Kennedy Wilson Europe Real Estate (KWERE) has signed its maiden revolving credit facility (RCF) with Bank of America Merrill Lynch (BAML), Deutsche Bank and JP Morgan for £225m over three years and is considering two additional portfolio refinancings.
BAML acted as lead arranger for the unsecured floating rate facility, which was split equally three ways, at £75m each. Pricing on the RCF is linked to KWERE’s group wide LTV, varying between 150 basis points and 200bps over LIBOR.
The debt facility has a maturity date of 29 August 2017. KWERE has not yet drawn down any funds.
KWERE said in a statement to the Stock Exchange that it intends to use the funds for general “corporate purposes, including, amongst other things, acquisitions of certain property and loan assets, meeting working capital requirements, and the payment of capital expenses”.
In a statement, Mary Ricks, president and CEO of Kennedy Wilson Europe, said: “We have a strong investment pipeline and this new unsecured corporate finance facility, which is the company’s first, marks a significant step forward and provides us with additional firepower to capitalise on new investment opportunities and finance further acquisitions quickly, giving us a competitive edge in an active real estate market.
“In addition, it further optimises the company’s capital structure and funding model and assists us in achieving our ultimate goal of delivering attractive returns for our shareholders.”
Two additional refinancings are thought to be on KWERE radar.
First, the refinancing of the £296m all-cash acquisition 21-strong UK-wide Fordgate Jupiter portfolio, acquired initially through receivership after its £40m discounted purchase of the B-Loan underneath the securitised debt in May.
According to KWERE’s half year results, the 2.4m sq ft Fordgate Jupiter portfolio has risen in value to £314.9m, a gross rental income of £24.7m and an occupancy level of 88%, all excluding the Aspects Leisure Park in Bedford, the purchase of which only closed 15 August.
The 21 assets comprise nine offices, two mixed-use, five car showrooms, three leisure assets, one retail property and one warehouse. The largest seven assets represent 84% of the total value of the portfolio.
Second, is the potential refinancing of the remaining €195.8m Bank of Ireland senior loan which financed KWERE’s €310.6m purchase of the former Treasury Holdings Opera portfolio, net of acquisition costs.
Bank of Ireland’s five-year loan, which funded in July 2013, was priced at 385 basis points over Euribor and matures in July 2018. Based on KWERE’s revised valuation of the Opera portfolio, at €314.5m, the LTV is 49.8%.
In March this year, Deutsche Bank extended a five-year €57.4m (£46.0m) senior loan to finance KWERE’s €82.0m (£65.6m) acquisition of the multi-family component of the Central Park portfolio in Dublin. The current LTV is 70%.
Deutsche Bank’s senior loan was originally priced at 350 bps over Euribor, but the margin reduced to 275 bps on 23 July.
Last month, KWERE, advised by CBRE Debt & Structured Finance, refinanced the initial all-cash acquisitions of the listed company’s two seed portfolios, the £66.9m 14-strong Tiger portfolio and the £138.6m 25-strong Artemis portfolio, with GE Capital Real Estate.
GE Capital Real Estate extended a £127m five-year senior loan for the combined portfolios – acquired for £205.5m but with a market value at end of June of £225.9m. The senior loan – priced at circa 190 basis points over LIBOR – has two separate 12-month extension options and reflects a 56.2% LTV, based on the most recent valuation.
KWERE is expected to continue refinance unencumbered direct portfolios to free up capital to deploy in line with investment pipeline, spanning the UK, Ireland, Spain and Italy.
Between its £1.0bn IPO on the London Stock Exchange in February this year to the 30 June, KWERE has acquired six direct property portfolios and two separate loan portfolios across the UK and Ireland for an aggregate purchase price of £995.8m against a 30 June market value of £1.05bn.
Subsequent to this reporting period, KWERE has completed three direct portfolio acquisitions – Portmarnock, The Marshes and Fairmont Hotel – as well as the purchase of the Elliot loan from Ulster Bank for €44.5m (£35.2m).
These four additional investments take KWERE’s total capital deployment to £1.147bn.