The Day of Reckoning is Here for Tides Equities
In a fresh hell for Tides Equities’ co-founders, their lender on a Dallas multifamily complex is going after them personally for the unpaid balance of a $33 million loan.
Tides already lost the property — Tides on McCallum — to foreclosure this summer.
But Long Island-based Acres Capital, which took back the asset with a $28 million credit bid, alleges the sale failed to satisfy the debt. It slapped Sean Kia and Ryan Andrade with a suit in New York Supreme Court, alleging the two principals defaulted three times on a recourse guaranty.
Under such a guaranty, the debtor is personally liable for a loan’s outstanding balance after the collateral sells — in this case, $5 million.
Kia said he and Andrade “fortunately have a good relationship with Acres and have been in constant communication with them on this.”
The principal said he expects Tides and Acres to come to an “amicable agreement” in the next few months.
Acres is led by CEO Mark Fogel and managing partners Marty Reasoner and Andrew Fentress.
Acres CEO Mark Fogel (Acres)
Tides Equities’ principals, whose firm has lost numerous properties to foreclosure because of rising interest rates and other issues, agreed to keep the Dallas complex free from waste and liens, and to maintain an interest rate cap to protect against rising rates.
Kia and Andrade failed on all fronts, Acres’ suit alleges. It claims they allowed bed bug, roach and termite infestations to spread and failed to repair collapsed roofs, foundation leaks and units made uninhabitable by mold. They did not buy a new interest rate cap in September to replace an expired one, the suit claims. (The cost of caps soared after the Federal Reserve raised interest rates.)
For those alleged breaches, Acres seeks $3 million in damages.
The kicker, though, are the $427,000 in mechanic’s liens Kia and Andrade allowed to fester.
Acres alleges the liens allow it to hold the borrowers liable for the full amount owed under the loan documents — a sum to be proven at trial. On top of that, Acres wants $8.2 million in damages.
That includes $3 million for property damage and the missing rate cap, and $5.2 million for failing to complete renovations — a condition of a separate guaranty.
Why the hell did they get a recourse loan for the dogshit properties they invest in? Anyone know if they have other recourse loans? $8.2mm seems too light and will likely be less if they reach a settlement.
Beats me mate
Might be reading this wrong but it seems like the loan was non recourse but Tides ended up doing a bunch of shit that was specified in the carve out which turned it into a recourse loan.
Still extremely stupid on their part to run this property into the ground
Kia gonna be driving a Kia by the time this is over
Ah got it, thanks!
Boys will be boys
Well, first off, when you're running a fraud the key is to extract as much value as you can, as early as you can, because frauds always expand to cover up the evidence of dishonest behavior until they implode spectacularly. These two might have just been betting that they'd keep getting bailed out by the market, or maybe they didn't have enough capital lined up and wanted to churn fees and so needed the higher LTV that came with a recourse loan. After all, this one was technically non-recourse but they defaulted on enough covenants to trigger the recourse, so at the end of the day these guys aren't exactly the brightest bulbs.
Or, alternatively and more likely, they're so deluded and incompetent that they didn't actually think these were dogshit assets.
Think of how stupid and unethical most people are. Once you understand that, you understand how these guys are capable of convincing themselves that they were competent operators. After all, someone with respect for the people they were defrauding wouldn't gone into this business in the first place. Once you've rationalized away the fact that you're just a parasite and a crook, you almost have to keep deluding yourself that everything you do is going to go well. If you stop to rethink anything, you risk confronting the reality of who you are and what you're doing.
It’s genuine incompetence with a lot of these guys.
I don’t understand how you can look at a proforma and think your numbers will realistically pencil when you buy at a 4 cap and then plan on 5% rent bumps for the next 5 years.
Based on the most helpful WSO content, here's what you need to know about the current situation with Tides Equities:
Foreclosure and Lawsuit: Tides Equities lost the property "Tides on McCallum" in Dallas to foreclosure this summer. The lender, Acres Capital, took back the asset with a $28 million credit bid but alleges the sale did not satisfy the $33 million loan. Consequently, Acres Capital is suing Tides Equities' co-founders, Sean Kia and Ryan Andrade, for the unpaid balance of $5 million.
Personal Liability: The lawsuit claims that Kia and Andrade defaulted three times on a recourse guaranty, making them personally liable for the loan's outstanding balance after the collateral sale.
