Starwood launches ninth fund, eyes up to $3bn

The Greenwich, Connecticut-based firm, led by Barry Sternlicht, has commenced fundraising for Starwood Distressed Opportunity Fund IX, targeting between $2 billion and $3 billion. The firm's hospitality fund series, however, will come to an end.

Starwood Capital Group officially has launched its ninth global real estate fund, targeting between $2 billion and $3 billion of equity, PERE has learned. The firm, led by Barry Sternlicht, is believed to have started fundraising for the vehicle, Starwood Distressed Opportunity Fund IX, this week, with a first close expected early in the fourth quarter, according to people familiar with the matter.

The fund will focus predominantly on distressed opportunities in the US, although the Greenwich, Connecticut-based firm will be able to invest between 20 percent and 30 percent in Europe, with a further 10 percent to 20 percent targeting Brazil and India. 

Just this week, Starwood announced its first major investment in Brazil, acquiring a 33 percent stake in MRV Logistica, the industrial arm of Brazilian developer MRV Engenharia, for $150 million. MRV also invested $60 million of fresh capital in its logistics subsidiary as part of the deal. Co-investments are expected to be a major focus for Starwood when it comes to investing in Brazil and India.

In launching Fund IX, Starwood also will call an end to its hospitality fund series. Over the past few years, the firm has raised a global hospitality vehicle alongside its opportunity funds. In April 2010, Starwood closed its Starwood Global Opportunity Fund VIII and Starwood Capital Hospitality Fund II on $1.8 billion and $965 million of equity, respectively.

However, sources told PERE that the hospitality fund would be discontinued as the firm concentrated on deploying equity through one vehicle. Starwood declined to comment.

Starwood raised capital for its Starwood Global Opportunity Fund VIII and Hospitality Fund II from institutional investors that included the California Public Employees' Retirement System, the New Mexico Public Employees' Retirement Association, the Teachers Retirement System of Louisiana and the Pennsylvania State Employees' Retirement System, among others, according to pension documents.