Environmental, Social and Governance (ESG) Policy 2 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
1 HOTEL WEST HOLLYWOOD WEST HOLLYWOOD, CA INTRODUCTION 3
The purpose of this Policy is to set out the environmental, social and governance (ESG) principles that we take into account in the course of operating our company, evaluating investments and managing assets for the funds that we sponsor.
We believe that good governance practices and responsible corporate behavior contribute to the long-term success of companies, and are critical to well-functioning markets. We also believe that strong corporate governance helps reduce investment risk and ensures that investor capital is used effectively. Starwood Capital Group is proud to be both carbon neutral and a signatory of the United Nations-supported Principles for Responsible Investment.
The following reflects the principles that guide us and the goals that we strive to achieve. 4 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
ENVIRONMENTAL
As a core philosophy, Starwood Capital Group is committed to responsible investing through environmental sustainability, as well as responsible community development.
The commitment to environmentally responsible investments starts with our acquisition team. Starwood Capital Group conducts rigorous reviews before acquiring properties to ensure clean environmental backgrounds. Starwood Capital Group’s Investment Committee reviews the due diligence performed by our in-house acquisitions team, and our legal team works with transaction counsel, local counsel and third parties (environmental consultants, architects, etc.) to identify any potential environmental issues and request additional due diligence when necessary.
At Starwood Capital Group, we do not just look at real estate as it is today—we see it as it could be. This philosophy extends to our approach to environmentally responsible investing. Instead of accepting the status quo that says conservation is a secondary concern when managing property, we are committed to setting a new standard for the private equity industry.
SUPPORT SUSTAINABLE OFFICES AND RESIDENTIAL PROPERTIES
Starwood Capital Group’s eco-conscious approach to investing includes office and residential properties around the world. Since our inception in 1991, a number of assets owned by the Firm and its affiliates have garnered recognition for their environmentally friendly design and operations, including but not limited to:
THE VISIONAIRE, NEW YORK, NY ONE UNION STATION, DENVER, CO T-MOBILE OFFICE PARK, Manhattan’s first Platinum LEED Gold WARSAW, POLAND LEED-certified condominium project Poland’s first building to earn THE COLONNADE, MINNEAPOLIS, MN BREEAM Excellent 400 CAPITOL MALL, LEED Gold SACRAMENTO, CA ST VINCENT PLAZA, LEED Platinum PCT OFFICE CAMPUS, LOS ANGELES, CA GLASGOW, SCOTLAND LEED Gold BREEAM Excellent SEAMARK BUILDING (ELM PARK) DUBLIN, IRELAND WELLS FARGO CENTER, SOUTH BANK CENTRAL, LEED Platinum MINNEAPOLIS, MN LONDON, ENGLAND LEED Gold BREEAM Excellent ENERGY PARK, MILAN, ITALY LEED Platinum ROUTE 128 OFFICE CAMPUS, ST LEONARDS, SYDNEY, AUSTRALIA BOSTON, MA NABERS 5 MILLENIA LAKES, ORLANDO, FL LEED Gold LEED Gold ZENITH, SYDNEY, AUSTRALIA JEFFERSON MARKETPLACE, NABERS 5 WASHINGTON, D.C. LEED Silver ENVIRONMENTAL 5
ENERGY PARK, MILAN, ITALY
T-MOBILE OFFICE PARK, WARSAW, POLAND ONE UNION STATION, DENVER, CO THE VISIONAIRE, NEW YORK, NY
Our goal is to obtain Energy Star Certification (score of 75 or greater) for all U.S. office buildings, if we can do so cost effectively. We also plan to conduct high-level energy audits for the entire U.S. office portfolio. For our European portfolio, our goal is to obtain LEED or BREEAM certifications for our office refurbishments and redevelopments, if we can do so cost effectively. We also plan to conduct high-level energy audits on targeted parts of our European office portfolio.
PCT OFFICE CAMPUS LOS ANGELES, CA
ST VINCENT PLAZA, GLASGOW, SCOTLAND SEAMARK BUILDING (ELM PARK), ST LEONARDS, SYDNEY, AUSTRALIA DUBLIN, IRELAND 6 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
INDUSTRY LEADER IN ENVIRONMENTALLY CONSCIOUS HOSPITALITY
Nowhere is the Firm’s commitment more apparent than 1 Hotels. Operated by Starwood Capital Group affiliate SH Hotels & Resorts, this luxury lifestyle brand represents hospitality with a purpose: To capture the beauty of nature while being a platform for change for the luxury traveler. As a mission-driven luxury lifestyle hotel brand inspired by nature, 1 Hotels cultivates the best of sustainable design and architecture, together with extraordinary comfort and an unrivaled level of service. We are inspired by a simple idea that those who travel the world also care about it.
