Member Article

US property giant invests in multimillion pound property portfolio with large proportion in London and South East

US property investment company Kennedy Wilson Europe Real Estate has acquired a portfolio of 180 mixed use properties located, primarily located in England, from multiple receivers on behalf of Aviva Commercial Real Estate Finance for a purchase price of £503 million.

The acquisition is expected to complete at the end of January and will be funded from the Company’s cash resources and a new £352.3 million secured loan facility with Aviva.

The c. 3.5 million sq ft portfolio is 98% occupied with a WAULT of 9.6 years (11.1 years to expiry) and generates total net rental income of £36.1 million.

Its geographic concentration is predominately England, 54% weighted towards London and the South East with 5% of value weighted towards Scotland and Wales.

The primary sector use is retail, food and convenience, comprising 62% of the value of the portfolio followed by leisure at 14%, industrial at 12%, and office and hotels at 6%, respectively.

The portfolio includes strong institutional grade properties with the top ten assets representing 31% of the purchase price and a combined value of £153.5 million.

These include the likes of the Travelodge hotel in King’s Cross, London, the Waitrose Superstore in Saltash, Cornwall and the Asda Superstore in Hemel Hempstead.

Simultaneous with the acquisition, a senior debt facility has been agreed for £352.3 million, reflecting an LTV on the portfolio of 70%.

Mary Ricks, President and CEO of Kennedy Wilson Europe, said: “This significant portfolio acquisition allows us to access a high quality mixed use portfolio with strong tenant covenants generating robust income streams at a material discount to the original loan amounts.

“The portfolio benefits from a number of institutional quality investments with good individual asset liquidity across the remaining portfolio. There are significant asset management angles, including growing income through lease re-gears, renewals, rent reviews and the leasing up of vacant space.

“We are pleased to have vendor finance provided on such a material transaction and to be adding Aviva to KWE’s portfolio of lenders. This has enabled us to reduce the Group’s borrowing costs and extend the term to maturity.”

This was posted in Bdaily's Members' News section by Ellen Forster .