YEARS SINCE STARWOOD CAPITAL’S INCEPTION FINANCINGS BY CAPITAL MARKETS TEAM SINCE 2010 EMPLOYEES IN SIXTEEN OFFICES WORLDWIDE BUSINESS At a Glance Firm History Business Lines Edge Approach AT A GLANCE Starwood Capital Group is a 30-year-old private investment firm with: A primary focus on global real estate. Assets under management are approximately $100 billion. ~4,000 employees in 16 offices worldwide. A seasoned, stable executive committee that has worked together an average of 21 years and possesses an average of 29 years of industry experience. The investment flexibility to shift between real estate asset classes, geographies and positions in the capital stack as the Firm perceives risk-reward dynamics to be evolving. Extensive public markets expertise, having guided IPOs for eight leading companies. A commitment to responsible investing, as well as to fostering, cultivating and preserving a culture of diversity and inclusion. Learn more by reviewing our Environmental, Social and Governance (ESG) Policy. FIRM Starwood Capital Group is a private investment firm with a primary focus on global real estate. Since its inception in 1991, the Firm has raised over $65 billion of capital and currently has approximately $100 billion of assets under management. Over the past 30 years, Starwood Capital has invested in over $195 billion of assets, including properties within every major real estate asset class. Since founding Starwood Capital during the depths of the savings & loan crisis with the purchase of non-performing loans and real estate assets from the Resolution Trust Corp., Chairman and CEO Barry Sternlicht has overseen the Firm’s growth into a diversified investment company that today encompasses ~4,000 employees. The Firm maintains offices in Miami (Headquarters), Arlington, Atlanta, Chicago, Dallas, Greenwich, Los Angeles, New York, San Francisco, Washington, D.C., and affiliated offices in Amsterdam, Hong Kong, London, Luxembourg, Sydney and Tokyo. Starwood Capital’s hallmark is to invest opportunistically, moving between geographies, asset classes and positions in the capital stack as the Firm perceives risk/return dynamics to be evolving. To execute this strategy, Starwood Capital has built up geographic and asset-class expertise in the Firm’s targeted markets. Throughout its history, the Firm has created a number of market-leading platforms to enhance operational efficiencies and maximize the value of its investments. These platforms include: One of the world’s largest public hotel companies—Starwood Hotels & Resorts (formerly NYSE: HOT, since merged with Marriott Hotels). Two of the biggest commercial mortgage finance companies in the United States—Starwood Property Trust (NYSE: STWD) and iStar (NYSE: STAR). One of the largest collections of multifamily apartments in the United States and an in-house multifamily property management company—Highmark Residential. One of the largest portfolios of select-service hotels in the United States. One of the United Kingdom’s leading hotel operators—Principal Hotel Company. An innovative hotel management company, SH Hotels & Resorts, that is growing its 1 Hotels, Baccarat Hotels and Treehouse Hotels brands. One of the largest homebuilders in the United States—TRI Pointe Homes (NYSE: TPH). One of the leading providers of residential sites to the U.S. homebuilding industry—Starwood Land Ventures. One of the largest publicly traded owners and operators of single-family rental homes in the United States—Starwood Waypoint Homes (formerly NYSE: SFR; since merged with Invitation Homes — NYSE: INVH). In its pursuit of the most compelling opportunities globally, Starwood Capital has invested in more than 30 countries, ranging from the Americas to Europe to Asia. Highlighting Starwood Capital’s international commitment and ability to shift geographies to capitalize on market dislocations, the Firm made the strategic decision in 2011 to enhance its longstanding presence in Europe. Reflecting the success of its investment activities, Starwood Capital and its professionals have received numerous industry accolades over the years, including: Global Commercial Property Executive: Executive of the Year (Barry Sternlicht; 2020) PERE Inaugural Lifetime Achievement Award (Barry Sternlicht; 2016) PERE Firm of the Year (2017) Private Equity Wire: Best Fund Raising Firm – Real Estate (2021) PERE Capital Raise of the Year (2017, 2014) PERE Hotels & Leisure Investor of the Year (2018) North America Private Equity Wire: US Award for Best Real Estate Manager (fund size above $1B; 2020) PERE Firm of the Year (2018, 2017, 2015) PERE Deal of the Year (2017, 2015) PERE Office Investor of the Year (2019) PERE Industry Figure of the Year (Christopher Graham; 2017, 2015) Europe PERE Firm of the Year (2015, 2013) PERE Deal of the Year (2018) PERE Residential Investor of the Year (2019) PERE Nordics Firm of the Year (2019, 2018) PERE German Firm of the Year (2018) HISTORY 1991 Barry Sternlicht launches Starwood Capital 1992 Starwood Opportunity Funds I and IA (SOF I and IA) close at $52M 1993 SOF I/IA contribute the majority of their multifamily portfolio to Equity Residential (NYSE: EQR)—which goes on to become the largest publicly traded apartment owner in the U.S., with Mr. Sternlicht serving on its Board of Directors Starwood Opportunity Fund II (SOF II) closes at $102M 1994 Starwood Capital, via an affiliate, acquires a majority of the distressed senior debt of Hotel Investors Trust, thus setting the stage for the Firm’s emergence as a global leader in the hospitality space Starwood Mezzanine (SOF III) Investors closes at $220M 1995 Starwood Capital creates Starwood Hotels & Resorts Worldwide (NYSE: HOT) and Mr. Sternlicht becomes Chairman and CEO Starwood Capital purchases Westin Hotels & Resorts and begins a new growth phase for the business 1997 Starwood Opportunity Fund IV (SOF IV) closes at $830M 1998 Starwood Capital creates Starwood Financial, subsequently renamed iStar Financial (NYSE: STAR), which becomes one of the largest publicly traded real estate finance companies in the U.S. Starwood Hotels & Resorts Worldwide completes the $14B acquisition of ITT Sheraton, making the company the largest hotel operator in the world First W Hotel opens in New York 1999 Starwood Opportunity Fund V closes at $516M Starwood Capital makes its first non-hotel investments in Europe (London) and in Asia (Japan and Thailand) 2000 Starwood Hotels & Resorts Worldwide is added to the S&P 500 Index 2002 Starwood Opportunity Fund VI (SOF VI) closes at $567M 2003 Starwood Capital, via an affiliate, takes National Golf Properties (NYSE: TEE) private Starwood Capital opens an office in London—marking the beginning of the Firm’s significant expansion of the Firm’s international operations that also includes a Luxembourg hub with responsibility for all European investments in Starwood Capital funds 2005 Mr. Sternlicht returns to Starwood Capital full time as Chairman and CEO Starwood Capital Hospitality Fund I (Hotel I) closes at approximately $900M Starwood Capital funds complete the $3.2B acquisition of Groupe Taittinger and Société du Louvre Starwood Global Opportunity Fund VII (SOF VII) closes at $1.475B 2006 Starwood Capital sells Taittinger champagne company, which was part of the Groupe Taittinger/Société du Louvre acquisition 2008 Starwood Energy Infrastructure Fund (SEIF I) closes at $433M The Visionaire, developed by Starwood Capital via an affiliate, becomes Manhattan’s first Platinum LEED-certified condominium project Starwood Capital, via an affiliate, launches Starwood Land Ventures, which goes on to become one of the leading providers of residential sites to the U.S. homebuilding industry 2009 Starwood Debt Fund II closes at $378M Starwood Capital creates Starwood Property Trust (NYSE: STWD), a leading diversified finance company that is the largest blind pool company ever listed on the NYSE Starwood Capital leads a consortium in acquiring Corus Bank’s $4.5B face-value loan portfolio from the FDIC in one of the government’s largest distressed debt transactions during the Great Recession 2010 Starwood Global Opportunity Fund VIII (SOF VIII) closes at $1.83B Starwood Capital Global Hospitality Fund II (Hotel II) closes at $965M 2011 Starwood Energy Group, via an affiliate, completes the Starwood SSM Project—one of the largest solar power plants in Canada Starwood Capital, via an affiliate, makes the first in a series of acquisitions that will establish the Firm as one of the largest operators of select-service and extended-stay hotels in the U.S. 2012 Starwood Capital affiliate Starwood European Real Estate Finance (LSE: SWEF) goes public 2013 SOF VIII’s TRI Pointe Homes (NYSE: TPH) goes public and is later combined with a Weyerhaeuser subsidiary to create one of the largest homebuilders in the U.S. Starwood Capital funds acquire Principal Hayley, which the Firm subsequently merges with Four Pillars and De Vere Ventures to create a leading U.K. hotel platform Starwood Capital, via an affiliate, and Starwood Property Trust acquire LNR Property LLC (along