Kennedy Wilson Europe Real Estate has secured a new €264m facility from the Bank of Ireland to finance a portfolio of assets in Ireland, the company revealed as part of its first full annual results this morning.
The debt reflects a loan-to-value of close to 42% and has been agreed at a margin of 212.5bps. It is secured against The Marshes shopping centre in Dundalk and the Opera portfolio, which was previously owned by Treasury Holdings.
The loan shows how dramatically margins have tightened in Ireland over the past two years; when Kennedy Wilson Europe Real Estate bought the Opera assets in June last year the portfolio was financed with debt at a margin of 385bps.
Opera includes 14 office and retail properties, one in Cork with the remainder in Dublin. Initially Kennedy Wilson’s US-listed vehicle and Värde Partners bought the distressed CMBS, Opera Castle Market Holdings, in July 2013. Subsequently Kennedy Wilson bought Värde out and sold the portfolio to its UK-listed company for €391.4m.
KWERE acquired The Marshes shopping centre, which was part of Royal Bank of Scotland’s Project Swallowtail sale, in July this year as part of a broader disposal of assets previously controlled by Foyleside. It is valued at £37.4m.
Kennedy Wilson Europe Real Estate currently has net debt of £886.6m and a pro forma LTV of 31.3%. Last September the company put in place a three-year £225m revolving credit facility with Bank of America Merill Lynch, Deutsche Bank and JP Morgan at a margin of 160pbs, although it is yet to begin drawing the facility down. The company has also put loans in place with Aviva, GE Capital and Royal Bank of Scotland.
The company’s results this morning showed an NAV rise of 5.6% since its £1bn IPO in February last year and it increased its interim quarterly dividend by 75% to 7p per share. It has amassed a portfolio of £2bn, and following a further £350m equity raise in October and based upon its target 50% gearing level, has a further £700m of firepower.
Charlotte Valeur, chair of Kennedy Wilson Europe Real Estate, said:
“2014 has been a year of notable milestones. KWE’s successful IPO was the second largest real estate IPO in LSE history. The team has delivered on all fronts and the robust financial and operating performance underpins today’s interim quarterly dividend announcement of 7 p, a 75% increase.”
Mary Ricks, president and chief executive of Kennedy Wilson Europe, added:
“We are pleased with our progress since the IPO and have put in place the stepping stones to deliver both income growth and long term capital appreciation. The team’s ability to execute on £1.5bn of investments in ten months highlights our sourcing capabilities and deep local relationships across the industry and with financial institutions.
“We believe the current European environment will lead to a prolonged period of low interest rates and profitable opportunities in our target markets where active asset management will generate attractive total returns. Our pan-European remit across multiple sectors means that we can leverage our platform across property cycles in different geographies as the path to recovery remains uneven across Europe.”