Toronto-based Fairfax Financial Holdings Ltd. has agreed to make a $300 million preferred equity investment in Beverly Hills-based Kennedy-Wilson Holdings Inc.
Kennedy Willson will use the money for its development pipeline, real estate investments and to pay off unsecured bank borrowings.
It isn’t the first time Fairfax has made an investment in Kennedy Wilson. In 2010, Fairfax made a $100 million equity investment in the company. The two have gone on to partner on $8 billion worth of acquisitions, which includes $5 billion of real estate-related debt investments, according to Kennedy Wilson.
Fairfax, along with the latest $300 million equity investment, has also increased its first mortgage target within Kennedy Wilson’s debt investment platform from $2 billion to $5 billion.
“We are excited to expand our long-standing relationship with Fairfax through this preferred equity investment and debt investment platform expansion, which highlights the strength of our investment strategy as we continue growing our global business,” William McMorrow, chairman and chief executive at Kennedy Wilson, said in a statement. “This new permanent capital will provide us flexibility as we grow our income-producing portfolio and complete our development projects.”
With its latest investment, Fairfax is purchasing $300 million in perpetual preferred stock and seven-year warrants for 13 million common shares. The company has a roughly 9% equity ownership in Kennedy Wilson.
“We are pleased to make this new investment in Kennedy Wilson and to build on our outstanding partnership that dates back to 2010,” Prem Watsa, chairman and chief executive of Fairfax, said in a statement. “We believe in their global business model, the strength of their high-quality, income-generating assets, and their best-in-class management team.”
JPMorgan Chase & Co. acted as the placement agent for the agreement, and Latham & Watkins served as legal advisor to Kennedy Wilson. Shearman & Sterling was the legal advisor to Fairfax.
Kennedy Wilson reported its fourth-quarter earnings on Feb. 23., when it also discussed the Fairfax investment.
“We continued to see values increase across our real estate portfolio as we focused on growing our (net operating income) and investment management business,” McMorrow said in a statement. “Kennedy Wilson has emerged from the pandemic a much stronger company, and the $300 million investment from Fairfax positions us well for continued long-term growth.”
