Landlord sues over shuttered cinema
After closing its theaters in March as the coronavirus pandemic took hold, Regal Cinemas allegedly stopped paying rent for its Fiesta Stadium 16 location at a North Side shopping center.
The chain started reopening its locations in August before shutting down once more in October, but it’s unclear whether the Fiesta discount theater ever reopened.
One year later, its landlord’s patience has run out.
A subsidiary of Weingarten Realty Investors, a Houston-based real estate investment trust that owns the Fiesta Trails shopping center, is suing Regal for skipping out on nearly $408,000 in unpaid rent and other charges since April.
In the lawsuit, Weingarten also said Regal may be on the hook for at least $563,245 for future rent through June 2022, the end of its lease term.
Weingarten confirmed last month that the discount theater at 12631 Vance Jackson Road is permanently closed.
Weingarten is marketing the site for sale to developers who want to build an apartment complex, which may require rezoning it, according to the complaint. But it “has yet to enter a binding sales agreement ... and its damages under the lease continue to accrue on a daily basis.”
Act III Theatres built the 3,300seat theater and parking lot as part of a lease deal in the mid-1990s. The company later merged with Regal, which took over the lease.
Regal told Weingarten in September 2019 that it did not want to renew or extend its lease past July 2021. The following spring, amid the pandemic, Regal allegedly stopped paying rent.
After Weingarten sent Regal a default notice in May, the theater chain said in a letter that the pandemic-induced closures had reduced its income “to essentially zero.”
Regal also claimed Texas law excuses tenants from fulfilling lease obligations “in situations where performance is frustrated, impossible, illegal or contrary to public policy.”
Although Weingarten disputed that interpretation, it said it amended the lease to forgive 25 percent of Regal’s minimum monthly rent from April to September and also to defer the remaining 75 percent and other costs.
In return, Regal agreed to extend the lease through June 2022 and start paying 75 percent of the minimum monthly rent and other amounts owed in October, Weingarten alleges. The theater chain also agreed to repay the deferred rent and other costs in monthly installments beginning Jan. 1, 2021, through the end of the lease.
But Regal allegedly didn’t pay in October or November of last year, and Weingarten sent another notice indicating it planned to give Regal the boot without terminating the lease. A spokesperson for the trust said it was Regal’s decision to close and not reopen and declined to comment on the suit.
Weingarten is seeking to recover all amounts due under the lease, pre- and post-judgment interest, attorneys’ fees and other costs.
Regal, which is owned by Cineworld, did not immediately respond to an inquiry.
Theaters’ revenues have plummeted during the pandemic as movie-goers opt to stay home and studios sell new releases to streaming services. Landlords are also feeling the pinch, and more are resorting to lawsuits to force tenants to pay back rent.
Mall owners in other cities have sued Regal over unpaid obligations, according to media reports. A firm that owns Park North Shopping Center sued Alamo Drafthouse Cinema last fall after it closed its location there in March and stopped paying rent. The chain recently settled the litigation.
Alamo Drafthouse filed for bankruptcy protection Wednesday and is looking to sell its assets. The company doesn’t anticipate disruption in operations, except for three theaters it is permanently closing, including its New Braunfels location.