2010AWARDS & AnnuAL REVIEW - PERE

GLOBAL
INDUSTRY FIGURE OF THE YEAR
1. Barry Sternlicht, Starwood Capital Group
2. Andie Kang, national Pension service of Korea
3. Collin lau, China investment Corporation
“A good crisis is a terrible thing to waste,” Barry Sternlicht recently
told a real estate conference. And when it comes to 2010,
the founder of Starwood Capital Group can’t be accused of wasting
opportunities that came his way. Investing several billion
dollars of equity, his firm was a big player in distressed loans and
assets, particularly in the US. However, it was Sternlicht’s international
ambitions that were of note during 2010, not least due
to the fact they will set the stage for the firm’s deal flow in 2011.
Brazil, of course, was one highlight for Sternlicht after the firm
opened an office in São Paulo, led by the founders of Sollers Investimentos,
Rodolfo and Vitor Senra, and Starwood’s acquisitions
professional Ryan Hawley. With a booming middle class,
demand for real estate in the country is rising with Starwood
expected to source deals alongside local partners across all real
estate sectors, as well as make entity-level investments in real estate
operating firms.
Europe also is expected to become a bigger part of Starwood’s
deal flow this year, with Sternlicht eagerly eyeing the region’s
banking system for more transactions. The chief executive officer
said he remained “calm” about European deals in 2010, but
GLOBAL
FIRM OF THE YEAR
1. The Blackstone Group
2. starwood Capital Group
3. lasalle investment Management
During a call on its third quarter results in October, The Blackstone
Group’s illustrious leader Steve Schwarzman declared of
the private equity real estate sector: “There will be a huge shakeout.”
So convinced of being the biggest player standing when the
dust finally settles following the financial crisis, the New York
firm already has revealed it wants to raise a whopping $10 billion
for its next global real estate opportunity fund. Despite the
widely accepted notion that the raising of mega funds – the likes
of which were last seen from 2006 through 2008 – is largely over,
few doubt Blackstone will do it. And why not? After all, while others
struggle to achieve respectable targets, Blackstone’s real estate
operation presented impressive figures for 2010, with its portfolio
increasing in value by 69 percent. As bottoms were hit in many of
Blackstone’s major markets, the firm really ramped up its investment
activities, investing $6.5 billion globally in 2010, according
to Real Capital Analytics. That is more than anyone else.
The common thread between most of Blackstone’s real estate
investments in 2010 was that they were truly opportunistic – situations
where the firm could capitalise on distressed or troubled
positions. Standout transactions included its participation in the
8 PERE | 2010 AwArds & AnnuAl review
he sees more exciting opportunities
in the near fu- Sternlicht: agnostic internationalism
ture as the financial sector
starts actively dealing with its legacy loan portfolios.
However, what is perhaps most interesting in Sternlicht’s success
in clinching the title of Global Industry Figure of the Year for
the second year running is that his nearest rivals hail from parts
of Asia where Starwood is not expected to tread anytime soon.
Despite many of Starwood’s rivals wanting to break into the Chinese
market, Sternlicht has remained cool about the country’s
real estate prospects, not least owing to the fact rules and regulations
can change – sometimes overnight – and that real estate
supply can alter dramatically as government bodies authorise
massive developments. Instead, he kept much of his Asia attention
in 2010 on India, where the firm has maintained its presence
and where Starwood is hoping to expand its investments.
For Sternlicht, there is a secret to the firm’s success in international
investing. “I think it’s being agnostic,” he explained to
a recent gathering of real estate executives. “There is no emotion
when investing abroad.”
$6.8 billion recapitalisation of General Growth Properties, helping
to take the stricken US shopping centre business out of Chapter
11 protection; the hotel chain Extended Stay, which it helped
remove from creditors’ protection via a $3.9 billion investment
with partners just three years after selling it for $8 billion; and
the purchase of 180 logistics properties from ProLogis at a time
when the Denver-based business needed to offload assets to meet
its debt obligations.
2010 also will be remembered as the year Blackstone finally cemented
its place in Asia. Initially reluctant to absorb the Asia real
estate principal investments platform of Bank of America Merrill
Lynch until its litigation issues were settled, Blackstone finally
took the 60-person business over once the LPs of its $2.65 billion
Asian Real Estate Opportunities Fund had received a handsome
settlement to quell their disquiet in November. Subsequently, the
firm now has large asset management capabilities to add to its
investment executives at its offices in Hong Kong, Shanghai, Tokyo
and Mumbai. Naturally, the episode was another example
of capitalising on a distressed situation and further underscored
why it was voted Global Firm of the Year.