T
he multifamily operator, Tides Equities, is undergoing a challenging period as it continues to shed properties from its portfolio through forced sales. This process started in April and shows no signs of slowing down, as two more properties are now on the chopping block. These properties are located in Denton County, Texas, and are scheduled for auction on October 1st.

    Tides borrowed a substantial amount of money from Starwood Mortgage Capital to purchase these properties. Specifically, they borrowed $152.8 million, which translates to $200,000 per unit. However, despite their best efforts to negotiate a loan modification, they were unable to secure enough concessions from the lender to make the deal financially viable.

    Tides on Chadwick, built in 2009, consists of 264 units, while Tides on Trinity, built in 1999, has a total of 500 units. Both properties are burdened by liens from contractors who claim they have not been paid for their work.

    Tides Equities, led by co-founders Sean Kia and Ryan Andrade, purchased these properties in January 2022 during their Texas multifamily buying spree. Between 2021 and 2023, Tides took advantage of low interest rates to acquire nearly 15,000 multifamily units across Texas, with plans to renovate the units and increase rents.

    However, swift rate hikes caused issues for multifamily operators like Tides. Although they managed to secure extensions on dozens of loans, they are still losing buildings to foreclosure. The October auction could also result in the loss of another property, Tides at Mueller in Austin, which is currently under threat of foreclosure.

    Tides bought this property in April 2022 for $30 million, which translates to $165,750 per unit. They borrowed $26.8 million from Bridge Investment Group for this purchase. Unfortunately, they defaulted on a $103 million loan from Rialto Capital Advisors for their 636-unit Tides on Copper Creek in Austin earlier this month, leading to the return of the keys to the lender.

    In summary, Tides Equities is facing significant challenges as they struggle to maintain their hold on their properties amidst financial difficulties. The situation is further complicated by the foreclosure of multiple properties, indicating a need for urgent action to prevent further losses.