Reading International Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 17, 2024

Key Takeaways

  • Q1 2024 total revenue of $45.1 million was down 2% year-over-year (to 73% of Q1 2019), primarily due to release date shifts from the Hollywood strikes.
  • Global cinema segment operating loss improved 10% to $4.2 million, and adjusted EBITDA would have been flat YoY excluding a $1.1 million loss on the Culver City office sale.
  • Management completed a $10 million sale of its Culver City office and A$2.8 million sale of its Maitland property, and is reviewing additional real estate assets (including Cannon Park) to bolster liquidity and pay down debt.
  • U.S. cinemas achieved record first-quarter metrics with a $13.76 average ticket price and a $7.74 food & beverage spend per patron, while Australian and New Zealand circuits posted second-highest Q1 F&B SPP.
  • Despite a softer 2024 box office outlook, the company is optimistic about a strong 2025 movie slate—featuring Deadpool & Wolverine, Joker: Folie à Deux, Wicked and Avatar 3—to drive attendance and revenue rebound.
AI Generated. May Contain Errors.
Earnings Conference Call
Reading International Q1 2024
00:00 / 00:00

There are 3 speakers on the call.

Operator

This is the Q1 2024 Earnings Call. Thank you for joining Reading International's earnings call to discuss our 2024 First Quarter Results. My name is Andrzej Matyczynski, and I am Reading's Executive Vice President of Global Operations. With me are Alain Kotter, our President and Chief Executive Officer and Gilbert Avanes, our Executive Vice President, Chief Financial Officer and Treasurer. Before we begin the substance of the call, I will run through the usual caveats.

Operator

In accordance with the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995, certain matters that will be addressed in this earnings call may constitute forward looking statements. Such statements are subject to risks, uncertainties and other factors that may cause our actual performance to be materially different from the performance indicated or implied by such statements. Such risk factors are clearly set out in our SEC filings. We undertake no obligation to publicly update or revise any forward looking statements. In addition, we will discuss non GAAP financial measures on this call.

Operator

Reconciliations and definitions of non GAAP financial measures, which are segment operating income, EBITDA and adjusted EBITDA are included in our recently issued 2024 Q1 earnings release on the company's website. We have adjusted where applicable the EBITDA items we believe to be external to our business and not reflective of our costs of doing business or results of operations. Such costs include legal expenses relating to extraordinary litigation and any other items that we can consider to be non recurring in accordance with the 2 year SEC requirement for determining whether an item is non recurring, infrequent or unusual in nature. We believe that adjusted EBITDA is an important supplemental measure of our performance. In today's call, we also use an industry accepted financial measure called theatre level cash flow, TLCF, which is theatre level revenue less direct theatre level expenses.

Operator

Average ticket price, ATP, is also used as an accepted industry acronym. We also use a measure referred to as Food and Beverage Spend Per Patron, F and B SPP, which is a key performance indicator for our cinemas. The F and B SPP is calculated by dividing a cinema's revenues generated by food and beverage sales by the number of admissions at that cinema. Please note that our comments are necessarily summary in nature, and anything we say is qualified by the more detailed disclosure set forth in our Form 10Q and other filings with the US Securities and Exchange Commission. So with that behind us, I'll turn it over to Ellen, who will review our 2024 Q1 results and discuss our business strategy going forward, followed by Gilbert, who will provide a more detailed financial review.

Operator

Ellen?

Speaker 1

Thank you, Andre. Welcome everyone to call today and thanks for listening in. The negative impacts from the 2023 Hollywood strikes continue to be felt through the Q1 of 2024. Each of our cinema divisions in Australia, New Zealand, and the United States felt the blow of release date shifts, especially in the early part of the Q1. While there were some impressive picture by picture performances like Bob Marley, 1 Love, Dune Part 2 and Godzilla Kong.

Speaker 1

Overall, the trajectory of our improved performance since the pandemic was interrupted by the unexpected bump in the road during the Q1 because of the strikes. While our Q1 2024 top line metrics disappointed, the dips compared to earlier periods were not material. Our $45,100,000 in total revenue represented a slight 2% decrease over the Q1 of 2023 and was 73% of 20 19's Q1. At 41,300,000 our global cinema revenue decreased 2% compared to the Q1 of 2023 and was 71% of 20 nineteen's Q1. At $3,800,000 our Q1 twenty twenty four global real estate revenue represented a 1% decrease over the Q1 of 2023, but a 6% increase over the Q1 of 2019.

