They were able to get through the challenging transaction and find a financing package that met the sponsor's needs by educating lenders on the deal. Smith tells GlobeSt.com, “This was a complicated transaction, and lenders need to dig in and get granular. We walked each lender that we showed the deal to through the process. While lenders were attracted to the strong sponsorship with Kennedy Wilson and the strong asset quality in a relatively good location, we need to be there as advisors to walk them through all of the elements of the transaction, especially some of these deals that require more structure.”

The property was built between 2002 and 2006 and has 30,000 square feet of ground floor retail space. Kennedy Wilson will execute a value-add strategy to renovate unit interiors, improve existing tenant amenities and the build a new community center, leasing office, clubhouse and a fitness center. The investor declined to respond to a request for comment.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

LOS ANGELES—Kennedy Wilson has acquired University Glen, a 386-unit apartment community in Camarillo, CA, for $81 million from an undisclosed seller. The apartment community is adjacent to the California State University Channel Islands, and the acquisition included the assumption of an 82-year leasehold from the school. As part of the transaction, Kennedy Wilson has also forged a public-private partnership with the school in which the school will leaseback 58 units for student housing, 100 units for faculty housing and retail space for the school bookstore.

“It is harder to find yield today, so you have to go outside the box. What Kennedy Wilson did was go outside of the box and created a public-private partnership with the university,” Brian Eisendrath, vice chairman of CBRE capital markets, tells GlobeSt.com. “They got creative and did an extremely complex transaction in an effort to obtain yield that meets their requirements. Today, buying a basic apartment building and doing value-add is becoming tougher and tougher. There is so much capital that is floating into the market, and deals have compressed. A lot of groups couldn't take on a deal like this because there are too many moving parts.”

Eisendrath, VP Brandon Smith and senior associate Annie Rice secured acquisition financing on behalf of Kennedy Wilson, which purchased the property with $18 million in equity and $65 million in debt financing funded by Freddie Mac. The loan carries a seven-year term and has a rate of LIBOR + 2.48%. “Kennedy Wilson was looking for debt that had an attractive interest rate and interest-only to provide cash flow to investors, but another component that was important to them was to have pre-payment flexibility,” adds Eisendrath. “As they go through and stabilize the asset and add value, they want the ability to potentially refinance in the near term.”

The capital markets team settled on Freddie Mac because it provided “the best economics” according to Eisendrath. However, there was strong interest from multiple lending sources, despite the complexity of the deal. “There was very strong interest. Kennedy Wilson has an excellent name in the industry, and they are very highly regarded,” says Eisendrath. “They are a public company and they have a significant amount of liquidity. As a result, they are a group that a lot of lenders want to lend to.”

They were able to get through the challenging transaction and find a financing package that met the sponsor's needs by educating lenders on the deal. Smith tells GlobeSt.com, “This was a complicated transaction, and lenders need to dig in and get granular. We walked each lender that we showed the deal to through the process. While lenders were attracted to the strong sponsorship with Kennedy Wilson and the strong asset quality in a relatively good location, we need to be there as advisors to walk them through all of the elements of the transaction, especially some of these deals that require more structure.”

The property was built between 2002 and 2006 and has 30,000 square feet of ground floor retail space. Kennedy Wilson will execute a value-add strategy to renovate unit interiors, improve existing tenant amenities and the build a new community center, leasing office, clubhouse and a fitness center. The investor declined to respond to a request for comment.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.