The private investment firm based in America, has announced their target of $2 to $3 billion for their Starwood Distressed Opportunity Fund XI.

Starwood Capital Group has held its first closing for the ninth global real estate fund and has raised $1.2 billion of equity in just four months. They have also suggested offering management fee breaks for the first time to institutional investors and those investors committing a more generous fund of $150m and over. The first closing was held in December 2011, the interim expected to be early 2012 and the final closing is likely to be by summer 2012.

Starwood is imitating an industry trend by offering fee breaks to investors. This acts as an incentive to attract investors and trigger fundraising activities as previously done by The Blackstone Group and the Carlyle Group. The Blackstone Group slashed its management fee for certain investors during the first close of the Blackstone Real Estate Partners VII, which targeted $10 billion of equity in August 2011.

Starwood’s Fund IX will primarily focus on the US distressed opportunities; however 20 to 30 percent of investment will be in Europe and 10 percent in emerging markets.

Over the past 20 years Starwood has averaged over 30 percent gross IRRs on its funds, as well as taking away three Global PERE Awards last year.

Source: PERE 06/01/2012