Starwood Real Estate Income Trust (SREIT), the $22.5 billion nontraded REIT managed by Starwood Capital Group, has entered into a $1.02 billion joint venture with funds managed by Apollo Global Management. Under the agreement, Apollo acquired a 41.5% equity interest in a portfolio of approximately 120 U.S. affordable housing properties, while SREIT retained a 58.5% ownership stake, as well as full asset management and operational control of the portfolio.
According to the company, the transaction is intended to strengthen SREIT’s balance sheet by using the proceeds to reduce outstanding borrowings under its credit facility. The deal follows a series of liquidity initiatives undertaken by the nontraded REIT after suspending shareholder repurchase requests earlier this year. The transaction allows SREIT to generate liquidity without relinquishing operational control of the assets and includes an option for SREIT to repurchase Apollo’s interest during a specified period several years after closing, subject to agreed-upon terms.
Affordable housing has become one of SREIT’s largest investment themes, reflecting the continued demand for workforce and affordable rental housing across the United States. The transaction underscores ongoing institutional investor interest in the sector while providing Starwood with additional financial flexibility as it continues managing one of the industry’s largest nontraded real estate investment trusts.
