Jon Venetos’ multifamily distress, which started in Florida, is permeating the Texas Triangle.
Fannie Mae slapped Venetos’ Lurin Capital with a lawsuit accusing the firm of defaulting on a $77.2 million loan tied to Latitude 2976, a Houston apartment complex, according to the Nov. 6 filing in District Court for the Southern District of Texas.
JLL Real Estate Capital provided the mortgage in June 2023, and it was assigned to Fannie Mae.
The loan, which has a fixed rate of 5.1 percent, matures in August 2028, the lawsuit said. Lurin stopped making payments in June, Fannie Mae alleges.
Fannie Mae further accuses Lurin of failing to keep the property in good condition.
Lurin failed to make repairs identified in a March property inspection, Fannie Mae claims. The lender said Lurin “left the Property to further deteriorate in ways that present immediate danger to tenants and accelerate waste of Fannie Mae’s collateral.” In addition to mold, roof leaks and cracked stairs, some residents don’t have access to running water, Fannie Mae alleges.
Over $749,000 in liens have been filed against the property, not including a $107,529 default judgment against the property awarded to a law firm that helped evict tenants from the property.
Fannie Mae is asking the District Court for the Southern District of Texas to appoint a receiver for the property, a 734-unit complex built in 1976 at 201 and 301 Wilcrest Drive. The property is south of the Buffalo Bayou, near Briar Forest.
The lawsuit is one of several for Jon and Ashley Venetos’ “value-add” multifamily operation.
Judge Bryan Gantt granted the city of Plano a temporary restraining order against Lurin on Oct. 27 and ordered residents of Evana Grove Apartments to vacate due to unsafe conditions.
According to the filing, residents of the complex at 3500 Hillridge Drive didn’t have access to water, sewer or gas — even though the property had racked up 1,459 code violations and ownership and management of Evana Grove was on the receiving end of nearly 100 lawsuits over conditions at the property.
The Venetoses’ legal trouble started ratcheting up in the spring when lender Acore claimed Lurin defaulted on nearly $400 million worth of loans tied to properties in Florida and Texas. The 12 Florida properties headed to foreclosure auction in April.
Acore also claims Venetos personally guaranteed the $394.4 million he borrowed. The lender filed six lawsuits in October asking for judgments totaling $80.7 million, Venetos’ payment guaranties, plus other default-related expenses, court records show.
Acore alleges his liability was triggered when he defaulted on the loans and when he allowed mechanics’ liens to be placed on the properties.
Venetos is also fighting a recent lawsuit from Select Securities Europe, a lender from Luxembourg that claims he defaulted on 15 loans totaling $40.5 million.
Jon and Ashley Venetos launched Lurin Capital in 2016 amid a wave of upstart real estate operators who planned to make money by purchasing Class B apartment complexes, updating them, raising rents and selling them at a profit.
Lurin’s website says the firm owns 46 properties across five states, but the list includes assets that have faced foreclosure.
Interest rates threw sand in the gears for many of them, increasing debt service on their floating-rate loans and raising construction costs. At the same time, Texas, a hotspot for value-add multifamily operators, was absorbing a historic wave of apartment development, causing rental rates and occupancy levels to fall.
As a result, experts anticipate a wave of multifamily distress in Texas, where about $19 billion in CMBS loans tied to multifamily is set to mature in the next five years.
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Judge deems Lurin Capital-owned apartment building “uninhabitable”
Acore hunts Jon Venetos to collect $80M judgment from guaranties
“Value-add” investor faces foreclosure on $383M in multifamily loans
