MIAMI BEACH, FLA. AND PHOENIX — Starwood Property Trust (NYSE: STWD), an affiliate of global private investment firm Starwood Capital Group with a core focus on real estate and infrastructure, has announced plans to acquire Fundamental Income Properties for roughly $2.2 billion.
Starwood Property Trust has entered into a definitive agreement with Fundamental, a fully integrated net lease real estate owner and operator based in Phoenix. The transaction is expected to close on July 23, subject to customary closing conditions. Fundamental is currently owned by New York City-based Brookfield Asset Management.
Fundamental’s portfolio totals 12 million square feet across 467 properties in 44 states. The properties feature a weighted average lease term (WALT) of 17 years, with 2.2 percent average annual rent escalations. The portfolio was fully occupied by 92 tenants across 56 industries at the time of the agreement with Starwood.
As part of the acquisition, Starwood will assume Fundamental’s existing financing facilities, which total $1.3 billion, including $900 million of asset-backed security debt. Starwood plans to fund the remainder of the purchase price with a combination of cash and debt and equity capital.
Fundamental’s management team, which comprises 28 employees, will be retained by Starwood Property Trust.
BofA Securities is acting as sole financial advisor to Starwood Property Trust. Wells Fargo and Evercore are serving as financial advisors to Brookfield Asset Management.
Miami Beach-based Starwood Property Trust has deployed $108 billion of capital since inception and currently manages a portfolio of $27.5 billion across debt and equity investments. The company’s stock price closed on Wednesday, July 16 at $20.85 per share, about the same price from a year ago ($20.37).
— Hayden Spiess