Earnings Call Transcript - RDI Q3 2023

Andrzej Matyczynski, Executive Vice President of Global Operations

Thank you for joining Reading International’s Earnings Call to discuss our 2023 Third Quarter Results. My name is Andrzej Matyczynski, and I’m Reading’s Executive Vice President of Global Operations. With me as usual are Ellen Cotter, 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’ll run through the usual caveats. 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 all 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. Reconciliations and definitions of non-GAAP financial measures, which are segment operating income, EBITDA and adjusted EBITDA, are included in our recently issued 2023 third quarter 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 cost 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 two-year SEC requirement for determining whether an item is non-recurring, infrequent or unusual in nature. We believe that the adjusted EBITDA is an important supplemental measure of our performance. In today’s call, we also use an industry-accepted financial measure called Theater Level Cash Flow - TLCF, which is theater level revenue less direct theater level expenses. ATP, average ticket price, is also used as an accepted industry acronym. We will also use a measure referred to as F&B Spend Per Patron - SPP, which is a key performance indicator for our cinemas. The F&B SPP is calculated by dividing cinema’s revenues generated by food and beverage sales by the number of admissions at that cinema. Cash Flow Pre-Occupancy, CFPO, is an internal measure that we use to show the profitability of a particular location on a level playing field. This measure ignores the ownership versus leasing issues associated with the location by excluding depreciation/amortization and/or rent, common area costs and real property taxes. Please note that our comments are necessarily summary in nature, and anything we say is qualified by the more retail disclosure set forth in our Form 10-Q 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 2023 third quarter results and discuss our business strategy going forward, followed by Gilbert, who will provide a more detailed financial review.

