Kennedy Wilson Europe ripe for takeover bid, Merrion says

Kennedy Wilson Europe, the London-listed property company that owns the Stillorgan shopping centre and a number of offices and apartment developments in Dublin, is likely to become the subject of a takeover bid within the next 12 months, according to Merrion Capital analysts.

"With UK real-estate mergers and acquisitions picking up, we estimate a 65 per cent probably of a bid for Kennedy Wilson Europe," said Merrion Capital analysts Darren McKinley and Dylan Simmonds in a note to clients on Friday as they upgraded their stance on the stock to "buy".

The analysts noted that the £1.2 billion (€1.4 billion) market value of in Kennedy Wilson Europe (KWE), which reported a solid set of results last week, represents a 20 per cent discount to the value of assets on its books. The stock is trading on a 5.2 per cent dividend yield.

“Kennedy Wilson, KWE’s parent company, has been buying up shares in KWE recently, which suggests to us that they feel the company is currently undervalued,” the Merrion analysts said. “We believe KWE could be eventually taken over by its American-listed parent counterpart, who currently own 24 per cent of KWE, up 5 per cent over the last year.”

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California-based Kennedy Wilson was among the first overseas investors to dip its toe into the Irish market following the 2008 crash, initially buying Bank of Ireland’s real estate business before taking a small stake in the then-beleaguered Irish investor as it raised money to shore up its balance sheet. The Californian-based company floated KWE in 2014.

Report

Shares in KWE rose as much as 1.8 per cent in London on Friday as investors digested the Merrion Capital report.

A spokeswoman for Kennedy Wilson in Dublin didn't have a response when contacted by The Irish Times on Friday.

Ireland accounts for 31 per cent of KWE’s assets at the end of December, while the UK made up 56 per cent of the portfolio. Spain and Italy accounted for 7 per cent and 6 per cent, respectively.

Its Irish portfolio includes the Stillorgan shopping centre, Portmarnock Hotel and Golf Links, Baggot Plaza office building in Dublin 4 and numerous multi-unit residential rental developments in the capital.

The group handed over the keys on the 129,300sq ft (12,000sq m) Baggot Plaza development in July under a 25-year lease at a “headline rate” of €47.50 per sq ft.

It also obtained planning permission to build a new extension unit of 11,000sq ft to the 142,300sq ft Stillorgan Village Centre shopping complex and signed a new 25-year lease with its main anchor tenant, Tesco.