HomeMy Public PortalAboutORD15267 BILL NO. 2014-12
SPONSORED BY Councilman
,�7,Graham
ORDINANCE NO. I S uC 7
AN ORDINANCE OF THE CITY OF JEFFERSON, MISSOURI, APPROVING A PRELIMINARY
PUD PLAN AMENDMENT FOR PROPERTY LOCATED AT 3550 COUNTRY CLUB DRIVE;
DESCRIBED AS PART OF THE SOUTH HALF OF SECTION 4, TOWNSHIP 44 NORTH, RANGE
12 WEST, JEFFERSON CITY, COLE COUNTY, MISSOURI.
WHEREAS, Capital Mall JC, owner of the real estate hereinafter described, having submitted
to the City Council a Preliminary PUD Plan Amendment of said real estate, being
part of the south half of Section 4, Township 44 North, Range 12 West, in the City
of Jefferson, County of Cole, more particularly described as follows: Parcels 1-a
and 1-b as shown on the Property Boundary Survey of record in Survey Record
Book B, Page 425, Cole County Recorder's Office. Containing 13.3 acres; and
WHEREAS, it appears that the procedures set forth in the Zoning Code relating to Planned
Unit Developments have in all matters been complied with, as said property owner
submitted to the Planning and Zoning Commission and City Council an Amended
Preliminary PUD Plan for the above referenced property.
NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE CITY OF JEFFERSON,
MISSOURI, AS FOLLOWS:
SECTION 1. The Preliminary PUD Plan Amendment submitted by Paradigm Design, Inc.,
on file as Case No. P14006 in the Jefferson City Planning Division, is hereby approved for the land
referenced above.
SECTION 2. Common Areas and Public Land. No common areas are proposed and no
lands are dedicated to public use with this PUD Plan.
SECTION 3. This ordinance shall be in full force and effect from and after the date of its
passage and approval.
Passed:/ / Vti7 �� Approved:
Presiding Officer Mayor
ATTEST:; tel° APPROVED AS TO FORM:
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Gi y Cle k•. CitKounselory
EXCERPT OF UN-APPROVED MINUTES
JEFFERSON CITY PLANNING AND ZONING COMMISSION
April 10, 2014
5:15 p.m.
COMMISSION MEMBERS PRESENT ATTENDANCE RECORD
Jack Deeken 8 of 10
Dean Dutoi 9 of 10
Bob George 6 of 10
Chris Jordan,Vice Chairman 8 of 10
Michael Lester 8 of 10
David Nunn 9 of 10
Dale Vaughan 8 of 10
Bunnie Trickey Cotten, Alternate 9 of 10
Ron Fitzwater, Alternate 5 of 10
COMMISSION MEMBERS ABSENT
Ralph Robinett, Chairman 9 of 10
Chris Yarnell 8 of 10
Kevin Thoenen, Alternate 5 of 10
EX-OFFICIO MEMBERS PRESENT
Rick Mihalevich, City Council Liaison
STAFF PRESENT
Janice McMillan, Director of Planning & Protective Services
Eric Barron, Senior Planner
Shane Wade, Civil Engineer II
Anne Stratman,Administrative Assistant
New Business/Public Hearings
Case No. P14006 — 3550 Country Club Drive, Preliminary PUD Plan Amendment.
Application filed by Capital Mall JC, property owner, on behalf of Goodrich Quality Theaters,
applicant, for an Amended Preliminary PUD Plan for a building addition to the Capital 8 Theaters
consisting of 8,253 square feet. The building is located on an oullot of the Capital Mall and the
property is described as part of the South Half of Section 4, Township 44 North, Range 12 West,
Jefferson City, Missouri (Paradigm Design, Consultant).
Mr. Barron described the proposal and explained that the applicant is requesting approval of an
amended Preliminary PUD Plan in order to construct an additional theater, consisting of 8,253
square feet. He stated that the applicant is also planning exterior renovations and interior
renovations including upgrades to stadium style seating in the existing theaters and new finishes in
the interior lobby. Mr. Barron explained that the stadium seating upgrades in the existing theaters
will reduce the number of seats from 1,483 to 985. He stated that the new theater will contain 454
seats, bringing the total number of seats to 1,470 after the proposed improvements. He stated that
existing signage on the canopy and on the south side of the building is proposed to be removed
and three new signs will be added above the canopy, on the west side of the addition, and on the
south side of the addition. Mr. Barron explained that the proposed addition will not encroach into the
woods between the existing movie theater and the single family residential area.
Mr. William Brunner, President, Paradigm Design Inc., 550 3 Mile Road NW, Grand Rapids,
Michigan, spoke regarding this request and explained that stadium style seating will be available in
all of the auditoriums. He stated that the proposed addition will consist of a large auditorium with a
screen that is 65' wide x 35' tall. Mr. Brunner explained that one of the existing auditoriums will be
converted into a VIP luxury seating house. He staled that the lobby will be expanded and the
concession area will be upgraded. Mr. Brunner explained that the proposed addition will not
negatively impact the existing tree buffer.
Mr. Heath Thomas, Regional Manager, Goodrich Quality Theaters, 4417 Broadmoor SE,
Kentwood, Michigan, spoke regarding this request and explained that the sound system will be
upgraded as well. He stated that a VIP room with recliner style seating will be available as well.
No one spoke in opposition to this request.
Excerpt of Un-Approved Minutes Page 2
April 10, 2014
Correspondence was received from the following individuals:
Pat& Doug Thomas, 3444 Hobbs Lane
Mrs. Don B. Riley, 3448 Hobbs Lane
Mr. Barron gave the Planning Division staff report. Mr. Wade gave the Engineering Division staff
report.
Mr. Nunn moved and Mr. Vaughan seconded to recommend approval of the Preliminary PUD
Plan Amendment subject to comments and technical corrections by City Staff, to the City Council.
The motion passed 8-0 with the following votes:
Aye: Cotten, Deeken, Dutoi, Fitzwater, George, Lester, Nunn,Vaughan
City of Jefferson Planning & Zoning Commission
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APPLICATION FOR PLANNED UNIT DEVELOPMENT (PUD)
Date Received
City of Jefferson -Planning Division
Department of Planning & Protective Services
320 East McCarty Street-Jefferson City, Missouri 65101
Phone (573) 634.6410 Fax (573) 634.6467
I7 Concept PUD Plan
D Preliminary PUD Plan
O Final PUD Plan
IN Amendment to Final PUD Plan
O Amendment to Final PUD Plan for Signage
PUD Project Name: Capitol 9 Large Screen Addition
Street Address: 3550 Country Club Dnve
Legal Description (as follows or Is attached): Part of the South 1/2 of Section 4; per lease agreement between
GGP Limited Partnership&Crown Cinema Corporation; recorded in book 372 page 615.
Please attach or Include the following:
(a) Typed project narrative describing the type and character of the development, including land uses, acreage,
proposed residential densities or commercial floor area (FAR); public or private open space, amenities or
recreation areas to be provided;sidewalks and pedestrian ways;parking areas;deviations from minimum design
standards of Section 35-51;and other information required by Section 35-74 or applicable sections of the Zoning
Code. The project title and location must be included upon every page. Number all pages and attachments.
(b) Site Plan and/or Development Plan,as applicable.
(c) Preliminary or Final Subdivision Plat or Declaration of Condominium Association,as applicable;
(d) Draft of Covenants, Conditions and Restrictions, as applicable;
(e) Traffic Impact analysis, if required by Section 35.60;
(f) Signage Plan, Including type, locations and dimensions of all proposed signs;
(g) Landscaping and Screening Plan;
(h) Lighting Plan, including pole heights,type of fixtures or luminaries,and foot candles;
(i) Project Phasing Plan(if applicable)
0) Application Filing Fee$206.00 plus$20 per acre(Approved by City Council on May 28,2013)
Application Information:
Property Owner: Capital Mail JC, LLC
Address ATTN:Rob Kln9bury,221 Bolivar Street,Suite 400,Jefferson City,MO 65101
Phone Number(s): (573)6352265
Applicant Name (if different from owner): Goodrich Quality Theaters, Inc.
Address 4417 Broadmoor SE, Kentwoo—lr, F1fl A951
Phone Number(s):_ Martin Betz -(616)827-6528
Consultant Name: Paradigm Design, Inc.
Address: 550 3 Mile Road NW, Suite B. Grand Rapids MI 49544
Phone Number(s): William Brunner-(616)785-5577
The attached Information accurately represents this proposed project.
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,� .. Rob Kingbury
Property Owner SIIa�aa re
�Q Printed Name Dale
DCkASK1.5
onsuC� slant Signature Printed Name Date
For Staff Use Only.,
Application Filing Fee Received: Amount Check 0 )
Attachments: _Narrative Site Plan _Applicant/Proiect Information Sheol
Note other information submitted.-
Individuals
ubmitted:Individuals should contact the ADA Coordinatorat(573)634-6570 to request accommodations oralternative formats as
required under the Americans with Disabilities Act. Please allow three business days to process the request.
PUD Preliminary Plan Amendment
Capital 9 GDX Retrofit & Large Screen Addition
3550 Country Club Drive
Project Narrative
Project Location:
The project is located at 3550 Country Club Drive NE of the Capital Mall where the existing
26,416 sf Capital 8 Theater exists.. The property that the theater sits on is zoned PUD,the
Capital Mall to the West is zoned Cl, the Property North and East of the theater parcel is zoned
PUD. The PUD property to the East provides a significant buffer between the theater and the
residential property zoned RS-1. The existing theater lease parcel is 5.04 acres and will be
expanded to the south to accommodate the new 8,253 sf addition. The existing FAR is 0.12 and
the proposed FAR will be 0.16. This is well below the Maximum FAR of 1.0 for C-1 or C-2
zoning.
Project Description:
The Capital 9 GDX Retrofit & Large Screen Addition will consist of interior renovations of the
existing building including stadium seating upgrades, exterior renovations and a one screen
addition. The proposed interior renovations include new finishes in the interior lobby and
promenade, creating stadium seating and replacing seats in all of the existing studios. The
stadium seating will reduce the number of seats in the existing building from 1,483 seats to 985
seats. The 8,253 sf addition is for a single screen studio which will have 454 seats. This will
bring total seating to 1,470 which is 13 less than presently in the existing theater.
The proposed exterior renovation of the Capital 8 includes painting of the existing exterior
block building, minor modifications to the EIFS above the entry, replacement of the canopy
column finishes, and expansion of the storefront to align with the existing columns staying
under the existing canopy. The exterior will remove the existing neon on the canopy and add
updated LED lights.
The 8,253 sf addition is for a single screen studio which will have 454 seats. The exterior
materials of the addition are precast with exposed aggregate accents and masonry bases at the
corners for aesthetic appeal.
