Another one bites the dust. S2 Capital's REIT is prioritizing value for mezz investors and is about to go through a fire sale after failing to raise ~$70mm of pref. Trinity Investors is expecting a full loss of capital for all common equity investors. Yikes
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Someone please go light up that WSO thread where the founder attempted to refute claims of mismanagement
Suprised nobody's commenting here, this is hugeeee news, they were one of the biggest players in the paint the cabinets and flip game and consistently denied they were in trouble. This is nuts
On the multi-brokerage side and we quit sending deals to S2 a long time ago. Scott Evertt is a bozo. They sued LP Whisper who was pretty right. Fort Capital sold because Chris Powers was going broke and sold for just the asset management fees. Chris Powers was another bozo.
S2 is a garbage shop. Scott Evertt is a complete tool who had no business in the real estate business. His bio alone should have been enough to detur investors. He got a chick pregnant as a teenage and waited tables. Wow this guy is really responsible couldn't pass college algebra at a community college. I highly doubt any LP will ever trust Scott again. You blow up your first fund and went heavy into the sunbelt when every smart investor I know was reallocating or pumping the breaks. The only ones I saw going hard where these multi family gurus in their 30s and early 40s.
I'm all for the scrappy guy but all these multifamily gurus since 2013 are in for a real shit storm when their debt starts coming due and when they realize the market is not going to correct. A good example is Nicholas Residential or whatever Paul Panza aka Paul Ponzi is calling his non exsistent company. I think he blew up had to sell his house and got arrested last year for possession of a controlled substance.
Issue for these multi family gurus realize is once they lose money nobody will ever trust them again because nobody ever should have. Many of them have weak backgrounds and are shady asf. I cringe everytime I speak to these multi-family gurus.
Looked at a financing request from them where they wanted $180MM to do a $200MM DPO.
Equity was supposed to come direct from S2 and wipe out all their existing investors. Left a really bad taste in our mouths.
Maybe I’m confused here - why in the world would the original lender agree to a 10% DPO with current ownership bringing in fresh equity (I assume > $20M) to capitalize a new venture?
Lender likely thinks that the DPO amount exceeds or matches the value they would get if they foreclosed and then marketed the property themselves to sell plus holding and closing costs.
Unpaid balance was $220MM and the lender is a very large institution that could totally operate the assets so I’m assuming actual value is well below the DPO amount.
Don’t think S2 will be able to pay off the DPO amount since their ask is 90% of the DPO. Lenders will typically size as a % of the DPO in scenarios like this and no one is lending them 90% of value.
"Fixed rate is for Suckers".....
If you go to their website and look at current asset allocations, you will see they bought all properties, the comps and their mothers in the Houston and Dallas submarket. Like what kind of moron does that and not diversify their risk profile?
Everyone in the value-add multifamily space were total morons in 2021 and 2022
Interesting to see Scott Everett pivot entirely into ground-up development. I wonder whether S2 can raise fresh capital after what happened to his previous investor base. My gut instinct says no, but I have surprisingly seen other syndicators do exactly that, quietly moving on from their multifamily acquisition portfolios decimated by the 2021 to 2022 buying spree to spur a completely new vertical
https://finance.yahoo.com/sectors/technology/articles/s2-capital-launches-development-platform-030000515.html
It’s just a very tired narrative to juice AUM and continue to fleece more what I assume are retail LPs. I’ve worked in SE development for about a decade now. You can just buy new lease ups at a similar basis to or slightly below construction costs. Maybe that changes - but I doubt it personally.
Developing apartments in sunbelt markets feels like the dumbest move ever right now but what do I know
Scott Everett’s S2 Capital faces $78M foreclosure amid REIT equity wipeout
https://therealdeal.com/texas/dallas/2026/05/27/scott-everetts-s2-capit…
Couldn't even survive with gutted property taxes.
Majority of those traveling HFC never really went fully into effect and are being unwound
Ouch!
https://therealdeal.com/texas/2026/07/02/s2-capital-winds-down-first-fund/
Listen to this as it’s so stupid in hindsight
Chris Powers was a guy with zero talent. Complete bozo. Fort Crapital.
Total loser and just rode a good market and now is an “influencer”
Yikes
They're also now doing industrial?? Looks like they just make a huge 31 building industrial purchase? Who is giving this guy money???
Definitely not Fund I investors...
I knew they bought fellow Fort Capital’s OpCo. Did they buy their assets too?
He bought for AM fees. Chris was upside down on his debt. He was probably going to lose the firm anyway.
S2 got the management fees.
BTW how do you even lose this much $ this fast in RE, I don't get it. I feel like even someone very junior...like a 25 year old would not do this.
Hand an incompetent person a lot of money and give them access to lots of leverage.
Easy.
Seriously? Its actually easy to do. Study any cycle and you always see morons like this losing money so quickly it makes your head spin
Warren Buffett said the three quickest ways to go broke: liquor, ladies and leverage
Looks like he had all 3 going on.
It is simple structure the deal so fees>sponsor equity contributed.
deploy a ton of money with 75% LTV into the peak of an asset class w floating rate debt right before your cost of debt spirals AND the fundamentals (revenue and expenses) go against you AND values fall massively. values fell more than 25% so it's easy to lose it all in that scenario.
I've worked in multifamily brokerage to past 15 years. I have seen it all. The rise and fall of the giants. Some syndicators are good some are ok and some are total morons. All these guys think they are gurus. They truly great ones knew we peaked in 2019 - 2021 and started disposing of stuff.
S2 has issues but a ton of syndicators do. The one thing I give Scott Everett is scrappy and has nothing else left. He has not education to fall back on, he has no other skill to fall back on. He has nothing so maybe he can turn it around. Issue will be will LPs give him another chance. I would not count Scott Everett out regardless of what you think of him.
Windmass, Mitch Voss is having a lot of issues. Again another victim of the multifamily bull run. Does he survive? I would bet that S2 survives over Windmass.
Knightvest is one that has been holding up. They seem to be holding on strong. They have a good process overall.
Prime exampe of a conplete bozo is Bellevue Living or whatever the fuck Paul Panza or as our firm called him Paul Ponzi. That bozo was was a complete idiot. Had no clue what he was doing. Anytime someone quit his firm they would tell everyone and their mom what a bozo Ponzi was. His firm imploded like the Titan submarine. Nobody was shocked that it did but more shocked that it took as long as it did. Something about looking at that guy just was not right. He looked like he was born out his mothers a butthole. He was always a giant douche on calls and very flashy for someone who was not at that level. I highly doubt that he ever makes a comeback. I doubt anybody will miss him in the multifamily world.
Sir this is a Wendy’s
I will have 2 junior bacon cheeseburgers
Yeah but “he looks like he was born out of his mother’s butthole” is new to me. Can’t wait to let that rip on someone
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