Kennedy Wilson Receives $300M Investment

Waverleygate office building, Edinburgh, U.K. Image courtesy of Kennedy Wilson and Fairfax Financial Holdings Ltd.

Global real estate investment company Kennedy Wilson and Fairfax Financial Holdings Ltd. are expanding their longtime relationship with Fairfax agreeing to make a $300 million strategic preferred equity investment in Kennedy Wilson.

Kennedy Wilson, a Beverly Hills, Calif.,-based firm, expects to use the proceeds to fund its development pipeline and real estate investments, as well as pay off its unsecured bank borrowings in full.

Among the firm’s recent investments was the $106 million purchase earlier this month of Waverleygate, a Class A office building in Edinburgh in the U.K. from real assets investment manager PATRIZIA AG. The property is 97 percent occupied by credit-worthy tenants including Amazon, Microsoft, the Scottish Government and the National Health Service.

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Fairfax also increased its first mortgage target within Kennedy Wilson’s debt investment platform by $3 billion to $5 billion. Kennedy Wilson expects to have an approximate 5 percent interest in future debt investments within the platform, while earning customary fees in its role as asset manager.

In addition to the $2 billion invested in May 2020 when the partners initially formed the debt platform, there is now approximately $4 billion in additional investment capacity with a strong pipeline of future opportunities. Under the May 2020 agreement, the partners pursued first mortgage loans secured by high-quality real estate in the Western U.S., Ireland and the U.K. At that time, Kennedy Wilson agreed to act as asset manager and co-invest an average of 20 percent on each investment.

William McMorrow, chairman & CEO of Kennedy Wilson, said in a prepared statement the new preferred equity investment and debt investment platform expansion highlights the strength of the firm’s investment strategy as it continues to grow globally. He added the new permanent capital will give Kennedy Wilson the flexibility it needs to grow its income-producing portfolio and complete its development projects.

Long-standing relationship

Kennedy Wilson and Fairfax began their relationship in 2010, when Fairfax made a $100 million equity investment in Kennedy Wilson. Over the past decade, the companies have partnered on $8 billion in aggregate acquisitions, including approximately $5 billion of real estate related debt investments. Fairfax currently has an equity ownership interest in Kennedy Wilson of approximately 9 percent.

In 2012, Kennedy Wilson and Fairfax formed a $365 million partnership to seek assets, including loans and real property, mainly in Ireland and the U.K. Fairfax provided $327 million in capital, while Kennedy Wilson contributed a 10 percent co-investment.

Five years later, the two firms formed a joint venture along with the National Asset Management Agency to develop Capital Dock, a 660,000-square-foot mixed-use project in Dublin, Ireland, with office and retail space along with a 190-unit apartment community. In its fourth-quarter 2021 earnings report released this week, Kennedy Wilson reported the completed stabilization of the Capital Dock project.