Starwood Property to acquire Fundamental Income Properties for $2.2B

Starwood Property Trust (STWD) announced that the company has entered into a definitive agreement to acquire Fundamental Income Properties, a fully integrated net lease real estate operating platform and owned portfolio, for approximately $2.2B. Fundamental, currently owned by Brookfield Asset Management (BAM), operates a vertically integrated net lease real estate investment business led by a best-in-class, experienced management team. The 28-person team, which will be employed by the company, brings comprehensive capabilities across originations, credit and real estate underwriting, portfolio management, and capital markets. Fundamental executes its acquisitions through strong relationships with middle market companies and private equity sponsors across a variety of industries. The acquired portfolio consists of 467 properties spanning 12 million square feet across 44 states, 56 industries, and 92 tenants. The assets demonstrate strong credit quality, featuring a 17-year weighted average lease term, and 2.2% average annual rent escalations. In connection with the transaction, the company will assume Fundamental’s existing financing facilities totaling $1.3B, including $0.9B of asset-backed security debt. The company expects to fund the remainder of the purchase price with a combination of cash on hand and debt and equity capital. The transaction is expected to close on or about July 23, subject to the satisfaction or waiver of customary closing conditions.