We have another European real estate play. The venerable US real estate investment and services firm Kennedy Wilson (KW, est. 1977) just over a year ago spun off its European investment operations into a new London listed entity, Kennedy Wilson Europe plc, KWE on the main London Stock Exchange, and KWERF on the pink sheets. The ipo raised £1 billion of equity, the 2nd largest London real estate ipo ever. KW is based in Greenwich (CT).
The new share is what to buy, benefiting from some existing holdings parent KW made earlier in Britain, Ireland, Jersey, and Spain, and also from external management by KW’s services arm. KW services manages real estate for outside owners and has experience in arms-length dealings. KW is the major shareholder in KWE. There are also Japanese property investments totally owned by parent KW for now. Initially, US KW owned 13.4% of KWE. This has fluctuated since.
The new KWE group was set up in Jersey, a tax haven, to generate cash-flow and capital gains for its shareholders, including KW. Its first acquisition occurred almost immediately, of 14 properties around Britain about which few details were released. Since this left the shareholding by parent KW of the US at 12.2%, it probably did not come from the US KW property portfolio but from an outside firm.
A month later KWE acquired a high quality mixed use portfolio of 26 UK properties in an off-market transaction totaling approximately £144 mn which included unleased sites. This counted as the KWE seed portfolio with 5 retail properties, 7 office properties, a warehouse, and 13 industrial estates. The price was ~£223 mn, but again the seller’s name was not given. In the interval, KW of the US bought a further 1% of KWE. Then in May it took a new tack, buying a portfolio of 5 real estate loans from Lloyd’s Bank along with claims on the assets backing them, called the Avon portfolio
In June KWE bought the Fordgate Jupiter Portfolio in the U.K., the Central Parkand Opera property portfolios in Ireland, and the Liffey Trust Building in Dublin in separate deals costing a total of ~£685 mn (including some £202 mn of assumed non-recourse debt).
