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Kennedy Wilson ( KW - Snapshot Report ) , a real estate investment trust (REIT), recently announced the acquisition of an apartment community named Capital Towers in Sacramento, California. Kennedy Wilson and its partners purchased the 409-unit property for $64 million with $50 million in financing at a 3.51% fixed rate for a term of seven years.
Capitol Tower covers a four-block area with one 15-story tower with 203 units and 206 separate villa units around the tower. There is further scope for expansion as the area is allotted for 1,290 villa units. The tower also consists of 6 ground-floor retail units and modern amenities such as groceries, dry cleaning and other conveniences.
Capitol Towers is a valuable acquisition for Kennedy Wilson as it is perfectly placed to serve the Sacramento central business district (CBD). According to Meyers Research, a market research firm, market rents for Sacramento metropolitan statistical area (MSA) increased 2.2% in 2011 and further by 1.0% in the first quarter of 2012. Additionally, Real Estate Investment & Services (REIS), a private research firm, predicts a four-year cumulative rent growth of 32% for the MSA.
The deal is also consistent with Kennedy Wilson's policy of acquiring projects in high density areas with a transportation hub and proximity to job center. It is located close to the Capitol Mall and State Capitol, an area that supports over 100,000 office and government workers.
With this deal, Kennedy Wilson has increased its multi-family portfolio to 13,876 units, which includes deals currently under contract.
Headquartered in Beverly Hills, California, Kennedy Wilson offers a wide array of real estate services including auction, conventional sales, property services, research and investment management with 23 offices in the U.S., Europe and Japan. As of March 31, 2012, the value of the real estate assets under the company’s management stood at $11.8 billion.
Kennedy Wilson currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock. One of its competitors, CBRE Group, Inc ( CBG - Analyst Report ) holds a Zacks #2 Rank, which implies a short-term Buy rating.
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