Barry Sternlicht Raises $10B for Data Centers, Rentals

Barry Sternlicht landed an 11-figure sum to make investments in data centers, rental housing and beyond.

Starwood Capital Group raised $10.2 billion for its latest commercial property fund, Bloomberg reported. More than a third of that capital is expected to be deployed in data centers, doubling the last fund’s expenditure in the same sector.

It’s the largest opportunistic fund raised by Starwood in the company’s history, raised from more than 300 investors, including more than $100 million coming from Starwood itself. It’s also the first one raised since Jonathan Pollack joined the firm as president in 2024.

More than $3 billion from the fund is already committed to 20 investments. Those committed deals include a stake in Echelon Data Centers, land in Texas for residential development and industrial holdings in Northern Italy.

Starwood aims to lighten its financing loan in the sector by finding co-investors and pushing capital into developments over a longer period of time. That strategy previously emerged in an earlier fund that partnered with MARA Holdings to convert Bitcoin mining sites into data centers.

Starwood’s interest in the sector was already apparent. In the spring, an affiliate of Starwood purchased approximately 42 acres in Chantilly, Virginia, from Fairfax County for $166.8 million for a potential data center development.

The firm was already developing another data center campus in nearby Herndon.

As for the rental investments planned through the fund, the company plans to eschew areas with strict regulations — like New York — to focus on locations where rent growth is starting to emerge, such as the Sun Belt.

Two months ago, Starwood temporarily suspended redemptions at its $22 billion Starwood Real Estate Income Trust due to a surge in withdrawal requests, which Sternlicht framed as a defensive move to avoid selling quality assets into a soft pricing environment.

To preserve cash, the firm cut SREIT’s annualized distribution rate for Class I shares from 6.3 percent to 4.7 percent, a liquidity squeeze that has effectively locked in most investors with more than $5,000.

— Holden Walter-Warner