Earnings Call Transcript - RDI Q2 2021

Andrzej Matyczynski, Executive Vice President of Global Operations

Thank you for joining Reading International's Earnings Call to discuss our 2021 Second Quarter Results. My name is Andrzej Matyczynski, and I am 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 will just 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 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 2021 second 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 operation. Such costs include legal expenses relating to extraordinary litigation and any other items that can be considered non-recurring in accordance with the two-year SEC requirement for determining an item is non-recurring, infrequent or unusual in nature. We believe 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. We also use a measure referred to as F&B spend per patron, which is a key performance indicator for our cinemas. The F&B spend per patron 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 10-Q and other filings with the U.S. Securities and Exchange Commission. So with that behind us, I’ll turn it over to Ellen, who will review our 2021 second quarter results and discuss our strategies for navigating Reading through the COVID-19 pandemic to the post-COVID era; followed by Gilbert, who will provide a more detailed financial review. Ellen?

Ellen Cotter, President and Chief Executive Officer

Thanks, Andre. We're happy to report that as of June 30, 2021, our company, which is in both the cinema and real estate businesses in the U.S., Australia and New Zealand, is in a significantly stronger position compared to where we were last year and all prior quarters since March of 2020. During Q2 2021, we continued to navigate through the COVID-19 pandemic. And again, we're pleased that the fundamentals of our diversified business strategy supported Reading and its subsidiaries through this unparalleled crisis. Confronted with the elimination of most of our cinema cash flow in 2020 due to the COVID-19 pandemic, we considered a variety of possible routes to increase our liquidity. These included raising new capital, taking on new debt, and monetizing certain assets that had appreciated substantially during our ownership, but would require significant amounts of new capital in order to progress them to the next level of value. We decided that rather than dilute our stockholders by issuing stock at low prices or mortgaging our future by taking on additional debt, it was in the best interest of our company and our stockholders to monetize certain readily sellable assets. Over the past six months, we have successfully monetized four assets, which contributed to our ability to pay down debt by over $32 million and still have cash on hand of $111 million or $111.8 million as of June 30, 2021. In early June 2021, we monetized our entertainment themed center, Auburn/Redyard, which included 114,000 square feet of undeveloped land in a suburb of Sydney for $69.6 million or AUD90 million. We have recognized a gain on sale after transaction costs of $38.7 million or AUD50.1 million. As part of this transaction, we lease back our Reading Cinemas at Auburn/Redyard from Charter Hall, the buyer. At the end of June 2021, we monetized our Royal George Theater complex in Chicago for $7.1 million and recognized a gain on sale after transaction costs of $5 million. The monetization of these two assets in Q2 2021 follows the monetization of two non-income producing properties in Manukau, New Zealand, and Coachella, California in the first quarter of 2021. During Q2 2021, the majority of our operating businesses had been reactivated. At $36 million, our Q2 2021 consolidated total revenues increased over 950% from the second quarter of 2020, when most of our operations were shut down due to COVID restrictions. And we were encouraged that this $36 million in total revenues was about 70% higher than our Q1 2021 consolidated total revenues. This increase was despite the fact that during Q2 2021, over half of our Australian cinemas temporarily closed due to state-specific lockdowns required because of the Delta variant. Regarding our cinema business at June 30, 2021, 20 of our 24 cinemas in the U.S. were open and trading, 9 of our 10 cinemas in New Zealand were open and trading, and due to the Delta variant outbreaks, 16 out of our 25 cinemas in Australia were open and trading as of this date. On June 26, 2021, we opened our second new cinema in Australia during the COVID-19 pandemic, Reading Cinemas at Millers Junction Village in Victoria. It features two TITAN LUXE screens, all luxury recliner seating, and an F&B menu that offers craft and local beers and a curated hot food menu. Despite the Delta variant conditions in Australia, our global cinema business in Q2 2021 exceeded our expectations due to the positive rollout of vaccines in the U.S. and the reassuring global box office performance of several Hollywood movies: Quiet Place