Barry Sternlicht

From the August issue: Barry Sternlicht started his company, Starwood Capital Group, during a downturn — and recently he’s been expanding it, especially here in New York.

Since the beginning of the year, Sternlicht, the firm’s chairman, has been ramping up his Manhattan deal-making.

The brains behind the iconic “W”brand, he’s picked up a slew of Manhattan properties in the last few months, including 1414 Avenue of the Americas, and the former Donnell Library on West 53rd Street, among others.

While Sternlicht has been one of the most active real estate players of the downturn, the focus on New York marks a shift from 2009 and 2010, when he concentrated on distressed properties in other parts of the country. Notable was his company’s 2009 deal to buy a 40 percent stake in Corus Bank’s distressed loan portfolio for $554 million after the lender was shut down by regulators. [more]

A partnership of Tribeca Associates and Starwood Capital has closed on the $67.4 million purchase of the former Donnell Library at 18-30 West 53rd Street, Real Estate Weekly reported. The purchase marks the latest step in a long process to develop the building into a new 120-room, five-star hotel with a new space for the library, a project that would cost around $400 million.

Orient-Express Hotels had signed a similar deal in 2007, under which it agreed to buy the site from New York Public Library for $59 million; that deal was never finalized. The Donnell branch, which is across from the Museum of Modern Art and is known as the home of the original Winnie-the-Pooh doll collection, shuttered in 2008 following the deal, but Orient-Express backed out of its development plans in 2009 after the market crashed.
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In a sign of Wall Street’s recovering interest in commercial property, banks such as Deutsche Bank AG, Goldman Sachs and JPMorgan Chase are weighing bids for parts of Anglo Irish Bank’s $9.5 billion U.S. real estate portfolio, according to the Wall Street Journal.
The portfolio, the largest to hit the market since the start of the recession, offers a relatively low risk opportunity to jump back into commercial property, the Journal said, as the majority of debt is concentrated in large cities such as New York, California and Chicago. There are around 250 properties in total.
“It’s the first foreign bank to sell its entire U.S. loan portfolio, and it will be a good test of the market,” said Robert Ivanhoe, head of the global real estate practice for the law firm Greenberg Traurig. [more]

Dune Real Estate Partners has agreed to pay $190 million for Anglo Irish Bank’s mortgage loan on the embattled Mark Hotel on the Upper East Side, the Wall Street Journal reported. The note, which had a face value of around $300 million, had several interested bidders, including Starwood Capital, in an offering that had been ongoing for months. Dune now plans to work with Alexico Group, the developer of the landmark, 84-year-old hotel, whose renovation and partial co-op conversion had landed the property in financial straits. Comments

Brad Case, a vice president with the National Association of Real Estate Investment Trusts

From the April issue: Whle real estate investment trusts clearly have a lot of challenges right now, they have one key thing going for them that a lot of other investors don’t: access to capital. In this month’s Q&A, experts who track REITs told The Real Deal that the tremendous volatility the sector was experiencing a year ago is largely gone now. They said the biggest challenge REITs face today is finding worthwhile investments and paying down their debt. Some REITs, including Sam Zell’s Equity Residential, SL Green and Hersha Hospitality (see “Hersha’s New York play”) have already started picking up more property in New York. Others, like Simon Property Group and Westfield Group, are going head-to-head to take over bankrupt megamall operator and South Street Seaport owner General Growth Properties. Sources said they expect more REITs to start going after entire portfolios of properties (though not on the General Growth Properties scale) in the coming months. For more on which REIT sectors are faring best and worst and which REITs are most under- and overvalued, click here to turn to our panel of experts.

In a segment called “How I Built It,” Barry Sternlicht talked to the Wall Street Journal about how he founded Starwood Capital, the real estate investment firm that founded Starwood Hotels and Resorts and, subsequently, the W Hotels brand, which includes W Union Square – New York, and the Westin Hotels line. “I borrowed money from friends and invested what I had… and I borrowed a million dollars, which is a lot when you’re 31 and have a net worth of about $100,000,” Sternlicht said.

While it’s bad enough that the boom days of commercial real estate are over, Barry Sternlicht argues that investors are stuck with their tail between their legs in the wake of the market crash. The Starwood Capital CEO talked with CNBC’s Maria Bartiromo about navigating the market downturn, saying that investors today are more conservative — and sheepish — than they were just a few years ago. “People are doing things today because they’re a little embarrassed about what they did before, so they need money to restructure,” Sternlicht said. But Starwood could be in a position to help save face. “We’re focused on lending money… and we’re buying a lot of debt,” Sternlicht said.