Beverly Hills-based global real estate investment and services firm Kennedy Wilson has set up a partnership with Deutsche Bank to seek out and purchase €2 billion in European real estate loans.
According to a statement issued by Kennedy Wilson, the initiative will target the acquisition of “performing, sub-performing and nonperforming loans secured by commercial and residential real estate in Europe, with a focus on the UK and Ireland”.
Though Kennedy Wilson would not disclose the identity of its partner beyond it being a “global financial institution”, market sources have told PERE that Deutsche Bank is the partner. Indeed, prior to this initiative, Kennedy Wilson structured a number of transactions in Europe with the German Bank. Most notably, Deutsche Bank provided debt financing for Kennedy Wilson’s purchase of Bank of Ireland’s $1.8 billion UK property loan portfolio in 2011.
Under the terms of the initiative, Kennedy Wilson will potentially act as the asset manager and/or master servicer in respect of assets acquired under the framework and will co-invest with its partner along with other potential investors in connection with assets acquired under the framework. The two organisations will agree on the structure of any transaction under the framework on a case-by-case basis.
Mary Ricks, president and CEO of Kennedy Wilson Europe, said in the statement: “We believe the Eurozone banking sector will continue to present many attractive opportunities in the property space, and Kennedy Wilson's operating platforms in London and Dublin will enable us to identify opportunities for the framework.”
In a recent Blueprint interview with Kennedy Wilson, the firm’s chairman and chief executive officer William McMorrow told PERE in April that it was planning to expand its footprint in the European real estate market beyond its purchase of Bank of Ireland’s €1.6 billion property investment management business and $1.8 billion UK loan portfolio.
“In our business, you’ve got to be the first mover in a market that’s inefficient,” said McMorrow. “That was the whole idea with Europe.”
Ricks added: “We looked at what was going on in Europe and Ireland and determined that that’s where we potentially wanted to invest.” She said at the time that Kennedy Wilson planned “to continue to grow the business” in Europe.