Since founding Starwood Capital during the depths of the savings & loan crisis with the purchase of non-performing loans and real estate assets from the Resolution Trust Corp., Chairman and CEO Barry Sternlicht has overseen the Firm’s growth into a diversified investment company that today encompasses more than 2,200 employees and approximately 17,000 additional employees involved with a dozen portfolio operating companies. Including affiliated operations, the Firm maintains offices in Greenwich, Atlanta, Chicago, Frankfurt, Hong Kong, London, Los Angeles, Miami, San Francisco and Washington, D.C.
Starwood Capital’s hallmark is to invest opportunistically, moving between asset classes, geographies and positions in the capital stack as the Firm perceives risk/return dynamics to be evolving. To execute this strategy, Starwood Capital has built up asset-class and geographic expertise in the Firm’s targeted markets.
Throughout its history, the Firm has created a number of market-leading platforms to enhance operational efficiencies and maximize the value of its investments. These platforms include:
In its pursuit of the most compelling opportunities globally, Starwood Capital has invested in more than 30 countries, ranging from the Americas to Europe to Asia. Highlighting Starwood Capital’s international commitment and ability to shift geographies to capitalize on market dislocations, the Firm made the strategic decision in 2011 to enhance the Firm’s longstanding presence in Europe—in anticipation of a prolonged recovery across the region—by relocating the Firm’s Global Head of Acquisitions to London. The London office, opened in 2003, now serves as the hub of a pan-European operation that has grown to comprise more than 150 employees and has been the source of an increasing portion of the Firm’s global acquisitions activity.
Reflecting the success of its investment activities, Starwood Capital and its professionals have received numerous industry accolades over the years. In 2015 alone, the Firm was honored by leading global private real estate publication PERE in the following categories:
Barry Sternlicht launches Starwood Capital
Starwood Opportunity Funds I and IA close at $52M
Starwood Capital funds contribute multifamily holdings to Equity Residential (NYSE: EQR)—which goes on to become the largest publicly traded apartment owner in the country, with Mr. Sternlicht serving on its Board of Directors
Starwood Opportunity Fund II closes at $102M
Starwood Capital funds acquire a majority of the distressed senior debt of Hotel Investors Trust, thus setting the stage for the Firm’s emergence as a global leader in the hospitality space
Starwood Mezzanine Investors closes at $220M
Starwood Capital creates Starwood Hotels & Resorts Worldwide (NYSE: HOT) and Mr. Sternlicht becomes Chairman and CEO
Starwood Capital funds purchase Westin Hotels & Resorts and begins a new growth phase for the business
Starwood Opportunity Fund IV closes at $830M
Starwood Capital creates Starwood Financial, subsequently renamed iStar (NYSE: STAR), which becomes one of the largest publicly traded real estate finance companies in the U.S.
Starwood Hotels & Resorts Worldwide completes the $14B acquisition of ITT Sheraton, making the company the largest hotel operator in the world
First W Hotel opens in New York
Starwood Opportunity Fund V closes at $516M
A Starwood Capital fund completes the Firm’s first international investment, purchasing the distressed loans of condominiums in Bangkok
Starwood Hotels & Resorts Worldwide is added to the S&P 500 Index
Starwood Opportunity Fund VI closes at $567M
A Starwood Capital fund takes National Golf Properties (NYSE: TEE) private
Starwood Capital opens an office in London—marking the beginning of the Firm’s significant expansion of its international operations
Starwood Global Opportunity Fund VII closes at $1.475B
Starwood Capital Hospitality Fund I closes at $900M
Starwood Capital funds complete the $3.2B acquisition of Groupe Taittinger and Société du Louvre
A Starwood Capital fund acquires Mammoth Mountain, one of the top-ranked ski resorts in the U.S.
