Kennedy Wilson continues to purge its inventory of non-core assets with the recent disposition of a 418,000-square-foot retail portfolio in Spain. Kennedy Wilson sold the group of 10 supermarket-occupied properties to global investment management firm Barings in a transaction valued at $81 million.
The majority of the portfolio is located in prime metropolitan destinations in Spain—four in Barcelona and two in Madrid. The remaining four properties can be found in Salamanca, Vizcaya, Cádiz and Almería. The 10 retail buildings have been leased in their entirety to leading European grocery chain Carrefour since Kennedy Wilson acquired the stores as part of a 16-property purchase from a joint venture of French institutional investors managed by AEW Europe in 2015. Kennedy Wilson paid €85.5 million, which equated to $95.3 million, for the 16 properties; now, five years later, the real estate investment company has pocketed approximately $33 million of net cash proceeds on the sale of 10 of those properties.
“We had a robust response to the acquisition opportunity when the portfolio was marketed,” Peter Collins, president of Kennedy Wilson Europe, told Commercial Property Executive. “This can be attributed to the fact that the ten properties are very well located in prime markets across Spain, and fully let to an established operator with a great track record, which has the potential to produce strong, long-term cash flows for the new ownership.”
SEE ALSO: Video: Why Invest in Europe?
Kennedy Wilson plans to utilize proceeds from the retail portfolio sale as part of its strategic capital recycling program in Europe, allowing for investment in new opportunities and the funding of existing development projects. In the third quarter of 2019, Kennedy Wilson’s European portfolio of primarily office, multifamily and retail assets generated $205 million, or 51 percent of the company’s global estimated annual net operating income.
Sell Non-Core, Buy Top-Tier
Over the last several months, Kennedy Wilson has made a bevy of moves with its global capital recycling program. Among the company’s most recent transactions in Europe was the December 2019 sale of the Fairmont St. Andrews resort in Scotland and the Leavesden Park office asset near London in Watford for $178 million. Later in the month, Kennedy Wilson used proceeds from the sale of the U.K. properties to help finance the $179 million joint venture purchase of The Heights, a 25-acre office campus in London’s thriving Weybridge submarket.
“Across our portfolio, capital recycling continues to be a strength of ours as we focus on selling assets where we have completed our asset management plans,” Collins said.