EUROPE – There have been whispers for quite some time that US-based Kennedy Wilson would take its European arm public on the London Stock Exchange, and now the rumours have been proven.
The international real estate investment and services company has announced that Kennedy Wilson Europe Real Estate will launch a £750m (€916m) initial public offering.
Through a private placing, a targeted group of cornerstone investors, as well as certain affiliates of Kennedy Wilson Holdings, will be offered ordinary shares at an issue price of £10 per share.
There's little question as to the potential success of the offering, as binding commitments from 12 cornerstone investors are presently in place.
The group includes Canada's Fairfax Financial Holdings, Janus Capital Managements LLC and Wellington Management Company LLP.
The commitments, with those from certain Kennedy Wilson affiliates, represent a total of approximately £615m.
As a public entity, KW Europe will commence its efforts with a focus on real estate and real estate loans in the UK, Spain and Ireland, where it already has a strong presence.
Parent company Kennedy Wilson, in its December 2013 investor presentation, pointed to a refinancing gap of £101bn in Europe – with the UK, Ireland and Spain accounting for 38% of the total.
It said the dearth presented an opportunity to capitalise on companies' need to divest real estate and non-performing loans.
The presentation added that, in 2012, the UK, Ireland and Spain were among the top four countries with the largest size of NPLs in Europe.
Mary Ricks, president and chief executive at KW Europe, said: "The European real estate market is mostly at or past the trough of the cycle and currently offers great investment opportunities to capable investors.
“Kennedy Wilson Europe Real Estate plc has the right platform to benefit from the next phase of the cycle.
“It is a unique vehicle in terms of investment mandate flexibility, and sourcing and asset management ability that differentiate it from other companies.”
To seed the company, KW Europe has solidified agreements to acquire two portfolios of office, industrial and retail properties totalling 2.6m square feet in the UK.
The purchase price was £223m.
The company's plans to float on the LSE should come as little surprise, as it has been increasingly active on the Continent since its inception in 2011.
During Kennedy Wilson's third quarter 2013 earnings conference call, William McMorrow, chairman and chief executive, said: "As I said at the beginning of the year, we felt going into the year that a large percentage of our investment activity would be centred around Europe, and so, when you look at what we’ve done here through the first nine months, approximately 70% of what we’ve invested has been in Europe."
In the December investor presentation, Kennedy Wilson noted that it had a pipeline of deals valued at £500m for real estate and loan assets across Europe.