with subsidiary Hatfield Philips International) for $1.05B, thus expanding the Firm’s distressed real estate expertise Starwood Distressed Opportunity Fund IX (SOF IX) closes at $4.2B Starwood Energy Infrastructure Fund II (SEIF II) closes at $983M 2014 Starwood Waypoint Residential Trust (NYSE: SWAY), one of the largest owners of single-family rental homes in the U.S., goes public Starwood Capital leads a consortium to take public Opus Bank (NASDAQ: OPB), a leading regional real estate lender A Starwood Capital fund acquires a diverse portfolio of assets in Sweden and Norway for $1.4B—the largest property transaction in Scandinavia for the year 2015 Starwood Global Opportunity Fund X (SOF X) closes at $5.6B Starwood Capital launches 1 Hotels and Baccarat Hotels & Resorts brands Starwood Capital funds acquire TMI Hospitality, one of the largest owners, managers and developers of select-service hotels in the U.S. 2016 Starwood Capital funds acquire a portfolio of apartments in the United States from Equity Residential in a transaction valued at $5.4B One of China’s largest life insurance companies, along with some major sovereign wealth funds and insurance companies, invest with Starwood Capital in approximately $3.3B of U.S. select-service hotels 2017 Starwood Capital funds acquire Milestone Apartments REIT Starwood Waypoint Residential Trust merges with Invitation Homes, creating the largest single-family landlord in the U.S. Starwood Capital acquires a multifamily property management company, now named Highmark Residential 2018 Starwood Global Opportunity Fund XI (SOF XI) closes at $7.56B Starwood Energy Infrastructure Fund III (SEIF III) closes at $1.2B Launched Starwood Real Estate Income Trust (SREIT), a non-listed NAV REIT Starwood Property Trust acquires GE Capital’s infrastructure finance division, now known as Starwood Infrastructure Finance 2019 Launched Treehouse Hotels brand Starwood Opportunity Zone Fund I closes at $304M 2020 Starwood Distressed Special Situations Co-Investment closes at ~$700M Starwood Capital becomes a carbon neutral firm 2021 Starwood Distressed Opportunity Fund XII (SOF XII) closes at $10B BUSINESS LINES Starwood Capital has been organized into complementary business lines that feature executive sponsorship and dedicated teams of professionals, supported by the Firm’s general resources in acquisitions, asset management, finance, investor relations, accounting, tax and legal. REAL ESTATE BUSINESSES Global Opportunistic Real Estate Starwood Capital considers opportunistic real estate investing to be defined by minimizing downside risk and maximizing upside. In executing this strategy, the Firm’s seasoned team pursues global investment opportunities across all real estate asset classes and positions in the capital stack that offer compelling risk/return propositions. For example, Starwood Capital has been one of the most prolific investors in distressed debt since the global financial crisis, while acquiring cash-flowing office, residential, industrial and hotel assets at discounts to replacement cost. The Firm has also successfully built platform strategies in asset classes such as residential land and select-service hotels. Starwood Capital has fully raised 16 opportunistic real estate funds to date, with the most recent (Starwood Distressed Opportunity Fund XII), attracting $10 billion of committed capital. Performing Real Estate Debt With total capital deployed since inception of more than $72 billion, Starwood Property Trust (NYSE: STWD) is a leading diversified finance company with a core focus on the real estate and infrastructure sectors. Externally managed by Starwood Capital, Starwood Property Trust focuses on originating, acquiring, financing and managing commercial mortgage loans and other real estate investments. Starwood European Real Estate Finance Ltd. (LSE: SWEF), also externally managed by Starwood Capital, pursues similar investment objectives to Starwood Property Trust, with a geographic focus on Europe. Loan Servicing Starwood Capital, through Starwood Property Trust’s 2013 acquisition of LNR Property LLC, operates as a special loan servicer in the U.S., and has expanded its product offerings to include fixed-rate and conduit loans. LNR provides Starwood Capital with unique insights into the distressed debt market, as it is the named special servicer on approximately 20% of all transactions in the CMBS universe. Hotel Brand Management SH Hotels & Resorts is a hotel brand management company with over 1,500 employees that provides the Firm with significant proprietary investment opportunities and helps enhance the performance of fund hotel investments—including assisting Starwood Capital’s in-house design and hotel operations experts. Leveraging its marketing, design, operational and technological expertise, SH Hotels & Resorts is the force behind some of the most groundbreaking and dynamic hotel brands in the world, including: 1 Hotels As a luxury lifestyle hotel brand inspired by nature, 1 Hotels cultivates the best of eco-conscious design and sustainable architecture, together with extraordinary comfort and an unrivaled level of service. 