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A $10 Billion Real-Estate Fund is Bleeding Cash and Running Out of Options

May 22, 2024

Ilustration Peter Ryan for WSJ

In this edition of Above the Line, we explore the dire situation facing the Starwood Real Estate Income Trust (Sreit) as it grapples with a severe liquidity crisis. Investors are rapidly seeking redemptions, and the fund is struggling to manage its dwindling cash reserves.

We also explore the Biden administration's controversial subprime mortgage proposal and China's aggressive measures to rescue its property market.

Let’s dive in.

A $10 Billion Real-Estate Fund Is Bleeding Cash and Running Out of Options
Wall Street Journal
The Starwood Real Estate Income Trust faces three challenging options to manage its liquidity crisis: taking on more debt, selling properties in a tough market, or halting investor redemptions. Each option presents significant risks and could impact the fund's future viability.

Joe Biden Goes Subprime; Should Citi Buy NYCB/Flagstar?
The Institutional Risk Analyst
The Biden administration's proposal for Freddie Mac to buy closed-end second lien mortgages has sparked controversy. Critics argue that this move could put low-income families at risk, drawing parallels to the subprime crisis of 2008.

China Seeks to End Property Crisis With Rescue Package
China has introduced a comprehensive rescue package to stabilize its property market. Measures include scrapping the nationwide minimum mortgage rate, lowering down-payment ratios, and encouraging local governments to convert commercial homes into affordable housing.

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