• Salesforce Tower, London
    Financed by Starwood Property Trust

  • Facts At A Glance

    53 Million Square Feet of Retail Assets Required

    Square Feet of
    Retail Assets Acquired

    143k Units of Apartments and Condos Acquired

    Units of Apartments and Condos Acquired

    65 Million Square Feet of Office Assets Acquired

    Office Assets Acquired

    50k Residential Lots Acquired 52k Residential Lots Acquired

    Residential Lots
    Acquired

    2.5k Hotels Acquired

    Hotels Acquired

  • 1 Hotel Central Park, New York
    Owned by Starwood Opportunity Fund VIII and Starwood Hospitality Fund II

  • The Shope at Willow Bend, Plano, TX
    Owned by Starwood Global Opportunity Fund X, managed by
    Starwood Retail Partners

  • Independence, Orlando, FL
    Owned by Starwood Opportunity Fund VIII,
    managed by Starwood Land Ventures

  • The Visionaire, New York
    Owned by Starwood Opportunity Fund VII

Throughout our history, we have consistently sought to acquire well-located real estate assets at a discount to replacement cost that have the potential to benefit from improving fundamentals. In so doing, we have invested in a wide range of  distressed securities and non-performing loans, single assets, portfolios of assets and companies. Following are some notable transactions from our more than decades in the business.

Private Transactions

Corus Bank

In October 2009, a consortium led by Starwood Capital acquired a $4.5 billion face-value distressed loan portfolio owned by the former Corus Bank. The $2.7 billion purchase of the portfolio from the Federal Deposit Insurance Corp. was one of the government’s largest distressed debt transactions during the Great Recession. The portfolio at acquisition consisted of more than 100 loans and owned real estate assets linked to high-quality condominiums, multifamily housing, office properties and land. Our strategy included “reworking” more than 40 large, non-performing loan positions and creating a dedicated entity (ST Residential) to manage the 13-asset multifamily portfolio. The team subsequently created an innovative branded lifestyle message for the multifamily properties that allowed it to raise prices and rents while achieving healthy absorption rates, followed by a successful program of loan payoffs, condo sales and asset sales. In March 2015, the Firm sold the last major asset in the portfolio.

Now, as Starwood Capital focuses on managing the end of the life of this partnership, we team can look back on what has proven to be an extraordinary investment for investors and the U.S. government.

Regional Mall Portfolio

Starwood Capital’s growing mall portfolio is an example of the Firm’s ability to leverage in-house expertise to add value to its investments. In two separate transactions in June 2012 and November 2013, Starwood Capital funds purchased a total of 14 attractive malls from the Westfield Group. Due largely to a longtime relationship between Starwood Capital and Westfield senior executives, we were able to hand-pick many of these assets.

The overall portfolio has continued to grow under the leadership of Starwood Retail Partners, the wholly owned, fully integrated operating platform that we created to oversee our retail assets. The collection across multiple funds now comprises 30 properties totaling 28 million square feet of gross leasable area and over $6 billion of gross asset value. Starwood Retail Partners is actively pursuing a number of re-tenanting and re-merchandizing opportunities for the assets, and has created “refresh” plans to enhance the shopping experience for customers.

The Principal Hotel Company

In February 2013, Starwood Distressed Opportunity Fund IX, alongside a limited partner co-investment vehicle, acquired Principal Hayley Group and its extraordinary pan-U.K. collection of 22 grande-dame style hotels, as well as a London conference center. This purchase represented an opportunity to invest in an entire hotel company, including its management team, brands and technology platform. The platform expanded in January 2014 through the acquisition of Four Pillars Hotels—a portfolio of five hotels located in and around the historic city of Oxford. The portfolio grew further in March 2014 with the acquisition of De Vere Venues, which added 23 owned and leased hotels, as well as several conference centers in London.

