GVA’s ill-timed buying spree has syndicator on shaky ground
Alan Stalcup doubled portfolio to 30,000 residential units as interest rates spiked. Can he hold on?
The head of GVA, one of the Sun Belt’s largest multifamily syndicators, is an anomaly.
Alan Stalcup didn’t use get-rich courses, social media and podcasts to raise huge sums, as younger, less experienced syndicators did. But he ended up with the same problems.
Others who built apartment portfolios with pooled equity grew thanks in part to their large online presence. Tides Equities made media rounds, advertising billions in deals; Brad Sumrok promoted and starred in his own investment conferences; and Joe Fairless hosted what he calls “the world’s longest-running daily real estate podcast.”
Stalcup’s online presence is more like a cardboard cutout. He’s there — on Facebook, a silver fox with a Texas tan and waxy smile; on LinkedIn, professing his “love” for tax-efficient passive income; and at AlanStalcup.com.
But GVA’s website looks populated by stock photos. The only video of Stalcup speaking online shows him telling employees how to sign up for health insurance. In a search for GVA on Google it showed up fifth, behind a Canadian lighting manufacturer and the Wikipedia page for gross value added, among others.
None of it screams “invest with me.”
And yet, the Austin everyman scored big firms Crow Holdings and Fortress Investment Group as partners and pulled in hundreds of millions of dollars from retail investors to finance multifamily plays.
He cracked a national ranking of the 50 largest landlords in 2022, acquiring nearly 40 percent of his portfolio in that year alone. A year later, his unit count doubled to over 30,000. The strategy was basic — use floating-rate loans to buy and renovate apartments, then raise rents.
But toward the end of last year, Stalcup’s kingdom began to crumble. In November, GVA defaulted on a handful of its late-cycle deals.
Today the firm is delinquent on almost half a billion dollars of securitized debt, and one of its go-to lenders, LoanCore, has filed foreclosure actions on a number of GVA properties. Sources say Stalcup is considering fire sales to save others. Lenders could go after his personal assets on some of the loans.
For four months, The Real Deal reached out to Stalcup for comment, but he did not respond. Inquiries to more than a dozen former employees, to 11 brokers in the Texas Triangle (some of whom had worked with Stalcup) and to firms he sold to or bought from also were declined or ignored.
A patina of charity
Like many real estate investors, Stalcup cut his teeth in the wreckage of the Great Financial Crisis, the San Antonio Business Journal reported in 2019 in what appears to be the only other published profile of the investor.
After mixing a career in golf marketing with property investments — mostly in Austin assets — Stalcup went all in on real estate in 2015. He sold his company, CourseTrends, to a private equity firm and pivoted to value-add multifamily, founding GVA.
A fit, middle-aged dad who favors golf polos and sports a slight Texas twang, Stalcup initially tapped low-income housing tax credits to acquire properties in Denver and Austin, his home base.
He bought five properties in Austin in 2016 with money from the Impact Foundation, a charity of the Evangelical Free Church of America. Impact’s website lists GVA in its “poverty alleviation” section. A frequent donor to Austin’s Trinity Episcopal School and St. Andrew’s Episcopal School, Stalcup branded himself as a do-gooder.
By 2018, Stalcup had graduated to using New York money, partnering with Fortress on an 11-building deal in San Antonio. By then his 38 acquisitions had rounded the Texas Triangle and he had planted GVA’s flag in Clarksville, Tennessee, and the Nashville suburbs.
On many, GVA turned a profit. The firm bought a 146-unit property near South Carolina’s Clemson University in 2013. When it exited three years later, the firm boasted a 137 percent internal rate of return, according to documents published on investment platform Carofin.
“I’ve made all the money I need to make.”
“I’ve made all the money I need to make,” he told the San Antonio Business Journal after the Fortress deal, curating an image as a social impact-oriented investor.
Around the same time, Stalcup made the leap to private offerings, the fuel of the syndication boom.
His first raise pulled in $1.3 million from 23 accredited investors, meaning those with incomes over $200,000, documents show. The equity helped pay for the Aspire, a multifamily complex in San Antonio.
