Earlier this month, S2 Capital announced the acquisition of a distressed portfolio of five properties in Dallas and Nashville and Knoxville, Tennessee, formerly owned by troubled Austin-based syndicator GVA Real Estate Group.
To take control of the five properties, S2 placed $60 million of rescue capital through a structured preferred equity investment in a new joint venture with the existing limited partner of the assets, Southlake, Texas-based private equity firm Trinity Investors. S2 also secured a new 5-year, $170 million senior loan through New York City-based commercial real estate debt provider ACORE Capital.
The five properties include:
- Landmark at Gleneagles in Dallas.
- Stone Ridge at 500 Piccadilly Row in the Nashville suburb of Antioch, Tennessee.
- Hickory Highlands at 100 Hickory Highlands Dr in Antioch.
- North Park Apartments at 5237 Tillery Road in Knoxville.
- The Park at Fountain City at 2132 Adair Dr in Knoxville.
In addition to taking over as the general partner with full operational control across property, asset and construction management, S2 will have major decision rights to protect the preferred equity investment.
S2’s data analytics platform projects Southeast Nashville to be a top quartile submarket for investment, given continued year-over-year demand growth of 11% while supply and permits have plummeted by 80% to less than 2.5% of inventory.
"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,” Ryan Everett, managing director and head of acquisitions of S2 Capital, told Multifamily Dive.
Over its history, S2 has acquired over 49,000 units through 145 acquisitions across domestic markets. It is focused on high-growth U.S. markets and is currently targeting Texas, Arizona, Colorado, Florida, Georgia, the Carolinas, Tennessee and Virginia.
The firm has a total capacity of more than $2 billion to make more acquisitions, according to Everett. “S2 Capital continues to evaluate potential targeted distressed opportunities in today’s market,” he said.
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