After capitalizing on cost synergies, robust operating performance and positive market conditions post-acquisition, Starwood Capital announced a rebranding of its portfolio of U.K. hotels under the name of The Principal Hotel Company. The new brand comprises Principal—city-center hotels based in landmark building in exceptional locations, and De Vere—modern country estate hotels with mansion houses at their heart.  Following Starwood Capital’s investment in the portfolio of approximately £150 million, Principal will launch in November 2016 with a trio of properties—The Principal Manchester (formerly The Palace Hotel), The Principal Edinburgh George Street (formerly The George Hotel) and The Principal York (formerly The Royal York Hotel).

The distinctive heritage and resulting relationships between the properties and their surrounding communities are the cornerstones of the Principal brand. Each of the hotels has a story to tell—of its history, its design and architecture, its quirks and its characters, and its role in shaping the city in which it resides. These stories represent the antithesis of the mass-produced chain hotel, and provide Principal with a canvas on which to curate a unique sense of place. The Principal portfolio also includes Principal Partners—iconic hotels that will join the brand over the course of 2017, among them The Grand Central Hotel in Glasgow; The Hotel Russell in London, which is currently closed and is due to reopen in summer 2017 as The Principal London; and the former Martins Bank Building, which will reopen as The Principal Liverpool in early 2018.

The De Vere brand is scheduled to launch in spring/summer 2017, following an investment of more than £50 million.

LNR Property LLC

Starwood Capital has long demonstrated the ability to tackle complex investments that offer attractive risk/return potential. Such was the case when the Firm teamed up with affiliate Starwood Property Trust (NYSE: STWD) on the $1.05B acquisition of the largest special servicer in the U.S., LNR Property LLC, in April 2013.

While Starwood Property Trust‘s purchase of LNR greatly enhanced its expertise in the distressed marketplace and added Starwood Mortgage Capital, a commercial real estate conduit loan origination platform, Starwood Capital through an affiliated fund also acquired two important components. The first was LNR’s Commercial Property Group, a real estate portfolio consisting of 26 assets in nine states, concentrated in land suitable primarily for single and multifamily development. The second component was an interest in Auction.com, which sells owned real estate and loans on behalf of financial institutions, corporations and individual owners. In 2014, Google Capital invested $50 million in Auction.com and has committed to helping the company take advantage of its unique platform.

Starwood Capital continues to evaluate both the commercial mortgage-backed securities markets and LNR’s portfolio to identify situations where the team can provide potential solutions for troubled borrowers. LNR’s position as the largest special servicer in the United States—and the named special servicer on approximately 24% of all CMBS transactions in the industry, representing an unpaid principal balance of $101 billion—enables it to provide unique insights into specific investment opportunities, sectors and markets.In addition, LNR subsidiary Hatfield Phillips International, one of the largest commercial real estate loan servicers in Europe, provides important visibility into the continued untangling of the region’s distressed real estate loan inventory.

Select-Service Hotel Portfolio

In 2015, Starwood Capital took a major step in the Firm’s continuing expansion into the select-service space with Starwood Global Opportunity Fund X’s acquisition, alongside a limited partner co-investment vehicle, of TMI Hospitality, one of the largest owners, managers and developers of select-service hotels in the United States, with 184 operating hotels and more than a dozen in the development pipeline. This follows joint ventures that Starwood Capital has established across multiple recent funds that target select-service hotels with strong cash-on-cash yields that can be acquired at significant discounts to replacement cost. As a result, the Firm has assembled one of the largest collections of select-service hotels in the United States.

Throughout the portfolio, the Firm has enhanced the management of the hotels and implemented property improvement plans focused on enhancing guest-facing areas. Starwood Capital believes that these hotels should allow the Firm’s funds to participate in significant upside if the economy enters an inflationary cycle, due to the properties’ ability to pass on inflation through rate increases. This investment highlights Starwood Capital’s ability to assemble well-curated portfolios below replacement cost and increase value through the efforts of the Firm’s dedicated hotel asset management team.

1 Hotel & Homes South Beach

With the 2009 acquisition via SOF X and and a limited partner co-investment vehicle of Corus Bank’s loan portfolio, Starwood Capital became the second-largest condo owner in Miami. As a result, the team was intimately familiar with the city and its massive potential.  All that was needed was the right opportunity to capitalize upon—and the team found it with the Gansevoort, an unloved property blessed with a perfect location on South Beach.

