Kennedy Wilson Extends $500M Credit Facility

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Global real estate investment company Kennedy Wilson has just revealed that its wholly owned subsidiary, Kennedy-Wilson Inc., recently extended its existing $500 million unsecured corporate revolving credit facility. The agreement is Kennedy-Wilson’s second amended and restated credit agreement; the first A&R credit agreement came in October 2017.

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Kennedy-Wilson made the new arrangement with a global syndicate of nine lenders, with Bank of America N.A. serving as administrative agent. BofA Securities Inc. and JPMorgan Chase Bank, N.A. are joint lead arrangers and joint bookrunners, and U.S. Bank National Association is onboard as joint lead arranger. Per terms of the transaction, the Kennedy-Wilson credit facility will mature on March 25, 2024; however, the company does have the option to extend the facility twice in increments of six months. Loan terms under the extended credit facility feature an interest rate of LIBOR plus a spread of 1.75 to 2.50 percent, compared to the previous spread of 1.75 to 2.75 percent.

Kennedy Wilson declined to comment on the transaction. As of the close of the fourth quarter of 2019, the credit facility was undrawn, leaving the full $500 million available.

Where the money goes

As noted in Kennedy Wilson’s SEC filing on the agreement, proceeds from the extended $500 million credit facility are to be used for general corporate purposes, including acquisitions and development and redevelopment of real properties. “While the development is clearly an important component, we expect to meaningfully add to the NOI over the next two or three years through acquisitions,” William McMorrow, chairman & CEO of Kennedy Wilson, said during the company’s fourth quarter 2019 earnings conference call on February 27, 2020. “And we have a very, very strong pipeline of acquisitions that we’re looking at, both here in the U.S. and I would say our core market of the United Kingdom.”

The credit facility, however, isn’t Kennedy Wilson’s first go-to for financing acquisitions and development activity. “That capital is basically coming out of noncore assets that we’re selling at nice gains, and then taking that capital and redeploying it into longer-term value-add assets that have 10- to 15-year type of lives,” McMorrow said. Notable transactions over the last three months include the company’s disposition of a 418,000-square-foot retail portfolio in Spain for $81 million and the $179 million joint venture acquisition of The Heights, a 348,000-square-foot institutional-quality office campus in London’s Weybridge submarket.

With the $500 million credit facility and the remainder of Kennedy Wilson’s balance sheet and liquidity through its co-mingled funds in separate accounts, the company has more than $4 billion in purchasing power.