Speaker 1

The slight drop in this segment metric compared to Q1 2023 was due to the sale of our Culver City office building in February of 2024. These results reported in US dollars were achieved notwithstanding the Hollywood strikes, but also despite decreases in the value of the Australian and New Zealand dollars visavis our reporting currency, US dollars. This FX change impacts us as historically approximately 50% of our revenues are generated in Australia and New Zealand. While our top line revenues dropped a bit, thanks to the efforts of our operating teams, our operating income improved from the Q1 of 2023. At $3,300,000 our Q1 2024 segment operating loss improved 9% from an operating loss of $3,600,000 in the Q1 of 2023.

Speaker 1

At negative $4,200,000 our Q1 twenty twenty four Global Cinema operating loss reduced by 10% from negative $4,600,000 Our global real estate operating income of $900,000 decreased 12% compared to the Q1 of 2023. Our Q1 2024 adjusted EBITDA was negative $4,000,000 which was a 40% deficit adjusted EBITDA compared to Q1 of 2023. Excluding the impact of the $1,100,000 loss on the sale of our Culver City office building, then our adjusted EBITDA would have been flat compared to the Q1 of 2023. Reflecting the increase in interest rates across the globe, our first quarter interest expense was $5,300,000 a 28% increase from the Q1 of 2023. This macroeconomic condition drove a higher Q1 2024 net loss, which was negative $13,200,000 Understanding the pressing need to enhance our liquidity and fortify our balance sheet, we've continued to divest certain strategically selected assets from our real estate portfolio to secure the company's long term future and reinforce short term liquidity.

Speaker 1

In February 2024, we sold our Culver City office building for $10,000,000 in anticipation of moving into less expensive Los Angeles office space. In the Q4 of 2023, we sold our property in Maitland, New South Wales, Australia for A2.8 million dollars Following these asset sales and in order to further bolster our liquidity and capital resources in 2024, our Board has directed management to review the company's real estate portfolio for additional potential assets to monetize. We've begun efforts to monetize our Cannon Park assets in Townsville, Queensland. Management is also analyzing potential monetization strategies for certain of its real estate assets in New Zealand. One of our key 2024 priorities is to continue reducing our debt and thereby reducing our interest expense.

Speaker 1

Understanding our debt conditions, we made progress on reducing institutional debt and extending multiple bank loans this year. We paid off an $8,400,000 loan with the proceeds from the sale of our Culver City office building, which closed in February of 'twenty four. In March of 24, we amended our Bank of America facility and extended the maturity date to August 18, 2025. In early April, we amended our NAB facility. We extended the maturity date to July 31, 2026 and obtained a AUD 20,000,000 Australian bridge facility, which we'll need to prepay when we sell our Cannon Park assets.

Speaker 1

In late April, we executed the 1st 12 month extension of our Union Square financing, extending the maturity to May 6, 2025. And right at the start of this year, we extended our Mineta and Orpheum loans to June 1, 2024, while we pursue a full refinancing. And today, we are continuing discussions with the bank about a further extension. We're fortunate to have strong real estate assets on which to fall back. As opposed to diluting our stockholders, these assets have provided us a bridge to 20252026 when the blockbuster movie slate looks substantially more promising.

Speaker 1

On that note, let's look more closely at our Global Cinema business, which historically has provided the foundational cash flow to support our asset growth. As I just mentioned, while the quarter overall was down, audiences did come out for certain movies. Bob Marley One Love set a record as the highest grossing Valentine's Day opener with over $14,000,000 on its debut. It's now grossed $177,000,000 globally, showing that biopics can still resonate with broad audiences. June Part 2 surpassing its 2021 predecessor now has over $710,000,000 in worldwide grosses.