Part II, Demon Slayer, Godzilla vs. Kong, F9: The Fast Saga, Cruella, and The Conjuring: The Devil Made Me Do It. Regarding our real estate business during Q2 2021, at June 30, 2021, our combined Australian New Zealand portfolio had 73 third-party tenant spaces with a gross leasable area, or GLA of just about 260,000 square feet. Of that GLA, 95% was occupied by third-party tenants leaving eight vacant third-party tenant spaces. Currently, in Australia and New Zealand, 71 third-party tenants are open, and two tenants are temporarily closed due to tenant fit-out works, and only two third-party tenants received minor COVID-related abatements during Q2 2021. We continued with our third-party leasing activity by completing five new leases and two lease renewals at Newmarket Village, Cannon Park, and Courtenay Central, collectively representing over 19,300 square feet. Turning to the U.S., we enjoyed our second full quarter of rent on a straight-line basis from our Culver City office tenant. We worked to reopen the Orpheum theater in New York City, which resumed public performances of STOMP on July 20, 2021. To date, STOMP has been one of the first shows to resume performances in both Broadway and off-Broadway in New York. We also carried on discussions with national retailers for retail space at 44 Union Square. Our operational results were further enhanced by the comparative strengthening of the Australian and New Zealand dollars against the U.S. dollar during this time period, which Gilbert will touch on in a few minutes. During the second quarter of 2021, we continued to strengthen our liquidity position and balance sheet. As of June 30, 2021, Reading had cash and cash equivalents of $111.8 million compared to $26.8 million as of December 31, 2020. We reduced our total debt to $252.7 million compared to $285 million on December 31, 2020. During the second quarter, we permanently repaid $11.2 million or NZD16 million to Westpac. We permanently repaid $15.7 million or AUD20 million on our NAB revolver, paid down $4.9 million on our Bank of America revolver, and closed a new three-year $55 million loan facility with Emerald Creek Capital, which secured our 44 Union Square, of which $43 million was immediately drawn. Due to the strong asset monetizations and their timing, we reported Q2 net income of $22.7 million, basic earnings per share of $1.04, and EBITDA of $37.1 million. As a result of these transactions, each of these financial metrics for Q2 2021 represented record highs, not only for second quarters but also for any calendar quarter for Reading. While we're pleased with the progress we've made, we're still cautiously monitoring the evolving situations related to the Delta variant and other potential coronavirus variants and vaccination rates in Australia, New Zealand, and the United States. It goes without saying that new Delta variant conditions could further impact businesses that are public-assembly centric. Our Australian cinemas, along with the whole Australian cinema industry, were impacted by the recent Australian state lockdowns. These conditions highlight the pressing need for us to get cooperation from our 48 third-party cinema landlords to ensure that our occupancy costs are contained and managed during periods when we're prohibited from maximizing our profitability due to government-mandated closures, as well as seating and showtime restrictions. So, while the execution of our diversified business strategy has ensured that the company is on a steadier path compared to earlier periods, we know we're not out of the woods yet. Now let's turn to more specifics about our global cinema business. At $32.7 million, our Q2 2021 global cinema total revenues increased by $31.8 million or almost 2600% from just $1.2 million in Q2 of 2020. We reported a second-quarter 2021 cinema operating loss of $7.3 million versus an operating loss of $17.3 million in Q2 of 2020. In an encouraging sign of progressively improving operations, our Q2 2021 global cinema revenues increased 81% from the first quarter of 2021. And our Q2 2021 global cinema operating loss decreased by 11% from the first quarter of 2021. However, reflecting the significant impact of COVID-19, at $32.7 million, our Q2 2021 global cinema revenues were just 45% of our Q2 2019 global cinema revenues of $72.4 million. As I mentioned earlier, on June 30, 2021, only 45 of our 59 global cinemas, excluding joint ventures, were open. The Delta variant lockdowns in Australia impacted our second quarter 2021 Australian cinema division. Today, 41 of our 59 global cinemas, excluding joint ventures again, are open. Again, some theaters still have social distancing and seating capacity restrictions and all bear the increased cleaning and safety costs required to generate guest confidence in a COVID-19 operating environment. Our Q2 box office performance of F9: The Fast Saga, A Quiet Place Part II, and Demon Slayer continue to demonstrate the global