Just curious if anyone knows much about how these guys. Guessing that they originally met through the Benedict Canyon/TruAmerica prior jobs (same office, same principal).
Given the volume they are doing (I have heard a few brokers that have sold them deals refer to them as "ultra aggressive"), I am just curious if they have some secret HNW investor backing them, or some other creative way of acquiring north of $2B in asset value the past 5 years.
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Comments ( 114 )
Commenting because I'm interested as well.
I'm pretty sure they had a few Co-GP partners to get off the ground and help qualify for financing and raise capital, but I imagine the two principals are now able to carry that torch (both experience-wise & financially) on their own.
Regarding the comments from brokers - not at all surprised to hear that folks who bought a swath of multi in Phoenix over the last 3 years have hot hands and are remaining aggressive. The debt fund/bridge lending market is insane right now - you can get 70-80% LTC financing at 315-325 over. That strategy depends on interest rates remaining low for their buyer's takeout, so it isn't without risk, but they seem to know how to get in & out of properties pretty damn quickly. It will be interesting to see if they have longevity, or are simply a product of this never-ending "9th inning" business cycle we're in.
I am in this shit-mix currently and everything you said is spot on
Shit-mix being the bridge debt side or this sponsor in particular? I can't imagine what the guts of their operation look like, but their AM's must be worked to the bone.
A quick google search shows me that The Robinson Group manages a lot of their AZ properties. I've never heard of "The Robinson Group", but their website's "Team" page almost looks fake.
https://robinsongroupre.com/team
Yeah that inning is now over and Tides is going to be handing back the keys next couple of years on tons of deals
Is this comment anecdotal or based on specific intel? They appear to be aggressively buying 70s product in Vegas - one of the lowest rungs of a market that was hit hardest during the last downturn.
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Learn moreAny specifics? Because based on just our pipeline (bridge lender), they are looking at a recap and bringing in CIM for a $100MM deal in Phoenix, a $100MM acquisition in NV, a $50MM acquisition in TX. LP's including institutional ones after doing their due diligence appear to be on onboard. And note we are just one lender and may not see every deal of theirs, so they appear to be not just be busy but also actually executing on deals.
know them well, what is your question? their business model is pretty simple, it's just straight up value add multi acquisitions in texas and phoenix. have done very well given how hot phoenix in particular has been, with some multi deals now trading at sub 4 caps.
Maybe I am being a bit naive or ignorant, but both of the principals were probably late 20s/early 30s prior to them jumping ship from TruAmerica & Benedict Canyon (where they were likely being overworked and abused like most Acquisition Director -types at firms such as those types of shops).
Granted, I am showing that when they started buying under the Tides banner in 2017, their first 5-10 purchases were all Phoenix sub $10M, but then they almost overnight starting closing on $25MM+ transactions.
Do either or both of these guys come from money? Have an in with some uber high net worth LA guy who likes throwing money at real estate?
Similarly, a couple of ex Benedict Canyon acq guys (operating under the APRA Capital) jumped ship and saw that they just closed on a $55M deal in Tucson AZ. Again, WTF?!? Is it as simple as pitching the shit out of any capital source until you find someone with enough liquidity and net worth to be a sugar daddy for a few deals and then just scale from there?
Pretty sure they have a southern California equity connection. Think it is a top real estate broker contact that started getting his neighbors/friends involved.
A broker had shared with me a that a few years ago one of the partners has a UHNW uncle who had backed them to start off. As they have done very well, I am sure they are financially well off and can do deals on their own now.
It was an aunt. I've met with them for potential JVs, but they overpay for everything.
According to the other forum about them on wso they have a rich uncle who signed their mortgage docs. I have also heard from a very well known multifamily principal I know that they are super liberal in their underwritings. I know one person who works there.
Seconded on the aggressive UW. My company partnered with them on a deal. Lots of obstacles had to be navigated to get it approved by the IC.
Are they sharp guys and a great shop or overhyped? I heard they underestimate renovation costs.