Speaker 1

Kung Fu Panda 4 marked the return of a beloved franchise after an 8 year hiatus and has earned over $529,000,000 globally. Godzilla Kong, the New Empire released on March 29th has garnered over 500 $559,000,000 in worldwide grosses. The quality of the movie slate for the remainder of 'twenty four does look terrific. Key titles we're watching include Inside Out, a sequel to Pixar's beloved animated film expected to attract both families and animation fans, Deadpool and Wolverine reuniting iconic Marvel characters and promising a mix of humor and action. Joker Folie Adieu, the sequel to the groundbreaking 2019 film, already has audiences eager to come out to see what's next.

Speaker 1

Wicked, a beloved musical adaptation, is set to draw large audiences with its unique blend of fantasy and drama. Gladiator 2, the long awaited sequel to the Oscar winning epic, is expected to be a major box office draw. The diversity and quality of the upcoming film slate along with the passion of movie audiences give us reason to remain optimistic about the future of our industry. However, in 2024, despite certain movies having an amazing box office potential, it's widely expected that the overall industry box office will be behind 2023, which was already in recovery mode, but ultimately set back by film release delays due to the Hollywood Strikes. The Hollywood strike production delays and the rescheduling of theatrical release dates resulted in several big titles being postponed to 2025, including Captain America Brave New World, Thunderbolts, Disney Snow White, Elio, Dirty Dancing, Mission Impossible 8, SpongeBob SquarePants, and James Cameron's highly anticipated Avatar 3.

Speaker 1

With that said, we believe that the 2025 outlook looks very promising. Disney is planning nearly twice as many releases compared to 2024 benefiting from the studio's renewed emphasis on creativity and original storytelling. In 2025 audiences will get James Cameron's Avatar 3, Tom Cruise and Mission Impossible 8, a new Jurassic World film from Universal and James Gunn's Superman from DC Studios for Warner Brothers. During the Q1 of 2024, despite the challenges we faced, our management teams continued to work a variety of business angles. Each cinema division delivered the 2nd highest 1st quarter F and B SPP to date.

Speaker 1

And in the U. S, our FMB SPP outperformed certain publicly traded exhibitors for the Q1 of 2024. Our box office per capita for our U. S. Cinema division reached the highest Q1 ever and for the first quarter of 'twenty four, our Australian cinemas recorded their 2nd highest first quarter for their box office per capita when measured in local currency.

Speaker 1

Through the 2024 year, we'll continue to focus on key initiatives that should generate increased income by 2025, just in time for a very compelling movie slate. By the end of 'twenty four, we're looking to launch a paid rewards program to be implemented across each cinema division. We're focused on increasing transaction or basket sizes in each cinema division from F and B ordering via our websites and apps. And following our 2024 asset sales and reduction in debt, we expect to start growth CapEx investments in our facilities again. Now let's look specifically at our U.

Speaker 1

S. Cinemas. Our Q1 2024 revenue decreased 2% to $41,300,000 and our U. S. Cinema operating loss improved by 10% to an operating loss of $4,200,000 These metrics take into account the closure of 3 underperforming theatres during 2023, 2 in Hawaii and 1 in California.

Speaker 1

We received a stockholder question about other underperforming theaters that we have identified for near term closure and what's the estimated timing and future savings. To further streamline the efficiency of our U. S. Circuit going forward, we do expect to close 1 more unprofitable small U. S.

Speaker 1

Theater during the Q2 of 2024. Other notable milestones achieved during 2024. Despite the cinema industry experiencing an overall 5.1% decline, our U. S. Circuit's gross box office revenues rose by 1.6% from the Q1 of 2023, boosted by the success of specialty and art films like Zone of Interest, American Fiction, All of Us Strangers, Problemista, and Perfect Days at Our Art These results were achieved even with the closure of 3 locations, Kahumanu, Coco Marina and Rohnert Park in 2023 and the challenges posed by the Hollywood strikes.

Speaker 1

The Angelica in New York distinguished itself as North America's top performing theater for Zone of Interest, All of Us Rangers, Problemista and Perfect Days. The Q1 2024 box office grosses at the Angelica New York increased by 67% over the Q1 in 2023. Moreover, the Q1 2024 box office grosses of $1,200,000 at the Angelica New York represented 127 percent of 20 nineteen's box office grosses. Though our U. S.

Speaker 1

Average ticket price or ATP in the 1st quarter reached $13.76 the highest first quarter ever for our U. S. Cinemas. Our team will be evaluating our pricing structure to provide our guests with more value options. Since early 2023, each of our U.

