Kennedy Wilson Launches $200M Fund

(To read more on the debt and equity markets, click here.)

(To read more on the multifamily market, click here.)

BEVERLY HILLS, CA-Kennedy Wilson Fund Management Group, a division ofKennedy Wilson, has launched a new investment initiative called KW Fund II that plans to raise $200 million in equity for acquisitions primarily in the West and the Southeast. The new fund expects to acquire properties with an aggregate value of $570 million.

The new fund will be a value-added U.S. investment vehicle, according to Barry Schlesinger, chairman of KW Fund Management. He says that the objective will be to capitalize on opportunities in office and industrial submarkets by buying at prices below replacement cost and the adding value.

Besides Kennedy Wilson itself, institutional investors in the new fund include CalPers, Wachovia Securities and US Bank. The fund is the second in a series of real estate investment partnerships to be launched by Kennedy Wilson.

Kennedy Wilson launched the first partnership, KW Fund I, in 2000 with $160 million in assets. The fund has sold most of the original properties in that portfolio and is reinvesting the capital.

When fully funded, the two partnerships will have taken title to combined assets of approximately $730 million. Schlesinger notes that, when the initial portfolio from the first partnership is completely liquidated, the fund will have “significantly exceeded” its pro forma internal rate of return.

The new fund is the latest in a number of investment arrangements that Kennedy Wilson has executed with institutional partners. The Beverly Hills-based company recently acquired the 153-unit Courtyards Apartments in Norwalk from CT Realty of Newport Beach in a joint venture between its KW Multifamily division and Wachovia Securities. The Courtyards was one of four West Coast infill properties that the joint venture bought recently.