In February 2012, SOF VIII and an LP co-investment vehicle purchased the fee-simple interest in property in a 50/50 joint venture with one of New York’s most successful private developers. After an approximately $250 million renovation, Starwood Capital celebrated the opening of the newly rebranded 1 Hotel South Beach in March 2015. The opening also marked the launch of 1 Hotels, a new lifestyle hotel brand that cultivates the best of eco-conscious design and sustainable architecture, together with extraordinary comfort and an unrivaled level of service.

The team has already seen remarkable demand for the property’s condos—amid a market that is red hot and growing hotter. Starwood Capital is thrilled that its bullish view on Miami has materialized, and is excited to have delivered what the team believes is one of the city’s (and country’s) premier hotel and condo destinations.

NAMA Loan Portfolio

In August 2013, SOF IX purchased—at a significant discount to par—an €809.4 million ($1.0 billion) non-performing loan portfolio from the National Asset Management Agency (NAMA), the Irish “bad bank.” Consisting of 18 loans secured by 39 Irish commercial properties, the portfolio was the first sale of Irish assets by NAMA. The pool—heavily concentrated in Dublin, Ireland’s largest and most liquid market—comprised retail, industrial and residential properties, offices, parking garages and land/development sites.

The transaction highlights our focus on the increasing number of distressed debt investment opportunities in Europe, and it positioned us to benefit from the recovering Irish real estate market in general, and Dublin in particular. Building on this relationship, in January 2015, Starwood Capital via SOF X purchased a portfolio of four extended-stay hotels and one residential complex in London following the completion of an administration and company voluntary arrangement process led by NAMA and Duff & Phelps.

Westin Hotels & Resorts

In 1993, Japanese construction company Aoki Corp. was under pressure from its lenders to shed non-core operations, including Westin Hotels & Resorts. The hotel company had been struggling, and a reputation for poor operating performance had prevented it from adding new management contracts. After extensive negotiations, funds managed by Starwood Capital acquired Westin in May 1995 for $537 million. The team quickly installed a new management team to execute a strategy of operational enhancements, brand marketing and growth.

As a result of these efforts, Westin saw its managed or franchised hotels increase from approximately 70 to more than 120, before Starwood Hotels & Resorts (NYSE: HOT) purchased the business for $1.6 billion in January 1998. This transaction served as an early example of the Firm’s skill in identifying undervalued assets and enhancing operations through its asset management expertise—and helped establish the Firm as a global leader in the hospitality space.

u.s. suburban office portfolio

In April 2015, SOF X purchased a 6.7 million square-foot, high-quality, welllocated suburban office portfolio in an off-market transaction for $1.125 billion. The vast majority of assets were located in the high-growth markets of Raleigh, Nashville and South Florida.

The portfolio at acquisition included 61 existing buildings and 57 acres of land, as well as a building under construction in Raleigh. The buildings were based in markets with minimal supply under construction, with the majority of that new construction pre-leased—thus greatly reducing the negative impact new supply might have on the portfolio. Moreover, these office markets are expected to continue experiencing strong rent growth, with projected job and population increases that are among the best in the nation. Starwood Capital has built a dedicated office asset management team that is positioning the portfolio’s assets to capitalize on strong cash flow and maximize profit by investing in high-return amenities, actively engaging tenants on early renewals and increasing rents to market levels.

The team has also taken advantage of opportunities to generate upside through early asset sales—including selling non-strategic properties for prices well above initial allocations.This investment demonstrated Starwood Capital’s ability to identify an attractive point in the cycle to enter markets (in this case, for suburban offices) that were well-positioned for growth.

starwood land ventures

Anticipating an opportunity that would emerge following the financial crisis, the Firm in 2008 began to selectively acquire both small and large assemblages of finished and semi-finished residential lots in some of the nation’s most distressed markets that the team nonetheless believed were positioned for recovery. To pursue this strategy, Starwood Capital created an affiliate, Starwood Land Ventures, which teamed up on an exclusive basis with best-in-class, local residential land experts in Arizona, California, Colorado and Florida.