Speaker 1

S. Cinemas have the ability to sell alcohol, allowing us to achieve a stellar U. S. Cinema F and B SPP of $7.74 becoming the 2nd highest first quarter ever. As of today, we have over 130,000 Angelica members in our free to join membership program, which accounted for approximately 27% of all paid attendance for our Angelica Cinemas within our U.

Speaker 1

S. Circuit. And now let's turn to our cinemas in Australia and New Zealand. First, I note that these results are in U. S.

Speaker 1

Dollars and as a result understate the actual improvement due to the loss in value of the Australian and New Zealand currencies. In the Q1 of 2024, our Australian cinema revenue increased by $110,000 or 1 percent to $17,300,000 versus the Q1 of 2023. However, our operating loss also increased by $373,000 to a loss of $498,000 In the Q1 of 2024, our New Zealand cinema revenue decreased by $323,000 to $2,600,000 versus the Q1 of 'twenty three, and the operating loss increased by $70,000 to a loss of $231,000 from an operating loss of $161,000 in the Q1 of 'twenty 3. Notable milestones achieved during the Q1 of 20 24 include the following, which are all reported in functional currency: Our Australian ATP of $13.62 was the 2nd highest first quarter ever for our Australian cinemas. This comes even though we strategically added compelling $10 ticket value options in early 2024 for guests at 8 of our theatres.

Speaker 1

Our Q1 2024 Australian F and B SPP of $7.66 is the 2nd highest Q1 ever for Australian cinemas and represents a 68% increase from the Q1 of 2019. We added another liquor license this past quarter and expect our Australian circuit to be over 75% licensed by the end of 2024. We also launched a new Gold Lounge F and B menu featuring new food items and a curated wine list with an emphasis on quality regional varietals. We entered into countrywide revenue generating promotions with blue chip global brands like Mastercard and Telstra, which helped us deliver the highest Q1 ever screen advertising in Australia for the Q1 of 2024. At 210 screens in the Q1 of 'twenty four, our screen count increased by 7% due to the Q3 2023 openings of the Angelica in Brisbane and the Reading Cinemas in Busselton.

Speaker 1

On an Australian dollar basis, these new builds helped generate a 7% increase in attendance and a 5% increase in total revenue compared to the Q1 of 2023. We believe we're well positioned to take advantage of the more encouraging slate in 2025 in Australia. With respect to our New Zealand cinemas, our Q1 2024 New Zealand F and B spend per head of $6.70 was the 2nd highest first quarter ever. And in New Zealand, we're also steadily increasing the percentage of F and B sold online. Now let's turn to our global real estate business.

Speaker 1

First and most importantly, due to our liquidity needs, let's start with our asset monetizations. During the Q1 of 2024, we sold our Culver City office building for $10,000,000 Factoring in our office needs in Los Angeles over the next few years, we chose to downsize and reduce our overall G and A cost structure. Our decision was also influenced by the effective bankruptcy of Worldwide Packaging, our 2nd floor tenant, which was leasing approximately 50% of the net rentable area of the building. We expect to save about $1,500,000 over the next 2 years. To improve the commute time of our Los Angeles based team and to take advantage of a dip in the downtown Los Angeles market, we intend to move our team downtown.

Speaker 1

Due to the current office market conditions in big cities including LA and the loss of the WWP tenancy, this monetization while improving our overall cash flow, generated a $1,100,000 book loss. As I touched on earlier, a key priority for the Company is to reduce our overall interest expense through debt reduction. Our Board has directed management to evaluate the Company's real estate portfolio for assets to monetize that will provide us with liquidity to pay down debt over the next few years as we wait for the global cinema business to rebound in full. As of today, our team has decided to put our Cannon Park assets on the market and pursue a sale. We expect that we will have a transaction completed by the Q4 of 'twenty four.

Speaker 1

We intend to lease back the Reading Cinema on the property on a long term basis from purchaser. As you know, we also currently have our 26 plus acre industrial site in Williamsport, Pennsylvania on the market. To continue boosting our liquidity to pay down debt, we expect to announce other asset monetizations within the next quarter. With respect to our real estate operations compared to the Q1 of 2023, our Q1 2024 global real estate revenue of $4,900,000 slightly dipped by 3%. And operating income of $890,000 decreased 12%.

