Corporate Property Associates 14 Acquires To Be Built Megaplex Theater
$14.7 Million Sale-Leaseback Transaction With Consolidated Theatres Facilitates Entertainment Company’s Expansion Program
NEW YORK, NY – October 20, 1999 – W. P. Carey & Co. LLC, a leader in the ownership and net leasing of corporate properties, announced today that it has closed on the acquisition of a to- be-built 20-screen stadium seating theater located in Richmond, Virginia on behalf of Corporate Property Associates 14 (CPA®:14). CPA®:14, a private real estate investment trust (REIT), is a member of the $3.0 billion W. P. Carey Group. The facility, which is anticipated to be completed by midyear 2000, will be located in Richmond’s Commonwealth Center retail complex will be leased to Consolidated Theatres Holdings under a 20-year bond-type net lease. The purchase price of the 88,000 square foot facility was approximately $14.7 million. Wachovia Bank is providing a construction/first mortgage loan in the amount of $9.4 million.
Consolidated’s management team, headed by 35-year veteran Herman A. Stone, is a seasoned group of cinema professionals with a wealth of experience owning and operating movie theaters. As part of a management buyout in the late 1980’s, Consolidated adopted a longer-term strategy of expansion which has led today to a focus on the industry shift toward stadium-seating megaplexes. This includes a commitment to the highest industry standards, particularly 18-inch stadium risers and Euro chairs using 44-inch high padded headrests allowing for an unobstructed view. Consolidated is equally committed to using state-of-the-art sound systems.
Consolidated is currently building more than 100 screens throughout six locations, and its five-year plan involves expansion to more than 500 screens with over 200 in operation by year-end 2000. The sale-leaseback financing arranged by W. P. Carey will be instrumental in allowing Consolidated to pursue and capitalize on an aggressive strategy involving solely megaplex, stadium-seating theater construction in the southeastern United States.
Commenting on the investment, W. P. Carey First Vice President Edward V. LaPuma, noted, "This transaction demonstrates our ability to recognize the value an experienced management team can bring to a company in an evolving, dynamic industry. Given the recent shift in consumer preferences toward large megaplex theaters, Consolidated is poised to capitalize on this. Unburdened by obsolete slope-floor theaters that industry giants must either renovate at great expense or simply abandon, We believe Consolidated’s dedication to megaplex, stadium-seating design will enable the company to outperform its rivals. By financing Consolidated in the early stages of its expansion program, we believe that we have secured a solid and improving credit that will diversify and strengthen CPA®:14’s portfolio."
W. P. Carey Managing Director Gordon F. DuGan, added, "The Consolidated Theatres transaction demonstrates W. P. Carey’s ability to finance unique transactions. In this case, we addressed two issues that less experienced firms might find daunting. First, we needed to understand the unique aspects of the megaplex facility and secondly, evaluate the business plan and strategy for a growing company backed by a leading private equity investor, Boston-based Arby Partners. By addressing these two issues, we have structured a sale-leaseback providing single-source financing for construction of a major facility while allowing the company to lock in longer term financing in the currently favorable interest rate environment."
Founded in 1973, W. P. Carey & Co. specializes in corporate real estate financing using the corporate net lease, or sale-leaseback structure. The firm and its affiliates is one of the largest lessors of net leased corporate real estate in the nation. The W. P. Carey Group manages the largest publicly traded limited liability company listed on the New York Stock Exchange and four real estate investment trusts (REITs). Collectively, Carey manages over 33 million square feet of property located in 41 states. The W. P. Carey Group’s properties have an aggregate value of approximately $3 billion.
This press release contains forward-looking statements within the meaning of the Federal securities laws. A number of factors could cause the company's actual results, performance or achievement to differ materially from those anticipated. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office and industrial properties; interest rate levels; the availability of financing; and other risks associated with the acquisition and ownership of properties, including risks that the tenants will not pay rent, or that costs may be greater than anticipated. For further information on factors that could impact the company, reference is made to the company's filings with the Securities and Exchange Commission.
