Starwood Businesses: Past and Present
In addition to investing in individual real estate assets and portfolios of properties, at Starwood we have also created several leading public operating companies and sponsored funds dedicated to other real estate-related industries, including:
Starwood Property Trust, Inc. (NYSE: STWD)
In August 2009, Starwood Capital created and took public Starwood Property Trust, Inc., a real estate finance company that focuses on originating and investing in commercial mortgage loans and other commercial real estate-related debt investments. Given the significant distress in the commercial real estate credit markets, Starwood created STWD to become a direct lender to and investor in the commercial real estate sector, similar to when the firm created iStar in the mid-1990s. With Starwood's experience creating and operating two successful public companies, including Starwood Hotels & Resorts (NYSE: HOT) and iStar Financial (NYSE: SFI), which is also a fully integrated mezzanine origination platform, STWD successfully raised $950 million in its IPO, the largest blind pool company ever created and traded on the NYSE. STWD has since raised an additional $3.2 billion in subsequent offerings on the NYSE. STWD is externally managed by an entity 100% owned by Starwood Capital Group, with Barry Sternlicht serving as Chairman and CEO of the company.
Starwood Energy Group Global, L.L.C.
In 2004, affiliates of Starwood Capital participated in the firm's first energy infrastructure project, the development and financing of a regional transmission line. Subsequently, and in response to an increased focus on energy and power infrastructure projects due to the urgency and importance of achieving a sustainable energy independence in North America, a sister company to Starwood Capital, Starwood Energy Group Global, LLC (“SEGG”), was created. After making a series of individual energy-related investments, SEGG sponsored and closed its first dedicated energy and power infrastructure fund in June 2008 with $433 million of equity commitments. The fund has targeted investments in transmission, natural gas generation and wind and solar generation facilities, primarily in North America. SEGG has its own dedicated investment team and Barry Sternlicht serves as Chairman of the fund.
Starwood Real Estate Securities, L.L.C. (a separately registered investment adviser)
In 2004, Starwood Real Estate Securities (“SRES”), an affiliate of Starwood Capital, was created. SRES is a hedge fund adviser that sponsors open-ended, long-short hedge funds that invests in a broad universe of global public real estate securities, including but not limited to REITs, lodging and gaming companies, homebuilders, real estate finance companies, site-based operating companies and land companies. SRES aims to achieve superior risk-adjusted returns with low volatility and limited correlations to traditional investments. SRES has its own dedicated investment team, and Starwood Capital’s investment professionals and the firm’s local operating partners provide SRES with “on the ground” market knowledge and real-time access to industry information.
In 2006, Starwood Capital created SH Group, a hotel brand management company that owns the environmentally-focused 1 Hotels & Resorts brand and holds the Baccarat hotel license, as well as other potential future hotel brands. SH Group provides Starwood with significant proprietary investment opportunities, as well as maximizes returns on hotel investments in the firm’s dedicated hotel funds. Professionals within SH Group also act as Starwood Capital’s in-house design and hotel operations experts.
Starwood Hotels & Resorts, Inc. (NYSE: HOT)
In February 1994, Starwood Capital acquired performing debt and exchanged it, together with assets of SOF I, II and other partnerships, for a 75% ownership interest in the nearly bankrupt NYSE-listed Hotel Investors Trust (HOT). With Starwood Capital acting as the acquisitions arm of the company between 1994 and 1998, HOT was transformed from an overleveraged, $8 million equity value liquidating REIT into a $20 billion global enterprise three years later. During this time, the company completed the $1.6 billion acquisition of Westin Hotels and the $14.6 billion acquisition of ITT Sheraton. Mr. Sternlicht served as Chairman and CEO of Starwood Hotels from January 1995 to May 2005, during which time he created W Hotels, built St. Regis into a global luxury brand from a single asset, revolutionized the four-star hotel category by launching the Westin Heavenly Bed and Bath and introduced the industry’s first “no blackout” frequent stay program with Starwood Preferred Guest. Starwood Capital exited its investment in Starwood Hotels in 2000.
iStar Financial, Inc. (NYSE: SFI)
In 1994, driven by high equity asset prices and mispricing in the commercial real estate credit markets, Starwood Capital shifted its acquisition investment focus to mezzanine debt, aggregating a portfolio of approximately $1 billion of loans. In 1998, through contributing assets from its third fund and 2/3 of SOF IV to a small, public REIT that it controlled, Starwood Capital created the publicly traded company, Starwood Financial, Inc (NYSE: SFI). This public exit strategy enabled Starwood Capital to capitalize on the sizable, well-seasoned portfolio and prove that an ongoing business would provide investors higher value than simply holding debt to maturity. Starwood Financial was listed on the NYSE in November 1999 and later renamed iStar Financial. From its formation until Starwood Capital's exit in 2003, Mr. Sternlicht served as Chairman of the Board and chaired iStar’s Investment Committee.