SSC Equity Holdings, LLC - Landlord’s Demand for $13 Million Rent Hike Preliminarily Enjoined

Challenge

SSC Equity Holdings, LLC (“SSC”), a wholly owned subsidiary of SavaSeniorCare LLC, a nationwide provider of short- and long-term care to nursing home residents, received a notice from its landlord demanding rent escalation of more than $13 million per year under the parties’ Master Lease Agreement. Over the term of the Master Lease, that escalation—if successful—would have resulted in an increased rent obligation of $167 million for the client.

Approach

AGG attorneys brought suit in the Supreme Court of New York to enjoin the rent escalation. In particular, they opposed the increase on grounds that the triggering event to a rent escalation—an increase in interest rates imposed by the master landlord’s mortgagee—had not occurred. Rather, only the master landlord’s mezzanine lenders had imposed a rate increase, rendering the rent escalation provision inapplicable. 

Result

After extensive briefing and a hearing before the New York Supreme Court, the court preliminarily enjoined the landlord’s rent-escalation attempt. Case is pending.