Investcorp is one of Tides' repeat equity partners. I know they have done two separate value add portfolios with Tides in Phoenix and Dallas this year.
Believe they also have a lot of junior underwriting staff incl offshore that helps them understand the market quicker and better than your typical value add shop with one or two analysts who handle all the grunt work. I can see if you're a broker with a seller who wants a pretty penny you go them them first and get an offer within 24 hours.
I also know they put up huge nonrefundable deposits on day one
Know some guys here. They run a cookie cutter (boring) model for every single deal they do that has worked relatively well. Not sure how they will fair over the coming months/years, but have crushed it with their phoenix holdings. They have rich family, can confirm.
Also - they really don't get worked to the bone. I think they outsource work quite a bit (which seems to work so far). One of my friends who works there works relatively normal hours.
I follow them on LinkedIn and every other day they're posting a new acquisition. I don't know much about them but seems almost unsustainable. Pretty incredible, wonder if they get roughed up on a few of their buys in the next few years.
It's almost guaranteed, just by the sheer volume of deals.
Checked out their case studies below due to this thread and there seem to be insane returns (without construction costs) in a year or two and very active on the sale side. In some cases 20%+ IRR based on simple purchase/sale price timeline without cashflow (if any in some of these cases) and obviously I don't know renovation costs on each.
https://www.tidesequities.com/casestudies
I can't say how but I saw one of their UW models for a deal they did and their assumptions are extremely aggressive. Not surprised if BX buys them out for a discount if they become distressed
They are still actively buying...
Yeah and they are still getting 75% LTC non recourse debt. Institutional groups like CIM and Investcorp will be 95 or 97% of the equity on some of their deals but apparently according to the outsiders looking in, they are going to implode lol. Sure, Investorcorp, CIM and literally every bank is wrong, the smart ones here have it all figured out..... Especially during this time, the investment committees are putting everyone through the wringer and killing deals left and right. The fact that LP's and banks have signed off their deals must count for something. Dont get me wrong, deals can still go south (as it did for even some of the biggest names in the business in 09, that is par for the course) but given how deals are structured, it wont be Tides that is getting burnt lol there is a bigger fish to fry.
10 employees and 100 deals of Acq fees, Non- recourse loans - lets do some simple math
LOL this is the kinda attitude that made everything implode in 08. Everyone can't be wrong right? Just from reading the comments on this thread I can tell half their deals are gonna hosed in the next 2 years. The guy below me gets it - fees baby.
What happens to your acq fee if you give the deal back to the bank?
Show me where I said everything cant go wrong. In fact I said the opposite. I said, "deals can still go south". I am almost certain deals will go bad, that is pretty par for the course. I (as someone who is particularly very familiar with the IVC and Tides deals) am of the belief that when deals go south, Tides wont get burnt too much. They have very little to loose if you look at how much skin in the game they have. brosephstalin
not sure if you meant to reply to me. I agree Tides owners have/will make out like bandits (though I also think the people still giving them equity are foolish). this comment was related to whether they may have their fees clawed back on deals that do go south.
I agree tides likely won't get burned monetarily, maybe reputationally. I was referring to the probably of the deal returns being COOKED. My point is right now IMO most people in the industry, esp on the multifamily side, are just lying to each other / together. No one REALLY believes the uw anymore, but people need to put money out and merchant builders dgaf cuz all they want is their fees.
