Investors may love AMC, but movie theaters still have a long way to go – Commercial Observer
Are we back in the movies?
Investors inject money into AMC, studios are celebrating their first big box office weekend and theaters are finally starting to fill up again. But, in the midst of all this hype, it’s worth noting that film fundamentals are still lagging behind.
While about 72 percent of theaters were open over Memorial Day weekend, traffic dropped about 60% on average for three major national chains – AMC, Royal Cinemas and Cinemark – compared to 2019 levels, according to data from the analysis company Place.ai.
“While all retail businesses have felt the effects of COVID, few have been as affected as movie theaters,” said Ethan Chernofsky, vice president of marketing at Placer.ai. âThe restrictions fundamentally undermined the ability to function, creating a huge challenge for an industry that had previously faced challenges – not to mention the impact COVID has had on major motion picture releases. ”
Theaters saw a sharp increase in traffic over Memorial Day weekend, the $ 100 million first box office weekend since the start of the pandemic, but attendance remained well below 2019 levels.
For Tennessee-based national chain Regal Cinemas – which closed 536 locations after the pandemic began – foot traffic was 65.4% lower than 2019 levels the week of May 24, compared to 83.1% lower than in 2019. it was down the week of May 3. For Cinemark, which was down 73.8% from 2019 levels in the week of May 3, Memorial Day weekend increased its traffic to the point that traffic was down 57.4% from 2019 levels, according to data from Placer.ai.
But Chernofsky was optimistic about a recovery, seeing Memorial Day weekend as a sign of progress for the industry.
âA recovery appears to be underway with Memorial Day weekend providing a much needed boost,â he noted. “Visits to three major chains the week of May 24 were at their strongest since the pandemic’s impact on retail began in March 2020.”
Optimism appears to be the dominant sentiment among retail investors, which has driven AMC shares soaring during the pandemic. On June 5, AMC shares were worth more than double the entire movie 2019 theater industry national box office ticket sales, according to Propmodo. Thanks to a fervor of retail investors on the social media platform Reddit, the share price has climbed over 2,900% this year, even though very little has changed in the way the company does business and the industry as a whole is reeling from the downturn. pandemic.
And the holiday weekend turned out to be a surprising performance for the once-closed silver screens. American cinemas have brought nearly $ 100 million in ticket sales over the four-day weekend.
Those numbers are less than half of the $ 232 million bag theaters secured in the same weekend of 2019, but this holiday weekend was in stark contrast to the start of the pandemic, when theaters closed their doors. , turned off their popcorn machines and said goodbye to glitzy firsts.
Two films have proven to be indispensable cash cows for cinemas: Primordial‘s the highly anticipated sequel “A Quiet Place Part II” grossed $ 48.4 million – the highest debut film in the pandemic – while the theatrical and online premiere of Disney‘s “Cruella” cashed $ 27 million in ticket sales, according to CNBC.
As Tom cruise said at a London screening of “Tenet” during the pandemic: “Here we are, back to the movies.”
But, for landlords, the real question is: are theaters back on rent?
Rent collection for national movie theater chains stood at 63% of total rents due in May, up 17% from March, according to a report from the data portal Datex real estate solutions, based on a subset of theater venues across the country. That’s a huge jump from this month last year, when rent collections for movie chains stood at just 11.6%.
Much of it came from AMC, flush with the Reddit money. The collection of rents for AMC cinemas amounted to 94% of the rents due on May 31, against 85% in April and close to the 99% paid in 2019.
“With more major film releases expected during the critical summer season, the wider industry can see the silver lining it desperately needs,” Chernofsky added.
But movie theaters still have a long way to go, and owners are struggling to collect movie theater rents, especially during the pandemic. Palm Springs Mile Associates, the owner of Palm Springs Mile mall, AMC sued to seek more than $ 7.5 million in damages for the $ 52,154 he said the theater owed rent to AMC Hialeah Theater 12 in April 2020, reported Variety. Palm Springs Mile Associates did not immediately respond to a request for comment.
Other big movie owners, like EPR properties, also did not respond to requests for comment. AMC represents 17.7% of EPR annualized rents, according to Seeking Alpha. Terranova Corp., who owns a Regal movie theater in Florida, did not immediately respond to a request for comment. Weingarten Realty declined to comment.
Chava Gourarie contributed to this report.