By ELIZABETH HAYES
Pacific Theatres, which for decades has made its money selling movie tickets and popcorn, is charging into a new line of business real estate.
The company is taking its dozens of shuttered drive-in theaters around Southern California and transforming them into new retail and industrial developments.
"Most people know Pacific Theatres as a movie-theater company, but we also are a major real estate owner, operator and development company," said Neil Haltrecht, the company's vice president of real estate and development. "It's not just the theaters anymore. Most people in my group know nothing about theaters."
Pacific currently is developing 2 million square feet of space excluding its new multiplex theaters for shopping centers and industrial parks. That's in addition to the 1 million square feet the company already has developed. And all of it is on the sites of former drive-ins.
"We're one of the busiest retail developers in Southern California," Haltrecht said.
To be sure, with 400 screens at 50 theaters, the company's focus remains movie theaters. But the real estate component is growing fast. Pacific Theatres is looking to beef up and diversify its portfolio even more by acquiring new properties, including office buildings, apartment complexes and industrial parks, as income-producing assets. Haltrecht expects at least one or two deals to be completed by the end of the year.
Doug Brown, managing partner of commercial developer Regent Properties, said it is unusual for a theater operator to focus outside its core business. But Pacific is "doing a nice job at both" real estate development and movie operations, he said.
There's a good reason for Pacific's dual focus: The privately held company once operated 30 to 40 drive-in theaters around Southern California and a few in Hawaii. But as the market for passion pits dried up in the late 1980s primarily due to the popularity of videos the company was left with acres of developable land.
Nationally, the number of drive-in screens has declined from 3,561 in 1980 to 815 today, according to the Motion Picture Association of America.
Many drive-in operators sold their land large parcels often located near major intersections and thoroughfares for others to develop. Pacific, on the other hand, decided to assume that role itself. Though the company unloaded a couple of sites for single-family housing, it kept most of its holdings for commercial development.
"We prefer not to sell. We want to build up the real estate company," Haltrecht said.
And with pieces of land that range from about 15 to 25 acres, it's no wonder.
"Today, unless you're on the Westside where stand-alone deals are done, it's hard to put together large pieces of property in urban areas," said Cliff Goldstein, a partner with J.H. Snyder Co.
Pacific has done market studies on each drive-in location to determine its best reuse, and finds that many are well-situated for retail centers, while others would be best used as industrial parks and a couple as new multiplex theaters.
"In some cases, the (theater) market was already saturated or it was not an optimal theater location," Haltrecht said. "We're very long-term oriented. We want to do what makes sense."
Completed developments on former drive-ins include an industrial business park in San Pedro; Rancho Marketplace in Burbank; and an entertainment center with an ice rink in Long Beach.
Last week, Pacific broke ground on the 150,000-square-foot Long Beach Towne Square, a neighborhood retail center. Also under development in Long Beach is another 388,000-square-foot retail center on Bellflower Boulevard. The company also is working on a smaller retail development in Whittier.
Soon, Pacific will break ground on a 350,000-square-foot industrial building in Santa Fe Springs and is finalizing a deal with Home Depot at its El Monte drive-in site.
In addition, Pacific anticipates beginning construction on the $50 million Cinerama Dome project in Hollywood this September. The company plans to renovate the landmark theater with its geodesic dome at Sunset Boulevard and Vine Street, as well as add more screens, shops, a fitness center and restaurants.
"If we didn't do the project, (Cinerama Dome) is not viable anymore," Haltrecht said.
Besides Pacific Theatre's 400 screens at its walk-in theaters, it has three remaining drive-ins that continue to operate in L.A. County: the Vineland 4 in the City of Industry, the Fiesta 4 in Pico Rivera and the Vermont 3 in Gardena. Pacific is in the early stages of looking at projects for Fiesta and Vermont, in addition to already defunct drive-in sites that it will look to develop.
Haltrecht declined to specify the company's return on its developments.
"Typically, a developer looks for a 10 to 12 percent return on a project," he said. "We build projects as any other developer would."
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