Evanston Cinemark Movie Theater Closes After Escaping Lease

EVANSTON, IL — The private equity firm that owns Evanston's only commercial cinema is without a tenant after the national movie theater chain that has operated it for two decades was able to terminate its lease due to Gov. J.B. Pritzker's executive orders issued in response to the coronavirus pandemic.

City staff say at least a dozen theater operators have already expressed interest in replacing Plano, Texas-based Cinemark as the leasee of the 18-screen theater, formerly known as the Century 18 and branded more recently as the Century 12 Evanston/CinéArts 6, with six of its 18 screens set aside for limited releases.

Across its brands, Cinemark Holdings operates 533 theaters in 42 states and 15 countries in North and South America and reported more than $191 million in profit the year before the outbreak of COVID-19 in Illinois. It is the nation's third-largest movie theater chain.

"Technically, this could be reported as a COVID-related closure," Evanston Economic Development Manager Paul Zalmezak said Wednesday at a City Council committee meeting.

"However, we know from our conversations over recent years that this particular operator, Cinemark, was not investing in upgrades to the facility," he said. "It was profitable, it was doing its thing, it was still attracting a pretty broad audience from the North Shore, North Side of Chicago, but they weren't investing in it."

The property is owned by San Francisco-based Stockbridge Capital Group as part of its Church Street Plaza commercial development. Cinemark's 20-year lease on the property, which it took over after purchasing Century Theaters, had been due to expire in February of 2019, but a May 2012 extension pushed it to November 2025, according to court records.

That lease had a clause called "prohibition of use" that allowed the tenant to terminate the lease if it ever became "illegal to operate a motion picture theater complex within," unless the landlord was able to stop the applicable law within 30 days of it taking effect. In such a circumstance, according to the terms of the contract, the tenant does not have to pay rent and may terminate the lease.

On April 20, 2020, a month after Pritzker's stay-at-home order restricting non-essential businesses and gatherings amid the outbreak of the first wave of COVID-19 in Illinois, Cinemark did just that.

Stockbridge responded less than two weeks after Cinemark's notice of termination, according to court records, contending that the governor's order had triggered the contract's "Force Majeure" clause, which includes "restrictive governmental laws or regulations" and acts of God outside of either party's control.

The private equity firm alleged it offered to forgive rent for the publicly traded multiplex chain for as long as the stay-at-home order forced the theater to remain closed to the public, but the theater chain's representatives rejected the offer, in addition to unspecified "proposed financial concessions," offered by the property owner.

The two corporations availed themselves of high-powered law firms and went to court over the terms of the lease in June.

Cook County Associate Judge Michael Otto issued a ruling in the case in favor of Cinemark last month, agreeing that Pritzker's executive orders had, in fact, rendered it "illegal" to operate a movie theater on the property.

Otto rejected Stockbridge's claim that the lease termination was improper because Cinemark's motives were purely financial, and that the pandemic-related shutdown should be considered more like an act of God than a movie theater ban.

"It may well be true, just as [Stonebridge] was likely motivated by its own economic interests in opposing Century's efforts to terminate the lease," Otto said in a Jan. 14 order. "That the parties may be considering their economic self-interest does not alter or invalidate their respective rights under the lease."

Ald. Melissa Wynne, 4th Ward, said the movie theater serves as an invaluable community space.

"I think people are just craving getting back out into movie theaters. Everyone is tired of sitting by themselves, or with their loved ones, watching a screen, and watching a movie that was actually designed to be seen on a large screen in a communal place," Wynne said.

"So I'm hoping that we can bring this back, I can't imagine Evanston without the movie theaters. When you think about it, the next nearest place is Old Orchard, or the small little place in Wilmette."

Alpana Singh, host of WTTW's "Check Please", warned she would shut down her downtown restaurant, Terra and Vine, if there was no longer a movie theater next door, according to city's economic development manager.

Zalmezak said having a downtown theater was a "quality of life matter," providing value across all demographics, from those early in their career to those who have recently retired, he told the economic development committee Thursday.

"And if we're going to recover, we need that revenue generated, we need people coming downtown," he said. "We're going to work on it. I wish we had some higher power to make something happen, but we're going to bring a lot of energy to it, and I think the market is really going to take care of this."

Annie Coakley, executive director of Downtown Evanston, the marketing nonprofit established to support the city's central business district, said it the city may need to put some pressure on Stonebridge to get it to work with one of the interested theater operators.

"It might come to that, we might have to push a little bit to get ownership to work with one of these operators. The energy around it is huge. So many people are coming out and saying they want to be here and this is the ideal theater and Evanston needs a theater, which I could not agree more," Coakley said at Wednesday's remote meeting. "But, again, we might need some pressure to get a deal done if the landlord feels they're not going to be able to make it work, but I think something could definitely work."

According to the Evanston RoundTable, which first reported the theater's closure, city officials initially estimated the downtown cinemas would attract 1.5 million people a year to the city's downtown.

With $6.3 million in gross revenue in 2019, Evanston's downtown theater was the 10th-highest grossing theater in the Chicago area and Cinemark's top-selling multiplex in the region, according to the film news website IndieWire.

Separately, Cinemark last year sued its insurance company, Factory Mutual, in Texas federal court over its insurer's refusal to cover $400 million in lost revenue and legal fees since the start of the pandemic.

Evanston's other cinema, the 148-seat theater at the Block Museum of Art on Northwestern University's campus, does not exhibit mainstream releases or generate appreciable sales tax revenue for the city.

Representatives of Stockbridge Capital and Cinemark did not respond to requests for comment Wednesday.

Zalmezak said he and City Manager Erika Storlie plan to meet with Stockbridge representatives later this week to discuss the situation.

Cinemark Holdings company officials are scheduled to announce its fourth quarter earnings on a conference call Friday.