Ellen Cotter, President and Chief Executive Officer

Thanks, Andrzej. Welcome, everyone to our call today, and thank you for listening in. During 2023, we've demonstrated that we're clearly on the path to recovery. During each quarter of this year, we've delivered operational results that were an improvement over 2022 and in some cases, we established new record highs. Our third quarter of 2023 was a continuation of that story. At $66.6 million, our third quarter Global total revenue represented the highest since Q4 of 2019, a 95% recovery of our Q3 2019 global total revenue. At $1 million, our Q3 global operating income represented a 115% improvement compared to Q3 2022 and was the second highest since Q4 of 2019. Each of our global operational divisions—cinema, live theater and real estate—contributed to the quarter's success with each division delivering higher cash flow results compared to the third quarter of 2022. Thanks to a stronger movie slate led by the phenomenal success in July at Barbenheimer, coupled with a strong operational performance from our cinema management teams, our global cinema revenue topped $62.7 million, which was 30% better than Q3 2022 and represented 94% of Q3 2019, marking the highest third quarter achieved since Q4 of 2019. Our Q3 2023 real estate revenue of $5.1 million represented a 24% increase over the same quarter last year, marking a record third quarter for our US real estate division. Our Q3 2023 real estate operating income of $900,000 represented an increase of over 700% compared to the same period in 2022. These third quarter real estate results were driven by the rental stream from Petco, our new tenant at 44 Union Square that opened its flagship retail store in New York in June of 2023, the strong performance of our live theaters in New York City, which delivered the highest third quarter theater-level cash flow since the pandemic, and the continued solid performance of our third-party tenant real estate portfolio in Australia and New Zealand, which now has 77 third-party tenants and a 97% occupancy rate in available space. While our operational results are encouraging and demonstrate our business moving in the right upward trajectory, we remain focused on our debt and liquidity conditions and further recognize that the duration of the recently settled Hollywood strikes will negatively impact our box office in 2024. Given our upcoming 2023 and 2024 debt maturities, coupled with the current interest rate environment, which has resulted in the payment of over $5 million in interest in just the third quarter, we've recognized the urgency to improve our liquidity and strengthen our balance sheet. As we've previously reported, we intend to monetize the built-in gain in some of our real estate assets to ensure the company's long-term viability. In October of 2023, we sold our property in Mainland, New South Wales for AUD 2.8 million, which had a book value of AUD 1.4 million. Two other assets are currently being held-for-sale, and we're evaluating the rest of our portfolio for strategic options to pursue while taking into account suboptimal market conditions for commercial real estate. With that, let's look more closely at our global cinema business, which has provided the foundational cash flow to support our asset growth over the last few decades. The strong diversified movie lineup drove our impressive third quarter box office results for our global cinema business. The premiers of Barbie and Oppenheimer, both released on July 21st, led to the fourth biggest box office opening weekend in history. As of today, Barbie has grossed over $1.4 billion globally and is the highest grossing film of 2023. Its opening weekend generated over $337 million in worldwide grosses, making it the highest grossing opening weekend for a non-franchise film ever. Similarly, Oppenheimer has grossed over $949 million at the global box office, becoming the third highest grossing film of the year, and the highest grossing World War II movie of all time as well as the highest grossing biographical movie of all time. Not only was Barbenheimer a cultural phenomenon, other films also contributed to our third quarter results, including Sound of Freedom, the unlikely summer box office hit that's now one of the most successful independent films of all time and fan-favorite franchises returning to the big screen such as Mission Impossible, Indiana Jones and Teenage Mutant Ninja Turtles. While the strong box office was the key to our third quarter success, our global cinema management teams worked on almost every line of the P&L to improve our overall profitability. In fact, our cash flow pre-occupancy per capita for the third quarter 2023 was the highest that that metric has ever been for any third quarter ever across all of our cinema divisions in the US, Australia and New Zealand. This winning combination of box office and management prowess drove our third quarter 2023 global cinema operating income to improve by 306% to $4.4 million compared to an operating loss of $2.1 million during the third quarter of 2022. The box office momentum experienced during the third quarter supports our optimism for the cinema industry and our company as a whole as we head into the final weeks of 2023. The fourth quarter has even started out somewhat better than we anticipated given the uncertainty created by the actor strike. On October 13th, the Swifties came out for the opening weekend of Taylor Swift: The Eras Tour, making it the highest grossing film of its kind in North America. As of today, it's grossed over $241 million globally. On October 20th, adult audiences returned for the release of Martin Scorsese's Killers of the Flower Moon, produced by Apple, which has grossed over $138 million globally and marks the best wide release for a film produced by a streaming service. For Halloween, horror