Theatreplex Forms Movie-Complex Venture

Theatreplex Entertainment Properties Inc. said it formed a $250-million joint venture with the real estate unit of Japan’s Orix Corp. to buy, develop and provide financing for movie theaters in the U.S.

The companies plan to invest the money during the next two years, then take the company public as a real estate investment trust, or REIT.

The venture comes amid a trend toward bigger and more luxurious theaters containing 15 to 20 screens and costing about $10 million to build, not including seating, equipment and fixtures.

“In the past, there was no dedicated source of real estate capital for theater properties, and new development was financed primarily through internal cash flow and bank debt,” said Ralph Cram, Theatreplex’s chief investment officer. “Now, exhibitors are seeking outside sources of capital to upgrade their theaters.”

Based in Chicago, Theatreplex provides real estate services and financing to movie theater owners. Orix, a financial services company, is investing in the venture through its U.S.-based Orix Real Estate Equities Inc. unit.

REITs are firms that own and operate all types of commercial and residential real estate, from office buildings to apartments to prisons.

REITs are exempt from corporate income taxes if, among other things, they distribute at least 95% of net income to shareholders as a dividend.

In November, Kansas City, Mo.-based movie theater company AMC Entertainment Inc. raised $276 million by spinning off a REIT called Entertainment Properties Trust to own 12 of its movie theaters.

Entertainment Properties’ shares are trading at $19.88 on the NYSE, below the $20 price at which it was brought public.