Starwood Capital Group is back in the market with its 13th real estate opportunistic fund, PERE has learned.
The Miami Beach-based private investment firm officially launched Starwood Distressed Opportunity Fund XIII last month and has set a $10 billion target for the vehicle, the same size as its predecessor, Fund XII, which closed on $10 billion in 2021. PERE understands the fund does not have a hard-cap.
The firm is offering fund management fee breaks for investors participating in the first close, which is targeted for H1 2024, according to a source familiar with the matter. First-close investors are eligible for a six-month fee waiver, and fee breaks are also available for investors making large-size commitments starting at $150 million.
Starwood is understood to be targeting the same types of institutional investors that committed to its prior real estate funds. Existing limited partners include Teachers’ Retirement System of the State of Illinois, Teacher Retirement System of Texas and Texas County and District Retirement System, according to PERE data.
Similar to the prior funds in the firm’s opportunistic series, Fund XIII will have a global strategy, with an expected geographic allocation of 45-55 percent to the US, 35-45 percent to Europe and 5-15 percent to Asia-Pacific, the source said.
Starwood declined to comment, but PERE understands distressed opportunities are expected to be a major focus, making up 30-50 percent of the fund. Potential investments will include acquiring undercapitalized assets, buying portfolios of performing and non-performing loans, originating structured positions to generate upside, providing rescue capital with joint ventures to borrowers facing liquidity issues, making investments into public companies and making limited securities investments.
Although Starwood has invested in data centers through Funds XI and XII, the firm will target a sizable sector allocation to data centers and digital infrastructure for the first time with Fund XIII, representing 20-30 percent of the fund’s capital. The other target sector allocations will be 40 percent to residential – including multifamily, affordable housing, single-family rentals, student housing and residential land – 15-25 percent to industrial, 10-20 percent to hospitality and up to 20 percent to life sciences and traditional office. The manager expects to source distressed opportunities in all of the above sectors, with the exception of data centers.
By contrast, target allocations by sector for Fund XII were 20-30 percent to multifamily and affordable housing, 20-30 percent to hospitality, 20-30 percent to office, 15-20 percent to industrial and up to 10 percent to other investments, which included land and niche sectors such as student housing or senior housing.
Similar to prior funds in the series, Starwood is targeting 18-20 percent gross returns and 14-16 percent net IRRs for Fund XIII. The firm expects to finish investing the remaining capital in Fund XII in the coming months and then begin deploying equity from Fund XIII.
Fund XIII is now the third-largest real estate fund in market, after Brookfield Asset Management’s Brookfield Strategic Real Estate Partners V, with a $15 billion target, and Blackstone’s Blackstone Real Estate Partners Europe VII, which has an equity goal of $10.59 billion, according to PERE data. Nine of the top 10 funds in market all have targets of $5 billion or larger. The exceptions are Rockpoint’s Rockpoint Real Estate Fund VII and IPI Partners’ IPI Data Center Partners Fund III, with both managers aiming to raise $4 billion for their respective funds.
If you do not receive this within five minutes, please try to sign in again. If the problem persists, please email: 
