In a Blueprint interview with Kennedy Wilson earlier this year, Mary Ricks, president and chief executive officer of Kennedy Wilson Europe, told PERE: “We plan to continue to grow the business” in Europe. She sure wasn’t kidding.
Shortly after those words were imparted by Ricks in late April, the Beverly Hills-based real estate investment firm announced that it had formed a partnership with the European Commercial Real Estate Group of Deutsche Bank aimed at acquiring around €2 billion of European real estate loans. Through the initiative, the pair intends to 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.
Furthermore, it wasn’t too long—mere weeks, in fact—before the partnership made its first purchase: a loan portfolio with an unpaid principal balance of €361 million. The properties backing the portfolio are predominantly commercial real estate assets across a mix of property types, with the majority located in Dublin. Although representatives from Kennedy Wilson and Deutsche Bank declined to disclose the seller, market sources told PERE that the partnership bought the portfolio from the former Bank of Scotland Ireland.
At the time of the acquisition, Ricks called it “a great win” for both partners in the joint venture. “We are seeing signs of recovery in the Irish property market,” she said. “Investor confidence is returning, and there is a good macroeconomic recovery story that is starting to play out.”
Since Kennedy Wilson’s entrance into the European market last year via its acquisition of Bank of Ireland’s €1.6 billion property investment management business and the bank’s $1.8 billion UK loan portfolio, the firm has been aggressively expanding its footprint in the region. As big of a deal as the Bank of Scotland Ireland portfolio purchase is, it—and Kennedy Wilson’s new partnership with Deutsche Bank—is not the only way that the firm has been looking to expand in Europe, particularly in the UK and Ireland.
Last month, it was announced that Kennedy Wilson was in the running to bid on a property loan portfolio with a face value of €650 million from Allied Irish Bank. Independent of its partnership with the German bank’s regional real estate advisory, financing and capital markets execution arm, Kennedy Wilson is one of three firms on the shortlist—Dallas-based Lone Star Funds and New York-based Goldman Sachs Group are the others — to buy the loans at around a 50 percent discount from the troubled Irish bank.
That’s not all. In March, Kennedy Wilson struck up a €250 million joint venture deal with Canadian financial services company Fairfax Financial to buy European commercial real estate assets, including loans and real property. Not unlike the partnership between Kennedy Wilson and Deutsche Bank, this venture with Fairfax initially is focusing on the UK and Ireland.
In the span of just over a year, Kennedy Wilson has gone from being Europe’s new kid on the block to neighbourhood regular. At the rate it’s going, the firm will be a seasoned investor in the region by year’s end.