1 Hotels upholds this vision by channeling nature through design and culinary partnerships, while connecting with the local community and taking sustainable steps to make a difference.
All 1 Hotels are designed to meet the stringent requirements of LEEDv4 Silver-level certification (or local equivalent), the rating system administered by the U.S. Green Building Council that is the industry standard to evaluate building performance. The daily operation of each 1 Hotel is carefully planned to minimize the property’s carbon footprint by minimizing energy use, leveraging local resources, conserving non-renewable materials, minimizing plastic/paper consumption and reducing landfill waste.
1 HOTEL BROOKLYN BRIDGE, BROOKLYN, NY ENVIRONMENTAL 7
Sustainability keystones are the foundation on which we base all our design, construction and operational decisions. From there, we bolster our brand through the application of Evergreen Standards, including:
THE FUNDAMENTAL START MATERIAL RE-USE AND • Sick Building Assessment WASTE MANAGEMENT • Solar Generation and Water • Locally Sourced Building Materials and Reclamation Feasibility Study Furniture (20%, 500 Miles) • Local Community and Ecology Report • Organic Waste Digester • Biophilic Design Assessment • In-Room and BOH Waste Sorting (Landfill, Recycling, Organic Waste) SITE DESIGN AND BUILDING PLANNING CLEAN WATER • Daylighting Design • Base-Building Water Filtration System • Light Pollution Reduction • On-Floor distribution • Cool Roof • Water Bottle Filling Stations in Public IN-ROOM WATER FILTRATION SYSTEM 1 HOTEL BROOKLYN BRIDGE, BROOKLYN, NY • On-Site Garden or Farm Areas • Access to Electric Car Charging CLEAN, FRESH AIR Stations In operations, we aim to reduce • Minimum Indoor Air Quality • Green-E Certified Fleet Performance single-use items throughout the properties, from reducing dependency WATER MANAGEMENT • Construction Air Quality Management Plan • Efficient Irrigation System and on paper to not utilizing single-use Indigenous Landscaping • Low-Emitting Materials plastic. This includes a paperless • Efficient/Low-Flow Plumbing Fixtures • Indoor Air Quality (IAQ) Monitoring approach to the guest experience that • Cooling Tower Management • Carbon Dioxide Monitoring includes electronic check-in, bedside • Building Level Water Metering • Minimum Efficiencyeporting R Value chalkboards instead of notepads, and (MERV) Filtration Media the 1 Hotels app that provides personal ENERGY MANAGEMENT • Operable Guestroom Windows devices with pre-loaded newspapers • Guestroom Energy Management • Minimum Acoustical Performance Controls and magazines. • Automated Public Area Controls with PERFORMANCE IMPROVEMENT Building • Environmental Monitoring Platform 1 Hotels’ philosophy regarding its • Annual Sustainability Capital culinary offerings is: “Ingredients MANAGEMENT SYSTEMS (BMS) Expenditure Plan first.” The company has partnered with INTEGRATION • Annual Property Assessment celebrated chefs united by a common • Building Management System • Ongoing Commissioning Plan • Fundamental Systems Commissioning • Preventative Maintenance Plan focus on ingredients, seasonality and Verification and responsible sourcing from local • Enhanced Energy Performance purveyors. In addition, farm stands Modeling located in the lobby of each hotel • Building Level Energy Metering offer snacks from local farmers and • Maximum Lighting Levels suppliers. • Variable Speed Drives on Mechanical Systems 8 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
1 HOTEL SOUTH BEACH, MIAMI BEACH, FL
1 Hotels launched in March 2015 with the opening of 1 Hotel & Homes South Beach in Miami, Florida, on the site of the former Gansevoort Miami South Beach. Situated on 600 feet of pristine beachfront property, the resort benefited from a comprehensive refurbishment ensuring that nature is omnipresent—from the graceful twist of driftwood furnishings to the soothing sounds of the ocean and abundance of living materials.
