Starwood Capital Group has closed its latest distressed opportunity fund well above its initial target. According to sources, the Greenwich, Connecticut-based investment firm led by Barry Sternlicht has garnered $4.2 billion in equity commitments for its Starwood Distressed Opportunity Fund IX, making it the largest fund that Starwood has raised to date. The global fund, which was launched in August 2011, originally was understood to be targeting between $2 billion and $3 billion.
As PERE previously reported, Fund IX held a first close of $1.2 billion in December 2011, just four months after launch. By September 2012, it was understood that Starwood had raised a total of $2 billion on behalf of the fund. Fund IX is focused predominantly on distressed opportunities in the US, although the firm will be able to invest between 20 percent and 30 percent in Europe and a further 10 percent in emerging markets.
In addition, for the first time in its history, Starwood offered management fee breaks to institutional investors joining the first close and to larger investors committing more than $150 million of equity. Sources were unable to confirm details of the fee breaks provided, and Starwood declined to comment.
Investors in Fund IX are a mix of institutional investors, including corporate and public pension plans, sovereign wealth funds, endowments and foundations. In July 2012, The New York State Teachers’ Retirement System committed $50 million to Fund IX and, in February 2012, the Teachers’ Retirement System of the State of Illinois contributed $150 million.
Starwood already has made a few investments on behalf of the opportunistic vehicle. Last May, the firm bought a 9,500-unit multifamily portfolio spanning five states with Gaia Real Estate for $446 million. That same month, Starwood teamed with New York Life Investment Management to acquire 1372 Broadway in New York. The firm bought the building for $175 million, while New York Life acquired the freehold for $150 million. In addition, earlier this year, Starwood agreed to acquire the Miami-based special servicer LNR Property in conjunction with affiliate Starwood Property Trust for $1 billion in cash.
Starwood’s prior fund, Starwood Global Opportunity Fund VIII, closed on $1.83 billion in March 2010. It previously was the firm’s largest fund.
Separately, Starwood has hired Zsolt Kohalmi to head up its European acquisition efforts. Kohalmi will join Peter Denton, a former BNP Paribas executive who joined Starwood last year to oversee the firm's European debt platform, to round out the firm's senior leadership team in Europe. Kohalmi will report to Jeff Dishner, Starwood's senior managing director and head of global acquisitions. Prior to joining Starwood, Kohalmi was chief investment officer at Meyer Bergman.