Contents
Trending
Scott Everett’s S2 Capital is melting down and losing millions in investors’ capital.
Read the timeline of the meteoric rise and subsequent unraveling of S2’s $4.5B portfolio.
And other real estate syndicators’ portfolios are collapsing too…
Top Stories
Big Money Heads to the Sun Belt to Catch the Wave of Foreclosures and Rising Rental Rates
The golden opportunity has arrived: the supply pipeline is near zero, inventory is shrinking, years’ worth of strong rental growth is all but certain, and multi-family foreclosures are escalating. But retail investors in early 2020s vintage deals won’t benefit - their equity will be lost to foreclosures and forced sales while large investors stand ready to take advantage of bargain pricing and rising revenues.
The Winners…
1789 Capital plans to invest in Sun Belt markets - The Real Deal
REITs redirect to the Sun Belt - Multifamily Dive
Texas Multifamily Supply Dips as Investors Move Ahead of Rents - CRE Daily
Multifamily rents grew in July, buoyed by Sun Belt: Yardi - Multifamily Dive
The Data Behind Multifamily - Real Estate Investor Podcast
New Deal Launched: 37% Discount To Recent Appraisal - Cash Flow Connections
The Losers…
CRE’s $65B Maturity Wall Is Finally Hitting - CRE Daily
Multiple factors pushed multifamily CMBS distress up in July - Multifamily Dive
Tampa real estate firm faces foreclosure on Clearwater apartment complex - Tampa Bay Business Journal
Pair of Miami Beach apartment buildings could be seized in foreclosure - South Florida Business Journal
Why Even Great Deals Can Turn Sour - The Best Ever CRE Show
Fraud is on the Rise…
GPs resort to desperate measures to avoid losses, and support for putting PE into retirement plans is unverifiable.
The Skeptic’s Corner
Who would have thought that people with a great smile and little to no relevant education or experience in syndications other than channeling investors’ hopes and dreams would raise and then lose tens of millions of dollars in less than 15 years?
That’s exactly what happened with S2 - among others. But the trend continues. Everyone has to start somewhere, but confidence is not competence, charisma is not skill, and rapid growth is not indicative of profitability.
In fact, there appears to be a negative correlation.
Are you investing with an expert in marketing or an expert in profitability?
Weekly Roundup
Market Place
Monarch offloads Golden apartments amid Colorado divestment
Local firm cited statewide renter protection laws as catalyst for sell-off.
- The Real DealPower grid uncertainty leaves data center projects in limbo
Audits are the result of a rare bipartisan anti-data center fervor across Texas. Local governments and activist groups have been attempting to limit the Texas data center gold rush for a year, and recently, the issues have come to a head.
- The Real DealEconomic signs show consumers are not tapped out
The consumer is not tapped out, but bifurcated. Affluent households continue to support travel, dining, entertainment and luxury real estate, while lower- and middle-income households face thinner savings, high borrowing costs, and rising credit stress.
- The Real DealCrowd Street Announces Availability of Flexible Credit Income Fund
Crowd Street announced the launch of T. Rowe Price OHA Flexible Credit Income Fund “OFLEX” on its platform.
- Crowd StreetWhat’s Going On??? Fireside Chat with Neal Bawa
Neal Bawa takes us into the realm of macroeconomic resets, explaining the concept of a debt jubilee. How countries could wipe out trillions in debt, and what that means for assets, currencies, and investors globally. He discusses the potential impact of AI-driven productivity surges on debt reduction, and whether this black swan could pave the way for a new financial order.
- The Best Ever CRE ShowBTR Developer Targets 20% IRRs Building Rental Homes in Secondary Markets
Ryan and Steven Watts of Red River Development break down the build-to-rent market, why Red River focuses on secondary markets, and how recent housing legislation could reshape the future of single-family rental investing.
- Passive Pockets
Investor Education
What to Ask When Your Adviser Pushes Private Funds.
The questions you need to ask before joining Wall Street’s $2 trillion party.
- Jason Zweig, The Wall Street JournalCan AI Replace Financial Advisors?
What happens when financial advice meets AI? Featuring Laura Cornely, CEO & Co-Founder of Count. Laura shares how Count is using technology to help people manage and invest through personalised financial strategies. Laura also explains why human connection could become even more valuable in an increasingly AI-driven world
- Nothing VenturedONE QUESTION: Justin Linscott
What Tax Issues Actually Matter for Retail LPs in Real Estate Syndications?
- Net Zero is a WinClosing & Servicing Bridge Loans
The nitty gritty details of lending. This post is part of the Guide to Bridge Lending series.
- LRL FinancialThe Cost of a Total Loss Is More Than Money
The three parts of loss: personal, interpersonal, and financial - and how to move on.
- InvestClearly InsightsThe $20 Billion Storage Empire Built on Orange Doors: B. Wayne Hughes
How B. Wayne Hughes drove past a fully rented self storage warehouse in Texas in the early 1970s and turned that single image into one of the most overlooked real estate fortunes in American history, then did it again in his seventies with a second billion dollar company built around single family rental homes.
- The Wealth ClockHe Walked Away From Blackstone, Then Built a $100B Real Estate Empire: The Barry Sternlicht Story
How Barry Sternlicht, the son of a Jewish Holocaust survivor, turned a career setback at 29 into Starwood Capital Group, personally invented W Hotels, the first true lifestyle hotel brand, and built and sold an entire hotel empire, all before building something even larger in its place.
- The Wealth Clock
Quote of the Week
“Fixed-rate is for suckers,”
-Scott Everett, April 5, 2022
In case you don’t remember 2022, the Fed signaled rate increases in January, and the first increase came in March. The US was experiencing the largest and fastest inflation rate in 40 years. But Mr. Everett didn’t seem to be aware of any of these shifts in market fundamentals…suckers indeed….
What did we miss?
Comment below on news and resources worth sharing.
Thanks for sharing this breakdown of the commercial real estate distress! Wall Street data shows a $65 billion maturity wall hitting CRE, driving widespread foreclosures as variable rate debt defaults rise. Check out Capital Libre to explore simple breakdowns of these shifting market dynamics!