February 16, 2021
Regal movie theater in Virginia Beach Town Center gets new lease to reopen
by Kimerly Pierceall of The Virginia-Pilot.
VIRGINIA BEACH — The Regal movie theater at Town Center in Virginia Beach is getting a second chance after its lease was terminated in late October by landlord Armada Hoffler.
Armada Hoffler CEO Louis Haddad told investment analysts Thursday that his development company had signed a new lease with Regal earlier this year to return to its Columbus Movies 12 space at 104 Constitution Dr.
Haddad described the new lease as “very advantageous” for Regal, with rent payments starting again in the spring as the second largest movie theater chain in the country anticipates reopening. The lease is only good through the end of the year, though, at which time Regal will need to decide if it wants to sign on for a full lease and return to business as usual or to walk away. The latter option would allow Virginia Beach-based Armada Hoffler to speed up plans to redevelop the site, which is across the street from its higher-density shopping center, by building more apartments and retail space.
“What we’ve negotiated is the ability to take advantage of the additional land surrounding the property,” he said. The theater sits on three acres, much of it a parking lot, and Armada Hoffler has called it a prime site for redevelopment.
In early October, as studio film release dates kept getting pushed back, Cineworld-owned Regal suspended operations at more than 500 theaters across the United States. It had reopened in Virginia Beach for a little more than a month before closing again and eventually defaulting on its lease, leading Armada Hoffler to end it.
Armada Hoffler had also terminated a Regal movie theater lease in Harrisonburg near the James Madison University campus but has since leased it back to Regal. It had been the only movie theater in a 100-mile radius, Haddad said, and the new arrangement gives Armada Hoffler the ability to develop five of the 10 acres it sits on there.
The theater news was included in Armada Hoffler’s fourth quarter and annual earnings report to analysts and shareholders Thursday. The real estate investment trust that owns and builds office, retail and apartment space across the Southeast and mid-Atlantic, reported net income of $4.6 million during the three months ending Dec. 31, down from $7.8 million a year prior but, for the year, profit rose to nearly $37 million for the year compared to $32.2 million in 2019.
When calculating normalized funds from operations, which doesn’t account for gains or losses from sales or purchases of real estate, among other fluctuations, and is a measurement used for real estate investment trusts, the company recorded $19.9 million in the fourth quarter, down from $22.9 million a year earlier, but $86.2 million for the year compared to $85 million in 2019.
“Over the last few months, we’ve announced three new development projects, purchased two high-quality multi-family assets and made solid progress on releasing COVID-related vacancies,” he said during the earnings call, according to a transcript. “Perhaps most importantly, 2020 saw us maintain high occupancy portfolio-wide and collect 94% of scheduled rents since the beginning of the pandemic.”
During the call, Haddad was asked about office tenants returning to their workplaces amid the pandemic. He said he was aware of an engineering firm returning to one of the company’s offices as early as March 1 and others planning to return in May and June, particularly in the Virginia Beach market.
“Markets like ours, which are basically drive to the office, get out of your car and go up to your building, it’s different than what’s happening with where you got to use major commuting lines and mass transit,” he said.