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US hedge fund Saba Capital has offered to buy shares in a high-profile property fund at a large discount to the fund’s stated value, after it has limited investor redemptions for nearly two years.
Saba has offered to buy 5 per cent of the outstanding shares in Starwood Real Estate Income Trust (Sreit), at a discount of more than 20 per cent discount to the fund’s most recent stated value. Sreit, an $8.2bn property fund marketed to individual investors, significantly limited investor redemptions beginning in May 2024.
The offer, if accepted, would underscore the heightened risks that have emerged in private capital, as investors come to terms with the limited liquidity and unlisted assets with higher credit risks that suffuse such portfolios.
A Starwood representative did not immediately respond to a request for comment.
Saba, run by veteran Deutsche Bank credit derivatives trader Boaz Weinstein, has emerged as one of the early opportunists seeing to capitalise on investor unease. Last month it presented investors in private credit group Blue Owl an offer to buy shares in their non-traded credit funds at significant discounts, after one closed to redemptions as part of a plan to instead sell off assets and return cash to investors.
Sreit, one of the private capital industry’s largest retail property funds, mostly closed the fund to investor redemptions after an FT report detailed how it had tapped its credit lines to meet surging redemptions, instead of selling property assets to return money to investors.
The fund, managed by Starwood Capital, limited investors’ ability to redeem their investment from 5 per cent of the fund’s net assets to just 1 per cent. In 2025, it slightly increased the amount investors could pull from the fund to 1.5 per cent of its assets every quarter. But redemptions have remained high. In January, Sreit met just 3.5 per cent of investor redemption requests, meaning they are still seeking to pull billions from the fund.
Saba said its offer would provide “a pathway for Sreit shareholders to tender their shares through a simple, transparent process that will enable them to receive guaranteed cash liquidity”.
Sreit has struggled to recover from a real estate slowdown that began in 2022 when the Federal Reserve increased interest rates. When it limited redemptions, it expected the Fed to quickly cut interest rates, bolstering property prices and allowing it to sell off assets at better values. Sreit has written down the value of its assets by nearly 5 per cent since it limited investor redemptions.
Other retail property funds that also faced heavy redemptions, such as Blackstone’s $62bn property fund Breit, were more successful in selling off assets to meet redemptions, and have since recovered. The Blackstone fund sold more than $30bn in assets at their stated value in recent years. Last year, the fund drew in net new money for the first time in three years and recorded returns of over 8 per cent.