fans were treated to Five Nights at Freddy's on October 27th. This cinematic adaptation of a popular video game generated over $132 million in its opening weekend and delivered the highest opening in North America for a PG-13 horror film in over two decades. In late November, the release of Director Ridley Scott's Napoleon will see another production from a streaming service by a major studio and will hopefully benefit the entire exhibition community. We'll also see a diverse mix of titles that we anticipate will attract audiences of all ages, such as the Hunger Games: The Ballad of Songbirds and Snakes, Migration, Wonka, The Color Purple, and Aquaman and the Lost Kingdom. The last weeks of 2023 should benefit greatly from the recently settled SAG-AFTRA strike, allowing for movies like Aquaman and Wonka to be fully promoted with support from lead actors, Jason Momoa and Timothy Chalamet. While we're thrilled that the writers and actors strike have concluded, we anticipate that the halt in movie production from May 2023 until this month will negatively impact the release schedule for 2024 and even early 2025. Now, let's turn to our US cinema division, which again delivered encouraging third quarter results. Our attendance in this division increased 27% from Q3 2022. Our US cinema revenue increased by 39% to $34.2 million compared to Q3 2022, representing the best quarterly revenue performance since Q4 2019 and outpacing Q2 2023 revenue performance. Our US cinema operating income increased by $4.3 million compared to the third quarter of 2022, and our positive theater level cash flow was almost 200% ahead of the same quarter last year. Other notable third quarter milestones included an average ticket price of $12.81, the highest for any third quarter. Our continued focus on F&B led to an F&B SPP of $7.58, which is the third highest third quarter ever. It’s impressive considering all of our US cinemas offered value-priced Tuesdays with concession discounts in addition to various other F&B discount programs. Our ancillary revenue generated from theater rentals and online service fees was the highest third quarter on record. Our US specialty cinemas continued to shine, led by the Angelica Film Center in New York City. Our third quarter 2023 box office at the Angelica increased by over 100% compared to the third quarter of 2022 and was higher than the box office recorded in the third quarter of 2019. The gross box office engagements of Past Lives at the Angelica New York ranks as the highest in the US since the film premiered on June 2 of 2023, grossing over $605,000. Theater Camp, which opened in July, achieved its highest box office engagement at the Angelica New York. Our Angelica membership, launched in April of 2022, has exceeded 100,000 members. In the last quarter, our programming, operating and marketing teams have worked hard, and our executive team has focused on reducing fixed expenses by renegotiating leases across the portfolio, closing unprofitable cinemas that required significant capital investment for profitability, and taking steps to stem theater cash losses. As reported in our 10-Q, we closed two cinemas in Hawaii in July and just closed another Reading Cinema in Rohnert Park, California. In each case, these cinema leases were either at the end of their term or held on a month-to-month basis. Now, turning to our international cinema divisions. Our Australian circuit also delivered an encouraging third quarter 2023 performance, benefiting from movies like Barbie, Oppenheimer, Mission Impossible, Indiana Jones, and Elemental. The Australian cinema revenue of $24.2 million increased by 21% compared to Q3 2022 and marked the best third quarter revenue since Q3 2019. Our Australian cinema operating income increased by 123% compared to the same quarter last year, reaching $3.5 million. Given the continued decline in the value of the Australian dollar, these operational increases were even more impressive when measured in local currency. Our Australian circuit achieved significant milestones during the third quarter, including an average ticket price of AUD 13.74, the second highest for any third quarter. Our F&B SPP reached AUD 7.24, the second highest third quarter ever, and online F&B sales continue to grow, achieving about 9% of total Australian F&B sales, up from 7.3% in Q3 2022. Throughout the quarter, we executed growth initiatives and developed our pipeline in Australia, including the opening of our eight-screen Angelika Film Center at South City Square in Brisbane on August 24, 2023, and the opening of our five-screen Reading Cinema with TITAN LUXE at Busselton in Western Australia on September 22, 2023. Turning to New Zealand, our Q3 2023 cinema revenues increased by 16% to $4.3 million compared to the same quarter last year. Our third quarter New Zealand cinema operating income rose by $277,000 compared to the third quarter last year, reaching $551,000. Our New Zealand circuit achieved notable milestones during the quarter, with an average ticket price reaching $12.05, the highest for any third quarter, and an F&B SPP of NZD 6.25, the second highest third quarter ever. Our online F&B sales also grew in New Zealand, achieving 7.2% of total F&B sales, up from 5% in Q3 2022. Now let's focus on our global real estate business. Our Q3 2023 global real estate revenue increased by 24% to $5.1 million compared to Q3 2022, and our third quarter 2023 real estate operating income of $920,000 improved by 700% from the same quarter last year. The improved third quarter real estate operating results are primarily due to Petco at 44 Union Square, whose rent commenced in Q4 2022, along with increased attendance at our Medallion theater, which continues to be the home of Audible Theater. Our real estate business achieved the highest third quarter real estate revenue and operating income since Q3 