Barry Sternlicht, Chairman and Founder of Starwood Capital Group, intends to significantly expand within the growing data centre market. Starwood Capital Group announced that it has closed a $10.2 billion opportunistic real estate fund, which is set to invest in residential, industrial, hotel properties, and data centres. The fund will primarily focus on transactions in the US and Europe, while also targeting markets in Asia.
Bloomberg first reported on the closing. Starwood envisages that the fund – known as Starwood Distressed Opportunity Fund XIII – will double its previous commitment to the data centre sector and allocate 35 per cent of its opportunistic capital to this asset class, which is driving the current AI revolution.
Sternlicht expressed pleasure at the investment opportunities already identified for this fund, emphasising the company's track record of delivering results for its investors across various market cycles. Starwood's strategy in the data centre sector will focus on co-investments with larger players. The aim is to meet the enormous capital requirements that most data centre developments demand – this can amount to up to $2 billion for standalone facilities. Other approaches involve the company investing equity or debt in projects.
Jonathan Pollack, President of Starwood Capital, noted that his firm is experiencing investment tailwinds, whether due to a supply shortage in traditional asset classes like multifamily, hospitality, and industrial, or because of the immense growth of technology and industrial assets. He sees this as a promising time to invest in real estate.
Starwood Distressed Opportunity Fund XIII has already completed 20 transactions with a total equity volume of $3 billion. The company has partnered with MARA Holdings, a vertically integrated digital energy and infrastructure firm, to convert former Bitcoin mining sites into new data centres. Starwood Capital Group currently manages approximately $130 billion in assets.