1 Hotels, which launched in 2015 with the opening of exclusive properties in Miami’s South Beach and Manhattan, followed by Brooklyn in 2017, was developed with the simple idea that those who travel the world also care about it. 1 Hotels upholds this vision by channeling nature through design, culinary partnerships, connecting with the local community and taking small steps to make a big difference. Baccarat Hotels & Resorts Drawing upon the 250-year history of the iconic French crystal maker, Baccarat Hotels & Resorts delivers a distinctive, personalized experience in the world’s most illustrious locales. Baccarat Hotels & Resorts launched in March 2015 with the opening of its flagship property in New York City. Distinguished by a singular sense of glamour and celebration, as well as a groundbreaking vision of modern luxury, Baccarat Hotels & Resorts sets a new precedent for the ultimate lifestyle experience—reimagining excellence through impeccable service and inspired artistry. Treehouse Hotels Inspired by the mission of sister brand 1 Hotels, sustainability remains a core standard in the nostalgic way. Treehouse Hotels evokes the excitement and anticipation necessary to ignite an adventurous spirit within us all. Attention to found objects, locally sourced knickknacks and mismatched details come together to form the perfect treehouse. Treehouse London, which began welcoming guests in 2019, sets the standard with sustainability initiatives that will live on and be built upon at all future Treehouse locations. From a robust composting and recycling program to committing to reducing single-use plastics throughout all operations, Treehouse Hotels commits to the road less traveled in order to do what’s best for the planet. Multifamily Starwood is one of the largest owners of multifamily in the U.S. and in 2017 acquired a multifamily management company. This provides the Firm with asset and market information not accessible to competitors, which helps with deal sourcing, underwriting and asset management. The team’s expertise also is valuable with revenue/expense management and marketing. Opportunity Zone Program We target proven growth markets that have demonstrated strong fundamentals and liquidity. Starwood Real Estate Income Trust Starwood Real Estate Income Trust, Inc. (SREIT) is a non-listed REIT with an investment strategy that targets a diversified portfolio of high-quality, stabilized, income-producing real estate. Starwood Real Estate Income Trust invests in primary and secondary markets across the U.S. and in Europe. For more information about Starwood Real Estate Income Trust, please visit starwoodnav.reit ENERGY BUSINESSES Energy Infrastructure Starwood Energy Group specializes in energy infrastructure investments, with a focus on the natural gas and renewable power generation and transmission sectors. Through its general opportunity funds and other affiliated investment vehicles, Starwood Energy Group has raised over $3 billion of equity capital and has executed transactions totaling more than $7 billion in enterprise value. By leveraging its extensive operations, development, construction, acquisition and financing expertise, the team is well-positioned to capitalize on opportunities emerging in this rapidly evolving industry. Oil & Gas Starwood Oil & Gas invests in conventional and unconventional oil & gas assets in North America. In 2013, the group made a $36 million investment in Northeast Natural Energy to fund the Charleston, WV-based company’s acreage acquisition and development program in one of the most prolific areas of the Marcellus Shale. In 2015, the team led a $110 million investment in EagleRidge Energy, a Dallas-based oil & gas producer focused on one of the lowest-cost natural gas shale plays in Texas. In 2017, the group led a $50 million investment in Ventana Exploration and Production to acquire non-operating working interests and minerals in the