Regal Requests Rent Reduction From Downtown Theater Owner

VANCOUVER, WA-Regal Cinemas, the largest theater chain in the country, is attempting to renegotiate its lease of the City Center 12 theater here owned by local developer Elie Kassab. It’s just one more local sign of the movie theater industry’s nationwide troubles. Both Regal and the No. 2-sized chain Loew’s Cineplex are warning of possible Chapter 11 bankruptcy filings before Christmas, and four other top 10 chains already have filed. Locally, General Cinema Theater’s recent filing has forced development partner Robert Redford to stop work on his half-built Sundance Cinema project atop The Rouse Co.’s brand new Pioneer Place II shopping mall in downtown Portland.

According to various analysts, the industry’s trouble is the result of a heavily financed 33% expansion of luxury, multiscreen theaters during the latter half of the 1990s followed by paltry 13% growth in ticket sales – including a summer 2000 sales season down 5% from 1999 – along with rising ticket prices. Indeed, instead of the oversupply driving prices down, average ticket prices have risen 21% since 1994. Although the boom in theaters and prices is responsible boosting total U.S. box office revenues by 39%, it hasn’t been sufficient to cover debt payments on the fancy new theaters or make up for lower revenues at the companies’ smaller, older theaters. Analysts say many chains are now declaring bankruptcy in part to get out of long-term leases that have become unfavorable.

In lieu of that, Knoxville, TN-based Regal is apprently attempting to negotiate more favorable terms on its lease contracts. Regal couldn’t be reached for comment on Friday, but Kassab tells GlobeSt. that Regal, which has 23 years left on a 25-year lease, is requesting a reduction in its rent and in trade is offering a “kickback” on movie receipts. Kassab says he’s negotiating with the company, and expects an outcome within the next 30 days.