In June of 2019, the McEnery Company was engaged by a private client to provide a valuation of the Leasehold Interest of historic Saenger Theatre in downtown New Orleans. The historic venue has a capacity of 2,764 seats and a total gross building area of approximately 100,000 square feet. Originally opening in February of 1927, the property was one of the largest entertainment venues in the United States at the time and sold in 1929 for $10,000,000 ($147,180,000 when adjusted for inflation) to an owner who operated the property successfully throughout the Great Depression. In 1933, it was converted to a movie theatre and operated for 40+ years in this capacity as the building was ill-maintained and significantly depreciated. It was sold again in 1978 and converted back into a performing arts center. It operated in this capacity until it received significant damage in 2005 as a result of Hurricane Katrina. A public/private partnership engaged with an operator to renovate the subject at a reported cost of $54,000,000 with a long term lease.
The scope of the assignment required a determination of the market value of the leasehold interest under the long term lease in place, as well as the determination of the insurable replacement cost. National and regional leases of similar entertainment venues and theatres were analyzed in order to determine the income potential of the sandwich leasehold position. This income potential was discounted over the life of the lease in order to conclude the present value of the leasehold position.