your center, then canvass markets outside of your center’s area, look at concepts that could be enhanced to a larger in-line format and look at merchants that don’t operate bricks & mortar stores (there are thousands of these on the Web).
This month’s issue is full of leads for mall, urban, tourist, outlet and downtown sites... over 50 chains looking for sites. So here’s to making some deals and stop by our booths at the ICSC’s Atlanta and Palm Spring shows this month.
Ann O'Neal, Publisher