Santikos Entertainment announced Monday that it has entered into an agreement to transfer operations of its two Houston theaters to Tennessee-based Regal Cinemas. It’s a move intended to concentrate more energy and dollars on San Antonio and Bexar County, the beneficiary of the theater chain’s profits since its official transformation to a social enterprise in 2016.
“Today’s announcement reflects an acceleration of Santikos’ commitment to our philanthropic mission in San Antonio,” CEO David Holmes said in a statement to the press. “This new relationship with Regal will allow us to better align our operational focus with our philanthropic goals for San Antonio.”
Under the terms of the deal, Regal will operate the two Houston locations, one in Richmond and the other in Tomball, as well as develop an additional Santikos-owned property in Houston. Regal is signing long-term leases for the buildings, opened in 2008 and 2013, which will continue to be owned by Santikos.
Holmes would not disclose the amount that Regal paid, but Harris County tax records show the Tomball property, known in Houston as the Silverado IMAX, is valued at just over $1.1 million.
“There are a couple of great benefits that are going to happen as a result of this,” Holmes told the Rivard Report. “First, we have looked strategically at our portfolio and recognize some challenges associated with Houston. Number one is the fact it is not a perfect mission fit for our charitable giving platform. When we say that all proceeds benefit charities in your community, we really can’t say that about Houston.
“Also, we just want to focus more on San Antonio. We see the ability to broaden our footprint here, to upgrade and remodel some of our existing portfolio assets, and we also want to look at opportunities to build new theaters in San Antonio.
“So to create this liquidity, where we’re able to pull some cash out of our operations, refocus our energies right here in San Antonio, while maintaining this great relationship with Houston, that was the goal of this transaction.”
Santikos will retain ownership of the properties, what Holmes considers great real estate assets acquired by founder John Santikos, and there will be no immediate impact to San Antonio theater operations.
“It’s business as usual here and that was one of the first things we wanted people to understand,” he added.
But Holmes also calls the deal a win-win-win. First, proceeds from the agreements will be used to “accelerate the date” when Santikos donates funds it has committed to the San Antonio Area Foundation and increase the amount it contributes in coming years.
By the end of this year, Santikos Entertainment will have distributed more than $40 million to more than 200 San Antonio area charitable organizations through the Area Foundation. It has been just over two years since Santikos’ death in late 2014 and the creation of the John L. Santikos Charitable Foundation.
In addition, funds from the deal will be used to renovate existing theaters in San Antonio. First to get upgrades will be the Palladium, which has seen 11 million visitors since it opened at The Rim in 2006, followed by the Mayan Palace 14 and Santikos Northwest 14.
A new San Antonio theater is also planned, though the exact location has not yet been determined.
The third “win” is Regal’s acquisition of the two theaters in Houston. With 564 screens across 47 states and the Cayman Islands, including those at five theaters in San Antonio, Regal is the second largest theater circuit in the United States. Its 2016 revenues totaled $3.1 million.
Both Houston theaters will remain open during the transition, according to Holmes, and theater staff will now be employed by Regal.