“Neither a borrower nor a lender be,” the wise fool Polonius counsels his son in Hamlet. “For loan oft loses both itself and friend.” But this was well before we had multifamily syndicators.

In his pomp, Alan Stalcup owned ≈ 30,000 apartments across the Sunbelt, an empire built on the back of an army of retail investors. His was an incredibly lucrative operation: rents were rising, fees were thicc, and ZIRP-era Wall Street had an endless appetite for CRE CLOs. Stalcup had a Pied Piper-esque gift for fundraising, with $1.5B in LP commitments allowing his GVA Management to embark on one of the more audacious acquisition sprees of this cycle. 🪈

That was then. You know what happened next: Rates rose, deals collapsed, and Stalcup and his peers found themselves in triage mode. First came the loan mods, then the foreclosures, then the lawsuits and then the personal-guarantee crusades. Today, GVA’s portfolio – through acts both voluntary and involuntary – is down to ≈ 5,000 doors. Stalcup is being pursued personally by his lenders for ≈ $400M, and some investors are alleging fraud. But he says he’s not fussed and is focused on the work ahead.

“When you have a loss, you have to go through the five stages of grief. And a lot of people get stuck at anger,” Stalcup said in an extended interview w/ The Promote Friday. Given the immense interest in him and the timeliness of the conversation – there’s now talk of an SEC investigation – we decided to bring out the issue a day early. - HS

This interview has been condensed and edited for clarity.

Let's be fucking real: If you Google ‘Alan Stalcup,’ it's apocalyptic headlines. The lawsuits, the PG pursuits, all the losses. As you’re scrambling to do what you need to do on the deal side, could you give me a sense of what it’s been like for you – as a person?

I've been pretty silent in the media. You had mentioned other syndicators that had podcasts, that had the, “look at my Rolex and big cigar.” That wasn't me. You didn't see me in the media promoting. What you saw was a guy who had a good business plan. Did it with his own money. Part of our secret sauce is that I would do every deal 100% on my own balance sheet.

You said that overall, you've lost $400 million?

I did. I was the first money in and the last money out. I bridged our deals as much as I could before it became evident that it wasn't going to work. So when I underwrote a deal, I was doing it with my money, not anyone else's money. That resonated with investors. I didn't have to go to the web. I didn't have to go to the media. I didn't have to do what most people do to raise money.

And so when the headlines broke, that didn't concern me whatsoever. What I was concerned about is our investor equity, my investor equity… As I told a lot of guys, “I care about your $100,000, but I care about my $5 million.” And so when I'm pari-passu with you, I care about my money just as much as I care about your money. And when the tide went out, it was time to liquidate and that's what we focused on over the course of 18 months.

I'm very, very proud of our accomplishments. I'm very proud of what we did for investors. I look at the value-add that we created for residents. We were coming out of the GFC, lot of REO was bought, lot of slumlords were running this stuff. We took over properties that had leaks and cockroaches 🪳. Some families got refrigerators for the very first time in their lives. I’m proud of that. 

The headlines? Look, I wore glasses when I was a kid and Suzy said, “Hey, Four-eyes Alan!” 🥸 That probably bothered me. Do I sweat it today at 53? No. The people that matter in my life – my wife, my kids, my friends – they know what's real. 👇  

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From 2010 to 2023, 42% IRR track record. Doubling everyone's money every two years. The challenge that we had was when the Black Swan event happened and the Fed chair said “I'm not going to raise rates in ‘22,” and then raised them 11 times over 17 months. Floating-rate debt at 0 + 300 went to 550 + 300, tripled debt service.

You weren't alone. Tides, Rise48, Nitya, they’ve all been dealing with this.

BlackRock and everyone else, too. Where we got hit the hardest is we bought 80% of our portfolio, $4 billion, in ‘21 and ‘22. Buying at the peak of the market, not a great strategy. Buying in a zero interest-rate [environment] and having that dramatically change on you and debt service tripling on you and valuations dropping 30-40 % pretty much overnight…

So you have a choice to make. I was the largest single investor in all of our deals. I was 25% of our total equity stack across the whole portfolio.

