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Stanger Reports Summer Slowdown for REIT Redemption Requests

An update by Robert A. Stanger & Co., Inc., on the 10 net asset value real estate investment trusts in its research coverage universe reveals a decline in share redemption requests since the May 2024 surge.

“Following May’s 65% surge in share redemption requests, things certainly calmed down in June for the top NAV REITs. For those reporting, redemption requests declined across the board, resulting in an average monthly decrease of 34%, which is just 10% over the pre-surge redemption pace set in April,” said David J. Inauen, head of research at Stanger.

The REITs included in the outlook were:

• Ares Industrial Real Estate Income Trust Inc.
• Ares Real Estate Income Trust Inc.
• Blackstone Real Estate Income Trust Inc.
• Brookfield Real Estate Income Trust Inc.
• FS Credit Real Estate Income Trust Inc.
• Hines Global Income Trust Inc.
• JLL Income Property Trust Inc.
• KKR Real Estate Select Trust Inc.
• Nuveen Global Cities REIT Inc.
• Starwood Real Estate Income Trust Inc.

Each company reported updates to its respective NAV per share as of June 30, 2024, along with updated portfolio information. Stanger analyzed each REIT’s derivation of its NAV and NAV per share, distributions, redemptions and various metrics, along with other reported events.

“We estimate that eight of the top 10 satisfied all redemption requests, with certain REITs again authorizing redemptions in excess of stated capacity limits to appease investors,” added Inauen.

When SREIT lowered the capacity under its REIT share repurchase plan beginning with May 2024 redemptions and satisfied just 3% of each stockholder’s request, other top NAV REITs experienced a rise in monthly redemption requests.

Examples include the following.

BREIT’s majority independent board of directors approved exceeding the 2% of NAV monthly limit to fulfill 100% of repurchase requests in May. Across April and May, BREIT returned about 4.4% of its NAV to investors.

Also in May 2024, Nuveen REIT received repurchase requests equal to approximately 2.47% of its NAV. Its board of directors authorized repurchases in excess of the 2% limit for May 2024 such that it met 100% of share repurchase requests received on time in May.

Brookfield REIT received repurchase requests equal to 2.3% of its aggregate NAV in April and during the calendar quarter ended June 30, it received repurchase requests equal to 5.6% of its aggregate NAV. Brookfield’s board of directors authorized repurchases in excess of the 2% monthly and 5% quarterly limitations both times so that 100% of share repurchase requests were met.

Robert A. Stanger & Co., Inc., founded in 1978, is an investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, real estate investment trusts, and real estate advisory and management companies in support of strategic planning and execution, capital formation and financings, mergers, acquisitions, reorganizations, and consolidations.

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