I see where you are coming from but look if your argument is flat out they are cooking the books, then I have no response as that is dangerously close to calling something "fake news", so I wont go there particularly when I have access to things like SREO, PFS, etc. . But keep in mind, you are also essentially implying Tides will have to deceive the underwriting and the credit & investment committee of institutional LP's and banks. Especially in this market, the credit committee at banks get off on trying to poke holes in a business plan . Do you really think lenders particularly non recourse ones just roll out the red carpet for them? Secondly, look sponsors big or small have had deals go south. Tishman and Blackstone have handed over keys in the past. Their reputation is just fine. What is key is when there is a foreclosure how were the negotiations and did the sponsor act in good faith. Speaking from personal experience, this is how it will likely go in the future when a credit committee at a bank wants to finance another Tides deal--
There will be a memo sent to the credit committee that will note "Please see attached SREO and our stressed analysis for Tides. They had three foreclosures during the downtown in 2023. JV Partners were institutions that were 95-97% of the equity and had major decision rights. Tides would have much rather held onto the assets, and frankly would have done very well if they had held the assets, but the financial condition and decision makers of ABC LP forced the partnership to return the assets. The three properties were overleveraged in one of the hardest hit markets. Tides worked closely with the lenders and offered a deed-in-lieu, because the properties were in Arizona the easiest route for the lender is a friendly foreclosure, which Tides complied with. At no point did the lender, equity partner, or Tides pursue any litigation; the process was amicable for all parties. The foreclosure was finalized in December of 2023. Tides stayed on operating the property through the foreclose process. Tides strong investment track record for the past 10 years has resulted in a xx% project-level IRR and xx equity multiple. Tides current institutional equity LP partners include Investorp, CIM , AIG, PIMCO , etc"
As you can see I have been through this process before and past foreclosures has not prevented LP's and banks getting comfortable with the sponsors as long as there is a story there.
The banks are fine. People seem to equate rising rates to automatic deal implosions, this is only the case if these sponsors get caught in refinance squeezes. I would imagine that most of them have been taking 10 year paper for the last 5 years so they should be able to ride the storm out even if it means their equity investors have to stay in longer than they were promised. Paper losses in real estate are different than they are in the stock market. Real estate generates income.
Can confirm they have been taking expensive, short-term bridge debt.
Who was the short-term lender to Tides? Or did they vary?
i'd be curious to see the breakdown of debt maturities as my guess would have been 5-7 year maturities.
I disagree on the only problem being refinance squeezes. If you bought at a 3 cap and interest rates are now 5, you better have executed on that business plan because otherwise you're in the red and probably broke a few debt covenants along the way.
Most of their projects bank on appreciation more than cash flow , so with rates raising the way they have, they are having problems covering debt service. At least that's what i've heard.
Yes, if they haven't converted to permanent debt prior to the rate hikes. My point was that most of them in the past 5 years or so have likely already gone to permanent debt through a refinance.
Heard they're getting crushed with how rates have raised. Bleeding cash by the day.
There seems to be a select group on this thread who know exactly what is going on and don't want to give away too much or out themselves.
And another few giving euphemisms with general RE knowledge and who are living on a different planet.
Anyone who reads this thread should probably stick to the anon posters here.
To be fair, a lot of groups are getting crushed.
Read these in Order, The Tides are changing
https://archive.ph/85yrb
https://archive.ph/6yWTD
https://www. mba .org/docs/default-source/research-and-forecasts/cmf-mdo/4q21mortgagedebtoutstanding.pdf?sfvrsn=d661c656_1
Can confirm these guys are in trouble. Good opportunity to scoop up their assets when they default on their loans.
Source?
Confirm here as well. Word on the street they've got a big portfolio they're trying to source pref on for cash in Refi's
Can confirm with some of these folks. They were extremely risk-on past two years. They bought total ~$2B worth of assets… from my understanding, they were the largest buyer in Texas from 2019-2022. 95% of their SREO is with bridge lenders. They are insanely over-levered.
If no one can come to rescue, I'd imagine they will be fucked…
Maybe it's time for those seasoned blue-blazer sponsors to eat them up within a year or two… As majority of their bridge loans are set to mature….
Here's to 2023, the year Tides loans start to mature.
Word around town is they have a personally secured line of rescue capital to help them with debt service while trying to sell off deals everywhere. Northmarq alone has 1,000+ units in Phoenix and Texas trying to sell for Tides.
