Kennedy-Wilson Holdings, Inc.’s (KW) wholly owned subsidiary, Kennedy-Wilson, Inc., announced the upsizing and pricing of 5.875% senior notes due 2024. In particular, the size of the offering has been increased to $300 million from $250 million disclosed earlier. The offering is expected to close on March 25, 2014, though it is subject to some customary closing conditions, and interests on them are payable semiannually.
The move will help Kennedy Wilson enhance its financial flexibility. Specifically, the company would use the amount for repaying its entire outstanding borrowings under its unsecured revolving credit facility and meet other corporate needs like future acquisitions and co-investments.
Furthermore, Moody's Investors Service, the rating arm of Moody's Corporation (MCO) assigned a B2 rating to Kennedy-Wilson's new notes and the rating outlook was stable. Increasing real estate asset book and a notable portfolio of joint venture investments are reflected in the ratings assigned.
While the company has a vertically-integrated operating platform, its portfolio is concentrated in California, Hawaii and other western states (they made up over 60% of its investments in 2013).
The rating agency expects the company to experience an improvement in its leverage profile and earnings quality as well as expand its business with adequate liquidity and without credit metrics dilution, which is reflected in their stable outlook.
We believe that the current move will enable Kennedy Wilson to strengthen its liquidity and focus on diversifying efforts. This would go a long way in improving its top line going forward.
Kennedy Wilson currently carries a Zacks Rank #3 (Hold). Investors interested in the real estate operations industry may also consider stocks like HFF, Inc. (HF) and FirstService Corporation (FSRV). While HFF holds a Zacks Rank #1 (Strong Buy), FirstService carries a Zacks Rank #2 (Buy).