Kennedy Wilson, Fairfax Financial Launch $2B Debt Platform

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Global real estate investment company Kennedy Wilson is teaming up with a longtime partner, Fairfax Financial Holdings Ltd., and forming a $2 billion platform to pursue first mortgage loans secured by high-quality real estate in the Western U.S, Ireland and the U.K.

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Beverly Hills, Calif.-based Kennedy Wilson will act as asset manager and co-invest an average of 20 percent in each investment. The investments will be made without leverage and earn customary management and performance fees.

William McMorrow, chairman & CEO at Kennedy Wilson, said in prepared remarks the debt platform will build on Kennedy Wilson’s expanding investment management business and leverage its track record of investing in debt opportunities in key markets. He noted the firm’s decade-long partnership with Fairfax and said the two companies were pleased to continue building on their relationship as they invest in the changing market environment.

Prem Watsa, chairman & CEO of Fairfax, stated the two companies have had a successful history investing together since the Great Recession and is confident of Kennedy Wilson’s ability to continue delivering long-term value creation through the new platform.

The two firms first invested together in 2010 when they acquired $250 million of real estate assets, including real estate secured loans and real property. During the past decade, the companies have partnered on $7 billion in aggregate acquisitions, including more than $3 billion of real estate-related debt investments. Fairfax also has a 9 percent equity ownership interest in Kennedy Wilson.

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. At that time, Kennedy Wilson had a 43 percent ownership in the project, which was planned to have about 345,000 square feet of office space, 25,000 square feet of retail space and a 190-unit apartment community.

Kennedy Wilson, together with its partners, has purchased or originated more than $6 billion of real estate-related debt since 2010.

Extending credit facility

In March, Kennedy Wilson’s wholly owned subsidiary, Kennedy-Wilson Inc., revealed it had extended its existing $500 million unsecured corporate revolving credit facility. The arrangement was made with a global syndicate of nine lenders, with Bank of America, N.A., serving as administrative agent. It was the second amended and restated credit agreement; the first occurred in October 2017. The credit facility will mature on March 25, 2024, but the company can extend it twice in increments of six months. Proceeds are to be used for general corporate purposes, including acquisitions and development and redevelopment of real properties. Including the $500 million credit facility, the company has more than $4 billion in purchasing power. During Kennedy Wilson’s fourth-quarter 2019 earnings call in late February, McMorrow noted the company had a very strong pipeline in the U.S. and the U.K. Late last year, Kennedy Wilson and an equity partner paid $179 million for the acquisition of The Heights, a 348,000-square-foot institutional-quality office campus in London’s Weybridge submarket.