A Starwood Capital fund acquires BR Guest Hospitality, owner and operator of some of New York’s most successful restaurant brands
The Visionaire, developed by Starwood Capital, becomes Manhattan’s first Platinum LEED-certified condominium project
Starwood Energy Infrastructure Fund I closes at $433M
Starwood Capital launches Starwood Land Ventures, which goes on to become one of the leading providers of residential sites to the U.S. homebuilding industry
Starwood Debt Fund II closes at $378M
Starwood Capital creates Starwood Property Trust (NYSE: STWD), a commercial mortgage REIT that is the largest blind pool company ever listed on the NYSE
Starwood Capital funds acquire Corus Bank’s $4.5B face-value loan portfolio from the FDIC in one of the government’s largest distressed debt transactions during the Great Recession
A Starwood Capital fund purchases a property in New York’s Chelsea neighborhood that, when redeveloped as the Walker Tower, sets a new record price for a downtown Manhattan condo sale
Starwood Global Opportunity Fund VIII closes at $1.83B
Starwood Capital funds acquire The Viceroy Resort—making the Firm the largest employer on the island of Anguilla
Starwood Capital Global Hospitality Fund II closes at $965M
Starwood Capital funds acquire two prime Manhattan assets that the Firm will develop into flagship properties for its 1 Hotels and Baccarat Hotels & Resorts brands
A Starwood Energy Group fund completes the Starwood SSM Project—one of the largest solar power plants in Canada
A Starwood Capital fund makes the first in a series of acquisitions that will establish the Firm as one of the largest operators of select-service and extended-stay hotels in the U.S.
A Starwood Energy Group fund finances the Gainesville (FL) Renewable Energy Center—one of North America’s largest-ever biomass projects
Starwood Capital funds acquire Principal Hayley, which the Firm subsequently merges with Four Pillars and De Vere Ventures to create a leading U.K. hotel platform
A Starwood Capital fund and Starwood Property Trust acquire LNR Property LLC (along with subsidiary Hatfield Philips International) for $1.05B, thus expanding the Firm’s distressed real estate expertise
Starwood Capital portfolio company TRI Pointe Homes (NYSE: TPH) goes public and is later combined with a Weyerhaeuser subsidiary to create one of the largest homebuilders in the United States
Starwood Distressed Opportunity Fund IX closes at $4.2B
Starwood Energy Infrastructure Fund II closes at $983M
Starwood Waypoint Residential Trust (NYSE: SWAY), one of the largest owners of single-family rental homes in the U.S., goes public
Starwood Capital portfolio company Opus Bank (NASDAQ: OPB), a leading regional real estate lender, goes public
A Starwood Capital fund acquires a diverse portfolio of assets in Sweden and Norway for $1.4B—the largest property transaction in Scandinavia for the year
Starwood Capital funds acquire TMI Hospitality, one of the largest owners, managers and developers of select-service hotels in the U.S.
Starwood Capital launches Baccarat Hotels & Resorts brand with the opening of its flagship property in Manhattan
Starwood Capital launches 1 Hotels brand with opening of its South Beach property in Miami
Starwood Global Opportunity Fund (SOF X) closes at $5.6B—the Firm’s largest fund to date
Starwood Capital funds acquire a portfolio of apartments in the United States from Equity Residential in a transaction valued at $5.4B—the largest non-hotel purchase in the Firm’s history.
Starwood Capital considers opportunistic real estate investing to be defined by minimizing downside risk and maximizing upside. In executing this strategy, the Firm’s seasoned team pursues global investment opportunities across all real estate asset classes and positions in the capital stack that offer compelling risk/return propositions. For example, Starwood Capital has been one of the most prolific investors in distressed debt since the global financial crisis, while acquiring cash-flowing office, residential, industrial, retail and hotel assets at discounts to replacement cost. The Firm has also successfully built platform strategies in asset classes such as residential land, retail malls and select-service hotels. Starwood Capital has raised 15 opportunistic real estate funds to date, with the most recent (Starwood Global Opportunity Fund X), attracting $5.6 billion of committed capital—the largest fund in the Firm’s history.
