A bruising, decade-long development process and ensuing court fight over a newly built suburban Chicago apartment complex ended with a $65 million sale JSB Capital Group last week.
Rescue capital lender 7 Acre Investments, based in Kansas City, Missouri, gave the green light to sell the Lincoln Station property in New Lenox, a southwest suburb, to the Miami-based JSB following a lawsuit it filed against developer Richard Gammonley, who has a checkered past of real estate investments in the Chicago area, public records show.
The 220-unit property completed in 2024 at 208 North Prairie Road was originally conceived in the mid-2010s, when Gammonley was trying to pitch a more than 300-unit plan to New Lenox officials. Due to concerns with the scope of the proposal, however, the project was scaled back, and was finally completed as five separate buildings, each with 44 units, that sits near the town’s Metra train station connecting to downtown Chicago.
But the project ran into financial trouble. Gammonley’s development venture turned to 7 Acre, led by Adam Fletcher and Chase Watson, for more debt to help complete the project about a year ago. The Lincoln Station developer borrowed $1.4 million in September 2024 to help fund cost overruns on the project, public records show. As collateral for the loan, the Gammonley venture pledged 76 percent of the ownership interest in the LLC used as the property’s owner.
Yet by November, Gammonley was in default on the debt to 7 Acre, according to a letter contained in Missouri court records from the lender to the developers. In December, 7 Acre filed a lawsuit against Gammonley, who has tussled with lenders over multifamily and condo developments in the Chicago area multiple times throughout his career, previous reports said.
Gammonley fought back against the allegations. He claimed that after 7 Acre made the loan, it improperly tried to insert itself into the decision-making process as the development team was looking to sell Lincoln Station, with the understanding that the lender would be paid back out of the proceeds from the sale.
“Specifically, 7 Acre interfered with two separate purchase negotiations for the property, that were all but under contract in the months of November and December 2024, by attempting to raise purchase price and altering the core structure of the deals in the last hour,” Gammonley alleged.
He argued the conduct of the lender caused the debt to enter default and that 7 Acre should be blocked from asserting its right to take majority control of the property’s ownership.
JSB and 7 Acre did not respond to a request for comment, nor did attorneys for Gammonley.
The lawsuit was settled earlier this month, but a person familiar with the situation said 7 Acre ended up in control of most of the property ahead of the sale. The developers made little to no money on the transaction, after factoring project costs, despite only taking out a $34 million senior construction loan in 2022 to fund the development, the source said. The developers incurred additional debt behind that loan that was separate from the 7 Acre loan to complete the buildings.
The deal closed as interest from institutional landlords is ramping up in Chicago-area multifamily properties, due to rising rents stemming from the low supply of new development projects on the horizon amid difficult fundraising conditions in real estate equity markets. Earlier this month, Waterton, one of the nation’s largest apartment landlords, paid $90 million for a property in Chicago’s Fulton Market neighborhood, on the heels of two other trades in the city’s suburbs that each exceeded $100 million, the first in Vernon Hills and the second in Naperville.
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