Give me a sense of where things stand today. 

Out of that 30,000-unit portfolio, we actively marketed and sold for equity recapture [about 20K units]. Shout out to my team, [then] 800 employees, working twice as hard for half the pay. We're foregoing asset-management fees, foregoing construction-management fees, delaying property-management fees. Certainly any kind of promotes are gone. A lot of young guys like yourself are working hard. 

That S2 rescue recap deal we talked about would fall into this category?

That's right. We also refi’d a big chunk of the portfolio at sub-5 fixed-rate debt in ‘23. Today, we’re at 5,000 units and about 150 employees with a pretty stable portfolio. With that said, we're going to run through debt maturity. We're hoping markets will improve between now and then. We're taking some appraisals on [May ‘23 vintage] 65% LTV loans. The property is not worth the debt right now. 

I think there's going to be hundreds of billions of dollars, if not close to $1 trillion of defaults between now and 2030. 

It's not going to be pretty. Part of the reason we're talking today is that it’s one thing getting caught up in a bad macro situation. But the allegations made against you go beyond that. There's a lawsuit that accuses you of “cooking the books.” There’s smoke about an SEC investigation. How did we get here?

We have 509 investors. These are all accredited investors. They understood the risks. Not all of us were expecting the crash that came and a lot was invested at the top. But out of our 509 investors, we've had 2 sour-grape lawsuits: One was Overwatch in the spring of ‘24 - their claims have been dismissed with prejudice

(Editor’s Note: Since we’re not privy to the details of the GVA-Overwatch settlement, can’t say for sure what happened there. The GVA release fwiw is here)

After 18 months of litigation, you come to the realization that there's nothing wrong. Guess what? The headlines are still there. 

The [Bryan Kastleman “cooking the books” lawsuit] is a page out of the Overwatch playbook. We’re going to have the exact same results of dismissals, but here’s what’s different and why I’m talking to you: Kastleman has organized a malicious campaign against my wife and my kids in an effort to extort money.

How so?

Sending intimidating texts, emails, voicemails, impersonating the sheriff, looking for my wife's arrest, impersonating my wife, sending letters to our neighbors, impersonating my daughter, sending letters to my wife. It's a little sticks and stones maybe. But here's the problem: Kastleman has a multi-decade felony history. So when you cross the line, and you start intimidating my family, that's a problem. And if you're going to come sue me and libel me and smear me, that's a problem."

And when it comes to this SEC allegation… the SEC doesn't share any information about what they're pursuing or why. So if you say that there’s a fraud allegation from the SEC about me, you are lying because you don’t know that – no one knows that. 

(Editor’s Note: An attorney for Kastleman sent the following response: “These are blatantly false allegations, and his disparaging statements here reek of desperation. We stand ready to prove the allegations in the lawsuit and are confident that justice will be found and Mr. Stalcup will be held fully accountable.") 

Have you been contacted by the SEC and asked to hand anything over? I don’t know what you’re allowed to say. 

We have no information on what they're investigating or why. If there is [an investigation], I welcome it. Because I want to clear my name. 

There are PG lawsuits filed by your lenders – and I'll refer specifically to Benefit Street Partners and Starwood Capital. Starwood’s was in the $100M range and Benefit Street’s was in the $285 million range. The allegations in Benefit’s are quite colorful…  

[Chuckles] To say the least. 

There’s one that you didn't report a fire at one of the properties that they loaned on, which is obviously a violation if true. I wanted to give you a chance to respond to that. 

I think it's a novel approach. If you could, say, spend $200K, $300K, on legal and get this $285M headline, if I could settle for $2M, wow, that’s a 10X. And if you could do this across all of your loans, why wouldn't you do that? I get it. So here we are.