Starwood REIT Tender Offer Price Well Below NAV
Mackenzie Realty Capital and its affiliates are reportedly offering to purchase 700,000 shares of Class S common stock from STARWOOD REAL ESTATE INCOME TRUST, INC. at a price of $18 per share in cash. The purchasers are not affiliated with the REIT or its management.
According to MacKenzie’s letter to shareholders, the share repurchase program of Starwood Real Estate Income Trust, Inc. is oversubscribed, with only 30% to 55% of requests being redeemed over the past year. Shareholders must re-submit requests monthly and may only have a portion of their investment returned.
Mackenzie Capital Management, LP is offering to buy Class S Shares for $18 each. The offer represents a 22% discount to the estimated net asset value of the shares, according to Mackenzie.
Starwood Limits Redemptions
As we reported in December 2022 Starwood Real Estate Income Trust limited investor redemptions.
We reported that Blackstone REIT (BREIT) was limiting redemptions after an influx of redemption requests, and then Starwood halted redemptions after investor withdrawal requests exceeded the REIT’s monthly limit in November 2022.
Starwood Real Estate Income Trust (SREIT), the second largest non-traded REIT, reportedly invests in stabilized real estate across the United States and Europe. The REIT allows for monthly redemptions of 2% of net asset value and 5% of NAV in a calendar quarter.
According to Barron’s, the REIT said in a letter to shareholders that it received repurchase requests equal to 3.2% of NAV in November 2022 and it fulfilled 63% of investor redemption requests. The REIT noted that any requests that weren’t filled would have to be made again in December.
The Trouble with Non-Traded REITs
Non-traded REITs are complex and high-risk investments for several reasons. First, the investment itself is unsuitably risky because it is dependent on the overall health of specific sectors of the economy.
Often less regulated than other types of investments (i.e., mutual funds, stocks, etc.), non-traded REITs generally pay higher sales commissions and fees than these other products. Further, non-traded REITs are generally illiquid, severely limiting the investor’s ability to access funds should the need arise.
Is a Non-traded REIT Suitable for you?
Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so may be held responsible for any losses in a FINRA arbitration claim.
Free Consultation
If you suffered losses investing in Starwood REIT you may be able to recover your losses through FINRA arbitration. Please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.
The firm represents investors in FINRA arbitration claims throughout the country. For more information on the firm, visit https://www.whitesecuritieslaw.com.
