Kennedy Wilson Sheds Two Apt. Assets for $154M

BEVERLY HILLS, CA-Kennedy Wilson has sold two of its multifamily properties for a total of $154 million. Net proceeds of $64 million will be distributed to the company and equity holders, including $18.5 million to Kennedy Wilson.

The two properties include 360 Residences, a 213-unit luxury residential tower in San Jose, CA and Arbor Creek Apartment Homes, a 440-unit community in Beaverton, OR. The properties were traded to separate buyers at an average cap rate of 4.5%. Kennedy Wilson did not respond to GlobeSt.com by deadline to disclose the buyer’s identity or further reasons for selling, however an unidentified source not involved in the deal tells GlobeSt.com that 360 Residences was bought by an investment partnership led by Capri Capital and involving LACERA. Arbor Creek was bought by Holland Partner Group, the source says.

Kennedy Wilson acquired the first trust deed on 360 Residences in November 2010. When the company took title to the property in March 2011, it was vacant with unfinished interiors, according to a prepared statement. The company converted the use to apartments, completed $2-million of interior finishes and then leased up and stabilized the property, which is now at 97% occupancy. According to Robert Hart, president of KW Multifamily Management Group, “The goal was to complete and then stabilize the asset, and we took 360 from a note to an income producing apartment building in 10 months.”

Over the past few years, Kennedy Wilson increased the rental income of Arbor Creek, improving NOI by 22% since 2010, according to a prepared statement. Recent upgrades to the property include renovation of the leasing center, clubhouse and fitness center in addition to paint and other exterior enhancements.

Institutional Property Advisors, a brokerage division of Marcus & Millichap, arranged the sale of 360 Residences for $118 million, which represents a price of approximately $554,000 per unit and marks the largest single asset multifamily sale to close in the Bay Area year-to-date, according to IPA.

Kennedy Wilson’s multifamily portfolio in the U.S. and Japan now consists of ownership interests in 13,305 units, including deals currently under contract. Stan Jones, an EVP of investments; Sal Saglimbeni, a vice president investments; and Phil Saglimbeni, a vice president of investments, represented Kennedy Wilson. “Rarely do truly iconic assets like 360 Residences come to market, especially in infill locations with high barriers to entry and severe supply constraints,” Jones says. "The property’s prime downtown location in one of the strongest job markets with arguably the best demographics in the United States attracted numerous institutional buyers."

As GlobeSt.com recently reported, this isn’t the first apartment sell by the company in recent months. In March, the locally based company sold NoH—14, a 180-unit, 14-story luxury apartment building located in the NoHo Arts District of Los Angeles’ San Fernando Valley. The asset was sold for $73.9 million or $410,583 per unit, representing a 4.1% cap rate on in place income.