A NEW 1 HOTEL IS COMING TO KAUAI’S NORTH SHORE
• Performing a deep energy retrofit and redesigning the central plant, while reducing the embodied carbon of the project through re-use of an existing building • Rainwater capture and greywater re-use, with a water feature cascading down the property site • Restoring turf grass to natural landscaping • Reestablishing a native Hawaiian fish pond through coordination with the local community • Open-air lobby and common-area experience, decreasing need for mechanical ventilation • Destination spa experience with associated wellness 1 HOTEL HANALEI BAY, KAUAI, HI rooms ENVIRONMENTAL 9
ENVIRONMENTAL AWARENESS EXTENDS TO HOSPITALITY PROPERTIES GLOBALLY
Starwood Capital’s commitment to sustainable hotel TREEHOUSE LONDON, LONDON, ENGLAND operations has not been confined to 1 Hotels. In June 2019, Starwood Capital Group announced a new hotel brand, Treehouse Hotels, which will also embrace sustainability practices throughout its portfolio.
At the Sea Island Resort in Georgia, an ambitious sea turtle nesting program—overseen by a full-time naturalist on staff—focused on both conservation and education. During our ownership, approximately 5,000 of the endangered creatures are hatched on the resort’s beach each year, with hotel guests invited to observe both adult and baby turtles as they embark upon their critical journeys to and from HILTON GARDEN INN WASHINGTON, D.C./ the ocean. GEORGETOWN, WASHINGTON, D.C. Newly constructed and opened in May 2014, The Hilton Garden Inn Washington, D.C./Georgetown Area is a premium select-service hotel that received LEED Silver certification due to its many green features— including condensate and ventilation recovery systems, low volatile organic compound finishes and seven separate vegetative roofs over three different levels of the property.
We embrace environmental policies in our entire full and select-service hotel portfolios by often: • Conserving water by encouraging guests to hang towels to signal re-using vs. washing/replacing SEA ISLAND RESORT, SEA ISLAND, GA • Awarding bonus points if guests waive housekeeping services • Limiting cleaning schedule for extended stay guests • Providing recycling bins in guestrooms • Replacing parking lights with LED
At these and our other hotel properties, Starwood Capital continues to show that taking care of guests and taking care of the environment are not mutually exclusive. 10 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
BUCK LAKE, HARMONY, FL
TERRAMOR, TEMESCAL VALLEY, CA ENVIRONMENTAL 11
RESPECT FOR THE LAND
Through our many land investments across multiple funds, Starwood Capital Group takes a hands-on approach to preserving irreplaceable habitats and minimizing the impact of development on fragile ecosystems. One of our Florida developments earned Green Development certification from the Florida Green Building Coalition based on a number of community-wide practices that follow sustainable principles, including:
• A LAND-USE MIX that allows residents • EXTENSIVE USE OF NATIVE PLANTS and to meet most daily needs within a short grasses in landscaping. distance of their homes— making walking, cycling or neighborhood-type vehicles a • TWO NATURAL LAKES of approximately viable first choice for transportation. 500 acres apiece with protected shorelines for recreation. • MORE THAN 7,000 ACRES OF OPEN SPACE out of the community’s total area of • DARK SKY-COMPLIANT LIGHTING to approximately 11,000 acres. reduce glare, eliminate wasted light and preserve our star-filled sky. • IRRIGATION CONTROLS ON PUBLIC AND PRIVATE LANDS that conserve water by responding to landscape growing conditions.
In Colorado, we have clustered development areas to maintain corridors for wildlife such as deer, elk, bear and wild turkey. In California, we have taken the view that thoughtful environmental design in our land planning not only preserves wildlife habitat, but also adds value and enjoyment to our residential owners and plays a large part in their choice to live in our communities. We design and build hiking trails that provide residents with great outdoor exercise as well as help them commune with nature.
In addition to our active approach to land planning, we have employed a number of measures to protect the land and natural resources. These include building bridges to avoid areas with sensitive oak trees and other natural habitats and conserving water by (1) constructing reclaimed water storage and distribution systems, (2) utilizing native and drought-resistant landscaping, and (3) using reclaimed water for some irrigation.
