Starwood Creates Infrastructure Investment Unit

GREENWICH, CT-As the economic downturn continues, an increasing number of municipalities are requiring private developers shoulder more of the burden of funding infrastructure improvements. Starwood Capital Group Global LLC has formed a new subsidiary that will be looking to invest in this specific niche market.

The locally based company reports that it has formed Starwood Infrastructure Finance LLC, a subsidiary that will invest and manage investments in public real estate infrastructure bonds. Starwood Capital has hired former Bank of America executives Ramiro Albarran and Bob Burch as managing principals of the new entity who will both hold primary responsibility for finding and managing Starwood Infrastructure Finance’s investments.

Albarran tells GlobeSt.com that Starwood Infrastructure Finance will invest in municipal bonds used to finance infrastructure improvements on private real estate development projects. He believes this will be a growing sector, especially during the current economic downturn and credit crunch, as more and more localities will be requiring private developers to shoulder the cost of infrastructure improvements.

“Starwood Infrastructure Finance will fill a valuable need in today’s market by providing long-term capital to projects–both large and small–across the country with attractive risk-adjusted returns for our investors,” says Karl Frey, managing director for Starwood Capital. “Starwood Infrastructure Finance will take a disciplined approach to underwriting these bonds for what they are–non-recourse real estate development loans–and we are especially pleased to have the ideal management team in place to lead that effort.”

Albarran adds that “Starwood Infrastructure Finance’s initial focus will be to purchase performing debt on ongoing projects that hold great long-term potential, but are in need of new capital partners. With a number of troubled projects still yet to reach their ultimate downside, we will employ a diligent and disciplined investment approach that seeks to capitalize on a great number of attractive opportunities we believe exist across the country.”

He stresses that Starwood Infrastructure Finance will not be a short-term workout play but rather a long-term capital provider in this sector, working with developers and underwriters to see projects successfully completed. “Through tailored solutions and a deep institutional understanding of the underlying real estate projects, we believe we can achieve attractive long-term returns by meeting a need in the market,” Albarran says.

A Starwood Capital spokesman says that the company intends to ultimately have an investment portfolio of between $500 million to $1 billion in net asset value at its newly formed subsidiary.

Prior to joining Starwood Capital, Albarran served as the national head of investment banking for public finance at Bank of America and was a member of the group’s Operating and Commitment Committees. He also was a member of the Municipal Securities Rulemaking Board. Burch was a managing director at Bank of America and the national manager for real estate securities within public finance, which was responsible for structuring all the real estate infrastructure bonds underwritten by Bank of America.