Kennedy Wilson Grows Portfolio in Sacramento with $100MM Buy and More Than Tripling of Another Asset


By Jon Peterson

Beverly Hills-based Kennedy Wilson has increased its acquisition efforts in Sacramento with the $100 million purchase of the 612-unit Slate Creek at Johnson Ranch asset located at 1751 East Roseville Parkway.

“There were several things we liked about the property. It’s in an area that has seen strong rental rate growth of around 10 percent over the past year. There has been no supply added to the area recently. The property is no too far away from major employers like Hewlett-Packard, Kaiser Permanente and Oracle. The complex has a unique setting as it covers 39 acres of land,” says Kurt Zech, president of Kennedy Wilson Multifamily Investments. He works out of the company’s regional office in San Francisco.

The cap rate on this deal was at 6.51 percent. “This return is a little higher due to the fact that the property had some existing debt that had a higher than normal interest rate. A more typical interest rate would have had the cap rate about 50 basis points lower,” said Zech.

There was a total of $38.5 million of equity in the transaction. This capital came from Kennedy Wilson and one of its commingled funds, Kennedy Wilson Fund V.

The seller of the property was DiNapoli Capital Partners. This company has offices in the San Francisco Bay Area in Walnut Creek and Los Gatos. The property was built in 1989, an the occupancy at closing was 97 percent. The new owners are planning to make some improvements to the property, which will include upgrading the fitness center and the leasing office.

Kennedy Wilson is planning on more than tripling the size of one of its other assets in Sacramento. This is the 409-unit Capital Towers project located at 1500 7th Street. “We just received approval from the city of Sacramento to expand the property by another 1,000 units. We are very excited about this. Our firm has not decided the timeline as to when the expansion of the property will be started. We like the location of being downtown near where the new basketball arena will be constructed for the Sacramento Kings,” said Zech.

Kennedy Wilson owns one other asset in Sacramento. This is the 393-unit Shorepark complex located at 7952 Pocket Road. The investor would like to find more assets to buy in the state capital city. “We like this market, and we would be interested in finding more apartments to invest in for the future,” said Zech.

West Coast Commercial Real Estate News