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Trading the box office blockbuster halo effect

Still from the film Exodus: Gods & Kings.
Source: 21st Centery Fox | YouTube
Still from the film Exodus: Gods & Kings.

When 21st Century Fox's "Exodus: Gods and Kings" comes out on Friday, mall property developers such as Simon Property Group should benefit, if history is any guide.

Shopping mall operators had consistently high gains in a study of stock performance in the three months following the release of a major movie, according to Kensho, a quantitative data analytics tool.

The fundamental basis behind the data: Box office success leads to higher traffic in malls connected to cinemas, which in turn leads to higher rents malls can charge.

Simon had a median return of 8.3 percent. Macerich, whose properties include Broadway Plaza, Tysons Corner Center and Fashion Outlets of Niagara Falls, had a median return of 9.8 percent. Simon recently disclosed a 3.6 ownership stake in Macerich and a report by Evercore ISI said the announcement could be "an initial step in a possible merger of the two companies."

Queens Center operator Kimco Realty had a median return of 7.5 percent. All three firms traded positive 73 percent of the time.

In the same analysis, the S&P 500 traded in the green 67 percent of the time with a median return of just 2.8 percent.

"If there's one word that would describe what every property owner wants to provide, it's 'experiential.' And theaters are part of that," said Todd M. Caruso, senior managing director at CBRE.

He added that the properties with theaters providing a quality audiovisual experience do well and can generate $300 to $400 more per square foot in sales.

"Cinemas have been the longest anchor of shopping centers," said Michael Ellis, principal at 5+design, an architecture firm focused on mixed-use retail projects.

"Any kind of shopping center benefits from any other reason to come (besides shopping)," he said.

Hollywood box office receipts were down in the crucial summer season with total gross coming in at $4.06 billion, down 16 percent from 2013, according to Boxofficemojo.com. However, movies made a mild comeback in the fall with Ben Affleck's "Gone Girl" leading the way to a 24 percent increase for the season and a $1.43 billion take over last year.

The Christian Bale-starring epic "Exodus" is expected to match other past big December releases like "The Chronicles of Narnia," and pull in around $25 million this weekend. "The Hobbit: The Battle of the Five Armies," "Night at the Museum: Secret of the Tomb," and "The Interview" all have blockbuster potential over the following two weekends to close out the holiday season.

Ellis and Caruso noted that movie theaters generate revenue for nearby restaurants and specialized food vendors, such as ice cream shops, which in turn help malls draw foot traffic that might otherwise prefer to shop online at home.

Stifel Nicolaus has a "buy" rating on Simon and said in a recent report that new additions to malls, including restaurants and entertainment, "should give shoppers more reasons to come to the mall and stay longer."

The Kensho study looked at 30 instances since 1980 when a major movie was released by Fox, Disney, Paramount, Sony Pictures, Warner Brothers, New Line Cinema and Universal Studios.

NBCUniversal, the parent company of CNBC and Universal Studios, is a minority investor in Kensho.