Since its inception, Starwood Land Ventures on behalf of multiple funds has purchased nearly 20,000 lots at an average price of over $13,000 per lot—resulting in what the Firm believes may be the largest independent fee assemblage of finished and semi-finished lots in the United States since the Great Recession. Among its acquisitions, Starwood Land Ventures purchased the remaining 635 fully entitled lots in the gated community of Country Club East within the master-planned community of Lakewood Ranch in Sarasota, Florida—the top-selling master-planned community in the state at the time. In California, Starwood Land Ventures is developing residential land in supply-constrained submarkets with high demand—including Terramor, one of the largest land parcels to be developed into a new home community along the I-15 corridor, and Robinson Ridge, one of the last remaining spaces available for large single-family detached homes in Orange County.

To date, Starwood Land Ventures has generated significant profits by selling 62% of the lots at average pricing of more than $58,000 per lot—solidifying its position as one of the nation’s leading providers of residential sites to the homebuilding industry.

denver union station assemblage

In 2011, Starwood Capital via SOF VIII capitalized on the opportunity to form a joint venture with the master developer for the 50-acre Union Station project in Denver, Colorado—the largest transit-oriented development in the U.S. The Fim believed that Denver was poised for a resurgence, and that the Lower Downtown (LoDo) area in particular—which includes the Union Station neighborhood—was primed to emerge as the new city center. As part of the JV, SOF VIII’s partner contributed several undeveloped land parcels that were all located within steps of the historic Union Station, which has become Denver’s new transit hub.

The first building that the JV developed, One Union Station, was sold in 2014—and established a new high-water mark for Denver office pricing on a per-square-foot basis. The second, the Triangle building, was completed in August 2015, and is home to high-quality tenants including Liberty Global and WeWork. The third property, 16 Chestnut, broke ground in June2016, and has already signed up Davita Healthcare Partners, the leading providing of kidney services in America, as an anchor tenant. The building was sold to a core investment manager prior to the start of construction.

The Denver office market continues to thrive, with LoDo in particular becoming a destination of choice for Fortune 500 companies. The team is excited to see the market play out as expected in its original investment thesis.

150 west 34th street

In 2014, SOF IX acquired 150 West 34th Street, a 78K square foot retail building 100% leased to Old Navy. The Fund purchased the property—situated in the heart of New York City’s 34th Street retail corridor, between Sixth and Seventh avenues—from a seller that was determined to close quickly. Thus, the Starwood Capital team was able to showcase the ability to rapidly and thoroughly analyze and finalize what it viewed as a fantastic opportunity to acquire a prime retail asset—with an investment-grade tenant and valuable optionality through development rights—in one of NYC’s top shopping districts.

At acquisition, the 34th Street corridor was experiencing a major rejuvenation—some of its most prominent stores, such as the Macy’s and H&M flagships, were undergoing significant renovations. Due to the disparity in rents between 34th Street and the Times Square, Madison Avenue and Fifth Avenue shopping districts, the team believed that tenants would increasingly be attracted to this corridor. With Penn Station down the block, foot traffic averaged up to 12,000 pedestrians per hour at peak times—and the team knew the neighborhood was well-positioned to reap the additional benefits of Hudson Yards and other nearby development and improvement projects.

With market participants recognizing the increasing strength of the 34th Street retail corridor in New York, the team elected to realize those gains by selling 150 West 34th Street for significantly more than its purchase price—barely one year after SOF IX’s acquisition of the asset.

walker tower

With its Walker Tower investment, Starwood Capital was able to position itself to capitalize on the New York City luxury condo boom. In December 2010, the team negotiated a 50% interest in a 19-story condominium complex located at 212 West 18th Street, between 7th and 8th avenues, in New York City’s stylish Chelsea neighborhood. At the time of acquisition, the Firm’s outlook for high-end luxury development in the downtown Manhattan area was extremely positive, due to decreasing supply, a stable price environment, increasing sales volumes and limited new construction.