Speaker 1

Noting that our intercompany rents are included in our segment reporting, the slight dip in these real estate metrics relate to property sales of Maitland New South Wales for A2.8 million dollars and the Culver City office building for $10,000,000 Our live theater circuit continued to achieve positive operational results for the Q1 of 2024 compared to the Q1 of 2023 and provided important cash flow for the company during a time when the real estate market, especially in New York City, is challenged. During the Q1 of 'twenty four, The Orpheum hosted comedian Rachel Bloom in a limited engagement of Death Let Me Do My Show. Then Eddie Izzard performed in a limited engagement which ended in mid April 2024. And in April 2024, we executed a license agreement for an open ended run of the Big Gay Jamboree being produced by, among others, Lucky Chap Entertainment, Margot Robbie's production company, and one of the producers, Barbie. This show stars performances at the Orpheum in mid September 2024.

Speaker 1

Audible, an Amazon company, continued to operate at the Moneta Lane Theatre and they mounted 3 new shows during the Q1 Energy Curfew Music Hour, Laura Bonatti Nobody Cares and Dead Outlaw. In April of 24, the license agreement with Audible was extended through March 15, 2026 and has a 1 year option to further extend to March 15, 2027. Turning to our Australian real estate operations on a local currency basis, our Q1 2020 4 Australian real estate revenue increased by $48,700 or 1 percent and our New Zealand real estate revenue of NUS596000 dollars increased by just $3,700 Reflecting a weaker foreign exchange rate for the Australian and New Zealand dollars with respect to U. S. Dollars, our Q1 2024 Australian real estate revenue of $3,100,000 slightly decreased by 2% in the Q1 of 2024 compared to the Q1 of 2023.

Speaker 1

And our Q1 2024 New Zealand real estate revenues of $365,000 decreased by 2% compared to the same period last year. As of March 31, 2024, we had 77 third party tenants in our combined Australian and New Zealand real estate portfolio. Our combined third party tenant sales for the quarter from our Australian real estate portfolio was AUD 28,500,000 Our 3rd party occupancy rate was 96%. During the quarter, we signed 2 new leases, 1 lease renewal and 1 assignment of lease. With respect to our development opportunities in the U.

Speaker 1

S. And New Zealand, as we've mentioned before, we recently engaged George Comfort and Sons, a full service New York City real estate firm with a proven track record of tackling complex and challenging urban projects to assist with the activation of the upper floors of 44 Union Square. In 2023, we resumed focus on realizing the value of our real estate holdings in the City of Philadelphia. Our properties include the just under 1 mile long Reading Viaduct, a raised rail bed and bridges reaching through the Callow Hill and Poplar neighborhoods in Philadelphia to Vine Street in the city's central business district near the proposed site for the new home of the Philadelphia 76ers. Calculated inclusive of our continuous contiguous properties, the Reading Viaduct comprises approximately 6.5 acres of land plus various bridges passing over various public streets and sidewalks connecting our various parcels into one continuous land holding unimpaired by any public thoroughfares.

Speaker 1

With respect to our assets in Wellington, New Zealand, we were approached by the Wellington City Council in late 2022 about accelerating the redevelopment of our Courtney Central building. For approximately 18 months, we engaged with representatives of the Wellington City Council about a transaction that would accelerate the redevelopment. While we were able to negotiate an agreement that was approved by the council and which would have facilitated financing for the initiation of the project, that agreement required the negotiation of definitive additional documentation. After months of negotiating that documentation and believing that we'd substantially finished it in all material respects, negotiations were purportedly terminated by the Wellington City Council on a unilateral basis without warning. This action followed a leak of the Company is reassessing its options the company is reassessing its options with respect to all of our real estate holdings in Wellington.

Speaker 1

In sum, while we're bracing for a slowdown in the global box office in 'twenty four as a result of the Hollywood strikes, we're optimistic about the movie slate in 2025 and beyond and are confident that our teams are pulling all appropriate operational levers to drive attendance and revenue ancillary to the box office. In 2024, we've worked with our lenders to provide some relief and we've activated another round of asset sales to sustain our company through 2024 and maintain a stable foundation into the future. This will also give the company the ability to focus on some of the most important real estate developments that will drive the most long term value for our stockholders. That wraps up my business review for now. I'm going to turn it over to Gilbert.

