As GlobeSt.com recently reported, Starwood formed a newsubsidiary that will be looking to invest infrastructureimprovements, but a source close to Starwood tellsGlobeSt.com that the two have separate focuses. The subsidiary willinvest and manage investments in public real estate infrastructurebonds, and the Fund targets generation and transmission assets inNorth America.

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The Fund has already committed more than $250 million of equityto specific projects exceeding $1 billion in cost. The Fundattracted commitments from various investors, including endowmentsand foundations, pension plans, banks, insurance companies and highnet worth individuals, which the source says is due to acombination of this sector "gaining a great deal of interest," andof Starwood Capital resources standing behind it.

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Barry Sternlicht, chairman and CEO of locally based StarwoodCapital, says in a prepared statement that "the Fund is the resultof a focused business strategy that we have been pursuing in theextremely vibrant North American power generation and transmissionsector for several years. Our investors have responded to thestrategy, to the potential to earn very attractive risk adjustedreturns, to our experienced team, and to Starwood Capital's strong16-year investment track record as a firm."

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Starwood Energy actively pursues attractive, risk-adjustedreturns from both opportunistic acquisitions and fromdevelopment-stage funding of energy infrastructure assets."Starwood Energy targets investments in hard assets with strongcash flows that offer superior equity returns upon exit. StarwoodEnergy believes that this approach reduces downside potential,provides financial flexibility, and broadens exit alternatives,"explains Brad Nordholm, Starwood Energy's CEO and managingdirector, in a prepared statement. The source could not detailfurther information as to how Starwood Energy chooses theinvestments, since "they are not narrowly defined."

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Starwood Energy also targets both greenfield and brownfielddevelopment opportunities where it can add value through itsdevelopment and financial expertise, according to a preparedrelease. Madison Grose, Starwood Energy's vice chairman, says inthe release that "on the development side, we are, in effect,delivering 'build to suit' assets for long term credit counterparty'tenants.' The high-quality nature of the cash flows in ourprojects has allowed us continued access to the debt capitalmarkets in these turbulent times, while facilitating an investmentthesis that seeks balanced returns between current yield andresidual gains."

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The Fund seeks to maximize returns to, and achieve liquidityfor, its investors through regular cash distributions and theproceeds from the sale or other disposition of assets. StarwoodEnergy seeks to enhance value by pursuing negotiated transactionswhen possible. To identify such opportunities, the release saysthat Starwood Energy executives leverage long-standingrelationships with owners of energy assets and their advisors. "Ourexecutives have a demonstrated history of successfully originatingtransactions through proprietary channels rather than throughagent-led auctions," says Steve Zaminski, Starwood Energy's EVP andmanaging director. "We continue to enjoy a strong pipeline ofinvestment opportunity driven by industry fundamentals and anevolving regulatory environment."

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Current assets in the Fund include: Midway, a 120-megawattsimple-cycle natural gas peaking plant located 60 miles west ofFresno, CA, which is currently under development; Thermo Ft. LuptonFacility, a 272-megawatt combined cycle natural gas power plant andassociated greenhouse steam-host located approximately 25 milesnortheast of Denver. The transaction is expected to close in thenear future; Minority interest in the Mead-Phoenix project which is1,296 megawatts, and the Mead-Adelanto project which is 1,300megawatts; Hudson, a 660-megawatt transmission line currently underdevelopment between Ridgefield, NJ and midtown Manhattan; and GreenLine, a 660-megawatt undersea transmission line currently underdevelopment between Maine and Boston. Sources did not respond toqueries by deadline regarding how the $250 of equity wasdivided.

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.