A $10billion property fund managed by Barry Sternlicht’s Starwood Capital is strictly limiting its investors’ ability to exit their investments as it preserves liquidity and avoids a fire sale of assets in what it believes are poor markets.
The fund, known as Sreit, on Thursday told investors it would restrict their liquidity rights by more than 80 per cent, limiting redemptions to 0.33 per cent of its net assets a month from as much as 2 per cent — the amount it has allowed them to redeem since its inception in 2018. Sreit’s portfolio spans apartment blocks in Arizona, logistics centres in Norway and a large loan it provided to Blackstone for the acquisition of Australian hotel and casino group Crown Resorts.
Facing high redemption requests and dwindling liquidity, Sreit said it would increasingly gate investors because it believes the Federal Reserve will soon cut interest rates, providing for “sunnier skies” in which it would favour selling property.
The new limits will keep quarterly redemptions to about $100million, preserving scarce cash. Since the beginning of 2023, investors have redeemed nearly $3bn from Sreit. In the first quarter, investors asked for $1.3bn in cash back, but received only about 38 per cent on a pro-rata basis.
In a letter to shareholders on Thursday, Sreit said it had decided to almost fully restrict investors’ liquidity rights because it believed property markets will soon recover.
(source:ft.com)
