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TOPIC: Yikes.... One Million Dollars in Back Rent Due

Yikes.... One Million Dollars in Back Rent Due 14 Jan 2012 03:10 #37753

  • muviebuf
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The Great Escapes Theatres 14 Plex at the Harrisburg Mall in Harrisburg PA

www.pennlive.com/midstate/index.ssf/2012...ht_threaten_gre.html

I guess thats what happens when you way overscreen a market.
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Re: Yikes.... One Million Dollars in Back Rent Due 14 Jan 2012 14:47 #37754

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Since links die over time, nice to include the text of the story.

Will the screens be going dark soon at Great Escape 14 in the Harrisburg Mall?

That could hinge on the outcome of a financial battle being waged between the mall’s owner and the theater operator in Dauphin County Court.

Maine-based mall owner COBA Inc. is contending that Ragains Enterprises LLC, the theater’s operator, is more than $1 million behind in its rent.

A dispute over lease payments has raised the possibility that the Great Escape movie theater at Harrisburg Mall might close. COBA is not only demanding payment of that money, but in a breach of lease complaint is asking the court to bar Ragains from carrying out an alleged threat to close the 4-year-old theater and yank out its projectors.

Although the theater, one of the midstate’s largest, was still operating as of Friday, COBA in its lawsuit has voiced fear that a closure of the 14-screen theater would cripple customer traffic at the mall in Swatara Township. According to COBA, Ragains officials have threatened to close the theater this month if COBA refuses to modify the lease terms and forgive the rent arrearages.

COBA is so concerned about that prospect that it asked Judge Lawrence F. Clark Jr. for an injunction to bar Ragains from removing equipment, particularly its digital projection gear. Clark didn’t grant an injunction, but he has issued an order giving both sides until Jan. 21 to start talking “for the purpose of attempting to reach an amicable resolution of this dispute.” COBA and Ragains must give him a status report by Jan. 25.

Meanwhile, Clark has barred Ragains from closing the theater or removing equipment without first giving him and COBA written notice at least seven days in advance of such an act.

Ragains is an affiliate of Alliance Entertainment, which is based in the state of Indiana and is the 23rd-largest movie theater chain in the U.S., with about 300 theaters in several states. Attempts to reach Chance Ragains, chief operating officer of Alliance, and Scranton attorney Eugene F. Hickey II, who is listed in court papers as representing the theater operator, for comment on the lease dispute were not successful.

The Great Escapes franchise has operated at the 43-year-old mall since November 2007. COBA claims the lease requires Ragains to show first-run movies continuously at the mall for at least 10 years. Its original lease for the 52,600-square-foot theater was with prior mall owner Feldman Lubert Adler Harrisburg LP, which lost the property in sheriff’s sale to creditor TD Bank of Toronto, Canada, in December 2008 after defaulting on a $52.5 million mortgage. The bank sold the mall to COBA in mid-2009.

According to court filings, the original theater lease with Feldman called for Ragains to pay a minimum of $789,345 a year, or nearly $66,000 a month, plus a percentage of gross annual sales at the theater once those sales exceeded $6 million.

COBA said TD Bank modified the lease in June 2009 to give Ragains a temporary reduction. That modification pared the annual minimum rent to $250,000, or just shy of $21,000 monthly.

That reprieve expired in April 2010, COBA claims, but Ragains didn’t resume making its full rent payments. The arrearage, including late fees, now is at least $1.013 million, the mall owner contends. COBA claims it doesn’t know how much more rent the theater operator might actually owe under the lease provision that requires additional payment based on the theater’s gross receipts.

Ragains won’t provide it with those revenue figures, COBA contends.
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Re: Yikes.... One Million Dollars in Back Rent Due 14 Jan 2012 17:27 #37756

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The woman Ragains who owns Great Escape is advertised to have made her money in real estate in the midwest and then morphed into the theatre biz by supposedly finding middle market underserved locations.

