Kimco’s Rescue of Iconic Houston Cinema Preserves Community Touchpoint

After being shuttered for three years, a restored, historic movie house—the centerpiece of Houston’s River Oaks Shopping Center—reopened on Oct. 3. Kimco Realty Corp. (NYSE: KIM) spearheaded the revival by signing a deal with a Houston-based cinema chain to renovate and operate the beloved venue. The resurgence of the landmark anchor tenant marked the first step in Kimco’s long-term revitalization of the entire shopping center.

Built in 1939, the River Oaks Theatre is Houston’s oldest cinema, featuring a classic, neon marquee and Art Deco design. The venue anchors the 336,585-square-foot River Oaks Shopping Center, built in 1937. The open-air lifestyle center was the first retail development of its kind in Houston, and one of the oldest shopping centers in the country.

For decades, the vintage, two-screen theater featured mainstream blockbusters and classic, independent, and foreign films. However, following COVID-fueled empty seats and failed lease negotiations, it closed in March 2021. 

Houstonians feared it would be converted to another use, or worse, demolished. Many have personal ties to the theater and the community connection it created.

“Anybody who was born and raised in Houston or has spent time here has their own memory of the River Oaks Theatre, and not just a singular memory,” says Houston Council Member Abbie Kamin. “You’ll hear people say, ‘When I was a kid, I went to see this movie with my parents, and as a teenager, I was at Rocky Horror.’ It’s generational in terms of the impact.” 

Kimco Steps In

When Kimco acquired Weingarten Realty Investors and its retail portfolio in August 2021, negotiations regarding the empty theater, located at 2009 West Gray St., picked up steam.

Kamin and Houston’s former Chief Economic Development Officer Andy Icken met with Kimco officials to discuss the community’s and preservation groups’ concerns.

“This was really a community effort and rally cry to save what is the last theater of its kind in one of the largest cities in America,” Kamin says. “As a city, we're very much ‘Build, baby, build!’ This was a moment in time in our history where we paused and said, ‘This is worth saving.’”

“When people think of River Oaks, they think of the theater. Kimco felt it was very important to keep that aspect as this sense of place,” says Kimco Vice President of Leasing Andrew Bell.

Kimco wanted the theater to be restored and succeed, but it had to find the right operator with the right vision, and it had to make economic sense. 

“What became clear to everybody is that [the previous] business model, especially coming out of COVID with question marks on theaters, just didn't look like a viable option,” Icken says. “We just opened the door to Kimco to find the right operator, which they did on their own. Kimco had to make the business model work for their interest.”

And that’s exactly what the REIT did. “Kimco stepped in, saved the day, and has really shown how outstanding their commitment is to the community and to the city of Houston,” Kamin says.

Versatility is Key

In early 2022, Kimco announced that Culinary Khancepts, the parent company of Star Cinema Grill and led by CEO Omar Khan, would take over the lease with plans to overhaul and operate the venue.

“It took an operator who understood and admired the theater’s history. Omar really stood out from the pack,” Bell says. Culinary Khancepts is the only Houston owned and operated cinema chain.

Many operators vied to take over the theater, but Khan’s vision and business plan rose to the top. “No one else was reimagining the River Oaks Theatre,” says Star Cinema Grill Director of Development Jason Ostrow. “They were imagining it as the exact same thing it was before. But our thought was, ‘Can we keep it what it was before, but also evolve it into something more suitable for the needs of the city?’”

With that in mind, Culinary Khancepts undertook a two-year, multimillion dollar, studs-to-screen renovation that preserves the theater’s rich, cherished history while integrating modern technology and amenities.

They restored the original Art Deco design, iconic marquee, and terrazzo flooring, but it now features new screens, advanced projection and sound systems, two bars, and a stage for live performances including music, comedians, and other live shows.

That versatility is key. There's a very different pricing model for live performances, Ostrow says, noting that they’re seeing high demand for booking events.

“When you do movies, there's only so much somebody's going to pay for a movie ticket,” he notes. “When you start doing live events like Rocky Horror screenings or comedians or concerts, your price points can be significantly higher. You gain the ability to bring in much more revenue by diversifying what can be done in the space.”

Culinary Khancepts also added plush seating with personal dining tables and created a food-driven experience beyond traditional movie snacks. River Oaks offers an updated food-and-beverage menu served from the brand-new, 5,000-square-foot-adjoining Leo’s River Oaks supper club, owned and operated by Culinary Khancepts. The menu features upscale dining options delivered directly to theatergoers' seats.

