The megaplex movie theater industry continues to outflank competition from online streaming and DVD vending machines by adding further social elements to the movie-viewing experience, creating a new generational change in the industry, says David M. Brain, President, CEO & Trustee of Entertainment Properties Trust (EPR).
“There is an old song in Hollywood that says as long there are kids that want to get away from parents and parents that want to get away from kids, you’re going to have a healthy movie industry,” Brain said. “People have kitchens, but they still go out to eat. Just because you can do something at home doesn’t mean you do it at home. People want to go out.”
EPR invests in the megaplex movie theater experience through triple net leases that are 15 to 25 years long. Brain says his REIT is currently investing in the multiclass movie theater experience, with a new trend toward luxury theaters offering full bars and in-theater dining.
“That’s the beauty of net lease investing: You have these very reliable income streams that grow over time,” Brain said. “Generally about 5% of revenues is our total expense ratio, and to manage some $3.25 billion in assets, we only have about 30 employees. We’re able to do that in a net lease structure, where you don’t have a lot of moving parts.”
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