By Jon Peterson
Beverly Hills-based Kennedy Wilson is currently in the process of raising $750 million to $1 billion for its newest investment fund, Kennedy Wilson Real Estate Fund VI, according to company sources.
“We have a first closing on the commingled fund earlier this year. We are planning to have a second closing at the end of this year and have a final closing sometime in 2018,” said Kurt Zech, president of Multifamily Investments, the multifamily investment division of Kennedy Wilson.
This new commingled fund will focus on investing in apartments and office buildings, although most of its assets will be focused on placing capital with existing assets. Only a small portion of the fund will involve investing capital in new development projects.
The investment fund will seek opportunities west of Denver along the West Coast. Two of its biggest areas of interest will include the San Francisco Bay Area and Seattle. The company typically looks to invest in properties that are in suburban locations, and all of its deals have a value-add component. The properties for Fund VI will be acquired with cash and leverage, with the amount of debt placed on the portfolio is projected to be around 60 percent.
Kennedy Wilson has completed a major apartment sale in Alameda, Calif. with the $231 million trade of the 615-unit Summer House property located at 1826 Poggi St. The seller had originally acquired the property in 2007 with RREEF as its financial partner for $87 million. It later had brought in PCCP as an equity partner and then in 2013 acquired the property outright.
On top of that, the company invested money to increase the value of the asset. “Over time, Kennedy Wilson had invested an additional $35 million to improve the complex. Once this was completed we were able to increase the property’s net operating income by $8 million,” said Zech.
The asset was sold to an un-named institutional investor. The listing agent on the sale was John McCulloch, an executive managing director with ARA, a Newmark company. He works out of the company’s San Francisco office. “This property attracted a great deal of interest from a variety of institutional investors. The property was 95 percent leased at the time of the sale. This is about where current occupancy is in the Alameda market. There should be a chance for the new owner to add some value through the renovation of the interior of the units,” said McCulloch.