Starwood looks to sell 2,000 rentals

Just two years after Barry Sternlicht’s Starwood Capital Group purchased a portfolio of thousands of single-family rental homes for more than $1 billion, the firm is already looking to sell a bulk of them.

Starwood Real Estate Income Trust is looking to sell more than 2,000 single-family rentals, Bloomberg reported. People familiar with the matter told the outlet many of the homes being marketed were part of the 2,300-home portfolio Starwood snagged from Pretium Partners in 2021.

Pretium is actually reacquiring roughly 100 homes it previously sold to Starwood. Sternlicht’s firm may still hold on to many of the homes, which aren’t being offered at distressed prices.

The reported figure up for sale is a significant slice of SREIT’s single-family rental holdings. As of the end of March, the REIT owned slightly more than 3,200 single-family rentals, a portfolio valued at $1.26 billion.

The investment trust recently recognized an $80 million impairment charge on its single-family rentals during the first quarter on revised cash flow assumptions. That impairment charge was related to an “increased probability of a near-term disposition.”

Starwood’s REIT has a net asset value of $12.8 billion, including mostly housing and industrial properties. In the face of rising interest rates, however, it has been forced to restrict redemptions after facing an onslaught of withdrawal requests. In April, it received redemption requests equal to 4.2 percent of its aggregate net asset value, fulfilling fewer than half of those requests.

In the first quarter, SREIT reported $52 million in earnings, an 84 percent decline year-over-year. The REIT reported $490 million in revenue, a 67 percent gain.

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Sternlicht in a first quarter earnings call ripped into the Federal Reserve, saying it “completely screwed up” in regards to interest rate hikes and central bank policy. Speaking directly after another interest rate hike, Sternlicht called the move “bordering on idiotic.”

— Holden Walter-Warner