JV Targets $500M in Investments with Growth Potential

BELLEVUE, WA—Global real estate investment company Kennedy Wilson formed a new joint venture platform with Security Benefit targeting stabilized, income producing, high-quality real estate investment opportunities in the Western United States. The joint venture is initially targeting $500 million of investments with potential to grow. In its role as asset manager, Kennedy Wilson expects to invest alongside Security Benefit with a 20% interest in the investments of the joint venture and will earn customary fees.

In the process, the joint venture also acquired Sunset North, an institutional quality three-building campus in Bellevue for $227 million. The joint venture invested $77 million of equity, including $15 million of equity from Kennedy Wilson, and secured a 10-year fixed rate interest-only loan for $150 million at 3.25%.

The Sunset North office campus totals 464,000 square feet across seven acres at the intersection of Interstate 405 and Interstate 90, with direct access to downtown Bellevue and Seattle. The properties’ three buildings which are certified LEED Silver were constructed between 1999 and 2000, and are currently 99% leased to 10 long-term tenants with a weighted-average lease term of eight years.

“We are pleased to announce this new platform that delivers on our strategy to continue growing our investment management business and leverages our proven, long-term track record and credibility in Western US markets,” said Matt Windisch, executive vice president of Kennedy Wilson. “Sunset North is an ideal first acquisition for our joint venture and we are pleased to expand our relationship with the talented team at Security Benefit.”

GlobeSt.com learns that all real estate investment types are on the table for the joint venture. The investments will be focused in the Western US markets where Kennedy Wilson already invests.

“We are pleased to have completed the first acquisition within our new platform with Security Benefit, and to leverage our expertise in the Western United States markets where we have invested over the past 30 years,” Windisch tells GlobeSt.com.  “Looking ahead, we are considering high quality, income-producing real estate across the property spectrum, with a focus on the Pacific Northwest, California and the Mountain States regions.”

Kennedy Wilson and affiliates of Security Benefit have invested together in several real estate opportunities since 2015. Most recently, Kennedy Wilson and Cain International partnered on a 390,000-square-foot commercial portion of the Coopers Cross mixed-use development in Dublin, Ireland.

“We’ve enjoyed a great relationship with Kennedy Wilson over the last several years and we are confident in their ability to help expand our existing real estate presence across the West Coast,” said Joseph Wittrock, chief investment officer of Security Benefit. “Kennedy Wilson’s unique sourcing capabilities and their ability to strategically add value to assets make them a great addition to our team.”

Security Benefit and Cain International are Eldridge Industries businesses.

Demand from tech giants continued to have a resounding impact on the region this period, with activity and expansion plans in the Seattle and Eastside submarkets the strongest drivers, according to a second quarter report by Colliers International. Of the 1.9 million square feet of Puget Sound net absorption thus far this year, class-A properties recorded more than 1.7 million square feet or nearly 91%. Vacancy declined in reflection of the absorption, and full-service rental rates continued to increase for all spaces as options became more limited, says the report.