Kennedy Wilson Kicks Off New Investment Platform with $342M Loan Acquisition

Plenty of firms have formed new divisions to snap up loans on distressed commercial real estate and Kennedy Wilson is among them. The Beverly Hills, Calif.-based real estate investment and services firm has made its first move for its newly created investment platform, and it's a big one.

March 2, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user caccamo

Plenty of firms have formed new divisions to snap up loans on distressed commercial real estate and Kennedy Wilson is among them. The Beverly Hills, Calif.-based real estate investment and services firm has made its first move for its newly created investment platform, and it’s a big one. Along with its venture partner, an unidentified top financial institution, Kennedy Wilson acquired a $342 million commercial real estate loan portfolio from an unidentified major regional bank.

The loan portfolio involves a broad range of assets–predominantly located in Southern California–including hotel, multifamily, office, residential and retail properties, in addition to parcels of land. The purchase is a notable debut for Kennedy Wilson’s new venture, which was established to engage in the acquisition of sub-performing and non-performing commercial real estate loans, as well as the origination of commercial whole loans and bridge/permanent multifamily loans.

Given the current climate in the mortgage market, there should be plenty of potential deals available to Kennedy Wilson in its latest endeavor. “There is a significant increase in the number of lenders who are selling performing and non-performing loans,” reads real estate services firm Jones Lang LaSalle’s Lenders’ Expectations Report 2010. “In addition, these lenders are prepared to accept significant discounts in 2010 to create liquidity and to rid themselves of these non-core or problem assets.”

Among the entities that have made large commercial loan acquisition deals recently is Greenwich, Conn.-based REIT Starwood Property Trust, which signed an agreement in February with TIAA-CREF to shell out $510 million for a $503 million group of performing mortgages secured by 4.5 million square feet of office and retail properties. February also brought news of Miami-based homebuilder Lennar Corporation’s closing of two structured transactions with the Federal Deposit Insurance Corporation involving the acquisition of two loan portfolios featuring a combined $3 billion unpaid balance connected to 5,500 distressed commercial and residential assets.