Kennedy Wilson snaps up portfolio

International real estate and fund management group, Kennedy Wilson has bought a tranche of some 180 UK properties for (£503m) €640m.

The firm’s European arm purchased the portfolio from receivers appointed by Aviva Commercial Real Estate Finance.

Within the portfolio, the primary sector use is retail, food and convenience which comprises 62% of its value.

The move brings the total split of Kennedy Wilson Europe’s (KWE) portfolio to 28% Irish focused and 72% investment value weighted towards the UK.

The net yield on the portfolio KWE announced yesterday is 6.9% while 98% of the properties are occupied. The portfolio also has a weighted average unexpired lease term of 9.6 years and generates total net rental income of £36.1m.

Aviva are to provide debt financing of £352m which is split into three-year floating rate (33%); five year fixed rate (20%); and eight-year fixed rate (47%) tranches at a weighted average margin of 2.06%.

On completion of the acquisition, KWE will have approximately £1.1bn of total debt financing of which £920m will be fully drawn, according to analysts at Davy Stockbrokers.

The portfolio will also brings the company’s total portfolio value to £1.9bn with net rental income of £130m, generating a net yield of 6.5%.The total portfolio will then have a sector split of 40% office, 27% retail and 8% industrial.

Davy analyst, Ray Crowley says the acquisition leaves Kennedy Wilson’s European business well positioned in the UK and Ireland market.