Kennedy Wilson
(
KW
), a real estate investment trust (REIT), recently announced the
acquisition of an apartment community named Capital Towers in
Sacramento, California. Kennedy Wilson and its partners purchased
the 409-unit property for $64 million with $50 million in financing
at a 3.51% fixed rate for a term of seven years.
Capitol Tower covers a four-block area with one 15-story tower
with 203 units and 206 separate villa units around the tower. There
is further scope for expansion as the area is allotted for 1,290
villa units. The tower also consists of 6 ground-floor retail units
and modern amenities such as groceries, dry cleaning and other
conveniences.
Capitol Towers is a valuable acquisition for Kennedy Wilson as
it is perfectly placed to serve the Sacramento central business
district (CBD). According to Meyers Research, a market research
firm, market rents for Sacramento metropolitan statistical area
(MSA) increased 2.2% in 2011 and further by 1.0% in the first
quarter of 2012. Additionally, Real Estate Investment &
Services (REIS), a private research firm, predicts a four-year
cumulative rent growth of 32% for the MSA.
The deal is also consistent with Kennedy Wilson's policy of
acquiring projects in high density areas with a transportation hub
and proximity to job center. It is located close to the Capitol
Mall and State Capitol, an area that supports over 100,000 office
and government workers.
With this deal, Kennedy Wilson has increased its multi-family
portfolio to 13,876 units, which includes deals currently under
contract.
Headquartered in Beverly Hills, California, Kennedy Wilson
offers a wide array of real estate services including auction,
conventional sales, property services, research and investment
management with 23 offices in the U.S., Europe and Japan. As of
March 31, 2012, the value of the real estate assets under the
company's management stood at $11.8 billion.
Kennedy Wilson currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. We have a long-term
Neutral recommendation on the stock. One of its competitors,
CBRE Group, Inc
(
CBG
) holds a Zacks #2 Rank, which implies a short-term Buy rating.
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