Starwood Just Bought 467 Security Blankets

[Bisnow First Draft]

Another day, another net lease deal. Starwood Property Trust has agreed to buy Fundamental Income, a net lease specialist owned by Brookfield Asset Management, for $2.2B. That adds 467 fully occupied properties totaling 12M SF, plus 28 specialist brokers, to Starwood’s portfolio. The net lease sector is having a moment in the sun because it’s seen as a safe bet, particularly in a world of higher interest rates. Fundamental’s portfolio is averaging 2.2% rent increases annually and has a 17-year weighted average lease term — a nice, steady and secure book for a company looking to weather a volatile market.          That would be particularly welcome at Starwood — its preliminary Q2 earnings, announced yesterday evening, came in below expectations, and its REIT had to sharply limit withdrawals in 2024 to retain liquidity. CEO Barry Sternlicht, who had promised he would go big on investments in 2025 and already revived its hotel business earlier this year, called the Fundamental acquisition “the next evolution” of the company.  BlackRock went even bigger on the net lease space earlier this month when it agreed to buy ElmTree Funds, a $7.3B net lease firm. Argonne is buying a $1.8B portfolio of 100 multitenant retail assets from Global Net Lease. More than $9B in net lease assets sold in Q1, according to CBRE, which said that should continue to accelerate. — Kayla Carmicheal, Jay Rickey, Catie Dixon and Mark F. Bonner Not getting The First Draft in your inbox? Click here to sign up. Got any feedback or a news tip? Email first...@bisnow.com. You can catch all episodes of First Draft Live here. CRE News Quiz U.S. warehouse vacancy is at its highest point in how many years, according to Cushman & Wakefield? (Answer at the bottom.) On Our Radar Trump’s Powell obsession underscores CRE’s rate addiction. President Donald Trump again threatened to fire Fed Chair Jerome Powell yesterday, roiling markets before he backed off. Though legally dubious, even the suggestion rattled investors and sparked fresh debate over Fed independence. It also highlighted a deeper issue: real estate’s dependence on cheap money. After 15 years of ultralow rates, CRE got hooked on easy financing and rising asset values. But with no return to 1% in sight, investors face a new reality — one that demands active management, real value creation and far less faith in the central bank. As they say, “Denial ain't just a river in Egypt.” Feds press landlords for tenant data in immigration crackdown. The Trump administration has begun demanding tenant records from landlords as part of its immigration enforcement efforts. Federal officials have issued subpoenas and made calls to apartment owners in several states seeking lease applications, ID cards and forwarding addresses — often without court orders. ICE insists landlords must comply or face penalties, but legal experts say only criminal warrants require cooperation. NMHC declined to comment to Bisnow, while NAA pointed to its member guidance on handling immigration-related inquiries. Other CRE groups have mostly stayed silent. No Fed coin? No problem … crypto legislation moves ahead. House Republicans reached a deal to advance three major crypto bills after agreeing to tie a central bank digital currency ban to a future defense bill. Votes are expected soon on stablecoin regulation, crypto oversight and the CBDC ban — the most comprehensive crypto push ever in Congress. For CRE, regulated stablecoins and clearer tokenization rules could streamline rent, escrows and fundraising. Join us on First Draft Live this Friday at 12:30 p.m. ET with Savills Vice Chairman Gabe Marans, who will break it all down. Register here. On The Charts: Construction Spending     Courtesy of JLL         JLL’s midyear construction update is a story of shattered dreams. The brokerage revised its construction spending forecasts down for this year and beyond as a wave of anticipated groundbreakings hasn’t come to fruition. Policy shifts, immigration crackdowns and trade volatility have delayed projects, cut spending forecasts and worsened labor shortages. Tariffs are driving up material costs — textiles are forecast to rise 14%, nonmetallic minerals could increase 13%, and electrical could rise 12%.  Demand for advanced mechanical and electrical equipment for the booming data center industry — along with manufacturing, a bright spot for construction activity — could push those numbers even further. This Morning’s News CAPITAL MARKETS — AEW Closes Largest Property Fund To Date (Bisnow): AEW closed on its tenth fund, raising $1.8B, but missing its $2B target. AEW will deploy the capital into roughly 40 to 50 investments ranging from $25M to $40M each. Read more here. MULTIFAMILY — States Demanding Fee Disclosure (Bisnow): A growing number of cities and states are requiring fees like trash collection and pest control be shown to prospective tenants. Supporters say transparency is good for renters and companies. Others say price fluctuation can make upfront disclosure complicated or artificially raise rents. Read more here. AI — Mapped: The Next Boomtowns (Brookings): A new Brookings report identifies regional hubs best positioned to thrive in the AI economy, based on infrastructure, talent and capital flows. Read more here. M&A — $47B Deal Melts Down (NYT): Canadian retailer Couche-Tard has scrapped its $47B bid for 7-Eleven parent Seven & i. The failed deal has cast doubt on 7-Eleven’s U.S. IPO. Read more here. HEALTHCARE — Steward Cleared To Target Insiders In Bankruptcy (WSJ): A judge has approved Steward Health Care’s restructuring plan, which includes authority to sue former executives and investors. Read more here. FINANCE — Private Credit Brings New Risks (WSJ): As banks pull back from commercial property finance, private credit has stepped in with fast, flexible capital — but that brings heightened risk exposure and limited oversight. Read more here.           