pent-up demand for experiencing movies in a shared cinema environment. And reflecting our focus on food and beverage, our F&B per patron in all three countries, despite the pandemic, continues to be strong. For Q2 2021, we had an F&B per patron in the U.S. of $7.72, and in Australia, $6.46. At $5.58, our New Zealand F&B per patron set an all-time highest quarterly record. For Q2 2021, on a theater level cashflow basis, which only reflects current occupancy costs paid, all three of our cinema circuits in the U.S., Australia, and New Zealand generated positive cash flows and had increases above Q1 2021 of 130%, 26%, and 127%, respectively. While this cash flow improvement, after current occupancy costs paid, sounds encouraging, during Q2 our global management teams continued to proactively manage our cinema cash burns across all three countries. Because of the severe impact we've suffered from COVID and could still suffer, we continue to aggressively seek further extensions of our existing deferrals and abatements with our global third-party landlords. Now let me give you some specific highlights and detail about our global cinema business. Starting with the U.S. As of today, 20 of our 24 U.S. cinemas are operating. Today, seating capacity restrictions continue to apply in Hawaii. Of the 20 cinemas that are open, none of our U.S. cinemas have had to temporarily reclose in 2021 due to the Delta variant. The four U.S. theaters that remain closed are all in Hawaii. We recently reactivated the renovation of our consolidated theater at the Kahala Mall in Honolulu. Our renovation includes converting all eight screens to recliner seating, a renovation of the lobby areas, and a full F&B upgrade. We're targeting a Q4 2021 relaunch. We've also begun renovation plans for our consolidated theater in Kapolei in West Oahu. We're adding luxury recliners to certain auditoriums and completing a lobby renovation, and we're also targeting a Q4 2021 relaunch. We expect to open our consolidated theater in CoCo Marina within 10 days. But we have no reopening date scheduled for our consolidated theater in Kahala. Our Q2 2021 U.S. total cinema revenues increased by $12.6 million or almost 2,700% to $13.1 million compared to the second quarter of 2020. And our U.S. cinema segment operating loss decreased to $9.3 million from a loss of $12.1 million when compared to the second quarter of 2020. And again, in a sign of improving operational conditions when compared to Q1 of 2021, our Q2 2021 total cinema revenues for our U.S. circuit increased by over $9.3 million or 245%. Finally, I'll point out that our Q2 2021 U.S. expenses reflect an accrual for a proposed $4 million settlement for wage and hour litigation filed in California, which is more fully described in our most recent 10-Q. Turning to Australia. Though every Reading Cinema in Australia was open for a period during Q2 2021, on the last day of the quarter or June 30, 2021, only 16 cinemas were trading, leaving nine cinemas closed. Unfortunately, as of today, August 11, 2021, half of our Australian circuit is closed, with 13 cinemas in New South Wales and Victoria temporarily closed due to government-mandated COVID-19 Delta variant lockdowns. Our Reading Cinemas in Western Australia, South Australia, Tasmania, and Queensland are currently open. The current closures in New South Wales are anticipated to continue through September; however, in Victoria, we anticipate they will end during late August. Our Q2 2021 Australian total cinema revenues increased by $15.6 million or just over 3,100% to $16.1 million compared to Q2 of 2020. Again, in what we hope to be a continuing trend, our Q2 total cinema revenues for our Australian circuit increased by $4 million or 33% to $16.1 million compared to the first quarter of 2021. During Q2 of 2021, we continued our development plans in Australia, reflecting our optimism about the industry. Working collaboratively with our landlord, Charter Hall, and our lender, National Australia Bank, on June 16, 2021, we opened a brand-new six-screen state-of-the-art Reading Cinema at Millers Junction Village in Victoria. It features luxury recliner seating in all screens, two TITAN LUXE auditoriums, and it features a selection of craft and local beers, supported by a curated hot food menu. Through Q2 of 2021, we worked on a design plan for our new eight-screen cinema at South City Square in the Brisbane area. We're honored to be part of this beautiful multi-use lifestyle destination project being developed by Pellicano and Perri Projects. Our current design reflects that this cinema will be our first Angelika branded venue in Australia. We expect our first international Angelika to open in mid-2022. Turning now to New Zealand. As of today, all our cinemas in New Zealand are open except for the Reading Cinemas at Courtenay Central, which remains temporarily closed because of seismic issues. Our theaters there continue to operate with no physical