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2/28/22
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Fairfax Financial Holdings Limited, through its affiliates, will make a $300 mil strategic preferred equity investment in global real estate investment company Kennedy Wilson. Kennedy Wilson expects to use the proceeds to fund its development pipeline and real estate investments, as well as pay off its unsecured bank borrowings in full.
Along with the equity investment, Fairfax has increased its first mortgage target within Kennedy Wilson’s debt investment platform by $3 bil to $5 bil. Kennedy Wilson expects to have an approximate 5% interest in future debt investments within the platform while earning customary fees in its role as asset manager. In addition to the $2 bil already invested across Kennedy Wilson’s global debt platform, there is now approximately $4 bil in additional investment capacity with a strong pipeline of future opportunities.
According to William McMorrow, Chairman and CEO at Kennedy Wilson, this new permanent capital will provide the firm flexibility as they grow their income-producing portfolio and complete their development projects.
Under the terms of the agreement, Fairfax is purchasing $300 mil in perpetual preferred stock that carries a 4.75% annual dividend rate and is callable by Kennedy Wilson at any time. Additionally, Fairfax acquired seven-year warrants for approximately 13 mil common shares with an initial strike price of $23.00 per share, based on Kennedy Wilson’s closing price on February 9, 2022, and representing a premium of 2% to the daily volume weighted average price per share of Kennedy Wilson’s common stock over the past 20 trading days.
Kennedy Wilson and Fairfax began their relationship in 2010 when Fairfax made a $100 mil equity investment in Kennedy Wilson. Over the past decade, the companies have partnered on $8 bil in aggregate acquisitions, including approximately $5 bil of real estate related debt investments. Fairfax currently has an equity ownership interest in Kennedy Wilson of approximately 9%.
J.P. Morgan acted as exclusive placement agent and Latham & Watkins LLP acted as legal advisor to Kennedy Wilson. Shearman & Sterling LLP acted as legal advisor to Fairfax.
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