Allegations of Mismanagement: Acres Capital's suit alleges several breaches by Kia and Andrade, including:
Damages Sought: Acres Capital is seeking $3 million in damages for property damage and the missing rate cap, and an additional $5.2 million for failing to complete renovations, totaling $8.2 million in damages. Additionally, there are $427,000 in mechanic’s liens that Acres alleges allow it to hold the borrowers liable for the full amount owed under the loan documents.
Current Status: Sean Kia mentioned that he and Andrade have a good relationship with Acres and are in constant communication, expecting to reach an "amicable agreement" in the next few months.
For more detailed information, you can refer to the original article on The Real Deal: https://therealdeal.com/new-york/2024/11/27/acres-goes-after-personal-a…</a">Acres goes after personal assets of Tides Equities principals.
Sources: Tides Equities?, Tides Equities?, BREAKING TIDES EQUITY/AMC - EMAIL LETTER REVEALED, BREAKING TIDES EQUITY/AMC - EMAIL LETTER REVEALED
I was surprised that the relationship between Tides and Acres is described as amicable. Acres is exercising their discretion to go after Kia and Andrade personally. If they weren't friendly and were on bad terms, how would this have played out?
Note that it was the Tides guys (or their PR person) who said they had a good relationship with their lender. Based on the lawsuit, I don't think the lender agrees on that point.
Good point. Though I wonder why the Tides guys or their PR would describe it is amicable when it obviously isn't. At best they're overly optimistic, but could be seen as out of touch or delusional. Or maybe their relationships with other creditors are somehow even more adversarial?
Ahh yes….the nonrecourse guaranty that suddenly becomes full recourse through a series of acts that would cost you millions to prevent/cure when you’re already broke/going broke.
Failure to prevent bed bugs is a new one, but I like it a lot! I could argue every operator in default right now has a full repayment guaranty waiting for them in court by tripping bad-boy clauses they ignored.
Same thing happened when banks hit every developer in 2010 for “misrepresentation” when their personal balance sheet of Miami real estate went down 50%.
The smart ones did not forget and only provide entity guarantors.
Their "business plans", otherwise known as value-add, were most likely completely absurd, massively overleveraged, and used short-term loans w short rate caps. Extremely limited background, obviously didn't really understand how to operate properties or how inflation and interest rate caps work. When the business plan (crank up the rents) didn't pan out, it appears they used any available NOI to stave off default by paying interest before some very necessary expenses. Some of their foreclosures look like war zones. Trash piled up, windows boarded up, vendors unpaid, liens, etc.. It's a complete lesson of everything NOT to do. University real estate programs should use them as a case-study. This is also a case-study of why lenders require bad-boy guarantees. They gambled with the equity investors money, shame on them, but the lenders aren't going to let it slide so easily.
They should have spent more time learning what they were getting into, instead of acting like they did in those stupid investor pitch videos. They'll lose the fees they accumulated, but the small LP investors who trusted them are the victims. Bad recipe: giving inexperienced sponsors access to unwitting LP's and highly leveraged loans that they didn't understand.
I'm not sure if the original Tides thread is still active, or if it was forcibly taken down, but there was probably 1,000+ comments. I learned so much and even referenced it during interviews- special servicing notes, bad boy carveouts, recourse triggers, asset mgmt 101, general business models, etc
Absolutely brutal update on twitter from Hiten Samtani - https://twitter.com/hitsamty/status/1863324865647800611
Tl;dr, Starwood smelled blood in the water from the ACRE news and has already filed judgements on ~ $12.5M for carry guarantees. If you read the end of the link below, these were filed on 11/29 (day after thanksgiving). These guys are cooked.
https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=15HmVdSB9…
That’s crazy. You would think that they would have a good understanding of the bad boy clauses within their loan documents but this is absolutely shocking. I’d be throwing my own capital into deals to prevent a breach but looks like they either didn’t know, care or assumed that lenders would never exercise their rights.
If I'm reading this correctly, Starwood's justification for the trigger was ultimately the prohibited transfer of interest via ~ $40k in mechanic liens. I imagine they would have found a breach even if these liens didn't exist, but, yes, crazy that they didn't come out of pocket to plug this hole that is now the rationale behind them owing $5.4M.
EDIT - correction, it looks like Starwood is pursuing full recourse on the loss from foreclosure + the carry. So, they're going after them for $17M on this one deal in Texas. All still predicated on the mechanic liens. Fuck.
