“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 02:00 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
    Sergio Pino of Century Homebuilders Group and the church (Century Homebuilders, Facebook via St. James Evangelical Lutheran Church - MIAMI FL)
    On holy ground: Sergio Pino’s Century Homebuilders plans apartments, school on Coral Gables church site
    On holy ground: Sergio Pino’s Century Homebuilders plans apartments, school on Coral Gables church site
    Developer Thomas Conway and the Little River location (Google Maps, Qualcon)
    Thomas Conway’s Qualcon eyes mixed-income apartment project in Little River Opportunity Zone
    Thomas Conway’s Qualcon eyes mixed-income apartment project in Little River Opportunity Zone
    Ivanhoé Cambridge's Nathalie Palladitcheff and Greystar's Bob Faith with the InTown Apartments at 1900 Southwest 8th Street, Miami (Ivanhoé Cambridge, Greystar, InTown Apts.)
    Ivanhoé Cambridge picks up Little Havana apartment complex for $105M
    Ivanhoé Cambridge picks up Little Havana apartment complex for $105M
    AMLI Residential Chairman and CEO Gregory Mutz with the site (Google Maps, AMLI)
    AMLI Residential bets $31M on another Midtown Miami development site
    AMLI Residential bets $31M on another Midtown Miami development site
    The Oakwood Apartments at 2425 Second Avenue North in Lake Worth Beach (Google Maps)
    New Jersey firm buys Oakwood Apartments in Lake Worth Beach for $35M
    New Jersey firm buys Oakwood Apartments in Lake Worth Beach for $35M
    Trammell Crow CEO Kenneth Valach and the site for the development (Google Maps, Trammell Crow)
    Trammell Crow Residential wraps up $10M deal for Miramar multifamily dev site
    Trammell Crow Residential wraps up $10M deal for Miramar multifamily dev site
    PTM Partners' Michael Tillman and Nicholas Pantuliano with Kushner's Laurent Morali and Nicole Kushner with renderings of the project (PTM Partners, Kushner)
    Kushner brings on PTM Partners for Opportunity Zone rental towers in Miami
    Kushner brings on PTM Partners for Opportunity Zone rental towers in Miami
    Canadian firm buys Pompano Beach apartments as part of $3.6B Greystar sale
    Canadian firm buys Pompano Beach apartments as part of $3.6B Greystar sale
    Canadian firm buys Pompano Beach apartments as part of $3.6B Greystar sale
    arrow_forward_ios

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

    Loading...