Kennedy-Wilson Holdings, Inc. (KW) recently priced the underwritten public offering of 6 million common shares at $18.50 per share. The company also granted a 30-day option to underwriters to buy up to 0.9 million additional common shares, to cover any over-allotments. The move will add to the company's flexibility.
Kennedy-Wilson intends to utilize the proceeds from the offering to pay off the outstanding debt worth $50.0 million under the unsecured revolving credit facility. Moreover, the company plans to use the remaining proceeds to finance proposed acquisitions and co-investments as well as for other corporate purposes.
Notably, Deutsche Bank Securities – an operating arm of Deutsche Bank AG (DB) – is acting as the sole underwriter. The common share offering is slated to close on Sep 13, 2013, upon fulfillment of customary closing conditions.
Though this public offering will result in share dilution for Kennedy-Wilson, the payment of debt is encouraging as it will reduce interest expenses. Moreover, strategic investments will help the company to enhance its portfolio quality, which will consequently be accretive to its earnings going forward.
Kennedy-Wilson, which offers a wide array of real estate services – such as auction, conventional sales, property services, and research and investment management – is actively engaged in expanding its portfolio in vibrant markets across the U.S., the U.K., Spain, Ireland and Japan.
In connection to this, last week, Kennedy-Wilson bought a four-story Class A office building and seven-story parking structure – 5161 Lankershim Boulevard – in North Hollywood for $45 million. Moreover, the company bought a portfolio of 8 shopping centers situated across England and Scotland, out of administration for $388 million (£250 million). We expect these acquisitions to enhance Kennedy-Wilson’s rental revenue growth, going forward.
Kennedy-Wilson currently carries a Zacks Rank #3 (Hold). Other better-performing companies include FirstService Corp. (FSRV) and E-House (China) Holdings Ltd (EJ). Both these stocks have a Zacks Rank #1 (Strong Buy).
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