Weeks after completing a $343 capital raise, Scott Everett’s S2 Capital is buying up industrial operator Fort Capital.
Fort Capital has an 11 million-square-foot industrial portfolio and a pipeline of $350 million in targeted acquisitions, according to a release from S2.
The Dallas-based multifamily syndicator is hiring Chris Roach as president of the new vertical; Parker McCormack is coming on as chief investment officer.
Fort, which was founded by Chris Powers in 2010, focuses on value-add industrial assets in high-growth markets. Specifically, it specializes in shallow-bay infill properties.
In a statement, Everett pointed to the growth of e-commerce and rising transportation costs as the reasoning for S2’s foray into industrial real estate.
News of the merger comes after S2 announced the closure of its second value-add fund. It was first reported by The Promote.
The capital was raised 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.
Everett has been more successful at dealing with the higher interest rate environment than syndicator peers like Rise48 and Tides Equities.
In an effort to shield his syndicated deals from the floating-rate debt that was the downfall of his peers, he launched the biggest private REIT last year. 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.
Even so, there have been speed bumps along the way. The firm faced foreclosure on an apartment complex last month after appearing to default 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.
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