Kennedy Wilson Europe Real Estate has exchanged on the acquisition of a non-performing loan secured against the freehold interest in London's Pioneer Point mixed-use development.

Kennedy Wilson Europe Real Estate has exchanged on the acquisition of a non-performing loan secured against the freehold interest in London's Pioneer Point mixed-use development.

Kennedy Wilson is buying the loan from an unnamed financial institution for £68.5 mln (€93 mln), representing a 54% discount on the unpaid principal balance (UPB) of £149 mln. The acquisition price is below the replacement cost of the property, which reached practical completion in November 2012.

The deal, which is Kennedy Wilson's first incursion into Europe's private rental sector, is expected to complete on or around May 18 and will be funded with the company’s existing cash resources, the company said.

Pioneer Point is a mixed-use development comprising 17,100 m2 of residential accommodation across 294 units in two blocks. The North Tower contains 159 residential units, with occupancy at 91%, while the South Tower has 135 residential units which are vacant after practical completion. There is a three-storey podium that contains 4,300 m2 of retail space which is 83% let and has a weighted average unexpired lease term of 14 years.

Administrators were appointed over the developer in early 2012.

Mary Ricks, President and CEO of Kennedy Wilson Europe, commented: 'The acquisition of the Pioneer Point NPL gives KWE its first UK exposure to the private rented sector (PRS) market where there is significant institutional demand and lack of available product.'

She added: 'We aim to access the underlying real estate over the course of 2015 and look forward to implementing our asset management plan to materially improve the net operating income across the entire scheme, from £1.5 mln currently, over the next 18-24 months to generate an improved and stabilised yield.'