S2 Capital, a real estate investment firm, recently acquired four distressed multifamily properties in Nashville and Knoxville, Tennessee. These properties were facing foreclosure and S2 saw an opportunity to turn them around.
In addition to these four properties, S2 also acquired another property in Dallas. To make this acquisition possible, S2 invested $60 million of rescue capital through a joint venture with the existing Limited Partner. 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 across all aspects of management including property management, asset management and construction management. This gives them major decision-making power 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 submarkets for investment due to its consistent year-over-year demand growth rate of 11%. In addition, there has been an 80% decrease in supply and permits for new developments which now account for less than 2.5%of inventory.” He also mentioned that they expect strong household formation and migration into this area which makes it an ideal location for their investments.
