KWE scoops up three office assets for £142m

London-listed real estate investment firm buys developments in Manchester and Dublin from US giant Lone Star and Irish property services firm Chase Arkle. 

Kennedy Wilson Europe (KWE) Real Estate, the London-listed real estate investment firm, has purchased three office developments in Manchester and Dublin at a joint cost of £142 million (€177 million; $202 million). The acquisitions were made using balance sheet capital, the firm said.

Towers Business Park, in Manchester, totals 290,000 square feet and is made up of ten offices. It was bought by KWE for around £82 million and is 96 percent leased, with tenants including British Airways, John Lewis, Cisco and Oracle. Towers is located in the south of city, within close proximity to the city center and Manchester Airport.

In 2011, the development was bought by UK real estate fund manager Moorfields for £47 million. The business park was then bought as part of a £1 billion portfolio of mixed assets by US private equity firm Lone Star through its Lone Star Real Estate Fund III in February 2015.

Mary Ricks, president and chief executive officer of KWE, said: “The portfolio provides best in class location, quality and blue-chip tenant roster with significant value-enhancing asset management angles.

“We expect to deliver about 20 percent reversion between passing rent and estimated rental value. Upon completion of asset management plans, we anticipate the stabilized yield to grow to around 8 percent,” she added.

In a separate deal, KWE acquired two office assets in Sandyford and Blackrock, in south Dublin, for £60.8 million. The Chase, in Sandyford, was picked up for £49.4 million from Irish property services form Chase Arkle. The office building, which is 68 percent leased, occupies 175,600 square feet of space, has 242 car parking spaces and is within 20 minutes of the city center.

Blackrock Business Park was also purchased for £11.4 million. The seller was Hudson Advisors, an investment advisory firm which works closely with Lone Star. The complex, which is 98 percent leased, comprises 50,500 square feet of space and 85 car parking spaces. It is also within close proximity to Dublin city center.

Peter Collins, chief operating officer and head of Ireland for KWE, said: “We continue to be attracted to the fundamentals of the south Dublin suburban office market and the Chase represents one of the leading offices in this catchment. Following significant improvement in city center office rents and capital values over the last two years, we believe that top quality suburban offices are poised for a catch up.”

The transactions were announced by KWE at the same time as it released its first quarter results, which were in line with expectations. The firm said it remains on track to sell around £300 million worth of its property by June.

In February last year, KWE invested £503 million in a portfolio of 180 mixed-use UK properties from UK insurance giant Aviva.

KWE owns a portfolio currently valued at £2.8 billion across 287 properties. The firm is the European arm of US real estate investment company Kennedy Wilson.