Yesterday, Maria Bartiromo sat down with Barry Sternlicht, CEO of Starwood Capital. The full interview is below:
For those with attention deficits, here are some of the highlights:
“Real estate really is the last real imperfect market. People are doing things today because they are a little embarrassed of what they did before.”
Where does Starwood see the best opportunities?
Starwood is focused on lending money and buying land on the equity side. Starwood is also buying a lot of debt with the expectation of getting the keys and owning these assets with a reasonable basis.
Starwood is looking to buy land in the “growth states” like CA, FL, AZ and NV looking for land because there are no natural lenders to land today and we don’t have to compete with homebuilders to buy land. At the same time, Starwood remains cautious with the shadow of foreclosures “with between 12 and 15 million homes stuck on banks balance sheets.”
Who else do you see in the market looking for opportunities?
With the rise in the stock market, it has allowed institutional investor’s allocations to be such that some are now beginning to look at real estate again.
We have also seen a lot of interest from off-shore investors. For example, China’s sovereign wealth fund. “China would rather to buy our office buildings and shopping centers rather than our T-bonds. That may be good, but will be politically interesting.”
What’s next?
With the weakness in the economy, Sternlicht expects to see flat rent growth in office, retail and industrial for the next 3 years. Apartments may see an up-tick in rents sometime in the next year.
As for monetary policy he comments, “We need a very careful Fed. The Fed should raise short-rates to protect the dollar and to get people to start thinking about risk again. It wouldn’t kill the economy to have 1% interest rates.”
Navigating the Real Estate Market
Yesterday, Maria Bartiromo sat down with Barry Sternlicht, CEO of Starwood Capital. The full interview is below:
For those with attention deficits, here are some of the highlights:
“Real estate really is the last real imperfect market. People are doing things today because they are a little embarrassed of what they did before.”
Where does Starwood see the best opportunities?
Starwood is focused on lending money and buying land on the equity side. Starwood is also buying a lot of debt with the expectation of getting the keys and owning these assets with a reasonable basis.
Starwood is looking to buy land in the “growth states” like CA, FL, AZ and NV looking for land because there are no natural lenders to land today and we don’t have to compete with homebuilders to buy land. At the same time, Starwood remains cautious with the shadow of foreclosures “with between 12 and 15 million homes stuck on banks balance sheets.”
Who else do you see in the market looking for opportunities?
With the rise in the stock market, it has allowed institutional investor’s allocations to be such that some are now beginning to look at real estate again.
We have also seen a lot of interest from off-shore investors. For example, China’s sovereign wealth fund. “China would rather to buy our office buildings and shopping centers rather than our T-bonds. That may be good, but will be politically interesting.”
What’s next?
With the weakness in the economy, Sternlicht expects to see flat rent growth in office, retail and industrial for the next 3 years. Apartments may see an up-tick in rents sometime in the next year.
As for monetary policy he comments, “We need a very careful Fed. The Fed should raise short-rates to protect the dollar and to get people to start thinking about risk again. It wouldn’t kill the economy to have 1% interest rates.”