Starwood Buys Brookfield’s Net Lease Platform for $2.2B

Starwood Property Trust is paying $2.2 billion to Brookfield Asset Management to acquire its net lease platform and portfolio called Fundamental Income Properties, according to an announcement by Starwood. 

The portfolio Starwood acquired features 467 properties across 12 million square feet throughout 44 states, 56 industries and 92 tenants.  

“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,” Barry Sternlicht, chairman and CEO of Starwood, said in a statement. “The acquisition of Fundamental marks the next evolution, but not the last, of our platform.” 

The Fundamental platform specializes in net lease real estate investments, according to Bloomberg, which first reported the sale. These are investments in which the tenant pays a portion or all of the property’s operating expenses in addition to the rent. 

“With nearly 20-year leases, annual rent escalators and access to attractive proven [asset-backed securities] financing, the transaction highlights our safety focus,” Starwood President Jeffrey DiModica said in the statement. “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.”

The deal is expected to be completed later this month, according to the announcement.

“In just five years, we partnered with the Fundamental Income team to found and grow a scaled, high-quality net lease business— featuring a diversified portfolio, vertically integrated platform and exceptional leadership,” Lowell Baron, real estate CEO for Brookfield, told Commercial Observer via email. “With this sale, we’ve seized the right moment to realize our investment, bringing our successful realizations to nearly $13 billion of real estate assets so far in 2025.”

Starwood was exclusively represented in this deal by Bank of America‘s B of A Securities, while Brookfield was represented by Wells Fargo and Evercore. B of A and Evercore did not immediately respond to a request for comment. Wells Fargo declined to comment. 

“We built our platform to meet the growing capital needs of middle-market companies by providing efficient capital along with certainty of execution,” Alexi Panagiotakopoulos, chief investment officer of Fundamental, said in the statement. “Joining Starwood Property Trust enhances our abilities to help our current and future clients grow and improve their businesses.”

Amanda Schiavo can be reached at aschiavo@commercialobserver.com.