RJ Milligan: That’s very helpful. That’s it from me guys. Thank you.
Mark Peterson: Thanks, RJ.
Operator: Thank you. Our next question comes from Michael Carroll with RBC Capital Markets. Your line is open.
Michael Carroll: Yes, thanks. I guess not to belabor the writer’s strike, but Greg Silvers, I believe on the June call that you highlighted that if the writer strike was resolved in 40 to 50 days post that end of June call that there’ll be middle to — minimal to no impact. I guess that would put us into mid-August. So, I mean, if we get in through mid-August and this is not resolved, is that when we should start thinking about this could be having an impact on some of these movie delays?
Greg Silvers: Yes. I mean, I think we’re still consistent with that. And I think what I said was that we thought it’s really — we still believe that it’s later in 2024. Now they could move titles and remember, we’re just moving titles from ‘23 to ‘24. And as we see outperformance in ‘23, if studios want to derisk some of that. They can move that kind of into ‘24. But I think as we move into the August and September timeframe is when we will start to see if titles are moving. And if or if there’s progress in the discussions and they are, don’t feel or they feel that they’re good on track. But Greg, I don’t know if that’s consistent with what you think. But so I think that logic still holds, Michael.
Michael Carroll: Okay. That’s sounds good. And then the way that we should think about, too, is, I mean, obviously, you have leases that a lot of these theaters, so you’re not — that’s not going to impact it, but like the Regal percentage rents, your operating theaters, that’s going to be impacted. How much percentage rents do you have outside of that Regal restructuring that could be impacted by some of those movement?
Greg Silvers: It’s very minimal.
Greg Zimmerman:
Greg Silvers: Yes.
Greg Zimmerman: Our percentage rent, for example, this year is non-theater related.
Michael Carroll: Okay, great. and then going to back to the investment market, I know you talked a little bit about the 11 assets held for sale, but what about the value for like the high quality theaters? I mean, is there a market forming where you could potentially sell some of your higher end type assets, theater assets. Is there starting to be interest out there?
Greg Silvers: I think there’s always. And I think as Greg talked about, some of these 11 that we’ll take — will probably be sold as theaters. But it’s always about highest and best use. And if you look at what the theater that we sold this year, that Greg just reported on, even though it’s going to a non-theatre use. This was a — based on previous rents, a low-single-digit cap rate that we achieved on that. So I think it’s truly about and Greg and his team and our asset management team trying to just determine what is the highest and best use. It’s always nice as we’re starting to see now theater operators come in and starting to bid these properties, but it’s the juxtaposition of, okay, does it have a higher and better use, and we can put non-theater use versus theater use as competing bids.
Greg Zimmerman: Yes. And Michael, to the extent you’re talking about selling theaters as theaters for cash flow, we’re starting to see some green shoots there. And again, I think the fact that Santikos was willing to buy Southern shows that the theatrical exhibition business is recovering nicely.
Michael Carroll: Okay, great. Thank you.
Operator: Thank you. Our next question comes from Jyoti Yadav from JMP Securities. Your line is open.
Mitch Germain: Hey, guys. It’s Mitch here, I think a lot of the Regal and other topics have been covered. I was curious a little bit about some of the dispositions. Greg, I think you said that there were the vacant assets, but I’m curious about potentially considering maybe some non-core or even core dispositions here, in this environment on top of, you know, kind of what you’re doing with Kinder Care and Regal?
Greg Silvers: Again, like I said, you know, we’ll always consider those things. I think we had a lot going on with resolving Regal and getting this and think about we had our fourth largest tenant just changed hands. So over the quarter, we’ve had a lot going on. I think we’ve got quite a few dispositions that we’re managing right now, but we’re going to look at all of those things, Mitch, as we kind of remove the overhang that was a parent for the first-half of the year. But kind of as we go forward, you start to look at some of the things we’re talking about. And as I said, our three of our four largest theater tenants now, we’re — if you look at Regal better — we’ve been talking about that they’re going to come out on a sub-3 balance sheet kind of debt to EBITDA.
But if you look at the proformas that they presented in their balance, they’re actually going to come out sub-2. And we’re talking about a Santikos that now may have little to no debt in their entire structure. So I think overall, we have spent a lot of time getting that theater portfolio. And Greg and his team and Mark and his team are getting these things into a position that we have fantastic theater tenants into a rising and recovering box office. So I think that was our focus in getting those things right. And now as we move forward we’ve got an opportunity to create additional capital, as Greg has talked about many times, we have good opportunities. And we’ll start kind of balancing all of those things out to whether it’s some of our operating education, which Greg relied is performing very well.
And some of these other assets we have a stated intent and continued belief to lower our theater exposure. And as that market comes back and as we’re starting to see capital flow into exhibition. We’re going to see more and more opportunities. So we’re very encouraged about not only our to raise capital, but the ability for the market to recognize the improvements that have been made not only in terms of the exhibition world, but in the terms of the quality of the tenants that we have now relative to their — relative to that recovery. And I think it’ll create opportunity. But Greg?
Greg Zimmerman: I think that’s right.
Mitch Germain: Great, last one for me. I know that, you guys went over some of the puts and takes from ‘23 to ‘24. I’m curious how much G&A in ‘23 was allocated to Regal that, you know, kind of doesn’t recur heading into ’24?
Mark Peterson: Yes, it’s probably around a couple of million dollars actually that was kind of prolonged and a lot of work went into that. So we do expect G&A to come down next year. Q – Mitch Germain Thank you.
Greg Silvers: Thank you, Mitch.
Operator: Thank you. I’m showing no further questions at this time. So I would now like to turn the conference back to Greg Silvers for closing remarks.
Greg Silvers: Thank you, Theresa, and thank you all for joining us. Again, we look forward to talking to you in the coming months. And as always, if you have any questions, be sure to reach out. So thanks, everyone, and have a great day. Bye-bye.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
