NAPLES, FL - Kennedy-Wilson, Inc, a vertically-integrated real estate investment and services company headquartered in Beverly Hills, CA, with 21 offices throughout the U.S. and Japan, and Prospect Acquisition Corp, a special purpose acquisition company with approximately $248 million of cash, today announced that they have signed a definitive agreement under which they plan to combine. The proceeds of the transaction will enable Kennedy Wilson to seek to capitalize on distressed real estate acquisition opportunities and to fund the growth of its auction and property management businesses.
Through its fund management and separate account businesses, Kennedy Wilson is a strategic investor and manager of real estate investments in the United States and Japan. Kennedy Wilson has a long track record of capitalizing on off-market real estate opportunities. The transaction has been unanimously approved by the Boards of Directors of Prospect and Kennedy Wilson. Following completion of the transaction, Prospect will change its name to Kennedy-Wilson Holdings Inc. The closing of the transaction is subject to Prospect and Kennedy Wilson receiving stockholder approval of the transaction and to other customary closing conditions, including regulatory approvals.
In 2008, Kennedy Wilson raised approximately $83 million of capital through convertible equity and debt securities issued to investors including the Guardian Life Insurance Company of America, the Royce Funds, affiliates of the LeFrak Organization and Elkhorn Partners. Those investments together with this transaction will substantially add to the liquidity and capital base of Kennedy Wilson.
"This merger will allow us to significantly enhance our resources, capabilities and momentum in the real estate investment management space," said William J. McMorrow, Kennedy Wilson Chairman and Chief Executive Officer. "Within our core markets, significant opportunities are emerging, particularly in the residential, multifamily and office sectors, which we expect to take advantage of with the consummation of this transaction."
Currently, over $1 trillion of commercial real estate loans will reach maturity in the next five years, the majority of which were originated in the past five years. (Source: Intex, Mortgage Bankers Association and Federal Reserve) Additionally, in the State of California alone, Kennedy Wilson believes that there are approximately 450 condominium projects with more than 37,000 unsold units, worth in excess of $10 billion, that are currently being marketed by developers and/or lenders. These looming debt maturities and the expected re-pricing of real estate assets present a compelling opportunity for well-capitalized investors.
In concert with its investment platform and with a strategic focus on financial institutions, Kennedy Wilson offers a comprehensive array of real estate services including property and asset management, brokerage and auction services, as well as construction and trust management. Based on its proprietary relationships and successful history of investing in and harvesting real estate assets through various cycles, Kennedy Wilson believes it is uniquely positioned to capitalize on the current distressed opportunities.
"Given the dislocation in the financial markets, those investors with sufficient equity capital and investment prowess will emerge as the successful real estate companies of the future" said McMorrow. "I believe that now is the time to begin taking advantage of some of the best real estate buying opportunities that I have seen in my lifetime."
"We believe that Prospect's capital will allow Kennedy Wilson to accelerate the growth it has already experienced in its businesses," said David A. Minella, Chairman and Chief Executive Officer of Prospect. "We believe Kennedy Wilson should be able to expand its market presence and aggressively pursue deal opportunities in its burgeoning pipeline," said Minella.
Source: Prospect Acquisition Corp.