DWS Group, a leading European asset manager based in Germany, is falling short of shareholders' expectations as they try to pull cash from one of its American nontraded REITs.
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Shareholders in RREEF Property Trust were only able to redeem 67.6% of the cash they tried to pull from the nontraded REIT in June. The withdrawals were capped at RREEF, a relatively small fund for DWS with $337M in assets at the end of March, after it ran up against its quarterly redemption limit.
The 32.4% shortfall was driven by the REIT’s cap on repurchases at 5% of net asset value in any given quarter, the company disclosed in a filing with the Securities and Exchange Commission on Wednesday.
A separate 2% NAV cap on monthly redemptions held back the fund’s April and May distributions at 95.6% and 97.5% of requests, respectively.
DWS and RREEF declined Bisnow’s request for comment Thursday morning.
RREEF has had trouble meeting redemption requests as investors have pulled cash over the last two years. In February, it fulfilled all requests for the first time since 2024 after DWS added $15M of its capital to the fund that same month through the purchase of Class Z common stock, AltsWire reported at the time.
The fund raised roughly $498M from investors since its inception in 2013 and owned eight assets at the end of March. It has sold two properties in the past year for a combined $140K profit, according to its first-quarter filing.
RREEF ended the quarter with a $425K net loss, down from the $798K it lost during the same period a year prior. The diversified REIT’s properties — three retail assets, two apartment complexes, two industrial properties and one office — are dotted around the country and were acquired between 2013 and 2021.
The REIT values its portfolio, which is 97.4% leased, at $444.8M.
DWS Group, RREEF’s parent and a publicly listed asset management firm majority-owned by Deutsche Bank, has roughly $1.1B in assets under management and has seen its share price rise by more than 20% this year.
Nontraded REITs grabbed headlines in the wake of the pandemic as banner funds like Blackstone Real Estate Income Trust capped redemptions in 2022 amid a wave of requests. BREIT cleared its backlog in March 2024, and last year’s 8.1% return was its best since 2022.
Starwood Capital Group hasn’t had the same success clearing the backlog for its nontraded REIT, and in April, it fully halted redemptions amid a strategic review, with billionaire manager Barry Sternlicht saying the move was needed to “preserve the opportunity to realize better outcomes as market conditions improve.”
Nontraded REITs had largely closed the gap on redemption requests by October, returning $56B to investors and leaving less than 2% of requests outstanding, the vast majority coming from Starwood.
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