Barry Sternlicht

Starwood Capital Group enjoyed record investment in 2021 and is positioned for further growth this year. 

The global private investment firm’s Starwood Distressed Opportunity Fund XII (SOF XII) exceeded $10 billion of capital commitments last October, which far surpassed its predecessor opportunistic real estate vehicle. Combined with other commitments to other private real estate investment vehicles, Starwood’s assets under management rose to more than $95 billion in 2021.

Notable U.S. investments through SOF XII include a U.S. single-family rental home platform that has acquired more than 4,500 homes, and teaming up with Blackstone to buy Extended Stay America for $6 billion in a deal that closed in spring 2021. Starwood deployed or committed $16.7 billion toward acquisitions last year, including $3.6 billion toward its U.S. multifamily portfolio. 

Starwood, the No. 1 owner of apartments in the U.S, with 115,00 units, according to the National Multifamily Housing Council, is well positioned to capitalize on recent multifamily growth after years of investing in the sector. Sternlicht launched Starwood Capital Group with Bob Faith in 1991 as a vehicle to buy apartment buildings the federal government-created Resolution Trust Corporation was selling following the savings and loan crisis. 

“The year was really good for multifamily owners, with rents climbing at a double-digit pace, and cap rates fell fairly dramatically given the rental growth that was looking everyone in the face,” Sternlicht told Commercial Observer. “We picked some really good markets that have outperformed even a strong nation.”

The company’s private real estate investment trust, Starwood Real Estate Income Trust, raised $6 billion in 2021. The non-listed REIT also formed a joint venture with Morningstar Properties in January to target self-storage assets 

“We put capital where the best risk rewards are,” Sternlicht said. “We were able to build a portfolio that big primarily because we had the nontraded REIT vehicle.” 

Sternlicht said Starwood’s hotel assets also held up well during the past year despite challenges posed by the pandemic, with its Florida properties well ahead of 2019 numbers and occupancy also picking up in New York City.