Nontraded REITs Have Erased The Backlog Of Redemptions, With One Exception
The line at the door of some of the globe’s largest investment managers to redeem cash in nontraded REITs stretched around the block as recently as June. Now, it’s nearly nonexistent, except for one fund.
Nontraded REITs have fulfilled roughly $56B worth of redemptions, with just $1B left in the queue, according to data from valuation firm Robert A. Stanger & Co. That leaves less than 2% of redemption requests outstanding less than three years after investment giants Blackstone and Starwood Capital Group first limited withdrawals amid a crunch of redemption requests.
Barry Stenlicht’s Starwood has kept its cap for Starwood Real Estate Income Trust redemptions in place, but it loosened restrictions on withdrawals in June by lifting the cap on outbound cash from 1% to 1.5% of the fund’s net asset value.
Still, SREIT had nearly $999M in outstanding redemption requests at the end of August, accounting for 11.6% of the fund's net asset value and nearly all of the nontraded REIT sector's outstanding withdrawal requests, according to Stanger.
BREIT first fulfilled all of its redemption requests again in March 2024, the same time it lifted its cap. The rush to pull cash waned by the middle of 2024, and by January 2025, net redemptions at BREIT were down 97% from their January 2024 peak.
Redemptions still outpace fundraising, and nontraded REITs have been dragged down by legacy assets, but the shifting regulatory environment has created opportunities for sponsors, according to Stanger.
Fundraising this year through August has pulled in a combined $130B, with $16B targeted at real estate, through August. Nontraded REITs have raised $7.5B over the last 12 months.
The 50 top alternative asset managers tracked by Stanger have raised a combined $540B since 2020 — including $22.8B raised by KKR and $15B raised by Blackstone — with $187B targeting real estate.
More than half of the private capital raised through August was targeting credit solutions, roughly in line with the last five years. Funds targeting real estate acquisitions attracted 13% of capital this year, losing ground to private equity and infrastructure funds.
