The theaters, totaling 83 screens, are trading for $40.5 million and the development site in LaVista, NE is costing $4.4 million. The theaters are mainly located in Omaha and Lincoln, NE. The portfolio includes 20 Grand and Village Pointe Cinema in Omaha, Twin Creek Cinema in Bellevue and East Park, Edgewood Cinema, Lincoln Grand and Southpointe Cinema, all in Lincoln.
Douglas is the "dominant" theater company in Lincoln and one of three operating in the Omaha market, says David Loeb, senior real estate research analyst and managing director for Milwaukee-based Robert W. Baird & Co. The acquisition is Marcus' first foray into Nebraska.
"The Douglas theaters were a good opportunity to expand into additional markets in the Midwest, which are very close to our existing operations," says a spokesman for Milwaukee-based Marcus. [IMGCAP(2)]"Moving a little bit further west into Nebraska made a lot of sense to us." The buildings are all less than 10 years old so no major renovations are being planned, he says.
Loeb, a Marcus analyst, says the deal will generate 13% unlevered earnings before interest, taxes, depreciation and amortization with a 20% yield when assuming 50% leverage. "The Midwestern markets are similar in size and demographics to [Marcus'] existing markets and should integrate well into the company's portfolio," he reports.
Marcus has not decided what it will do with the development site in LaVista, the spokesman says. And, he adds that a decision is pending about exercising an option to acquire another undeveloped site in North Lincoln.
Loeb tells GlobeSt.com that he sees Marcus developing a "fairly large nice theater" on the LaVista land, with some type of "progress," if not construction, being made in the next year.
Douglas Theatre Co., which has been in business more than 55 years, owns nine theaters, totaling 100 screens. Douglas will remain as owner of Cinema 9 in Omaha, but does plan to shutter it after the deal closes with Marcus. Cinema Center Theatre, also in Omaha, will continue to be owned and operated by Douglas for an "undetermined period of time," according to a press release from Marcus.
After the sale, Marcus will own 56 theaters, with 678 screens in Wisconsin, Illinois, Minnesota, Ohio, North Dakota, Iowa and Nebraska. Last year, Marcus acquired 11 theaters in Minnesota, Iowa, North Dakota and Wisconsin from Cinema Entertainment Corp. for $75.7 million.
Loeb says it is quite likely that Marcus will acquire other portfolios in the next couple years. "There are a number of family-run chains in the Midwest where the family owners are getting older," he says.
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