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
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
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