CA - Kennedy-Wilson Fairfax Financial close on first tranche of PacWest loan portfolio

2023-06-09 10:30:30 ET

Kennedy-Wilson ( NYSE: KW ), a real estate investment firm, and certain affiliates of Fairfax Financial Holdings ( OTCPK:FRFHF ) have closed on the purchase of an initial tranche of loans as part of a $5.7B loan portfolio acquisition from Pacific Western Bank ( NASDAQ: PACW ).

The first part of the transaction, totaling $3.25B in total commitments and $1.8B in current principal balance, was acquired for $1.6B. An additional 12 loans, totaing $800M in commitments, are expected to close on a rolling basis by no later than July 31, 2023.

In May, Kennedy-Wilson ( KW ) agreed to acquire a portfolio of 74 real estate construction loans from PacWest Bancorp ( PACW ), which was seeking to strengthen a balance sheet weakened by deposit outflows and declining real estate values. Earlier this month, Fairfax Financial Holdings ( OTCPK:FRFHF ) agreed to acquire a majority stake in the bulk of the portfolio.

The $5.7B in loans arranged by Kennedy-Wilson includes the $4.1B loan portfolio, $1.2B of  loan commitments to be purchased by a third party ($970M of which have already been acquired), and $400M of loans subject to further due diligence.

The loan portfolio being acquired consists of loans located in KW's key western U.S. markets and expands the company's footprint into new regions across the southern and eastern U.S.

"We are pleased to expand our debt portfolio in such a significant way, which strategically positions our private credit platform for substantial future growth," said Matt Windisch, executive vice president at Kennedy-Wilson ( KW ).

The loan portfolio is made up of floating-rate construction loans that carry a weighted-average interest rate of ~8.6% with ~80% of the portfolio secured by high-quality multifamily and student housing properties and the remaining including mainly industrial, hotel, and life science assets.

Kenndy-Wilson ( KW ) is also finalizing arrangements with Pacific Western Bank ( PACW ) for certain employees that originated and currently manage the portfolio to join the company.

The deal contributes to the company's expansion of its global debt platform, which launched in 2020 and totals $7B in total gross commitments.

For more on Kennedy-Wilson:

• PacWest Bancorp Surges on Win-Win with Kennedy-Wilson
• Kennedy-Wilson's 6.4% Dividend Yield and Potential Upside Make for a Compelling Buy
• Kennedy-Wilson: Office Is Different in Europe
• Kennedy-Wilson real estate debt platform crosses $3B in originations (Dec. 14)

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