Starwood CEO Sternlicht broadens data centre footprint globally

[BEVERLY HILLS, Los Angeles] Barry Sternlicht, chairman and CEO at Starwood Capital Group, said his company has been investing in data centres for the past five years, expanding from the United States to Europe and Asia. 

Starwood has established a significant presence in the data centre sector, including the Northern Virginia market near Washington, DC, he said in an interview with Bloomberg Television at the Milken Institute Global Conference in Beverly Hills.

The company expanded its business by acquiring a majority stake in Ireland’s largest data-centre operator and, in Asia, secured a controlling interest in ESR alongside Warburg.

“They have a big data centre business,” Sternlicht said of the ESR acquisition, which he described as “the largest privatisation in Asia last year”.

The deal gives Starwood exposure to markets including South Korea, Japan, India, and Australia, complementing Starwood’s existing focus on Europe and the US, he noted. 

Sternlicht said that data centre economics are relatively consistent across global markets, saying the yields on development costs are “about the same” in Australia as in the US.

“You can get power anywhere in the world. You have something you can talk to a hyperscaler about. So we’re just agnostic,” he added.

On the broader investment landscape, Sternlicht said that Europe became attractive earlier than the US because “yields on property are higher than the cost of debt”. 

He expressed concern about wealth disparity in the US, saying “half the country isn’t doing so great”, which could impact politics, real estate and taxes. That’s led Starwood to “shy away from blue states lately” in favour of Sunbelt states where job growth is stronger.

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Sternlicht made his reputation buying distressed real estate in the aftermath of the savings and loan crisis of the 1980s and 1990s. He went on to found Starwood Hotels & Resorts, which was later acquired by Marriott International, and the real estate lender Starwood Property Trust. BLOOMBERG