Starwood Property Trust completes purchase of Fundamental Income Fund
Starwood Property Trust Acquires Fundamental Income Properties for $2.2 Billion
Starwood Property Trust, a diversified finance company with a focus on real estate and infrastructure sectors, has announced the acquisition of Fundamental Income Properties, LLC for approximately $2.2 billion. The deal, expected to close around July 23, 2025, marks a significant expansion for Starwood into net lease real estate.
The acquisition is expected to enhance long-term cash flow for Starwood Property Trust's shareholders. Barry Sternlicht, Chairman and CEO of Starwood Property Trust, expressed satisfaction with the acquisition, stating that it aligns closely with the company's platform and leverages existing strengths.
The acquisition provides a strong growth engine by adding a diversified portfolio with a weighted average lease term (WALT) of 17 years and an average annual rent escalation of 2.2%. The portfolio, which is fully occupied by 92 tenants across 56 industries, enhances Starwood's revenue diversification and access to specialized net lease asset-backed security financing markets.
Starwood will assume Fundamental's existing financing facilities totaling $1.3 billion, including $900 million of asset-backed security debt. The deal will be funded with a mix of cash, debt, and equity capital, including a planned public offering of 25.5 million shares. The acquisition also includes retaining Fundamental's 28-person management team, ensuring operational continuity and expertise in managing the portfolio.
In summary, the transaction strengthens Starwood Property Trust's position as a leading diversified REIT by expanding its stable income-producing asset base, providing secure cash flow from long-term leases, and adding management capabilities to support growth in the net lease real estate sector. The acquisition is expected to be accretive to Starwood’s distributable earnings.
The author of this article is Theodore Koumelis, Co-Founder and Managing Editor of our website Media Network. BofA Securities served as the sole financial advisor to Starwood Property Trust in the acquisition, while Wells Fargo, Evercore, and Stephens served as financial advisors to Brookfield Asset Management.
Starwood Property Trust, an affiliate of global private investment firm, Starwood Capital Group, has successfully deployed $108 billion of capital since inception and manages a portfolio of $27.5 billion, including debt and equity investments.
It's worth noting that this article is not related to the previous paragraphs about the acquisition of Fundamental Income Properties LLC by Starwood Property Trust. In a separate development, LOT Polish Airlines has unveiled seats for a new Boeing 737 MAX 8.
References: [1] Starwood Property Trust Press Release. (2025). Starwood Property Trust to Acquire Fundamental Income Properties for Approximately $2.2 Billion. [online] Available at: https://www.starwoodpropertytrust.com/news/press-releases/detail/2025/starwood-property-trust-to-acquire-fundamental-income-properties-for-approximately-22-billion
[2] Fundamental Income Properties Press Release. (2025). Fundamental Income Properties Announces Agreement to be Acquired by Starwood Property Trust. [online] Available at: https://fundamentalincome.com/news/press-releases/detail/2025/fundamental-income-properties-announces-agreement-to-be-acquired-by-starwood-property-trust
[3] GlobeNewswire. (2025). Starwood Property Trust to Acquire Fundamental Income Properties for Approximately $2.2 Billion. [online] Available at: https://www.globenewswire.com/news-release/2025/05/01/2630180/0/en/Starwood-Property-Trust-to-Acquire-Fundamental-Income-Properties-for-Approximately-22-Billion.html
[4] BusinessWire. (2025). Starwood Property Trust to Acquire Fundamental Income Properties for Approximately $2.2 Billion. [online] Available at: https://www.businesswire.com/news/home/20250501005081/en/Starwood-Property-Trust-Acquire-Fundamental-Income-Properties-Approximately-%602.2-Billion
Investing in the acquisition of Fundamental Income Properties marks a strategic business move for Starwood Property Trust, aiming to boost their financial returns and strengthen their position in the net lease real estate sector. The diversified portfolio acquired will provide a growth engine, enhancing Starwood's cash flow and revenue diversification.
Through the acquisition, Starwood Property Trust expects to leverage its platform, assuming existing financing facilities and retaining a capable management team for operational continuity. The deal will be funded through a mix of cash, debt, and equity capital, reflecting the company's commitment to expanding and securing its future in the real estate and finance sectors.