Here's the full docket from the NY Courts.
https://iapps.courts.state.ny.us/nyscef/DocumentList?docketId=t7BUzXFyT…
This is not surprising from what I've read or know. The whole system was designed to move fast and flip. I have made private comments that I doubted the Tides guys even read the non-recourse carve-out section of the loan documents. Carve-outs mean nothing if you can make the lender whole. Once they became "long term" owners by circumstance and the shell game stopped it was only a matter of time before lenders started looking at the failed business plan and their remedies. Not sure what that gets these lenders in the long run but a bunch of headlines. No way there is enough money to go around.
Good thing Starwood never ramped up to binge on ZIRP financing. They would otherwise be sitting on a mountain of redemption requests themselves ....
This news warms the cold cockles of my heart.
My heart is also warm. I remember coming across the the Tides Equity thread 2 years ago and consistently following up with it just waiting for this moment and now it is finally here! Reading this thread and the court docs is the best way to pass the time while I take a shit
https://ten31.beehiiv.com/p/tides-principal-punishment-greystar-s-modul…
Kaboom, let the lender flood gates rush before the bankruptcy filings.
I wonder where the money was going. It seems like they weren't paying the lender, the vendors, or the management company. I dealt with foreclosures for a while and it was rare to see all three get snubbed.
Interest reserves & rate caps. They were still probably significantly bleeding out on their capped interest payments, so plugging holes every month.
They didn't pay the rate cap on one of them so that's money "freed" up. What was generally the rate cap strike for loans originating in 2021-22? I found some paperwork for one we had in 2018 and it looks like it was 150bps over SOFR but I'd have to assume they were higher in 2021.
Well Kia listed his Brentwood home for sale last month at $26M (he bought it last year for only $14M lol) so maybe that's where it went.
Are they the only guarantors on the loans or did anyone else sign the loan docs?
I don’t know about you guys but if I signed as the bad boy carve out guarantor I would be really fucking careful not to trigger personal recourse. These guys just seem like absolute morons.
I am not a fan of the tides investments, practices or capital strategy.
They didn’t trigger the carve outs because they wanted to, they triggered them because they ran out of money in the company.
Almost all of these clo loans and debt funds could trigger the defaults on the loans but they haven’t done so because they are trying to pretend like everything is okay.
The tides principals might have some personal assets these lenders can take, so they are trying to get them.
The rest of the clos and debt funds will be left with worthless personal guarantees and bigger losses because instead of acting in their investors best interest and liquidating early, they tried to pretend like everything was great and so their collateral value deteriorated more in the process.
I suspect they will file bk soon and this will hopefully trigger all the other lenders to act instead of pretend, so the bad deals can be liquidated and the market can recover.
If the banks start to hold the clos and debt funds accountable on their lines of credit (warehouse, etc.), things will really heat up. That will be much more interesting than the tides stuff.
Where is the analyst guy that vehemently defended Tides, its founders and practices?
Organizing all the lawsuits in the filing cabinets
Pretty sure Acres is about to file another one for Tides on East Broadway. Just sold 11/15 at a trustee auction for a credit bid of $48.3M against UPB of $53.1M. Articles says they still haven’t paid appfolio for services per pending lawsuit.
Sounds like the panel they did a few months ago to restore their image really worked lol, relationships with lenders have never been better lol.
Even more recourse action now against the Tides guys, this time from Starwood and Rialto.
Starwood took over 3 properties via credit bids and is now suing to enforce Carry Guaranties on them. Going after kia and andrade for at least $17M.
Source: The Promote
Hiten, I already gave you credit above my guy. I respect the source, don't worry. Thanks for staying on top of this shit.
ah, my bad, didn't see that. new here so still getting used to the nav- good lookin' out
the tides on 44th suit in particular is v interesting. i don't think I can post links here yet but pull that one; lots of great detail
And then you got MF1 with 40 loans out to these fools sitting here like.. "idk it's all good imo..."
Really hope they get Sean’s Brentwood mansion. If these articles are true, these guys should have nothing left. Pretty soon they’ll be pooping in the street bc they can’t afford a toilet
Sternlicht will pull the Shooter McGavin and show up at the auction to buy it.
Wishing for others misfortunes is rough. They and others were reckless with others money and should be held accountable. Hopefully that is done and they become productive members of society. I sincerely hope they never end up pooping on the street.
You’re right, I took it too far. I hope they are held accountable but continue pooping in toilets
This was a heartwarming exchange, unusual for the Internet in this modern era. Ultimately we just want to see evil punished but without feces being slung around our municipal shared spaces. God bless you gentlemen.
