Starwood Capital Group raised $10.2B for its latest fund by tapping investors from around 20 countries on the hunt for distressed deals.

Billionaire Barry Sternlicht’s investment firm raised the capital for its Starwood Distressed Opportunity Fund XIII, which was formally closed to new investment Wednesday. Starwood, which contributed $100M to the fund, has already leveraged the capital to deploy $3B in equity across 20 transactions.

Up to 35% of the cash will be spent on data center investments, Sternlicht told Bloomberg, nearly double the size of Starwood’s allocation to the sector in its last opportunistic fund. This fund will mainly target U.S. and European assets with a focus on data centers, residential, industrial and hospitality, the company said Wednesday.

In an interview with Bloomberg, Sternlicht repeated his sentiment from Starwood Property Trust’s first-quarter earnings call in March that the firm has “never been so excited and so terrified at the same time.”

The fundraise is the first since Jonathan Pollack, former head of global commercial real estate at Deutsche Bank, came aboard as president of Starwood Capital in early 2025.

More than 300 investors contributed to the fund including pensions, sovereign wealth funds, endowments, wealth managers and family offices. The fund has already invested in Dublin-based Echelon Data Centres, a Texas land portfolio held for residential development and a Northern Italy logistics property, according to Bloomberg.

Pollack said in a statement that Starwood Capital was growing its global presence and bringing on new talent to support what he called an exciting time to be investing in real estate.

“We are seeing strong tailwinds driven by slowing supply in traditional real estate asset classes and tremendous growth in technology and manufacturing,” he said.

Starwood Capital has roughly $130B in assets under management, including $31B in debt and equity in Starwood Property Trust, its publicly traded mortgage REIT that has lost 10% of its value this year as it continues to rebalance its portfolio and go “from headwinds to tailwinds,” as Sternlicht said in March.

Those headwinds are still apparent at Starwood Real Estate Income Trust, its $22B nontraded REIT, that had redemptions frozen in April amid a wave of requests.

SREIT is also undergoing a strategic review, but Sternlicht defended the portfolio in a letter to investors announcing the freeze as best-in-class and saying the redemptions “rose quite suddenly when interest rates spiked and have remained high.”

SREIT was one of several nontraded REITs to face a capital crunch starting in 2022 including Blackstone’s flagship fund, but Starwood is the only major firm to still have caps on redemptions. Blackstone first fulfilled all of its redemption requests in March 2024.

Starwood's opportunity fund that just closed is designed with the flexibility to shift between asset classes, continents and positions in the capital stack as the market develops, Starwood said Monday.