Kennedy Wilson has sold its Avon loan portfolio to a UK infrastructure fund for £100.3m – a yield of 6.5%.
The Avon loan portfolio was acquired on June 2014 for £93.5m, reflecting a yield of 7.3%.
The portfolio comprises five fire control centres totalling 114,900 sq ft that are leased to the UK government and located on business parks across the UK.
The leases are subject to five-yearly rent reviews with fixed indexation of 2.5% pa and a WAULT of 15.1 years.
Mary Ricks, president and chief executive of Kennedy Wilson Europe, said: “We resolved the loan by selling the underlying real estate where the leases are materially over-rented and we anticipate limited future growth prospects.
“The Avon portfolio has delivered robust unlevered returns to the company with 15.3% return on cost and 10.0% unlevered IRR; both ahead of business plan targets and timing. The sale forms an important part of our £300m non-core disposal programme, which remains on track. A further update will be provided at our full-year results on 26 February 2016.”
EY Real Estate Corporate Finance and CBRE advised KWE.
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