We often designate permanent open spaces when developing land. In one case, our partnership invested $13M to restore a permanent wildlife corridor 2.5 miles long to assist in the migration of local wildlife. Our corridor was the final connection point between the Santa Ana Mountains and the Orange County coastal habitat. Our efforts across our investments prove that, even as we develop land, we can help preserve it as well. 12 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
SPEARHEAD THE SHIFT TOWARD CLEAN ENERGY PRODUCTION
As corporations and individuals place a greater emphasis on the health of the environment in their decisionmaking processes, clean sources of energy have seen a surge in interest. Starwood Capital Group affiliateStarwood Energy Group has emerged as a leader in the industry’s push toward greener energy production. Since its founding in 2005, the team has invested in a number of clean energy projects across North America— including wind, solar and other renewable energy facilities—including:
• STARWOOD SOLAR SAULT STE. • NAUTILUS SOLAR ENERGY, Summit, New MARIE, Ontario, Canada: A three-phase, Jersey: A leading solar power producer. 69-megawatt DC solar photovoltaic project—one of the largest solar power • SHANNON WIND PROJECT, Clay County, plants in Canada. Texas: A 204-megawatt. The project entered into a 13-year Renewable Energy • BERLIN STATION, Berlin, New Hampshire: Credit purchase agreement with Facebook, A 75-megawatt, wood-fired power plant— Inc. one of the largest biomass power plants in the Northeast. • STEPHENS RANCH WIND PROJECT, Lynn County, Texas: A two-phase project totaling • GAINESVILLE RENEWABLE ENERGY 376 megawatts that began commercial CENTER, Gainesville, Florida: operations in November 2014. Phase II of A 100-megawatt, wood-fired power plant— the project was completed in May 2015. one of the largest biomass power plants in the U.S. • HORSE CREEK, Knox and Haskell Counties, Texas: 230-megawatt wind projects that • HUDSON AND NEPTUNE began commercial operations in October TRANSMISSION PROJECTS, New York 2016. Starwood Energy sold its interests in and New Jersey: Two projects that, upon the project to MEAG, the investment arm commencing operations in 2007 and 2013, of MunichRE, and Skyline Renewables in provided customers in New York City and separate transactions in 2017 and 2018. Long Island with access to significantly cheaper and more diverse sources of • NORTH WEST OHIO WIND, Ohio: energy, including low-cost shale gas, A 100-megawatt wind farm. The project is nuclear and renewables. contracted to General Motors for 100% of the project output under a long-term power purchase agreement. 13
Starwood Capital Group has Good for the Environment demonstrated time and again that Good for Our Investors environmentally conscious investing can also be profitable investing. Whether employed for hotels, offices, residential or energy infrastructure, sustainable design and practices often result in more efficient processes that reduce expenses and enhance the value of real estate assets. Such properties also benefit from the growing demand from eco-mindful tenants, buyers and investors.
As an industry leader, we embrace the opportunity to serve as stewards of the environment to encourage sustainability. We are just as serious about serving as stewards of our investors’ hard-earned capital to maximize returns. Across our portfolio, we are have demonstrated that both of these critical responsibilities can go hand-in-hand.
STEPHENS RANCH WIND PROJECT LYNN COUNTY, TX 14 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
SOCIAL
Starwood Capital Group is committed to enriching the communities in which we live, work and serve—and in protecting the interests of all our stakeholders—including investors, partners, vendors, employees, the community and the environment. We are guided by the following principles:
Create a Positive Workplace Environment Starwood Capital Group employees are dynamic, self-motivated, team-oriented individuals who possess the ability to help implement innovative solutions that ultimately benefit our investors. To support all our employees in their efforts, the Firm seeks to provide a comfortable and collegial environment in which to work. Starwood Capital Group adheres to safe workplace guidelines such as OSHA regulations, including monitoring indoor air quality and providing a clean environment for employees. We are also concerned for the safety of our employees when commuting to and from the office. For example, we send out weather alerts before and during storms, and employees are encouraged to work from home if weather conditions are potentially hazardous.
Starwood Capital Group also hosts American Red Cross CPR and Defibrillator Certification onsite training sessions for employees. These training sessions provide employees with the skills needed to help adults, children and infants with respiratory and/or cardiac emergencies. The American Red Cross Certification classes include a digital certificate, which is valid for two years, plus access to digital learning materials and online refresher courses. The Firm also maintains first aid kits, medicine cabinets and AED defibrillators at Starwood Capital Group offices.
In addition, Starwood Capital Group complies with ADA rules to provide a barrier-free workplace. To this end, we operate handicapped-accessible bathrooms and elevators to ensure that all employees can move freely and safely throughout our offices.