2019. In the US, our third quarter 2023 real estate revenue increased by $1.1 million, or 206% to $1.6 million, primarily due to Petco's rent and increased revenue from our live theaters in New York City. On a US dollar basis, Australian real estate revenue for Q3 decreased slightly by $91,000 to $3.1 million compared to Q3 2022, and in New Zealand, our Q3 real estate revenue decreased slightly by $10,000 to $380,000 compared to the same quarter last year. Regarding our Australia-New Zealand real estate portfolio, as of September 30, 2023, we had 77 third-party tenants for available spaces, achieving a total third-party occupancy rate of 97%. We executed four leases during the quarter: three new leases and one lease renewal. Our Australian third-party tenants achieved sales for the quarter of over AUD 30 million. Now turning to the status of our asset monetizations to support our liquidity needs. I mentioned earlier that our cinema property in Mainland New South Wales sold for AUD 2.8 million, with the sale closing on October 25, 2023, while we leased back the cinema on a short-term rental basis. This was a transaction that, while supporting our liquidity needs, was also driven by competitive market conditions. This reflects that we are not conducting fire sales of our tangible assets but are in the process of strong strategic monetization. All real estate assets monetized since the beginning of the COVID-19 pandemic have reached full value that was not distressed and would have required substantial capital investment to generate any meaningful increase in value. Concerning our office building in Culver City, California, unfortunately, Newmark has not been able to sell the building at its advertised price. We believe that the property has a fair market value in excess of its book value, but the office market in Los Angeles continued to deteriorate due to interest rate hikes, ongoing work-from-home trends, and increasing office space vacancies. The 27,000 square foot space is strategically located in Culver City, surrounded by some of the most important leaders in entertainment and media, right on the I-405 and across the street from a Westfield Mall. To expand our reach to potential buyers globally, we're putting the asset up for marketing and auction on a leading international online auction platform, expecting the building to be sold through this auction process in the first quarter of 2024. Newmark will continue to be the exclusive listing agent throughout this process. We anticipate gaining a clearer picture of potential purchasers while also offering it on a vacant occupancy basis. However, we are open to negotiations with investors looking to purchase the building with leaseback for the second floor, where we currently occupy. Our first-floor tenant surrendered its premises in breach of its lease, and we have drawn down on a letter of credit securing obligations under that lease. The first floor is fully built out and ready for occupancy. Our almost 27-acre industrial site in Williamsport, Pennsylvania, is a property that does not hold any strategic value for our company. We've received proposals from potential buyers, but we do not believe they reflect fair value based on an independent September 2023 appraisal. Our broker, CBRE, continues its marketing efforts, and we're offering the property on a vacant possession basis as our long-term industrial tenant has given notice to terminate its month-to-month tenancy at the end of November. A principal component of its value is its connection to the principal rail line servicing that part of Pennsylvania and its extensive rail yard. Our Reading Viaduct property, together with various adjacent properties in Philadelphia, continues to be an area of focus for us. These properties have been part of our company for over 100 years and, consequently, do not show as material assets on our balance sheet. Despite having negligible book value, they collectively aggregate over 350,000 square feet of land and bridgeworks. In light of the benefits brought to New York City by the High Line and support for the development of the Camden Highline in London, which recently received planning approval, we believe that this uninterrupted corridor connecting Spring Garden to Center City in Philadelphia has significant potential value. While shorter than the New York Highline at approximately 3,200 feet, it is significantly wider. Its southern terminus connects to Center City, a short distance from the proposed new home of the 76ers, and its northern end connects to the Spring Garden neighborhood, where significant new housing units have just been completed or are under construction. While the Viaduct is a unique property for which there are no ready sale comparables, recent land sale transactions along the Viaduct suggest considerable potential value. Recently, we've begun demolishing obsolete structures on the Viaduct and on our adjacent properties. The Philadelphia City Council currently has before it a proposed ordinance to enable the city to acquire part of our interest in the Viaduct and transfer it to a non-profit entity for development as a park. We're in discussions with the city and community leaders regarding such a transaction and provisions that could enhance value for our remaining holdings. We've also explored the potential sale in whole or in part of the Cinema 1, 2 & 3 property in New York City, or otherwise reducing our interest in that property. However, commercial real estate values in New York have been significantly affected by elevated interest rates, office vacancies, and the work-from-home preferences of employees. We're balancing our necessity to raise sufficient liquidity against the risk of selling at a low point in the real estate cycle. With that, I'll wrap up my business overview for the third quarter, and I'll turn it over to Gilbert.

