{"id":1004666593,"date":"2023-06-07T04:14:27","date_gmt":"2023-06-07T12:14:27","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004666593"},"modified":"2023-06-07T05:59:55","modified_gmt":"2023-06-07T13:59:55","slug":"fairfax-to-buy-2b-construction-loan-portfolio","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/fairfax-to-buy-2b-construction-loan-portfolio\/","title":{"rendered":"Kennedy Wilson Sells $2B Construction Loan Portfolio"},"content":{"rendered":"
\"A<\/a>

Image by Frank Wagner\/iStockphoto.com<\/p><\/div>\n

Toronto-based insurer Fairfax Financial Holdings Ltd.<\/strong> has agreed to purchase a portfolio of 63 construction loans from property investment company Kennedy Wilson<\/strong>. The deal is valued at $2.1 billion, of which Fairfax will fund 95 percent. The transaction comes only a month after Pacific Western Bank <\/strong>sold 74 construction loans to Kennedy Wilson for $2.4 billion at a $200 million discount, Reuters<\/em> reported.<\/p>\n

The construction loan portfolio that Fairfax acquired is worth approximately $2.3 billion. The insurer will also assume 95 percent of all future funding obligations under the loans, which total roughly $1.7 billion and have an average interest rate of 8.6 percent.  Fairfax expects the average annual return in connection to the loans to exceed 10 percent.<\/p>\n

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READ ALSO: <\/strong>How Debt Costs Will Affect Industrial Demand This Year<\/a><\/p>\n

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More than 70 percent of the construction loans that traded are connected to multifamily and student housing projects, while the rest is attributed to a mix of industrial, hotel and life science office developments. The transaction is set to close during the third quarter of 2023.<\/p>\n

Besides the loan portfolio acquisition, Fairfax will make a $200 million preferred equity investment in Kennedy Wilson, an agreement that will enable the insurer to acquire perpetual preferred stock that carries a 6 percent annual dividend rate. This transaction is set to close before the end of the second quarter.<\/p>\n

The deal comes in the aftermath of the March collapse of Silicon Valley Bank and Signature Bank that resulted in increased volatility in the financial markets<\/a> and amounting concerns over interest rate hikes. According to CBRE<\/a>, commercial real estate lending activity has continued to slow, with many borrowers waiting on the sidelines for conditions normalize.<\/p>\n

Longtime partners<\/h2>\n

Fairfax and Kennedy Wilson first partnered in 2010 when the two firms acquired $250 million of real estate assets. A decade later, the companies launched a $2 billion debt platform<\/a> in which Kennedy Wilson acts as asset manager.<\/p>\n

In early 2022, Fairfax made a $300 million strategic preferred equity investment<\/a> in Kennedy Wilson. The Beverly Hills-based company was expected to use the proceeds to fund its development pipeline, real estate investment and pay off in full its unsecured bank borrowings.<\/p>\n","protected":false},"excerpt":{"rendered":"

The deal represents most of a package the firm acquired from a regional bank last month.<\/p>\n","protected":false},"author":2829,"featured_media":1004666737,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21825,21783,23891,21742],"tags":[35567,33237,41225],"class_list":["post-1004666593","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-investment","category-national","category-latest","tag-fairfax-financial","tag-kennedy-wilson","tag-pacific-western-bank"],"acf":[],"yoast_head":"\nKennedy Wilson Sells $2B Construction Loan Portfolio - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Fairfax agreed to buy 63 construction loans from Kennedy Wilson for $2.1 billion and make a $200 million equity investment in Kennedy Wilson.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/fairfax-to-buy-2b-construction-loan-portfolio\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Kennedy Wilson Sells $2B Construction Loan Portfolio\" \/>\n<meta property=\"og:description\" content=\"Fairfax agreed to buy 63 construction loans from Kennedy Wilson for $2.1 billion and make a $200 million equity investment in Kennedy Wilson.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/fairfax-to-buy-2b-construction-loan-portfolio\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2023-06-07T12:14:27+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-06-07T13:59:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/06\/iStock-1366581844-Image-by-Frank-Wagner.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"600\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Madalina Pojoga\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/fairfax-to-buy-2b-construction-loan-portfolio\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/fairfax-to-buy-2b-construction-loan-portfolio\/\",\"name\":\"Kennedy Wilson Sells $2B Construction Loan Portfolio - 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