THE CUBE, BERLIN, GERMANY SOCIAL 15
Maintain a Commitment to Diversity, Equity and Inclusion Starwood Capital Group’s Chairman & Starwood is deeply committed to fostering, cultivating and preserving a culture of diversity, equity and inclusion. The collective sum of the individual differences, life experiences, knowledge, inventiveness, innovation, self- expression, unique capabilities and talent that our employees invest in their work represents a significant part of not only our culture, but our reputation and company’s achievement as well.
Starwood Capital Group’s Chairman & CEO, Barry Sternlicht, has demonstrated a commitment to diversity throughout his career and was granted the CEO Diversity Award by Diversity Best Practices/Business Women’s Network. As part of our drive to encourage diversity, equity and inclusion in the workplace, we have placed significant focus on developing meaningful external partnerships. Some examples include:
• Signatory of ILPA’s Diversity in Action initiative. • Partnerships with InternX, The Robert Toigo The ILPA Diversity in Action initiative brings together Foundation, TipStart, Harlem Capital Partners, and limited partners and general partners who share The Posse Foundation, organizations that help match a commitment of advancing diversity, equity and employers with candidates from diverse backgrounds inclusion in the private equity industry • Partnered with iMentor, an external mentorship • Aim to increase minority and women hiring by opportunity for Starwood employees to commit posting open positions at historically black colleges to helping high school students from low-income and universities (HBCUs) as well as at over 425 communities get to college through encouragement diversity groups across 58 college campuses to achieve their ambitions including Women in Real Estate Group (WIRE), • Partnered with Girls Inc., an organization which Association of Latino Professionals for America, inspires all girls to be strong, smart, and bold through Harvard Undergraduate Women in Business life-changing programs and experiences that help (Sponsor), Black in Business at Brown, MIT Hispanic girls navigate gender, economic, and social barriers Business Club, Wisconsin Graduate Women in • Partnered with Out Investors, a global network for Business, Cornell LGBTQ Business Alliance and LGBTQ investment professionals that’s mission is to many more make the direct investing industry more welcoming • Partnered with Year UP, an organization that for LGBTQ professionals by organizing networking provides internships for students from low-income events, speaker series and mentorship programs communities • Launch partner of HIVE Diversity, a first of its kind • $500K commitment to support the PREA recruiting app that is designed to connect employers Foundation in partnership with Sponsors for with a community of students that represents a broad Educational Opportunity (SEO), a professional range of diversities development program, providing Black & Hispanic • Partnered with 100 Black Interns, which offers 100 undergrads with internships internships in the investment management industry • C orporate sponsor of Point Foundation, the nation’s to black students in the UK helping them kick start largest scholarship organization for LGBTQ scholars their careers
Starwood Capital recognizes that diversity alone is not enough; equal attention must be given to creating and cultivating an equitable and inclusive environment. All employees are required to complete an eLearning course on Unconscious Bias, which is designed to provide examples of how to continue to foster a diverse and inclusive environment. To do this, the course offers realistic, practical guidelines for creating an inclusive, respectful workplace. It also addresses some of diversity and inclusion’s biggest challenges, increases awareness of unintentional micro inequities, and offers learners tips for navigating these challenges. 16 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
Offer a Path to a Rewarding Career As a world-renowned and highly respected private investment firm, Starwood Capital Group is the ideal place for employees to build their careers. The Firm provides a wide range of work experiences and learning opportunities with our various teams including: acquisitions, asset management, investor relations, accounting, human resources and information technology. Starwood Capital Group offers a challenging, fast-paced, collegial environment developed through teamwork and close working relationships. Employees are given extensive responsibilities and are stretched intellectually. We provide incoming analysts and summer interns with a comprehensive training program before they report to their specific teams. We also offer our more experienced employees a catalog of professional classes/training from LinkedIn Learning and other sources covering a range of topics and subject matter that improves both technical and soft skills including: leadership and management, public speaking, business writing, emotional intelligence, unconscious bias, Excel and other applications. Our goal is to empower our professionals to exceed their own expectations. Equally as important as professional development is personal development. We offer personal learning opportunities on topics such as mindfulness, motivation and balance and send out weekly wellness newsletters, which include fitness challenges, healthy recipes, and other health tips.
Foster a Culture of Meritocracy Starwood Capital Group creates lucrative incentives for its employees to expand their careers and advance in the organization through promotions and recognition of achievements. The Firm has more than 100 partners, all of whom have a participation in the profits of the Firm’s funds. We believe that sharing profits across a large and broad group of professionals encourages everyone to think and act like owners, further aligns interests with our investors and maximizes overall fund returns.
