The multifamily investment management firm S2 Capital acquired a distressed multifamily portfolio consisting of five properties facing foreclosure in Dallas, Nashville, and Knoxville, Tennessee, encompassing 1,768 units.
S2 invested $60 million of rescue capital in a new joint venture with the existing Limited Partner through a structured preferred equity investment and secured a new 5-year $170 million senior loan through ACORE Capital. S2 will take over as the general partner with full operational control across property, asset, and construction management plus major decision rights to protect the preferred equity investment. The transaction was sourced off-market.
“This transaction is a great representation of how S2 is taking advantage of targeted distress in today’s market,” said Ryan Everett, managing director and head of acquisitions of S2 Capital. “Our vertically integrated operating platform, in tandem with our discretionary capital, positioned us as the preferred partner to step in as the new GP and programmatically address the in-place operating issues through the implementation of a new business plan.”
“This investment allows us to expand our geographic footprint to Tennessee, where we have planned to invest in the Nashville and Knoxville markets for several years,” Everett added. “Our internal data analytics platform projects Southeast Nashville to be a top quartile submarket for investment, given the continued year-over-year demand growth of 11% while supply and permits have plummeted by 80% to less than 2.5% of inventory, coupled with expected strong household formation and in-migration.”
Photo: Landmark at Gleneagles in Dallas, one of the five properties acquired by S2 Capital
