REPE Fund Profile Series - Part Three: The Starwood Capital Group

Welcome to Part Three of our Fund Profile post series. Here, we take an in-depth look at the top 50 real estate private equity (REPE) firms to help stand you in good stead for your interview with a real estate private equity firm. 

Each REPE fund profile will briefly summarize each fund’s history, as well as getting into the details of the funds themselves. Our series will also outline a few of each firm’s key real estate equity investments in recent years. By the end of each post, you should have a solid starting point to aid your preparations for your upcoming real estate private equity interviews.

Following on from Part Two of the series which focused on Brookfield Asset Management, the third part of this series will examine the Starwood Capital Group in more detail.

Key facts about the Starwood Capital Group

Barry Sternlicht founded Starwood Capital in 1991 as a joint venture with Robert (Bob) Faith after meeting as MBA students at Harvard Business School (yes, that’s the same Bob Faith who then went on to found Greystar Real Estate Partners in 1993! Greystar is currently ranked 44th in the PERE 100 list—we’ll come back to them later on in the series).

The firm was originally founded to buy non-performing loans and real estate assets from the U.S. government during the savings and loan crisis of the 1990s. Having just reached its 30th anniversary, Starwood Capital has since diversified and invested in over $195B worth of various assets in different geographic markets along the way.

Starwood Capital has a 4,000-strong team with affiliated offices in both Europe and the Asia Pacific region, as well as hubs in major U.S. cities such as New York, Atlanta, Chicago, San Francisco, and Washington D.C. The Group’s headquarters are in sunny Miami, Florida.

Starwood Capital’s main areas of concentration

With $95B worth of assets under management, the firm’s global real estate equity investment portfolio incorporates properties within every major real estate asset class, including office properties, retail developments, multifamily units, and hospitality and leisure assets through its former Starwood Hotels & Resorts entity (later acquired by Marriott International—more on that in ‘signature deals’ below). This is on top of its aforementioned investments in distressed debt and financing solutions for commercial real estate projects.

Outside of the firm’s primary focus on real estate equity investments, Starwood Capital also invests in energy infrastructure and oil & gas as “complementary” business lines through its Starwood Energy Group entity.In terms of investment strategy: Starwood Capital’s scale and depth of specialist industry expertise across asset classes allows the firm to make the most of cross-intelligence gathered from each of its business lines—this is what gives the team their edge when it comes to capitalizing on interesting investment opportunities.

Starwood Capital’s signature deals

To get to grips with the reasoning behind a real estate private equity firm’s investment strategy, it's crucial to examine the fund’s track record—examining both challenges and successes. 

To give you a head start, we’ve listed some of Starwood Capital’s signature deals for you to investigate below:

Groupe du Louvre

In 2005, the firm acquired Société du Louvre (SDL) and Groupe Taittinger for $3.2B, adding a large European network of hotels (both luxury and budget) and luxury brands to its portfolio. 

After a period of restructuring, Starwood Capital later sold Groupe du Louvre to Shanghai Jin Jiang International Hotels Development Co. Ltd. for EUR€1.3B in 2015, but retained the Baccarat brand to create a luxury hotel chain featuring said company’s decorative crystal pieces.

Starwood Capital still manages the flagship Baccarat New York hotel via its SH Hotels & Resorts entity, but sold the actual property to Sunshine Insurance Group in 2015.

Corus Bank

In 2009, Starwood Capital spent $2.7B to acquire a distressed loan portfolio from Corus Bank worth $4.5B in a deal with the U.S. government. After successfully reorganizing and restructuring the debt, the last major asset was sold in 2015 for an undisclosed amount.

Starwood Hotels and Resorts Worldwide, Inc.

Originally founded as Starwood Lodging after acquiring Hotel Investors Trust in 1995, the firm developed the Starwood Hotels and Resorts company into the largest hotel company in the world—accelerated by the acquisition of Westin Hotels & Resorts for $1.57B  and ITT Sheraton for $13.3B in 1997, and Le Méridien Hotels & Resorts for $225M in 2005.

In 2015, the investment firm sold Starwood Hotels and Resorts Worldwide to Marriott International in a deal worth $12.2B. As well as the aforementioned acquisitions, the Starwood Hotels portfolio includes “own brands” like the W Hotels, Aloft, St. Regis, and Tribute Portfolio.

Equity Residential REIT 

In 1993, the firm contributed 6,400 residential assets it had acquired during the savings and loan crisis of that time period to Equity Residential in exchange for a sizable stake (approximately one fifth) in the newly listed company. Equity Residential then went on to successfully become the one of the largest publicly listed apartment owners in the U.S.—with a portfolio including over 78,000 apartment units as of Q2 2021.

In 2016, Starwood Capital acquired over 23,000 apartment units from Equity Residential for $5.37B.  

TPG Real Estate Finance Trust 

In 2020, the firm provided a strategic investment of $325M to recapitalize TPG Real Estate Finance Trust, a listed commercial mortgage REIT with a loan portfolio worth $5.75B, during the period of market volatility caused by the Covid-19 pandemic. TPG repaid the loan, plus interest, in full by the end of Q2 2021.

Now back to you...

We hope this Starwood Capital Group REPE fund profile was useful for helping you broaden your industry knowledge in preparation for your upcoming real estate private equity interview. 

Now that you’re up to speed: do you have the right interview strategy in place to help you land your dream job and get started in your real estate private equity career? Let us help you set yourself up for success: check out what we can offer you at Leveraged Breakdowns.

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About the Author: 

Melody Sadé Abeni is a London-based writer who specialises in commercial real estate content. As a generalist member of the Leveraged Breakdowns team, she crafts detailed posts geared towards those curious about the real estate private equity life. 

In her former professional life, Melody supported senior corporate executives as a global mobility consultant and did her time in both management consulting and specialist asset management firms.