Starwood Real Estate Income Trust sharply curtailed investor withdrawals in April, underscoring mounting pressure on nontraded REITs as high interest rates continue to test liquidity across private real estate.
In an SEC filing dated April 29, the company disclosed it amended its share repurchase plan, effectively blocking most redemption requests for the month. The move comes as Starwood seeks to avoid forced asset sales while it waits for what it expects will be a more favorable interest rate environment.
Under the revised plan, only two categories of investors can access liquidity. Shareholders who have died or experienced a qualifying disability may redeem shares, subject to a $5 million monthly cap if funds are available. Investors with account balances below $5,000 can also fully exit, subject to the same $5 million monthly limit and available liquidity.
At the same time, the REIT reduced its Class I distribution rate to 4.7% to preserve cash.
The decision reflects sustained redemption pressure that has persisted since borrowing costs surged in 2022 and 2023. In a five-page shareholder letter, Chairman and CEO Barry Sternlicht wrote that the company is facing "elevated redemption requests, which rose quite suddenly when interest rates spiked and have remained high."
Starwood had previously opted to slow property sales beginning in March 2024, betting that holding assets would ultimately produce better outcomes than selling into a weak market. At the time, roughly 80% of investors had not sought redemptions, reinforcing management's view that selling into a "challenged market" would be counterproductive.
The firm also anticipated that rates would begin to decline. Sternlicht pointed to political pressure on monetary policy, writing, "We felt vindicated as President Trump took office and pushed the curve lower through persistent rhetoric that rates should come down." By midyear, market expectations had shifted toward rates near 3.0%, and despite tariff-related uncertainty, the REIT continued to expect cuts by year-end.
Sternlicht argued that broader economic conditions could ultimately force that outcome. " In fact, we believe if there is global weakness driven by sustained high oil prices, it will ultimately act as a 'tax' on growth and should be met with rate cuts, not hikes, to support interest rate–sensitive sectors such as real estate and housing," he wrote.
For now, however, liquidity remains constrained. "We will reintroduce liquidity when it can be done in a consistent and sustainable way," he explained.
Starwood's move echoes earlier actions across the nontraded REIT sector. Both Starwood and Blackstone's BREIT limited redemptions several years ago amid a surge in withdrawal requests tied to margin calls among overseas investors. By early 2023, KKR Real Estate Select Trust had also imposed limits, highlighting the structural reality that redemptions are the primary liquidity mechanism for investors in these vehicles.
Pressure is not confined to real estate. According to Reuters, Blackstone's $82 billion private credit fund saw a notable rise in withdrawal requests in the first quarter of 2026. The Financial Times also reported increased redemption activity at private credit funds managed by Blue Owl and BlackRock, signaling broader strain across private market strategies.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.