prolific STACK and SCOOP basins in Central Oklahoma. Leveraging its industry knowledge and extensive transactional experience, Starwood Oil & Gas is well-positioned to capitalize on the dramatic transformation of the energy sector. EDGE Starwood Capital occupies a unique position in global real estate investing, based on the following differentiators: DEEP HANDS-ON REAL ESTATE PERSPECTIVE Starwood Capital has 30 years of experience covering virtually every real estate asset class. The Firm has acquired over $94 billion of opportunistic real estate assets since inception, generating strong returns throughout that time. The Firm also operates a leading diversified finance company —Starwood Property Trust (NYSE: STWD), which has deployed over $72 billion in capital since inception. INVESTMENT AGILITY A hallmark of Starwood Capital is the ability to pursue a wide variety of investment opportunities as they emerge—moving from asset class to asset class, shifting geographies from the U.S. to international markets and changing positions in the capital stack as the team perceives risk/return dynamics to be evolving. SCALE AND CREATIVITY As one of the largest institutional real estate investors in the world, Starwood Capital benefits from a worldwide sourcing engine—creating a robust deal flow, and accessing the majority of transactions on an off-market basis. In fact, over 80% of SOF VIII – XII’s investments were sourced off-market or via small auctions. The Firm also boasts a history of extraordinary creativity that extends to its innovative transaction structuring and execution capabilities. OPERATIONAL EXPERTISE The Firm has broad real estate operating experience, with asset management organized into dedicated teams by specialty. The Firm has created a number of platforms to enhance operational efficiencies and maximize the value of underlying assets. In addition, our in-house loan workout expertise gives us the ability to manage large portfolios of non-performing loans. CAPITAL MARKETS SKILLS Starwood Capital’s capital markets expertise is a core competency that the Firm believes sets it apart from more traditional real estate investors. The team constantly evaluates real estate in relation to the capital markets in order to take advantage of pricing inefficiencies, and arbitrage between the public and private markets. When the public markets are willing to pay more for assets or platforms than could be generated from longer-term holds or individual asset sales, Starwood Capital has completed a number of successful public market executions, including: Starwood Property Trust (NYSE: STWD) Starwood Hotels & Resorts Worldwide (formerly NYSE: HOT, since merged with Marriott Hotels) Equity Residential (NYSE: EQR) Starwood Waypoint Homes (NYSE: SFR; since merged with Invitation Homes — NYSE: INVH) TRI Pointe Homes (NYSE: TPH) iStar Financial (NYSE: STAR) Starwood European Real Estate Finance (LSE: SWEF) Opus Bank (NASDAQ: OPB) On the debt side, the Firm’s skilled in-house capital markets team has closed transactions totaling over $140 billion since January 2010. The team’s expertise and global network of lending relationships has often allowed it to obtain best-in-market terms for investors, while using brokers only sparingly. AN INFORMATION ADVANTAGE The expertise developed through Starwood Capital’s symbiotic business lines enhances the team’s judgment throughout the underwriting process. These platforms provide critical bottom-up intelligence that helps set the agenda for the Firm’s investment strategy: Starwood Property Trust: This affiliated diversified finance company helps Starwood Capital underwrite transactions by providing information on where loans are being executed in the market. The team also shares market data with the Firm to help create more accurate underwriting projections. As one of the largest loan special servicers in the United States (through affiliate LNR) the team supplies Starwood Capital with general market information. Starwood Multifamily Portfolio: Starwood Capital is not only one of the largest apartment owners in the United States, but also among the largest within a number of select markets. This critical mass in targeted markets provides the Firm with information on asset performance that other investors simply do not possess. SH Hotels & Resorts: Starwood Capital’s hotel brand management team brings operational expertise in the areas of revenue management, marketing, food & beverage, systems and cost management to the hotel underwriting and asset management