It certainly is heartbreaking to lose the Mann Theatre, both emotionally and financially. We have rented space to the Mann family for 20+ years. We just renewed their lease several years ago for another 20 years, and we collectively invested over $500k in the theatre to reposition it for the next 20 year run. The Mann family is perhaps the finest tenant we have ever had the privilege of renting to. Over 20 years ago we were able to convince the Manns and the Big 10 to anchor our redevelopment project when Hopkins was struggling with vacant store fronts and porn shops. The Big 10, owned by Todd Dupont and Tom Hutsell, became 30 Bales, and they are grinding it out each day to try to keep from going under. The devastation to main street retailers is obvious. The closure of the Mann Theatre is also devastating to our ownership group. Our group will lose over $1mil (loss of rents from the Manns and the write off of all the capital improvements we just invested when their lease was resigned) as a result of the Mann's closing.
The pressures on the theater industry right now are complex and not unique to Hopkins. The recent closure of all Minnesota theaters by Governor Walz during the Holiday season is devasting to theaters as the holiday period historically has been some of their top grossing periods. However the Covid-19 closures aren't the only challenges facing the movie theater industry. Most all the 2020 major movie releases were pushed back to 2021 or sent to streaming. There have been only a few 1st run movies released since March when the pandemic closures started and attendance numbers were abysmal. Most of the theaters that re-opened to show these few new releases closed voluntarily immediately. The traffic just wasn't there. As you may know, it was announced last week that Warner Brothers is now going to by-pass movie theaters altogether in 2021 and go direct to streaming. Disney and Sony have already started releasing what would be considered blockbusters directly to streaming as well. So the Manns were faced not just with the Covid-19 lockdowns and closures but also with the fact that there aren't any new releases they could show in their theaters.
The final straw with all of this are the complex economic realities. When the 1st Covid closure was announced in March we (property owner) went to our lender and re-negotiated the terms of our loan to provide rent relief to all our tenants. However, as the closures and lockdowns were extended into the summer, fall and now winter, this temporary rental relief just wasn't enough. Our tenants weren't able to keep up with their bills even when they have reduced rent. Like everyone who has a loan and a mortgage from a bank, that loan in turn is monitored by the Federal government. Loans to borrowers whose tenants are movie theaters and restaurants get special treatment and there is pressure by the Feds to make the loans conforming. What conforming means in this instance is that tenants need to start paying what is required under their lease when the loan was made. Our tenants haven't been able to do this. We were required by our lender to submit a plan by the end of the year showing how our loan would become conforming again. When asked the questions when will you reopen and when can you begin to pay full rent, tragically the Manns weren't in a position to be able to say when the State's lockdown order would end and when there would be product available to put into their theaters. Hopkins was a 2nd run theater so product would trail 3-6 months before it could be released to 2nd run theaters, so that would delay the reopening of Hopkins theater even longer than the 1st run theaters. The closing of the Mann Theatres is the perfect storm of: Covid-19 lockdowns and mandated closures, the delay and shift in movies released to streaming, lack of Federal assistance past the initial lockdown phase and the financial realities that confront all parties (tenants, landlord, and banks).
As far as the City's role in all of this, the City reached out to us early. We started a conversation and discussed all the possible alternatives and we stayed in contact as this situation played out. We appreciated the interest, concern and the willingness on the City's part to try to find a solution, but in the end there isn't a public solution to the private struggles that we faced. Covid-19 lockdowns and mandated closures, the delay in 2020 releases and the shift in movies being released to streaming, lack of Federal assistance past the initial lockdown phase and the financial realities confronting all parties (tenants, landlord, and banks) forced the closing of the Mann theater.
No one in this process came to the decision to close the Mann Theatre easily. Please know that the Manns did everything they possibly could to try to make this work. The Manns formed an internal task force to try to find interim solutions and explored many different scenarios including most of the ones listed below. From our perspective the Mann's turned themselves into pretzels trying to find a solution.
As the property owner we understand all too well the pain of the loss of the Mann Theatres. It is a deep financial hardship and we regret losing a 20 plus year relationship with the Mann Family. We share in the grief of their closing. At the end of the day there wasn't a public solution to this problem.
The Beard Group, Inc.