One too many
If the late 2010s were GVA’s training camp, Covid was its playoff run.
Interest rates were at record lows and rents were soaring across the Sun Belt as tenants fled coastal cities. Multifamily buildings from Florida to Nevada were trading like baseball cards.
“The pandemic changed everything and really pumped a lot of money into the system, which accelerated growth,” said Bobby Larsen, a multifamily syndicator and head of Vanamor Investments. “That’s the boom we saw.”
Tides Equities made the bulk of its acquisitions in that heady period. Stalcup, who by then had a decade of experience, also couldn’t resist the opportunity.
“Tides was the kid who had never drunk before,” said one person who tracks syndicators. “GVA, I think they went to the party and just drank too much.”
In March 2022, the Federal Reserve began a relentless series of 11 interest rate hikes. Ahead of the first increase, Stalcup went full bore on syndication and floating-rate loans. Through the rest of the year, GVA raised $277 million from 392 investors through 19 syndications — one for each deal it closed, according to SEC filings.
Even with rates rising, Stalcup raised higher amounts as the year went on, increasing his minimum investment to $100,000 in May. Rent growth in the Sun Belt was robust — that summer it was about 10 percent year-over-year — outweighing any concerns about inflation and the Fed’s quest to tame it.
With more partners and projects to manage, Stalcup tapped real estate investment funds, including Trinity Real Estate Group and Overwatch, to do some of the legwork. Trinity would go on to do 14 deals with GVA, raising $242 million for the sponsor.
Stalcup also found more equity in institutional partners. In May 2022, GVA teamed with Crow Holdings, the Dallas-based investment firm tied to the politically powerful Harlan Crow, to buy the 420-unit Charlotte, North Carolina, complex Coffey Creek for $97 million.
Signs of distress
GVA’s acquisitions are typically older properties in need of repairs. The Falls on Bull Creek, an Austin property GVA had picked up with Trinity in 2021, has negative online reviews dating back two decades, including one complaint of “raccoons in my ceiling the entire lease.”
Predictably, as Stalcup’s dealmaking hit a fever pitch and his portfolio grew, problems at the properties began piercing his altruistic image.
GVA had already been docked by the Texas housing department in 2020 for breaking some rules of low-income tax credits when KEYE-TV, the CBS affiliate in Austin, started hammering the firm for code violations at a northwest Austin complex. In July 2022, the station reported that the city had labeled four other local GVA multifamily properties “repeat offenders.”
The Falls on Bull Creek was cited as having public health and structural integrity violations. Residents also reported issues at four other properties GVA acquired between 2017 and June 2022. At Northgate Hills, a tenant complained to local media about mold and said the building was “shifting toward the creek that’s over there.” The buildings were all managed by GVA’s property management arm.
Lawsuits by employees and complaints by vendors about unpaid invoices began to stack up.
The former manager of five Houston properties sued GVA in 2023, claiming she had been fired after asking to go on family leave to care for two newly adopted children.
“Many times, there’s nothing you can do.”
In an earlier suit, the manager of the Meadowbrook Apartments in Madison, Tennessee, alleged that she had been “violently attacked at knifepoint and sexually assaulted” while approaching a unit to demand unpaid rent. The employee said she was allowed one day off and that when she returned, she found an envelope with her name on it in the leasing office. Inside was the necklace she had worn during the assault and a bullet, according to the complaint.
GVA allegedly stopped paying two apartment staffing companies. Austin-based Wilson Tindal & Associates sued for $78,000, and Costello Properties alleged it was owed nearly $100,000.
Other disgruntled vendors tried to draw Stalcup’s attention via social media.
“We currently have $11k+ of overdue invoices,” an August tweet from an HVAC repair firm reads.
“GVA hasn’t released payment. We’ve been waiting over 60 days.”
End game
In February 2022, GVA made one of its largest acquisitions to date, buying a dozen properties across North Carolina, South Carolina, Texas and Tennessee for $703 million.
It financed the portfolio with $555 million in debt — half of it lent by LoanCore Capital — and $148 million in equity, according to ratings agency DBRS Morningstar.