At year-end, employees engage in a performance review process which includes a self-evaluation, manager evaluation and 360-degree feedback. These reviews are a useful tool for reflecting on one’s own performance and providing objective feedback to colleagues and managers. Self-evaluation includes the opportunity to outline both short- and long-term career goals, as well as training and development goals.
Enrich the Lives of personal trainers to lead community Our Employees on-site group workouts. In addition, we offer a confidential Employee We are committed to the health and Assistance Program to provide well-being of our employees. For counseling services for employees and example, the Firm regularly sponsors their families during difficult personal wellness competitions, which includes times. We also offer an attractive complimentary workout classes at benefits package including market boutique gyms including Soul Cycle, competitive medical, dental and Barry’s Boot Camp and Equinox, vision plans for physical wellness, and provides access to in-house flu shots 401k, life and disability insurance for and biometric testing, and provides financial well-being. SOCIAL 17
Best-In-Class Real Estate Investment Firm We are driven to maintain our position as a world-class real estate (and other alternatives) investment firm that embraces values others may overlook, while delivering superior results for our clients through rigorous financial and risk discipline. To achieve this, we: • Cr eate an ideal environment to attract talented people • Ment or, teach and provide support resources for our professionals to make successful investments • F ocus on risk/reward analysis, with an emphasis on downside protection and capital preservation • Align our interests with those of our LPs, so our team thinks and acts like principals • Alw ays do the right thing for our LPs, our communities and our world
ONE ATLANTIC CENTER, ATLANTA, GA 18 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
FOUR SEASONS RESORT AND RESIDENCES ANGUILLA, ANGUILLA, BWI
Make a Positive Impact other issues to form a mutually participated in various fundraisers On the Community beneficial relationship and ensure and charitable programs nationally the successful operation of the and in our local markets for many By conducting in-depth market hotel. Then, after Hurricane Irma years. We have donated ~$100K research before entering any market, struck the island in September 2017 over the years to the American Red Starwood Capital Group gains an as a Category 5 hurricane—with Cross, raised from our associates, understanding of the issues facing sustained winds of 185 mph and residents and vendors. We have the community, which then enables gusts as high as 215 mph—we also consistently engaged with the the Firm to make an informed worked tirelessly and leveraged U.S. Marine Toys for Tots program decision about whether to enter relationships around the world to and the Carter Blood Bank, as well the market and if so, to bring a restore the resort. As a result of our as provided labor, materials and better product to market to the swift actions and dedication, we donations for local projects organized benefit of the community and our officially reopened the hotel in March by our local apartment associations investors alike. Since our investments 2018—the first among the large for the greater good of our neighbors, are generally in physical assets, resorts that sustained major damage. residents and overall communities. Starwood Capital Group maintains In addition, we created and deployed In addition, Starwood Capital Group a hands-on approach to all aspects a major relief effort, Anguilla supports nationwide programs such of asset management, including Stronger, for employees of major as #GiveHealthy online food drives community risks. Starwood Capital resorts on the island, and raised over and One Warm Coat drives and we Group regularly works closely with $1.8M. The reopening of the hotel created partnerships in our local the local community to ensure that not only provided recovery of jobs communities with organizations such our investments enhance the area. but also increased awareness around as Neighbor to Neighbor, Person the world that the island and resort to Person and Family Centers. Our For example, throughout the long were operational which resulted in activities with these organizations process of acquiring the Four additional bookings for the remainder include setting up a holiday toy store Seasons Anguilla (which made of 2018 and beginning of 2019. for families in need and gift wrapping Starwood Capital Group the island’s selections, distributing frozen turkeys largest employer), the Firm worked In addition, our multifamily property for Thanksgiving meals, and working with the Anguillan government management company (Highmark with social services to adopt a family regarding taxes, employment and Residential) and its associates have for the holiday season. SOCIAL 19
Uphold High Standards for Our Service Providers We are committed to hiring contractors and service providers who compensate workers fairly and have a reputation for safety and dependability. It is also important to note that all large- scale procurement we do is competitively bid, and all of our successful bidders are obligated to comply with local, state and federal laws pertaining to wages, safety and building ordinances. For example, depending on the scope of work, most of our construction projects employ at least one fulltime OSHA-certified site safety person, and contractors must adhere to rigorous safety standards. Starwood Capital Group seeks to have positive relationships with various unions. However, those relationships do not trump our fiduciary duty to our investors, who expect us to manage costs in an effort to increase profitability. Starwood Capital Group is neither pro-union nor anti- union: we simply try to find the most qualified workers for the best price, and every project is different depending on size, location and complexity of the job. While some of our construction projects are “open shop” (where employees are not required to join a labor union in order to be hired or continue working), we opt to build certain projects exclusively with union labor when the circumstances are appropriate.