Originally built in 1929 for Bell Telephone Company, the property was designed by Ralph Thomas Walker—named “the architect of the century” by The New York Times. Walker Tower presented an exciting redevelopment opportunity, due to its 13’6” average ceiling heights, art deco architecture, space for residential terraces, unobstructed views of the Empire State Building, Hudson River, New York Harbor and both midtown and downtown, neighborhood amenities and existing development rights. The transformation of the asset into 47 high-end residential condominiums involved a gut renovation of the entire building, as well as the construction of four additional floors.

Starwood Capital’s in-house design staff, in collaboration with the Firm’s development partners, produced what we believed to be an extraordinary product. Clearly, the market agreed with the team’s assessment—extremely high demand allowed Walker Tower to sell out at an average of $3,750 per square foot. A full-floor penthouse unit in the building sold in January 2014 for $51 million, or nearly $8,400 per square foot—setting a new record for a downtown Manhattan condominium transaction.

 

 

Public Offerings

Starwood Property Trust

Amid the depths of the Great Recession, Starwood Capital recognized that traditional commercial lenders were withdrawing from the marketplace and a significant need had emerged for alternative commercial mortgage financings. In August 2009, Starwood Capital created Starwood Property Trust, Inc. (NYSE: STWD), a publicly traded real estate finance company focusing on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt investments. With an initial market capitalization of $950 million, Starwood Property Trust was, at the time of its IPO, the largest blind pool company ever created and traded on the NYSE.

In conjunction with Starwood Capital, Starwood Property Trust in April 2013 acquired LNR Property LLC and subsidiary LNR Partners LLC, the largest special servicer in the U.S., thus gaining significant expertise in the distressed marketplace while also adding substantial scale and sophistication to the company’s operations. LNR subsidiary Hatfield Philips International, one of the largest loan servicers in Europe, also helped position Starwood Property Trust to capitalize on the unwinding of European banks’ real estate lending portfolios. In addition, Starwood Property Trust in early 2014 spun off its single-family residential operations into a separate entity, Starwood Waypoint Residential Trust (NYSE: SWAY), that is listed alongside Starwood Property Trust on the NYSE—and is one of the largest publicly traded investors, owners and operators of single-family rental homes in the U.S.

The business has grown dramatically since inception, and Starwood Property Trust today is the nation’s largest commercial mortgage REIT by market capitalization. With total capital deployed since inception of more than $28 billion, Starwood Property Trust continues to solidify its position as one of the world’s leading non-bank real estate finance companies.

Starwood Hotels & Resorts Worldwide, Inc.

Starwood Capital is perhaps best known for creating and building Starwood Hotels & Resorts. This leading global hotel company has its origins in Starwood Capital’s initial investment in publicly traded Hotel Investors Trust (NYSE: HOT) in 1994. At that time, HOT had an equity market capitalization of just $8 million and needed an immediate recapitalization. Through a series of complex negotiations, Starwood Capital affiliates acquired a majority interest in HOT, and completed a restructuring and reorganization of the company. Between 1994 and 1998, Starwood Capital dramatically expanded the rebranded Starwood Hotels—highlighted by the acquisition of two major hotel companies, Westin Hotels & Resorts and ITT Sheraton. Following these transactions, Starwood Hotels in three short years had become the largest hotel company in the world, with more than 120,000 employees at its peak, 895 properties in 100 countries, and ownership of brands such as W Hotels, Westin, Sheraton, The St. Regis, Le Méridien and The Luxury Collection.

Barry Sternlicht became the Chairman and Chief Executive Officer of the renamed Starwood Hotels & Resorts in 2000. Mr. Sternlicht created W Hotels, generally regarded as the world’s most successful “boutique” brand, built St. Regis Hotels from a single hotel to a global brand, and is credited with industry innovations including the Westin Heavenly® Bed and line of related products and Starwood Preferred Guest, the industry’s first “no-blackout” frequent-stay program.

