Deals

Kennedy Wilson management team to stay intact

No-one from Prospect Acquisition Corp, the $248m blank-cheque company that has acquired Kennedy Wilson, will be joining the firm following the deal, PERE has been told.

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Kennedy Wilson’s management team will remain intact following its acquisition by the blank-cheque company Prospect Acquisition – with senior executives saying “zero people” will come over from Prospect as a result of the deal.

Don Herrema, executive vice chairman of KW Capital Markets and in charge of the firm’s fundraising activities, told PERE Kennedy Wilson’s existing management team would continue to operate the firm and have a significant stake in the company.

Don Herrema

“Zero people from Prospect will come over [to Kennedy Wilson],” he said. “We have been exploring a number of alternative ways of raising additional capital for use in co-investment … and this opportunity came to us.”

He added that the capital injection from Prospect – a special purpose acquisition vehicle (SPAC) created by David Minella – would help Kennedy Wilson focus on investment opportunities in its core geographies of the Western US, greater Tokyo and Hawaii, and the residential, multifamily and office property sectors.

Herrema said the firm was seeing the “best opportunities” in the residential sector, including busted condo deals, particularly in California. Under the terms of the deal between the two firms, Kennedy Wilson and a Prospect subsidiary will merge, with the Kennedy Wilson name remaining in tact. Kennedy Wilson will then be a wholly-owned subsidiary of Prospect.

We have been exploring a number of alternative ways of raising additional capital for use in co-investment … and this opportunity came to us.

Don Herrema

Herrema declined to disclose financial details for the transaction, which is expected to close by 14 November, the date by which the SPAC has to have acquired a target business, or face dissolution. According to regulatory filings, Prospect raised $245 million in its IPO in November 2007. Twenty-two months after its original IPO, Prospect now has $248 million in capital.

Prospect is issuing 26 million shares of common stock to Kennedy Wilson shareholders, and 4 million of restricted Prospect stock to Kennedy Wilson senior managers, which will vest over a three-year period.

At the time of the deal’s announcement at the start of September, Kennedy Wilson chairman and chief executive officer William McMorrow said: “This merger will allow us to significantly enhance our resources, capabilities and momentum in the real estate investment management space.”