Improve the Lives of Others Starwood Capital Group Chairman & CEO Barry Sternlicht is personally committed to “giving back,” and this philosophy is woven into the fabric of the Firm. services. Starwood Capital Group senior management With ~4,100 employees in offices around the world, facilitates corporate donations to foundations and we have the intellectual capital, talent, and financial charities, including Habitat for Humanity, the Breast resources to band together and drive positive change to Cancer Research Foundation, Big Brothers Big Sisters of make a difference. Mr. Sternlicht’s humanitarian efforts New York City, Nature Conservancy and City Harvest. have garnered prestigious national honors such as Employees are encouraged to volunteer for causes of JDRF’s Man of the Year, JDRF’s Living and Giving Award importance to them, including serving on non-profit and JDRF’s Chairman’s Award. boards.
Mr. Sternlicht serves on the Board and is the Former On multiple occasions, Starwood Capital Group has Chairman of The Robin Hood Foundation, New York held company-wide community service days. For largest poverty-fighting organization, which has these days, we have partnered with City Harvest, a distributed more than $3 billion to hundreds of New food rescue organization dedicated to feeding the York City-based soup kitchens, homeless shelters, day city’s hungry men, women and children, and packed care and senior citizen centers, schools, job training thousands of pounds of produce for use in New York programs, veteran programs, among other vital City like soup kitchens and food pantries. 20 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
GOVERNANCE
At Starwood Capital Group, we work hard to meet the gold standard for strong and ethical governance procedures that ensure we never conduct business that could jeopardize our leading role in the investment community. We are guided by the following principles:
The Firm has adopted a comprehensive Code of Ethics that each employee is required to acknowledge. Employees must conduct themselves with honesty and integrity, bearing in CONDUCT BUSINESS mind that their conduct reflects on the Firm’s reputation. Employees must refrain from any FAIRLY, OBSERVING A activity that places or appears to place their interests ahead of the interests of the Firm’s STRONG CODE OF ETHICS advisory clients. Employees must also observe all applicable provisions of federal securities laws pertaining to their conduct and the Firm’s business.
The Firm’s senior executives work to ensure compliance with all legal and regulatory requirements applicable to the assets managed on behalf of investors, including, but not limited to, the Foreign Corrupt Practices Act, U.K. Bribery Act, Pay to Play laws and other regulatory laws and statutes domestically and abroad. The Chief Compliance Officer and the General Counsel are responsible for overseeing the Firm’s regulatory obligations, and a dedicated insurance team is responsible for placing the proper insurance on all of our assets. In addition, each fund maintains an independent Advisory Committee comprised of LPs, whose review and approval is called for in certain instances where there may be a potential conflict of interest.
We invest alongside our Limited Partners with personal money in every transaction, and we only collect our carried interest after our Limited Partners have received a full return of their ALIGN OUR INTERESTS capital as well as an attractive preferred return. Our opportunity funds take no acquisition, WITH THOSE OF OUR financing, disposition or advisory fees—which means that the General Partner does not PARTNERS profit from simply winning a bid. Further, we are guided by ethical behavior within the investment community. For example, for those funds affected by the 2008-2009 recession, the Firm voluntarily deferred collecting management fees (for several years) until the funds had adequate liquidity.
The legal and compliance teams are responsible for performing background checks and other checks associated with standard Know Your Customer (KYC) diligence to verify the WORK WITH integrity and ascertain or confirm that Starwood Capital Group is dealing with responsible RESPONSIBLE PARTNERS partners, counterparties and investors. Starwood Capital Group has a robust Anti-Money AND COUNTERPARTIES Laundering Policy that is designed to address the risks related to financing terrorist activities and criminal organizations. We always seek to comply with screening requirements, such as those set forth in various treasury regulations (such as the Patriot Act). GOVERNANCE 21
The Firm’s regulatory counsel is responsible for including provisions related to OFAC, specially designated nations, the investment advisors act of 1940 and other regulatory requirements. The attorneys at Starwood Capital Group’s lead outside counsel, Rinaldi, Finkelstein and Franklin LLC, have been representing Starwood Capital Group for more than 25 years and are deeply familiar with the standard legal protections the Firm requires.
