Kennedy Wilson targets $1.25bn for Fund III

The Los Angeles ‘full service’ real estate firm will leverage its close relationships with banks to target property buying opportunities. The fund will focus on the US West Coast, Hawaii and Japan. Kennedy Wilson's last fund raised just $150m.

Kennedy Wilson, the Los Angeles real estate services and investment firm, is raising a new fund with a target of $1.25 billion, according to a source close to the firm.

Kennedy Wilson Property Fund III will be a huge step up from the firm’s previous fund, formed in 2005 with $150 million. The source said Kennedy Wilson will target commercial and multi-family acquisitions, primarily on the West Coast and in Hawaii. The fund also has a 25 percent allocation to Japan.

Placement agent Guggenheim Partners will represent Wilson Kennedy in the fundraise.

Kennedy Wilson has invested over $2 billion in equity since 1999 in 184 transactions, and has realized 85 investments representing over $1 billion in equity, generating a 40 percent gross and 33 percent net IRR.

Calling itself a “full-service” real estate specialist, the firm has been involved in all aspects of real estate investment and management, including running a major property auction business.

It also has close relationships with regional banks and Kennedy Wilson principals expect many buying opportunities to flow from these contacts as banks seek liquidity from their balance sheets.

Already the firm has made five acquisitions that will be injected into the fund at cost once the vehicle is closed.

Kennedy Wilson was formed in 1988 when it was purchased by William McMorrow, the current chairman and chief executive. He was a senior executive with Imperial Bank in Los Angeles.

The fund will be managed by Barry Schlesinger, the former chief executive officer of Heitman Properties, and Mary Ricks, a former commercial broker for the Hanes Company. Kennedy Wilson’s partners will commit five percent of the capital for Fund III. 

Since its founding the firm has deployed together with co-investors some $6 billion in equity in property acquisitions valued at roughly $15 billion, the source said. Among the previous co-investors in Kennedy Wilson deals have been Mitsubishi, GE, RREEF Real Estate and Cargill.