Gilbert Avanes, Chief Financial Officer and Treasurer

Thank you, Ellen. Consolidated revenues for the quarter ended September 30, 2023, increased by $15.4 million to $66.6 million when compared to Q3 2022. This increase was primarily driven by increased revenue from a strong film slate and rent recognized in Q3 2023 from our Petco tenancy at our 44 Union Square property that did not occur in the same period of the prior year. Consolidated revenue for the nine months ended September 30, 2023, increased by $21.5 million to $177.4 million when compared to the same period of the prior year, driven by improved performance across our worldwide cinema circuit due to a stronger movie slate and the new rental stream from Petco at 44 Union Square, offset somewhat by a decrease in the value of Australia and New Zealand currencies. The net loss attributable to Reading International for the quarter ended September 30, 2023, decreased by $0.8 million to a net loss of $4.4 million, when compared to the same period in the prior year. Basic loss per share decreased by $0.03 to a basic loss per share of $0.20 for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. These results were due to improved segment revenue, decreased depreciation and amortization expense, offset partly by increased interest expense and decreased other income. The net loss attributable to Reading International for the nine months ended September 30, 2023, decreased by $4.7 million to a loss of $18.3 million when compared to the same period in 2022. Basic loss per share was $0.82 for the nine months ended September 30, 2023, compared to a basic loss per share of $1.04 for the nine months ended September 30, 2022. This was due to better cinema segment results, increased attendance in our US cinema circuit, enabling more patrons to return to theaters and a stronger film slate. The rent recognized from our 44 Union Square tenant Petco during the first nine months of the year did not occur in 2022, accompanied by decreased G&A expenses and depreciation and amortization expenses, which were partly offset by increased interest expense and a decrease in other income. Our total company depreciation, amortization, impairment and general and administrative expenses for the quarter ended September 30, 2023, decreased slightly by $0.3 million to $10 million compared to the same quarter in the prior year. For the nine months ended September 30, 2023, these expenses decreased by $5.1 million to $29.6 million compared to the same period in the prior year. The decreases are attributed to impairment expenses incurred in 2022 that did not occur in 2023 and decreased depreciation and amortization due to delays in CapEx spending. For Q3 2023, income tax expense increased by $0.6 million to income tax expense of $0.9 million compared to the equivalent prior year period. The changes between Q3 of 2023 and Q3 of 2022 is primarily related to an increase in the reserve for valuation allowance in 2023. For the nine months ended September 30, 2023, income tax expense decreased by $1.2 million to $0.3 million compared to the equivalent prior year period. The changes between the nine months of 2023 and 2022 are primarily related to decreases in reserves for unrecognized tax benefits in 2023. The third quarter of 2023 saw our adjusted EBITDA increase by $2.3 million compared to the same prior year period, reaching $6.1 million. This increase was primarily driven by strengthened cinema operating performance and rent from our Petco tenant. For the nine months ended September 30, 2023, our adjusted EBITDA increased by $5.4 million to $10 million compared to the same prior year period, due to improved net income loss resulting from enhanced cinema operations and an increase in real estate rental income from Petco, which was not recognized in the same time frame of the prior year. Shifting to cash flow for the nine months ended September 30, 2023, net cash used in operating activities decreased by $19.7 million to a net cash used of $6.4 million compared to the same prior year period, driven by improved cinema operating performance relative to the past year, receipt of rental income from tenants at our 44 Union Square property, which did not occur in the same period in the prior year, and an increase in operating liabilities primarily including accounts payable and accrued expenses. Cash used in investing activities for the nine months ended September 30, 2023, was $6.2 million, remaining relatively flat compared to $6.4 million for the same period last year. Cash used in financing activities for the nine months ended September 30, 2023, decreased by $4.1 million to $3.9 million due to borrowing on our existing facility. Turning now to our financial position. Our total assets on September 30, 2023, were $532.6 million compared to $587.1 million on December 31, 2022. This decrease was driven by an $18 million decrease in cash and cash equivalents as we funded our ongoing business operations and a $19.7 million decrease in operating lease write-off use asset. As of September 30, 2023, total outstanding borrowings were $208.6 million compared to $215.6 million on December 31, 2022. Cash and cash equivalents as of September 30, 2023, were $11.9 million, which included approximately $5.5 million in the US, $5.6 million in Australia and $0.7 million in New Zealand. To address liquidity pressure on our business, we have closed some underperforming cinemas and have identified certain real estate assets for potential monetization, listing them for sale. In Q1 2023, we modified our Bank of America loan, extending the maturity date of the facility to September 4, 2024, and in May 2023, our required monthly repayment of $725,000 commenced. By September 29, 2023, we paid down $1.2 million of our Cinemas 123 Term Loan and extended its maturity date from October 3, 2023, to October 1, 2024. In August 2023, we modified our revolving corporate market loan facility with NAB, adjusting certain covenants and extending the maturity date of this facility to July 31, 2025, to continue maintaining the debt as non-current. As we focus on preserving our liquidity, no shares were purchased during the quarter ended September 30, 2023, and our stock repurchase program has and will likely continue to take a lower capital allocation priority for the foreseeable future. With that, I will now turn it over to Andrzej.

Andrzej Matyczynski, Executive Vice President of Global Operations

Thanks, Gilbert. First, I'd like to thank our stockholders for forwarding questions to our Investor Relations email. In addition to addressing many of your questions in the prepared remarks from Ellen and Gilbert, we've selected a few additional questions to offer insights from management. The first question for Ellen—we received several inquiries about our assets in Wellington, New Zealand, seeking an update on our development process.