Anyone have an idea of the NWs of these guys? They seem quite young to have owned/managed this much CRE. Where did they develop the funds to do this? Did their family/relatives own a business? Any insight? And yes, I’m aware that they are syndicators.
"Together, Kia and Andrade had a combined net worth of $69 million in 2021, according to a DBRS Morningstar report for a loan Tides scored on"
https://therealdeal.com/la/2023/02/03/multifamily-player-tides-equities…
Yeah, but that's using their PFS numbers. Given the way they underwrote deals and pitched them to lenders, that number seems pretty darn low when all is said and done - if you assume that your rents are going to grow by 5%+ every year for a decade and then slap a 3 cap valuation on it, you don't have to own much real estate at all to be worth $70mm
I've followed this story loosely and am on the equities side of things, so forgive my ignorance here. But aren't Ready Capital & Arbor big lenders to these guys as well? If Acres is essentially ending the can kicking here, won't RC & ABR be forced to end the can kicking as well?
Ready and ABR aren't their big lenders, but they did similar deals. But if you follow ABR, they've done a ton of can kicking.
This
https://therealdeal.com/national/2024/12/06/tides-equities-kia-and-andr…
Any updates to this saga? I saw that a few of their properties went to foreclosure.
A new lawsuit came out yesterday from Electra. Not sure it changes anything other than it continues the pile on of lenders trying to get their slice of the pie.
https://finance.yahoo.com/news/copycat-suits-corner-tides-kia-210722703…
looks like cb guys in vegas has a Tides deal they are marketing for the lender
Just hit the Dallas BJ today for more foreclosures in North Texas.
---
A Los Angeles investment firm that scooped up dozens of older apartment complexes across Dallas-Fort Worth is continuing to lose properties as foreclosures pile up.
LA-based Tides Equities LLC bought 15,207 apartment units across Texas and 31,000 units total across the country in states such as Arizona and Nevada in 2022. Last year, the firm faced fallout from the investment, as multiple properties across the Dallas-Fort Worth area faced foreclosure.
Now, several of the properties have new owners, and contractors continue to file mechanic's liens alleging Tide has not paid them for work on properties.
The most recent property Tides lost was the 424-unit Tides on Haverwood, locate at 1900 Dallas Pkwy. in far north Dallas, which Benefit Street Partners took back with a $66.7 million credit bid Dec. 12, according to Collin County deed records. It's important to note that a credit bid at a foreclosure auction doesn't necessarily reflect the total value of a building — simply what's owed on that single loan.
Tides Equities co-founders Sean Kia and Ryan Andrade did not respond to a request for comment.
Tides has lost properties across DFW totaling about 3,000 apartment units. Many of the entities that acquired the properties were former lenders.
Here's a list of the properties the company has lost:
In Tarrant County:
In Collin County:
In Denton County:
Contractors are continuing to file mechanic's liens alleging Tides did not paying for work on its properties across DFW, although it appears some of the liens are starting to be released. Those liens are a way for contractors to force payment for construction work or services. Alan Taber, managing member of trash removal service Better Than We Found It LLC, filed a lien in August for work done at the Tides on North Collins, after he found out the property was in foreclosure.
"I talked to the property managers and get a very clear impression that the invoices are in the system and have been in the system," Taber said. "The owners are not paying because they don't have cash."
Taber, whose firm services 56 properties, said the late payments aren't just happening at Tides properties. He said he was waiting on about 15 invoices last August from multiple apartment owners. Eventually he gets paid but he said the delay strains his business, which relies on 30-day invoices to operate.
"I have to have working capital to cover my costs for three months instead of a month and a half," he said. "Which is a strain."
Tides Equities also lost a handful of properties across the Phoenix metro area last year to foreclosure, according to Phoenix Business Journal.
I heard that the tides owners were starting a new real estate company. Is there any truth to that?
Please god no
I have not heard this. I can’t fathom anyone would do business with them?
People are dumb as hell. Adam Neumann is still raising funds. Elizabeth Holmes’ husband is the CEO of a blood testing company.
Well folks... it looks like the end is near.
I decided to circle back on some of the Starwood court filings, and it looks like the two lads have been hit with a combined $26.6M in judgements across two disposed cases.
https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=B2cVNL5rqXwsd3OMtzkpdw==
https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=2K/TFUgiEZ5PtINp_PLUS_j5Rjw==
An additional case on a PHX asset seeking a $23.7M judgement is still marked as active, but Starwood's lawyers are like a hawk and have already provided the two successful judgements as exhibits.
