Studio real estate is in a tough place in the U.S., with owners facing increased debt distress as maturities loom and occupancy falls. 

The sector in the UK is facing its own headwinds, and the famous Pinewood and Shepperton studios to the west of London have not been immune. Still, the investors that own the studio have made a £100M payout to themselves and refinanced a £300M debt facility that was due to mature next year. 

Pinewood is the home of film franchises such as James Bond and The Avengers, and streaming giants Netflix, Amazon and Disney have all taken long leases on production facilities at the studio.

Pinewood Group accounts filed at the start of August show that in July, the company paid its owners a £100M dividend out of its cash reserves. The company paid two small dividends totalling about £30M in 2018 and 2020. 

Pinewood is owned by a group of institutional investors led by real estate fund manager Aermont Capital. Aermont took Pinewood private in a £323M deal in 2016 and then signed a series of long leases with content creation companies, which previously leased out space on a production-by-production basis. 

That increased the value of the company, and in 2022, it was recapitalised at a value of £3B. It was transferred from an Aermont fund to a new company owned by investors including the New York State Teachers' Retirement System.

Pinewood and Shepperton total 1.5M SF, and the company also owns a major production facility in Toronto. 

The combined value of the company’s UK and Canadian real estate was £3B at the end of June, the company said, and its loan-to-value ratio was 35%, with debt of £1.1B.

In July, the company refinanced a £300M bond that was due to mature in 2027. A new £300M bond facility has been sold to investors, but at a higher interest rate margin — 6.4% rather than 3.6%. Fitch rated the new bonds BBB. 

While Pinewood has been insulated from the pullback on content creation due to its long leases, its first-quarter results did show the impact of the wider industry slowdown. Its revenue for the three months to 30 June was down 12% to £54M, and earnings before interest, tax, depreciation and amortisation dropped 10% to £36M.

The company had been planning a major expansion of its production facilities, but streaming services stopped signing long leases. As a result, it is pivoting to build a £1B data centre in Pinewood. Planning was granted in March. 

While Pinewood’s revenue has dropped, its slowdown is nothing compared to that being experienced by U.S. studio owners. 

Netflix bought the Radford Studio Centre in Los Angeles from its lenders in June for $400M (£293M), compared with a previous valuation of $1.8B. It was previously owned by Hackman Capital Partners. 

The property was 71% leased as of March, and in 2024, the revenue from the property was only enough to pay 21% of the interest.