With total capital deployed since inception of over $28 billion, Starwood Property Trust (NYSE: STWD) is the largest commercial mortgage real estate investment trust in the U.S. Externally managed by Starwood Capital, Starwood Property Trust focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt investments. Starwood European Real Estate Finance Ltd. (LSE: SWEF), also externally managed by Starwood Capital, pursues similar investment objectives to Starwood Property Trust, with a geographic focus on Europe.
Starwood Capital, through Starwood Property Trust’s 2013 acquisition of LNR Property LLC, also operates as a special loan servicer in the U.S. and a primary and special loan servicer in Europe (through LNR’s subsidiary, Hatfield Philips International), and has expanded its product offerings to include fixed-rate and conduit loans. LNR provides Starwood Capital with unique insights into the distressed debt market, as it is the named special servicer on 24% on all CMBS transactions in the industry representing an unpaid principal balance of $101 billion. In Europe, Hatfield Philips has been the active servicer on more than £75 billion and the named special servicer on over £40 billion of loans since 1997.
Formed in 2012 to acquire, redevelop, lease, manage and operate the retail centers in Starwood Capital’s portfolio, Starwood Retail Partners has grown to become one of the largest mall enterprises in the United States. Starwood Retail Partners seeks to capitalize on opportunities in the rapidly changing retail landscape through a unique combination of talent, experience and execution capabilities in the regional mall, lifestyle, street retail and power center sectors. Through a variety of co-investments, joint-venture partnerships, stand-alone transactions and a closed-end core-plus fund, Starwood Retail Partners currently manages a portfolio of 30 properties across the United States, comprising 28 million square feet of gross leasable area and over $6 billion in value. With approximately 370 employees, the organization brings hands-on experience in management, leasing and redevelopment to each of its investments.
SH Group is a hotel brand management company owned by a fund sponsored by Starwood Capital that provides the Firm with significant proprietary investment opportunities and helps enhance the performance of fund hotel investments—including assisting Starwood Capital’s in-house design and hotel operations experts. Leveraging its marketing, design, operational and technological expertise, SH Group is the force behind some of the most groundbreaking and dynamic hotel brands in the world, including:
In January 2013, Starwood Capital established TRI Pointe Homes (NYSE: TPH), a West Coast homebuilder that merged with Weyerhaeuser’s homebuilding business in July 2014 to create one of the largest homebuilders in the U.S. TRI Pointe Homes provides Starwood Capital with a unique perspective on the U.S. residential markets, while Starwood Land Ventures, one the nation’s leading providers of residential sites to the homebuilding industry, offers additional insights into land valuation trends in the U.S. and their resulting impact on residential property values.
Starwood Energy Group specializes in energy infrastructure investments, with a focus on the natural gas and renewable power generation and transmission sectors. Through its general opportunity funds, Starwood Energy Infrastructure Fund I and II, and other affiliated investment vehicles, Starwood Energy Group manages total equity commitments of approximately $2.3 billion, and has executed transactions totaling more than $5 billion in enterprise value. By leveraging its extensive operations, development, construction, acquisition and financing expertise, the team is well-positioned to capitalize on opportunities emerging in this rapidly evolving industry.
Starwood Oil & Gas invests in conventional and unconventional oil & gas assets in North America. In 2013, the group made a $35 million investment in Northeast Natural Energy to fund the Charleston, WV-based company’s acreage acquisition and development program in one of the most prolific areas of the Marcellus Shale. In 2015, the group led a $110 million investment in EagleRidge Energy, a Dallas-based oil & gas producer focused on one of the lowest-cost natural gas shale plays in Texas. Leveraging its industry knowledge and extensive transactional experience, Starwood Oil & Gas is well-positioned to capitalize on the dramatic transformation of the energy sector.
Starwood Capital has 25 years of experience covering virtually every real estate asset class. The Firm has acquired approximately $59 billion of opportunistic real estate assets since inception, generating strong returns throughout that time. The Firm also operates the largest commercial mortgage REIT in the United States—Starwood Property Trust (NYSE: STWD), which has deployed over $28 billion in capital since inception.
