Scott Everett’s S2 Capital is taking over as GP on a massive portfolio formerly controlled by Alan Stalcup’s GVA, according to investor docs viewed by The Promote. S2 is putting in ≈ $60M to recap the distressed portfolio, which spans 1,768 units in Nashville, Knoxville, and Dallas. 🤠
To make the deal happen, GVA’s existing LPs had to agree to contribute all the individual property JVs into a new holdco that would sit junior to S2’s pref, according to sources - that’s the move that puts S2 in control here.
Wonder where Scott is getting all the cash for these new acquisitions. Maybe new money is flowing in after the LPWhisperer went dark.
ummm... I don't think LPW's actions/scams have the slightest impact on what actual market players do. He's still around btw, now tweeting under the @abolishzoning handle.
Buying older vintage value add deals in markets like these was so a last cycle play only based on interest rates moving lower
No clue why anyone would want to own this crap as they are a nightmare to manage and you constantly are spending money on repairs. Need to buy this type of stuff super cheap which none of these idiot syndicators do as they only are in it for the fees
This 100%. I don’t think people realize the difference in operating costs when factoring in replacement reserves. Don’t be surprised to see $5,000 per door replacement expense in which case you need 150bps spread in cap rates.
Because lots of people have huge egos and absolutely no ability to introspect. You have success doing a couple deals or executing on a certain business plan, and suddenly you're the best thing since sliced bread, and comparatively few people have the self-confidence to sit back and say "hey, that was because of certain market conditions and not my innate genius" and take a different tack for the next deal.
These people will do the same thing, even after it fails repeatedly, because their own self-image is tied up in their ability to execute in a specific manner.
😴
Curious if this is acquisition caps or your guesstimate on the future?
Not a single one of your investments would accurately stabilize at a 7.5% cap with correct assumptions.
Lol
Says the guy that lost millions and millions of dollars of equity from unaccredited investors, only to hide his incredible failure with a forced conversion to REIT shares.
They probably know the secret to cutting opex in half while simultaneously increasing rents that no other owner has been able to figure out
I agree with this thesis. Every multifamily buyer in the market is chasing either 2000s and later value add or new construction with the pitch being that the basis is below replacement cost. I think operators that can fix some of these broken 70s and 80s deals will outperform. Almost every institutional LP I’ve spoken with says they won’t touch anything 80s or older. Yes these properties have a lot more CapEx needs, but it feels like the cap rate curve between older and 2000+ multifamily is steep.
I don't agree with this and would otherwise have some other non-flattering opinions I'd normally voice. That aside, I actually respect that you laid out your position and defended it quantitatively. Time will tell who is right and who is wrong.
Zero chance you get to 7.5% yields and no chance cap rates will be 5.5% when you sell
Look you are doing this for fees
I get it, we all get it. If your business plan was so smart Blackstone would be doing what you are doing but they are not. In fact they are trying to dump their older vintage product as fast as they can.
Your entire business plan revolves on their being a greater fool out there to buy this crap and there will not be.
And as some here have said you lost a lot of people money this cycle by cramming them down on your private REIT vehicle
Let’s also not forget you are also jacking rents on hard working Americans. Don’t know how you sleep at night doing that.
My advice, spend more time actually learning how to be a better operator then being on the internet
“Fixed rate is for suckers”
https://www.bbb.org/us/tx/dallas/profile/property-management/s2-capital…
A grade of F
Truth. The ongoing repairs to pre-1980s assets in particular are a nightmarish game of whack-a-mole. Layer in the lower-income tenants that tend to inhabit these properties and it’s an extremely difficult way to make money.
Yep
Just ironic this cycle these groups were sort of knighted as real estate gurus
They will quickly be nobodies after they stop making money for investors and people realize they don’t do anything special at all
Will not be that newsworthy like they have been
Only newsworthy thing will be that the ship has finally sunk…..
Remember when renovated pre-1980's buildings were trading for similar, if not the same, cap rates as Class A new construction? That was fun.
Its was glorified insanity from a bunch of idiots who convinced bigger idiots to invest with them
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