Equity Residential

At its inception in 1991, Starwood Capital was focused on the disarray in the real estate markets resulting from the S&L crisis of the late 1980s and early 1990s. Over approximately 18 months, the Firm acquired 7,000 multifamily units at a fraction of replacement cost through the purchase of equity and distressed debt from the Resolution Trust Corp., FDIC and troubled lending institutions. In assembling this portfolio, Starwood Capital focused on newer properties in fundamentally sound secondary markets, with the strategic view that the recovery would be both imminent and dramatic. In August 1993, the Starwood Capital funds contributed approximately 6,400 multifamily units to Sam Zell’s Equity Residential (NYSE: EQR) at its IPO. EQR went on to become the largest publicly traded apartment owner in the country, with Barry Sternlicht serving on its Board of Directors for several years.

This transaction marked the first of numerous investments in which the Firm created leading real estate platforms or companies in order to enhance value for its investors.

Starwood Waypoint Residential Trust

Consistent with Starwood Capital’s longstanding approach of investing capital at attractive return levels relative to risk, the investment team identified an opportunity to buy, renovate and lease a large assemblage of single-family homes across the United States. Leveraging the efforts of Starwood Capital, affiliate Starwood Property Trust (NYSE: STWD) constructed a portfolio of 7,200 single-family homes and distressed and nonperforming residential mortgage loans. The team built this portfolio using a network of local partners who managed the renovation and leasing of these homes and the resolution of the loans. Starwood Capital also used its real estate acumen to build scale in select geographic markets that the team believed had the greatest potential for long-term appreciation, and in which the team could buy homes at the largest discounts to replacement cost. The success of these efforts was reflected in the fact that the portfolio grew to almost $800 million, or 13% of Starwood Property Trust’s equity base. Once the team decided to spin off these assets, it scoured the country to find a best-in-class management team to build an industry-leading company. To that end, Starwood Capital acquired Waypoint Homes, a veteran of this newly institutional asset class. In 2014, Starwood Capital and Starwood Property Trust completed the spinoff of the single-family rental business and created Starwood Waypoint Residential Trust (NYSE: SWAY).

In 2016, Starwood Waypoint merged with Colony American Homes, bringing together two industry pioneers and creating a portfolio of over 30,000 homes. The combined company—for which Starwood Capital CEO Barry Sternlicht serves as Chairman—is today one of the largest publicly traded investors, owners and operators of single-family rental homes in the United States.

TRI Pointe Homes

By 2010, amid a rather grim macroeconomic climate, the Starwood Capital investment team believed that many of California’s housing markets had hit cyclical lows, and long-term demographics, household formation and population growth all implied a positive course ahead. Therefore, the team thought that a pure-play homebuilder focused on California would be extremely well-positioned in the market.

SOF VIII created a vertically integrated homebuilder focused on California, led by Doug Bauer, the former President and COO of William Lyon Homes. An opportunistic niche builder and land developer, TRI Pointe Homes’ approach focused on constructing single-family detached and attached homes, targeting entry-level and move-up buyers in proven, fast-growing markets. TRI Pointe Homes (NYSE: TPH) went public in 2013—the first IPO for a homebuilder in almost a decade. In 2014, TRI Pointe Homes combined its assets with Weyerhaeuser’s homebuilding subsidiary, WRECO, in a transformative transaction for the company—for which Starwood Capital CEO Barry Sternlicht serves as Chairman—that promised to accelerate the company’s growth.

With nearly 28,000 lots owned and controlled by year-end 2015, TRI Pointe Homes has grown to become one of the largest homebuilders in the United States. TRI Pointe Homes’ successful strategy and operations—evidenced by a rise in new orders, a lift in average pricing and an increase in the builder gross margin—should position the company for continued growth.

iStar Financial, Inc.