Most of the equity apparently came from Stalcup’s largest-ever private offering: $88 million raised from 11 investors. Stalcup signed SEC documents for the ownership entity, Sunrise Portfolio LLC.
LoanCore securitized about $225 million in debt tied to eight of the buildings, according to Morningstar. GVA initially paid about 3.25 percent interest, or about $609,000 a month. By August 2023, the monthly bill had soared to $1.12 million and the properties were not pulling in enough revenue to pay it — Sun Belt annual rent growth had slipped to 3 percent as of June 2023, according to a CBRE report. The debt is now delinquent and in special servicing.
Similar issues weighed on Stalcup’s other properties. In February, over half of his $850 million securitized loan balance was delinquent. Of that, 95 percent either matured in December or comes due in the next 12 months.
The sponsor had defaulted on $600 million in debt as of January and faces foreclosure across the Texas Triangle.
Some observers of the syndication space warn that more foreclosures are imminent. The rash of foreclosure actions by LoanCore suggests the lender does not believe GVA can turn around those properties. A Texas-based private multifamily lender said LoanCore has been shopping around those assets.
LoanCore declined to comment.
Other lenders to GVA have not moved to foreclose. But one lender’s action can snowball.
“If you see other loans foreclosed on, you have a distressed situation at the corporate level,” the Texas-based lender said, “and the chance that you can modify that loan with the same ownership in place is getting slimmer and slimmer.”
At the same time, lenders are not eager to foreclose and sell the many value-add properties that are now worth less than their debt, which would mean recording a loss.
Real estate loans are often nonrecourse, meaning the lender cannot come after a delinquent borrower’s personal holdings. But many loans have “bad-boy” provisions that allow lenders to do so if certain covenants are breached.
A typical requirement is maintaining a debt service coverage ratio of 1.25, meaning a property’s cash flow can cover its debt service. Many syndicators have recently failed that test. Other exceptions include misrepresenting personal finances or committing fraud.
There are also completion guarantees, which apply to deals in which property upgrades are promised. Unpaid vendors can signal to lenders that renovations have not wrapped.
Stalcup has signed for at least one loan — $72 million from LoanCore for the Park at Walnut Creek in Austin — as a “recourse carveout guarantor,” meaning the lender can come after his personal assets. Stalcup, as of February 2022, had “adequate net worth and liquidity for the loan amount,” according to Morningstar. But much has changed since then.
Stalcup sold his private jet in October, according to federal records, before LoanCore scheduled foreclosures on some GVA assets including the Park at Walnut Creek.
Because Stalcup is a syndicator, he’s not the only one who stands to lose money on GVA deals that go awry.
One GVA investor, app developer Noah Kagan, announced to more than 130,000 followers on X that he had lost $100,000 on the Park at Walnut Creek. Kagan declined to be interviewed.
In such cases, limited partners have little recourse.
“Many times, there’s nothing you can do,” Aleksey Chernobelskiy said, who advises limited partners. “You can cause a fuss, but practically speaking, in the vast majority, there’s no monetary benefit.”
GVA was known to manage the majority of its portfolio. But since a number of its properties landed in hot water, management has been turned over to Austin-based RPM Living.
As maturities approach on loans performing as badly as the LoanCore debt, sources say Stalcup is trying to sell what he can. One Tennessee broker said in January that he had reviewed seven GVA deals. Another observer shared that GVA was trying to unload its entire portfolio. TRD could not independently verify that claim.
Sale prospects are hampered by interest rates, which remain high, and the issues GVA has been dealing with at some properties, such as housing violations and unfinished work. Given the turmoil, buyers tend to be far from sellers on price, and wary as well.
“Everyone wants this unicorn deal to materialize — they’re looking for distress in the market,” Tides Equities’ principal Ryan Andrade said. “Anything that comes to market, it’s probably not a deal you want to own.”
If you have invested in a syndication deal and have information to share, please contact isabella.farr@therealdeal.com or suzannah.cavanaugh@therealdeal.com.