U.S. Real-Estate Investors Seek Hollywood Dreams in London
December 08 2020 - 8:29AM
Dow Jones News
By Ruth Bloomfield
U.S. and other global property investors are putting billions of
dollars into a significant expansion of new production studios in
the U.K., where tax breaks are attracting business from movie
makers and television companies.
While the pandemic has upended many major commercial real-estate
sectors -- from hotels and retail to office towers -- investing in
properties related to content creation has emerged as a rare bright
spot. People stuck at home are consuming more content than ever.
Real-estate investors like Blackstone Group Inc. have stepped up
their commitment to studio production facilities with two
partnerships near Hollywood.
Now, some investors are making a similar bet in London. In a
November deal, the Los Angeles-based firm Hackman Capital Partners
agreed to invest around GBP300 million (about $401 million) in a
facility to be known as Eastbrook Studios, located about 14 miles
east of central London. Work on the project is slated to begin in
the first quarter of 2021 and be completed 18 to 24 months
later.
"Content is a growth business, people are consuming more
programming than ever before," said Chief Executive Michael
Hackman.
HCP recently led a group of investors in a deal to acquire the
New York studios where "The Sopranos," "30 Rock" and "Sex and the
City" were filmed. Mr. Hackman said he is also bullish on
London.
"The U.K. has got a very attractive tax incentive program, and
there is a huge shortage of sound stages in the U.K. right now," he
said.
The British government has been offering tax breaks of up to 25%
for feature films since 2007. It extended those tax incentives to
high-end television, animation and videogames in 2013 and 2014. The
tax breaks and a weaker currency have made the U.K. an attractive
alternative to Hollywood, said Adrian Wootton, chief executive of
Film London and the British Film Commission.
"There is a difference in cost between our two regions because
of the U.K.'s well-publicized tax credits and also the extremely
beneficial U.K. exchange rate," he said.
The production-facility business has its challenges. Contracts
with production companies can be as short as one month, offering a
lot less security than long-term office leases.
But spending on movies and high-end television was GBP3.62
billion during 2019, up about 50% from 2015, according to the
British Film Institute.
Broadcaster Sky U.K. is working on a 14-stage, 32-acre studio in
Elstree, just north of London, due to open by 2022. The project is
backed by Sky's parent company, Philadelphia-based Comcast Corp.
and will be delivered in partnership with NBCUniversal.
The U.K.'s biggest movie studio player, Pinewood Group, is
meanwhile proceeding with plans to spend a total of GBP1 billion on
expanding its two studios, Pinewood, 10 miles west of London, and
Shepperton, in southwest London.
Both studios were founded in the 1930s. Classics from "The Third
Man" to "Oliver!" as well as most of the James Bond movies were
filmed there. More recently, the studios have hosted productions
including "The Bourne Ultimatum" and "Star Wars: The Rise of
Skywalker."
There are also plans to increase the number of stages at
Shepperton, giving the studios a combined total of 61 stages, the
majority already preleased to Walt Disney Co. and Netflix Inc. By
comparison there are 36 stages at Warner Bros. studios in Burbank,
Calif.
(END) Dow Jones Newswires
December 08, 2020 08:14 ET (13:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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