S2 Capital is now the largest multifamily buyer in Texas with its latest four-property acquisition, bringing its total number of units in the Lone Star State to 16,000.
The four-property transaction, totaling 1,893 units, includes Hyde Park at Montfort in Dallas (662 units), Twin Creeks Crossing I (347 units) and Twin Creeks Crossing II (330 units) in Allen, and Tintara at Canyon Creek in Austin (554 units).
S2 plans to spend more than $7.2 million on renovations at the Tintara at Canyon Creek property, some of which include upgrading the pool, leasing office, gym, flooring, appliances and countertops. Additionally, S2 will spend more than $6.6 million on Hyde Park at Montfort renovations, including upgrading finishes to balcony fencing and railing, landscaping and the swimming pool exterior, while implementing new flooring and materials on the interiors.
“When Covid first hit, S2 quickly recognized that the market trends we witnessed in Texas and the Sunbelt pre-pandemic were going to dramatically accelerate in a post-pandemic environment,” said S2 Capital CEO Scott Everett. “The 10-Year Treasury spread to cap rates jumped 300 basis points overnight and we started buying as much as we could handle. I’m very proud of our team’s ability to acquire 13,000 units totaling $2.5 billion in the past 24 months, and we have no plans of slowing down.”
Taylor Snoddy, James Roberts and Philip Wiegand of NorthMarq’s Dallas investment sales team represented the seller of the transaction, which closed on Sept. 30. NorthMarq’s Dallas Debt/Equity team of Executive Vice President/Executive Managing Director Jeffrey Erxleben, Senior Vice President Lauren Bresky, Vice President Kevin Leamy, and Investment Analyst Loren Heikenfeld arranged floating rate debt that was heavily tailored to the sponsors business plan.
“This was a true team effort for TKG/Provident, S2 Capital and NorthMarq,” said NorthMarq Senior Vice President James Roberts. “The seller had amassed a sizeable portfolio of assets spanning multiple markets and product types which was very appealing to S2. This sale rounds out over $1 billion for our Dallas team in September which speaks to investor appetite for multifamily in Texas.”
“The sponsor elected to go with Blackstone as their balance sheet bridge lender who offered certainty of execution at very attractive terms,” Erxleben said. “The quality of this portfolio and Sponsor aided our ability to deliver a market leading financing.”
S2 currently has $1.1 billion under contract to sell between now and Dec. 1 across 21 deals resulting in a blended net internal rate of return for its investors of 41% and a 2.4 LP MOIC. S2 will transact on $4 billion this year across 54 transactions.