A hallmark of Starwood Capital is the ability to pursue a wide variety of investment opportunities as they emerge—moving from asset class to asset class, shifting geographies from the U.S. to international markets and changing positions in the capital stack as the team perceives risk/return dynamics to be evolving.
As one of the largest institutional real estate investors in the world, Starwood Capital benefits from a worldwide sourcing engine—creating a robust deal flow, and accessing the majority of transactions on an off-market basis. In fact, over 90% of SOF X, SOF IX and SOF VIII’s investments were sourced off-market or via small auctions, including all 14 of SOF X’s European investments to date. The Firm also boasts a history of extraordinary creativity that extends to its innovative transaction structuring and execution capabilities.
The Firm has broad real estate operating experience, with asset management organized into dedicated teams by specialty. The Firm has created a number of platforms to enhance operational efficiencies and maximize the value of underlying assets. In addition, our in-house loan workout expertise gives us the ability to manage large portfolios of non-performing loans.
Starwood Capital’s capital markets expertise is a core competency that the Firm believes sets it apart from more traditional real estate investors. The team constantly evaluates real estate in relation to the capital markets in order to take advantage of pricing inefficiencies, and arbitrage between the public and private markets. When the public markets are willing to pay more for assets or platforms than could be generated from longer-term holds or individual asset sales, Starwood Capital has completed a number of successful public market executions, including:
On the debt side, the Firm’s skilled in-house capital markets team has closed transactions totaling approximately $52 billion since January 2010. The team’s expertise and global network of lending relationships has often allowed it to obtain best-in-market terms for investors, while using brokers only sparingly (less than 15% of the time).
The expertise developed through Starwood Capital’s symbiotic business lines enhances the team’s judgment throughout the underwriting process. These investment platforms provide t critical bottom-up intelligence that helps set the agenda for the Firm’s investment strategy:
Starwood Capital’s track record as a global investor is well-established. Beginning with the purchase of distressed condominium loans in Bangkok in 1999, the Firm’s international investments have steadily grown to encompass more than 30 countries around the world. In Europe alone, Starwood Capital has acquired more than $15.6 billion of assets in over 50 transactions since 1999. To provide on-the-ground support for international investment opportunities as they develop, the Firm has established a number of offices around the world. For example, the Firm opened a London office in 2003 that now serves as the hub of a pan-European operation comprising nearly 150 employees. Today, Starwood Capital and its affiliates operate 10 offices worldwide. This expansive network allows the Firm to efficiently evaluate the most compelling risk/return opportunities across the globe.
Starwood Capital was founded during the savings & loan crisis in the early 1990s, when the Firm acquired real estate holdings from the Resolution Trust Corp. The Firm has since capitalized on numerous opportunities to purchase distressed assets at deep discounts. Across its last three funds, the Firm has acquired $10.4 billion of unpaid principal balance NPLs, partially sourced by engaging domestic money center and regional banks, and forming strategic partnerships with the National Asset Management Agency (Ireland’s “bad bank”) and the FDIC (via the Corus Bank investment) to purchase some of their NPL pools, as well as purchasing a pool from Bankia (Spain’s amalgamation of seven troubled local banks). Starwood Capital also benefits from the distressed real estate expertise of affiliates LNR Property LLC and Hatfield Philips International, two of the largest special loan servicers.
The senior team at Starwood Capital has worked together for an average of 17 years, and has an average of 28 years of industry experience—across all real estate asset classes and stages of the investment cycle.
Starwood Capital’s disciplined investment approach has enabled the Firm to consistently deliver strong performance across its funds, with the Firm’s first seven funds 100% liquidated.
