Starwood to court Israeli institutional investors

Barry Sternlicht Photo: Reuters
Barry Sternlicht Photo: Reuters

The US real estate fund chairman and CEO Barry Sternlicht hopes to raise hundreds of millions of dollars in Israel.

US real estate investment fund Starwood Capital in the process of raising its 11th fund, and sources inform "Globes" that senior executives in the fund are expected to visit Israel next week for a series of meetings with investment institutions in the framework of the road show for the fund. Starwood Capital's target for its 11th fund is $6 billion, and the fund hopes to raise hundreds of millions of dollars in Israel. The money raised will be channeled into investments in North America and Europe, with an eye for exploiting opportunities, such as the UK's exit from the European Union and the opportunities likely to emerge in the US following the November elections.

Overseas income-producing real estate investments have prospered in recent years, following the scanty yields on government and corporate bonds. Investment institutions have made many such investments, both in foreign companies operating in the global real estate markets and direct investments in overseas income-producing properties. Starwood Capital has been active for 25 years, and some of its business is reported quarterly by public companies. The fund is represented in Israel by Oz Israeli , partner and head of mergers and acquisitions and investment banking at BDO Israel, which will conduct the meeting and manage the fund's presentations in Israel.

Chairman and CEO Barry Sternlicht founded Starwood Capital in 1991. Five years later, Starwood Capital took over ITT, the owner of the Sheraton hotel chain, and within eight years, before leaving it, turned the failing chain into one of the world's biggest hotel chains, with a value of $20 billion, compared with $8 billion before the takeover. In 2009, Sternlicht, 55, held an IPO for Starwood Property, part of Starwood Capital's activity on the New York Stock Exchange. The public company specializes in investments in real estate in forced sales.

Starwood Capital currently manages $51 billion in assets. The company has 2,200 employees in 10 branches in the US, Europe, and the Far East. The fund provides loans in the real estate business, and searches for opportunities for investment in multi-family complexes, offices, shopping malls, hotels, and real estate properties in forced sales.

Starwood Property reported a $111.5 million net profit in the second quarter of this year, $0.47 a share, compared with $116 million ($0.49 a share) in the corresponding quarter last year. Starwood Property's second quarter revenue totaled $200 million, compared with $178.5 million in the corresponding quarter last year. The company share gained 5.5% over the past year, bringing its market cap to $5.3 billion. The company's dividend return is a very high 8.5%.

This is not the first time that Sternlicht has tried to raise money in Israel. In 2009, he visited Israel, meeting with both senior businessmen and investment institutions. Anyone who invested in US real estate (at the beginning of the recovery from the great crisis), with or without Sternlicht, earned a high annual return on his investment. The situation now is substantially different, and it is far more difficult to find attractive investments, especially if large sums are involved.

Published by Globes [online], Israel business news - www.globes-online.com - on September 18, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Barry Sternlicht Photo: Reuters
Barry Sternlicht Photo: Reuters
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