**Starwood to Acquire Fundamental Income Properties from Brookfield for $2.2 Billion**
In its second major institutional net lease acquisition in as many weeks, Starwood Property Trust, Inc. has announced a definitive agreement to acquire Fundamental Income Properties, LLC. The deal, valued at approximately $2.2 billion, includes the assumption of around $1.3 billion in debt—$900 million of which is asset-backed securities (ABS). Fundamental Income Properties is a fully integrated net lease real estate operating platform currently owned by Brookfield Asset Management.
The acquisition adds 467 properties spanning 12 million square feet across 44 states to Starwood’s portfolio. The properties are diversified across 56 industries and tenanted by 92 different companies. A 28-person team from Fundamental will join Starwood Property Trust as part of the transaction.
Barry Sternlicht, Chairman and CEO of Starwood Property Trust, commented on the acquisition:
“When we went public in 2009, we said we would create a diversified company around the areas of expertise of our manager, Starwood Capital. With the addition of another business cylinder, we are expanding into another proven, scalable segment with strong synergies with our platform.”
He added, “Our core commercial real estate lending business is now approximately half of our asset base as we have strategically expanded into complementary lending and investing verticals. This diversification has allowed us to weather cycles and deliver consistent earnings and dividends for our shareholders, who have earned an average of 10.8% per year on their investment since our formation as a blind pool in 2009. The acquisition of Fundamental marks the next evolution, but not the last, of our platform.”
BofA Securities is serving as the sole financial advisor to Starwood Property Trust. Wells Fargo and Evercore are acting as financial advisors to Brookfield Asset Management. The deal is expected to close on or around July 23.
This transaction follows the recent announcement that BlackRock will acquire ElmTree Funds, another net lease investment platform, further demonstrating growing institutional interest in the net lease space.
