BEVERLY HILLS, CA-Locally based Kennedy Wilson has acquired a majority interest in two office buildings totaling 98,928 square feet in Carlsbad and has purchased a 17.3-acre residential property in Hawaii that includes 63 finished lots and six completed single family homes on a total of 17.3 acres situated on an 18-hole championship golf course.
The office buildings, called One Carlsbad Research Center, are at 2382 and 2386 Faraday Ave. The minority interest in the project is held by Kennedy Wilson’s Property Fund I.
As part of the transaction, Kennedy Wilson recapitalized the property and extended the loan on the project for an additional five years. John Prabhu, president of Kennedy Wilson Commercial Investment Group, says that the new capital structure will allow the ownership to aggressively pursue all leasing opportunities in the market. “The buildings are in close proximity to affluent residential communities, which will allow us to take advantage of tenant expansions priced out of areas such as Del Mar Heights and La Jolla,” Prabhu says.
Kennedy Wilson chairman and CEO William McMorrow notes that this is “the first office building acquisition that the company has completed in the current real estate cycle.” He cites reports of the $1.4 trillion of debt in the commercial real estate sector coming due by the end of 2014, saying this will create investment opportunities in all real estate sectors but more specifically, office properties. “We intend to be a major investor in these opportunities,” McMorrow says.
In the Hawaii transaction, Kennedy Wilson bought Wai’nani at Kiahuna, a residential subdivision in the resort area of Poipu Beach on the island of Kauai. The acquisition was completed through Kennedy Wilson’s Property Fund III, a value-added/opportunistic investment vehicle that targets real estate in the western US and Hawaii.
Mary Ricks, executive vice chair of Kennedy Wilson, notes that the company has been investing in Hawaii real estate since the mid-1990s, acquiring more than 7,000 acres of land and has been involved in numerous projects throughout the islands. “We have always liked the fundamentals of investing in Hawaii real estate such as high barriers to entry and an extremely difficult entitlement process,” Ricks says.
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