distancing restrictions, so all seats are available for sale. Unlike Australia, during 2021, temporary lockdowns in Auckland during the first quarter of 2021 for a total of 10 days impacted just our New Zealand cinema. Our Q2 2021 New Zealand cinema revenues increased by $3.2 million or almost 1,300% to $3.5 million for Q2 2021 compared to Q2 of 2020. Once again, in a sign of improving operational conditions, our Q2 2021 total cinema revenues for our New Zealand circuit increased by $1.3 million or 57% compared to the first quarter of 2021. Reflecting our continuing success in F&B across our global circuit, our F&B per patron in New Zealand at $5.58 is the highest F&B per patron for any quarter on record for this division. The global release schedule for the second half of 2021 continues to look promising. In the third quarter of 2021, tempo movies like Space Jam, Black Widow, and Jungle Cruise all released on the big screen despite also being available on streaming services. To date, our specific audiences have embraced each of these movies with encouraging box office returns. Our programming team continues to be optimistic about the future releases in 2021. It's great to see three new wide releases, Free Guy, Respect, and Don't Breathe 2 scheduled to open in the U.S. this Friday, August 13. The September release calendar includes Marvel Studios' Shang-Chi and the Legend of the Ten Rings, Candyman, Dear Evan Hansen, and Venom: Let There Be Carnage. As of today, the Q4 2021 slate includes; No Time To Die, Top Gun: Maverick, Eternals, Spider-Man: No Way Home, Sing 2, and West Side Story. The specialty film lineup to support our Angelika brand is starting to fill in nicely in Q3 and Q4. Films like The Eyes of Tammy Faye, The French Dispatch, Belfast, Spencer, Nightmare Alley, House of Gucci, Parallel Mothers, and Cyrano, each currently have exclusive theatrical windows and all look like they'll resonate with critics and audiences. Similar to what we've experienced thus far in 2021, we expect that the pent-up demand to get out of the house and experience a popcorn movie or quality specialty film in a shared cinema environment will benefit each of these theatrical releases. Now let's turn to our global real estate business. Reflecting the strength of our dual and diversified business strategy, our real estate operations continue to be less impacted by COVID-19 than our cinema business. Our second quarter 2021 total real estate revenue increased by 50% to $3.4 million compared to the second quarter of 2020. However, we did report a second quarter 2021 operating loss of $1.1 million, which increased 31% over the second quarter of 2020. This increase in the second quarter operating loss was driven by a few key factors. As a result of 44 Union Square being completed, our income statement now reflects depreciation in certain operating expenses. Our U.S. live theaters continue to be closed by government order for all of Q2 of 2021. We abated intercompany rent revenue for some of our fee interest cinemas. A few key points about our increased Q2 2021 real estate revenues. In Australia, our real estate revenues increased from Q2 2020 as a result of fewer abatements being issued to third-party tenants in the second quarter of 2021. A de minimis amount of COVID rent relief was granted to third-party tenants during the second quarter of 2021. Q2 2021 reflected three months of rent on a straight-line basis from our Culver City office tenant, while Q2 2020 only reflected rent on a straight-line basis from May 27, 2020. In New Zealand, there were no COVID-related rent abatements provided to any third-party tenants during the second quarter of 2021. The sale of Auburn/Redyard was completed on June 9, 2021, which meant that our real estate revenues reflected no rental revenue from that closing date. As of today, in Australia and New Zealand, even with the recent Delta lockdowns in Australia, 97% of our third-party tenants are open. The Australian code of conduct, which is the legislatively mandated framework to assist tenants impacted by the global pandemic, officially came to an end in most Australian states at the end of March of 2021. The official termination of that code signaled the commencement of rent deferral payments over a 24-month period. So our Australian property team will be managing these deferral payments over the next couple of years. However, in light of the recent Delta lockdowns, we've been advised that the Victorian Code of Conduct will be reinstated up until January of 2022. During the third quarter of 2021, to date, we've not issued any further abatements or deferrals to our three third-party tenants in Victoria. Only two abatements were provided during the second quarter, which are minimal, and we've not yet heard about whether the Queensland legislative code of conduct will be reinstated. I'll note again that on July 20, STOMP resumed public performances at our Orpheum theater in New York City. Audible, an