Starwood REIT Joins Blackstone REIT in Limiting Redemptions

Starwood Real Estate Income Trust, a publicly registered non-traded real estate investment trust sponsored by Starwood Capital Group, limited redemptions as investor withdrawal requests surpassed November’s monthly limit.

As Alts Wire reported, Blackstone Real Estate Income Trust (ticker: BX), the largest nontraded REIT with $69 billion of net assets, also limited redemptions after it failed to fulfill all investor repurchase requests made during November.

SREIT, the second-largest nontraded REIT with $15 billion of net assets, allows for monthly redemptions of 2% of net asset value and 5% of NAV in a calendar quarter.

In a letter to financial advisors that was first reported by Barron’s, the REIT said it received repurchase requests equal to 3.2% of NAV in November. Based on the 2% monthly limit, it fulfilled 63% of investor redemption requests.

The letter states that any requests that weren’t filled will have to be made again in December.

“These [monthly] limits are designed to protect existing investors and the long-term health of the vehicle, and ultimately to maximize shareholder value,” SREIT wrote in its letter.

According to public filings made by Starwood, SREIT’s annual base fee is 1.25% of net assets and a performance fee of 12.5% subject to a 5% hurdle rate. It has reported inception-to-date annualized returns ranging from 13.6% to 14.4%, depending on share class, since Dec. 21, 2018. The REIT’s year-to-date return through October ranged from 9.5% to 10.2%. SREIT had $2.5 billion of immediate liquidity at the end of September, consisting of $1.7 billion of borrowing power and $800 million of cash.

Starwood Real Estate Income Trust invests in stabilized real estate across the United States and Europe. Its initial $5 billion offering launched in December 2017 and raised approximately $3.9 billion from investors before closing in June 2021. The first follow-on offering, comprised of $10 billion in shares, launched immediately afterward and raised approximately $8 billion. The second follow-on offering, which is currently offering up to $18 billion in shares of common stock, launched in August 2022 and has raised approximately $516.6 million in the primary offering to-date. As of Sept. 30, 2022, the REIT’s NAV was approximately $14.6 billion.

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