All it took was Berkshire Hathaway’s annual meeting in Omaha, Neb., to seal a $278 million partnership between Beverly Hills investment firm Kennedy-Wilson Holdings Inc. and Toronto financial services firm Fairfax Financial Holdings Ltd.
Well, not exactly – but it was a start.
According to Kennedy-Wilson Executive Vice Chairwoman Mary Ricks, one of the firm’s major shareholders introduced Chief Executive William McMorrow to Fairfax CEO Prem Watsa at the May 1 meeting, known as the Woodstock for Capitalists for bringing together the high and low of the business world.
Sure enough, the two chief executives hit it off.
“Prem is a contrarian investor and so is Kennedy-Wilson,” Ricks said. “(Fairfax doesn’t) have a lot of real estate exposure so they selected Kennedy-Wilson to partner with. Our management teams got together and it’s a really good fit.”
The companies moved quickly. From May to August, Fairfax bought about $132 million of Kennedy-Wilson’s convertible preferred stock. Then this month, Kennedy-Wilson announced that it had formed the joint venture with Fairfax, in which the Beverly Hills firm has 10 percent of the equity.
The partnership’s first investment was the acquisition of 65 percent of a Japanese apartment company, KW Investment Co., in which Kennedy-Wilson already had a 35 percent stake. The Japanese company owns about 50 apartment buildings in Japan – most are in Tokyo, though there are some in Osaka and other major cities. It is Kennedy-Wilson’s only overseas investment vehicle. The partnership is looking for other investments.
Ricks said it’s rare that such a large deal would emerge from a relatively casual first meeting. “Somehow things are just meant to be,” she said.
Kennedy-Wilson shares closed at $10.41 on Sept. 16, up about 6 percent since the preferred-stock purchases by Fairfax were announced Aug. 16.
A 74-unit apartment building in Sherman Oaks has been sold for $9.4 million – yet another in a string of multifamily buildings to trade hands in recent weeks, suggesting the market is picking up steam.
The 14355 Huston St. property was purchased Aug. 31 by Parkview Terrace LP, the entity of a family company based in Woodland Hills. The seller was Latitude Management Real Estate Investors Inc., a Westwood investment firm formerly known as Legg Mason Real Estate Investors Inc.
Greg Harris of Marcus & Millichap Real Estate Investment Services, who represented the seller, said his client sold the property because the timing was right. “The values came back pretty quickly,” he said.
The deal breaks down to $127,027 per unit. Harris said there were multiple offers on the property, first listed in March for $9.85 million and reduced in May to $9.65 million. The building, which is subject to the city of L.A.’s rent control ordinance, was given a $500,000 upgrade by Latitude after it purchased the property about two year ago, Harris said.
“I think the buyers felt like they got a good deal,” said Marcus & Millichap’s Matt Ziegler, who represented the family company, which owns about 4,000 units in the county. Mike Millea of Marcus & Millichap also represented the buyer.
Latitude did not return calls seeking comment.
Century City Lease
Pachulski Stang Ziehl & Jones LLP signed an $18 million lease renewal last week for new space in its Century City high-rise.
The law firm’s 31,600-square-foot lease at 10100 Santa Monica Blvd. came after landlord Hines Interests LP “beat the market,” according to broker Gary Weiss of L.A. Realty Partners.
The company occupies space on the building’s 11th and fourth floors, and will move to floors 13 and 14 by July. Weiss, who represented the firm, which specializes in corporate restructuring and bankruptcies, had looked for other space but was swayed by Hines’ offer.
The construction of the firm’s new offices, he said, will cost more than $50 per square foot and Hines will pay for a portion of the project. “They’ve been in the same space for quite some time and it was old and antiquated,” Weiss said.
Bob Safai of Madison Partners also represented the landlord. Hines was represented in-house by Todd Later and Eric Lyon.
Staff reporter Daniel Miller can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 263.
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