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Starwood Real Estate Income Trust’s $5 Billion NTR Offering Declared Effective

January 4, 2018

Starwood Real Estate Income Trust’s $5 Billion NTR Offering Declared Effective

January 3, 2018 | James Sprow | Blue Vault

Green plant shoot with ladybug growing from coins

The SEC declared Starwood REIT’s $5 billion initial public offering effective on December 27, 2017. The nontraded REIT is offering four share classes to raise up to $4 billion in its primary offering as well as $1 billion through its distribution reinvestment plan. The Starwood REIT offering Prospectus is very similar to the Blackstone Real Estate Income Trust which broke escrow on January 1, 2017, and has raised over $1.7 billion as of December 20, 2017.

Starwood REIT plans to focus on acquiring stabilized, income-oriented commercial real estate and debt secured by commercial real estate located in the United States, and possibly Europe. The portfolio may include multifamily, office, hotel, industrial and retail assets, as well as other property types, including, without limitation, medical office, student housing, senior living, data centers, manufactured housing and storage properties.

The REIT will offer shares on a continuous basis at a price generally equal to the net asset value per share of each class of common stock, updated monthly.

Class T shares will be priced at $20.70 with a three percent maximum selling commission and 0.50 percent dealer manager fee, as well as a trailing 0.85 percent stockholder servicing fee based on the NAV of those shares. The trailing stockholder servicing fee will be paid for approximately 6.5 years from the date of purchase, subject to potential changes in the NAV of the shares. These shares will be available through brokerage and transaction-based accounts.

Class S shares will also be priced at $20.70 with a 3.5 percent maximum upfront selling commission as well as a trailing 0.85 percent stockholder servicing fee based on the NAV of those shares. The stockholder servicing fees will be paid for approximately 6.5 years, subject to potential changes in the NAV of the shares. These shares will be available through brokerage and transaction-based accounts.

Class D shares will be available through fee-based or “wrap” accounts and will have no upfront selling commissions. The dealer manager selling commissions will be paid over time as a stockholder servicing fee equal to 0.25 percent per annum based upon the NAV of all outstanding Class D shares. The trailing stockholder servicing fee will be paid until the total stockholder servicing fees would exceed 8.75% of the gross proceeds from the sale of Class D shares, which could approximate 35 years from date of purchase, depending upon the NAV of the shares. 

Class I shares, available through fee-based programs and to institutional investors, are initially priced at $20.00 each. These shares have a minimum initial investment of $1 million. 

According to the offering’s Prospectus, “Founded in 1991, Starwood Capital is generally regarded as one of the world’s leading private real estate investment firms, with $55 billion in assets under management as of May 31, 2017. It has sponsored 15 private opportunistic real estate funds, 15 co-investment entities, and eight public companies since its inception. Starwood Capital also has built one of the most highly regarded and experienced teams in the real estate business, with its executive committee working together for an average of 20 years and possessing an average of 29 years of industry expertise, across all stages of the investment cycle.”

Starwood Capital owns or manages 97,000 multifamily units and 30,000 single family homes, 28 million square feet of office buildings, 650 hotel properties and 31 million square feet of retail properties. 

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Matthew C. Strife
Blue Vault Services
April 11, 2016

Blue Vault's services are without question great resources for the review of the nontraded products offered.