Developers Stanhope Schroder presented its plans for a new Warehouse Theatre this week.
The property firm exhibited its plans for the Croydon Gateway site at a meeting held at the Warehouse on Monday.
The firm said it was "devastated" to hear the theatre had lost it's annual council grant as part of £16m town hall cuts.
Stanhope Schroder said it was committed to giving the Warehouse a new lease of life as part of its Gateway vision.
The council has cut its funding of around £125,000 a year in a bid to dig themselves out of a budget black hole they put at £37m.
The property developer's plans for the Croydon Gateway site would see a new Warehouse Theatre built to replace the existing premises in Dingwall Road.
The development would also include a new doctor's surgery, restaurants, commercial and residential space.
But Stanhope Schroder is in competition with rival developer Arrowcroft who have submitted plans to build a 12,500 seater arena for the Croydon Gateway.
It is understood that the Arrowcroft scheme is the council's preferred project. However, Stanhope Schroder own part of the Gateway site and the two firms are locked in a legal battle to gain control of the prime development space close to East Croydon station.
Matthew Lusty, Stanhope Schroder project director for Gateway, said: "The Warehouse has been and will continue to be a fantastic cultural addition in the town centre. We were devastated to hear news that the Warehouse is going to have its funding cut.
"The current theatre is a little bit past its sell by date so we want to provide a completely new facility for the Warehouse Theatre to keep moving forward into the 21st century."
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