S2 Capital, a real estate investment firm, recently acquired four distressed multifamily properties in Tennessee. These properties were facing foreclosure and located in Nashville and Knoxville. Additionally, S2 also acquired another property in Dallas.
To finance the acquisition, S2 invested $60 million of rescue capital through a joint venture with an existing Limited Partner. This was done through a structured preferred equity investment. They also secured a new 5-year senior loan worth $170 million from ACORE Capital.
As part of the deal, S2 will take over as the general partner with full operational control over property management, asset management and construction management. They will also have major decision-making rights to protect their preferred equity investment. The transaction was sourced off-market.
According to Ryan Everett from S2 Capital: “Our internal data analytics platform has projected Southeast Nashville as one of the top quartile submarkets for investment due to its consistent year-over-year demand growth rate of 11%. In addition to this strong demand growth rate, supply and permits have decreased by 80%, resulting in less than 2.5% inventory available for purchase.” This is coupled with expected household formation rates and an increase in migration into this area.