Amazon company, continues to license our Minetta Lane Theatre in New York City, and we anticipate that the Minetta will resume public performances in October of 2021. Now let's turn to the status of our key capital projects, beginning with our 44 Union Square project in New York City. We've been in discussions with national retail tenants about leasing space at 44 Union Square. Well, no assurances can be given that we'll be able to lease the space on acceptable terms in the near-term, we remain confident in the long-term viability of New York City as one of the world's most dynamic cities for commercial real estate. We believe that our property is particularly desirable given its brand of location, Union Square, which is one of New York City's biggest transit hubs. We also cannot offer any assurance as to when the building will be fully leased, and we would not want to quantify the dollar per square foot expectation as rents in that market are currently fluctuating. However, we do believe that the market is strengthening. In July of 2021, 44 Union Square was selected as a jury and popular choice winner in the architecture and collaboration concept category of the Architizer A+ Awards, which are the world's largest awards program for architecture and building products. Regarding our Australian developments. As mentioned in early June 2021, we completed the sale of our Auburn/Redyard Center in New South Wales. During Q2 2021, there were no other material capital developments in our Australian portfolio. Except I mentioned that in June, we were proud to welcome Live Fire, one of Townsville first barbecuing restaurants, to our Cannon Park development. Turning to our real estate assets in Wellington, New Zealand. As I mentioned previously, we continue to work through development plans related to our Wellington assets, in light of challenges and obstacles presented not only by the COVID-19 pandemic but also the seismic issues besetting our Courtenay Central building and the necessary demolition of our nine-story parking garage due to the 2016 Kaikōura earthquake. Despite the hurdles posed by the pandemic and natural forces, our management team continues to maintain a focus on the restoration and renewal of Courtenay Central as an integrated component of our overall holdings in Wellington. We are fortunate to be right across the street from the beautiful state-of-the-art Wellington Convention and Exhibition Center named Takina, which is slated to open in 2023. Takina will join the district already home to the National Te Papa Museum and the St. James Theater, which is nearing a complete seismic upgrade. Working together with the various stakeholders in Wellington, we continue to want to be a key part of the ongoing activation and reactivation of the downtown entertainment district of this world-class city. Our most recent 10-Q filing details an arbitration filed against us by GDL, the parent company of Countdown, the supermarket tenant with whom we signed an agreement to lease in 2013. While we intend to vigorously defend our position with respect to this agreement to lease, we've been having and are continuing to have, without prejudice discussions about possible alternatives pursuant to which a full-service supermarket could be developed and leased to Countdown. That wraps up my business overview for the second quarter of 2021. In conclusion, let me reiterate the strength and commitment to our diversified business strategy. As I mentioned previously, we determined that it would be in the best interest of our company and stockholders not to dilute our stockholders or mortgage our future with high-priced debt and elected to monetize certain real estate assets, which we believe had achieved their highest level of value without significant additional capital being invested. While we've used the sales proceeds to preserve other assets, fund business operations and pay down debt, we anticipate when conditions normalize, funds will flow back into the real estate part of our business. Our retained real estate assets, 44 Union Square; Cinemas 1, 2, and 3 in New York; Courtenay Central in Wellington; Newmarket Village in Brisbane; Cannon Park in Townsville; and our Viaduct properties in Philadelphia, all continue to offer substantial opportunities to create future value for our stockholders. Before I turn it over to Gilbert for a financial review of the second quarter of 2021, on behalf of Margaret, our Board and myself, we again want to extend our sincerest appreciation to the global Reading team. I feel like we can't say it enough. Thank you to all those executives and employees who have worked tirelessly since March of 2020. While we know we're not out of the woods just yet, it's the daily efforts of the Reading team under extraordinary circumstances for the last 17 months that have put this company in its various operating divisions on a stronger path forward. With that, I'll turn it over to Gilbert.

