SREIT Board Amends Share Repurchase Plan, Increasing Limits
The board of directors for Starwood Real Estate Income Trust, or SREIT, a publicly registered non-traded REIT sponsored by Starwood Capital Group, approved amendments to its share repurchase plan this month, increasing the monthly and quarterly repurchase limits and establishing a new priority system for repurchase requests.
Effective with repurchases made in June 2025, the company will increase its monthly share repurchase limit to 0.5% of its net asset value, up from the previous 0.33%. This NAV will be measured as of the end of the immediately preceding month.
Beginning July 1, 2025, the quarterly share repurchase limit will also see an increase, rising to 1.5% of NAV per quarter from the prior limit of 1%. This quarterly NAV will be measured as of the end of the immediately preceding quarter. Due to these adjustments, the repurchase limit for the second quarter of 2025 will be approximately 1.16% of the aggregate NAV, based on the NAV as of March 31.
SREIT enacted its previous withdrawal caps in May 2024; the monthly redemption limit decreased to the aforementioned 0.33% of stockholder NAV as of the end of the prior month, and in July 2024, the quarterly redemption decreased to the aforementioned 1% of stockholder NAV as of the end of the prior quarter.
SREIT had said the changes were temporary; the previous capacity limits in place were 2% of stockholder NAV monthly and 5% quarterly. Also in connection with the lowered capacity limits, SREIT waived its 20% of its monthly base management fees.
The move that was largely praised within the alternative investments industry: “This is how we would have done it ourselves,” stated Kevin T. Gannon, chairman and chief executive officer of Robert A. Stanger & Co. an investment banking firm that specializes in non-traded alts. “SREIT was facing a decision to either dispose of assets at fire sale prices just to meet redemptions or deny investors liquidity to prevent unnecessary dilution. They instead did the right thing: lowering capacity to buy time to generate liquidity that is not dilutive. The reduction in the management fee lets investors know that management feels their pain, and it lights a fire under SREIT to get back to normal SRP capacity expeditiously.”
In addition to the increased limits, the amended plan introduced a tiered repurchase priority system for instances where the REIT determines to repurchase some, but not all, of the shares submitted in a given month. This system aims to provide more certainty for specific types of repurchase requests:
- Death or qualifying disability: Repurchase requests made due to the death or qualifying disability of a natural person stockholder will receive the highest priority. These requests will be fulfilled in full, up to a limit of $5 million per month, provided sufficient funds are available and subject to specific terms and conditions. If such requests exceed the $5 million monthly limit, they will be satisfied based on the date of death or disability, with the earliest dates receiving priority, and any unfulfilled requests will be repurchased pro rata with all other requests for that month.
- Small account balances: Repurchase requests that would result in a stockholder’s account balance falling below $2,500 will be the second priority, repurchased in full to the extent of available funds.
- All other requests: Any remaining funds after the first two priorities are met will be used to repurchase all other submitted shares on a pro rata basis.
Repurchase Limitations and Discretionary Authority
The company retains the discretion to repurchase fewer shares than requested in any given month, or none at all. Since October 2022, repurchase requests have consistently exceeded the previous monthly and/or quarterly limits. All unsatisfied repurchase requests must be resubmitted for the following month or quarter.
SREIT’s board of directors may also modify or suspend the share repurchase plan if, in its judgment, it would place an undue burden on liquidity, adversely affect operations, or if investing liquid assets in real properties or other investments is deemed to be in the best interest of the company and its stockholders. The company said that material modifications or suspensions will be promptly disclosed through prospectus supplements, special or periodic reports, and on the company’s website. The plan may also be suspended due to regulatory changes, changes in law, or if the company becomes aware of undisclosed material information.
Upon suspension, the board will consider at least quarterly whether the continued suspension remains in the best interest of the company and its stockholders, though there is no specified timeframe for recommencement. The plan may also be terminated if required by applicable law or in connection with a transaction providing liquidity to stockholders, such as a sale, merger, or stock exchange listing.
The amendments follow the company’s leadership transition news; Nora Creedon will begin her tenure as chief executive officer and president of SREIT, effective July 28, 2025. Creedon’s appointment coincides with the resignation of Sean Harris.
The REIT also just sold for a $3.2 million profit a West Palm Beach, Fla., 304,000-square-foot shopping center it acquired three years ago.
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