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Starwood Capital Group is close to raising $10B for its latest real estate opportunity fund as it looks to cash in on distress that might arise as a result of the coronavirus pandemic.
The fund manager, led by Barry Sternlicht, has raised $9B so far for Starwood Distressed Opportunity Fund XII Global, PERE reported. That is already above the $7.5B it targeted when it launched the fund in June last year.
If it does breach the $10B mark, it will be only the third manager to raise a real estate fund of $10B or more, alongside Blackstone and Brookfield. The largest real estate fund ever raised is the $20.5B raised by Blackstone Real Estate Partners IX, which closed fundraising in 2019. Brookfield is looking to raise $17B for its fourth opportunity fund.
Starwood has already undertaken one big deal with the money raised for the new fund; in June it teamed up with Blackstone to buy hotel operator Extended Stay America for $6B. In the UK, it paid £700M to take private RDI REIT last year.
According to documents for the fund, 40% to 60% of the equity will be spent in the U.S., 40% to 60% in Europe, and up to 15% in Asia and Australia, depending on where the best deals arise.
In terms of sectors, 20% to 30% could be spent in multifamily or affordable housing, with the same allocation for hospitality and office, a 15% to 20% allocation to industrial and up to 10% allocated to niche sectors like strategic land, senior living or student housing.
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