Signage will be revised by removing the letters and box marquee that is currently on the face of
the canopy(226 SF)and removing the sign on the south elevation (75 SF). Signage will be
added above the existing canopy(170 SF), to the west face of the addition (46 SF), and to the
south elevation (113 SF).
I I P a g e
PUD Preliminary Plan Amendment
Capital 9 GDX Retrofit & Large Screen Addition
3550 Country Club Drive
No improvements are proposed to the existing parking lot including lighting and landscaping.
Traffic should not be impacted since the overall seating count is being reduced with the
proposed improvements.
No improvements to the existing sanitary sewer service are necessary. The existing sanitary
sewer service does have an exterior grease trap near the front drop off area.
No improvements to the existing water service are necessary.
A fire hydrant will be added in the existing triangular island in front of the building on the
existing fire service line (reference Sheet C102 of the accompanying preliminary plans) so there
is a hydrant in the proximity of the building to improve fire safety.
There is existing storm sewer which services the Capital Mall Property located where the
addition is proposed. These lines will be relocated around the addition (reference sheet C102
of the accompanying preliminary plan).
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City of Jefferson ' a - = Eric J. Struemph, Mayor
Department of Planning B Protective Services , Janice McMillan,Director
370 E.McCarty St. Phone:573-634-6410
Jefferson City,MO 85101 Fax: 573.634.6457
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March 27, 2014
Dear Property Owner:
This letter is to notify you that the Jefferson City Planning and Zoning Commission will meet at 5:15 p.m.
on Thursday, April 10, 2014 in the Council Chambers of the John G. Christy Municipal Building, 320 East
McCarty Street, to consider the following matter(see map on back):
Case No. P14006 — 3550 Country Club Drive, Preliminary PUD Plan Amendment.
Application tiled by Capital Mall JC, property owner, on behalf of Goodrich Quality
Theaters, applicant, for an Amended Preliminary PUD Plan for a building addition to the
Capital 8 Theaters consisting of 8,253 square feet. The building is located on an outlot of
the Capital Mall and the property is described as part of the South Half of Section 4,
Township 44 North, Range 12 West, Jefferson City, Missouri (Paradigm Design,
Consultant).
As a nearby landowner and/or neighbor, you have the privilege of attending this hearing. Unfortunately,
we are unable to record comments received by telephone, however, written comments may be directed to
the Planning and Zoning Commission in one of the following ways:
e-mail: jcplanning@jeffcitymo.org
fax: Dept. of Planning and Protective Services/Planning Division 573-634-6457
mail: Dept. of Planning and Protective Services/Planning Division
John G. Christy Municipal Building, 320 E. McCarty Street Jefferson City, MO 65101
Written comments received on or before 1:00 p.m. on the day of the meeting will be made a part of the
official record and copied and distributed to Commission members at the meeting. Those unable to
provide written comments in advance are invited to deliver their comments to the Commission Chairman
only at the meeting. Correspondence received after 1:00 p.m. will be included in the official record, but
there is no guarantee that copies will be made for distribution to all Commission members.
For your information, this case is tentatively scheduled for a public hearing in front of the City Council on
May 19, 2014. The City Council meets at 6:00 p.m. in the Council Chambers of the John G. Christy
Municipal Building, 320 East McCarty Street.
Information regarding this case may be viewed on the Planning and Zoning Commission webpage at:
www.jeffcitymo.org/pps/planning/pzcommission.htmi.
If you have any questions concerning this matter, please feel free to contact us at 573.634.6475.
Sincerely,
Eric Barron,AICP
Senior Planner
Individuals should contact the ADA Coordinator at(573)634-6570 to request accommodations or alternative formats
as required under the Americans with Disabilities Act. Please allow three business days to process the request.
Please call(573)634-6410 with questions regarding agenda items.
Jefferson City Planning&Zoning Commission Page 1
Property Owners List
Case No. P14006 3550 Country Club Drive April 10, 2014
Capital Mall C 5,LLC Goldammer Family Limited Partnership
221 Bolivar St,Ste 400 5511 Sonoma PI
Jefferson City,Mo 65101 Jefferson City,MO 65109
3516 Country Club Dr 427 Virginia Trl
Riley, Carol A Watson, John R&Julie K
3448 Hobbs Ln 425 Virginia Trl
Jefferson City,Mo 65109 Jefferson City,MO 65109
3448 Hobbs Ln 425 Virginia Tri
Howerton, Richard A Capital Mall J C 3
MO Public Entity Risk Management C/O Goodrich Quality Theaters, Llc
Properties&Development Inc 4417 Broadmoor Se
PO Box 574 Kentwood,MI49512
Jefferson City, MO 65102 3550 Country Club Dr(Subject Property) j
3425 Constitution Ct
Capital Mall J C 4,LLC
Shelton, James A&Dianna C 221 Bolivar St,Ste 400
421 Virginia Tri Jefferson City, MO 65101
Jefferson City,MO 65109 3546 Country Club Dr
421 Virginia Tri
Irwin, Don& Diane Irwin,Trustees
Albert, Steven P 423 Virginia Trl
419 Virginia Tri Jefferson City, MO 65109
Jefferson City,MO 65109-6840 423 Virginia Tri
419 Virginia Tr!
B R M 2002 LLC
Dillard Department Stores Inc 210 Kaylor Bridge Rd
4501 North Beach St Centertown, MO 65023
Fort Worth,TX 76137 3515 Amazonas Dr
3600 Country Club Dr
Jefferson City Area YMCA
Thomas, Douglas B&Patricia N PO Box 104176
3444 Hobbs Ln Jefferson City,MO 65110-4176
Jefferson City,MO 65109 3507 Amazonas Dr
3444 Hobbs Ln
Lighthouse Preparatory Academy
Carney, Bart J&Amanda E PO Box 105072
3440 Hobbs Ln Jefferson City,MO 65110
Jefferson City, MO 65109 216 EI Mercado Piz
3440 Hobbs Ln
J.C. Penney
Penney, J C Properties Inc U2006-5 3600 Country Club Drive
PO Box 10001 Jefferson City,MO 65109
Property Tax Office
Dallas,TX 75301-1217 Dillard's Department Store
3600 Country Club Dr 3600 Country Club Drive
Jefferson City, MO 65109
PLANNING STAFF REPORT
JEFFERSON CITY PLANNING AND ZONING COMMISSION
April 10,2014
Case No. P14006—3550 Country Club Drive, Preliminary PUD Plan Amendment. Application filed
by Capital Mall JC, property owner, on behalf of Goodrich Quality Theaters, applicant, for an Amended
Preliminary PUD Plan for a building addition to the Capital 8 Theaters consisting of 8,253 square feet.
The building is located on an oullot of the Capital Mall and the property is described as part of the South
Half of Section 4, Township 44 North, Range 12 West, Jefferson City, Missouri (Paradigm Design,
Consultant),
Zoning History
The original PUD Plan for this property was approved by the Planning Commission on June 8, 1995.
Nature of Request
The applicant is requesting approval of an amended Preliminary PUD Plait in order to construct an
additional theater,consisting of 8,253 square feet. The applicant is also planning exterior renovations and
interior renovations including upgrades to stadium style seating in the existing theaters and new finishes
in the interior lobby. The stadium seating upgrades in the existing theaters will reduce the number of
seats from 1,483 to 985. The new theater will contain 454 seats, bringing the total number of seats to
1,470 after the proposed improvements, which is 13 less than currently exists within the theater.
Location: The properly is located on an oullot of the Capital Mall to the northeast of the mal['
Surrounding Zoning Surroundin Uses
North PUD YMCA/Metro Business College/Lighthouse Academ
South PUD/C-1/RS-1 Shopping Mall/PUD Buffe and/SF Residential
East RS-I Single Family Residential/PUD Buffer Area
West C-1 Shopping Mall
Staff Analysis
Parking: �to additional parking spaces are proposed. The proposed improvements will result in a net
decrease in the number of seats within the theater.
Permitted Uses: The previous PUD Platt only identified use of the property as a theater. No change in
the permitted uses is proposed.
Building Design: The building addition would be constructed of brick veneer, aluminum storefront, glass
and an aluminum coping. Building height as measured from the lower level floor to the top of the parapet
will be a maximum of 32 feet. The exterior finish of the building addition would consist of precast with
exposed aggregate accents and masonry bases at the corners for aesthetic appeal. The exterior
renovations include painting of the existing exterior block building, minor modifications to the EIFS
above the entry, replacement of the canopy column finishes, expansion of the storefront to align with the
existing colmttns staying under the existing canopy, and removal of the existing neon on the canopy and
addition of updated LED lights.
Si&Ls- Signage is proposed to be revised by removing two existing signs (one on the canopy and one on
the south side of the building, totaling 301 sl) and placing three new signs (one above the canopy, one on
the west side of the addition, and one on the south side of the addition, totaling 329 so.
Fire Protection: A 26' wide fire access road is proposed at the rear of the building in order to meet Fire
Code requirements. A fire hydrant is proposed to be installed in front of the building.
Staff Recommendation
Staff recommend approval of the proposed Preliminary PUD Plan amendment.
Form of Motion
Motion for approval of the Preliminary PUD Plan amendment subject to comments and technical
corrections by City Staff.
Jefferson City
Planning& Zoning Commission Meeting
Engineering Division Staff Report
Thursday, April 10,2014, 5:15pm
Item 6. - New Business/Publie Hearings
Case No.P14006—Amended Preliminary Site Plan,Capital S Theatres,3550 Country Club Drive
(PUD)
ENGINEERING STAFF RECOMMENDATION-Engineering Staff supports approval of this request.
Existing Infrastructure
* Existing infrastructure serves this development.
-A private detention basin exists for this property.
-Sanitary sewer exists to serve this property.
-Utilities exist to serve this property.
-Public sidewalk does not exist for this facility.
-Access to this facility is from the Capital Mall parking lot.
Infrastructure/Improvements
Storm Water Drainage
* All storm water drainage from the site flows to an existing detention basin to the northeast of the
site.
-New roof drains from the proposed addition will be directed to the large drainage Swale on the
southeast comer of the site.
-No additional pavement will be added with this proposed addition, except for a fire access lane to
be added to the rear of the existing building.
-The existing detention basin is proposed to be cleaned out of sediment, dead vegetation,trash and
litter. The low flow outlet will be restored to function properly. Healthy vegetation will be left in
place.
Sanitary Sewer
* The development is currently served by sanitary sewer.
Street Access/Traffic Impact
* Existing access is internal from the Capital Mall parking lot.
Fire Hydrants/Lighting/Utilities
" Facilities exist in the vicinity and to serve this development. A new fire hydrant is proposed in
front of the existing building.
