The owner of Hollywood’s Dolby Theatre, host of the annual Academy Awards show, has rolled out a red carpet for a potential buyer.
The California Public Employees’ Retirement System has listed the 3,400-seat theater at 6801 Hollywood Boulevard for an undisclosed price, Bloomberg reported. It comes with two parking lots.
The 180,000-square-foot auditorium in the heart of Hollywood could sell for $70 million, an unidentified source with knowledge of the possible sale told the news service. That’s less than the $94 million cost to build it more than two decades ago, according to CoStar News.
Once known as the Kodak Theatre, the live events stage has hosted the red-carpet awards show since it opened in 2001. It also hosted “American Idol,” “America’s Got Talent,” and a Cirque du Soleil spectacular.
The theater, designed for the Oscars by David Rockwell, is managed by Dallas-based Canyon Partners. Its contract for the awards celebration goes through 2028; its sponsorship by Dolby stretches through 2032.
The theater comes to market as commercial property values have fallen with a rise in borrowing costs and decreased demand during the pandemic.
Brokers Carl Muhlstein, Will Poulsen and Peter Hajimihalis of JLL hold the listing.
The theater opened 22 years ago next to the heralded shopping complex once known as Hollywood & Highland, in honor of the renowned intersection on the Walk of Fame.
In 2019, Downtown L.A.-based Gaw Capital USA and San Jose-based DJM bought the five-story, 463,000-square-foot outdoor mall for $325 million. They renamed it Ovation Hollywood and renovated the 7.6-acre complex for another $100 million.
The Dolby Theatre is near three historic Hollywood cinemas: Disney’s El Capitan Theatre and the TCL Chinese Theatre. Down the street, Netflix bought the historic Egyptian Theatre and aims to reopen it on Nov. 9, according to CoStar.
The Pantages Theatre, which opened in 1930, competes with the Dolby for live events, said Bill Boyd of Kidder Mathews, a veteran broker of L.A. entertainment real estate.
Live theaters ran into revenue headwinds during the pandemic, which closed entertainment venues nationwide. The reopening season for live theater venues in 2021-2022 saw the number of seats sold fall 14 percent from 2018-2019, according to American Theatre magazine.
“The difficulty the theater’s sale will have is that it’s in an environment that the rest of our commercial market finds itself: higher interest rates, higher [capitalization] rates and quality assets selling for less than replacement value,” Boyd told CoStar News.
CalPERS, the largest public pension fund in the U.S., had a real estate portfolio worth $55.4 billion at the end of the third quarter, with a negative net return of 5.1 percent year-over-year, according to CalPERS consultant Meketa Investment Group.
— Dana Bartholomew
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