Value Add Bro's/Tides Equities
What happened to the poster children of the rate hike era and the other value-add bro companies?
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Tides Equities and similar "value-add bro" companies have faced significant challenges in the rate hike era. Based on the most helpful WSO content, here's a breakdown of their situation:
Interest Rate Impact:
Risky Strategies:
Desperation and Capital Calls:
Operational Concerns:
Future Outlook:
In summary, the rate hike era has exposed the vulnerabilities of Tides Equities and other value-add firms that relied on aggressive leverage and short-term strategies. Their future remains uncertain, with many predicting significant fallout in the coming years.
Sources: Tides Equities?, Tides Equities?
They are either no longer or dead bros walking
Tides is still around, they have a zombie portfolio that will likely all go through some sort of foreclosure/capital event in the next 2-3 years. I've seen them look at a few deals, but finding the equity appears to be difficult. They'll likely continue to exist, but whether they'll convince someone to partner with them anything at scale remains to be seen.
Over the past 12-18 months I’ve heard of them tying up a deal or two, trying to raise $$ during diligence, and failing so they had to drop. Heard their price was aggressive on one deal, so perhaps it was that, but haven’t seen any evidence that anyone institutional will give them LP dollars again.
I don't think we will until they actually close a new deal. I know a few guys who were there and they made it sound like they still had some bridges that hadn't been burned, but they haven't found a deal that works yet (obviously).
Did they ever raise institutional capital? I can't see it
.
Tides’ “continuation fund”
They've been surprisingly unlike Rise in that respect. Rise seems to think they can fundraise/churn out of the situation. Tides for the most part has taken their lumps and let properties go (partially because they had no choice).
Tides is screwed
They won’t come back from what they did given how much money they lost and that business is really dead
Maybe, a bunch of people lost A LOT of money in the GFC and came back from it, and they really just need one fund/bank/insurance company to trust them to start the next iteration of Tides. It's also not like they were alone in getting caught with their pants down on interest rates and there are some capital allocators I've talked to that are willing to give a bit of a pass on that.
Would I invest money with them? Definitely not, but that doesn't mean others may not see opportunity.
No one is investing money with them again they lost that much
This is sadly very true. However, I think a lot of those people had long, successful careers before going bust*.
Yeah but I think there comes a point where you apply the smell test. Did every deal get caught out? What is the physical condition of the properties like - if many of the assets are falling apart, then it might be the case that future lenders/partners think "there wasn't much of a business here in the first place except betting on rates staying low." Did they actually put their own capital into deals to save them, or are they just playing chicken with their lenders?
I don't think it's just as easy as saying "other people came back from big losses." Harry Macklowe had decades of success in the most competitive, cutthroat market in the country. It's a little easier to justify a comeback when you can point to that, and to the sheer scale of what brought you down.
*We can debate how much we should call anyone successful before they survive a downturn - everyone makes money when things are going well and they all point to their track record when things below up, but if all that "success" was on paper and never realized, then I would argue they never had a successful deal in the first place
Don't be too sure about that. Perhaps the brand of Tides will go away, but I've heard from multiple channels that the principals are getting traction. I won't be surprised to hear about them transacting in 2026.
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