For sale: Multiplex theater, great location, abundant parking, endless conversion possibilities.

Amid a cinema-business meltdown caused by a glut of screens nationwide, movie theaters are starting to disappear faster than Hannibal Lecter's victims. Often offering the advantage of a prime location at a distressed price, they are being reincarnated as restaurants, offices, nightclubs, even churches.

With the large, contiguous space and the high ratio of parking that theater properties have to offer, there is a tremendous opportunity to create offices out of them.

This attitude should come as some relief to shopping-mall and theater owners who have been wringing their hands since last summer wondering what to do with these white elephants — typically six- to eight-screen multiplexes with 20,000 to 50,000 square feet of space — as financial woes plague the movie-theater industry. At least half a dozen major chains have filed for protection under Chapter 11 of the federal Bankruptcy Code, including Loews Cineplex Entertainment Corp., Carmike Cinemas Inc., United Artists Theatre Co. and Edwards Theatres Circuit Inc. Nearly all the chains are shedding older theaters from their portfolios.

"We're finding that this is great real estate," says Gary E. Mozer, chief executive of George Smith Partners Inc., a Los Angeles-based commercial-mortgage brokerage firm who found funding for Casey's project.

Jim Duffy, chief executive of Restaurant Entertainment Group Inc. in Atlanta, agrees. The company, which takes old movie theaters and either updates them or converts them into restaurant-and-theater venues, estimates that 1,500 theaters with as many as 10,000 screens will be vacated by this summer.

Duffy believes that about 75 percent of those theaters can be reworked into very profitable operations. He hopes to pick up about 250 of them over the next two years. Under its Entertainment Film Works unit, which upgrades and operates traditional movie theaters, and its Cinema Grill Systems unit, which operates restaurant-and-movie-theater combinations, Restaurant Entertainment Group has taken over the leases of about 25 theaters and is currently pursuing another 100, primarily in California, Florida, Georgia and Texas.

"A Cinema Grill will generate three times the revenue from the same four walls of an existing movie theater," says Duffy. Each location generates between $12 and $15 a person, compared with the $2 to $2.50 a person a traditional movie theater generates in concession sales.

Transforming a theater into a Cinema Grill costs between $500,000 and $1 million, and involves replacing the traditional theater seating with conference-room and cabaret-style seating on a tiered floor, which reduces the capacity by about half. At a Cinema Grill, moviegoers purchase a $6 to $7.50 ticket. Once seated, they can order things such as grilled chicken, pizza and beer or wine from a server, usually 15 to 30 minutes before the movie starts.

In San Francisco, Leirum Corp., a nightclub and live-theater developer and operator, is spending about $10 million to convert a former single-screen movie house to a theater that will feature off-Broadway-type productions when it opens this fall. The company is looking at various convertible properties, including other movie theaters, around the country. "There's a glut of theater properties on the market," says Leirum's chief executive, Doug Ahlers, "and that's good for us because we can get them at good prices."

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To be sure, movie-theater owners can't assume that developers are waiting in line to snap up their properties for conversions. Those in less-than-stellar locations may be tough or impossible to unload, and even the better venues have growing competition. For example, lots of potentially convertible space is being dumped on the market from retail-store closings by Montgomery Ward & Co. and Bradlees Inc., both of which filed for bankruptcy protection earlier this year, and others.

Movie buffs may lament the theater closings, but one mall owner is actually glad that the operator of a 32,000-square-foot multiplex bailed out of one of its shopping centers. "We would not have renewed that theater lease anyway," says Daniel Hurwitz, executive vice president for leasing at Developers Diversified Realty Corp. of Beachwood, Ohio, which owns 260 shopping centers. The reason? Part of the inducement to keep retailers at the mall was an agreement not to release to the theater in order to free up some badly needed parking, says Hurwitz.

Ample parking is one of the reasons why 24-Hour Fitness Inc., a unit of Fitness Holdings Worldwide in Pleasanton, Calif., is looking at former theaters and vacated department stores. The fitness-center operator wants to open as many as 80 new facilities this year "depending on the availability of quality sites," says Eric Kelly, vice president of real estate. "The theaters obviously provide more opportunities for us."

Changing theaters into fitness centers does present "a challenge," though, says Kelly. The biggest issue: what to do about those sloping floors.

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