By Brenda Goh
LONDON Feb 14 U.S. real estate investment fund Kennedy-Wilson Holdings Inc plans to raise as much as 750 million pounds ($1.3 billion) from a stock market listing of its European property unit, betting on investor confidence in the markets of Ireland, Britain and Spain.
Kennedy-Wilson, which manages $13.7 billion in property assets globally, said on Friday it planned to raise the cash by placing shares with institutions and selected cornerstone investors, and also by allowing its affiliates to subscribe.
It said it had already received binding commitments of 685 million pounds of the gross proceeds, which included a pledge from a group of cornerstone investors - comprising of funds such as George Soros' Quantum Partners and asset manager Janus Capital - and affiliates to invest 615 million pounds.
The unit to be listed on the London Stock Exchange will initially look to acquire property and property loans in Britain, Ireland and Spain before looking for other opportunities in other parts of Europe and will target investments that on average will generate a total return of 15 percent, it said.
It has already agreed to buy two property portfolios in Britain, containing 40 office, industrial and retail properties spanning across 2.6 million square feet for 223 million pounds.
"The European real estate market is mostly at or past the trough of the cycle and currently offers great investment opportunities to capable investors," Mary Ricks, president and chief executive of Kennedy Wilson Europe, said.
Large North American investors such as Lone Star and Cerberus have dominated the hunt for cut-price deals in Europe, where lending has dried up and banks are under pressure to dispose of bad property assets and debt.
In 2013, such investors snapped up 30.3 billion euros ($41.4 billion) in commercial property loans and real estate, property consultancy Cushman & Wakefield said. Almost 90 percent of deals took place in Britain, Ireland and Germany as "bad banks" such as Ireland's National Asset Management Agency and Spain's Sareb stepped up activity,
Cushman says it expects over 40 billion euros of sales to complete in 2014 as more U.S. investors raise funds. Portfolios currently on the market include a Commerzbank -owned portfolio of Spanish mortgages, 3.3 billion euros in performing loans and roughly 1 billion in non-performing loans.
Two Spanish firms are approaching investors to raise up to 900 million euros for listed property funds, a type of vehicle that is taking off as more foreign investors search for real estate bargains in the country.
Deutsche Bank and Merrill Lynch International (part of Bank of America Corp ) are acting as joint global coordinators and joint book runners, while J&E Davy is acting as joint bookrunner.