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  • Writer's pictureRealFacts Editorial Team

Starwood CEO Justifies Withdrawal Limits, Optimistic About Market Rebound

Barry Sternlicht, Chairman and CEO of Starwood Capital Group

Barry Sternlicht, Chairman and CEO of Starwood Capital Group, defended the decision to limit withdrawals from the Starwood Real Estate Income Trust (SREIT), according to Yun Li from CNBC. Facing significant losses and an increase in redemption requests, Sternlicht introduced a cap on monthly withdrawals at 0.33% of net asset value to protect loyal investors who have remained committed to the fund.

"With all the hysteria in the media, people are saying, ‘I want to get out now and I’ll come back in later when the coast is clear.’ So we took a very tough decision,” Sternlicht explained on CNBC’s “Squawk Box” Wednesday. “I decided that for the benefit of the 80% of people who’ve never redeemed we would slow down redemptions. ... We hope this is going to be a six-month thing.”

The $10 billion SREIT, which focuses on multifamily, industrial, and office properties, has faced refinancing challenges due to the Federal Reserve's aggressive rate hikes. In a letter to shareholders on May 23, Starwood announced the new withdrawal cap, significantly lower than the previous 2% limit. Additionally, the firm waived 20% of its management fee to support investors during this period.

Sternlicht emphasized that the cap was a measure to protect the majority of investors who had not sought to withdraw their investments. As of the end of April, SREIT had $752 million in immediate liquidity.

Sternlicht criticized the Federal Reserve's monetary policy as "unbelievably ineffective," but expressed optimism that interest rates would decrease soon. “The real estate asset class is probably the biggest victim of the unintended consequence of his actions,” he said. “The spreads are coming in, which means the markets are healing, the future’s getting clearer.”

Sternlicht remains hopeful that these restrictions will only be necessary for about six months, anticipating market conditions to improve and lead to a recovery.


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