There's no business like the movie business. That's the view at Entertainment Properties Trust, the first and only publicly traded REIT focusing solely on the film industry.
The Kansas City-based company purchases megaplex movie theaters, with 16 to 30 screens at each location and leases them to movie exhibitors. The firm went public in November 1997, raising $276 million.
Since then, Entertainment Properties has purchased 18 properties with an average of 22 screens at each location and has contracts to buy 12 more. It owns 400 screens and has another 200 under contract to buy.
These are all leased to movie exhibitors AMC Entertainment, Muvico Theaters, Consolidated Theatres and Regal Cinemas, who run the movie theaters.
The concept of the megaplex has caught on, said David Brain, chief financial officer. "With so many screens, customers get to see what they want when they get to the theater. They don't have to wait two hours or even debate what to see, because all the movies are playing."
Entertainment Properties has been expanding its menu, adding restaurants at some locations, and has discovered the mix suits consumers' tastes. "They offer additional returns plus diversification," said Mr. Brain.
Now the company is meeting with pension fund executives and money managers to drum up interest in a secondary offering. The reaction has been good, said Robert Harris, president of Entertainment Properties.
"People like to hear about us, because our story is different," he said.
Despite the recent volatility in the stock market, he has faith people won't stop going to the movies. "That's been the trend," added Mr. Brain. "People go to the movies in good times and in bad. The growth in the last 15 years has been a steady 3% to 3.5%, and we expect it to continue."
