Three years after an affiliate of Antheus Capital acquired a large apartment complex in Bronzeville, one investor claims Antheus is blocking its exit.
3233 S. King Drive
Lake Meadows Holdings LLC, an affiliate of Englewood, New Jersey-based Anttheus, acquired the 1,869-unit Lake Meadows apartment complex at 3233 S. King Drive in Bronzeville for $161M in 2023, the largest single multifamily property to trade by total units in the Chicago area in more than 15 years.
A pair of companies affiliated with Fort Lee, New Jersey-based The Straus Group invested $ 30.5M in LM Holdings, according to a lawsuit filed in Cook County Court on October 6.
A condition of the investment includes a put option, which gives Straus affiliates the sole right to require other Antheus subsidiaries to buy all of their interests in the company at fair market value or marketable property, according to the lawsuit.
The lawsuit alleges that Eli Unger, the founder of Antheus Capital, presented two alternative business plans when seeking investors. One focuses on renovating the property while it is still occupied, and the other focuses on emptying the building by relocating residents and making significant improvements while the building is empty.
“Vacating the Lake Meadows building has, for some time, not been part of the company’s business plan,” according to the lawsuit.
That led to the put option provided in the agreement signed between the investors, claims affiliate Straus.
The option can be exercised at the beginning of three events: the 10-year anniversary of the effective date of the contract, the date the company has completed the renovation of the property, or the date the renovation is no longer part of the company’s plans for the property, according to the setting.
The Straus affiliate claimed that they tried to exercise the put option in September but received a letter from the lawyer representing the Antheus affiliate 10 days later who said that there were no conditions that triggered the option, because the 10th anniversary had not passed and the renovation was still ongoing.
The two plans differ in terms of risk, time horizon and return profile for investors, and Straus affiliates claim that part of their willingness to invest is an exit defined after the renovation is completed or a deviation from the renovation in the business plan.
Antheus has spent about $10M on upgrades and capital improvements since acquiring the property without relocating residents, according to the lawsuit.
Straus asked the judge to compel Antheus to undergo a property appraisal process and to award compensation equal to the fair market value of the investment. Documents included in the lawsuit estimate the current value of the original $30M investment at $70M in June.
Neither Antheus Capital nor Straus Group could immediately be reached for comment.
Lake Meadows is one of Chicago’s largest multifamily properties, located on 30 acres overlooking Lake Michigan.
Antheus has acquired thousands of units on the South Side of Chicago since 2007, according to Crain’s Chicago Business. The company paid nearly $58M for the Hyde Park student housing complex near the University of Chicago last December.
The Straus Group is the private investment office of healthcare entrepreneur Daniel Straus and has been investing in real estate, hedge funds, personal loans and equities for over 25 years.