Streitwise, the company behind the crowdfunded 1st Streit Office real estate investment trust (REIT) that focuses on office space with high-quality corporate tenants, says it will continue to honor redemption requests from shareholders, while many of its competitors suspend redemptions as the fallout from COVID-19 becomes more apparent.
In an early April communication, a Streitwise representative said that they did not anticipate receiving redemption requests above the 1.25% of net asset value limit they will honor in any one quarter and that they had been able to process all redemption requests as of the end of the prior quarter.
Other crowdfunded real estate platforms have chosen to pause redemptions. Crowdfunded real estate investing giant Fundrise announced it was also suspending redemptions and temporarily pausing new investments several weeks ago. Upside Avenue, a REIT focused on apartments, recently confirmed that it was also suspending redemptions due to the potential loss of cash flow from tenants losing their income.
Cash-generating assets are paying off
Fundrise, as the biggest and most popular crowdfunded real estate platform for non-accredited investors, likely saw a big uptick in redemption requests, making it pertinent to halt all redemptions to avoid putting its liquidity position at risk, as well as its exposure to multifamily and retail real estate.
Upside Avenue representatives said it was taking this step due to the potential impacts of the COVID-19 recession that could impact the income for many of its residents as well as a prudent decision to prioritize increasing cash during the downturn.
So far, Streitwise has been able to avoid taking this step, since the properties held in its 1st Streit Office REIT feature high-quality corporate tenants including the corporate headquarters for Panera Bread and Allied Solutions, among many others.
Well-built for the long term
In addition to being in the right asset class for this unprecedented environment, management's prudent use of debt is also a key reason Streitwise's 1st Streit Office REIT is in a good position. The REIT carries a loan-to-cost ratio below 60%, meaning less of its cash flow must service debt payments. That gives it a wider margin of safety than other commercial real estate investments and was a key reason it was one of our top-rated crowdfunded real estate platforms.
Moreover, the intention is to further pay down the debt on its properties, and continue long-term ownership of them, while other crowdfunded REITs regularly buy and sell new properties. For long-term-focused real estate investors, Streitwise remains a top choice.