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10/21/19
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Eldridge Industries has led a $300 mil strategic investment in Beverly Hills-based real estate firm Kennedy Wilson. Kennedy Wilson expects to use the proceeds to pay down unsecured debt, including repaying its unsecured bank borrowings in full, and to fund its development pipeline. The private placement expands the existing relationship between Kennedy Wilson and Eldridge, including its affiliates Cain International and Security Benefit.
“Eldridge’s investment is a tremendous vote of confidence in our company and we are pleased to be aligned with a world-class partner that shares our vision for growing Kennedy Wilson,” said William McMorrow, Chairman and CEO at Kennedy Wilson. “This transaction will help expedite the execution of our initiatives, including completing our development projects, while also reducing our overall leverage.”
Along with Eldridge’s equity investment, the previously announced Joint Venture platform between Security Benefit and Kennedy Wilson will increase its investment target from $500 mil to $1.5 bil. In its role as asset manager, Kennedy Wilson expects to continue investing alongside Security Benefit and its affiliates with a 20% interest in the investments of the Joint Venture and will earn customary fees. To date, the platform has acquired $227 mil in assets with a strong pipeline of future opportunities.
Under the terms of the agreement, Eldridge is purchasing $300 mil in convertible perpetual preferred stock carrying a 5.75% annual dividend rate, with an initial conversion price of $25.00 per share, representing a premium of 15% to the daily volume weighted average price per share of Kennedy Wilson’s common stock over the 20 trading days ending, and including, October 16, 2019. The preferred stock is callable by Kennedy Wilson on and after October 15, 2024.
Kennedy Wilson and businesses of Eldridge have invested together in two office properties totaling 509k sf in the Western U.S., while Cain International invested alongside Kennedy Wilson in the 390k sf office portion of the Coopers Cross mixed-use project in Dublin, Ireland, which is currently under development.
J.P. Morgan acted as exclusive placement agent and Latham & Watkins, LLP acted as legal advisor to Kennedy Wilson. Morgan Stanley & Co. LLC acted as exclusive financial advisor and Sidley Austin LLP acted as legal advisor to Eldridge.
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