Starwood Property Fund Still Under Pressure With $850M in Redemption Requests

After $1.6B in property sales, investor redemption requests still pile up at SREIT.

Jordan B.
June 11, 2025

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Good morning. Starwood’s flagship real estate fund is still under pressure as $850M in investor redemptions remain unmet. Despite recent property sales and a leadership shakeup, confidence hasn’t fully returned.

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Redemption Pressure

Starwood Property Fund Still Under Pressure With $850M in Redemption Requests

Despite asset sales and a new CEO on deck, Starwood’s flagship nontraded REIT continues to struggle with investor redemptions and liquidity constraints.

Redemption pressure continues: Starwood Real Estate Income Trust (SREIT) is contending with $850M in pending withdrawal requests as of June 2025. The fund imposed the industry’s strictest redemption limits—1% of NAV per quarter—after a challenging year, aiming to avoid distressed property sales.

Shrinking value: SREIT’s NAV has fallen 40% from its 2022 peak to $8.8B, mirroring a broader pullback in nontraded REITs. In Q125, redemptions outpaced fundraising $2.8B to $1.2B, down sharply from the $3B monthly inflows seen in early 2022.

Raising cash: From December through May, SREIT sold $1.6B worth of assets. These transactions helped boost liquidity, allowing SREIT to gradually loosen its strict redemption caps, raising quarterly withdrawal limits from 1% to 1.5% of NAV starting in July, a cautious step toward restoring investor confidence.

Investor confidence shaken: Starwood’s redemption limits have rattled the nontraded REIT market, leaving some investors feeling misled about liquidity. Critics argue that expanding retail access to private funds could expose individuals to risks they may not fully grasp.

Leadership change: Amid the turmoil, SREIT announced that its CEO will step down in July, to be replaced by Nora Creedon of Goldman Sachs. The fund’s liquidity has improved to over $900M, but confidence in a recovery remains slow.

➥ THE TAKEAWAY

Big picture: Starwood’s redemption backlog and fundraising freeze show how fast sentiment can flip in retail-facing private real estate. While the firm hopes lower rates will revive interest, it may need more than Fed cuts to restore investor trust.

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✍️ Editor’s Picks

Growth mode: Multifamily investors are rapidly embracing Build-to-Rent as a higher-yield alternative to traditional apartments. (sponsored)
Rent rebound: A construction slowdown and tight housing market are setting the stage for rent growth recovery across residential REITs, despite recent softness in performance.
Risk premium: Over the past decade, cap rate spreads have narrowed sharply across CRE sectors, with industrial margins now razor-thin.
Hudson sale: Related and Oxford may sell or recapitalize parts of 35 Hudson Yards, excluding its luxury condos, in a deal valued at around $600M.
Inflation eases: US consumers’ short- and long-term inflation expectations dropped in May, boosting confidence in household finances and job prospects.
Board overhaul: Investor pressure is mounting on CoStar to rein in spending on Homes.com and refocus on its profitable CRE core after a board shake-up and years of underperformance.
Holding steady: Green Street’s Commercial Property Price Index rose 0.6% in May and is up 4.1% YoY, with pricing holding firm despite recent market volatility.

🏘️ MULTIFAMILY

Heart of it all: Ohio’s multifamily market is heating up with record-high occupancy and rent growth, though new supply could test that momentum.
Suburban surge: Multifamily construction is accelerating in low-density US regions as urban core development slows.
Program update: Freddie Mac has revised its Preferred Equity Investment Program to allow Optigo lenders to retain servicing rights.
Debt watch: Over $10B in affordable housing loans mature by 2027, mostly from banks, testing stability as costs rise and federal support wavers.
Financing freeze: DivcoWest has paused new multifamily construction at Boston’s Cambridge Crossing due to financing hurdles and rising material costs.
Housing politics: Seattle’s nonprofit housing providers are lobbying to ease certain tenant protections, including eviction restrictions and roommate rules, amid rising financial pressures.

🏭 Industrial

Value-add: Rising vacancies in older warehouses are opening the door to value-add renovations that meet modern logistics demands.
Tenant advantage: Industrial tenants are gaining the upper hand as vacancy rates rise and rent growth slows globally, marking a shift from years of landlord dominance.
Amazon expansion: Amazon will invest $20B in new AI-driven data centers in Pennsylvania, its largest-ever private investment in the state.
Trade uncertainty: Uncertainty over tariffs is delaying projects and forcing industrial players to rethink leasing and supply chain strategies.
Industrial launch: Portman Holdings has delivered the first phase of its 1.9M SF I-76 Trade Center in Exton, PA, combining Class A industrial space with a community-focused park.

🏬 RETAIL

Outlet overhaul: Glaser Retail is demolishing the long-vacant Outlets at Hillsboro for a $75M retail and logistics redevelopment, aiming to revive the I-35 corridor.
Job cuts: Retail job cuts in the US surged 274% YoY in early 2025, with nearly 76K positions slashed and hiring plans stuck at historically low levels.

🏢 OFFICE

Texas takeover: Texas is now the top destination for corporate headquarters, leading a nationwide shift away from traditional business hubs.
Price floor: Investors say DC office values have likely hit rock bottom, with outdated buildings trading near land value.
Record deal: Walmart’s e-commerce division has signed a 338 KSF lease at Sunnyvale’s Tech Corners campus, the biggest Silicon Valley office deal since 2023.
Transit-led recovery: With Andy Byford now leading Penn Station’s long-overdue overhaul, New York’s office market could see a major lift.
Bio battle: Massachusetts, long a leader in life sciences R&D, is now struggling to compete for large-scale biomanufacturing investments as Big Pharma favors lower-cost states.

🏨 HOSPITALITY

Change of plans: Las Vegas Sands is scrapping its $6B casino plan for the Nassau Coliseum site but will stay involved with a new entertainment-focused project.
Auction ahead: Oakland’s largest hotel, the 500-room Marriott City Center, is headed to foreclosure after Gaw Capital defaulted on a $100M loan.

📈 CHART OF THE DAY

Source: Rentec Direct

After six months of gains, YoY apartment rent growth has slowed for two straight months, falling to 0.74% in May, despite strong demand and occupancy, as operator sentiment turns cautious across both high- and low-supply markets.