They are facing a wave of maturities, record supply deliveries, massive vacancies, falling rents, rising debt service, and a seemingly ignorant staff, yet they're maintaining this social media presence as if they are on top of the world. As soon as they lose one of the properties, the whole charade will be over.
I have heard they are in deep water as well with the way rates have gone.. but crazy enough, it looks like they are hiring for multiple positions? Not sure what's going on there...
They're selling assets faster than MC Hammer in the 90s, I've seen 4 of their assets listed in last few weeks. Equity is definitely spooked - as they should be, position is probably totally blown out.
I can confirm that shit is starting to hit the fan. No idea how many properties are impacted but it is more than just a few.
As I said above they are listing a bunch of deals at the end of the year in this market... Only a truly desperate seller does that. I bet someone big is definitely not happy and forcing their hand to sell now. Or maybe on the debt side, they are starting to break a bunch of covenants (though I doubt anyone at tides would be able to preemptively figure that out, the lenders probably just holding everything back).
2023 is going to be a challenging year for them, but a great year for all their "friendly" brokers who will start selling their notes.
There is an article out saying they have $7.5B of assets - sounds like the next FTX.
Deal just traded in Phoenix for a 5.8% cap rate which means Tides is F*CKED
Everyone knows it too
And they just closed on a portfolio there this week, keeping that fee train going.
They are done. Can confirm a few of the lenders are making moves to unload their crap in Q1 and just waiting for the last bits of capital to dry up.
Hope dem sharks have appetite for Phoenix and Vegas.
I've kept quiet on this for a few years, but I'm increasingly confused by their decision making. They closed on a portfolio of Class C assets in Dallas over the last 30 days as well as well above market prices. No idea what their capital stack looks like on those deals or what capital partners are being told or thinking in those partnerships. Would be very interesting to get an inside look.
Lol that deal was a 5.8% if you adjust like every single O&M and Salary expense that was way over market.
But I don't think that place was nice enough to operate by slimming those down.
https://www.entrepreneur.com/business-news/how-a-31-year-old-built-a-75-billion-multifamily-real/440172
This article in a non-real estate publication makes it sound like Tides invented multifamily value-add investing. As someone in the industry, the success of the company appears to be from a combination of luck, market selection, obscene risk appetite, and near perfect timing.
The thing about snowballing your money is that one bad deal wipes you out. I am extremely curious to watch this play out.
No matter how hot someone gets at a craps table, if they keep playing they eventually lose.
This guy is only 31 and started Tides in 2016, which means he was 24-25. How did he even raise this much capital?
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I can confirm, that others have confirmed, that they've heard confirmation, that the tides are changing.
I just re-reviewed the massive portfolio that's been on the market (for a year?) and clearly made its way around too many times. What a joke.
It feels like a lot of people keep asking themselves how are these guys still alive. If you've watched any documentary on financial scams/scandals/frauds, then you would see there is always this inflection point where there are a group of people asking how are they doing it, right before sh*t hits the fan. This is where we're at!
In the next few months their loans will be pulled and sold to distressed investors, then those notes will go into default, then foreclosure, then litigation by the investor, then the fat lady sings. By the fat lady sings I mean a funny article on The Real Deal with a title like "How the Tides went out" and a picture of the principals with a huge foreclosure sign behind them on their portfolio, which oddly just shows pools or crumby wood planked balconies.
There is clearly something questionable going on for them to have grown that quickly with such little experience and man power. Not illegal to grow that fast but definitely short cuts had to be had, and to service it during a recession without those short cuts taking them down is where the line must get crossed. They got lucky, granted, but it's not sustainable, they're not too big to fail though they may think so.
The multi housing community should collectively tell them to F off. The brokers made there money on them but now it's time for them to get out. When you're a player and someone's cheating, all you want is them to get kicked off the field.
In terms of a massive portfolio being on sale, I'd be keenly interested in seeing that pitch book. A friend of mine knows them somewhat well and he has worked with them a little. Some gossip follows for what it is worth.