The Firm continues to set a new standard for the private equity industry in environmentally responsible investment and development, across all real estate asset classes. Nowhere is this commitment more apparent than 1 Hotels. Operated by Starwood Capital affiliate SH Group, this luxury lifestyle brand represents hospitality with a purpose: To celebrate nature while encouraging sophisticated travelers to live well, do better and connect with the world around them.
Starwood Capital believes that it possesses an expertise in the design of real estate assets that is unsurpassed in the private equity industry. This sensibility starts at the top: CEO Barry Sternlicht is a member of the Interior Design Hall of Fame, and the Firm’s Head of Design was recently inducted into the Hospitality Design Platinum Circle. A number of Starwood Capital’s assets have been acclaimed for their aesthetics, which ultimately help drive value for the Firm’s investors.
Starwood Capital occupies what it believes is a distinct niche in the market: Nimble enough to target transactions of $50–125 million, yet large enough to capitalize on billion-dollar investment opportunities around the world by utilizing co-investment funds. For its sweet spot of midsized transactions, Starwood Capital believes that the Firm’s reputation, sophistication, speed, access to capital and ability to execute provide the Firm with a competitive advantage over smaller, more regional firms. On larger transactions, the Firm’s proven ability to conduct detailed due diligence using a vast network of resources and relationships results in an in-depth understanding of potential investments that few investors can match in a cost-efficient manner.
Target markets with high barriers to entry and little to no competitive supply planned or under construction. Since the economic recovery has generally been slow and steady, Starwood Capital has not seen the type of aggressive supply that would typically result from the recent rent growth and strength of the markets.
Seek to get ahead of capital flows in areas where economic growth is projected to drive tenant demand but new supply is not yet on the horizon. The Starwood Capital team has found that capital flows often influence asset valuations as much as—or more than—the impact of local market supply and demand trends. Once these target markets are identified, the team works on the “micro” side to pinpoint opportunities for asymmetrical return potential through value-add asset management.
Purchase—at favorable prices—fundamentally sound assets that have previously lacked capital, attention or effective management. Buying below replacement cost offers a margin of safety, typically ensuring that no new construction/ competition will be completed until values rise to justify new product. Starwood Capital’s recent transactions demonstrate that opportunities continue to arise to acquire assets at discounted prices.
Seek to use proper leverage—in amount and duration—to reflect the stability of each asset’s cash flow. In the current market, Starwood Capital can typically buy property at yields in excess of the cost of debt and generate strong cash-on-cash yields during the hold period. Positive leverage allows the investment team to be patient for a recovery, lessening the reliance on the residual value to achieve strong returns. In most cases, Starwood Capital can secure debt longer than the expected hold period—thus creating a potential asset upon exit if interest rates rise.
Actively manage concentrations of fund capital by diversifying exposures across risk profiles, geographic areas, asset classes and positions in the capital structure.
Acquire undermanaged or undercapitalized assets that the Starwood Capital team can stabilize and refurbish, and implement a dynamic asset management plan in order to position each investment for sale at the maximum price. In appropriate cases, the Firm can create a growth platform through the acquisition of complementary assets and/or portfolios.
Seek to enhance returns in both cyclical downturns and upswings by maintaining a disciplined approach to assets and their value. For example, prior to the market crash in 2008, Starwood Capital minimized its acquisitions and maximized dispositions of assets—whereas in subsequent years, the Firm shifted its focus toward a higher volume of acquisitions. By the same token, the Firm took advantage of a number of distressed investment opportunities in the wake of the Great Recession but shifted toward more defensive asset classes in recent years.
Design optimal exit strategies that can generate maximum asset value, with options including an individual asset sale, portfolio sale, operating company sale or public market execution—all of which Starwood Capital has extensive experience in executing.
Treat Starwood Capital investment partners’ capital as the Firm’s own—because a meaningful portion of it is the Firm’s own. Starwood Capital’s partners invest alongside its LPs in every transaction that they sponsor. Starwood Capital has never taken fund transaction fees—believing instead that the Firm should profit only after its investors receive a full return of their capital plus an attractive preferred return.