As GlobeSt.com recently reported, Starwood formed a new subsidiary that will be looking to invest infrastructure improvements, but a source close to Starwood tells GlobeSt.com that the two have separate focuses. The subsidiary will invest and manage investments in public real estate infrastructure bonds, and the Fund targets generation and transmission assets in North America.
The Fund has already committed more than $250 million of equity to specific projects exceeding $1 billion in cost. The Fund attracted commitments from various investors, including endowments and foundations, pension plans, banks, insurance companies and high net worth individuals, which the source says is due to a combination of this sector "gaining a great deal of interest," and of Starwood Capital resources standing behind it.
Barry Sternlicht, chairman and CEO of locally based Starwood Capital, says in a prepared statement that "the Fund is the result of a focused business strategy that we have been pursuing in the extremely vibrant North American power generation and transmission sector for several years. Our investors have responded to the strategy, to the potential to earn very attractive risk adjusted returns, to our experienced team, and to Starwood Capital's strong 16-year investment track record as a firm."
Starwood Energy actively pursues attractive, risk-adjusted returns from both opportunistic acquisitions and from development-stage funding of energy infrastructure assets. "Starwood Energy targets investments in hard assets with strong cash flows that offer superior equity returns upon exit. Starwood Energy believes that this approach reduces downside potential, provides financial flexibility, and broadens exit alternatives," explains Brad Nordholm, Starwood Energy's CEO and managing director, in a prepared statement. The source could not detail further information as to how Starwood Energy chooses the investments, since "they are not narrowly defined."
Starwood Energy also targets both greenfield and brownfield development opportunities where it can add value through its development and financial expertise, according to a prepared release. Madison Grose, Starwood Energy's vice chairman, says in the release that "on the development side, we are, in effect, delivering 'build to suit' assets for long term credit counterparty 'tenants.' The high-quality nature of the cash flows in our projects has allowed us continued access to the debt capital markets in these turbulent times, while facilitating an investment thesis that seeks balanced returns between current yield and residual gains."
The Fund seeks to maximize returns to, and achieve liquidity for, its investors through regular cash distributions and the proceeds from the sale or other disposition of assets. Starwood Energy seeks to enhance value by pursuing negotiated transactions when possible. To identify such opportunities, the release says that Starwood Energy executives leverage long-standing relationships with owners of energy assets and their advisors. "Our executives have a demonstrated history of successfully originating transactions through proprietary channels rather than through agent-led auctions," says Steve Zaminski, Starwood Energy's EVP and managing director. "We continue to enjoy a strong pipeline of investment opportunity driven by industry fundamentals and an evolving regulatory environment."
Current assets in the Fund include: Midway, a 120-megawatt simple-cycle natural gas peaking plant located 60 miles west of Fresno, CA, which is currently under development; Thermo Ft. Lupton Facility, a 272-megawatt combined cycle natural gas power plant and associated greenhouse steam-host located approximately 25 miles northeast of Denver. The transaction is expected to close in the near future; Minority interest in the Mead-Phoenix project which is 1,296 megawatts, and the Mead-Adelanto project which is 1,300 megawatts; Hudson, a 660-megawatt transmission line currently under development between Ridgefield, NJ and midtown Manhattan; and Green Line, a 660-megawatt undersea transmission line currently under development between Maine and Boston. Sources did not respond to queries by deadline regarding how the $250 of equity was divided.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
