Starwood has develop into the second nontraded actual property funding belief to restrict investor withdrawals after a surge in November requests exceeded month-to-month limits.
In a letter to its traders that was forwarded to Barron’s, the $15B Starwood Actual Property Revenue Belief, also referred to as SREIT, stated it fulfilled 63% of investor redemption requests in November after the repurchase requests exceeded a 2% restrict, reaching 3.2% of internet asset worth (VAV).
Final week, Blackstone, the biggest nontraded REIT, additionally disclosed that it was limiting redemptions to traders to tamp down a stampede to the exits. Like Blackstone, SREIT additionally has a quarterly restrict on redemptions of 5% NAV.
Starwood informed traders that any redemption requests that weren’t fulfilled in November must be submitted once more in December. The withdrawal limits are triggered as a way to forestall the fund from having to make compelled gross sales.
“These limits are designed to guard traders and the long-term-health of the automobile, and in the end to maximise shareholder worth,” SREIT stated within the letter to traders.
Based on Barron’s, traders are looking for to liquefy their nontraded holdings, which have far outperformed publicly traded REITs.
Final week, Blackstone stated it was limiting withdrawals from its $69B actual property funding fund after a surge of redemption requests from traders looking for to money out breached the REIT’s quarterly repurchase restrict.
The stampede of traders looking for to liquefy their belongings at two of the biggest non-public fairness funding funds is an ominous signal that financial headwinds are constructing in industrial property markets.
Final week, BREIT stated it acquired $1.8B in redemption requests, or about 2.7% of its internet asset worth, and has acquired redemption requests in November and December exceeding the quarterly restrict.
Blackstone allowed traders to withdraw $1.3B in November, or simply 43% of the redemption requests it acquired. Blackstone would enable traders to redeem simply 0.3% of the fund’s internet belongings this month, the letter stated.
“If BREIT receives elevated repurchase requests within the first quarter of 2023, BREIT intends to satisfy repurchases on the 2% of NAV month-to-month restrict, topic to the 5% of NAV quarterly restrict,” BREIT’s letter stated.
SREIT, like BREIT, has the majority of its belongings in multifamily residence complexes, adopted by warehouses. These have been two of the strongest-performing sectors within the REIT business in recent times. SREIT’s year-to-date return by way of October was 10.2% on one in all its share courses, similar to the return of about 9% for BREIT.
