Starwood closes two funds on $2.8bn

Starwood Capital Group has closed on more than $1.8 billion of capital commitments for its eighth opportunity fund, and almost another $1 billion for its second hospitality vehicle, according to a company statement.

The Starwood Global Opportunity Fund VIII will focus on distressed debt and equity investments. Although it is the largest fund ever raised by Starwood in its 19-year history, Fund VII still closed under target, with the vehicle believed to be originally targeting $3 billion of equity, according to PERE data.

Barry Sternlicht

The Starwood Capital Hospitality Fund II, which had targeted $2 billion of equity according to SEC documents, will invest in hotels globally.

A Reuters report stated that Starwood, lead by chairman and chief executive officer Barry Sternlicht, planned to invest much of the fresh capital for Fund VIII in the United States, targeting distressed borrowers, lenders and banks taken over by the US banking regulator, the Federal Deposit Insurance Corporation.

In March, Starwood’s mortgage REIT, Starwood Property Trust, said it had acquired two residential properties in North Carolina for $40.7 million alongside Fund VIII. Starwood has been actively buying US real estate through its opportunity funds and its mortgage REIT in the past year. The firm could not be immediately reached for further comment.

In July 2008, Fund VIII had raised $233 million of equity from 16 investors. Among the investors in Starwood’s Fund VIII are the $13 billion New Mexico Public Employees Retirement Association, which committed $25 million, the $15.8 billion Teachers’ Retirement System of Louisiana (TRSL), which committed $75 million and the Pennsylvania State Employees’ Retirement System, which committed $50 million.

According to SEC filings, the Hospitality Fund II had 9 investors as of March 2008. In October 2008, it received a $400 million commitment from the California Public Employees’ Retirement System.