Scott Everett’s S2 Capital, a Dallas-based real estate investment firm, has issued a capital call this month to investors in its private real estate investment trust (REIT), according to The Promote. The move comes as the firm faces pressure to avoid selling properties at a loss. If additional funds are not raised, S2 may be forced to sell off assets at an estimated 5.5 percent capitalization rate, which could result in investor equity losses between 60 and 75 percent.
S2 Capital shifted its 10,000-unit apartment portfolio into the largest private REIT of 2024 as a strategy to protect itself from floating-rate debt exposure. Some industry observers saw this approach as innovative. A LinkedIn account named CRE Analyst commented, “If this is what happened, S2 just showed other syndicators how to survive until ’25.”
The company managed to stay afloat through 2025 and took several notable actions during that period. It stepped in as general partner for GVA Property Management during a $60 million recapitalization involving 1,700 units across Nashville, Knoxville, and Dallas. Over the summer, S2 raised $343 million for its second value-add fund and acquired Fort Capital’s industrial portfolio of 11 million square feet in August. Later in the year, S2 made its first purchase in Chicago by acquiring the 344-unit Ovaltine Court for $93.7 million.
Despite these efforts, some limited partners expressed concerns about feeling pressured into converting their investments into the new REIT structure. Additionally, the conversion resulted in a valuation hit—portfolio values dropped to 93 cents on the dollar—and the company still faced challenges fulfilling its value-add commitments.
The same month it closed its second value-add fund, S2 lost one property to foreclosure after allegedly defaulting on a $36 million mortgage from CBRE for Preslee Apartments in Arlington.
Founded by Scott Everett in 2012, S2 Capital manages about 130 properties across the Sun Belt region and ranked 44th on the National Multifamily Housing Council’s list of largest apartment landlords with a portfolio totaling approximately 28,000 units.
