Starwood Capital Group Launches Starwood Digital Ventures

Rhea-AI Summary

Starwood Capital Group announces the launch of Starwood Digital Ventures, a platform dedicated to the Firm's growing global data center investment strategy, which currently includes $8 billion in assets. The Firm has also entered into a strategic alliance with Worldwide Mission Critical to support anticipated growth.

Insights

Market Research Analyst

The establishment of Starwood Digital Ventures represents a strategic move by Starwood Capital to consolidate and enhance its position within the data center market, a sector experiencing significant growth due to increased demand for cloud services, big data analytics and the Internet of Things (IoT). The investment in data center infrastructure, particularly in the robust markets of the U.S. and Europe, indicates a forward-looking approach capitalizing on the digital transformation wave. The alliance with Worldwide Mission Critical suggests a commitment to operational excellence and could potentially lead to cost efficiencies and improved service delivery, which is crucial in a capital-intensive industry.

By leveraging the expertise of Worldwide Mission Critical, Starwood Digital Ventures is likely to benefit from streamlined development processes and risk mitigation in the construction and operation of data centers. This strategic alliance could provide a competitive edge in project execution and enhance the platform's ability to attract institutional investors seeking exposure to digital infrastructure assets. The growth of Starwood's data center portfolio aligns with industry trends of increased capital allocation towards digital real estate, which is becoming an essential component of diversified real estate investment trusts (REITs) and institutional portfolios.

Financial Analyst

The announcement of an $8 billion asset base in the data center domain is a significant financial undertaking, suggesting that Starwood Capital is betting big on the continued expansion of the data center industry. This level of investment could have a substantial impact on the firm's balance sheet and revenue streams, potentially offering a high return on investment given the high demand for data storage and processing capabilities. The strategic partnership with Worldwide Mission Critical is also noteworthy as it could lead to improved margins through efficiencies in project development and management.

Investors should consider the long-term implications of such a venture, including the potential for increased cash flows from operations and the appreciation of the underlying assets. However, it is also important to be cognizant of the risks associated with the rapidly changing technology landscape and the large capital outlays required in the initial stages of data center development. The ability of Starwood Capital to execute on its strategy and manage these risks will be critical in determining the success of the investment.

Technology Infrastructure Analyst

The creation of Starwood Digital Ventures underscores the strategic importance of data centers as critical infrastructure for the technology sector. With the data center market projected to grow, driven by the surge in data consumption and cloud computing, Starwood Capital's investment is timely. The partnership with Worldwide Mission Critical could provide Starwood Digital with cutting-edge design and development capabilities, which are essential for maintaining a competitive edge in the technology infrastructure space.

The reference to 1.5 gigawatts of development capacity is a testament to the scale at which Starwood Capital is operating, as gigawatt-level power capacity is indicative of large-scale data center operations that can support significant IT loads. This level of investment in data center capacity is substantial and reflects the growing importance of energy efficiency and sustainability in data center operations, which are increasingly becoming differentiators in the industry.

New Platform to Oversee the Firm's Growing U.S. and European Data Center Investment Strategy, which Currently Includes $8 Billion in Assets 

Starwood Capital Also Enters Strategic Alliance with Worldwide Mission Critical to Help Support Anticipated Growth 

MIAMI, Jan. 18, 2024 /PRNewswire/ -- Starwood Capital Group ("Starwood Capital" or "the Firm"), a leading global private investment firm focused on real estate, today announced the launch of Starwood Digital Ventures ("Starwood Digital" or "the Platform"), a platform dedicated to the Firm's growing global data center investment strategy.

Over the past five years, Starwood Capital has committed a total of approximately $8 billion in data center development encompassing 1.5 gigawatts in various stages of development, making it one of the largest privately held data center developers in the United States and Europe. Starwood Digital Ventures will utilize funds from various Starwood Investment Vehicles to continue to develop its pipeline as well as partner with best-in-class data center operators.

In conjunction with this announcement, Starwood Capital also announced that it has entered into a strategic alliance with Worldwide Mission Critical, an industry-leading consulting firm with deep expertise assisting clients with the design and development of data center projects. Worldwide Mission Critical provides services ranging from design management, bidding and procurement, construction quality control, and integrated testing for data center projects. The firm has partnered with Starwood Capital on several projects over the past five years. The strategic alliance will allow Starwood Capital to quickly scale its data center platform to support anticipated growth.  

"We are incredibly excited about the launch of Starwood Digital, which will provide us with additional opportunities to grow our data center portfolio amidst strong industry tailwinds," said Barry Sternlicht, Chairman and CEO of Starwood Capital. "With the strong demand for data center services in the United States and growing needs to support end uses such as artificial intelligence, we see continued opportunity to invest in this growing sector."

"In addition, we have worked closely with Worldwide Mission Critical the last several years and look forward to deepening our relationship with the industry experts there, who have become valued partners of ours, as we leverage their skills and strong industry reputation to expand our data center investments both domestically and abroad generating compelling value for our investors," said Anthony Balestrieri, Managing Director at Starwood Capital.

About Starwood Capital Group

Starwood Capital Group is a private investment firm with a core focus on global real estate. The Firm and its affiliates maintain 16 offices in seven countries around the world, and currently have 5,000+ employees. Since its inception in 1991, Starwood Capital Group has raised over $75 billion of capital, and currently has ~$115 billion of assets under management. Through a series of comingled opportunity funds and Starwood Real Estate Income Trust, Inc. (SREIT), a non-listed REIT, the Firm has invested in virtually every category of real estate on a global basis, opportunistically shifting asset classes, geographies and positions in the capital stack as it perceives risk/reward dynamics to be evolving. Starwood Capital also manages Starwood Property Trust (NYSE: STWD), the largest commercial mortgage real estate investment trust in the United States, which has successfully deployed over $95 billion of capital since inception and manages a portfolio of over $27 billion across debt and equity investments. Over the past 32 years, Starwood Capital Group and its affiliates have successfully executed an investment strategy that involves building enterprises in both the private and public markets. Additional information can be found at www.starwoodcapital.com.

About Worldwide Mission Critical

Worldwide Mission Critical is a global owner's representation and project management company dedicated to advancing the data center industry. Relying on a team of more than 30 design and construction professionals, Worldwide Mission Critical handles every aspect of the development of data centers, including site selection, plan development, procurement, design oversight, construction and building turnover. Founded in 2018 under the principle of delivering high-quality, impactful projects, Worldwide Mission Critical has successfully completed more than 650 projects and currently maintains more than 3.5GW of data centers under development with operations spanning five continents. For more information, visit worldwidemissioncritical.com.

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SOURCE Starwood Capital Group

FAQ

What is the name of the new platform launched by Starwood Capital Group?

The new platform launched by Starwood Capital Group is called Starwood Digital Ventures.

How much has Starwood Capital committed to data center development over the past five years?

Starwood Capital has committed a total of approximately $8 billion in data center development over the past five years.

What is the name of the consulting firm that Starwood Capital has entered into a strategic alliance with?

Starwood Capital has entered into a strategic alliance with Worldwide Mission Critical.

What services does Worldwide Mission Critical provide?

Worldwide Mission Critical provides services ranging from design management, bidding and procurement, construction quality control, and integrated testing for data center projects.