Starwood Capital Group, the firm led by Barry Sternlicht, is in preliminary talks with potential investors for a new opportunistic real estate fund, according to people with knowledge of the matter.
A new vehicle, which hasn’t formally launched, would follow the company’s Starwood Distressed Opportunity Fund XII, which closed in October 2021 with more than $10 billion in commitments, said the people, who asked to remain anonymous citing private information.
Sternlicht has said that the company’s employees are “foaming at the mouth” to seize on mounting distress in the commercial-property market. The rise in borrowing costs has pressured property prices, sending values falling 16% from a peak in March 2022, according to real estate analytics firm Green Street. Some landlords have also defaulted, often in a bid to renegotiate debt terms.
More tricky situations could be on the horizon as lenders and borrowers confront looming maturities on real estate loans. Nearly $1.4 trillion of debt on commercial property is maturing in 2023 and 2024, according to the Mortgage Bankers Association.
A Starwood spokesman declined to comment.
Investors in the Starwood distressed opportunity fund that closed in 2021 include Teachers’ Retirement System of the State of Illinois, Teacher Retirement System of Texas and the South Dakota Retirement System, data compiled by Bloomberg shows.
This article was provided by Bloomberg News.