They buy crumby C+/B- stuff, maybe some B/B+ too, and put lots of lipstick on it. They have a fondness for wood paneling, and they do nice - but expensive - interior unit work. As far as operational efficiency and ability to hit a capital budget...I have heard mixed things. While their lip service indicates that they view their properties as long term holds, they have apparently traded in and out of stuff very fast without typically fully completing their capital plans.
In 2020/2021/2022, you could thoughtlessly dump a metric ass-load of cash into any class C or B property in the United States, get NOI up through rent increases, and make yourself look like a hero on the exit. I think that cap rate compression has been their very good friend. I assume that as young guys who believe themselves to be hot shit, they must be very good salesman on the capital trail.
Now that the times have changed, I assume they find themselves having overpaid for a chunk of their recent deals, perhaps in places where the rent roll growth that they hoped for is slowing. They devoured a lot of bridge debt, all of which was issued when their properties' values were peak. Those notes will come due soon and I am not sure whether they have been disciplined or strategic enough to increase their NOI enough to both pencil out to satisfactory long term debt or to actually pay the debt service on such debt if they were to qualify for it.
If you want to buy some perpetual value-add multi that has already had a couple of bites taken out of it, and you have the appetite to continue doing some unit renos knowing exactly what the premiums on Tides' vintage look like, it could be a good buy. It will depend on your horizon, as with anything - and how desperate they are....
There isn't an OM for a massive Tides portfolio? Unless it has been kept hush hush
I mean, nothing shady. Debt was dirt cheap and multifamily is a hot sector. People on here saying things like "you can't deceive the credit committee at a non-recourse lender," which anyone who has ever gone through a credit committee knows is an absolute joke.
I know nothing specific about the firm or their assets, but any group that grows this fast, especially in the markets in which they're active (which are all overheated anyway) is probably just underwriting deals extremely loose and churning for fees. I say this all the time, but underwriting a deal and buying it is super easy. It takes almost no intelligence or skill, just confidence and connections with equity partners and lenders. It's the execution that is tough, and from comments on this thread it sounds like Tides doesn't do much in the way of executing on a business plan. So yeah, I'm sure they made millions of dollars in fees... but there is no back end. IRRs will always look great if you get lucky with a macro environment and get in and out of a deal in 9 months.
Success in real estate isn't about who does well when times are good, it's about how survives the downturns and comes out the other side with their reputation intact. We've had a decade+ of boom times in which a ton of crappy operators probably got bailed out because the 10th person came along and said "hey, I'll install new countertops and appliances and bump rents by 25%, too!" Well, none of those suckers are going to be around in a recession or tight capital market to hold the bag, so we're about to see whose success was "cheap debt" and whose was actual ability to execute. Somehow, I don't think a ten man shop doing a dozen deals a year is the latter.
Next few months you say....okay, hold yourself accountable and come back to this thread in the next few months if you are confident in your "opinion".
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https://therealdeal.com/2023/02/03/multifamily-player-tides-equities-faces-6-5b-dilemma-in-the-sun-belt/
What did this say? Tried to open and it seems to have gotten taken down.
https://archive.is/n2m2a
this link should work.
They are simply liars who will do whatever it takes to close a deal. Young guys who are going to get CRUSHED under the weight of a bunch of bad deals
Now they will be personally fine as they did not sign recourse loans but going to be tough reputation wise to come back from this as the losses will be so great
Lying to investors is never a great look
The recently published TRD article mentioned they did sign "personal recourse" loans
What's the point of publishing this article?
Anyone see their notes trade yet? I heard whispers of a few groups trying to unload their exposure. Probably hitting maturities soon and won't be able to meet any extension requirements so those have to be getting some attention.
One of the founders just bought a $15m house.. so must not be too concerned lol
lol buying at a time with a mortgage are at a ridiculous high and home prices keep falling or buying all cash and eating away at his liquidity (covenants?).
How do you know this? Is there an article? I'm super interested.
New article on TRD: https://rb.gy/0nyo5n
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