Rockstar defaulting in houston
Anyone know the details behind this? Seems pretty odd to default less than 2 years after closing.
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https://therealdeal.com/texas/houston/2023/09/01/mf1-capital-to-foreclo…
This will likely be the first of many foreclosures in the class A space. There were a lot of syndicators that bought newly built properties with high leverage MF1, Rialto, Loan Core, floaters. These deals had little to no upside in cash flow and cap rates have blown out 150-200 bps.
Lots hitting the market in PHX rn. One buyer bought multiple core deals in DT / Midtown/ Tempe with MF1 / Lima / LoanCore floaters at the worst time possible.
Tides?
They have a a lot of assets left, but I'm going to count this on the Bingo card. Will be interesting to see where this lands at auction today. One step closer.
GVA has lost like 5+ deals. They should be marked off too
Who in their right mind invests with a company that goes by Rockstar Capital? Tells you all you need to know
GVA lost a similar deal in Houston. I work for a shop with a small portfolio of core assets in Houston. It's not an easy market to operate in right now. Rents are flat / declining. Vacancy trending upward. Property Taxes / Insurance increases in 2022 - 2023 were enough to kill most already struggling deals.
On the bright side, you can buy many of these deals well below replacement cost if you can weather the storm,
Class A+ going for $200,000/u, solid suburban 2010+ product for $130,000-$150,000. It’s crazy. How is there even a development pipeline there? Who’s justifying a ROC with existing product trading where it is?
Which A+ Type I is going for 200/unit?
No idea how anyone is justifying new development, I havent seen something even close to working in a while
When is Rise 48 getting knocked off?
Last I heard everything was fine over there, no capital calls planned in 2024 or 2025.
All of their deals are under water. They picked up the slack on buying up over priced deals when Tides and GVA stopped.
There is no way they will be able to refinance their deals.
I recently saw a dirty advertisement from a decent size Texas Sponsor. He sent it out as an "Executed LOI" to make it look like a new deal, but he was actually raising preferred equity on one of his broke properties that he bought 18 months ago.
Instead of "Executed LOI", it should have been labeled
"Wiped out inititial investors, under water loan, and I am trying not to have to pay the personal completion guarantee on the loan so i am going to waste more of your money before it goes to foreclosure".
It is probably the most misleading investment advertisement I have ever seen. I sincerely hope his investors don't fall for it.
It makes me mad that these crooks are still aloud to go waste people's hard earned savings. They are con artists advertising to uneducated investors.
At this point these Sponsors need to be called out and publicly shamed. They're just setting retail capital on fire. The end result is going to be a bunch of nonsense regulation on the industry.
Who was it?
A sponsor is asking for a big legal headache if they’re the controlling manager on rescue capital in the event that common equity is lost.
Hopefully they will be barred from taking investor money ever again.
I’ve seen this movie before. The crooks will
still be crooks and the honest guys will have more bullshit to deal with.
Apartment values down 20-25% peak from two years ago, if you leveraged 75-80% your whole equity is wiped and that’s leaving aside operational, capex or floating rate issues. If you ran into any of those it’s not a stretch to see how you run into distress so fast
They are down way more than 25%.
Class c deals are now trading above 7% in A markets and you would be crazy to buy them at that price
Only bad investors that don’t understand asset management would pay that right now
Agreed. 20-25% is optimistic, these fools were buying 3-4% caps, those are getting priced around 7%+ caps, so more like 50% haircuts.
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