In the mid-1990s, Starwood Capital recognized that the abundance of real estate capital, led by the growing REIT sector, was driving up pricing on traditional asset classes, and thus shifted its acquisition focus to mezzanine lending. After executing more than $1 billion in financings within a four-year period, the Firm capitalized on its sizable, well-seasoned portfolio and took the business public in 1998 by creating Starwood Financial, Inc. (NYSE: SFI). The Firm contributed the assets to a small, public REIT that it controlled and provided a dedicated management team to the entity. Barry Sternlicht became Chairman of the Board and several other executives of the Firm assumed Board seats. Starwood Capital subsequently expanded the company by closing on more than $1.1 billion of new financing commitments and by merging with TriNet Corporate Realty Trust.

Subsequently renamed iStar Financial, Inc., the firm grew to be one of the largest publicly traded finance companies focused exclusively on commercial real estate, with an enterprise value of more than $16 billion at its peak.

Starwood European Real Estate Finance

Starwood Capital has identified financing market dislocations twice in the last 19 years, and each time created a substantial lending platform–iStar in 1998 and Starwood Property Trust in 2009. Believing that another such dislocation had emerged in the European lending market, the Firm in 2012 created Starwood European Real Estate Finance (LSE: SWEF).

Starwood European Real Estate Finance originates, executes and services commercial real estate loans for institutional-quality investors throughout Europe. The company built a diversified portfolio of debt investments, collateralized by assets that has included the historic Claridge’s, Connaught and Berkeley hotels in London, the Salesforce Tower and Centre Point office buildings in London, the Battersea Place senior assisted living facility in London, a Finnish retail platform, and Dutch and Danish light industrial assets.

Leveraging the comprehensive real estate expertise of its investment manager and a flexible investment strategy, Starwood European Real Estate Finance is well-positioned to address the changing dynamics of the European financing markets. This investment represents an example of Starwood Capital’s longtime focus on businesses with strong potential returns, diversification benefits and significant downside protection.

Privatizations

Société du Louvre

In December 2005, Starwood Capital funds completed the $3.2 billion acquisition of Groupe Taittinger and Société du Louvre (SDL), a family-controlled French conglomerate. At acquisition, SDL’s assets included one of Europe’s largest hotel networks—a unique collection of 15 luxury hotels, the most famous of which was the Hôtel de Crillon in Paris, and more than 800 budget hotels under three brands. SDL also owned several luxury goods businesses, including famed champagne producer Taittinger, iconic crystal maker Baccarat and Annick Goutal perfumes.

The Firm’s  track record with this complex investment includes a number of milestones: a revamp and expansion of the Louvre Hotels budget business that spurred dramatic market share gains, and eventually led to the sale of the business to China’s Jin Jiang International Holdings Co., Ltd.; the sale of the Taitttinger Champagne and Annick Goutal businesses; the sale of a 22% stake in Baccarat and an enhancement of the brand in conjunction with its 250-year anniversary that included the launch in March 2015 of the ultra-luxury Baccarat Hotel & Residences New York; the execution of a sale-leaseback transaction for 32 budget hotels in France at an attractive yield; and the careful disposition of the portfolio’s luxury hotels at compelling prices.

This investment displays many of the hallmarks of Starwood Capital—creativity, agility and tenacity—and enabled the Firm to leverage its expertise in the hospitality industry, as well as its branding and operational savvy, to maximize the value of the portfolio.

Eco-Conscious Investment

Starwood Capital doesn’t just look at a real estate asset as it is today—the Firm sees it as it could be. This idea extends to the Firm’s approach to environmentally responsible investing as well. Instead of accepting the status quo that says conservation is a secondary concern when managing property, Starwood Capital is committed to setting a new standard for the private equity industry.

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. All 1 Hotels are designed to meet the stringent requirements of LEED certification, the ratings program administered by the U.S. Green Building Council that is the standard for measuring building sustainability. Each property in the 1 Hotels portfolio is distinguished by open spaces bathed in natural light, food made with the freshest organic ingredients, and construction and furnishing materials that are reclaimed or repurposed whenever possible. The daily operation of each 1 Hotel is carefully orchestrated to minimize the property’s carbon footprint by leveraging local resources, conserving nonrenewable materials, minimizing plastic and paper consumption, and reducing landfill waste.

