SREIT Investor Losses Investigated by Bakhtiari & Harrison

Bakhtiari & Harrison is investigating potential claims on behalf of investors who purchased SREIT through their financial advisor or brokerage firm. If you are an investor that lost more than $100,000 in SREIT you should consider all legal options. If you wish to discuss your particular situation and the potential for the recovery of your investment losses, or you have information of interest, please contact us for an evaluation of your potential case.

Investors, particularly retirees, often seek out investment opportunities that promise safety and capital preservation. Real Estate Investment Trusts (REITs) have long been marketed as reliable vehicles for achieving these goals. However, recent developments have raised significant concerns, particularly regarding the performance of Starwood Real Estate Income Trust (SREIT) which has drawn nearly $1.3 billion from its $1.55 billion line of credit, according to its recent regulatory filing. This move comes as SREIT faces significant withdrawal requests from investors worried about the troubles in the real estate sector, leading to substantial investor losses.

In March, SREIT shareholders applied to redeem $408 million from the fund, and only 24% of each investor’s request was honored. The $10 billion fund, managed by Barry Sternlicht-led Starwood Capital Group, invests in various real estate sectors, including multi-family and industrial properties. These investments have been heavily impacted by high interest rates and concerns over loan defaults, contributing to the investor losses.

The real estate sector’s turmoil has also affected regional banks, such as New York Community Bancorp, whose shares have dropped nearly 65% following an unexpected quarterly loss due to its exposure to commercial real estate.

The Financial Times first reported Starwood’s significant draw on its credit line, noting that the fund might exhaust its credit and cash reserves by the second half of 2024 if the current rate of redemptions continues.

FINRA Notices on Alternative Investments

The Financial Industry Regulatory Authority (FINRA) has issued several notices and guidelines concerning alternative investments like REITs. These notices aim to protect investors by ensuring that they are fully informed about the risks associated with such investments.

• NTM 03-71: Due Diligence

  FINRA’s Notice to Members (NTM) 03-71 emphasizes the importance of due diligence when recommending alternative investments. It requires firms to thoroughly investigate the investment’s potential risks and returns and to disclose these findings to investors.

• NTM 10-22: Suitability

  NTM 10-22 focuses on the suitability of recommendations. It mandates that financial advisors must ensure that any investment recommended to clients aligns with their financial situation, risk tolerance, and investment objectives. This notice is particularly relevant for retirees who typically seek low-risk investments.

What This Means for Investors

For investors, especially retirees, who were told that SREIT was a safe investment with capital preservation objectives, the fund’s poor performance has been a harsh lesson. The decline in NAV and reduced distributions have left many feeling misled and financially vulnerable.

Protecting Your Investments

If you are an investor who was misled about the safety of your investment in SREIT, you have options. At Bakhtiari & Harrison, we assist investors who have been wronged by their financial advisors. Our expertise includes:

• Thorough Investigation

  We conduct a detailed investigation into the circumstances of your investment, examining whether proper due diligence was performed and whether the investment was suitable for your financial situation.

• Legal Representation

  We represent investors in disputes with financial advisors and firms, seeking compensation for losses incurred due to misleading investment recommendations.

• Elder Abuse Protection

  For senior investors, we leverage elder abuse statutes to provide additional protections and seek damages for any fraudulent or misleading practices that have harmed their financial well-being.

Conclusion

Bakhtiari & Harrison, the law firm representing numerous SREIT investors, has been closely monitoring the situation and advising clients on potential legal actions to recover their investments. The poor performance of SREIT REIT serves as a stark reminder of the importance of due diligence and suitability in investment recommendations. If you have been adversely affected by your investment in SREIT, contact Bakhtiari & Harrison today.