Starwood Property Trust is acquiring a Brookfield Asset Management-owned US net lease real estate operating platform for $2.2bn (€1.9bn).
The NYSE-listed finance firm, focused on core focus on the real estate and infrastructure sectors, said it has agreed to buy Fundamental Income Properties, which owns a portfolio consisting of 467 properties spanning 12m sqft feet across 44 states, 56 industries and 92 tenants.
Barry Sternlicht, chairman and CEO of Starwood Property Trust, said: ”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. 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.”
Jeffrey DiModica, president of Starwood Property Trust, said: “With our combined relationships and global reach, we are poised to increase market share. With nearly 20-year leases, annual rent escalators and access to attractive proven ABS financing, the transaction highlights our safety focus.
“We anticipate this investment to be accretive to distributable earnings after giving effect to projected refinancing of existing debt and projected acquisition volume, and the impact of this accretion will grow as we deploy more capital at our targeted yields. We are pleased to welcome the Fundamental team to the Starwood family.”
Chris Burbach, CEO of Fundamental Income Properties, said: ”We are excited to join Starwood Property Trust and further scale our business as part of this best-in-class organisation.
“Our team has built a proven, credit-oriented origination process, supported by long-standing relationships across industries. Together with Starwood Property Trust’s real estate expertise, consistent access to capital, and a growing net lease market, we are well positioned to capitalise on compelling investment opportunities.”
Alexi Panagiotakopoulos, CIO of Fundamental Income Properties, said: “We built our platform to meet the growing capital needs of middle market companies by providing efficient capital along with certainty of execution.
“Joining Starwood Property Trust enhances our abilities to help our current and future clients grow and improve their businesses.”
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