Friday, May 6, 2005 | 11:15 a.m.
Barry Sternlicht, founder of Starwood Hotels & Resorts Worldwide Inc., will resign as executive chairman and director of the company to focus on building his real estate investment firm.
Sternlicht, who founded the hotel company in 1995 and retired as chief executive in October, is planning to raise $800 million to acquire hotels for Starwood Capital Group Global LLC, the real estate and private equity firm he heads. He's stepping down after turning Starwood Hotels into a global company and as hotel chains are benefiting from higher rates amid a surge in business.
Bruce Duncan, a current director, was named chairman, White Plains, N.Y.-based Starwood said Thursday in a statement. Sternlicht, 44, will be replaced on the board by Lizanne Galbreath, managing director of real estate firm Galbreath & Co.
Starwood has a presence in Las Vegas and was a key player in the transaction that turned the Desert Inn over to Las Vegas gaming executive Steve Wynn, who built Wynn Las Vegas on the site.
Starwood owns the Westin Casuarina property on Flamingo Road near the Las Vegas Strip and the company manages the hotel at the Aladdin under the Sheraton brand on behalf of a partnership led by Robert Earl. The Aladdin partners intend to transform that property into the Planet Hollywood.
In 1998, Starwood acquired ITT Corp., which owned the Desert Inn. Starwood agreed to sell the Desert Inn for $275 million to Sun International Hotels Ltd., headed by Sol Kerzner, but the deal fell through. In 2000, Wynn bought the hotel for $270 million from Starwood.
In February, Starwood reportedly was close to negotiating the purchase of property to build upscale W and St. Regis hotels in Las Vegas as well as a timeshare project. The company hasn't commented on any new deals.
Sternlicht, who will take the title of Starwood founder and chairman emeritus, fulfilled his duty to remain during a transitional period, according to the statement. He serves as president and chief executive of Starwood Capital, which has $5 billion invested in office buildings, hotels and golf courses.
"It's been a great 10-year run," said Robert Crosby, a fund manager with Birmingham, Mich.-based Munder Capital Management, which owns Starwood shares in its $40 billion in investments. "They've not only created brands but enhanced brands. His vision has been a big part of that, knowing what the consumers want."
Shares of Starwood rose 26 cents to $54.51 at 4:01 p.m. in New York Stock Exchange composite trading. They've risen 32 percent in the past year. The company owns, operates or franchises 750 hotels worldwide.
Duncan, 53, is also chief executive of Equity Residential, the largest U.S. apartment company by rental income.
Starwood Capital and Starwood Hotels last week said they teamed with Lehman Brothers Holdings Inc. to propose buying the Le Meridien hotel company.
Closely held Starwood Capital is based in Greenwich, Conn.
Sternlicht founded Starwood Capital Group LLC in 1991.
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