Facts At A Glance

At a Glance

Starwood Capital Group is a 27-year-old private investment firm with:

• A primary focus on global real estate.
• Assets under management in excess of $60 billion.
• Approximately 4,000 employees in 13 offices worldwide.
• A seasoned, stable executive committee that has worked together an average of 24 years and possesses an average of 32 years of industry experience.
• The investment flexibility to shift between real estate asset classes, geographies and positions in the capital stack as the Firm perceives risk-reward dynamics to be evolving.
• Extensive public markets expertise, having guided IPOs for eight leading companies.

Firm

Starwood Capital Group is a private investment firm with a primary focus on global real estate. Since its inception in 1991, the Firm has raised $45 billion of equity capital and currently has in excess of $60 billion of assets under management. Over the past 27 years, Starwood Capital has acquired $97 billion of assets, including properties within virtually every major real estate asset class.

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 approximately 4,000 employees. Including affiliated operations, the Firm maintains offices in Miami (Headquarters), Arlington, Atlanta, Chicago, Dallas, Greenwich, Los Angeles, San Francisco, Washington, D.C., and affiliated offices in Amsterdam, Hong Kong, London and Luxembourg.

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:

• One of the world’s largest public hotel companies—Starwood Hotels & Resorts (formerly NYSE: HOT, since merged with Marriott Hotels).
• Two of the biggest commercial mortgage finance companies in the United States—Starwood Property Trust (NYSE: STWD) and iStar (NYSE: STAR).
• One of the largest collections of multifamily apartments in the United States.
• One of the largest portfolios of select-service hotels in the United States.
• One of the largest homebuilders in the United States—TRI Pointe Homes (NYSE: TPH).
• One of the leading regional mall operators in the United States—Starwood Retail Partners.
• One of the largest publicly traded owners and operators of single-family rental homes in the United States—Starwood Waypoint Homes (NYSE: SFR; since merged with Invitation Homes — NYSE: INVH).
• One of the leading providers of residential sites to the U.S. homebuilding industry (Starwood Land Ventures).
• An innovative hotel management company, SH Group, that is introducing the 1 Hotels and Baccarat Hotels & Resorts brands to the market.
• One of the United Kingdom’s leading hotel operators—Principal Hotel Company.

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 its longstanding presence in Europe in anticipation of a prolonged recovery across the region.

Reflecting the success of its investment activities, Starwood Capital and its professionals have received numerous industry accolades over the years. Leading global private real estate publication PERE recognized Starwood Capital’s strengths in 2016 by giving Barry Sternlicht their inaugural Lifetime Achievement Award. Most recently, Starwood Capital was awarded with numerous 2017 honors, including:

• Global Firm of the Year.
• Global Capital Raise of the Year.
• North American Firm of the Year.
• North American Industry Figure of the Year.
• North American Deal of the Year.

History

Business Lines

Starwood Capital has been organized into complementary business lines that feature executive sponsorship and dedicated teams of professionals, supported by the Firm’s general resources in acquisitions, asset management, finance, investor relations, accounting, tax and legal. 

Real Estate Businesses

Global Opportunistic Real Estate

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 XI), attracting $7.56 billion of committed capital.

Performing Real Estate Debt

With total capital deployed since inception of more than $41 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.

Loan Servicing

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 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 approximately 20% of all transactions in the CMBS universe. In Europe, Starwood Property Trust’s non-controlling minority interest in Situs—which acquired LNR subsidiary Hatfield Philips International in 2016—allows Starwood Capital to benefit from access to a market-leading primary and special servicing platform.