PLANNING & ZONING COMMISSION
CORRESPONDENCE RECEIVED
Case No. P14006
3550 Country Club Drive
April 10, 2014
Sender Senders Address How Received Date Received
Pat & Doug Thomas 3444 Hobbs Lane Email 4/10/2014
Mrs. Don B. Riley 3448 Hobbs Lane Hand Delivered 4/9/2014
Stratman, Anne
From: Barron, Eric
Sent: Thursday,April 10, 2014 10:18 AM
To: pat@patthomas.us
Cc: Stratman, Anne
Subject: RE:Case NO. P14006-3550 tonights meeting
i
Thank you for your comments, they will be printed and distributed to the Planning and Zoning Commission members at
tonight's meeting.
Sincerely,
Eric Barron
Development Services Manager
City of Jefferson
573-634-6419
From: Stratman, Anne
Sent: Thursday,April 10, 2014 9:45 AM
To: Barron, Eric
Subject: FW: Case NO. P14006-3550 tonights meeting
..... ...... ..... --
From: Pat Thomas fmailto:Wtftatthomas.us]
Sent: Thursday, April 10, 2014 9:35 AM
To: Stratman, Anne
Subject: Case NO. P14006-3550 tonights meeting
Good morning!
As a neighbor whose property is adjacent to the mall property,my husband and I are not against the zoning change
requested,however we would like some considerations to be made a part of the plan.We have existing concerns
regarding noise,trash and trespassers that are there currently and may continue to get worse with the proposed
expansion.We would like to see an increased effort to pick up the trash that accumulates along the tree line and keep
the area "cut back and maintained".
Please let us know how a plan will be implemented to address these concerns so that we may maintain both a
prosperous mall area and our well maintained and friendly neighbor.
Pat and Doug Thomas
573-473-6454
3444 Hobbs Lane
This email has been scanned by the Symantec Ismail Security.cioud service.
For more information please visit htlp:/hvww.symanteecloud.com
t
Mrs. Don B. Riley
3448 Hobbs Lane
Jefferson City, MO 65101
April 9, 2014
City of Jefferson
(-� ECE� IU' [
Department of Planning and Protective Services/Plarming Division
John G. Christy Municipal Building APR - 9 2014
320 G. McCarty Street
Jefferson City, MO 65101 `Lr1td,;:G2: I
Re: Case No P14006—3550 Country Club Dr. - Preliminary PUD Plan Amendment
Members of the Planning and Zoning Commission:
This is in regards to the letter 1 received dated March 27, 2014 concerning the application filed by
Capital Mall JC, property owner, on behalf of Goodrich Quality Theaters, applicant, for an Amended
Preliminary PUD plan for a building addition to the Capital 8 "cheaters consisting of 8,253 square feet.
I would like to ask the Jefferson City Planning and Zoning Commission to address/consider the
following items:
1. Why is an expansion necessary if updating/rennodeling the existing space would suffice?
Comments on Yelp.com, an online business review site, say that the existing theater definitely
needs to be remodeled/updated but there are no comments indicating that more space/seating is
needed (see Attachment 1).
2. What is the square footage of the existing theater space and what are the attendance statistics
for the existing space?
3. Has a market analysis study been done to determine whether there is ail unsatisfied demand in
the Jefferson City market area that clearly demonstrates the need for an expansion, and if so, is
this information available for review?
4. Will the Capital Mall property owner make a commitment to maintain the buffer by planting a
living barrier of closely planted evergreen trees for privacy and noise reduction in such a way
that the theater expansion will not be visible from my property? If not, fain very much
opposed to the expansion of the existing theater due to the encroachment on my property and
also due to the increased traffic and noise that will occur during the late night peak viewing
hours.
5. Can the bright red neon lights be eliminated on the south side of the existing theater with a
commitment they will not be included on the expanded property? They are currently in my
view as well as my neighbors and are very annoying to say the least.
6. Are any special concessions, tax credits and/or abatements being offered to the property()%\mer
related to the proposed expansion?
Please find attached a press release dated June 18, 2013 by the Appraisal Institute, "Movie Theater
Industry Paces Obsolescence, Falling Property Values"regarding an article published in the Spring
2013 issue of The Appraisal Journal (Attachments 2 and 3). It states that the "movie theater business
is in troubled times, facing competition from many viewing alternatives,decreasing attendance and
failing values for some properties"; An estimated 1,000 theaters are in danger of failing, presenting
nearly 20%of the motion picture venues in the U.S. and Canada;" "The exhibition business and
development of rnegaplex theaters has surpassed its stage maturity; now obsolescence appears to be
thriving."
In closing, as you know, a movie theater is a special-purpose limited market property with a unique
physical design that restricts its utility to the use for which it was built. It seems likely that someday
movie theaters will be talked about like the days of the horse and buggy and vinyl records. Many have
been sitting vacant in other cities across the country, including ours, the former Capital 4 Theater on
Jefferson Street, which closed its doors in 2009 and still sits vacant. I question the prudence of
expanding the existing theater, when updating it may be best solution for all parties concerned.
Thank you for your time and attention to this matter.
Respectfully,
Mrs. Don B. Riley
Capital 8 Theatres - Jefferson City, MO Yelp Pagel of 4
vell� '� 1
Capital 8 Theatres
6reviews r�De;ailg
Cir)ema' Earl,
Y
dat�4011 Goog'<
3550 Country Club Dr o Edit
Jefferson City,MO 66109
Gel Directions -,i-r ;
�. (573)761-7469 ��' i .4 )' )' -. f r I t 1 ti
Recommended Reviews
•Ytlp sorC Date Rating ettes English
.Luke S.
0130001212012013 —
Hirdom Jefferson city,Mo
:6 1 mend The seats a cracked and the the floors are always dirty.
t 173 revs ys Mitch you would expect floors to be dirty in a movie theater.
But the Capital 8 floors are pretty dirty compared to others.
The workers are too stressed and can sometimes be pretty
rude.The movie quality is ok and the movie selection is
pretty good.All the new releases are always at this theater.
Overall,ok movie theater.
Chris H. 12/18/2013
Jefferson city,MO
z mendsDecent theater. It could use an uodate but other than that
* 233 revlews irs ok.The staff is a little on the rude side but I've gotten
use to that along time ago.
Nick C. ®, 812/2013
Portland,OR
o friends I have never been in Jefferson City,and as such,have
i 30 reviews never even stepped foot in the Capital 8 Theatre. I guess
I'm not exactly the best judge in this case,but I just read
about their little Iron Man 3 publicity stunt and there's no
way an owner this stupid could possibly run a competent
business. In case you're unfamiliar wilh the story,Capital 8
decided to out on a little show during the opening.of Iran
Man 3 where they hived an actor to come Into the theater
w bod armor and(fake)guns.Y2s_1ney d-d th's less
than a year after the horrible tragedy that oau¢ed_at-The
Dark Knight R ses premiere in Colorado.Audience
http://www.yelp.com/biz/capital-8-theatres jefferson-city 4/8/2014
Capital 8 Theatres - Jefferson City, MO I Yelp Page 2 of 4
members had absolutely no idea the guns were fake and
tjtat it was Dart otanact,so as you can probably guess,it
wasn't Ion before the weracatiaddn. Thankfully,the
actor portraying the gun man waw't harmed,but things
couldbe easily taken a turn for the worse.Check out the full
story here:nydailynews.cominewslnat...
On the bright side,I guess this place serves as a unique
tourist spot now:Come we Capital 8 manager Bob Wilkins,
the dumbest man In Missouri!Bring the wife and Most Fun
for the whole.family!It'll be like those old freak shows
where people went to gawk at the deformed people,only '
this time it would be humiliating someone who actually
deserves it
-' Llzzle B. s; -- 8!1712011
Washington,DC
ii 17 friends a 1 check in here
* 72 reviews
Definitely needs to remodel,the Fcrum 8(owned by the
same company)needs has better seating,etc...It is the
only"new movies'theater in Jeff.City,so they don't really
- have any competition. The closest theaters with recent
releases are In Holls Summit,Fulton,or Columbia...
- I'd prefer to drive to COMO,but offer the family just wants to
stay in Jeff.to watch the movies(my parents live maybe a _
mile away)when vie come for a visit.
Do yourself a favor,sign up for the rewards card on their
website-it is free and you save 43.50 off of concession
(soda and popcorn)combos. Of course,you get a paper
bag instead of a bucket of popcorn. I wonder if I brought in
one of those plastic popcorn tubs from a few years back It
they would let me fill that up instead of the paper bag..,it
would help the environment,no?and them some money on
supplies. So how you also accumulate points towards
concessions...I don't really understand how it all works,I
just like the$3.50 savings.
They do offer a nice little kids snack deal-my nephew
realty liked it. I'm sure Forum 8 has it,too...I just haven't
taken him to a lot of movies,yet. .
In the past,I have had some bad experiences with the staff
here especially for the midnight openings. The staff(and
these were managers)was just down right rude! For this
reason, I just won't go to a midnight showing here any
more. I will make the late night drive if I want to have a .
good oponing night experience!
Randy H. QM� ' 12/2412011
Jefferson City,MD
it 2ddends ale Check-ins here
*83 revievn
Could be updated.
It would be nice to have more than two movies showing on
four screens each.They don't branch out much with the
selection of movies.
Dusty M. 6110/2010
Columbia,MD
http://www.yelp.com/biz/capital-8-theatres-jefferson-city 4/8/2014
Capital 8 Theatres - Jefferson City, MO I Yelp Page 3 of 4
U 1 fdend 0 First to ROAM-,
# 49 renwv When oh when is Goodrich going to remodel the Capital 8.
Its nice to have a movie theater in Jefferson City but this
one is about outdated asYou can el. Watch the movie
the last picture show'in black and white and that movie
theater is more up to date. Get it donel
Page 1 of 1
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Movie Theater Industry Faces Obsolescence, Falling Property Values: The
Appraisal Journal
r
a}+. CHICAGO(June 18,2013)-The movie theater business is in troubled times,facing competition from
-• many viewing alternatives,decreasing attendance and falling values for some properties,according to
an article published this week in The Appraisal Journal.
• The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute,the
nation's largest professional association of real estate appralsers.The materials presented In ft
publication represent the opinions and views of the authors and not necessarily those of the Appraisal
r r r A Institute.
-The Business of Show Business Act It:Appraising the Movie Theater,'by Arthur E.Gimmy,MAI,and
William Condon,examines movie theater trends related to theater venues,box office revenue and
attendance.The authors hlghfighl factors leading to obsolescence In theaters,Including the
--- overdevelopment of megaplexes and the decline of discount or second-,un movie houses due to the
high costs to convert from analog film to digital projection.
