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
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.