Kennedy-Wilson Holdings, Inc. [NYSE: KW] disclosed that it has purchased Forum, a wholly-owned institutional-quality office campus, for $81 million. Forum is situated on the South Coast of the UK, midway between Southampton and Portsmouth. It occupies 252,000 square feet of office space across five buildings on a picturesque 30-acre site with lakes, trails, and lush landscaping.
Forum is well situated near Junction 9 of the M27 motorway. It has outstanding connectivity across the region. It is close to the Whiteley Shopping Centre, which encompasses restaurants, hotel and conference facilities, and other amenities. Furthermore, the purchase of Forum highlights the ongoing focus of KW on trading into assets with strong cash flow and high growth potential in the UK.
In addition, KW has purchased Forum under replacement cost. The deal underscored a secure initial income stream for Kennedy Wilson with further upside potential as its implement its capital and asset management programs to enhance the tenant experience and improve sustainability credentials onsite.
Moreover, the company disclosed that the campus is rented to a strong lineup of corporate tenants. Tenants are HSBC and Specsavers, with a weighted average lease term to the first break of 4.2 years. The office purchase was executed at a 6.3% cap rate with 85% occupancy. Hence, after the lease-up of the vacant space, the yield on cost is expected to increase to over 9 percent.