A giant real estate fund managed by the company of the billionaire investor Barry Sternlicht is limiting the amount of money that investors can redeem, in an attempt to fend off a potential cash crunch as high interest rates pummel the market for commercial properties like office buildings.
Starwood Real Estate Income Trust, which manages about $10 billion and is one of the largest real estate investment trusts around, said on Thursday that it would buy back only 1 percent of the value of the fund’s assets every quarter, down from 5 percent earlier.
Starwood said that it had chosen to tighten the limit because it was facing more withdrawals than it could meet with its cash on hand, and that it was a better option than raising money by selling properties at discounted prices.
The value of commercial properties has fallen — hit both by lower occupancy since the coronavirus pandemic and by high interest rates that make real estate less affordable.
In a letter to shareholders, Mr. Sternlicht, who leads the Starwood Capital Group, and Sean Harris, the chief executive of Starwood’s REIT, said: “We cannot recommend being an aggressive seller of real estate assets today given what we believe to be a near-bottom market with limited transaction volumes, and our belief that the real estate markets will improve.”
Persons:
Barry Sternlicht, —, Sternlicht, Sean Harris, Starwood’s REIT, ”
Organizations:
Starwood, Income Trust, Starwood Capital Group