Guardian Buys $30M Stake in Kennedy Wilson

Just weeks after The Guardian Life Insurance Co. of America and Kennedy Wilson teamed up for the first time to buy a California apartment community, Guardian said today it had purchased a 10 percent stake in the real estate services and investment firm for $30 million. The deal calls for Guardian to buy $30 million of convertible subordinated debt in Kennedy Wilson, headquartered in Beverly Hills, Calif. The transaction gives Guardian a 10 percent interest in the firm, while Kennedy Wilson management retains the controlling ownership with 54.1 percent. This is the second time this year that Kennedy Wilson has raised new equity. Earlier in the year, the firm raised $53 million by issuing convertible preferred shares to investors including the Lefrak Organization, a New York City-based real estate and investment company, and The Royce Funds, also of New York. “This new capital allows our company to take maximum advantage of the current opportunities in all sectors of the real estate investment, distressed debt and services businesses,” William McMorrow, Kennedy Wilson chairman, said in a release Friday. Tom Sorrell, Guardian’s executive vice president and Chief Investment Officer, said they were attracted to Kennedy Wilson’s successful record in real estate investments. “Our new relationship with Kennedy Wilson will provide us with greater opportunities to build on our solid real estate portfolio and provide long-term value to our policyholders.” De Guardiola Advisors, Inc. acted as a financial advisor to Guardian in the transaction. As reported Oct. 3 by CPN, the two companies acquired Avalon at Blossom Hill, a 324-unit apartment complex in San Jose, Calif., for $84 million. McMorrow said Friday that Guardian had supplied $23.25 million equity for that purchase. The 7.5-acre property at the intersection of Highways 85 and 87 was purchased from AvalonBay Communities and is now known as Saybrook Pointe. The garden-style complex was built in 1995 and has 16 three-story structures, a one-story fitness facility and 549 parking spaces. Kennedy Wilson Multifamily Management Group, a Kennedy Wilson subsidiary, and Guardian plan to spend $4.5 million to reposition the apartment community as a premier, luxury complex,according to the CPN story. In August, KW Multifamily partnered with PCCP, L.L.C., to acquire Cambridge Park, an 8.24-acre property with 165 townhomes in Montclair, Calif., for $29.25 million. The companies said they would invest an additional $2.33 million to renovate the 34-year-old complex located in California’s Inland Empire. Kennedy Wilson was founded in 1977 and has offices in 20 U.S. cities and Japan. It pursues value-added opportunities in partnership with clients seeking above-market investor returns and increased real estate values. Guardian was established more than a century ago in 1860 and is one of the nation’s largest life insurance companies. As of Dec. 31, 2007, Guardian and its subsidiaries had $41.3 billion in assets.