PREIT sues Regal Cinemas at Moorestown, Cumberland malls, alleging unpaid rent during pandemic

Retail landlord PREIT is seeking more than $2 million from Regal Cinemas, alleging that the theater chain failed to pay rent at two PREIT-owned malls in South Jersey that were closed to moviegoers due to the coronavirus.

Affiliates of PREIT contend in two separate lawsuits filed Wednesday in New Jersey Superior Court that Regal has not paid rent for its locations at the Moorestown Mall in Burlington County and the Cumberland Mall in Cumberland County since the pandemic’s early days.

Regal “has occupied the subject premises, and continues to occupy the subject premises, without making a single payment to landlord pursuant to the terms of the subject lease since March 2020,” the PREIT affiliates allege in each of the lawsuits.

A PREIT spokesperson declined to comment further, citing policy against discussing matters under litigation. Regal did not respond to a phone message.

Pennsylvania Real Estate Investment Trust, as PREIT is formally known, is the biggest mall owner in Philadelphia and its surrounding counties.

Its other properties include the Cherry Hill Mall, Willow Grove Park, and Plymouth Meeting Mall, as well as a partnership interest in Center City’s Fashion District Philadelphia mall.

During the three months ended Sept. 30, the most recent quarter for which PREIT has released financial results, its rent-collection rate stood at 99%.

However, the Regal theaters at the Moorestown and Cumberland malls continued to rack up unpaid rent bills through at least the end of October, PREIT alleges in its legal complaints. Regal was given until until Nov. 9 to “cure its default” by making the payments, but it failed to do so, the suits allege.

Regal and other movie theater chains had sued New Jersey Gov. Phil Murphy in July over his order that theaters remain closed last year as part of the state’s response to the coronavirus pandemic.

Even after the suit was dropped in September, theaters were only permitted to operate at 25% capacity, severely squeezing revenue. Then, Tennessee-based Regal announced in October that it was temporarily closing all of its U.S. theaters due to restrictions surrounding the virus.

PREIT is demanding at least $1.4 million for back rent at the Moorestown Mall and $764,000 for rent at the Cumberland Mall, according to the suits, which had been earlier reported on by the website Law360.

PREIT and other mall landlords had been rapidly losing retail-market share to e-commerce sites such as Amazon when the coronavirus hit, devastating their already suffering businesses.

By late last year, business losses from the coronavirus pushed PREIT into bankruptcy, where it won approval for a deal giving it some financial flexibility while it pursues a business overhaul that it has said will involve redeveloping some of its malls and selling parts of others.