“Good luck finding people”: Sternlicht warns of labor shortage for infrastructure bill

Starwood reports 15% y-o-y drop in Q3 earnings as CEO scoffs at Biden plan

National /
Nov.November 09, 2021 01:19 PM
Starwood Property Trust's Barry Sternlicht (Getty, iStock)

Starwood Property Trust’s Barry Sternlicht (Getty, iStock)

On a call where Barry Sternlicht and executives at his Starwood Property Trust touted the strength of their portfolio and the global real estate market, Sternlicht took a minute to sound off on the government’s $1 trillion infrastructure bill.

Sternlicht, chairman and CEO of the real estate investment trust, citing construction costs increasing 2 percent monthly, said the Biden administration–backed bill will push costs up even further for materials such as steel, concrete and piping.

“Add that to the fact that the country seems to have lost a million construction workers and there’s mass labor shortages in construction, and now you’re going to try to fix bridges, roads and tunnels all over the country? Good luck finding people to do it,” Sternlicht said.

“The funny thing is you’re going to have to import all of these workers from some offshore country because they don’t exist in the United States today,” he added.

Starwood, based in Greenwich and Miami Beach, reported $128.6 million in third-quarter earnings, or 44 cents per share, down 15 percent from the same period in 2020, but up about 16 percent from two quarters ago. The REIT reported $302.3 million in revenue for the quarter, up about 5 percent compared to the third quarter last year.

Starwood created a fund for its Woodstar affordable housing portfolio and sold a 20.6 percent stake at a valuation that exceeds Starwood’s cost by $1.1 billion. Sternlicht said “large offshore investors” purchased the stake, but declined to name them.

Jeffrey Dimodica, president of Starwood Property Trust, said a tax cut for affordable housing signed into law this summer in Florida, and the Florida Housing Authority’s approval of the REIT’s cash-out refinance of the portfolio, contributed to its success. Dimodica predicted that “institutional demand for these assets will keep cap rates in check.”

Sternlicht, who also leads Starwood Capital Group, said that in his 35-year career in real estate, he has never seen such “unprecedented strength” of the multifamily market.

“Affordable housing, you could argue, is better than market-rate,” he said, citing wage increases for entry-level service jobs boosting workers’ purchasing power. “We severely undervalued those investments.”





    Related Articles

    arrow_forward_ios
    Clockwise from top left: 162 West 13th Street, 325 Avenue Y in Brooklyn, 1281 Viele Avenue in the Bronx (Credit: Google Maps)
    Here’s what the $10M-$30M NYC investment sales market looked like last week
    Here’s what the $10M-$30M NYC investment sales market looked like last week
    Real Capital Analytics data showed that New York’s multifamily market had a very slow July. (Credit: iStock)
    New NYC rent law “beginning to shut down investment”
    New NYC rent law “beginning to shut down investment”
    Numbers were down across the board (Credit: iStock)
    New York’s multifamily market had its slowest first half of the year since 2011
    New York’s multifamily market had its slowest first half of the year since 2011
    From left: Joseph Chetrit, Barry Sternlicht, David Rubenstein, Michael Dell, and Marc Holliday, along with 305 East 86th Street and 1540 Broadway (Getty, Carlyle, Google Maps)
    New York City’s biggest borrowers of 2022
    New York City’s biggest borrowers of 2022
    New York Community Bank CEO Thomas Cangemi
    NYCB slashes 10% of staff as resi mortgages slump
    NYCB slashes 10% of staff as resi mortgages slump
    A photo illustration of 8 Spruce Street and 616 First Avenue (Getty, Google Maps)
    NYC multifamily sales boomed, but party could be over
    NYC multifamily sales boomed, but party could be over
    From left: Starwood Capital’s Barry Sternlicht and Veracity Development’s Edmond Li along with 111 Mercer Street (Getty, Google Maps, Veracity Development)
    Sternlicht’s LNR aims to foreclose on Veracity’s Soho condo
    Sternlicht’s LNR aims to foreclose on Veracity’s Soho condo
    Starwood's Barry Sternlicht
    Starwood wheels and deals to fix $800M loan default
    Starwood wheels and deals to fix $800M loan default
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...