It's always nice to be negotiating from a position of power. That's how I envision Income Investor selection iStar Financial (NYSE:SFI) in its negotiations to acquire the commercial lending business of Fremont General (NYSE:FMT).

The acquisition is good for iStar, but it wasn't something the company had to have. Fremont, on the other hand, is in need of capital, and while the price iStar paid isn't ridiculous, iStar expects the acquisitions to be immediately accretive to earnings, which is rare.

The deal is unique and will give iStar greater geographic diversity. For about $1.9 billion, iStar will acquire the operations of Fremont's commercial lending business, but only 30% of the existing $6.5 billion loan portfolio. The loan portfolio contains a mix of apartment, retail, industrial, office, hotel, and mixed use properties, but with a 45% concentration in condo construction and conversion projects. This concentration in an area of commercial real estate that is struggling a bit at the moment represents some risk, but based on the reserves and iStar's current mix of real estate investments and operational skills, it should be manageable.

iStar currently has short-term financing available for the transaction but will eventually refinance with long-term debt, and probably additional equity. I've been checking in on iStar for a while now, because it's fairly interesting at current prices. This acquisition makes it a bit more interesting, but it will also take some additional time to research and digest. Today's conference call is a good place to start. If you're curious about investments yielding more than 7%, I recommend keeping an eye on this REIT.

iStar Financial is a Motley Fool Income Investor recommendation. Find more dividend superstars with a free 30-day trial of James Early's low-risk, high-reward newsletter service.

Nathan Parmelee had no financial interest in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.