Saba Capital offers steep discount for Starwood real estate shares

March 5, 2026 - 22:37

Investment firm Saba Capital Management has made a significant offer to acquire shares in the Starwood Real Estate Income Fund at a substantial discount. The move targets a fund that has been grappling with severe liquidity issues, having sharply limited investor withdrawals throughout 2024.

Saba's offer proposes to purchase shares at approximately 80 cents on the dollar, representing a 20% discount to the fund's last published net asset value. This bold play highlights the growing pressure on non-traded real estate investment trusts and similar funds that own commercial properties. As rising interest rates and shifting market dynamics depress property values, several such funds have faced a surge in redemption requests they cannot immediately fulfill, forcing them to gate investor exits.

The offer presents a dilemma for shareholders stuck in the fund. While it provides a rare immediate exit opportunity, accepting it means crystallizing a heavy loss. For Saba, the strategy is a calculated bet that the underlying assets are worth more than the current distressed price, with the potential for profit if the fund stabilizes or liquidates its portfolio over time. This situation underscores the ongoing turmoil in certain segments of the commercial real estate market and the opportunistic strategies some investors are deploying to capitalize on the distress.