UNITED STATES - California Public Employees Retirement System has made a $400m (€300.4m) commitment to the Starwood Capital Hospitality Fund II, following earlier success with an first version of Starwood's specialist fund.
CalPERS officials revealed at its 20 October board meeting the fund would be willing to place its money with Barry Sternlicht's Hospitality Fund II offering, as he is considered to be a well- respected hotel investor by many US pension funds.
The pension fund previously invested capital in the Starwood Capital Hospitality Fund I and was pleased with the investment results, and the latest fund is projected to achieve a net IRR of at least 20%.
Starwood is hoping to raise $3bn and will then co-invest $20m of its own capital.
Pension funds in the US could therefore be significant players in the capital raising as another investor in the commingled fund besides CalPERS is the Los Angeles County Employees Retirement Association. (LACERA), having made a $100m commitment to the fund in June.
Hospitality Fund II is a global hotel investment fund which will split approximately one-third of the assets to be invested locally - the balance spread across the globe - and is being invested in all segments of the hotel industry from extended stay properties to the high-end full-service sectors.
Starwood Capital wants to invest in both the developed and emerging markets so the firm has the potential to invest capital in budget economy hotels in India and China.