Chairman and CEO Barry Sternlicht has had the last major bear market on hismind.

"Isthis the summer of '08?" Sternlicht said he has asked himself lately."Is this we're all getting lulled into a storm? Are the equity marketsgoing to blow up?" The short answer, he said, is no.

Speakingduring a conference call to discuss first-quarter , he noted that the creditmarkets' rally, rather than their deterioration, separates the currentinstability from the months preceding the financial crisis. Even high-yieldcorporate issuances are increasing, he said, and yields on debt rated AAA havecome down from around 175 basis points to 125 basis points in Starwood's lastsecuritization.

Sternlichtalso discussed the attractiveness of doing more business in parts of Europe. Onthe whole, he said, Starwood has had plenty of lending to do in the U.K. andIreland. But countries in northern Europe — where the company has already donea lot of equity deals — including Sweden, Norway, Poland and the CzechRepublic, could be considered, he said. Starwood also sees "goodopportunity" in Hungary.

"We'rejust being super cautious" in Europe, he added.