KW Funds Take Lennar Out of Multifamily Investment

RICHMOND, CA-Three funds sponsored by Beverly Hills, CA-based Kennedy Wilson have acquired Lennar Corp.’s interest in two apartment-to-condo conversion projects in this East Bay city. The assets are the Marina Cove and Marina Shores developments, a combined 712-unit development with 515 units still available for sale two years after they hit the market. The purchase price was not immediately available.

The buyer was a combination of KW’s Bay Fund Opportunity LLC, KW BASGF II and KW Fund III. In buying Lennar’s stake, the funds become co-owners of the assets with Emerald Fund Inc., a San Francisco-based condominium/multifamily specialist.

Marina Shores, located at 1 Shoreline Court, is a 488 condominium project. Nearby, at 1 Schooner Court, Marina Cove is a 224-condominium project. Each 20-year-old waterfront development has a fitness center and swimming pool, and units have been upgraded with new appliances, new bathroom finishes, wood-burning fireplaces, and washers and dryers.

Stuart Cramer, senior managing director of Kennedy Wilson’s Residential Development and Investments division, and Alastair Mactaggart of Emerald Fund say they expect the partnership to be a fruitful one due to the “high demand for moderately priced housing alternatives in the Bay Area.”

In 2005, Lennar and Emerald Fund converted the 468-unit Maria Bay apartment community here at a cost of approximately $60 million after acquiring the 13-year-old development from Archstone-Smith for $98.5 million. The remaining Marina Shores and Marina Cove units include one bedroom units that start in the $200,000 range and two bedroom units that range from $300,000 to $500,000.