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Starwood REIT Reports Negative Return of 3.25% through the First Half of 2023

Starwood Real Estate Income Trust Inc., a publicly registered non-traded real estate investment trust sponsored by Starwood Capital Group, provided a quarterly update for the second quarter of 2023.

After including the current 4.9% annualized distribution rate, SREIT reports that it delivered a total return of -3.25% year-to-date and an annualized return of 11.14% over the prior three years and 10.49% annualized inception to date. The company reports that strong portfolio performance has allowed it to maintain distributable cash flow of approximately 5%, but that these positives were outweighed by a modest decrease in the value of SREIT’s real estate resulting from higher interest rates and therefore higher cap rates.

The company’s portfolio, 82% of which is comprised of rental housing and industrial properties, had average occupancy of 95% at the close of the second quarter of 2023.

SREIT’s portfolio is 75% allocated to the Southeast and Southwest with their two largest concentrations (30%) in Florida and Texas.

Currently, 99% of SREIT’s debt is effectively fixed at approximately 3.5% and has five years of duration remaining. In addition, the company says it has minimal debt maturities over the next three years with 1% maturing in 2023, 1% maturing in 2024, and 9% maturing in 2025.

At the end of June 2023, SREIT says it had access to approximately $1.7 billion of liquidity or 14% of NAV in the form of cash, marketable securities, and lines of credit.

As The DI Wire previously reported, SREIT announced that repurchase requests declined by 24% month-over-month and represent their lowest level of requests since October 2022. According to the company, June repurchase requests were approximately 43% lower than their peak in January 2023.

Starwood Real Estate Income Trust invests in stabilized real estate across the United States and Europe. Its initial $5 billion offering launched in December 2017 and raised approximately $3.9 billion from investors before closing in June 2021. The first follow-on offering, comprised of $10 billion in shares, launched immediately afterward and raised approximately $8 billion. The second follow-on offering, which is currently offering up to $18 billion in shares of common stock, launched in August 2022 and has raised approximately $516.6 million in the primary offering to-date.

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