PPF RTL Atlantic Town Center, LLC; Hines – Unusual Approach Results in Nearly $1.3 Million Judgment for Landlord Client

Challenge

Hines is a private global real estate investment, development and management firm, founded in 1957. In the Southeast Region, Hines has more than $3 billion in assets under management, including the retail component of Atlantic Station, a mixed-use development in midtown Atlanta. After more than a decade at Atlantic Station, a Rosa Mexicano restaurant, the only one in the Southeast, abruptly closed, and the operators proceeded to remove personal property in violation of the lease. Hines refused to terminate the lease when the tenant vacated the property and sought Arnall Golden Gregory’s help in protecting its rights as the landlord. AGG pursued a seldom-used strategy that resulted in a nearly $1.3 million default judgment for the client just a few weeks after the tenant left.

Approach

Because Rosa Mexicano defaulted on its lease, the client was facing lost rent and unanticipated costs associated with finding a new tenant. Arnall Golden Gregory filed suit and pursued an unusual course of action – a distraint or distress warrant – which, upon entry of judgment, would allow the landlord to seize the tenant’s personal property located in the premises. On the date the distraint proceeding was filed, the lien was perfected, giving the landlord priority over other creditors. At the court hearing, the tenant failed to appear, and the client obtained a monetary judgment for all rent owed, including future payments in the lease period, plus any damages sustained by the landlord. Importantly, the lease contained an enforceable acceleration provision, so the landlord accelerated the rent due for the remainder of the lease before initiating the distraint proceeding.  .

Result

Distraint provides for a speedy resolution because it requires that a final hearing on the issues occur not more than seven days after the tenant is served. Distraint also is especially useful in securing collateral when the tenant is a special purpose entity and there are no personal guarantors of the lease. In this case, the client obtained a judgment in a short period of time for all the rent the tenant owed for the remainder of the lease, plus damages – nearly $1.3 million.