“The ability of having our own restaurant next door with a shared kitchen gives us the flexibility to make the menu that best suits the movie or event that's going on,” Ostrow says. “That’s all significantly added revenue versus popcorn, candy, and soda.”

The finished product is earning rave reviews. “They’ve done such a beautiful job preserving it. It was done the right way,” Kamin says. “We don't always get these wins, but this one matters.”

Beyond Theater Restoration

While Kimco’s acquisition of Weingarten included a portfolio of shopping centers, the company described the West Gray-River Oak-related area as prime real estate, and they had significant plans, according to Icken.

During the theater discussions, Kimco and the city began conversations about Kimco’s strategies to improve the entire area, turn over some tenants, and develop a long-range plan for what they described as their “centerpiece shopping center in the middle of Houston,” he says.

“We really needed to embrace the entire street and the historic nature of the entire shopping center, and that's really what Kimco brought to this,” Icken adds. “They said, ‘let's make the theater part and parcel of a broader redevelopment,’ which is something they have underway right now.”

Since taking over the property, Kimco has made significant investments to revitalize it and enhance the visitor experience while maintaining its iconic Art Deco design. Kimco wants to ensure that the architecture is kept as pristine as possible.

This ongoing project includes creating outdoor patios for five new restaurants, updating sidewalks, and implementing a mix of hardscape, landscape, and lighting elements. Kimco repainted the entire property, installed new underground detention and fire lines, and improved the plumbing infrastructure.

“We're investing in the infrastructure, not only of the aesthetic features, but we're also making sure that we do the right things to ensure that the buildings are properly maintained for the long term,” says Meredith Burris Keeler, Kimco’s vice president of Lifestyle Operations. “It’s an historic site, so we're really proud of Kimco’s stewardship.”

Kimco also replaced roughly 40 palm trees, the shopping center’s longtime signature brand, which line the street.

Blend of Old and New

River Oaks is part of Kimco’s Lifestyle Collection, a portfolio of 11 high-end flagship centers. The addition of The Driscoll at River Oaks, a luxury residential tower, which opened in 2021, was transformative to the shopping center, Keeler notes.

“We’re creating a seamless living, shopping, dining, and entertainment experience,” she says.

When Kimco acquired Weingarten, occupancy at River Oaks was 86.8%. As of the third quarter, occupancy had increased to 93.3%.

In addition to Leo’s, other new restaurants are Zanti Cucina Italiana, Hudson House, Pizzana, and Cocody Restaurant & Bar. Goode Co. Kitchen & Cantina is under construction.

Additionally, Talbots left the center and Evereve took over that space. Kimco also combined some spaces for a new Sephora store, which recently opened.

“If you look at our tenancy, we're keeping the look and feel of what people love so much about River Oaks and providing the shops they actually want to shop at,” Bell says.

“These are 2.0 and 3.0 tenants that exist inside a 1937 Art Deco building, which is cool,” he continues. He says Keeler’s team spends a lot of time making sure it's the perfect blend of old and new.

“The beautiful part of these historic sites is really the marriage between keeping its relevance and also making sure that it appeals to consumers that are constantly evolving in their tastes in entertainment, their tastes in clothing, and their tastes in dining,” Keeler says. 

“One of the things I appreciate so much about our tenants at River Oaks is that they have allowed their brand to fit within the historic nature of the buildings, and found a way to integrate and celebrate that,” she adds.

Capturing Investor Interest

When acquiring centers like River Oaks, Kimco leverages its leasing expertise to enhance the tenant mix, ensuring a vibrant and profitable shopping environment. The introduction of high-end brands and unique dining experiences tailored to community preferences exemplifies the company's approach to creating value.

A dedicated team for Kimco's Lifestyle Collection assets specializes in managing these premium properties. With deep expertise in the management of these unique assets, this team is adept at elevating the consumer experience and increasing the property’s attractiveness to both shoppers and prospective tenants. This strategic focus has transformed River Oaks into a flagship destination within the portfolio, significantly boosting its market presence and performance.

Kimco’s commitment to maintaining the unique character of River Oaks while introducing relevant and exciting new brands has been pivotal in driving up occupancy rates. River Oaks stands as a testament to how well-executed asset management can enhance the intrinsic value of prime real estate, making it a standout component of Kimco’s portfolio that captures investor interest and underscores the company’s expertise in the lifestyle retail sector.

This strategic management not only reinforces Kimco’s position as a guardian of community heritage but also as a forward-thinking owner that significantly enhances shareholder value through focused, innovative property stewardship.