teams. GLOBAL REACH Starwood Capital’s track record as a global investor is well-established. Beginning with the purchase of distressed condominium loans in Bangkok in 1999, the Firm’s international investments have steadily grown to encompass more than 30 countries. In Europe alone, Starwood Capital has committed more than $10 billion of equity in over 80 transactions since 1999. Today, Starwood Capital and its affiliates operate 16 offices worldwide. This expansive network allows the Firm to efficiently evaluate the most compelling risk/return opportunities across the globe. DISTRESSED INVESTING IN OUR DNA Starwood Capital was founded during the savings & loan crisis in the early 1990s, when the Firm acquired real estate holdings from the Resolution Trust Corp. The Firm has since capitalized on numerous opportunities to purchase distressed assets at deep discounts. Across its last three funds, the Firm has acquired over $10 billion of unpaid principal balance NPLs, partially sourced by engaging domestic money center and regional banks, and forming strategic partnerships with the National Asset Management Agency (Ireland’s “bad bank”) and the FDIC (via the Corus Bank investment) to purchase some of their NPL pools, as well as purchasing a pool from Bankia (Spain’s amalgamation of seven troubled local banks). Starwood Capital also benefits from the distressed real estate expertise of LNR Property LLC one of the largest special loan servicers. SEASONED, STABLE MANAGEMENT TEAM The executive committee at Starwood Capital has worked together for an average of 21 years, and has an average of 29 years of industry experience—across all real estate asset classes and stages of the investment cycle. FLEXIBLE INVESTMENT SIZING Starwood Capital occupies what it believes is a distinct niche in the market: Nimble enough to target transactions of $50–125 million, yet large enough to capitalize on billion-dollar investment opportunities around the world by utilizing co-investment funds. For its sweet spot of midsized transactions, Starwood Capital believes that the Firm’s reputation, sophistication, speed, access to capital and ability to execute provide the Firm with a competitive advantage over smaller, more regional firms. On larger transactions, the Firm’s proven ability to conduct detailed due diligence using a vast network of resources and relationships results in an in-depth understanding of potential investments that few investors can match in a cost-efficient manner. STRONG RISK-ADJUSTED PERFORMANCE Starwood Capital’s disciplined investment approach has enabled the Firm to consistently deliver strong performance across its funds, with the Firm’s first eight funds 100% liquidated. A HISTORY OF RECORD-SETTING VALUE CREATION Starwood Capital’s opportunistic real estate program is distinguished by the Firm’s proven ability to develop creative strategies to add value throughout the investment process—enabling the most advantageous exit. The success of this approach is underscored by the Firm’s sale of 21 assets since 2010 that have set records for: A Paris hotel (Hôtel de Crillon) A downtown Manhattan condo (Walker Tower) Denver office buildings (One Union Station and The Triangle Building) A Brooklyn condo (Pierhouse at Brooklyn Bridge Park) An East London hotel (Ace Hotel London Shoreditch) A North American hotel (Baccarat Hotel New York) A Portland office property (Block 300) A Vancouver hotel (Westin Bayshore) A select-service hotel in D.C. (Hilton Garden Inn Washington, D.C./Georgetown) A North Carolina asset (One Wells Fargo Center) Land in Denver (16 Chestnut) A Czech Republic office transaction (The Park) A Broward County, FL hotel (Margaritaville Hollywood Beach Resort) A Manchester hotel (Principal Manchester) An Edinburgh hotel (Principal Edinburgh Charlotte Square) A Glasgow hotel (Principal Glasgow Blythswood Square) A London hotel (Principal London) A light industrial portfolio across multiple European countries (Pan-European Light Industrial Platform) A North American resort (1 Hotel South Beach) An Ottawa hotel (Westin Ottawa) COMMITMENT TO ECO-CONSCIOUS INVESTMENT Starwood Capital Group is a proud signatory of the United Nations-supported Principles for Responsible Investment. The Firm continues to set a new standard for the private equity industry in environmentally responsible investment and development, across all real estate asset classes. Nowhere is this commitment more apparent than 1 Hotels. Operated by Starwood Capital affiliate SH Hotels & Resorts, this luxury lifestyle