University Medical Center has bought the Catalina Theater for $3 million, primarily for its parking garage, although there are also long-term plans to turn the theater into a teaching center or office space.
The Catalina 6, 2320 N. Campbell Ave., closed in the summer of 2006 just as Kansas City, Mo.-based American Multi-Cinema Inc. acquired Loews Cineplex Entertainment Corp.
At that time there was speculation that the theater would be sold and possibly turned into a retail development. But because of its location and 200-space parking garage, UMC saw value in the property.
"The truth is, the main reason we bought it, at least for the short term, is that we are really tight on parking over here," said Kevin Burns, the hospital's chief financial officer.
Burns said UMC already had been renting parking spaces in the theater's garage and then shuttling employees about nine blocks south to the hospital, at 1501 N. Campbell Ave.
"Parking is really very, very tight, and our volumes are continuing to grow. So that parking has become just precious to us," Burns said. "We shuttle (employees) over. I don't like to see our staff having to make that trip over here, but right now that is a necessity for us."
In the long term, Burns said the hospital would like to possibly replace or upgrade the garage and turn the theater into some kind of facility that could be used for training, education and office space. He said it's possible there could be some type of mixed-use development.
University Medical Center paid a markup of about a million dollars on the property.
America Multi-Cinema sold the property to Scottsdale-based Enterprise Development Group for $2,053,000 on Jan. 14. Enterprise Development Group then turned around and sold the property to the hospital for $3 million.
An AMC spokesman would not comment on the deal.
But Norman Brody, of Enterprise Development Group, said his group had the theater under contract for roughly a year while he negotiated with UMC about the hospital leasing the garage and possibly partnering in developing the theater into office space.
"We were going to redevelop the property," Brody said. "We were working with UMC for a long period of time."
But UMC pulled out of negotiations and instead expressed interest in buying the property.
"When UMC came back to buy, we negotiated a price based upon a lost opportunity in the future," Brody said. "Our group is really in the business of owning real estate, not flipping real estate."
Both Burns and Brody said the appraisal for the theater and garage came in higher than $3 million, and the per-space price of the garage was considerably less than a new one. At the end of December, Burns told the Star that UMC had put off construction of a "sorely needed" employee parking garage.
Burns said the Catalina Theater transaction was substantially less expensive than building a new garage.
"Even though I knew deep down they were probably going to have a good return on that, for us, we needed that parking, and we had been renting the parking for some time," Burns said. "To me, it is a great north entrance to the campus."
"When UMC came back to buy, we negotiated a price based upon a lost opportunity in the future. Our group is really in the business of owning real estate, not flipping real estate."
Norman Brody
Enterprise Development Group
