Real Estate
Home›Real Estate›REITs›Apollo to inject $1B into Starwood Real Estate Income…
Apollo to inject $1B into Starwood Real Estate Income Trust
The funding is aimed at reducing Starwood’s credit facility exposure as the REIT faced liquidity pressure from a large redemption backlog.
Apollo Global Management is providing $1 billion to Starwood Real Estate Income Trust in return for a 41.5% stake tied to a 120-property affordable housing portfolio, according to an SEC filing cited by Bisnow.
Starwood plans to use the cash to pay down a significant portion of its credit facility as a step toward improving liquidity. The company halted redemptions at a $22 billion real estate fund in April to avoid forced sales and meet withdrawal requests, with CEO Barry Sternlicht attributing the halt to investor cash calls rather than portfolio performance.
At the time of the redemption freeze, Starwood’s REIT had 598 assets valued at $22.4 billion and a 94% occupancy rate. Bisnow also reports Starwood had $14.6 billion in total liabilities in the first quarter, including $12 billion in mortgage notes and secured credit facilities, plus a $1.5 billion unsecured line of credit, with about $4 billion due within 12 months as of late March.
The joint venture is structured so Starwood will make regular distributions from portfolio profits and guarantee Apollo an annual minimum yield, with Starwood potentially covering the difference if assets underperform. The REIT still had about $999 million in outstanding redemption requests at the time of the article, after nontraded REITs collectively fulfilled $56 billion in redemptions through October, according to Bisnow.