Gilbert Avanes, Chief Financial Officer and Treasurer

Thank you, Ellen. Consolidated revenues for the quarter ended June 30, 2021, increased by $32.6 million to $36 million when compared to the same period in the prior year. This increase was attributable to the majority of our theaters operating during the second quarter of 2021 compared to the second quarter of 2020, when most of our global cinema remained closed due to the initial COVID-19 shutdown. These positive results were further supported by the release of several major films in the second quarter of 2021, which collectively led to an increase in attendance compared to the second quarter of 2020. These results were further enhanced by the strengthening of the Australian and New Zealand dollar. During the second quarter of 2021, the average Australian and New Zealand dollar strengthened against the U.S. dollar by 17.1% and 15.7%, respectively, compared to the same period last year. Revenue for the six months ended June 30, 2021, increased by $4.7 million to $57.3 million when compared to the same period in the prior year. This increase was attributable to the majority of our theaters operating during the first half of 2021, with occupancy restrictions in place compared to the same period in 2020 when most of our global cinema closed in late March and remained closed through the second quarter of 2020. Net income attributable to RDI common stockholders for the quarter ended June 30, 2021, increased by $45.4 million to $22.7 million when compared to the same period in the prior year. Basic earnings per share increased by $2.08 to $1.04 for the quarter ended June 30, 2021, compared to the quarter ended June 30, 2020. These increases are primarily from the gain on sale of assets related to our Auburn/Redyard and Royal George properties in June of 2021. Also due, in part, to the large scale COVID-19 vaccination rollout in the U.S., we continued to experience overall industry improvement in recent months, with the majority of our cinemas now reopened and major studios once again releasing films. For the six months ended June 30, 2021, net income attributable to RDI common stockholders increased by $70.2 million to $41.7 million compared to the same period in the prior year. Basic earnings per share for the six months ended June 30, 2021 increased by $3.22 to $1.91 compared to the six months ended June 30, 2020. These increases are largely due to the gain on sales related to our Manukau, Coachella, Auburn/Redyard, and Royal George properties. Non-segment G&A expense for the quarter ended June 30, 2021 decreased by 4% or $0.02 million to $3.7 million compared to the quarter ended June 30, 2020, due to reduced legal fees and professional and outside services related costs. This decrease was partially offset by the strengthening of the average Australian and New Zealand dollars against the U.S. dollars. Non-segment G&A expense for the six months ended June 30, 2021, decreased 5% or $0.04 million to $7.8 million compared to the six months ended June 30, 2020, due to reduced legal fees, professional and outside services-related costs, and corporate airfare and travel as a result of COVID-19. Income tax expense for the quarter ended June 30, 2021, increased by $7.1 million compared to the equivalent prior year period, while income tax expense for the six months ended June 30, 2021, increased by $17.9 million compared to the equivalent prior year period. The change between 2021 and 2020 is primarily related to the increase in pretax income in 2021, which was due to our gain on sale of assets. For the second quarter of 2021, our adjusted EBITDA increased by $54 million compared to the same prior year period to adjusted EBITDA of $37.1 million. For the six months ended June 30, 2021, our adjusted EBITDA increased by $92.4 million to $73.8 million compared to the six months ended June 30, 2020. These increases were primarily the result of our gain on sale of our real estate assets. Shifting to cash flow. For the six months ended June 30, 2021 net cash used in operating activities decreased by $17.1 million, to net cash used of $6 million, when compared to the same prior year period. This was primarily driven by a $34.5 million increase in net change in operating assets and liabilities primarily resulting from rent deferrals, offset by a decrease in cash inflow from operating activities of $17.4 million. Cash provided by investing activities during the six months ended June 30, 2021, increased by $144.2 million to $130.2 million, when compared to the same period in 2020. This increase is mainly attributable to $141.4 million in proceeds mainly from the monetization of Manukau, Coachella, Auburn/Redyard, Royal George and a $9.5 million decrease in capital expenditures. Cash used in financing activities during the six months ended June 30, 2021, was $36.8 million. The increase is primarily due to repayment of $40.6 million from our construction loan secured by our 44 Union Square property, $15.7 million or AUD20 million from our revolving corporate market loan facility with NAB; $374,800 or AUD500,000 related to scheduled pay down or the $2.2 million or AUD3 million drawdown allowed for the completion of Reading Cinema Jindalee, AUD11.2 million or NZD16 million for our loan with Westpac, and $6.2 million for our revolving credit facility with Bank of America. Offset by the new loan facility with Emerald Creek Capital for the funding of our 44 Union Square property in Manhattan, of which $43 million was immediately drawn. Turning now to our financial position. Our total assets on June 30, 2021, were $732.4 million compared to $690.2 million at December 31, 2020. This increase was primarily driven by an $84.9 million increase in cash and cash equivalent, primarily due to the monetization of $139.3 million worth of real estate assets in the first six months of 2021. This was offset by a decrease in land and property held for sale and net operating property due to the sale of our assets. On June 30, 2021, our total outstanding borrowings were $252.7 million compared to $285 million on December 31, 2020. Our cash and cash equivalent as of June 30, 2021, was $111.8 million, which includes approximately $15.5 million in our U.S. operations; $65 million in our Australian operations; and $31.3 million in our New Zealand operations. During the second quarter, as our cinemas have reopened and certain real estate assets have been monetized, a portion of these proceeds have been used to pay down debt or to satisfy our outstanding obligations. Into the second quarter of 2021, we paid down $4.9 million on the Bank of America revolving credit facility, bringing the balance to $45 million, which now has a total availability of $10 million, which can be drawn under this facility. On May 7, 2021, we repaid $11.2 million or NZD16 million to Westpac, which represents a permanent reduction in this facility. On June 9, 2021, as part of our amended revolving corporate market loan facility with NAB, $15.7 million or AUD20 million off the net sale proceeds of Auburn/Redyard Shopping Center were used to pay down the facility and permanently reduced the availability under the line. Regarding our December 29, 2020 increase of AUD3 million for our NAB revolving corporate market loan facility to fund the completion of our recently opened cinema in Jindalee, Queensland. We repaid the first installment of AUD500,000 on April 30, 2021, which was also a permanent reduction in the facility. These semiannual repayments will continue every six months until fully repaid on October 31, 2023. Total fully drawn NAB facility at June 30, 2021, was AUD102.5 million. Further, our bank loan with Bank of America, NAB and Westpac requires that our company comply with certain covenants. Generally speaking, we have a good relationship with our lenders and believe they understand the current economic environment and recognize we are doing everything we can to deliver on our strategic priorities. On June 8, 2021, we obtained a waiver from Westpac that temporarily suspended the testing of certain covenant tests, which through June 30, 2021. As of June 30, 2021, we were in compliance with all of our covenants under these loans. As we have previously mentioned, on May 7, 2021, we closed the new three-year $55 million loan facility with Emerald Creek capital for our 44 Union Square property, of which $43 million was immediately drawn, which includes cash reserves for interest, real estate and existing mechanics loan. As we continue to focus on preserving our liquidity, we did not repurchase any of our shares in the second quarter of 2021.

