Kennedy Wilson has confirmed its acquisition of a £503m mixed-use portfolio from receivers on behalf of Aviva Commercial Real Estate Finance, as revealed by Estates Gazette.
The listed firm is buying Project Bridgett, a 180-property portfolio covering 3.5m sq ft around the UK.
The purchase price reflects a net initial yield of 6.9%, and the deal completes the winding up of a series of defunct businesses once owned by the Noé family.
Bridgett contains 36 trophy assets once owned by Noé-controlled companies, along with 145 buildings that Aviva had financed for other smaller borrowers.
A senior debt facility has also been agreed for £352.3m, with a loan to value ratio of 70%, a three-year floating rate tranche of 33%, a five-year fixed-rate tranche of 20% and an eight-year fixed-rate tranche of 47%.
The acquisition is expected to complete at the end of January and will be funded from the company’s cash resources and the new £352.3m secured loan facility with Aviva.
With a 98% occupation rate, Bridgett has an average remaining lease length of 9.6 years, generating £36.1m.
It is weighted 54% towards London and the South East, with 5% of its value weighted towards Scotland and Wales.
The primary sector use is retail, food and convenience, comprising 62% of the value of the portfolio, followed by leisure at 14%, industrial at 12%, and office and hotels at 6% each.
The top 10 assets comprise 31% of the price with a value of £153.5m, including a Travelodge hotel in King’s Cross, London, a Waitrose superstore in Saltash, Cornwall, and an Asda auperstore in Hemel Hempstead.
President and chief executive of Kennedy Wilson Europe Mary Ricks said: “This significant portfolio acquisition allows us to access a high quality mixed use portfolio with strong tenant covenants generating robust income streams at a material discount to the original loan amounts. The portfolio benefits from a number of institutional quality investments with good individual asset liquidity across the remaining portfolio. There are significant asset management angles, including growing income through lease re-gears, renewals, rent reviews and the leasing up of vacant space.
“We are pleased to have vendor finance provided on such a material transaction and to be adding Aviva to KWE’s portfolio of lenders. This has enabled us to reduce the Group’s borrowing costs and extend the term to maturity.”
Aviva UK Life Commercial Mortgage Restructuring managing director Ewan Tocher said: “The sale of this portfolio was central to concluding our property restructuring strategy for 2014 and we are very pleased that the high quality nature of the assets and income streams were attractive to KWE as an investor. The sale has allowed Barry Fowler’s team in Aviva Commercial Finance to establish a new relationship with KWE through the provision of a new long term debt facility. With gilt yields at all time lows, we can offer attractive and competitive all-in financing costs for quality portfolios owned by experienced operators and we are keen to develop this relationship further.”
CBRE advised KWE and JLL advised Aviva.
