Capital One sues S2 Capital's Everett for $11.5M guaranty

Capital One is suing S2 Capital founder Scott Everett for $11.5 million. The claim comes from an $85.2 million loan that matured in July without repayment, and the Aug. 4 filing in New York Supreme Court is the latest chapter in the unraveling of a Sun Belt value-add empire, The Real Deal reports.

The money was lent in 2022 to buy and renovate Richmond Apartments, a 531-unit complex at 19251 Preston Road in North Dallas. Capital One says the full amount owed is now $93.8 million. The $11.5 million it seeks corresponds to a guarantee Everett signed at closing, one that caps his personal liability at $10 million plus interest.

S2 has already absorbed $400 million in apartment foreclosures. It told investors in its real estate investment trust and its $400 million first fund that their money was gone. The Dallas firm was once the most active buyer of North Texas multifamily, taking that position from Blackstone in 2022. Its value-add model depended on low rates to close the gap between purchase price, renovation spend, and refinancing. When rates moved, the gap became a loss.

Everett tried to outlast the rate cycle with a private REIT he launched in early 2024, folding in roughly 30 properties to secure a credit facility. The structure was the largest private REIT in the market; by the end of 2025 its shares were marked below a dollar. Now he is seeking $100 million for a continuation vehicle to preserve the properties that can still perform, according to The Real Deal. That target is a quarter the size of the first fund alone.

Everett is not alone among multifamily sponsors. Starwood has collected more than $50 million in judgments against Tides Equities' Sean Kia and Ryan Andrade. Acore and Vista Bank want Jon Venetos of Lurin Capital to cover more than $80 million in guarantees. Starwood and Fannie Mae are pursuing GVA Management's Alan Stalcup, citing bad-boy carve-outs in the loan documents.

The capped guarantee was the product that let small-equity sponsors borrow like big ones. Lenders accepted a cap in exchange for a personal signature, a trade that made sense as long as property values rose. With values down, the signature is the only recovery left. Capital One is owed $93.8 million and asking for $11.5 million; the difference is the bank's own loss. Bad-boy carve-outs are the exception: if triggered, the cap vanishes and the loan becomes full recourse. In the GVA case, Starwood and Fannie Mae allege Stalcup triggered them.

The loan matured in July. The filing arrived in August. Lenders with 2022-vintage value-add notes should not need a second example.