Chetrits’ struggles with $481M loan was “unmitigated disaster” for tenants: lawsuit

The Chetrit Group dug itself out from under a half a billion dollar default last year, staving off foreclosure on a 10-state, 43-building multifamily portfolio.

But for some tenants at its Indiana properties, the cash crunch was an “unmitigated disaster,” according to a suit filed by the state’s attorney general last week.

Renters suffered from deferred maintenance, “horrifying” trash piles and flooding “that gave way to microbial growth,” the lawsuit alleges. Entities tied to the Chetrit Group, founded by brothers Meyer and Joseph Chetrit, owned nearly 1,500 units in the state as part of the larger portfolio.

A spokesperson for the firm did not respond to a request for comment.

The Chetrit Group picked up the 43 buildings in 2019 using a $481 million floating-rate loan. When payment problems triggered a maturity default in the summer of 2022, tenant issues at the seven Indiana properties mushroomed, Attorney General Todd Rokita alleged.

One renter at Cheswick Village, a now-shuttered apartment complex on the northeast side of Indianapolis, said she lived “behind boarded-up windows for eight months waiting for repairs” after her unit was hit by bullets.

At Edison Pointe, a 310-unit property outside South Bend, residents reported having no heat during a blizzard.

And at the Hickory Ridge complex outside of Chicago, tenants whose apartments had flooded with “raw sewage” were given five days to vacate, then notified that their leases were terminated. One renter was 81 years old. Hickory Ridge is also marked as closed on Google.

The lawsuit alleges the Chetrits planned for that mismanagement.

Through 2022, the firm worked to get its loan out of default. It locked down a forbearance agreement, paid down $100 million in debt and found buyers for a dozen buildings, according to the suit and a spokesperson’s comments last year.

The owners were “severely undercapitalized” and asked their lender if they could “refrain from maintaining the properties … while their loan was in forbearance and default,” the lawsuit claims, adding that the lender declined the request.

Rokita, a Republican and former member of Congress, is seeking judgments against the owners for damages and for breaking state housing and consumer laws.

The Chetrit Group’s principals are entangled in a web of other lawsuits.

Most recently, the brothers were sued by the lawyers representing them in a bitter fight with Maverick Real Estate Partners for $450,000 in unpaid legal fees.

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