S2 Capital Acquires 14-Property Texas Portfolio

Lincoln Crossing. Image courtesy of S2 Capital S2 Capital has acquired 14 properties in the…

Lincoln Crossing. Image courtesy of S2 Capital

S2 Capital has acquired 14 properties in the Dallas-Fort Worth and Houston Metros with plans for extensive renovations that will modernize the portfolio. The company acquired the portfolio from an undisclosed seller and is making the investment through its S2 Multifamily Value-Add Fund 1.

JLL’s Mark Brandenburg, Lauren Dow, and Michael Cosby, along with Northmarq’s Lauren Bresky and Loren Heikenfeld, secured the debt financing for the transaction. JLL’s Roberto Casas, Rob Key, Matthew Lawton and Dustin Selzer along with Northmarq’s Taylor Snoddy led the investment sales.

The Texas multifamily portfolio totals 4,455 units spread across 14 properties located in the Dallas-Fort Worth and Houston metros. The communities are all Class B garden-style properties that were built between 1979 and 1987. The portfolio’s occupancy rate is at 94 percent.

Separated by metros, the portfolio includes 11 properties in the Dallas-Fort Worth metro that range from 150 to 532 units, located in Dallas, Rockwall, Irving, Arlington, Garland, Mesquite and Plano. The remaining three properties of the portfolio are in the Houston metro and range from 272 units to 440 units with two of them located in Houston and one in Katy.

Ryan Everett, vice president of acquisitions at S2 Capital, said in prepared remarks that the portfolio will provide affordable housing options for those who are being priced out of buying homes. Everett added in prepared remarks that higher mortgage rates have caused many prospective buyers to instead look at renting since it was the more affordable option.

MAJOR RENOVATIONS PLANNED

Over the next two years, S2 Capital is planning to spend $60 million to renovate the exterior and interior of each of the communities to improve the quality of life for current residents but also to attract prospective tenants. The exterior enhancements will focus on the swimming pools, fitness centers, clubhouses, leasing offices, repainting, refreshing siding, and upgrading balcony enclosures, while the interior upgrades will revolve around new flooring, countertops, appliance packages, kitchen tile, shower tile, light fixtures and hardware.

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The 14-property acquisition is the latest addition to S2’s portfolio that includes more than $10 billion in transaction volume. Previously in Texas, the company acquired two multifamily properties totaling 1,358 units in the Dallas-Fort Worth metro in July 2021.