Decurion Corp.’s decision to permanently shutter its Pacific Theaters and ArcLight Cinemas chains after closing the 300 California venues amid the COVID-19 pandemic will leave lots of empty real estate in its wake.
Pacific Theaters, whose footprint includes the iconic ArcLight and Cinerama Dome theaters in Hollywood, said that “despite a huge effort that exhausted all potential options, the company does not have a viable way forward.”
So what becomes of these properties? Will they be snapped up by another theater chain or subdivided into other retail uses?
One industry expert figures it could be a little of both.
“A likely scenario would be another theater chain coming along that has adapted better during the pandemic,” said Adam Handfield, a senior associate with SRS Real Estate Partners. “But one company taking over all 300 theaters would be a long shot. I could see a company taking over 25 or 50 locations. It would probably be on a case-by-case basis.”
Handfield cited the Dallas-based Studio Movie Grill and the Mexican-owned Cineopolis theater chains as potential suitors for the properties but said the venues could also be split up for other uses.
“It could be used for multifamily housing, grocery stores or fitness boxes, side by side,” he said.
Upside down on rental leases
The trade publication Deadline Hollywood said Decurion has “handed the keys back” to the landlords on all their ArcLight and Pacific properties. What happens next, Deadline said, will be up to the property owners.
“Many of the ArcLight venues the chain doesn’t own, and it’s those where they rent where the company is upside down on their leases,” the article stated.
Pacific Theaters also operates multiplexes at The Grove and The Americana at Brand shopping malls. Both Los Angeles-area retail centers are owned by Caruso Affiliated.
Rick Caruso, the billionaire, founder and CEO of Caruso Affiliated, said he plans to maintain a theater presence at both malls.
“Our theaters have consistently performed among the top in the country, so I have no doubt in my mind that this is what our guest is looking for – that this is a part of the very culture that defines who we are as Angelenos,” Caruso said via email. “We believe in the future of this sector, the future of entertainment, and we will not submit to the pressures of this unrelenting year.”
Supporters of the Cinerama Dome on Sunset Boulevard have already launched a petition on Change.org to preserve the iconic venue.
“It has been the choice of the greatest filmmakers in the world to showcase their films, including Quentin Tarantino, Stanley Kubrick, Steven Spielberg, Christopher Nolan and many more,” the petition says.
More than 10,000 people had signed the appeal as of Thursday, April 15.
Luis Olloqui, CEO of Cinepolis’ U.S. operations, didn’t say if his company was interested in taking over any of the theaters. But he expressed sadness over Pacific’s decision to close them.
“We were very disappointed to hear of the closing of ArcLight,” he said. “It’s been an extremely difficult year on all exhibitors and we sincerely hope that something can be done to save these iconic theaters.”
The Pacific Theater closures were announced less than two weeks after Regal reopened six of its Southern California theaters with scores of other Regal locations set to reopen later this month and in May.
Regal’s reopening plan includes a wide range of health and safety measures that adhere to CinemaSafe protocol and guidelines aimed at curbing the spread of COVID-19. Employees will wear masks and undergo daily health screenings, including temperature checks where mandated.
A heavy hit during COVID-19
Few businesses have been as heavily impacted by COVID-19 as movie theaters. AMC Entertainment reported losses of $946 million for the final quarter of 2020, and the company lost a total of $4.6 billion for fiscal 2020.
“This past year has presented AMC with the most challenging market conditions in the 100-year history of the company,” AMC president and CEO Adam Aron told investors recently.
Aron added that the company’s theaters in New York City have reopened with L.A.-area theaters likely to follow soon.
A report from IBISWorld reveals that revenue for the movie theaters industry plummeted 77.2% in 2020 due to the COVID-19 pandemic and social distancing measures.
“Over the five years to 2026, the industry will likely continue to struggle with difficulties left behind from the coronavirus pandemic,” the report said. “Large profit losses will likely drive some industry operators to close permanently and leave others with lasting challenges.”
Recovering employment and consumer spending will likely help the industry moving forward, IBISWorld said. But despite an expected 53.5% jump in revenue in 2021, it will take several years for the industry to recover to pre-pandemic levels.
The report predicts the industry will generate $6.3 billion in revenue in 2021.
Caruso said his properties have always been inspired by the art of filmmaking and the magic of Hollywood.
“We will rise up and reimagine the future of moviegoing,” he said. “We firmly believe in the future of the moviegoing experience.”
Source: Orange County Register
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