Kennedy Wilson, Fairfax JV on $365M European Investment Platform

By Gail Kalinoski, Contributing Editor

Kennedy Wilson and Fairfax Financial Holdings Ltd. continue to eye commercial real estate opportunities in Europe together, this time forming a $365 million partnership to seek assets, including loans and real property.

Fairfax, a Toronto-based insurance and investment management firm, will provide $327 million in capital with Kennedy Wilson contributing a 10 percent co-investment. The partnership will initially be looking at investments in the United Kingdom and Ireland.

Kennedy Wilson will seek out, negotiate and execute the acquisitions and will also be responsible for due diligence, financing, property management, asset management and disposition. Fairfax will review and approve all the proposed European investments.

“Kennedy Wilson and its partners have completed $3.7 billion of deals in the UK and Ireland to date,” said William McMorrow, chairman & CEO of Kennedy Wilson, a Beverly Hills, Calif.-based international real estate investment and services company. “We are excited to continue our relationship with Fairfax overseas and to pursue additional opportunities in Europe.”

McMorrow was referring to the $2.2 billion U.K.-based loan portfolio that was acquired in the fall from Bank of Ireland. Kennedy Wilson and Fairfax were also among the investors who bought a $1.5 billion stake in Bank of Ireland in July. Fidelity Investments, The Capital Group and WL Ross & Co. were the other investors, according to published reports. Also in 2011, Kennedy Wilson secured a contract to manage about $2.3 billion in assets, mostly in Western Europe, according to its fourth-quarter and year-end earnings report filed Monday with the U.S. Securities and Exchange Commission. The company stated in the filing that Kennedy Wilson now had 20 team members working in new offices in Dublin and London to handle the European work.

“We are pleased with our U.S. commercial real estate partnership with Kennedy Wilson and look forward to investing in European assets through this new platform,” said Prem Watsa, Fairfax chairman & CEO.

Kennedy Wilson and Fairfax’s relationship dates back to May 2010, when Fairfax agreed to purchase up to $100 million of Kennedy Wilson convertible preferred stock. They have a fully invested $278 million partnership together that began in September 2010. The first major transaction of that partnership was a 65 percent stake in a Japanese apartment community that had real estate assets worth about $600 million, mostly in Tokyo. More recently, Kennedy Wilson and Fairfax, along with The LeFrak Organization and the Kennedy Wilson Real Estate Fund IV, acquired a five-property office portfolio in metro Los Angeles for $143.5 million.