New lease secures the future of the Island's Cinema
Jersey Development Company, the Government’s property regeneration company, has negotiated amendments to the terms of the Cineworld lease that has secured the future of the Island’s only cinema for the next nine years.
As a result of Covid-19 and government-imposed closures of cinemas worldwide, Cineworld’s business all but collapsed, leaving the organisation no choice other than to file for Chapter 11 bankruptcy in the United States, this included the UK cinema arm which Jersey is part of.
Chapter 11 allows for a restructuring and reorganisation of the business, and, as has been widely reported, part of the process is to tackle reduced cinema admissions going forward. Cineworld has been forced to close several of its non-performing cinemas and renegotiate terms with landlords on the cinemas that stood a chance of remaining viable.
Revenues from the Jersey cinema were marginal with usage reducing from 280,000 visits in 2019 to just 180,000 visits in 2022. As the landlord of the Waterfront Leisure Complex, Jersey Development Company needed to be flexible in order retain an operating cinema on the Island so agreed to waive some of the Cineworld rent arrears debt in return for a longer-term commitment. The Jersey Development Company and Cineworld will continue to work together to keep the cinema open pending its eventual redevelopment, however, it is imperative that islanders use the facility more than they currently do to ensure their local cinema multiplex is not forced to close. A break clause from 2027 may be exercised if admissions are not sufficient to ensure the cinema remains financially viable and Islanders are urged to use the cinema and its facilities or risk losing it.
Lee Henry, CEO of Jersey Development Company said: “We are pleased to have reached agreement with Cineworld and to retain the Island’s cinema multiplex operation for the foreseeable future. The fact that the majority of objections to our future plans for the Waterfront referenced the closure of the cinema highlights the importance of the facility to Islanders. It was incumbent upon us as a government-owned company to facilitate the Island’s community and not simply maximise profit.”
Kevin Frost, Property Director, Cineworld Cinemas stated: “We are grateful to the Jersey Development Company for working with us on the commercial terms to have found a way, together, to keep the local cinema multiplex open and trading for at least the next four years, and hopefully another five after that.”
Notes to editors:
Amendments to the lease secure the Cineworld Multiplex operation until June 2027. Thereafter, if occupancy drops below a rolling three-year annual average of 180,000 visits, Cineworld is able to exit subject to a six-month notice period. The overall lease has been extended to a new expiry date of June 2032.
Jersey Development Company acquired the Waterfront Leisure Complex in November 2018 as a future regeneration site. The Company paid £17.3m for the properties with a £12.5m loan and the balance in cash from the profit that the Company generated from developing IFC 1. Rental revenues service the fixed interest loan as well as the capital repayments. As at 30 June 2023, the loan balance outstanding was £9.3m. Effectively Jersey Development Company is earning income from its future regeneration site whilst it secures planning consent and carries out earlier phases of the delivery on other parts of the Waterfront.