Speaker 2

Thank you, Alan. Consolidated revenues for the quarter ended March 31, 2024 decreased by thousand to CNY45.1 million when compared to the Q1 of 2023. This decrease was primarily driven by lower U. S. Food and beverage revenues, lower U.

Speaker 2

S. Advertising and other revenues and lower New Zealand admissions, compounded with a lower average ticket price as well as weakening Australia and New Zealand foreign exchange rate against the U. S. Dollar. Net loss attributable to Reading International Inc.

Speaker 2

For the quarter ended March 31, 2024, increased by CNY2.1 million to a net loss of CNY13.2 million when compared to the same period in the prior year. Basic loss per share increased by CNY0.09 to a basic loss per share of CAD0.59 for the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023. These results were primarily due to increased interest expense and the loss of the sale of our Culver City office building. Our total company depreciation, amortization, impairment and G and A expenses for the quarter ended March 31, 2024, decreased slightly by CAD200,000 to CAD9.6 million compared to the same quarter in the prior year. These decreases were due to a decrease in depreciation and amortization due to a delay in CapEx spending.

Speaker 2

For the Q1 of 2024, income tax benefit decreased by CAD 300,000 to an income tax benefit of CAD 220,000 compared to the equivalent prior year period. The change between the Q1 of 2024 and the Q1 of 2023 was primarily related to an increase in reserves for the unrecognized tax benefit in 2024. For the Q1 of 2024, our adjusted EBITDA loss increased by CAD1.1 million to a loss of CAD4 1,000,000 compared to the same prior year period. This increase was primarily the result of the loss on the monetization of our Culver City office building, along with slightly decreased cinema revenues offset by lower cinema expenses. Shifting to cash flows.

Speaker 2

For the 3 months ended March 31, 2024, net cash used in operating activities decreased by CAD8.8 million to a net cash used of CAD2.8 million when compared to the same prior year period. This was driven by an increase in operating liability, primarily accounts payable. Cash provided by investing activities for the 3 months ended March 31, 2024 increased by CNY9.2 million to cash provided of CNY7.6 million from a cash used of $1,500,000 This was due to a $9,600,000 net proceeds from the sale of our Culver City office building in February of for the 3 months ended March 31, 2024 increased by CNY9.8 million to CNY11.2 million due to the payoff of the citizens loan of $8,400,000 following the sales of the Culver City office building and an additional $275,000 debt repayment required when our Bank of America credit facility was amended on March 27, 2024. Turning now to our financial position, our total assets on March 31, 2024 were C494.9 million dollars compared to C533.1 million dollars on December 31, 2023. This decrease was driven by a $5,400,000 decrease in cash and cash equivalent from which we funded our ongoing business operations, a CAD 9,300,000 decrease in operating lease right of use assets, an CAD 8,600,000 decrease in operating properties and a $10,700,000 decrease in assets group held for sale.

Speaker 2

On March 31, 2024, our total outstanding gross borrowings were CNY195.7 million compared to CNY210.3 million on December 31, 2023. Our cash and cash equivalent as of March 31, 2024, were $7,500,000 which includes approximately $2,500,000 in the U. S, dollars 4,700,000 in Australia and $320,000 in New Zealand. In addition to address the liquidity pressure on our business, we are working with our lenders to amend certain debt facility and we have selected certain real estate assets for potential monetization. As Alan mentioned, we monetized our Maitland property in Australia during the Q1 of 2023 for A2.8 million dollars and during the Q1 of 2024, we completed the monetization of our Culver City office building for 10,000,000 and fully discharged the related mortgage.

Speaker 2

During the Q1 of 2024 on January 26, 2024, we extended our live theater loan maturity date to June 1, 2024. On March 27, 2024, we further extended our Bank of America loan maturity date to August 18, 2025, together with modification of certain financial covenants. On April 4, 2024, we extended the NAB loan maturity date to July 31, 2026, and NAB also provided a bridge facility of AUD 20 1,000,000. On April 23, 2024, we exercised a 1 year extension option for the loans with Emerald Creek Capital to extend the maturity date to May 6, 2025. With that, I will now turn it over to Andre.