According to the authors,the sale prices of movie theaters are based on the present value of future rent
and revenue as a going concern.The article discusses how movie theater industry demand-and
consequently value-is affected by competition from many viewing and access alternatives. The
authors emphasize that this competition is a major consideration for investment in movie theaters.
The authors present a case study example of a market analysis for a multiplex theater and an approach
to income analysis.The article also outlines for appraisers the project development factors to include in
a highest and best use analysis when developing an opinion of value for a movie theater.The article
concludes that the exhibition business and development of megaplex theaters has surpassed its stage
of maturity.Adaptive reuse,such as conversion into residences, office or retail spaces,likely will be an
opportunity in the near future for out-of-service movie theater venues.
Gimmy is the president of AGI Valuations in Petaluma,Calif.,and Newport Beach,Calif. He has
published more than 50 arlides and has authored eight books published by the Appraisal Institute and
its predecessor organization,the American Institute of Real Estate Appraisers,
Condon Is a graduate of the University of California,Santa Barbara.He intemed at AGI Valuations and
developed an interest in the entertainment business,particularly the workings of the movie theater
industry.
Read'The Business of Show Business Act 11,Appraising the Movie Theater'in the Spring 2013 Issue of
The Appraisal Journal.
Also in The Appraisal Joumafs Spring 2013 Issue: -
'A National Profile of the Real Estate Industry and the Appraisal Profession,'by J.Reid Cummings and
Donald R.Epley,Ph.D.,MAI,SRP.,provides a cross-secUonat view of employment in the U.S.real
estate Industry during 2001-11,with special attention given to employment in the valuation profession.
tp://www.appraisalinstitute,org/movie-theater-industry-faces-obsolescence-falling-nrnnrrtv-vah,rc_rhr_arn d171701e
Table B Market Data Summary—Overall Capitalization Rates
Size(SF) N.R.A./ Sale Price/ Net Operating Overall
No. Description Sale Date Screens Price per SF Income Rate -
1 Newer theater In suburb with 4/2009 81,706 SF/18 $23,69Q,000/ $1,563,540 6.60%
perimeter retail stores(not $290
Included)
2 Newer theater in rural city(pop. 11/2009 58,903 SF/16 $20,000,000/ $1.289,557 6.45%
90,000) $340
3 Downtown location in major 11/2010 72,857 SF/20 $26,400,000/ $1,713,080 6.49%
metropolitan area $362
4 Suburban mall In major 7/2008 95,150 SF/30 $26,315,000/ $2,215,092 8.42%
metrouolltan area $277
5 Suburban mall in major 5/2010 51,720 SF/12 $12.900,000/ $1,103,647 8.56%
metropolitan area $249
6 Suburb of major capital city 12/2008 32,1.85 SF/8 $10,00,000/ $900,000 9.00%
$311
slow-growing economy, continued production of Arthur E. Gimmy,MAI, is the president of AGI
average-quality movies,and lack of growth of mov- Valuations,a firm with appraisers and staff In
iegoers' discretionary income must be considered Petaluma and Newport Beach,Califomla. Gimmy's
when projections of theater performance are made. practice concentrates on the analysis of difficult,
The job of the appraiser or analyst is made more unique,or specialized properties and appraisal
complicated by these tactors Hopefully,the methods concepts,and he provides expert testimony in litiga-
and approaches presented will endure in spite of tion matters involving large and complex mal estate
ever-changing conditions. projects and related business Issues. Gimmy has -
published over fifty articles and has authored various
books for appraisal professionals,including eight
texts published by the Appraisal Institute and its
predecessor,the American Institute of Real Estate
Appraisers. Glmnty received the MAI designation
In 1965 and has taught appraisal courses for the
Appraisal Institute. He has served on numerous local
and national Al committees,including The Appraisal
Journal's Editorial Board. His awards include the
Professional Recognition Award(1975 and 1978)and
the George L.Schmutz Memorial Award(1996)from
the Appraisal Institute for his special contribution to
the advancement of appraisal knowledge.
Contact:agl@arthur0mmy.com
William Condon is a graduate of the University
of California,Santa Barbara,majoring in anthropol-
ogy. He interned at AGI Valuations and developed an
interest in the entertainment industry,particularly the
workings of the movie theater industry,leading to his
collaboration on this article.
�aAPAraleal-1pP[naI,.SPring_2Q3,�__ �—_ ARPtaisinglhejApvir,.Eaeate[
Web Connections
Internet resources suggested by the Y. T. and Louise Lee Lum Library
Entertainment Merchants Association
htipJ/www.entmerch org/
Film Journal International Magazine
http.'Ilwwuklmjournal.co»tlfllmjoumal/aboui-as indexz:jsp
Motion Picture Association of America,Policy and Research Reports and Statistics
http://www.mpaa.org/policy
National Association of Theatre Owners
—Movie Theatre Statistics
htlp.//www.pato on line,org/statistics.htm
—Box Office Magazine
h trp.//wwuAboxof ce.comlthe_uault
Tf�o_Appralsnl.lournel,_�pdng 2D13 �_—�ApptaisinB theNavieJbetet
o
. .. : The Business of Show
Business Act II: Appraising
the Movie Theater
:7he movie thealor
: - byArthuT•E Gimmy, NL/I, and William Condon
lases ta,.!n�t�utled
„ttmas,fadng cotnpetF >._
.;;tton hom�msily vlawing_,
�eltematNee Numerous
vulnereble venues
are dec 24a estimated 1,000 theaters are in danger of failing,representing nearly
oetlormLchStna are __ 20% of the motion picture venues in the United States and Canada.' Most of
.incri6.1n9 ihelr share > these theaters are first generation multiplexes or miniplexes, as they became
ithe market vatuea ! known once megaplexes came along.The endangered theaters typically have
nave dropped for come eight screens or fewer in a fill-up concrete box and are located at the perimeter
ropeitles puitlokei �;(�- of shopping centers,where reciprocal parking and ingress/egress agreements
.�ipdcea keep;going up provide sufficient parking at peak viewing hours that have minimal overlap with
i..'Theextdhltlori businass peak shopping hours.Or,that was how the movie theater business worked for
%:enB deyeidpmeyl_i of :__-:.:, close to four decades.Now,theater attendance is dropping,although prices are
Imega.P!e -Iheatore tea - not, and the megaplexes (typically 10-20 screens per auditorium) dominate
{ulpaa Ita aiege of ._ the market Small is not beautiful in the,movie exhibition business, except in
mStu dty-now . . : locations where land is scarce and expensive,and entry into the market is limited.
.iesceaca appears to - Movie theaters are special-purpose properties that require appraisal
l.De thpving:V...... enc.- expertise,knowledge of the motion picture industry,and an acquaintance with
%,ingoiying:adaptive reuse-;i current trends,which are overviewed in the introductory sections of this article.
:;willbe an opportunity. The first text on this subject was the Appraisal htstitute's The Baainess of Show
This antoie ypdate;the Business and the discussion here is intended to update that ten' The article
.`1999 text. Tw amine" also provides other supportive material,including the data sources listed to the
of Show tiuslnesai�Tha. `" Statistics Index of the Appendix.
rhaatvm „� Industry Background
The motion picture industry is comprised of three facets that operate in sequence.
At the leading end of the spectrum is the production process,which is typically
what happens in Hollywood,Bollywood,or other locales.The Industry requires
a constant flow of new movies or film product, and it is a worldwide industry.
Many nations have their own movie production industries, which produce _
films mostly for the domestic market Movie production can be a major source
of employment
1. MlcWel Hurley.'we're Mout W Lose 1.000 Small Theaters Text Can't comm to Digital.Does It Maus(!'
kialel%m_February 23,2012-
2.
3,2012.2. AMU E.G;mmf ani Mary G.Gates.The Business 0f5hpw Susln=.'The Valuaaon of Music Meater3(Chlpaeo:
The Appraisal Insdlute.1999).
�TJIa_APDlaisaU0ltmai,_SPflag.2013 ____.v._.--.. AP0lalstag-llta-Moftl4iDC2Ie[
In the middle of the industry are the distributors, megaplex theaters can draw up to 2 to 3 million
who release films to the public in both theater customers annually).The resultof this development
and home-viewing formats (e.g., DVD, television trend during the past fifteen years has been a direct
programs). The distributors negotiate a contract increase in sales and revenues for retail establish-
with theatrical exhibitors, establishing the amount ments, restaurants, and other businesses located
of the gross ticket sales to be paid to the distributor; in proximity to movie complexes. Because movie
this is usually a percentage of the exhibitor's gross theaters are good at generating traffic,at times they
income.The distributors are responsible for deciding have been specifically used in attempts to spur retail
how many theaters the film will be shown in and development in previously declining urban areas.
for how long, making the proper amount of prints The ongoing evolution of the motion picture
of a Bim and ensuring the delivery to the theaters theater business was,unti12005,in a growth cycle of
by opening day.The distributors'duties also include producing new screens at a fasterrate than the growth
creating the advertising for a film,such as posters, of movie ticket sales. Exhibitors desired a greater
television commercials,print ads,trailers,and more. range of movies to show viewers, who continued
The exhibitors are responsible for delivery of to visit movie theaters despite an increasing range
The movies to the public They manage and market of entertainment options to choose from. Some
films and related products or productions(films of industry analysts forewarned of a potential problem
events such as operas or the Oscars) and operate due to the rapid expansion and overdevelopment of
the theaters. F,ssendally, exhibitors are selling the megaplexes,and the theater industry growth trend
experience of the film to the audience. They may has left some exhibitors as victims. The continued
own the theaters or just lease [lie real estate. They cannibalization of older theaters by the larger,newer
typically pay over 5046 of what they take in at the box theater complexes is a risk to the smaller exhibitors,
office to the distributor or directly to the producer. especially ira fall in film quality or fewer blockbuster
movies limit revenue to the point of not carrying
Theater Industry Trends the necessary overhead load. The ongoing shift in
A movie theater,movie palace,or cinema is a venue the industry toward the expansion of new, larger
for viewingmotionpictures(drive-in theaters,which megaplex facilities is likely to continue, however,
have been disappearing, are not considered in this due to a number of factors:
article).Most movie theaters are commercially open .The continued decline of discount or second-run
ated and cater to the general public,who attend by movie houses due to the high costs to convert
purchasing a ticket The film is projected onto a large to digital, increased competition, and the ever-
screen at the front of the auditorium.Recent techno- shortening interval between first-run play dates
logical developments in the projection process have and video releases.
led to an increasing use of digital projection equip-
m 'The nationwide decline in admissions perwpiG.
ent in theaters. Although the number of theaters
offering digital projection has increased dramatically -The ability of the major exhibitors to raise debt
over the past several years(a total of27,749 or 0540 of and equity capital and also secure very favorable
all screens),many existing theaters are still equipped leases in shopping centers due to the ability to
with conventional analog film projection equipment.' draw in retail traffic.
