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12/05/16
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Kennedy Wilson recently completed a series of separate multifamily transactions totaling $363 mil. These included: the acquisition of Alara Hedges Creek, a 408-unit apartment community built in 1998 in a suburb of Portland, OR for $93 mil; the disposition of The Grove, a 331-unit apartment community built in 1964 in San Jose for $96 mil; and a $175 mil refinance of Bella Vista at Hilltop, a 1,008-unit apartment community built in 1988 located in the San Francisco Bay Area.
“These transactions allowed us to harvest gains, improve the quality of our portfolio and lock in attractive long term financing,” said Kurt Zech, President of Kennedy Wilson Multifamily Investments. “We were able to generate excess capital through these transactions while growing the cash flow of our portfolio.”
Alara Hedges Creek, Portland, OR |
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Kennedy Wilson acquired 100% of Alara Hedges Creek for $93 mil, securing a $60 mil, 10-year fixed rate loan from Freddie Mac at 3.59%, interest-only for five years. The loan’s interest rate was locked in October. The $33 mil equity investment was primarily funded from the net sale proceeds of The Academy, a 175k sf office building in North Hollywood, which was sold in October, as reported by RENTV at the time.
Alara Hedges Creek is a low-density garden style community situated on 20 acres. The property is located in the Portland suburb of Tualatin, near an abundance of upscale retail destinations, recreation and entertainment options. Kennedy Wilson’s value-add asset management strategy includes unit renovations with upgrades to the appliances, countertops and flooring.
In the disposition, Kennedy Wilson and its partner sold The Grove for $96 mil, generating $58 mil in net proceeds, including $29 mil to the company, which equates to a 5.0x equity multiple over the life of the investment. Kennedy Wilson held a 50% ownership interest in The Grove.
And, Kennedy Wilson refinanced Bella Vista at Hilltop, a wholly-owned asset, with a new $175 mil, 10-year fixed-rate loan at 3.50% from Fannie Mae, interest-only for the entire term. The loan’s interest rate was locked in September. The property previously had two loans totaling $126 mil at an average interest rate of 4.6%, of which $91 mil was due to mature in June 2017. This represented the company’s largest debt maturity in 2017.
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