Ellen Cotter, President and Chief Executive Officer

With respect to our properties in Wellington, we remain committed to finding a path to redeveloping those properties, which includes Courtenay Central, temporarily closed since January of 2019. As a reminder, Courtenay Central, which is one of three parcels we have in the Wellington CBD, was the foundation of our New Zealand business. It was the cash-flowing asset that powered both our cinema and real estate businesses in that country. In 2019, we closed the majority of the building in Wellington due to the discovery of seismic issues that could potentially put the families of Wellington at risk. We're committed to the people-first approach we've taken to date. We recognize the economic challenges that have impacted our business over the past several years, and we continue to take actions that we believe are in the best interest of our company and stockholders. We continue to be impressed by the accentuated elevation of Wellington City with its counsel, marked by the spectacular opening of Tākina and the innovations at St. James Theater. No assurances can be given that we'll succeed in completing those redevelopment plans. Our management team is very focused and dedicated to working with various stakeholders to find a workable path to commencing our redevelopment efforts. As we move toward that, we believe the outcomes will be exciting, not only for Wellingtonians and tourists to this capital city, but also for our stockholders.

Andrzej Matyczynski, Executive Vice President of Global Operations

Thank you, Ellen. Interest expense thus far in 2023 has exceeded EBITDA. Do you think that you can effectuate asset sales large enough to address your debt and once again have EBITDA exceed interest expense? On what timeline should investors expect that you will regain this position? Can you provide any color on the status of your attempts to sell the Culver City headquarters or the Williamsport property? Gilbert, can you answer this multi-part question, please?

Gilbert Avanes, Chief Financial Officer and Treasurer

We are actively pursuing the monetization of certain assets detailed in our Q2 report to provide sufficient funds to ensure we have appropriate liquidity to meet our obligations. We have solid relationships with our lenders and have managed to extend our loans. In the last quarter, we extended our largest loan with NAB to July 31, 2025, and also extended our Cinemas 123 loans to October 1, 2024. The recent end of the Hollywood strike gives us more confidence that 2023 will conclude positively, delivering better performance than 2022. As for Williamsport, the offers we've received do not reflect their fair value. Regarding our Culver City office, we expect the building to be sold in the first quarter of 2024.

Andrzej Matyczynski, Executive Vice President of Global Operations

Thanks, Gilbert. Ellen, are there additional underperforming theaters that you have identified for near-term closure? What is the estimated timing and future savings?

Ellen Cotter, President and Chief Executive Officer

As mentioned earlier, in the US, we've closed four underperforming theaters since late 2022, each of which was either at the end of its term or on a month-to-month tenancy. We estimate that the cash savings from those theaters will be well over $1 million annually. As of today, we haven't closed any underperforming theaters in Australia or New Zealand. As leases become due, we will review the historic cash flow from each theater and the projected CapEx necessary to keep it competitive. If we do not foresee achieving double-digit returns on invested dollars, our intention is not to exercise the option or seek to negotiate a new lease. Our management teams are laser-focused on ensuring that each theater can generate sufficient cash flow moving forward. During 2024, we plan to evaluate a few more theaters in the US for potential closure, always aiming to work out balanced agreements with landlords that could provide confidence for sufficient future cash flow.

Andrzej Matyczynski, Executive Vice President of Global Operations

Thanks, Ellen. Lastly, what are Reading's intermediate term plans to maximize and optimize the value of each of the Minetta Lane and Orpheum Theater sites?

Ellen Cotter, President and Chief Executive Officer

Our plan is to continue operating the Orpheum and Minetta Lane as Off-Broadway venues. Given the current costs of Broadway productions, there is considerable interest in Off-Broadway venues. Our Minetta Lane has been the home of Audible Theater for over five years, and they've expressed interest in renewing their license for a multi-year term. It may be that at some point, a sale or redevelopment of one or both of these properties could make more sense than continuing to enjoy cash flow from their operations. However, we do not believe that time is now, especially considering current market conditions, interest rates, and development costs.

Andrzej Matyczynski, Executive Vice President of Global Operations

And that brings us to the end of the conference call. I would like to thank everybody that participated and sent questions for some information from the management team. We appreciate you listening to the call today. Thank you for your attention and wish everyone good health and safety.