brand represents hospitality with a purpose: To celebrate nature while encouraging sophisticated travelers to live well, do better and connect with the world around them. DESIGN LEADERSHIP Starwood Capital believes that it possesses an expertise in the design of real estate assets that is unsurpassed in the private equity industry. This sensibility starts at the top: CEO Barry Sternlicht is a member of the Interior Design Hall of Fame. A number of Starwood Capital’s assets have been acclaimed for their aesthetics, which ultimately help drive value for the Firm’s investors. APPROACH Starwood Capital seeks to deliver consistent, robust returns while placing a premium on preserving capital. The team performs a comprehensive risk/return analysis on each potential transaction, and only invest in assets and businesses with asymmetrical return potential. Guided by common sense, discipline and the recognition that intellectual humility is the foundation of successful investing, the Firm adheres to the following core principles: INVEST WHEN NEW SUPPLY IS LOW Target markets with high barriers to entry and little to no competitive supply planned or under construction. Since the economic recovery has generally been slow and steady, Starwood Capital has not seen the type of aggressive supply that would typically result from the recent rent growth and strength of the markets. ANTICIPATE CAPITAL FLOWS Seek 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. The Starwood Capital team has found that capital flows often influence asset valuations as much as—or more than—the impact of local market supply and demand trends. Once these target markets are identified, the team works on the “micro” side to pinpoint opportunities for asymmetrical return potential through value-add asset management. BUY BELOW REPLACEMENT COST Purchase—at favorable prices—fundamentally sound assets that have previously lacked capital, attention or effective management. Buying below replacement cost offers a margin of safety, typically ensuring that no new construction/ competition will be completed until values rise to justify new product. Starwood Capital’s recent transactions demonstrate that opportunities continue to arise to acquire assets at discounted prices. UTILIZE APPROPRIATE DEBT TO GENERATE POSITIVE LEVERAGE Seek to use proper leverage—in amount and duration—to reflect the stability of each asset’s cash flow. In the current market, Starwood Capital can typically buy property at yields in excess of the cost of debt and generate strong cash-on-cash yields during the hold period. Positive leverage allows the investment team to be patient for a recovery, lessening the reliance on the residual value to achieve strong returns. In most cases, Starwood Capital can secure debt longer than the expected hold period—thus creating a potential asset upon exit if interest rates rise. 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. ADD VALUE TO INVESTMENTS THROUGH HANDS-ON ASSET MANAGEMENT Acquire undermanaged or undercapitalized assets that the Starwood Capital team can stabilize and refurbish, and implement a dynamic asset management plan in order to position each investment for sale at the maximum price. In appropriate cases, the Firm can create a growth platform through the acquisition of complementary assets and/or portfolios. MAINTAIN INVESTMENT DISCIPLINE Seek to enhance returns in both cyclical downturns and upswings by maintaining a disciplined approach to assets and their value. For example, prior to the market crash in 2008, Starwood Capital minimized its acquisitions and maximized dispositions of assets—whereas in subsequent years, the Firm shifted its focus toward a higher volume of acquisitions. By the same token, the Firm took advantage of a number of distressed investment opportunities in the wake of the Great Recession but shifted toward more defensive asset classes in recent years. CAPITALIZE ON THE FIRM’S DISPOSITION EXPERTISE Design optimal exit strategies that can generate maximum asset value, with options including an individual asset sale, portfolio sale, operating company sale or public market execution—all of which Starwood Capital has extensive experience in executing. ALIGN INTERESTS WITH INVESTORS Treat Starwood Capital investment partners’ capital as the Firm’s own—because a meaningful portion of it is the Firm’s own. Starwood Capital’s partners invest alongside its LPs in every transaction that the Firm sponsors. Further, Starwood Capital does not earn transaction fees in its opportunity funds.