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With $1.3B In Dry Powder, Starwood On The Lookout For 'Unbelievable Opportunities'

Starwood Capital Chairman Barry Sternlicht speaking at a Bisnow event in 2018.

Starwood Property Trust Chairman and CEO Barry Sternlicht told investors on Wednesday that the REIT is going to be cautious in the current economic climate, but not ignore the opportunities posed by it.

Not only are the opportunities there, Starwood has the means to pursue them, with more dry powder than at any time in its history — $1.3B all together, including a five-year, $600M loan on which it just closed.

"Given the craziness of the Fed, nobody knows what to do," Sternlicht said during the company's most recent earnings call. "So the banks are not only not lending, but they’re reluctant to do anything, frankly. That creates unbelievable opportunities for companies like us."

But, he added, the company is going to be very careful where it deploys that mass of capital.

"We have a large lending book, and we have to watch each loan individually," Sternlicht said.

Sternlicht further characterized current conditions as the best investing market he's seen since the Global Financial Crisis in 2009, with banks on the sidelines and many public mortgage REIT taking write-offs and write-downs.

Yet, he said, "the fundamentals of real estate are good, which is really the most important thing when we look at our or anyone’s mortgage book."

The REIT had a strong third quarter, reporting $194.6M in earnings for Q3 2022, or 61 cents per share, up more than 50% from the same period in 2021. Starwood reported $390.5M as well during Q3 2022, up about 30% from last year.

Related Topics: Barry Sternlicht