Everyone in the Central Pennsylvania theatre community wondered just how much research was actually done before Ragains took the plunge at the Harrisburg Mall in 2007. Not only was Central Pennsylvania at that time already way overscreened, but the Harrisburg Mall was struggling financially with a nearly 40% vacancy rate as several anchor tenants had fled. Reputation wise the Harrisburg Mall was considered by many a place to stay away from.

On top of that AMC Theatres had previously operated a multiplex at the Harrisburg Mall but in 1994 willingly gave up its lease (with ten years still to go) when the mall management (apparently hoping to attract a different sort of crowd) asked AMC for its pad space to build a freestanding Toys-Are-Us. The AMC Harrisburg Mall manager was more than happy to see his theatre closed and him be transferred to another Harrisburg location as he was tired of all the trouble making crowd and being robbed so often.

THE POINT OF ALL THIS .... and the question I keep asking myself over and over... is just how do people get financing for something like this ..... when anyone with half a brain could see that it was doomed to failure before construction even began. The former AMC Harrisburg Mall manager - who was still employed at another complex in the Harrisburg area in 2007 when Great Escape announced its intentions to build at the Harrisburg Mall - told me no one from Great Escape ever contacted him to ask about his experiences of running a theatre at the Harrisburg Mall. (Had I been doing research that would have been one of the first things I would have done .... but then again ... what do I know?)

Sadly .... adding yet another 14 screens to the already way oversaturated Harrisburg market so divided the business that no one could survive and resulted in the closure of a couple really nice complexes that deserved a better fate.


BTW ..... does anyone on this board have any idea what it takes for heating/cooling/utilities for 52,000 square feet of stadium theatre space? I was told about 500,000 per year. Does this seem right?
Last Edit: 14 Jan 2012 20:34 by muviebuf.
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Re: Yikes.... One Million Dollars in Back Rent Due 15 Jan 2012 16:56 #37759

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ANOTHER MORAL OF THIS GREAT ESCAPES HARRISBURG STORY ...... you cant fight the demograhics of your location. By that I mean there is only a cetain audience within a certain geograhic radius which goes to the movies and no matter what the ammenities, design or operation of your venue, you cant change that basic fact.

Theatrical exhibition is very EGO DRIVEN (and I guess it makes sense that people with big egos would be attracted to it)... so much so that otherwise intelligent people becomes convinced (whether they build new or take over an existing location) that their way of doing things, their operation and/or their brand will succeed no matter the demographics are. In other words ego triumphs business sense.
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Re: Yikes.... One Million Dollars in Back Rent Due 15 Jan 2012 22:58 #37763

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FROM THE EVERYTHING CYCLES DEPARTMENT ...........

Back in Mid 1990's AMC Theatres built the first truly 'upscale' multiplex in Harrisburg PA (to replace the older one that they had closed at the Harrisburg Mall). The grosses for this new complex were literally 'off the charts' and far beyond anything that pundits thought the area was ever capable of producing.

Of course in the movie theatre business report of large grosses is like blood in the water to a shark. And I will admit that in 1995 Harrisburg PA was definitely underscreened. By 1999 an additional half dozen complexes had been built within a few miles of one another with the result that all any operator was doing was basically breaking even.

The opening of the Great Escapes 14 at the Harrisburg Mall in November 2007 was literally the straw that broke the camel's back - resulting in dividing the business that much further that several nice complexes that really did not deserve such a fate were forced to close.

If the Great Escapes 14 ends up closing (and I believe it will) that will leave Harrisburg back with only one multiplex (and once again underscreened).

I guess what will happen now is that we start the cycle all over again.
Last Edit: 15 Jan 2012 23:02 by muviebuf.
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Re: Yikes.... One Million Dollars in Back Rent Due 19 Jan 2012 18:01 #37774

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muviebuf wrote:
BTW ..... does anyone on this board have any idea what it takes for heating/cooling/utilities for 52,000 square feet of stadium theatre space? I was told about 500,000 per year. Does this seem right?

Seems high to me. In our Northwest climate, I heated / air conditioned a building about a quarter that size on about $1,200 worth of energy (gas or electricity). That's a far cry from nearly $42,000 that your figure works out to.
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