Managers

CalPERS invests $400m in Sternlicht’s latest fund

The California pension has committed $400 million to Starwood’s $3bn Global Hospitality Fund II, which is targeting 20% IRRs. This summer, Sternlicht said he was rapidly expanding his latest hotel brand: the Baccarat, based on the famous crystals.

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Starwood Capital has received a $400 million commitment to its latest global hotel fund from the $233 billion California Public Employees’ Retirement System.

CalPERS said at its recent investment committee meeting it would invest $400 million with Starwood Capital Global Hospitality II, which is believed to be targeting $3 billion.

Despite being overweighted to both real estate and private equity, CalPERS committed a total of $1.2 billion to the alternatives asset class at the meeting.

The pension fund’s target allocation to real estate and private equity is 10 percent, however the actual allocation, as of the end of August, stood at 10.1 percent for real estate and 10.8 percent for private equity. The value of each portfolio is $23.6 billion and $25.3 billion respectively.

According to minutes on CalPERS website, Starwood Capital Global Hospitality II is targeting net returns of at least 20 percent. The first hospitality fund invested in and developed hotel, resort and related leisure activities globally.

In June, Los Angeles County Employees Retirement Association committed $100 million to the hotel fund. In July, the $15.8 billion Teachers’ Retirement System of Louisiana (TRSL) and the $13 billion New Mexico Public Employees Retirement Association approved total commitments of up to $100 million for Starwood’s latest opportunistic fund, Starwood Global Opportunity Fund VIII.

Starwood, founded by Barry Sternlicht, closed its previous global opportunity fund, Fund VII, on $1.5 billion in 2005, and its first global hospitality fund on $900 million in 2006.

Earlier this summer, the firm announced it was expanding its s new Baccarat Hotel brand agreeing to develop a AED2.5 billion ($680 million; €434 million) complex at Dubai's latest redevelopment project, the $3 billion Dubai Pearl resort. Together with Pearl Dubai FZ, a consortium of investors led by the Al Fahim Group, Starwood will develop a 500,000 square foot, 342-room hotel and 300,000 square foot apartment complex.

Baccarat brand hotels are also planned for the Caribbean, Europe and Far East. The first Baccarat Hotel project is set to open in 2010 at Wailea in Hawaii.