Andrzej Matyczynski, Executive Vice President of Global Operations

Thanks, Gilbert. But first, I'd like to thank our stockholders for forwarding questions to our Investor Relations email. We do appreciate these questions coming through to us. In addition to addressing some of your questions in Ellen's discourse, we've also compiled a set of questions and answers representing the most common questions and recurring themes emailed to us. Our first question is regarding our liquor licenses, according to your 10-Q as of June 30, 2021, you have pending applications for additional liquor licenses for 10 theaters in the U.S. and two in New Zealand. How long do you expect it to take for approval in these locations? I’ll handle this one. In most jurisdictions, obtaining a liquor license is a bureaucratic process that has many layers including state, local and in some cases, special interests. There is not one standard formula to be followed and replicated, at least not in the U.S. The majority require current public assembly permits and certificates of occupancy to be furnished and background checks to be performed on the principal offices. That being said, we anticipate that the majority of these licenses will be in place before the year's end, with some coming on board earlier like Valley Plaza, Kahala and Kapolei and some later, like potentially the Cinemas 1, 2 and 3 and Village East. With respect to the two applications in New Zealand, we don't expect to receive decisions on these this year. Another question we received was regarding the migrating relationship between studios and theaters regarding the exclusive windows. AMC just regained exclusive windows from Warner Brothers for 2022 films. What does that mean for Reading? Is Reading at risk in any way of having inferior terms? Has Reading negotiated any deals with any major studios regarding a new normal for exclusivity, or is our chain relegated to follower or taker of terms in such negotiations? Has Reading been in discussions with any studio or distribution company regarding emulating anything like the AMC Universal deal or other exhibitors recent deals allowing studio example Universal, the option to shorten the window and provide Reading a piece of the downstream PVOD or other revenue. Ellen, could you handle that one?