Operator

Thanks, Gilbert. First, I'd like to thank our stockholders for forwarding questions to our Investor Relations email. As usual, in addition to addressing many of your questions in the prepared remarks from Ellen and Gilbert, we selected a few additional questions to offer additional insights from management. The first of these Ellen will address, in addition to the Australian Cinema Development project in Noosa, what was or is the other cinema that you said was planned for New Zealand? And what happened to this prospective development?

Operator

What are the screen count, timing and milestones providing more info on the prospective projects known to be going forward? Helen?

Speaker 1

At this point, the potential theater deal we had in New Zealand will not progress because the real estate developers terminated negotiations due to their concerns about increasing construction costs in New Zealand. They've indicated to us that they'll pursue other uses at the center. Today, we have one new theater project on the books in Australia. It's located in Noosa in Queensland and our landlord is Stockwell, who's a well regarded Queensland based developer, which is creating a 1st class mixed use project as part of its Noosa Civic Shopping Centre. They've filed a development application already, and our Reading cinema will be a 6 screen all recliner seat theater with an elevated F and B component, F and B component and at least 2 Titan Luxe auditoriums.

Speaker 1

Will again serve as the anchor for the new village being created, and we expect the theatre to be open by 2027.

Operator

Thanks, Ellen. If the sale of Cannon Park is successful, approximately what percentage of the proceeds could be expropriated to the U. S? How much, if any, of the new Australian $20,000,000 facility can we expropriate to the U. S?

Operator

Given the possibility of another strike in Hollywood this summer and the weeks late this year, is it not prudent to attempt to raise twice the capital that a Cannon Park sale would raise? Gilbert?

Speaker 2

The bridging agreement with NAB provided us with the short term liquidity that was needed by the business.

Operator

We have been

Speaker 2

able to expropriate some of these funds out of Australia. The agreement further calls for repayment of the bridge facility out of any sale proceeds from the Cannon Park. As Ellen stated in her comments, our board has directed management to further evaluate the company's real estate portfolio for assets to monetize that will provide us with liquidity to pay down debt over the next few years.

Operator

Thanks, Gilbert. In light of the fact that any net proceeds from the proposed sale of the Williamsport Industrial Property won't come close to paying off the current outstanding balance due on the Bank of America U. S. Term loan, costing costly Valley National Bank loan maturing this October on cinemas 1, 23, when does it make sense for the Board to decide to more formally and aggressively offer up all or part of the cinemas 1, 2, 3 property for sale? Helen, can you address this?

Speaker 1

Yes. And yes, our stockholder is correct that the Williamsport sale will not pay off the balance of the Bank of America term loan and the other maturing debt. As I've addressed in my earlier comments and the answer that Gilbert just provided on Cannon Park, Under the board's directive, management is actively evaluating our entire real estate portfolio for assets to monetize. That evaluation is taking into account a myriad of factors including the conditions, the market conditions in each market where our asset is located. Today, the sale process is underway for our Cannon Park, asset, which is a major asset for us.

Speaker 1

As I mentioned earlier, we expect to announce other assets for sale during the Q2 of this year.

Operator

Thanks, Helen. And we'll round up with the final question regarding our new LA corporate HQ office plans and operating costs. 6 weeks ago on the quarter 4 2023 audio cast, you said you were finalizing a lease for office space in downtown LA and expect it to be in the space within 6 to 8 weeks. What is the status of the move and expectations of year on year quarterly cost savings. Well, the devil is in the detail.

Operator

We are in the final stages of negotiating the lease and expect it to be signed before the end of this Q2. Following that, occupancy should occur within 4 to 6 weeks after signing. As is typical for leases of built out space in this market, the LOI provides for certain TIs and rent abatements. Over the next 2 years, we expect to achieve a savings of at least GBP 1,500,000. In the interim, we are conserving cash by working remotely and creatively to meet our space needs.

Operator

With that answer, we'll conclude this Q1 2024 earnings call. We appreciate the questions that you have provided us and thank you for listening to today's call. We'd like to take this opportunity to wish everyone good health and safety. Thank you again.

Powered by Quartr