The Sternlicht-led non-traded REIT sold hundreds of millions in assets and still satisfied only a fraction of investor repurchase requests in 2025.

March 23, 2026

Portfolio Contraction and Falling NAV

Starwood Real Estate Income Trust, the non-traded real estate investment trust externally managed by Starwood Capital Group, disclosed a net loss attributable to stockholders of approximately $691.6 million for the fiscal year ended December 31, 2025, a modest increase from the $684.9 million loss recorded in 2024. The results paint a picture of a fund navigating declining asset values, persistent redemption pressure, and a challenging capital markets environment.

As of year-end, Starwood REIT owned 402 consolidated real estate properties and 878 single-family rental units, along with two unconsolidated joint venture investments and one real estate debt position. The company operates across five segments: multifamily, industrial, office, other properties, and investment in real estate debt. Its portfolio remains heavily weighted toward multifamily assets, which accounted for roughly 75 percent of segment revenue during the year.

The fund’s net asset value per share declined steadily throughout 2025. Class I shares, which carry no upfront commissions or ongoing servicing fees, fell from $21.64 per share in January to $19.96 by December. That trajectory represents an annualized year-to-date total return of negative 2.4 percent for Class I holders, though the inception-to-date annualized return remained positive at 5.4 percent.

Total revenues decreased to approximately $1.58 billion from $1.69 billion the prior year, driven primarily by asset dispositions that reduced the size of the portfolio. Rental revenue alone fell by nearly $100 million year over year.

Disposition Activity Accelerates

The company significantly ramped up its asset sales in 2025, disposing of 43 industrial properties, 13 multifamily properties, two hospitality assets, one retail property, and 55 single-family rental units for total net proceeds of approximately $300 million. These sales generated $21.1 million in net gains, a sharp decline from the $87.1 million in disposition gains recorded in 2024.

Management indicated that the sales strategy is aimed at generating liquidity for stockholders submitting share repurchase requests while protecting value for those who remain invested.

Redemption Pressure Persists

Perhaps the most significant ongoing challenge for Starwood REIT is the sustained wave of repurchase requests from stockholders. Since October 2022, monthly repurchase requests have consistently exceeded the plan’s limits. Throughout 2025, only a fraction of requests were honored — approximately 3 to 4 percent of each stockholder’s monthly request was fulfilled in the fourth quarter.

The company amended its share repurchase plan in June 2025, raising the monthly repurchase cap from 0.33 percent to 0.5 percent of NAV, and the quarterly cap from 1 percent to 1.5 percent of NAV. Despite the increase, requests continued to far exceed available capacity. For the full year, the company repurchased approximately 22.5 million shares totaling around $473 million — less than half the $1.1 billion repurchased in 2024.

The ongoing mismatch between investor demand for liquidity and the fund’s ability to provide it underscores a fundamental tension in the non-traded REIT structure. The company acknowledged that its shares should be considered as having only limited liquidity and may at times be illiquid.

Advisor Fee Waiver and Management Structure

Starwood REIT Advisors, the fund’s external manager, continued to waive 20 percent of its management fee during 2025, reducing the effective rate from 1.25 percent to 1 percent of NAV. That waiver, which began in May 2024, will remain in place until the share repurchase plan is restored to its original limits of 2 percent monthly and 5 percent quarterly. Total management fees for the year came to $87.6 million, down from $105.4 million in 2024, reflecting both the waiver and declining NAV.

The advisor elected to receive its entire management fee in Class I shares rather than cash, a practice it has maintained since inception. No performance participation was earned by the Special Limited Partner in 2025, as the required return hurdle was not met.

Leadership Changes

The year saw notable changes at the top. Nora Creedon was appointed Chief Executive Officer and President in July 2025, replacing Sean Harris, who resigned. Creedon previously served as CEO of Goldman Sachs Real Estate Income Trust and brings experience in non-traded REIT management. Jonathan Pollack, formerly Global Head of Real Estate Credit at Blackstone, joined the board of directors in April 2025.

Leverage and Financing

The company’s total indebtedness stood at approximately $13.9 billion at year-end, down from $14.6 billion at the end of 2024. The firm refinanced and closed approximately $3 billion in property-level financing during 2025 and completed an additional $1.7 billion in refinancings through March 2026. Variable-rate debt comprised the majority of the borrowing structure, with floating-rate mortgages indexed to benchmarks including SOFR and EURIBOR.

Interest expense totaled $636.1 million for the year, roughly flat compared to 2024. The company also recognized $5.2 million in losses on debt extinguishment related to property-level refinancings.

Distributions Funded Partially from Non-Operating Sources

The fund declared monthly distributions totaling approximately $484.8 million during 2025. However, only about 71 percent of distributions were funded from cash flows from operations, with the remainder coming from investing activities related to interest rate derivatives and offering proceeds from reinvested distributions. This marked a shift from 2024 and 2023, when operating cash flows fully covered distribution payments.

Outlook

In its business outlook commentary, management noted that amid economic uncertainty, geopolitical tension, and stock market volatility, real estate offers tangible, income-generating assets with low correlation to public markets. The company also suggested that rising tariff-related construction costs could make owning existing real estate below replacement cost an attractive defensive position.

As of March 2026, the company had approximately 388.5 million shares outstanding across all classes and had raised a cumulative $14.3 billion through its public offerings since inception.