Carmike will lease facilities, operate as usual
Missoula's newest movie theater, the Carmike 10, has been sold to an undisclosed buyer.
A spokesperson for Carmike Cinemas Inc. said the Georgia-based firm sold the 10-screen Reserve Street facility last week, along with a 15-screen theater in North Carolina and a 16-screen theater in Iowa, for $23.5 million.
Carmike, however, will lease the facilities and operate the businesses as usual, said Martin A. Durant, Carmike senior vice president and chief financial officer. The company's other Missoula theaters, the Cine 3 and the Village 6, have not been sold, he said.
Durant would not name the buyer.
He said the name of the Carmike 10 will not change and neither will its operations.
"There will be no impact on customers whatsoever," he said. "And pricing will stay the same. The only change is that we no longer own the land and building."
Carmike opted for this arrangement because it gives the company substantial cash flow and allows it to build more movie theaters, Durant said.
"It enables us to take the assets we own, generate cash and reinvest it," he said. "This is not an unusual transaction method in the industry. We do this to finance other projects."
By mid-year, Carmike expects to open five more theaters - a total of 88 screens - in Alabama, Florida, Minnesota, North Carolina and Tennessee.
Property involved in a sale-leaseback, such as Tuesday's arrangement, is generally sold at fair-market value, said Jonathan Horn, real estate broker for the transaction.
Typically, the investors provide the seller with a triple-net lease for a negotiated period of 10 to 25 years, Horn said. The seller/tenant then pays the investor a negotiated annual rent equal to 8 percent to 13 percent of the contracted sale price. The triple-net release property frees the investor/landlord from any property responsibility.