Kennedy-Wilson Holdings, Inc. (KW), an international real estate investment trust (:REIT), recently announced an underwritten public offering of 8.0 million shares. The company also granted the underwriter a 30-day option to buy up to an additional 1.2 million shares. Earlier, on Sep 10, 2013, the company priced an underwritten public offering of 6.0 million shares at $18.50 each.
Deutsche Bank Securities Inc., part of Deutsche Bank AG (DB), is the sole book running manager for the latest offering.
Kennedy-Wilson expects to utilize the net proceeds from the offering for asset acquisitions, investments and meeting other corporate needs. Notably, since Jan 2010 till Sep 2013, the company along with its equity partners acquired real estate related investments worth $10.6 billion.
We believe that though the offering will result in share dilution for the company, the acquisitions and strategic investments will aid the company enhancing its portfolio quality.
On Nov 5, Kennedy-Wilson reported its third quarter FFO (funds from operations) per share of negative 6 cents, narrower from the Zacks Consensus estimate negative of 15 cents per share. Results reflected top-line growth, partially offset by an increase in operating expenses. As of Sep 30, 2013, total assets stood at $1.6 billion compared to $1.5 billion as of Jun 30, 2013.
Recently, some other REITs including Parkway Properties, Inc. (PKY) and New York Mortgage Trust Inc. (NYMT) offered common stocks to increase liquidity. In Dec 2013, Parkway Properties priced an underwritten public offering of 13.5 million shares at $13.00 each, while in Oct 2013 New York Mortgage announced an underwritten public offering of 13.5 million shares.
Kennedy-Wilson currently has a Zacks Rank #3 (Hold).
Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.