Ellen Cotter, President and Chief Executive Officer

Yes, Andrzej, we also read that AMC had inked a deal with Warner Bros ensuring a 45-day theatrical window for the studios releases in 2022. As we mentioned in our last earnings call, in the U.S. at the moment, we don't have any new definitive long-term overall film deals with distributors that address changing windows or film splits or participation PVOD deals. We've historically had a strong relationship with Warner Bros and expect that relationship to continue going forward. We'll play Warner Bros movies in 2022 with this 45-day exclusive theatrical window in place, just like AMC. Following on this point, we don't believe that a major studio would treat our U.S. circuit differently from our larger U.S. peers when it comes to any major adjustments to the theatrical window. We believe that for pre-pandemic periods, our historic film deals have been competitive based on our relative size compared to our larger peers. We think our historic practice of competing with our larger peers in negotiating film deals in the U.S. that are competitive compared to our larger peers will continue in light of the announced 45-day exclusive theatrical window for the 2022 Warner Bros slate. Likewise, we believe that with respect to major shifts in windowing, we'll be treated similarly to our larger peers. In Australia and New Zealand, the same themes apply. We don't have any definitive long-term overall film deals with distributors that address changing windows or film splits or participation in PVOD deals. However, taking into account the overall cinema industry in Australia and New Zealand, we believe that in the near term, the average overall exclusive theatrical window will remain longer than in the U.S. As a general policy and philosophy, the pandemic and changing theatrical windows will put pressure on the economics and margins for exhibitors, like occupancy cost with their landlords focus on film rental terms that make economic sense for exhibition need to be a priority for our company and the industry at large.

Andrzej Matyczynski, Executive Vice President of Global Operations

Thanks, Ellen. Another question we received perhaps Gilbert, you can handle this one? Can Reading’s U.S. cinemas make money at 50% capacity restriction? What level of occupancy from capacity constraints do you feel are necessary to at least break even in your U.S. cinemas? Gilbert?

Gilbert Avanes, Chief Financial Officer and Treasurer

There are many potential variables that could be at play. If 50% seating capacity restrictions were strictly enforced across our U.S. circuit for a sustained period of time, it would be hard to break even the way we do business today.

Andrzej Matyczynski, Executive Vice President of Global Operations

Thanks, Gilbert. A former railroad property owned by Reading adjacent to the Reading Viaduct in Philadelphia was the target of a lawsuit seeking to basically condemn the property and charge Reading for its cleanup and rehabilitation. Reading purportedly has chosen to demolish the building. What is the status of the litigation regarding this property? What are your plans for the site post-demolition? And what are Reading's plans for its main Viaduct properties? Ellen?

Ellen Cotter, President and Chief Executive Officer

As an owner, we sought to complete the necessary demolition work. We initially obtained a permit from the City of Philadelphia to demolish the upper half of the building, which was connected to the Viaduct. After receiving this permit, we made the decision to demolish the entire building and sought a permit for that demolition. Before we sought the permit for the full demolition, the plaintiffs appealed the city's issuance of the initial permit for the partial demolition. We appeared before an administrative board of the City's Department of Licenses and Inspections, and with the City's support, successfully defended the issuance of the permit for the partial demolition. We then sought and obtained a permit for the demolition of the entire structure. As of today, the demolition of the building and the platform connecting to the Viaduct are currently underway and should be completed during the quarter. As to the status of litigation, we've appeared in court and moved to remove the matter to Federal Court. We've told the Federal Court that the Surface Transportation Board, the STB, or a federal agency having oversight over railroad properties has exclusive jurisdiction over transfers of rail properties such as this property, and that the STB, not Pennsylvania Court, must therefore approve any takeover by the plaintiffs of this parcel. The Federal Court hasn't ruled, and we believe our actions to demolish the structure render their litigation moot. With respect to our Viaduct and related property assets, we need a long-term plan that ensures the company and the interests of its stockholders are protected and a strategic action plan will be developed in due course.

Andrzej Matyczynski, Executive Vice President of Global Operations

Thanks, Ellen. With that, we’ll draw the question-and-answers to a close and also the earnings call. We appreciate your listening to the call today. Thank you for your attention. We wish everyone good health and safety. Thank you.