As he copes with a rash of defaults and mounting foreclosures, Alan Stalcup now faces his first investor lawsuit.
The head of multifamily syndicator GVA was hit with litigation claiming he lied to his limited partner on a San Antonio deal about how he financed the project.
Limited partner Overwatch, a private Fort Worth-based REIT and frequent Stalcup investor, alleges the syndicator’s “fraud, fraudulent inducement and fraud by omission” led to the foreclosure of the so-called Solara apartment complex last month and wiped out Overwatch’s equity.
The REIT claims it suffered a $7 million loss.
Overwatch Principal Ben Loughry said his firm was “forced” to file the petition against Stalcup but declined to comment further.
Stalcup said GVA disputes the claims and intends “to defend the lawsuit vigorously.”
A search of court records by The Real Deal found no other cases of investors taking GVA to court.
Overwatch invested in the 285-unit Solara in 2022 with the understanding Stalcup would finance the deal with a $30 million loan. With about 80 percent of the equity, Overwatch was the majority owner, the suit reads.
The loan “specifically precluded” GVA from entering into any other financing transactions on the Solara without Overwatch’s sign-off, yet Stalcup did so anyway, the complaint charges.
GVA tapped a LoanCore affiliate for a $56 million mortgage, pledging as collateral the Solara and a “Haverwood” property in which Overwatch alleges it is not invested. GVA owns 4804 Haverwood in Dallas, according to its website.
Stalcup failed to notify Overwatch of the second loan, according to the complaint. “Overwatch would not have invested in Solara had it known,” the suit reads.
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The REIT claims that when Stalcup took out the debt, Haverwood was underwater, unlike the Solara. “Cash generated by Solara has been used to prop up the failing Haverwood asset,” the lawsuit alleges.
In December 2023, Stalcup defaulted on the $56 million loan and LoanCore accelerated the maturity date. By March, LoanCore had foreclosed on both Solara and Haverwood, preventing Overwatch from selling Solara for a profit or recouping its investment.
The investor is now seeking damages.
This article has been updated to include comments from Overwatch and Stalcup.