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TOPIC: Lease Rates

Lease Rates 22 Jan 2007 10:39 #14233

  • Real1
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I am a commercial real estate appraiser in michigan, and I am trying to find leased theaters to use as comps in my appraisal report. Can anyone help? I would prefer theaters in Michigan, but will take information in the midwest. I am looking for the lease terms (lease rate, expense structure-NNN?, length of contract, rent escalators, and location, sq. ft. and # of screens of the theater). I would provide my email address or fax number as you wish.
I would appreciate any and all help that anyone could give me. Please know that all information is strictly confidential and is treated with the utmost discretion!
Thank you!
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Re: Lease Rates 22 Jan 2007 19:40 #14234

  • BurneyFalls
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I tried to get an appraiser to appraise a theatre I eventually purchased. Not one would even come out to take a look at the place. They said there were no comps and it would require too much work. At least you are trying. Good luck--hope you get some responses.
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Re: Lease Rates 25 Jan 2007 06:54 #14235

  • SamCat
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I come from the other side of the world in Australia but here are my thoughts anyway.

If the cinema is in a shopping centre the owner is not too concerned with the rent as it is all subsidized. They generally work on a low rent with a % of sales.
The rent increases depend upon what they negotiate, and I have seen a few leases with one c.p.i increase every few years and then evuantually go yearly.


The rent depends upon the position in the shopping centre. Obviously the better position determines the rental.
First floors are obviously a big decrease as it reduces turnover.

If you look at say what department stores pay it will help you get some indication.

Also most of the time the appraisers look at a rate per seat, per week. Also remember to factor in seat widths, stadium seating, isle widths. You could also work on a rental as a % of turnover as a ratio between cinemas to help give you some indication.

Also the other thing to determine is the number of screens as comparisons in regards to the rent. Try to keep the comparisons to similar sizes in screens, size m2 and seats.

As a two-three screen cinema operates much differently than a 7-8 screen cinema.
EG the range and type of movies will be different, the wages as a % will be different, and the concession stand as a rate per square metre will be much less.

Anyway that's some things to be aware of. Probably a good sourxe of info would be to track down the leasing guy/guys of AMC/ Regal etc.

If you have any other thoughts just let me know.

Sam
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Re: Lease Rates 25 Jan 2007 10:54 #14236

  • Real1
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Thank you Sam for the information!
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Re: Lease Rates 25 Jan 2007 17:59 #14237

  • Mike
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lease rates vary incredibly from city to town and are really worthless to compare except for the "oh my God" fun of how low or high someones lease is. We sell a book published by the Nat Assoc of Real Estate Appraisers (I think) on how to appraise a theatre. It is difficult as it is essentially a one use building with sloped floors. It's actuially more of a piece of machinery in some ways. The classic appraisal done by appraisers with no theatre experience is to err far too conservatively as they price the building as they'll say "If it goes bust what is it worth?" They said that about our theatre and it has run continuously since 1912. So the price tag came in far too low. You have to use a combination of income and real estate vals to come up with the correct figure. The book for sale is listed in our book store.

Michael Hurley
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Michael Hurley
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Re: Lease Rates 25 Jan 2007 18:02 #14238

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Michael Hurley
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