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Kennedy Wilson Europe buys £503m Aviva portfolio

The London-listed real estate investor has acquired approximately 3.5 million square feet of space across 180 mixed use UK properties.

Kennedy Wilson Europe Real Estate, the London-listed real estate investment entity, has invested £503 million (€666 million; $755 million) in a portfolio of 180 mixed-use UK properties from UK insurance giant Aviva.

The acquisition is being funded from Kennedy Wilson’s cash resources and a new £352 million secured loan facility with Aviva Commercial Real Estate Finance.

The portfolio consists of approximately 3.5 million square feet of space and is 98 percent occupied with a weighted average unexpired lease term of 9.6 years and generates total net rental income of £36 million.

The properties are predominately located in England and 54 percent of the portfolio’s value is weighted towards London and the South East. The primary sector is retail, food and convenience which comprises 62 percent of the portfolio’s value and leisure, industrial, office and hotels make up the balance.

The £352 million senior debt facility has been agreed with Aviva, reflecting a loan to value on the portfolio of 70 percent. The loan has been split into three tranches: a three-year floating-rate of 33 percent, five-year fixed-rate of 20 percent and an eight-year fixed-rate at 47 percent.

“The completion of this significant acquisition along with attractive and flexible vendor financing materially increases KWE’s stabilized cash flow, reduces the group’s borrowing costs and extends the term to maturity,” Mary Ricks, president and chief executive of Kennedy Wilson Europe, said in a statement.

This acquisition has grown the Kennedy Wilson Europe Real Estate investment portfolio to £1.9 billion, generating net rental income of £130 million. The geographic split of the firm’s investments is 72 percent UK and 28 percent Ireland with an asset mix of 89 percent direct real estate and 11 percent loans. The main sector splits are 40 percent office, 27 percent retail and 8 percent industrial.