Investment Philosophy

Starwood Capital seeks to deliver consistent, robust returns while placing a premium on preserving capital. We perform a comprehensive risk-reward analysis on each potential investment, and only invest in assets and businesses with asymmetric upside and limited downside risk. We are guided by common sense, discipline and the recognition that intellectual humility is the foundation of successful investing. We adhere to the following core principles:

Buy Below Replacement Cost
Purchase—at favorable prices—fundamentally sound assets that have previously lacked capital, attention or the proper financial incentives.

Utilize Appropriate Leverage
Seek to use the proper leverage—in amount and duration—to reflect the stability of each asset’s cash flow. In certain cases, we secure debt longer than our expected hold period—representing a potential asset upon exit if interest rates rise, as we expect them to.

Invest When New Supply Is Low
Target markets with high barriers to entry and little to no competitive supply planned or under construction.

Construct Diversified Portfolios
Actively manage concentrations of fund capital by diversifying exposures across risk profiles, geographic areas, asset classes and positions in the capital structure.

Align Interests with Our Investors
A defining aspect of Starwood Capital is that, from the very beginning of the Firm’s existence, we have treated our investment partners’ capital as our own—because part of it is our own. Starwood Capital’s partners invest alongside our LPs in every transaction that we sponsor. We have never taken transaction fees—believing instead that we should profit only after our investors receive a full return of their capital plus an attractive preferred return.

Anticipate Micro and Macro Opportunities
Capital flows often influence asset valuations as much as—or more than—the impact of local market supply and demand trends. Starwood Capital works hard to get ahead of capital flows in areas where economic growth is projected to drive tenant demand but new supply is not yet on the horizon.

Add Value to Investments
Starwood Capital’s value creation stems from:
The acquisition of undermanaged or undercapitalized assets that we can stabilize
The implementation of a dynamic asset management plan to improve operating cash flows and position an investment for sale at maximum price upon stabilization The design of optimal exit strategies that can generate maximum asset value, including an individual asset sale, portfolio sale or public market execution—all of which Starwood Capital has extensive experience in executing

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