1 Hotels launched in March 2015 with the opening of 1 Hotel & Homes South Beach in Miami, Florida. The 1 Hotel portfolio expanded further in August 2015, with the opening of 1 Hotel Central Park in New York City. In 2016, 1 Hotels’ first all-new, from-the-ground-up property will open at an iconic waterfront site in Brooklyn, New York. Starwood Capital’s commitment to sustainable hotel operations extends to a number of other hospitality properties around the world—including Hawaii’s Andaz Maui at Wailea Resort (honored with LEED Silver certification), the Hilton Garden Inn Washington, D.C./Georgetown Area (LEED Silver certification) the Sea Island Resort (with its ambitious turtle nesting program) and Viceroy Anguilla in the Caribbean.

Amid its steady growth into one of the largest shopping mall enterprises in the United States, Starwood Retail Partners has introduced a number of eco-friendly practices across its portfolio—including recycling over 6,000 tons of debris in 2015. Through such efforts, the team has demonstrated that its operational expertise extends beyond re-merchandizing, re-tenanting and “refresh” programs for its assets. It has also proved that it can significantly reduce the environmental impact of the many retail centers on its platform—and, like Starwood Capital, set a new standard for its industry.

Through affiliate Starwood Land Ventures—one of the leading providers of residential sites to the U.S. homebuilding industry—as well as land investments across multiple funds, Starwood Capital has taken a hands-on approach to preserving irreplaceable habitats and minimizing the impact of development on fragile ecosystems. These efforts demonstrate that, even as Starwood Capital develops land, the Firm can help preserve it as well.

As both corporations and individuals place a greater emphasis on the health of the environment in their decisionmaking processes, clean sources of energy have seen a surge in interest. Starwood Capital’s affiliate, Starwood Energy Group, has emerged as a leader in the industry’s push toward greener energy production. Since its founding in 2005, the team has invested in clean energy projects across North America—including wind, solar and other renewable energy facilities—totaling 1,450 megawatts.

Starwood Capital’s eco-conscious approach to investing also includes office and residential properties around the world. Over the past 25 years, a number of assets owned by the Firm and its affiliates have garnered recognition for their environmentally friendly design or operations, including:

  • The Visionnaire, New York City: Manhattan’s first Platinum LEED-certified condominium project.
  • Vertigo Office Buildings, Luxembourg: Luxembourg’s first HQE (Haute Qualité Environnementale) certified development.
  • Quattro Business Park, Krakow, Poland: BREEAM Very Good certification for three of the buildings and BREEAM Excellent certification for the fourth.
  • One Union Station, Denver, Colorado: LEED Gold certification.
  • Jefferson MarketPlace, Washington, D.C.: LEED Silver certification.
  • Jefferson Westshore, Tampa, Florida: National Green Building Standard designation.
  • Katowice Business Point, Katowice, Poland: BREEAM Very Good certification.
  • T-Mobile Office Park, Warsaw: Poland’s first building to earn BREEAM Excellent certification.
  • Lopuszanska Business Park, Warsaw: BREEAM Very Good certification.
  • Block 300, Portland, Oregon: LEED Gold certification.
  • Beagle House, London: Expected to receive BREEAM Excellent certification upon its completion.

Starwood Capital has shown time and again that environmentally conscious investing can also be profitable investing. Whether employed for hotels, malls, housing, offices, condos or energy infrastructure, the Firm believes that sustainable design and practices often result in more efficient processes that reduce expenses and enhance the value of real estate assets. Such properties also benefit from the growing demand from eco-mindful tenants, buyers and investors. For example, sales prices for condos at 1 Hotel & Homes South Beach have far exceeded brokers’ expectations to date, while a buyer signed a $10.5 million contract for a penthouse unit at the Pierhouse adjacent to 1 Hotel Brooklyn Bridge—a record-setting price for a Brooklyn condo.

As an industry leader, Starwood Capital embraces the opportunity to serve as stewards of the environment. The Firm is just as serious about serving as stewards of investors’ hard-earned capital. Across its portfolio, Starwood Capital has demonstrated that these critical responsibilities can go hand-in-hand.