•The desire of developers to have chain theaters
Theater Venues as anchors for a variety of shopping center and
Once relegated io the outskirts of parking lots and entertainment venues.Theaters and restaurants
shopping centers,innovations in the movie theater benefit by co-locating(but much less so If there
industry have included the development of mega- is a shared parking]at).
screen theaters as anchor tenants centrally located ,Movie theaters,limited to indoor screens for the
within urban entertainment and retailshopping cen- purposes of this analysis,have had a varied history
ters in an effort to capitalize on the ability of cinema of ups and downs.During the 1950s and early 1900s,
complexes to generate considerable traffic (larger there was a general decline of approximately 504b
3. cornu t ml analog projection equipmentIs an optom henlnal de%ipe olsdayng n ing pictures M prulecung a m onto a pMeMt DO screen. _
ADp@ISINg.iheldgtlg1119ataL—
The gppr416e1-J_ournah-Spdng.2013—M
Table i US Screens by Type of Venue
2007 2008 2009 2010 2011
1-7 Screens 9,804 9,091 8,673 8,345 7,878
8+Screens 29,170 29,743 30,560 31,202 31,763
Total 38,974 38.834 39,233 39.547 39,641
scum:qts screen olgest tYw�.•.eaweadrgeet.cam)
Table 2 US and Canada Top Five Exhibitors—Screen and Theater Statistics
Regal AMC Cinemark Carmike Cineplex Mean
Screens 6,614 5,034 3,878 2,254 1.352 3,826.40
Theaters 527 342 297 237 130 306.60
Screens per theater 12.55 14.72 13.06 9.51 10.40 12.05
Sc.".:Mmol Reports at Regal.WC.Clnenavk,C2=-k%,am dneplai
of the national inventory, with screen numbers Major Exhibitors
dwindling to a low of 9,150. however,a steady rate The exhibitor market is competitive as there are no
of growth began in the late 1960s,averaging more real dominant entities in the indushy,though local
than 350 new screens per year for the next decade. markets may sometimes be controlled by a single
In 1978,there were a total of 13,129 indoor screens major company. As of June 24, 2010, the top ten
in the United States. Growth rates accelerated even exhibitors accounted for about 57%of total screens
further during the 1980s and 1990s,as the number in the United States and Canada.The top ten exhibi-
oftotal screens increased byl60%from 1978 to 1998, tors included Regal Entertainment Group; AMC
when there were 34,168 screens.During most of the Entertainment, Inc.; Cinemark USA,Inc.; Carmike
1990s,growth rates achieved records,averaging ober Cinemas, inc.; Cineplex Entertainment LP; Rave
1,200 screens per year.During the past decade,movie Motion Pictures;Marcus Theaters Corp.;Hollywood
theater growth rates have slowed; currently, there Theaters; National Amusements; and Harkins
are 39,641 screens in the United States(7bble 1)and Theatres.The top five exhibitors controlled roughly
2,749 screens in Canada. 49% of total screens. Table 2 presents screen and
Since the late 1990s, a key indushy trend has theater statistics for the top five exhibitors.
been the dramatic increase in the number of screens
per theater. Nationally, the number of screens Box Office and Admissions
per theater has increased from 3.2 in 1988 to an In 2011, the total US/Canada box office was $10.2
average of 12.05 screens for the top five chains.The billion,down 4%compared to S10.6 in 2010,but up
expansion was driven by major exhibitors upgrading 644 from five years before. Despite strong second
their asset bases to an attractive megaplex format, and third quarter box office performance, the 2014
which typically includes 10 or more screens per box office could not fully overcame the slow startof
theater along with features such as stadium seating, the first quarter.Also,3D box office was down$400
digital projection,and superior sound systems(e.g., million in 2011 compared to 2010,which contained -
Dolhy).The modern rnultiplex/megaplex stadium- 4votoes record-breaking 3D boa office performance;
seating formatis generally preferred by patrons over 2D box office in 2011 was consistent with 2010.
a sloped-floor theater,which was the predominant US/Canada admissions(number of tickets sold)
theater floor layout prior to 1996. However,venues were 1.28 billion in 2011, down 4% against 2010'5
with more than 20 screens are generally categorized 1.34 billion admissions. The average number of
as having a higher level of risk due to lack of enough tickets sold per person (admissions per capita)
movies to fill each screen and high overhead. decreased 5% to 3.0 in 2011, which was the first
- Multiplex and megaplex theaters now represeul804b time in over a decade that admissions per capita fell
of all domestic screens. below 4.0 (Table 3). The most recent high point in
® beAppralsalJcumat�$pdng.2013 __--- — AgptaLsfaytheKgl4elhgate[
Table 3 US and Canada Admissions Data
I
Percent Change
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 vs.2010
US/Canada
Total
Admissions
(billions) 1.57 1.52 1.50 1.38 1.40 1.40 1.34 1.42 1.34 1.28 -40A
US/Canada
Admissions
per capita 5.20 4.90 4.80 4.40 4.40 4.40 4.20 4.30 4.10 3.90 -5%
50ur0a:A:otim PiC are A..dzrtkn of A Adea,meaoiml Alarket stamp till.
Table 4 US Average Cinema Ticket Price
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -
Avg.Ticket Price $5.81 $6.03 $6.21 $6.41 $6.55 $6.88 $7.18 $7.50 $7.89 $7.93
%Change vs.
Previous Year 3% 4% 3% 3% 2% 5% 4% 4% 5% 1%
CAI%Change vs.
Previous Year 2% 2% 3% 3% 3% 3% 4% 0% 2% 3%
%Change vs.
2011 37% 32% 28% 24% 21% 15% 10% 6% 1% n/a
new.neat Wic"bwcelbvav by aga groups tined,sauh,senb4,for nine of
day 6natlree,mn:rrg),am for soeriel e0ecw or Henlnd Irrmat(w.IA1AYl.
Source:M.Wen f>;etwe AssatialNn of Arnedca,Tivafriwl Abrhtt Swnsfln 2012.
per capita admissions was 4.3 in 2009,which was movie at a theater at least once in 2011,which was
1046 greater than in 2011.The ten-year trend in per comparable to the proportions in prior years. This
capita decreases-from 5.2 admissions per capita in group is identified as moviegoers,as opposed to the
2002 to 3.9 admissions per capita in 2011-averaging 3346 of people who did not attend a movie in 2011,
-2.8%per year willneed tobeconsidered when new labeled as non-moviegoers. A typical moviegoer
movie theater projects are being proposed. bought 5.8 tickets during 2041, which was below
Theability to increase ticketprices hassustained the number in prior years and reflected the overall
the industry for many years,with a price growth rate decrease in ticket sales.
of about 3.5%per year from 2002 to 2010(Table 4). Frequent moviegoers continue to drive the
However, this changed in 2011, when the Motion industry. Flrquent moviegoers are mmgegoere who
Picture Association of America (MPAA) reported purchase at least one ticket a month. They account
thatthe ticket price increase Lor 2010-2011 was only for less than 1046 of the population, but they bought
$0.08 (+1%), less than the 5%increase in inflation half of all ticketssoldin201l,vvhichwas comparable
as measured by the Consumer Price Index (CPI). to the 2009 and 2010 results for this group.In 2011, .
At an average ticket price of under $8.00, a movie those within the age group 25-39 were the majority
still provides an affordable entertainment option, of frequent moviegoers. Meanwhile, occasional
costing less than$35 for a family of four(excluding moviegoers, or those who attend the cinemas on
concession purchases). average less than once a month, accounted for•[846
of total tickets sold in 2011.Those who bought only
Attendance Demographics one ticket in 2011 purchased 246 of total tickets.
More than two-thirds of the US/Canada population The decrease in ticket sales in 2011 was among all
aged 12+(6786), or 2212 million people,went,to a categories ofmoviegoers.4
4. Motkn Pkture AwoclaUanofA .erica.lneabkal Afar tSwllstks2012.
Appraisingthe.Movie.Theater--_-__ The-App ralsaUottrnaL_$pdrtg 2013_
i
Trend Analysis discounting are still factors, catering to those with
AccordingtolBISNVorld,theworld'slargestindepen- lower disposable incomes.
dent publisher of US industry research,the gradual In addition to 3D projection,most theaters have
recovery In business and consumer spending since invested in equipment necessary for digital movie
the recession and the lagging recovery in unemploy- format presentation.Figure 1 shows the proportion
mentcontlnuetocurbdemandforthe movie theater of digital to 35 mm screens in theglobal marketplace.
industry.' However, enhanced cinema experiences Film projectors were in more t)tan 99%of theaters
like 3D technology, digital projection, superior as recently as 2004 and 85gb of theaters in 2009.By
sound systems,and luxury theaters attract a steady the end of 2012, however, traditional 35 mm film '
audience, partly counterbalancing low consumer projection was estimated to be present in just 3796
spending.As a result,industry revenue only declined of cinemas.°
at an annualized rate of 1.2% over the rive years to
2012.IBISWorid predicts that increasing consumer Market Analysis
spending driven by disposable income growth will Movie theaters face competition from technology
contribute to an estimated revenue of$12.9 billion advances in consumer products that were not typi-
in 2012.0 Relative to profit, the Risk Management cally a factor until recentyears.Personal computers
Association (RMA) examined 121 financial state- as well as DVD players, home theater systems,and
ments involving theaters or chains w1th annual the lnternetaliplay apartinentertainment for awide
revenue up to$250 million and reported uetincome range of age groups.The introduction of additional
before taxes of 6.5%and EBITDA of 12.796.1 in-home entertainment options can affect movie
Movie theater industry demand isbeingaffected industry revenues by increasing die competition for
by competition from many product viewing and a portion of household disposable income spent on
access alternatives, including cable and satellite entertainment.The availability of video on demand
TV, cell phones and Internet movie dowvnloads to offerings by cable and satellite TV operators also has
computers and game consoles.This competition is a an effect,as well as the pirating of movies.
major consideration for investment in theaters,and There are some realistic limits to this competition.
it has also spurred some companies to consolidate Typically,whenmovie distributors license theirproducts
or declare bankruptcy. Several major players have to the theater industry, the terms of the agreement
closed locations and others have made significant specify that they wi8 not license their motion pictures
acquisitions,such as Regal Entertainment Group's to other distribution channels for a specific period of
purchase of some of AM C Entertainment theaters and time.This factor is called the rheahim/releasetuindow
AMC's acquisition of Kerasotes ShovPlaceTheaters. This period can range from about three months from
Major operators are investing in significant the release at cinemas to availability on DVD to aslong
improvements to their auditoriums. Industry as twelve months.The typical time frame is about six
observers note that movie theaters continue to months for cable,satellite TV releases,and other legal
switch to digital and 3D projection systems. The video download sites.
popularity of 3D movies has supported these theater Depending on die intended use of an appraisal,
investments,as operators charge premium prices for the analyst will prepare a Level B or Level C market
3D movies that offer an experience very Few people analysis' A Level B type of analysis employs area-
can replicate at home. Various advances in movie wide market data on a general property class. The
making have also helped to stimulate demand for projected use conclusions are more subject-specific,
cinematic screenings.Industry profitability improves and the timing projections depend on Interpretation
when admission prices escalate and attendance of market-wide data on the property type. The
rises.However,second-run theaters and promotional public and proprietary surveys cover broad areas
5. "I81SWorid Industry Rlsk Reang Repent 51213:Ywie Theatera in the US;18)SWodd May 2012.
