Silver Law Group Investigates Starwood Real Estate Income Trust (SREIT)

Silver Law Group is investigating Starwood Real Estate Income Trust on behalf of investors who may have bought or acquired securities and lost money resulting from the REIT.

If you invested in Starwood Real Estate Income Trust (SREIT) and have questions about your legal rights, or information relevant to this matter, please contact Silver Law Group for a no-cost consultation at 800-975-4353 to discuss your potential options.

What Is Starwood Real Estate Income Trust (SREIT)?

Starwood Real Estate Income Trust is a non-traded, publicly registered real estate investment trust owned by Starwood Capital Group. Its company portfolio is primarily made up of industrial properties and rental housing concentrated in the southeast and southwestern US.

SREIT invests in a variety of different property types, such as offices, warehouses, retail centers, self-storage facilities, medical facilities, hotels, apartment buildings, data centers, and cell phone towers. The emphasis on high-quality, income-producing assets.

These investments are geographically diversified across the United States and select international markets. The focus is on stabilized assets that offer strong occupancy rates, stable cash flows, and potential for long-term appreciation.

Liquidity Issues

Starwood REIT began its public share offering in August of 2022, when its per-share net asset value (NAV) declined sharply. It then began limiting withdrawals after it received a wave of liquidation requests from investors. In November of 2022, Starwood REIT halted redemptions when those requests exceeded the REIT’s monthly limit.

As of May 2024, SREIT announced it would sharply reduce the amount of shares it repurchases from investors each month, a move aimed at preserving cash and credit while waiting for the commercial real estate market to stabilize and interest rates to ease.

In Q1 2024, SREIT received $1.3 billion in withdrawal requests but was able to satisfy less than $500 million.
The fund’s liquidity—comprising cash, marketable securities, and a bank line of credit—was under strain, prompting the reduction in redemptions.
The monthly share repurchase limit was cut from 2% of stockholder NAV to 0.33%, and starting July 2024, the quarterly limit will decrease from 5% to 1% of NAV.
SREIT has also temporarily waived 20% of its monthly base management fees to help offset the impact on investors.

The company emphasized that these measures were temporary in order to weather the market’s current conditions.

How REITS Function

A Real Estate Income Trust (also called a real estate investment trust) or REIT, is a company that owns and operates various types of income-producing real estate. REITS allow investors to participate in owning and earning from real estate without buying, managing, or financing properties themselves.

The REITS sell these shares to raise capital for purchases. Investors can receive regular income from these investments, paid from activity such as property rents and mortgage interest. These investments are an option for investors to diversify their portfolio while keeping some assets liquid but are more complex than standard stocks and other investments.

There are two types:

Publicly traded
Non-publicly traded

Publicly-traded REITS are a liquid asset and can be sold if needed. Non-publicly traded REITS are only available to investors through a private placement and are generally illiquid with no secondary market value. Non-publicly traded REITS are a higher-risk investment, since they depend on the general economic conditions of different sectors of the economy. Non-traded REITS also include higher fees and commissions for brokers who sell them.

Starwood Is A Non-Traded REIT

One particular issue is the valuation of the real estate involved in a REIT portfolio. In Starwood’s case, it’s the REIT’s management that determines value, not the marketplace. Therefore, investors must take it on faith that the company valuation is accurate. Long-term, investors may not realize their losses for years after the initial investment and not likely be compensated for any losses.

Brokers and broker-dealers have a requirement to do due diligence on any investment they recommend to their customers, as well as ensure that their recommendations are suitable for their customers. Failure to do so is a violation of Regulation Best Interest, and can lead to FINRA arbitration with a customer to recover their losses.

Did You Invest With Starwood Real Estate Income Trust (SREIT)?

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct and securities or investment fraud. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.