The FORT Podcast: Barry Sternlicht – Chairman & CEO @ Starwood Capital Group
Barry Sternlicht is Chairman & CEO of Starwood Capital Group, the private alternative investment firm he formed in 1991 that is focused on global real estate. He also serves as Chairman & CEO of Starwood Property Trust (NYSE: STWD), a leading diversified finance company.
For the past 32 years, Barry has structured investments with an asset value of $240B+. Starwood Capital’s investment vehicles have invested in approximately 290,000 residential units, 4,000 hotels, 103M SF of office properties, 75M SF of industrial, 56M SF of retail and 70,000 lots of land in residential subdivisions. The Firm currently manages approximately $115B of assets on behalf of its high net worth and institutional partners. Starwood Capital, its affiliates and externally managed public companies encompass over 5,000 employees.
On this episode, Chris and Barry discuss:
- Scaling the business to 120k employees in 7 years
- How to take a company from $1B in AUM to $10B
- Selling Caesars Palace
- Thoughts on the 2024 market
Listen on:
Spotify
Apple Podcasts
YouTube
Topics:
(00:00:00) – Intro
(00:02:07) – AI & Hotels
(00:08:48) – The Midas touch
(00:10:46) – Scaling to 120k people in 7 years
(00:15:48) – Paired-Share REITs
(00:28:41) – Thoughts on Blackstone
(00:36:26) – How to buy a REIT
(00:40:39) – Taking a company from $1B in aum to $10B
(00:49:57) – How did you keep Starwood Capital moving while you stepped away?
(00:58:42) – Selling Caesars Palace
(01:08:01) – Thoughts on the market in 2024
Episode Summary
As the founder, chairman, and CEO of Starwood Capital Group, Sternlicht has pioneered innovations in hotel design, real estate investment, and property management, reshaping the landscape of luxury and boutique hospitality. His journey, marked by strategic risk-taking and a keen eye for market dynamics, offers a masterclass in navigating the complex world of real estate and beyond.
The conversation kicks off with Sternlicht reflecting on the evolving landscape of the hospitality industry, particularly in the context of technological advancements and shifting consumer expectations. He underscores the growth potential in global travel, spotlighting emerging markets like China and India as future hotspots for tourism and hotel development. Sternlicht’s philosophy emphasizes the necessity of adapting to consumer demands, pointing out the challenges older hotel properties face in staying relevant amidst rapidly changing tastes and preferences.
An interesting facet of Sternlicht’s strategy involves leveraging niche markets to achieve remarkable success, even during economic downturns. He illustrates this with the example of a Miami property developed in the midst of the pandemic, which thrived by catering to the specific needs of small offices and family businesses. This anecdote underlines the importance of understanding and meticulously catering to targeted customer segments, a principle that has guided much of Sternlicht’s ventures.
Sternlicht also delves into the nuances of branding and market adaptation, sharing his hands-on approach to maintaining the integrity and consistency of his hotel brands. From sustainable practices to personalized services, he emphasizes the critical role of attention to detail in crafting memorable experiences for guests. The discussion extends to Sternlicht’s strategic expansion efforts, highlighting the success of properties in Nashville and San Francisco, and underscoring his belief in innovation balanced with profitability.
Transitioning to broader investment philosophies, Sternlicht recounts the serendipitous and strategic decisions that fueled the growth of his business empire. He shares tales of acquiring troubled assets, navigating complex financial structures, and seizing market opportunities, painting a picture of a career built on bold moves and strategic foresight. Sternlicht’s stories, ranging from restructuring deals to leveraging unique financial instruments, illustrate the multifaceted nature of real estate investment and the importance of agility in business strategy.
A significant portion of the podcast is dedicated to exploring the challenges and strategies inherent in scaling businesses. Sternlicht offers a candid look at the journey from managing a small team to overseeing a global workforce, highlighting the pivotal decisions, leadership challenges, and strategic pivots that have defined his journey. His reflections on building competent teams, making tough choices, and fostering resilience offer a roadmap for aspiring entrepreneurs and business leaders.
In the concluding segment of the podcast, Sternlicht turns his attention to the economic landscape, critiquing Federal Reserve policies and their impact on the real estate sector. He discusses the cyclical nature of the economy, the transient effects of inflation, and the strategic considerations that guide his investment decisions. Predicting adjustments in interest rates, Sternlicht emphasizes the importance of timing, market analysis, and adaptability in navigating the fluctuating economic terrain.
The FORT is produced by Johnny Podcasts