Starwood Capital Group has implemented a comprehensive reporting package that provides not only the standard GAAP financial statements, but also some of the industry’s OPERATE WITH most comprehensive Fund quarterly reports—that include detailed information on TRANSPARENCY portfolio activity and major investments as well as mark-to-market and projected internal rates of returns, U.S. dollar profits and multiples for every investment.
The Firm maintains a comprehensive Compliance Manual that includes rules related to, among other things, conflicts of interest, personal trading, gifts and entertainment and WORK WITHIN A political donations. All employees must acknowledge the Compliance Manual in writing COMPLIANCE CULTURE upon becoming an employee of the Firm and each year thereafter. Employees are also subject to a variety of compliance procedures, including personal trade monitoring, and if applicable, training with respect to the Foreign Corrupt Practices Act and the U.K. Bribery Act. Due to the constantly changing nature of the regulations applicable to the Firm, the Chief Compliance Officer evaluates new regulations and changes to existing regulations, and undertakes appropriate steps within the Firm to ensure compliance. The Firm’s Compliance Manual is updated annually to reflect new or changed regulations. The Firm has strict policies and procedures relating to personal trading and investing which is covered in our Compliance Manual. Among other things, Starwood Capital Group requires employees to pre-clear investments in real estate, hotel and gaming companies, as well as investments in private offerings. Starwood Capital Group also uses ComplySci to assist with personal trade monitoring.
Starwood Capital is a signatory to the United Nations-supported Principals for Responsive SUPPORT AND ADHERE Investing (PRI) as we hope to contribute to developing a more sustainable global financial TO THE UNPRI AND system. The Firm has also endorsed the ILPA Private Equity Principles, which outline ILPA PRIVATE EQUITY a number of key principles to enhance the partnership between Limited Partners and PRINCIPLES General Partners, with the goal of improving the private equity industry for the long-term benefit of all its participants. 22 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY
Starwood Capital Group’s longstanding relationships with its investors, business partners and lenders are a testament to our success in meeting the highest standard of fairness, cooperation, transparency and commitment to the communities in which we operate. CONCLUSION 23
SOUTH BANK CENTRAL LONDON, ENGLAND Starwood Cap
NORTH AMERICA
Miami Chicago New York 1601 Washington Avenue, Suite 800 One East Wacker Drive, Suite 3600 40 10th Ave 8th Floor Miami Beach, FL 33139 Chicago, IL 60601 New York, NY 10014 Phone: 305.695.5200 Phone: 312.242.3200 Phone: 203.422.8101
Arlington Dallas San Francisco 1525 Wilson Boulevard, Suite 825 5429 LBJ Freeway, Suite 800 100 Pine Street, Suite 3000 Arlington, VA 22209 Dallas, Texas 75240 San Francisco, CA 94111 Phone: 877.648.3235 Phone: 214.561.1200 Phone: 415.247.1220
Atlanta Greenwich, CT Washington, D.C. 400 Galleria Parkway, Suite 1450 591 West Putnam Avenue 1255 23rd Street NW, Suite 250 Atlanta, GA 30339 Greenwich, CT 06830 Washington, D.C. 20037 Phone: 770.541.9046 Phone: 203.422.7700 Phone: 202.507.6710
Los Angeles 11601 Wilshire Blvd, Suite 420 Los Angeles, CA 90025 Phone: 310.893.2781
EUROPE ASIA & AUSTRALIA
London Hong Kong 1 Eagle Place, 2nd Floor Somptueux Central, 20/F St. James’s 52-54 Wellington Street London, SW1Y 6AF Hong Kong United Kingdom Phone: +852.3792.0349 Phone: +44.207.016.3650 Tokyo Luxembourg Level 4 Keyakizaka Terrace 2-4 rue Eugène Ruppert 6-15-1 Roppongi, Minato-ku L-2453 Luxembourg Tokyo 106-0032 Japan Phone: +352.26.64.51.21 Sydney Amsterdam Level 32, Suite 2334 Beechavenue 54 200 George Street 1119 PW Schiphol-Rijk Sydney NSW 2000 The Netherlands Phone: +61 282 774 126 Phone: +31.20.658.65.20
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