1,109.00p

Share price at 14:56

Acquisition of 111 Buckingham Palace Road, Victoria SW1

11 November 2014

Kennedy Wilson Europe Real Estate Plc (LSE: KWE), an LSE listed property company that invests in direct real estate and real estate loans in Europe, announces that it has completed the acquisition of the corporate vehicle that owns 111 Buckingham Palace Road, Victoria SW1 from Kish Holdings Limited, an entity managed and controlled by Green Property Ventures ("Green Property").

The underlying real estate is valued at £207.5 million reflecting a gross yield of 5.1%, which is expected to rise to c. 7% following execution of asset management plans. The acquisition was undertaken by way of a share purchase for a net purchase price of £204.3 million. The acquisition will be funded from the Company's cash resources.The 227,165 sq ft landmark, Grade A London office building is located in the West End core sub market of Victoria, immediately over the mainline railway station and the Victoria Plaza shopping centre, fronting onto Buckingham Palace Road.

The building is fully occupied with a weighted average unexpired lease term of 5.7 years to first break (6.7 years to expiry) and average passing rents of c. £47 psf. It is the London headquarters of Telegraph Media Group (accounting for 54% of rental income), private equity group Advent International, TV and internet content group Scripps Network and serviced offices operator Regus.

The building was comprehensively refurbished in 2003 and offers generous floor plates ranging between 41,800 sq ft and 67,500 sq ft. The property also benefits from an unimplemented planning consent to redevelop the reception area.

Mary Ricks, President and CEO of Kennedy Wilson Europe, commented:
“111 Buckingham Palace Road provides KWE with an exciting opportunity to enter the thriving Victoria market, where Grade A office vacancies sit at only 1.5% and prime headline rents exceed £80 psf. The area is benefitting from substantial investment and redevelopment which will see its attractiveness grow as a West End destination.

“We aim to deliver material rental growth through the successful management of rent reviews and expiries and are targeting an income yield of c. 7% upon implementation of asset management initiatives. In addition to strategic refurbishments we intend to improve the occupier experience by creating a new double-height reception area ahead of major lease events in 2016/17.”

Pat Gunne, CEO of Green Property, commented:
“We are selling 111 at a very exciting time in the Victoria market which is going through transformational change. We secured an Eric Parry designed planning consent which if implemented will dramatically enhance the reception area, and further the property’s appeal to major global occupiers. It provides the purchaser scope for lease re gear negotiations with the principal tenants at what would look to be a very opportune time in the rental cycle particularly with the developments currently underway in the Victoria market.”

JLL advised KWE and CBRE advised the vendor.

Leavesden Park, Watford, UK (1)

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ir@kennedywilson.eu

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