6. Ibid.
7. Risk Management AssGclabon,2010-2011.
8. An article by CNN Money online discusses harm We change ecnared W quickly.The ansxer Woes in one woo:Avatar.That wry successful 2009-2010
Man was distributed be treaters only in Lilo digital format.
9. Stephen F.Fanning,MarkelAnaWs for Real£state:concepts andApplicadonsN musaan am Highest and Best Use(Chicago:Appraisal Institute.2005).
T.naAPP[alsaLJ4uinal,-�ptl_ng.2Q13-- ,----- APPtaisittgllre.Mawia]heater
Figure i Projection Technology in Global Cinemas: 35 MM vs. Digital Screens
100%
35 MM Screens
Digital Screens
80%
60%
40% -
20%-
0%-.
0%20%0%
2004 o 2015
source:INS screen olgest.&-member 2011 -
in an urban setting. The geographic boundaries of is driving time,parking,and public transportation.
the survey rarely conform to the submarket for the Theater customers will patronize the closest venue if
subject property. A Level C type of analysis goes the competing theaters areoffering similar first-run
further. whereas a Level B analysis uses historical movies.However, for a blockbuster, a unique spe-
absorption rates as indicators of future absorption, tial effects or IMAX movie,or an art-house theater,
a major shift occurs in Level C analyses, which viewers will break the Hiles.fn a major urban area,
incorporate future-oriented forecasting techniques. market areas may be defined by neighborhoods,for
Future demand and absorption are forecast by first example Greenwich Village in New York, the Gold
projecting the growth of population, income, and Coast in Chicago,acid Hollywood Boulevard in Los
employment. A Level C study provides detailed Angeles.In suburban areas,driving Lime gets more
submarket data on which to base absorption and emphasis as parking is free octelativelyinexpensive
net operating income(NOI)projections as well as a and public transportation is limited.
competitive ranking of the subject property.10 Level
C analyses make extensive use of primary data, Demographics
which are compiled by conducting field work and Population demographics are an Important factor
direct surveys." when investigating a market area,as certain groups
within the population are more likely to attend cin-
Market Area emas than others.The Motion Picture Association of
The purpose of a market analysis involving an America (�IMPAA) publishes information on movie-
existing theater or a proposed theater(a totally new goers in Its Theatrical Market Statistics. According
project or an expansion oran existing theater)is to to MPAA market statistics, in 2011 people within
determine whether there is unsatisfied demand in the age group 12-24 constituted 35% of frequent .
the market area.The fust step Is to define the market moviegoers, and purchased 30%of all tickets sold.
area.The critical parameter in an urban enviromitent Those within the age group 25-39 purchased 24%
10.For further dII6Cmesion of letels o1 market anaysis,See the Aporaiml of Real Estate.13th ed.(Chicago:Apd oWl Institute.2008),180-182;and Ibid..
18-26.
It.Deta on ba af!"(attendance)numbers for neinadal theaters Is net arallable to be purchased.Data can be obtained from a dent emoid,v nom
interviews from management of treaters.
Appraising the.Movklbeater_._.._._ TI1e_APP[alsaLJournal,SpIda l;2013-
of all tickets and made up 2846 of the frequent mov- includes both rural areas as well as metropolitan
iegoers.Thus, movie theaters are more likely to be regions. A populated area, such as that of the
successful if they are located in areas with a higher proposed subject, would contain a slightly higher
percentage of youngpeople.The MPAA's 77matrteaf ratio of screens to population. We will use a factor
Afarket Statistics 2011 also reports movie attendance of0.15 screens per 1,000 persons for our projections.
percentages by population ethnicity (Mgure 2). Demographic data from our hypothetical market
indicates a population of 643,460 persons within the
Demand 15-mile radius. Using this population and a factor
Demand for a current or proposed theater will of 0.15 screens per 1,000 persons, the market can
depend on a number of factors, including number support96 screens,indicating air undersupply of 22
of screens and theaters in the market, distance of screens for the market Theaters A and B in Table 5
other theaters from the subject,and driving distance are both modern facilities of a quality level similar
and driving time. to the proposed subject facility,with stadium seating
Suppose a new theater is proposed in a market. and 31)digital screens,but their locations are Inferior
For the proposes of this analysis, a 15-mile radius due to less advantageous freeway orientation.
will be used to examine the hypothetical market With thepopulationof643,469withinthe l5-mile
area.Table 5 presents data for multiscreen theaters radius and the 2011 average of 3.9 admissions per
in the competitive area of the proposed theater with capita, there would be 2,509,494 admissions in the
15 screens. market area. With a revenue of$8.00 per person,
In order to determine demand in the hypothetical there is a total potential revenue of$20,075,952 for
subject market,several factors must be taken into ticket sales, exclusive of other revenues. For the
consideration. There are currently 0.13 screens 74 screens in the 15-mile radius, this indicates an
per 1,000 persons in the US/Canada market. This average of$271,297 per screen. With the subject
Figure 2 2011 EthnlClty Share of Total Population, Moviegoers,and Tickets Sold
Population '_ %a5
Moviegoers
Tickets sold
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
■ Caucasian MHispanicAfrican American ® Other
source:N.otba M um Auaciawn of Nneha.RM001 Maker st.M6 2M
Table 6 Proposed Theater Demand Analysis—Compatltlon In Market Area
Theater Screens Distance from Subject Driving Distance Driving Time
A 16 5 miles 6.4 miles 13 min.
8 14 10 miles 10.5 mites 16 min.
C 14 10 miles 13.6 miles 22 min.
0 16 15 miles 15.6 miles 22 min.
E 14 16 miles 19.7 miles 28 min.
Total 74
e.BpDfalaalJtw[aal.SPdaC-2D>� — _ Appmisiag-thaldm'�a.firzwC[, .
featuring 15 screens, annual revenues from ticket 15-minute drive time of the subject but also within
sales are estimated at$4,069,455. the 15-minute drive time of two other megaplexes.
There areothermethods ofestimating unsatisfied Management expects to capture25%ofthis area,
potential demand.For example,the potential market
area can be defined by zone. Assume the zones in lbsummarize,thesubjecttheater project has die
the market reflect a population base totaling 132,784 potential to serve about 63,500 moviegoers.
people in 2012.Based on a number of assumptions,
the appraiser could determine that the proposed Zone population Capture% Potential Market
prolectwould have amarket of approximately 63,500 -
persons,or 4896 of the total market area population, A 21,379 60% 12,827
calculated as follows by zone. 8 363 10% 36
Zone A. Zone A Is defined as the core of the entire C 15,706 a0% 6,282 I.
market area due to its geographic proximity or easy 0 24,610 50% 12.305
access to the venue and is delineated by the less E 40,626 60% 24,376
than 5-minute driving time from the subject. Zone
A consists of 21,379 people,and it is estimated that F 30,10 25% 7,525
60%of this population will attend the subject and Totals 132,784 63,351
the remaining percentage would mainly attend the
other stadium-seating option within theservicearea, The proposed project was for l5 screens.However,at
which is 6 miles away. a rate of 0:15 screens per 1,000persons,the potential
Zone B. Lane 0 representsanisolated neighborhood market can support only 9.5 screens. Since exhibi-
tors would also want a cushion, the theater project
thatis within a 5-minute drive time of the subjectand as conceived is too large.
is also within the 5-minute drive.time of the closest
stadium seating competing theater.Zone R consists Valuation Principles
of only 363 people and tile management expects to Unlike the cost of a recreational activity that can vary
capture only 10%of the population within the area. depending on the quality or perception of quality
Zone C. Zone C represents the market area that is of the experience (e.g., golfing), the entertainment
within a 10-minute drive time of the subjectto the cost of a motion picture experience (meaning a
single, first-run movie) is virtually standardized.
southeast and is also within a 10-minute drive time prices(e.g.,tickets)of the b
i
at the p
This means that the 16-screen megaplem Zone C consists of 15,706 ness cannot h used some type of unit indicator
people and management expects to capture 40%of of value.
the population within the area. Sale prices for motion picture theaters converted
Zone D. Zone D represents the market area that is to price per screen or per seat are relevant only
within a 10-minute drive time of the subject to the when theyadjusted for differences in profitability or
eastand also witlim a 10-minute drive time of another potential profitability.Unlike a real estate commodity
megaplex with an IMAX. Management estimates it such as prices for apartments—which can be grouped
can capture 50%ofthe24,610people living indie area. or categorized by quantitative measurements such
as average rental rate and by locational factors such
Zone E. Zone E represents the market area to the as neighborhood—the prices paid formotion picture -
westthatis within it 10-minutedrivetimeofthe sub- eaters are based for the most part on the present
ject and has no significant influence fi•om any other value of future benefits.
competing theaters.Managem ent expects to get60gb What arc the future benefits?One,they are the
of this area. Zone E is comprised of 40,626 people. capitalized value of the net rental stream to typically
estimate the marketvalue of the theater real property
Zone F. Zone F represents the 30,100 person mar- (itis common for theaters to be leased investments).
ket area to the west of Zone E that is within the Two, they are the capitalized value of the net
AppralsiagntmMcme-]Ileatec�____-_-_�________V�_The9pp[aisal Inurnai,Spring 2013
earnings of the Greater as a going concent. Using area perseat.A higher space allotment is preferred.,
sales comparables where the rights transferred Variables that can impact the ratio include the devel-
represent all of the assets of the business is also an opment budget, size of the building envelope, and
indicator of going-concern value. desired combination of public/common area and
auditorium space.
