Net Lease Expansion as Starwood Buys $2.2B Brookfield Portfolio

Starwood Property Trust will acquire Fundamental Income Properties from Brookfield Asset Management in a $2.2B deal.
The acquisition includes 467 fully leased properties across 44 states, totaling 12M SF.
The portfolio spans 56 industries and includes 92 corporate tenants. It has a 17-year average lease term and 2.2% annual rent escalations.
Starwood will assume $1.3B in debt and fund the deal using cash, equity, and debt, including a 25.5M-share public offering.

Key Takeaways

Strategic Pivot

Bloomberg and GlobeSt report that Starwood Property Trust, led by CEO Barry Sternlicht, is expanding its platform with the $2.2B acquisition of Fundamental Income Properties. The deal marks a major shift into net lease real estate and broadens Starwood’s revenue base beyond commercial real estate lending.

What Starwood Is Getting

The acquisition adds 467 fully leased properties totaling 12M SF. These assets are spread across 44 states. Tenants operate in 56 different industries, and the portfolio includes 92 corporate tenants. All leases have a weighted average term of 17 years and include 2.2% annual rent escalations.

Why It Matters

Net lease real estate allows tenants to pay operating expenses in addition to rent. This structure provides stable income and low management costs. For Starwood, the acquisition offers immediate scale and access to a defensive asset class with predictable returns.

Deal Financing

Starwood will take on $1.3B of existing debt, including $900M in asset-backed securities. To fund the remaining purchase price, the company launched a 25.5M-share public offering. Leadership expects the deal to boost earnings over time as additional capital is deployed.

The Backstory

Founded in 2019, Fundamental Income Properties grew rapidly with a $500M commitment from Brookfield. It completed its first major deal in 2020 with a $50M purchase of a Carvana facility. Since then, it has added premium assets in cities like Chicago and Nashville.

Institutional Momentum

This deal follows a broader trend of institutional interest in net lease assets. Earlier this month, BlackRock announced plans to acquire ElmTree Funds and its $7.3B portfolio. These moves highlight the appeal of stable, long-term cash flow in today’s uncertain market.

What’s Next

The acquisition is expected to close by July 23. With this move, Starwood continues its evolution from a pure-play lender into a more diversified real estate investment platform.

Bottom Line

Starwood’s $2.2B acquisition adds scale, stability, and diversification. It positions the company to grow in the fast-expanding net lease sector alongside other major institutional players.