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BEVERLY HILLS, CA-Locally based Kennedy Wilson has formed a joint venture with Los Angeles-based LandCap Partners that is starting with a commitment of $100 million to acquire foreclosed properties as well as completed condominiums and homes held by developers. The two firms say that the initial equity commitment of $100 million will go to purchase completed homes and condominiums which homebuilders and financial institutions are holding in inventory or which have been foreclosed upon by lenders.

The business plan for the joint venture calls for acquiring portfolios of properties and reselling them over time, generally at auction through an affiliate of Kennedy Wilson. Industry analysts estimate that builders and lenders are holding in excess of 1.5 million completed condominiums and homes, some of which would be available for purchase through this new joint venture.

In addition to the business opportunity that the venture presents for Kennedy Wilson and LandCap, the partnership between the two firms will “create a platform for lenders, homebuilders and others to efficiently clear unwanted inventory from their balance sheets,” says Jeffrey Gault, chief executive officer of LandCap Partners. Bill McMorrow, chairman and CEO of Kennedy Wilson, notes that he and Gault have known each other for 20 years and that the joint venture will combine the special talents of their two organizations.

LandCap “differentiates itself through its ability to underwrite individual markets, to manage the risks of portfolio acquisitions and to close transactions at a competitive price,” McMorrow says. Kennedy Wilson has broad and deep experience in the auction market, having operated as one of the premier auction houses during the previous housing market downturn and having served as one of the first to conduct auctions during the current downturn. Kennedy Wilson Auction Group has been a leading player in the auction industry since 1977, conducting auctions of condominiums and single-family homes throughout the US, Europe and Asia. It conducts live auctions and sealed-bid sales for all types of residential properties.

Privately held LandCap provides capital for residential land transactions through options contracts, conventional and participating loans and equity investments. LandCap also has significant land development and home building experience, with the capability to complete construction improvements on its land investments.

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