Sale and Leaseback of 17 US-based Cinemas

Cineworld Group plc ("Cineworld") announces sale and leaseback of 17 US-based cinemas

15 May 2019

Cineworld today announces the signing and completion of a sale and leaseback transaction relating to 17 US-based multi-screen cinemas totaling 251 screens (the "Sale and Leaseback", or the "Transaction"). The Transaction is consistent with Cineworld's existing business model of operating a predominantly leasehold estate and long-term strategy of crystallising value for its shareholders.

As part of the Transaction, Cineworld is selling the cinemas to subsidiaries of Realty Income Corporation ("Realty Income") for cash consideration of US$ 286.3 million and leasing them back under 15-year leases on customary terms. The cinemas had a book value of US$ 240 million at the end of 2018 including an uplift on revaluation as part of the acquisition of Regal and generated EBITDA of US$ 42.5 million in 2018.

Cineworld intends to use the proceeds from the Transaction to reduce net debt. This will be in addition to management's planned deleveraging which continues as previously forecast.

Additionally, Cineworld announces today that it is in discussions with a separate party regarding a potential sale and leaseback transaction involving a further 18 US-based multi-screen cinemas totalling 255 screens for a similar consideration and on similar terms to the Transaction with Realty Income (the "Additional Sale & Leaseback Transaction"). There can be no assurance that the Additional Sale & Leaseback Transaction will proceed and any further announcement will be made in due course, if appropriate.  

To the extent that Cineworld consummates the abovementioned Additional Sale & Leaseback Transaction, the Board will actively consider returning future proceeds to shareholders in the form of a special dividend. The Board currently envisages that it will look to balance use of proceeds from both transactions such as approximately half of the combined proceeds will be used to reduce debt and the other half returned by way of a special dividend.

Mooky Greidinger, Chief Executive Officer of Cineworld Group plc, said:

"I am delighted to announce the Sale and Leaseback transaction today. We are realising value from these properties in line with our leasehold operating model. And further strengthening our relationship with Realty Income, who are an existing landlord to some of our Regal cinemas.

We have been spending a lot a time in the United States since the acquisition of Regal, getting to know our US business and implementing our strategy. We are very excited about the progress we made to date and the outlook going forward. The integration of Regal is on plan, we are on track to deliver on our synergy plans for 2019 while remaining committed to deleveraging, and our strategy of generating strong total returns for our shareholders."

The person responsible for arranging the release of this announcement is Fiona Smith, Company Secretary of Cineworld.

About Cineworld Group plc

Cineworld Group plc was founded in 1995 and listed its shares on the London Stock Exchange in May 2007. The company has grown through expansion and by acquisition to become the second largest cinema chain worldwide, holding the number one or number two position by number of screens in each of its regions. Cineworld currently operates 9,503 screens across 788 sites in the US, UK, Ireland, Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and Israel.

About Realty Income

Realty Income, The Monthly Dividend Company®, is an S&P 500 company dedicated to providing shareholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 5,800 real estate properties owned under long-term lease agreements with regional and national commercial tenants. To date, the company has declared 587 consecutive common stock monthly dividends throughout its 50-year operating history and increased the dividend 101 times since Realty Income's public listing in 1994 (NYSE: O). Additional information about Realty Income can be obtained from the corporate website at www.realtyincome.com.