Three years after an affiliate of Antheus Capital acquired a massive apartment complex in Bronzeville, one of its investors claims that Antheus is blocking its exit.
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Lake Meadows Holdings LLC, an affiliate of Englewood, New Jersey-based Antheus, 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 Oct. 6.
A condition of that investment included a put option, which gave Straus' affiliates a one-time right to require another Antheus subsidiary to purchase all their interests in the company at a fair-market value or market the property for sale, according to the lawsuit.
The lawsuit alleges that Eli Unger, a co-founder of Antheus Capital, presented two alternative business plans when seeking investors. One centered on renovating properties in place while they remained occupied, and the other centered on emptying buildings by relocating residents and conducting significant improvements while the buildings were empty.
"The emptying of the Lake Meadows buildings has, for some time, no longer been part of the company's business plan," according to the lawsuit.
That triggers the put option laid out in the agreement signed between the investors, Straus' affiliates claim.
The option becomes exercisable at the earliest of three events: the 10-year anniversary of the effective contract date, the date the company has completed renovation of the property, or the date the renovations are no longer part of the company's plans for the property, according to the suit.
Straus' affiliates claim that they tried to exercise the put option in September but received a letter from a lawyer representing the Antheus affiliate 10 days later that said neither triggering condition for the option has occurred, as the 10-year anniversary hasn't passed and renovations remain ongoing.
The two plans are materially different in terms of risk, time horizon and return profiles for investors, and Straus' affiliates claim that part of their willingness to invest was a defined exit following a completed renovation or deviation from renovations in the business plan.
Antheus has spent about $10M on upgrades and capital improvements since acquiring the property without relocating any residents, according to the lawsuit.
Straus is asking a judge to compel Antheus to undergo a property valuation process and award it damages equivalent to the fair-market value of their investment. A document included with the lawsuit estimates the current value of the original $30M investment at $70M as of June.
Neither Antheus Capital or the Straus Group could immediately be reached for comment.
Lake Meadows is one of the largest multifamily properties in Chicago, situated 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 close to $58M for a 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 invested in real estate, hedge funds, private credit and equity for more than 25 years.
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