The non-traded REIT is suspending virtually all share repurchases and lowering its monthly payout as it works to stabilize the portfolio for long-term investors.

May 12, 2026

Starwood Real Estate Income Trust, the non-traded REIT externally managed by Starwood Capital Group, has taken sweeping action to address persistent liquidity pressure, effectively suspending most share repurchases and reducing its monthly distribution beginning in April 2026. The moves mark a significant escalation of the redemption restrictions that have characterized the fund since late 2022.

Sweeping Changes to Share Repurchase Plan

Effective April 29, 2026, Starwood REIT amended its share repurchase plan to accept only two narrow categories of requests: those tied to the death or qualifying disability of a stockholder who is a natural person, and those for accounts holding balances below $5,000. Both categories are capped at $5 million per month each. All other repurchase requests will not be honored under the new framework.

This represents a dramatic tightening from previous plan limits. The company had previously capped monthly repurchases at 0.5 percent of net asset value and quarterly repurchases at 1.5 percent. Throughout the first quarter of 2026, even these elevated limits proved insufficient — only about 3 percent of each stockholder’s monthly redemption request was satisfied in January, February, and March.

During the three-month period, the company repurchased approximately 6 million shares totaling $120.3 million. By comparison, the same quarter a year earlier saw $87.3 million in repurchases.

Distribution Reduction and Strategic Rationale

In conjunction with the repurchase plan changes, Starwood REIT reduced its monthly distribution beginning with the April 2026 payment. Management explained that the combined actions are intended to preserve capital, support NAV stability, and position the fund to capitalize on improved market conditions over the long term.

The company highlighted that nearly 80 percent of its investors have not redeemed shares to date. To this point, the fund has redeemed over $5 billion of shares at NAV, with redemptions funded in part by approximately $5.1 billion of asset dispositions since the redemption wave began. Management indicated that selling additional assets into a challenged market would unfairly penalize investors who remain committed to the fund for the benefit of those exiting.

Financial Performance

For the three months ended March 31, 2026, Starwood REIT reported a net loss attributable to stockholders of $112.9 million, a meaningful improvement from the $177.2 million loss recorded in the prior-year period. The improvement was driven primarily by favorable swings in the fair value of derivative instruments and foreign exchange contracts, which together generated $13.8 million in other income compared to $86.7 million in other expense the previous year.

Total revenues for the quarter came in at $392.3 million, down modestly from $400.3 million a year earlier. The decline reflected the impact of asset dispositions completed during 2025. Rental revenue alone decreased by approximately $8.3 million year over year.

Interest expense rose to $172.3 million from $152.2 million, primarily reflecting higher costs on mortgage notes and additional borrowings on the unsecured line of credit. The company also recognized a $2.4 million loss on debt extinguishment tied to refinancing activity.

Adjusted funds from operations attributable to stockholders fell sharply to $23.8 million from $88.4 million a year earlier, reflecting the impact of higher interest costs and reduced portfolio scale.

NAV Continues Gradual Decline

The fund’s net asset value per share continued its downward trajectory in the first quarter. As of March 31, 2026, Class I shares carried a NAV of $19.65, down from $19.96 at year-end 2025. Class S shares stood at $19.82, Class T at $19.83, and Class D at $19.40.

For the inception-to-date period, annualized total returns remained positive, with Class I shares delivering 5.2 percent without upfront commissions, though year-to-date 2026 returns turned slightly negative across all share classes.

Total NAV stood at approximately $8.1 billion as of quarter-end, down from $8.3 billion at year-end 2025. As previously reported, the company has been navigating significant redemption pressure and falling property values throughout 2024 and 2025.

Portfolio Overview

Starwood REIT continues to operate a portfolio of 598 income-producing properties valued at roughly $22.4 billion, with occupancy of approximately 94 percent. Multifamily housing represents about 71 percent of the portfolio by value, with the fund among the largest owners of apartment units in the United States, including more than 63,000 units across market-rate and affordable categories.

Management emphasized that the portfolio is concentrated in Sunbelt markets, particularly Texas and Florida, which it views as benefiting from population growth and employment trends. The company noted that approximately 75 percent of multifamily assets are located in eight states projected to add over one million young adults over the next five years.

Management also pointed to declining new apartment supply as a positive long-term indicator, suggesting that rent growth could accelerate as supply diminishes by 60 to 70 percent in some of the fund’s markets.

Refinancing and Balance Sheet Activity

Starwood REIT refinanced and closed approximately $1.7 billion in property-level financing during the first quarter. Since the start of 2025, the fund has refinanced about $6.1 billion in mortgages, extending the weighted average remaining term of property-level debt to roughly five years while reducing financing spreads by approximately 12 basis points.

Total indebtedness stood at $14.1 billion at quarter-end, up from $13.9 billion at year-end. The increase reflected additional borrowings on the unsecured line of credit, which rose to approximately $1.5 billion from $1.4 billion. The company has roughly $4 billion of debt coming due within 12 months and plans to address those maturities through strategic capital transactions and refinancings.

Available liquidity totaled $393.6 million at quarter-end, consisting of $211.1 million in cash and equivalents, $32.5 million in undrawn unsecured line of credit capacity, and $150 million in undrawn senior secured revolving credit facility capacity.

Forward Strategy and Market Outlook

Management offered a forward-looking commentary in its quarterly disclosures, noting that the strategic actions taken position the fund to participate in potentially improving conditions. The company referenced expectations that geopolitical tensions could ease, oil prices might subside, inflation could stabilize, and a new Federal Reserve chair could support a lower interest rate environment.

The fund continues to evaluate strategic capital raises that could support liquidity and drive NAV growth through investments in additional real estate sectors. Management indicated that strategic asset sales remain on the table as needed to generate liquidity.

As of May 11, 2026, Starwood REIT had approximately 386.9 million shares outstanding across all classes and had received cumulative net proceeds of $14.3 billion from its public offerings since inception. The fund launched its fourth public offering in February 2026, targeting up to $10 billion in additional capital raised.