Starwood Hits New High with Tenth Fund

GREENWICH, CT—Starwood Capital Group has closed its 10th opportunistic fund at $5.6 billion, a sizable increase on the $4.5-billion target for Starwood Global Opportunity Fund X. With equity commitments of more than $2 billion, SOF X is already more than one-third spoken for.

SOF X takes roughly the same approach as its predecessor funds, “with a focus on acquiring, developing and repositioning high-quality assets in nearly every major real estate asset class with strong fundamentals,” says Christopher Graham,  senior  managing  director  and  head  of  real  estate acquisitions  for the Americas at Starwood Capital. “At the same time, we are seeking investments that can generate consistent and growing cash-on-cash returns either sourced directly, in partnerships, or joint ventures.”

The investment focus in Europe is similar, says Graham's colleague, Jeffrey Dishner. The main difference, and challenge, is “the divergent pace of recovery in the region,” says Dishner, senior managing director and global head of real Estate acquisitions.

“A number of northern European countries have stable and expanding economies, while the vast majority of countries in the south are experiencing substandard economic performance,” he adds. “So, while we are investing in higher current-yielding opportunities in the north, in the south, we are more focused on distressed investing through non-performing and sub-performing loans.”

The $6 billion worth of transactions that SOF X has already closed or committed to are divided roughly equally between the US and Europe. Among the highlights is the $1.4-billion acquisition last month of a diverse portfolio of office, logistics/industrial, hotel, retail and other assets in Sweden and Norway, in what was reportedly the largest property transaction in Scandinavia over the past year.

Through SOF X, Starwood Capital also acquired owner/developer TMI Hospitality in a $1.2-billion deal GlobeSt.com reported this past June. The acquisition tripled the size of Starwood Capital's presence in the select-service hotel sector.

In late January, GlobeSt.com reported Duke Realty's trade of 62 suburban office properties to Starwood Capital. The pending $1.1-billion acquisition was made through SOF X.

“We believe that our pipeline of potential investments is robust,” Dishner says. “We are ready to invest opportunistically in compelling properties around the world, while continuing to be patient and thus avoid rushing to compete for overpriced transactions.