Heap of pink piggy banks on wooden blocks written with the alphabet REIT. Illustration of the concept of real estate investment trust
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A major deal shows how some types of investment can leave investors with little objective information and fewer options because they’re locked into a non-liquid and opaque fund.
Starwood Real Estate Investment Trust, nicknamed SREIT, with a REIT being a standard investment vehicle for real estate, is a big-name real estate investment entity that started in December 2018 with a self-reported total asset value of $22.5 billion across 598 properties.
The firm just put together a joint venture with private equity giant Apollo Global Management, which has a market cap of $74.7 billion and, as of the quarter ending June 30, 2026, revenue of $35.6 billion and net income (or profit) of $1.88 billion, according to data from S&P Global Market Intelligence. The deal will allow SREIT to pay down a lot of its borrowing and cash out customers that want an exit.
REITs Can Give You Exposure To Real Estate
REITs have long been investment mechanisms with periodic ups and downs. They are involved in real estate, whether holding mortgages, owning, or managing commercial real estate. Some own mortgages on properties. REITs often concentrate on specific types of real estate or mortgages, such as retail, healthcare, apartments, offices, data centers, medical offices, warehouses, hotels, farmland, or other specialty properties.
They can be good to diversify a portfolio through exposure to real estate without directly owning properties. By U.S. law, according to the National Association of Real Estate Investment Trusts, REITs are governed by directors or trustees.
Here are some other regulatory requirements. Shares must be transferable, and by their second year, there must be at least 100 shareholders. There are limitations on ownership concentration: five or fewer individuals can’t own more than half of the value of the REIT’s stock in the last half of any given taxable year. At least 75% of annual gross income has to be from real-estate-related sources. The REIT has to distribute to shareholders at least 90% of its taxable income.
Some REITs are privately held, also known as private placement REITs, as the Corporate Finance Institute explains. They work differently. The Securities and Exchange Commission doesn’t regulate them to the degree it does with public companies, and their shares aren’t available on exchange markets.
Private REITs Like SREIT Are Opaque
Like other private REITs, there is at best little independent data available to investors to track their investments in SREIT.
This is a bigger problem than private REITs. In general, the degree of opacity in private investments has become a growing problem for individual investors, institutions, and Wall Street. The attention has mostly been on private credit, with large non-traded lenders seeing spikes in withdrawal requests by investors that caught attention in early 2026. The lack of transparency and information leaves investors unable to independently know what is happening.
REITs face challenges from interest rates that they thought would be lower by now. Higher interest, especially for REITs that hold properties and not mortgages, can disrupt finances and operating profits. But REITs often have liquidity issues because they can’t easily sell real estate properties or mortgages without creating impressions of a fire sale. That would drive down the value and reduce the funds available, cutting revenues and profits.
SREIT has restricted investor redemptions several times over the last few years as requested withdrawals from investors put more pressure on the company.
The last time the company did this was in April 29, 2026, according to a financial filing. They blocked most redemption requests for the month. Only two types of investors could request returns: either the estates of people who died or individuals who experienced a qualifying disability. Redemptions were subject to a $5 million monthly cap “if funds are available.” Investors with account balances below $5,000 could also fully exit. SREIT also reduced its Class 1 distribution rate to save cash.
SREIT, And Investors, Got A Rescue
The joint venture with Apollo Global Management will own, operate, and manage a portfolio of about 120 affordable housing properties. Apollo invested $1.02 billion in a “high-grade investment” and received Class B common stock units representing about 41.5% of the JV’s equity interests. SREIT has provided the assets and holds 58.5%.
SREIT said that proceeds from the transaction will repay a “significant portion of our credit facility,” reducing interest expense and improving operating cash flow. The plan is to improve liquidity, stockholder returns, and position for long-term performance.
SREIT has a call option to redeem Apollo’s interest in the JV at certain times. If exercised between the fifth and 10th anniversary of the closing date, the call price will be calculated to ensure a capped internal return rate of 7% to Apollo. The longer SREIT waits, the higher the payment obligation is.
Under the terms of the joint venture agreement, SREIT will distribute a portion of available cash generated by the portfolio to Apollo. Furthermore, SREIT is also guaranteeing distributions to Apollo that would result in an annual minimum yield on Apollo’s investment in the JV.
Perhaps that is all they will need. However, this offers two lessons about personal risk management. The first: the more external and public information you can get about a potential investment, the smarter a decision you can make. The second is that some investments are by their nature long-term and should only attract some of your capital if you can afford to have it out of reach.