Kirkland & Ellis advised Starwood Capital Group on the final close of Starwood Distressed Opportunity Fund XIII, securing capital commitments in excess of $10.2 billion for the private investment firm’s latest opportunistic real estate vehicle.
The closing takes Starwood Capital’s total assets under management to approximately $130 billion, cementing its position among the largest players in global real assets investing.
The Kirkland team advising on the fund’s formation spanned multiple practice groups. Investment funds lawyers Joseph Baldwin, Ben Briggs, Kelly Ryan, Paul Sampson, Andy Shiner, Josh Goldberg, Zoë Hamstreet and Peter Tirella led the mandate, working alongside real estate lawyer Jonathan Schechter, tax lawyers Stan Ramsay, Art Ward and David Levy, investment funds regulatory lawyers Scott Moehrke, Thomas Woodhead and John Reinert, and ERISA lawyer Christine Matott.
The breadth of the team reflects the cross-border, multi-asset structure of the fund, which will target residential, data center, industrial and hospitality assets across the United States, Europe and, selectively, Asia Pacific.
Starwood Capital’s fundraising drew more than 300 new and existing investors across roughly 20 countries, including pensions, sovereign wealth funds, foundations, endowments and family offices.
Barry Sternlicht, the firm’s Chairman and CEO, credited the outcome to sustained investor confidence in the platform’s track record through successive market cycles, while Jonathan Pollack, President of Starwood Capital, pointed to slowing supply in conventional real estate segments and growth in technology and manufacturing-linked demand as tailwinds for the fund’s strategy.
Starwood Capital and related parties committed $100 million of the total themselves, a signal of alignment that institutional allocators typically weigh heavily during due diligence.
The fund has already deployed more than $3 billion of equity across 20 transactions, spanning housing, industrial and data center assets, indicating that capital is being put to work well ahead of a conventional multi-year investment period.
For fund formation and investment management lawyers, the closing is a data point on continued institutional appetite for large-scale opportunistic vehicles despite a more selective fundraising environment across private real estate generally, and on the sustained relevance of flexible, cross-asset-class mandates over strategies confined to a single property type.
Starwood Capital’s broader platform, which includes Starwood Property Trust and Starwood Real Estate Income Trust, gives the firm scale that smaller sponsors cannot easily replicate when negotiating terms with large institutional limited partners.
Kirkland & Ellis’s role across the fund’s investment funds, tax, regulatory and ERISA workstreams reflects the multi-disciplinary structuring Starwood Capital required to close a vehicle of this scale, work that will factor into how Starwood Capital selects counsel when it next returns to market for a successor fund.