Scott Everett’s S2 Capital has again proved its resiliency in a market that drowned multifamily syndicator peers.
The Dallas-based firm raised $343 million for its second value-add fund, according to a news release. Its equity goal for the fund that launched in March 2023 was $600 million, according to Private Equity Real Estate.
The capital comes from investors like multifamily offices and public pensions. The fund will target distressed assets that it can upgrade, and 60 percent of the capital has already been invested in 14 properties in Texas, Arizona, Colorado, Florida, Tennessee, Georgia and the Carolinas.
S2 closed its first multifamily fund in September 2022 at $400 million. It hasn’t returned capital from this fund, but it landed a $500 million refi deal that provided distributions to limited partners.
News of the success of S2’s second fund comes after the firm faced foreclosure on an Arlington apartment complex last month.
S2 appeared to have defaulted on a $36 million mortgage provided by CBRE for Preslee Apartments, at 2504 Ivy Brook Court in Arlington. The 290-unit apartment complex was built in 1981. The loan amounted to $124,000 per unit.
Everett has staved off the distress that ruined syndicator peers like Rise48 and Tides Equities.
He got creative; last year, he launched the biggest private REIT to shield his syndicated deals from the floating-rate debt that drowned others. It wasn’t perfect: some LPs said they felt coerced into the conversion, and his portfolio still took a hit with the maneuver, coming out to 93 cents on the dollar. Plus, the firm still has to make good on the promise of its value-add plan.
Everett capitalized on his survivor status by taking a big bite of syndicator GVA’s distress mess. S2 joined as a general partner on a $60 million recapitalization deal.
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