Project Development Factors
Data obtained from theater projects developed by Average Number of Seats per Screen
atop ten regional exhibitor can assist in the high- There is a wide range in auditorium capacity among
est and best use analysis of existing or proposed theaters because newer facilities tend to have more
theaters.19 The data include(1) floor area ratio;(2) and smaller auditoriums. Virtually all megaplexes
square feetoflandperseat;(3)square feetofbuilding have 150 to300seatsperscreen.Incertain small mar-
per seat;(4)average number of seats per screen;(5) kers,auditoriums with fewer seats may be justified.
parking spaces per seat; and (6) building area per
screen.The megaplexes used in the sample ranged Parking Spaces per Seat
in size from 40,000 to 98,000 square feel and ranged The number ofparking spaces in suburban locations
in seating capacity from 2,000 to 5,400 seats, can vary substantially from one theater to another
depeuding on arrangements for the sharing of parking
Floor Area Ratio spaces such as in a shopping center or between office
According to industry data, the average floor area buildings and a cinema.For the sample,the mean is
ratio(FAR)iso.165,which means that for every acre 0255parkingspacesperseat,withmostat020to028,
of land(43,560 square feet)there is 7,100 square feet which Is one parking space for every 3.5 to 5.0 seats.
of building area.The range is 0.11 to 0.24. The rule of thumb of one space for every four seats .
FAR Is useful to the appraiser in determining is based on the assumption that one-half of the seats
whether there is adequate land area as well as are typically occupied at the most popular times for
the amount of land area that may be required for viewing and that each car will have two moviegoers.
a proposed development. Floor area ratio analysis
can also assist the appraiser in identifying where Building Area per Screen
there may be inadequate parking and in adjusting Obviously,building arra per screen must he a func-
comparable sales from one site to another. limn of the number of seats per screen so there is a
substantial range in this unit ofineasure.The industry
Square Feet of Land per Seat mean is 5,200 square feet,with most theaters having
Another measure of the amount of land required between 4,400 and 6,500 square feet ofarea per semen.
for a theater project is based on square feet per seat.
The mean for the sample is 121.5 square feet,with a Development Costs
range 80 to 178 square feet of land per seat Most of the newer megaplexes consist of a Class C
As with the FAR measurement, the amount (insurance rating)air-conditioned masonry box with
of land area required can vary, depending on the a steel trussed roof, concrete floors, high ceilings,
topography of the site, requirements of the local and specialized tenant improvements.Auditoriums
zoning ordinance, amount of required or desired range in size from 150 to 300 seats with the average
landscapingfbuffer area,and setbacks.In urban areas about 175 seats,and have well-insulated walls,use
where there is limited land for parking and public stadium-type seating,and are accessed directly from
transit is available,these factors are inapplicable. the corridors that extend out from the lobby.
The lobby should be designed with enough space
Square Feet of Building per Seat to display posters of coming attractions,and have a
Square feet of building per seat indicates the space concession stand with aflexible design and stations
adequacy or the building housing the auditoriums. that can accommodate small or large numbers of
The mean is 18.2 square feet of building per seat, patrons with a variety of food and snack options.
with a range of 13.1 to 23.5 square feet of building There are two profit centers in a theater—ticket
12.Data COTrWatbn source:author's Ines.
fl�ihaAaprafsalloume6-Sptin>:207ta--- ----------Aulaa�sing-tbe.Ma'de ih^ate'
r
I
sales and concessions—and the one with the highest • Does the lobby present an impression of good I
margin is the concession stand. Critical factors design?
here are fast and friendly service and good, hot Is the concession stand designed and located to
popcorn. The lobby area also provides a waiting encourage moviegoers to buy a snack or some
area (conveniently oriented to the veli-displayed other type of food plus popcorn?
food and beverage offerings) and access to men's . Are there clear directions to the individual audi-
and women's reslrooms. A game area is optional, toriums and are the corridors wide enough for
depending on the demographics of the market area. comfort?
Any game area should be placed where it does not
interfere with the moviegoers. Game areas may be • Is lighting adequate to navigate the aisles?
more of a negative than a plus. • Are auditoriums kept clean?
'Ippicaldirect costs ofamegaplextheateraccordng The basics of sales data are relatively easy to
to the rbfarahall Valuation Seivice are as follows:Is obtain. Costar Group provides sales data of movie
theaters for locations throughout the United States.
Rase cost,very good quality The information optimally includes:(1)address;(2)
Class C megaplex = $162.27 per buyer and seller names, addresses, and telephone
square foot, numbers; (3) type of buyer; (4) broker names and
(8/2011) telephone numbers;(5)sale price and terms;(6)land
This can be computed for an individual theater as area and parking spaces;(7)building area,FAR,and
age;(8)user or tenant occupancy;(9)data on rental
Time adjustment Local adjustment income and expenses,plusa capitalization rate;(10)
(assume 1.03) x (assume 1.22) _ $203.90 per parcel map; (1.1) location map; and (12) assessor's
square Foot, parcel number.
The strengths of using CoStar Group sales
which would include the structure, interior fin- data are ease of access to a lot of transactions and
ish, lighting, and plumbing and HVAC but not descriptive Informationthat would takethnetogather
the snack bar, screens, seating, draperies, and from multiple sources. The disadvantages are cost
projection equipment. and the tendency of some to rely on the data when it
Assuming there is an average of 4,650 square feet could be inaccurate and all of the subtleties are not
perauditorium,thedimetcostofconstrucdonwould be reported.The data needs to be verified,In particular to
$948,000perscreen;frxturesandprojection equipment determine the circumstances of the sale(why would
could amount to as much as another 204,raising the one sell a profitable mvesbnent?)and other Important
total costs of$1,158,000(rounded)per screen. Information such asthe number ofscreensand seats.
Once the appraiser has gathered market data it
Sales Data for Theaters can be consolidated and displayed in a table format.
In any market area, comparable sales of[heaters Table 6 summarizes some basic data derived from
will be few in number and difficult to analyze and the CoStar Group database,representing 65 sales of
adjust. Important variables for comparable sales movie theaters throughout the United Stales, with
include dale of sale, condition of sale, number of time total price converted to price per square foot or
screens, age and condition, location, competition, building area. More specific information, which is
panting,and reputation.In analyzing a comparable notavailablefor purchase,was developed from local
sale property,the analyst might buy a ticket,critique and regional research.Appraisers need to conduct
the amenities,watch a movie,study the patrons,and their own market research and data collection.(Note
buy a box of popcorn.A simple checklist may include that the CoStar Group does net report the number
the following: of screens or seats.)
•Is the box office located and sized where now is Table 6 shows the variety of possible prices In a
maximized? market.In Table 6,the sales range in date from 2008
13.Sea hk]rsfba raWatldn Servlre Sectlm la.Nose mat d4m costs in this example do not Include sp tisl foundation wwk,Wn points,enbemneudal
wemead and poli,and contingencks.
r Appraisingilie,Movta.Tbeatat _. TbaAPPmisal Journal,Spdog.2013—m t
to 2012, in price from $500,000 to $30,000,000, in because most theaters are purchased as part of a
year built from 1913 to 2008,and in unit price from portfolio of theaters and the portfolio details are
$12 to$1,364 per square foot.The median total sale virtually Impossible to investigate in detail.The key
price is$3,625,000 and the average(mean)price per aspects of any lease can vary substantially.As retail
square foot is$190. properties, theaters are typically leased on a net
Sale prices at the low end of the spectrum, basis.The appraiser's job is to analyze the contract
with unit prices far below replacement cost, rental rate, market rental rate, discount rate, and
illustrate the negative financial impact of newer capitalization rate when valuing a theater that is
megaplexes on smaller venues and the inability of subject to a long-term lease or a short-term lease.
marginal operations in small markets to survive Leasesinvolving new properties willbebased on
the recession. Some properties sold for land value, a return on investment (recapture of cost and yield
and older properties may have been purchased by on equity). Leases on older properties, such as an
preservationists.Somesalesinvolvechainsdisposing 8-screen theater,will typically bebasedonarate that
of assets acquired in portfolios that were not a good considers the percentage of ticket sales or box office,
fit,or sales of smaller chains to larger ones because and a percentage of total projected revenue.Rules of
of a favorable price.For the most part,Iransaetional thumb have been 15%of total revenue or 20%ofbox
volume in the industry is dominated by small drains office.For example,an older theater thathas revenues
selling out to the large exhibitors. of$1,200,000 from box office and concessions may
The following equation is an example of the support a rental of$180,000, which is 15gb of total
opinion of value of a 15-screen theater by the sales revenue. That same theater with 36,000 square feet
comparison approach. The value is derived from has a triple net annual rental of$5.00per square Foot -
analysis of sales in the sample that are more recent Capitalization rates for leased fees will likely
In time and are of a similar size to the proposed vary between 746 and 9qb based on a variety of key
project are used. information,but relying extensively on the credit of
the tenant. At an overall annual yield rate of 8qb to
Sample Summary of Sales Comparison Approach 99A the valuation of an older 8-screen theater would
be between $2,000,000 to$2,250,000(or$250,000 to
By Price per Screen. $281,250 per screen)and$55.55 to$62.50 per square
15 Screens x$1,400,000 (adjusted foot of building area.
per screen sale price from Data for yield rates can be derived from
comparables)=$21,000,000 transactional information and surveys. As a survey
example, the quarterly AvC Real Estate Investor
By Price per Square Foot Survey provides market data for national net lease
69,750 square feet x$300(adjusted properties of institutional quality. The overall
per square foot sale price front capitalization rates for the 2012 second quarter ranged
comparables)=$20,925,000 from 6.0%to 8.754b,with a mean of 7.495,and discount
By Price per Seat rates in a range of 7.0%to 9.04b,with a mean of 8:1646.
Since theaters are considered to be,for the most part,
4,000 seats x$5,500 (adjusted non-institutional in investment quality,au allowance
per seat sale price from of an additional 50 to 150 basis points is reasonable.14
comparables)=$22,000,000
Rental Rate Survey
Income Analysis—Leased Investment A rental ratesurvey is typically conducted on a
Ther eare as many transactions involving purchases regional basis due to the lack of a sufficient market
of theaters that are being leased as there are pur- rate lease transactions in any one market and the
chases ofthe fee simple interest.No data Is available size of the market Table 7 sets forth the results of a
on the actual number of leased theater transactions rental rate survey of megaplexes with the unit rent
14.The PsC Real Estate Iaveatwsurveyrias orevausly know as flue Rvpact Real Estate kM1a31lnem SunW..TM nationalnet lease marrm survey Infor.
Moon Is typloaay farts at approxlmatey pafiu'46-48 of the suncy apart.The data for the sewed duaner 2012 survey relathn t0 the aadRtoo of an
alld,vance for Mn4nsaturtwal ouelay Inwslment yielas Is located on pages 85 and 86.
�rLAppralsaLjJrUMW,-SPtIng.201 �_— .-----__ APPtalslag.tbe.blavieThater
l �
Table 6 Example of Summary of Theater Sales.(2008-2012)
Sale Year Built/
No. Location Sale Date Sale Price Size(Sq. Ft.) Renovated Price per Sq. Ft.