In total, we're looking at ~ $50M in recourse liability across just three deals. Are the tides about to turn?
Edit. You’re quick!
Yes.
In the judge's own words
The circles those two clowns hang out in here in LA (Persian Jews), are all spewing the same nonsense that they aren't going to go BK lol
Why not? What do they know that we don't...
Which Persian jews you hanging out with?! 😂
Looks like Kia and Andrade are pretty screwed - wonder what their net worth is and if they can even pay the $26.6?
Hopefully these tool bags end up living out of a van. I interacted with them briefly and they are the worst type of finance bro dipshits who seem to truly believe they invented value add real estate when really everything they have done is garbage. Their deals look like shit. Renos look awful, exterior work is cheap and crappy.
There is no way they don’t Declare bankruptcy as the judgements will be too large
https://therealdeal.com/national/2025/05/15/tides-equities-kia-and-andr…
3rd judgement on the Phoenix asset for $23.7M was awarded in favor of SMC on Monday. Just put it on the tab at this point, right?
Smc?
Starwood Mortgage Capital
Hi Everyone,
I’m invested in one of the Tides Deals and feel like an idiot for putting a good amount into it. I’ll be honest in saying I was probably as naive as them and feel like an idiot for doing this even though this was my first RE investment.
I spoke to them in Feb for an update on my property and they said as long as the SOFR rate goes under 3% within Q1 of 2026, I have a shot at getting my money back.
Curious to hear if you all think this is bullshit or if there is actually a glimmer of hope.
Thanks
It might not be bullshit in the sense that is what their models say, but why would they or anyone think SOFR would drop below 3% by Q1 of 2026? SOFR hasn't been in the high 2's since 2022.
Probably bullshit. Write off the money.
When did they buy the property and where is it located?
Your investment is almost certainly impaired at some level, and there's a real likelihood it is zeroed out.
Are they sending you monthly updates with income & expense statements? Shoot me a PM and I can help you analyze your position.
@Multiverse Any advice for this guy and the other LPs? Would uniting and filing a lawsuit have any point? This is not my area of expertise, so would be interested to read any advice you have for the LPs.
Not the guy you tagged, but there’s likely nothing left to go after. Lenders will be ahead of any equity investors in line, and its general consensus most deals are underwater. And if the LPs were able to prove there was fraud and/or willful misrepresentation (not saying there was at Tides, this goes for anyone)… then the lenders would still be first in line.
If you can tell us which property it is, we can all opine on the current valuation and likelihood that rises above the debt balance. Those will just be opinions, but will give you an educated range of what to expect for your investment.
This tells me enough about the deal and their thesis on it. It was only a play on low rates and not much else. Outside of not investing in it, there was nothing else you could do. Your money is likely lost. I'm likely wiped on a few unrelated deals from 3-4 years ago so take comfort that you aren't the only one.
I believe they are telling you the truth in so far as they believe that. They've been toting the "it's just the rates" issue for a while, but they still seem to not understand debt service has nothing to do with operations of a property.
Most of the NOIs have fallen 50-75% of where they were when they bought them. Some of the NOIs are negative from what I've seen. So in reality, rates can go to 0% and probably still nothing there.
Sorry to be so harsh, but I don't know if there is anything you can do at this point. If it's money that would've been allocated to a weekend in Vegas then just call it a bad bet and not take the risk next time. If it's real money that you can't afford, then the only thing is maybe a class action to try to prove (which shouldn't be too hard) that they did some type of investor fraud or misrepresentation. But you would need time and probably some more money to chase it.
But would there be any money to even go after?
The great noticing continues
A little bird has told me that Tides is no longer in control of some of their deals because the lenders added rescue capital in return for control rights, to avoid defaulting on CLOs at all costs. I’m curious what you guys think of this strategy on the lender’s part? I guess big lenders must just have the ability to absorb “bad” loans that they’ve made? It’s almost like flushing their debt fund clients’ money down the toilet has no real consequences. Pretty wild.
Stepping back - why wouldn’t a lender do this if the other remaining option is to force collapse of the CLO? In certain situations, stepping in on bad loans is the best available option for the debt fund’s investors
Fair point. As an investor in that fund, on the one hand you wouldn’t want the CLO to collapse but would you also be concerned about “good money after bad money” scenarios in pursuit of control? Higher paid people than guys like me make those decisions…
cough cough MF1
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