Kennedy Wilson adds more debt to increase its reach

Kennedy Wilson has raised more capital for investment by increasing its gearing via a £184m, five-year term loan Royal Bank of Scotland.

The loan is secured on assets in the UK Jupiter portfolio which Kennedy Wilson Europe Real Estate bought in June, for £296m.

Quoted KWERE raised  £1bn through an initial public offering in February last year to invest in the UK, Ireland and Spain.

It recently started to add leverage to the balance sheet as it looks to invest further and take advantage of the strong debt market, having initially focused on deploying equity.

Earlier this month Bank of America Merrill Lynch, Deutsche Bank and JP Morgan supplied the company with its first corporate debt facility of £225m with a three-year term. GE Capital also provided a £127m loan in August secured against the Tiger and Artemis UK mixed-use portfolios that seeded the IPO.

Mary Ricks (pictured), president and chief executive of Kennedy Wilson Europe, said of the latest loan: “The completion of this financing has enabled the company to effectively manage its balance sheet and provided significant additional flexibility to enhance future investment opportunities and manage growth prospects.”

Cairn Capital advised KWERE on the latest financing with RBS. Cairn went out to both bank and fixed income investors to get the best terms.

Cairn’s head of real estate, Peter Hansell, said: “We have raised nearly £1bn of real estate finance in the last 18 months in different deals, including the Debussy and Pangaea structured bonds and financing a DFS portfolio for LondonMetric”. The €237.5m floating Pangaea note was for Greek client NBG Pangaea secured on 77 bank branches, mainly let to National Bank of Greece. Cairn also arranged mezzanine finance for that deal, from hedge fund York Capital.

The Jupiter Portfolio is a mixed-use portfolio of 21 properties located across England and Scotland. It comprises 11 office assets, nine retail assets and one industrial asset totaling 2.5m sq ft. It has a gross rental income of £25.3m with a weighted average lease term of 7.3 years and an occupancy rate of 88%.

The portfolio was previously owned by Moises and Mendi Gerner’s Fordgate and securitised in Fordgate Com Sec 1. The assets were sold by Mount Street, the special servicer of the CMBS vehicle.

Once the RBS facility is fully drawn down, Kennedy Wilson Europe Real Estate’s loan-to-value ratio will increase to 34%, with £506m of debt financing in place at an asset level with a weighted average maturity of approximately 4.6 years. The company has made £1.2bn of investments since it was launched.