1 Suburb 5/9/2012 $30,000,000 62,857 1983 $477.27
2 Suburb 3/15/2011 $29,140,000 129,323 1998 $225.22
3 Downtom 1/31/2008 $18,654,500 67,033 unk. $278.29 _
4 Suburb 1/31/2008 $18,550.800 52,800 unk. $351.34
5 Downtown 1.1/30/2008 518,000,000 79,823 unk. $225.50
6 Suburb. 1/31/2008 $15,830,000 52,800 unk. $299.81
7 Downtown 11/25/2008 $14,500,000 23,000 1940/Renov.2005 $630.43
8 Suburb 1/31/2008 $14,070,150 67,033 unk. $209.90
9 Suburb 1/28/2008 $13,096,634 67,189 2005 $194.92
10 Suburb . 5/4/2010 $13,026,053 68,064 1985 $191.38
11 Suburb 4/30/2009 $12,100,000 66,732 2001 $181.32
12 Suburb 5/20/2008 $10,640,000 170,000 1990 $62.59
13 Suburb 1/31/2008 $9,100.150 67,189 2005 $135.44
14 Downtown 9/22/2010 $9,050,218 64,234 1998 $140.89 ,
15 Suburb 12/30/2011 $7,400,000 36,427 2005 $203.15
16 Suburb 3/12/2008 56,022.000 53,238 1915 $113.11 -
17 Suburb 2/1/2008 $5,900,000 18,920 1925 $311.84
18 Downtown 4/28/2010 $5.600,000 43,170 1999 $129.72
19 Downtown 1/30/2008 $5,363,700 31,591 1997 ' $169.79
20 Downtown 11/1/2009 $5,000,000 75,000 1916 $66.67
21 Suburb 6/27/2011 $5,000,000 47,581 unk. -$105.08
22 Suburb 12/13/2011 $4,900,000 30,910 1998 $158.52
23 Suburb 7/15/2008 $4,800,000 3,520 1913 $1,363.64
24 Downtown 4/30/2008 $4,800,000 29,101 1997 $164.94
25 Downtown 9/12/2011 $4,782,420 23,962 unk. $199.58
26 Downtown 5/17/2012 $4,780,000 30,729 2008 $155.55
27 Suburb 2/10/2010 $4,650,000 64,400 1998 $72.20
28 Downtown 10/24/2011 $4,200,000 35,000 2004 $120.00
29 Suburb 2/28/2012 $4,050,000 37,499 1917 $108.00-
30 Suburb 9/15/12010 $4,000,000 7,500 1940 $533.33
31 Downtown 1/30/2008 $3,700,000 34,000 1986 $106.62
32 Suburb 12/16/2008 $3,625,000 5,429 1999 $681.53
33 Downtown 11/4/2008 $3,625,000 34,000 1986 $106.62
34 Suburb 6/23/2009 $3,300,000- 41,000 1985/Renov.2006 $80.49-$87.80
$3,600,000
35 Suburb 9/2/2011 $3,066,000 17,401 1976/Renov. 2009 $176.20
36 Suburb 1/16/2009 $3,000,000 28,518 1988 $105.20
37 Downtown 8/17/2009 $3,000,000 32,640 1995 $91.91
38 Suburb 9/8/2010 $3,000,000 6,862 1938 $437.19
39 Suburb 10/22/2010 $2,850,000 15,562 1949 $183.14
AppralSinS the Atogeibeater.,._.___ ..____�____�,,_ mitis_APRrabai.Journal„$pjJng.2D13,�
Table 6 Example of Summary of Theater Sales (2008-2012) continued
Sale Year Built/
No. Location Sale Date Sale Price Size(Sq.Ft.) Renovated Price per Sq. Ft.
40 Suburb 12/16/2010 $2,800,000 53,837 1996 $52.01
41 Downtown 6/9/2011 $2,606.000 39,332 unk. $66.26
42 Downtown 9/18/2009 $2,600.000 101,233 unk. $25.68
43 Suburb 12/16/2010 $2,580.000 86,662 1997 $29.77
44 Downtown 6/8/2011 $2,540,000 7,279 1941 $348.95
45 Downtown 7/7/2008 $2,400,055 11,634 1928 $206.30
46 Suburb 6/2/2009 $2,100,000 11,927 1923 $176.07
47 Downtown 2/1/2008 - $2,100,000 11,232 1980 $186.97
48 Suburb 1/16/2009 $2.053.000 28,518 _ 1988 $71.99 .
49 Suburb 11/12/2010 $2,000,000 53,238 1915 $37.57
50 Suburb 4/1/2008 $1,850,000 41,624 1999 $44.45
51 Downtown 8/28/2008 $1,700,000 3,461 1918 $491.19
52 Suburb 4/17/2009 $1,691,911 16,000 unk. $105.74
53 Downtown 6/6/2008 $1,600.000 4,461 1999 $358.66
54 Downtown 1/27/2009 $790,000 11,828 unk. $66.79 ,
55 Suburb 12/16/2011 $781,000 30,934 1990 $25.25
56 Downtown 6/20/2008 $700,000 6,193 1920/Renov. 2010 $113.03
57 Suburb 6/6/2010 $650,000 34;354 1980 $18.92
58 Downtown 2/27/2009 $600,000 32,301 1971 $18.58
59 Downtown 2/25/2010 $600,000 6,045 1945 $99.26
60 Suburb 6/16/2011 $600,000 39,096 1998 $15.35
61 Suburb 1/25/2012 $600,000 50,024 unk. $11.99
62 Downtown 10/31/2008 $575,000 23,000 unk. $25.00
63 Downtown 4/4/2011 $572,500 18.345 1979 $31.21
64 Downtown 7/1/2008 $540,000 6.180 1915 $87.38
65 Suburb 9/30/2008 $500,000 12,477 1976 $40.07
Scvrcei:COSmr G=.P aW AU M1cs.
calculated on the basis of a rate per screen,rate per for by the lessee.Vacancy and management fees on
seat,and rate per square foot. this type of long-term lease with a strong national
The rent comparables produce arelativelywide credit tenant (such as Cinemark) are minimal,
range of rental values for good-to-excellent quality with a typical deduction of 2qb to 3% considered
megaplex theaters in market areas that range from reasonable as a combined total expense figure for
small suburban markets to highly populated urban both categories of expense. The next step would
markets.All the leases are relatively long term and be to capitalize the estimated stabilized net annual
are either triple net(NNN)or absolute netin nature. rental income.
The expenses to the owner would be Iimited to the
deduction for rent loss associated with vacancy or Capitalization Process .
with respect to a professional management fee. All In this example,itis assumed that a sale of the sub-
expenses associated with operation of the theater, jectproperty(real property only)would occurunder
such as maintenance,taxes,insurance,utilities,and financing terms considered typical in thelocal mar-
even major items ofreplacement(e.g., roof,IIVAC, ketplace.Itisalso assumed thata sale of the subject
parking lot,and grounds maintenance)areto be paid property would be either an all-cash We or a sale
�The_9pptatsal.f.¢umal.�pdnE 201,3-.- _ _--. _---AaPtaisinq.NaMm7eJbeate[
-r
based on conventional financing(both are typical fit Beyond valuation, the discounted cash flow
the local marketplace).It is further assumed that the technique can be used for investment analysis,
Subject property would be exposed during a market- with allowances for annual debt service and loan
Ing period of nine to twelve months.Table 8 sets forth balance at time ofreversion,todevelop anbucrnaL_
a summary grid of comparable sales and includes rate of retum.15
information about location,sale date,square footage
of the theater,saleprice,net operating income,and Summary ;-
overan capitalization rate. The motion picture theater business is continually
The sales produce a relatively wide range of evolving.There has been rapid expansion,a decline
overall capitalization rates, from 6.45% to 9.0%. in admissions per capita, a continuing increase in
The lower end of the range(Comparables 1,2, and the average ticket price, a very rapid conversion to
3) represents capitalization rates that are based on digital projection at a high investment cost,changes
the acquisition of a leased fee interest for the real in per capita attendance by demographic categories,
property only.The remaining three sales produced and significant declines in average values due to
substantially higher overall rates because they were the age-old problems of overbuilding and expenses
sales of going concerns. growing raster than revenue. The prospect of a
Table 7 Comparable Rental Rates—Theater Leases
No. Description Size Rental Rate/Month Comments
1 Only downtown 16 screens $7,095 per screen Very good quality fheater;constructed in 2003.
location in 120,000 3,432 seats $33.07 per seat Lease written on a NNN basis for 20-year term. -
population rural city 70,505 sq.ft. $1.61 per sq.ft. Theater anchors a retail center with 17,500 sq.
ft.In-One retail.Tenant pays share of city
parking. ..
2 Only location in 16 screens $6.921 per screen This is a very good quality 16-screen complex _
90,000 population 3,800 seats $29.14 per seat located north of the subject.20-year lease
suburban city 58,903 sq. ft. $1.88 per sq. ft. written on NNN basis;with percentage
clause.Theater anchors in-line retail.
Excellent parking ratio.
3 Only theater In growing 14 screens $5,893 per screen Very good quality 14-screen complex located _
affluent suburb 2,746 seats $30.04 per seat north of the subject Constructed In 2005.
55,001 sq.ft. $1.50 per sq. ft. Anchors a large shopping center with
33,153 sq. ft.of in-line national and bpi
tenants.
4 Only downtown 20 screens $7,539 per screen This is a newer facility(2006).The 20-screen
theater in suburb of 4,200 seats $35.90 per seat complex is 72,857 sq. ft.and is part of
metropolitan area 72,857 sq. ft. $2.07 per sq.ft. a larger 153,979-sq.-ft.retail center.Free
with over 5.000,000 parking for theater patrons.No rent Increases
people until 2020. -
5 Small rural town 12 screens $4,800 per screen This represents the pre-negotiated lease
1,800 seats $32.00 per seat rate on a proposed movie complex that
38,400 sq. ft. $1.50 per sq. ft. would anchor a larger(148.740 sq.ft.)
(wllh $15.00/sq.ft. retail center,approx.200 miles north of
TI allowance) the subject. Landlord will be giving tenant a
$15.00/sq.ft.TI allowance.
6 Suburb of largest 30 screens $6,946 per screen Very good quality,relatively new 30-screen
metro area 5,400 seats $38.59 per seat megaplex located a substantial distance south
95,150 sq.ft. $2.19 per sq.ft. of the subject.Leased to AMC Theaters with
17 years remaining on the 25year term.
15..TNs procedure.a"with an app ilsal of a megapkx as a go!nli o air,b set forth N The BMIness af Shaw Business,81-85.
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