Wikimedia Commons/AgnosticPreachersKid         PEOPLE — Banking Titans Defend Fed’s Independence (WSJ and Fortune): Top U.S. bank CEOs are publicly backing Jerome Powell amid Trump’s escalating push to remove him. They warn that politicizing monetary policy could destabilize markets and undermine global confidence. Read more here and here. ECONOMY — Firing Jerome Powell Could Actually Raise Rates (NYT): Economists warn that firing Powell could spook investors, sending borrowing costs higher instead of lower. Read more here. CONSTRUCTION — Ex-Waymo Engineers Build Self-Driving Bulldozers (Forbes): Bedrock Robotics, led by an executive from Alphabet’s autonomous tech unit, has raised $80M. The startup is looking to automate heavy construction equipment to work continuously without human operators. Read more here. INVESTMENT — Builders Turn To Mature Startups For Tech Investment (Construction Dive): Construction firms are targeting established startups with proven track records for their venture funding arms. Read more here. LEGAL — $700M Arbitration Award Fuels Nitya Capital Rift (TRD): Nitya Capital secured a $700M CMBS loan last month, which appears to have caused a feud between the syndicator’s co-founders. Read more here.           Unsplash/Igor Ovsyannykov         DEVELOPMENT — DeChambeau Tees Up $250M California Golf Resort (Realtor): LIV Golf star Bryson DeChambeau is planning a first-of-its-kind golf mecca on 200 acres in his hometown of Clovis, California. Read more here. PROPTECH — Menlo Equities Spins Off Data Center Arm (Menlo): The real estate firm has launched Menlo Digital, a new operating platform focused on digital infrastructure investments and operations. Read more here. ENERGY — Data Center Power Needs Have Wall Street Circling Utilities (NYT): U.S. utilities generally get a guaranteed rate of return topping 10% for grid investments. They also have state-sanctioned monopolies. Read more here. RETAIL — Sales Surge After Spring Spending Slump (Axios): Retail sales rose 0.6% in June after dropping by nearly a full percentage point in May. Read more here. MULTIFAMILY — Deliveries Dip Again But Remain Near Record Highs (RealPage): The U.S. apartment market saw its ninth consecutive quarter of record completion volumes in Q2. Read more here. LEGAL — CoStar CEO Renews Zillow Feud Amid Homes.com Backlash (Real Estate News): Andy Florance suggested Zillow was leading an "anticompetitive cartel" with Redfin and Realtor.com and questioned the legality of its listing rules. Read more here. HOUSING — Prices Falling In Major U.S. Markets (CNBC): Almost a third of the largest 100 U.S. markets show annual price declines of at least a full percentage point from recent highs. Read more here. INVESTMENT — WeWork India Eyes $407M IPO (Bloomberg): WeWork India operated 94,440 desks in 59 locations at the end of Q3. Demand for coworking space in India has been growing. Read more here. *** BTW … Most-read story on the website yesterday: Wells Fargo Sheds Bad CRE Debt, But Troubled Apartment Loans Persist  Most-clicked story in yesterday’s edition of the First Draft: Turner Impact Capital Sues Akerman For Malpractice Over $45M 'Mistake'  Venti? How about a vat? Forget mindfulness because jumbo bucket lattes are now flooding TikTok, with some shops pouring 34-ounce espresso bombs to woo millennial moms and trend-chasers. But will it fit in a cupholder? The happiest mess on Earth turns 70. Disneyland officially unlocked the keys to Sleeping Beauty Castle 70 years ago today in Anaheim. Despite broken rides, a concession shortage, overcrowding, unfinished attractions and counterfeit tickets, the $17M theme park is one of the most visited today. Reinvent the wheel? That’s exactly what they did. It evolved in a Carpathian copper mine 6,000 years ago, as sweaty miners slowly hacked wooden rollers into something that actually worked. Turns out, hauling rocks was a great motivator for an accidental, world-changing innovation. So You’ve Come For An Answer Eleven.  U.S. industrial vacancy in Q2 reached 7.1%, up from 6.9% the quarter before. The rate hasn’t topped 7% since 2014. *** The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from AI. We’d love your feedback! Email us at first...@bisnow.com.

www.bisnow.com 123 William St, Suite 1505, New York NY 10038 Singlearticleemail Approval Code: 87540 Unsubscribe | Unsubscribe from All | About | Contact         You are receiving this email because you are either a member of the Bisnow community, have attended a Bisnow event, because you have a legitimate interest in real estate news and events because of your profession, or because of your business associations, memberships or partnerships. The views and opinions expressed in advertisements throughout this publication (digital ads and orange text links) are those of the advertiser and do not necessarily reflect the views and opinions of Bisnow. Some ads may contain affiliate links from which Bisnow may receive a small fee.     © Copyright 2025 Bisnow. All Rights Reserved