Starwood eyes $11B raise for real estate, distressed bets

Barry Sternlicht’s company is also selling a $2B infrastructure loan portfolio

TRD New York /
Jul.July 31, 2020 09:26 AM
Starwood Capital Group CEO Barry Sternlicht (Getty)

Starwood Capital Group CEO Barry Sternlicht (Getty)

Barry Sternlicht is putting his money where his mouth is.

The Starwood Capital Group CEO last month quipped, “when it’s really ugly, it’s a good time to invest.” Now, the company is looking to raise $11 billion for real estate and distressed bets.

The firm’s Starwood Global Opportunity Fund XII is looking to raise $8 billion for real estate acquisitions, and a sidecar fund will raise $3 billion for distressed opportunities, Bloomberg reported.

Starwood, partly owned by Dyal Capital Partners, raised $7.55 billion in 2018 for its 11th flagship fund, its biggest ever. That vehicle’s investors include some of the largest public pension funds in the country, such as the Teachers’ Retirement System of the State of Illinois, Teacher Retirement System of Texas and New York State Teachers Retirement System.

The fundraising comes as global markets are in chaos — the U.S. Gross Domestic Product fell 9.5 percent in the second quarter, the largest percent decrease on record.

And Sternlicht predicted things may get worse, particularly for New York City if the government decides to raise taxes on the wealthy. That would cause a “negative cycle” of deteriorating services, less policing and a dirtier city — all things which could erode commercial real estate values.

Sternlicht’s worst nightmare — raising taxes on the wealthy — nevertheless gained some steam this week, after both the leaders of the state legislature broke with Gov. Andrew Cuomo and issued statements in support of taxing billionaires.

Things haven’t been pretty for Starwood, either. Its stock prices took a tumble, down 40 percent from last year, and its retail portfolio has been hit hard by the coronavirus crisis.

Starwood is also shopping around a $2 billion energy infrastructure loan portfolio it purchased in 2018. [Bloomberg] — Georgia Kromrei


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