Hotel Brand Management

SH Group is a hotel brand management company with more than 1,300 employees 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:

• 1 Hotels
  As a luxury lifestyle hotel brand inspired by nature, 1 Hotels cultivates the best of eco-conscious design and sustainable architecture, together with extraordinary comfort and an unrivalled level of service. 1 Hotels, which launched in 2015 with the opening of exclusive properties in Miami’s South Beach and Manhattan, followed by Brooklyn in 2017, was developed with the simple idea that those who travel the world also care about it. 1 Hotels upholds this vision by channeling nature through design, culinary partnerships, connecting with the local community and taking small steps to make a big difference.
• Baccarat Hotels & Resorts
  Drawing upon the 250-year history of the iconic French crystal maker, Baccarat Hotels & Resorts delivers a distinctive, personalized experience in the world’s most illustrious locales. Baccarat Hotels & Resorts launched in March 2015 with the opening of its flagship property in New York City. Distinguished by a singular sense of glamour and celebration, as well as a groundbreaking vision of modern luxury, Baccarat Hotels & Resorts sets a new precedent for the ultimate lifestyle experience—reimagining excellence through impeccable service and inspired artistry.

Multifamily

In 2017 Starwood acquired a multifamily management company. Starwood currently owns ~74,000 units providing the Firm with asset and market information not accessible to competitors, which helps with deal sourcing, underwriting and asset management. The team’s expertise also is valuable with revenue/expense management and marketing.

Retail

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, operates, and leases malls and lifestyle centers aggregating more than 28M sf. With over 350 employees, the organization brings hands-on experience in management, leasing and redevelopment to each of its investments.

Starwood Real Estate Income Trust

For more information about Starwood Real Estate Income Trust, please visit our website.

Energy Businesses

Energy Infrastructure

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 has raised over $3 billion of equity capital and has executed transactions totaling more than $7 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.

Oil & Gas

Starwood Oil & Gas invests in conventional and unconventional oil & gas assets in North America. In 2013, the group made a $36 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 team 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. In 2017, the group led a $50 million investment in Ventana Exploration and Production to acquire non-operating working interests and minerals in the prolific STACK and SCOOP basins in Central Oklahoma. Leveraging its industry knowledge and extensive transactional experience, Starwood Oil & Gas is well-positioned to capitalize on the dramatic transformation of the energy sector.

Edge

Starwood Capital occupies a unique position in global real estate investing, based on the following differentiators:

Deep Hands-On Real Estate Perspective

Starwood Capital has 27 years of experience covering virtually every real estate asset class. The Firm has acquired over $69 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 $41 billion in capital since inception.

Investment agility

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.

Scale and Creativity

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 80% of SOF X, SOF IX and SOF VIII’s investments were sourced off-market or via small auctions. The Firm also boasts a history of extraordinary creativity that extends to its innovative transaction structuring and execution capabilities.

Operational Expertise

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.

Capital Markets Skills

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:

• Starwood Property Trust (NYSE: STWD)
• Starwood Hotels & Resorts Worldwide (formerly NYSE: HOT, since merged with Marriott Hotels)
• Equity Residential (NYSE: EQR)
• Starwood Waypoint Homes (NYSE: SFR; since merged with Invitation Homes — NYSE: INVH)
• TRI Pointe Homes (NYSE: TPH)
• iStar Financial (NYSE: STAR)
• Starwood European Real Estate Finance (LSE: SWEF)
• Opus Bank (NASDAQ: OPB)

On the debt side, the Firm’s skilled in-house capital markets team has closed transactions totaling approximately $72 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).

An Information Edge

The expertise developed through Starwood Capital’s symbiotic business lines enhances the team’s judgment throughout the underwriting process. These investment platforms provide critical bottom-up intelligence that helps set the agenda for the Firm’s investment strategy:

• Starwood Property Trust: The largest commercial mortgage REIT in the United States by market capitalization, this affiliate helps Starwood Capital underwrite transactions by providing information on where loans are being executed in the market. The team also shares market data with the Firm to help create more accurate underwriting projections. As one of the largest loan special servicers in the United States (through affiliate LNR), as well as an investor in a leading debt advisory and loan servicing platform in Europe (through Starwood Property Trust’s non-controlling minority stake in Situs, which acquired LNR subsidiary Hatfield Philips International in 2016), the team supplies Starwood Capital with market information on both regions, as well as provides appropriate insight into troubled real estate projects.
• Starwood Multifamily Portfolio: With approximately 74,000 units under management, Starwood Capital is not only one of the largest apartment owners in the United States, but also among the largest within a number of select markets. The Firm is, for example, one of the largest institutional owners in Orlando, South Florida and Denver. This critical mass in targeted markets provides the Firm with information on asset performance that other investors simply do not possess—and helped give the team a decisive edge in the case of the acquisition in January 2016 of 23,262 garden-style units in 72 communities across the United States, as the Firm already owned assets in 95% of the markets represented in the transaction.
• SH Group: Starwood Capital’s hotel brand management team brings operational expertise in the areas of revenue management, marketing, food & beverage, and systems and cost management to the hotel underwriting and asset management teams.
• Starwood Retail Partners: Starwood Capital’s team of retail experts gives the Firm an edge in evaluating malls, power centers and lifestyle centers. The team has built strong relationships with tenants and can provide accurate operating metrics to help fine-tune asset cash flow projections.

Global Reach

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. In Europe alone, Starwood Capital has acquired more than $19 billion of assets in over 65 transactions since 1999. Today, Starwood Capital and its affiliates operate 13 offices worldwide. This expansive network allows the Firm to efficiently evaluate the most compelling risk/return opportunities across the globe.

Distressed Investing in Our DNA

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 over $10 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.

Seasoned, Stable Management Team

The executive committee at Starwood Capital has worked together for an average of 24 years, and has an average of 32 years of industry experience—across all real estate asset classes and stages of the investment cycle.

Flexible investment sizing

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.

Strong Risk-Adjusted Performance

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.

A History of Record-Setting Value Creation

Starwood Capital’s opportunistic real estate program is distinguished by the Firm’s proven ability to develop creative strategies to add value throughout the investment process—enabling the most advantageous exit. The success of this approach is underscored by the Firm’s sale of 14 assets in 11 different cities since 2010 that have set records for:

• A Paris hotel (Hôtel de Crillon)
• A downtown Manhattan condo (Walker Tower)
• A Denver office building (One Union Station and The Triangle Building)
• A Brooklyn condo (Pierhouse at Brooklyn Bridge Park)
• An East London hotel (Ace Hotel London Shoreditch)
• A North American hotel (Baccarat Hotel New York)
• A Portland office property (Block 300)
• A Vancouver hotel (Westin Bayshore)
• A select-service hotel in D.C. (Hilton Garden Inn Washington, D.C./Georgetown)
• A North Carolina asset (One Wells Fargo Center)
• Land in Denver (16 Chesnut)
• A Czech Republic office transaction (The Park)
• A Broward County, FL hotel (Margaritaville Hollywood Beach Resort)
• A Manchester hotel (Principal Manchester)
• An Edinburgh hotel (Principal Edinburgh Charlotte Square)
• A Glasgow hotel (Principal Glasgow Blythswood Square)
• A London hotel (Principal London)

Commitment to eco-conscious investment

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.

Design leadership

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. A number of Starwood Capital’s assets have been acclaimed for their aesthetics, which ultimately help drive value for the Firm’s investors.

Approach

Starwood Capital seeks to deliver consistent, robust returns while placing a premium on preserving capital. The team performs a comprehensive risk/return analysis on each potential transaction, and only invest in assets and businesses with asymmetrical return potential. Guided by common sense, discipline and the recognition that intellectual humility is the foundation of successful investing, the Firm adheres to the following core principles:

Invest When New Supply Is Low

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.

Anticipate Capital flows

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.

Buy Below Replacement Cost

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.

Utilize Appropriate debt to generate positive Leverage

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.

Construct Diversified Portfolios

Actively manage concentrations of fund capital by diversifying exposures across risk profiles, geographic areas, asset classes and positions in the capital structure.

Add Value to Investments through hands-on asset management

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.

maintain investment discipline

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.

capitalize on the firm’s disposition expertise

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.

Align Interests with Investors

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 the Firm sponsors. Further, Starwood Capital does not earn transaction fees in its opportunity funds—believing instead that we should profit only after our investors receive a full return of their capital plus an attractive preferred return.