CPP Investments Partners with Kennedy Wilson to Launch New UK Single-Family Rental Housing Joint Venture Targeting £1 Billion in Real Estate

Rhea-AI Summary

Kennedy Wilson (NYSE:KW) and CPP Investments have launched a new joint venture targeting £1 billion in UK single-family rental housing. CPP Investments will commit £500 million for a 90% stake, while Kennedy Wilson commits £56 million for 10% ownership. The JV will focus on energy-efficient, new-build housing in strong local economies, with initial properties in Norwich and Stevenage. Kennedy Wilson has an active pipeline of over £360 million and 1,100 units, with capacity for 4,000 units at full deployment. The venture aims to address UK's rental housing undersupply while providing professionally managed properties.

Positive

• Secured substantial initial funding of £556 million with potential for expansion
• Strong partnership with CPP Investments, managing C$646.8 billion in assets
• Clear pipeline of £360 million worth of opportunities identified
• Potential to scale to 4,000 housing units at full deployment

Negative

• None.

Insights

Real Estate Investment Analyst

This strategic joint venture marks a significant expansion in the UK single-family rental market, with £1 billion targeted asset value. The partnership structure, with CPP Investments holding 90% and Kennedy Wilson 10%, brings substantial institutional capital to address the UK's housing shortage while targeting attractive returns.

The venture's focus on energy-efficient, new-build properties in high-growth areas with strong employment fundamentals positions it well for sustainable returns. Kennedy Wilson's extensive residential management experience (60,000+ units) and established pipeline of £360 million worth of opportunities provides immediate scale potential.

The structure allows for significant leverage and potential capital expansion, while Kennedy Wilson's management fees create an additional revenue stream beyond their equity investment. This move strengthens Kennedy Wilson's position in the UK residential market and diversifies their revenue sources.

Market Research Analyst

The UK single-family rental sector presents a compelling opportunity due to structural undersupply and growing demand for professionally managed rental properties. This venture capitalizes on the market's maturation phase, similar to the successful institutional investment patterns seen in the US multifamily sector.

The initial developments in Norwich and Stevenage demonstrate a strategic focus on regional growth markets where housing affordability challenges create strong rental demand. The potential to scale to 4,000 units indicates significant growth runway in an undersupplied market.

This institutional investment could help professionalize the traditionally fragmented UK rental market, potentially setting new standards for property management and tenant experience while generating stable returns from rental income growth.

LONDON--(BUSINESS WIRE)-- Canada Pension Plan Investment Board (CPP Investments) has partnered with global real estate investment company Kennedy Wilson (NYSE:KW) to launch a new single-family rental housing joint venture (“the JV”) in the United Kingdom. CPP Investments will initially commit £500 million, with Kennedy Wilson committing £56 million. The JV will have an initial target of approximately £1 billion of asset value, including leverage, with the potential to commit further capital depending on market opportunities. CPP Investments will hold 90% of the venture and Kennedy Wilson will hold a 10% ownership interest moving forward.

Cringleford Heights, Norwich (Photo: Business Wire)

Through partnerships with housebuilders, the JV will target energy efficient, new-build housing stock in strong and growing local economies that offer residents excellent connectivity, attractive local amenities, and proximity to strong employment prospects and educational institutions.

The investment program is seeded with properties from two developments sourced by Kennedy Wilson, including units under construction by Barratt Redrow in Norwich, where Kennedy Wilson is now leasing up the first phase of completed homes, and units by Miller Homes in Stevenage, which will deliver completed houses from Q2 2025. Kennedy Wilson has an active pipeline of opportunities totaling over £360 million and 1,100 units, with the capacity to reach 4,000 units at full capital deployment.

“Private capital can play an important role in addressing the current undersupply of high-quality rental housing in the UK, particularly where it is professionally managed to provide a great customer experience,” said Tom Jackson, Head of Real Estate Europe at CPP Investments. “Investing into the UK single-family housing sector aligns well with our broader real estate strategy, to undertake scalable investments into high quality assets with growing cash flows. We look forward to launching the JV alongside Kennedy Wilson to deliver strong returns for 22 million contributors and beneficiaries of the CPP fund.”

Kennedy Wilson will manage the JV and earn customary fees, leveraging its expertise as a long-term owner, operator, and debt provider for rental housing with more than 60,000 units owned or financed by Kennedy Wilson managed platforms across the United States, the UK, and Ireland. The company’s established global residential platform comprises a vertically integrated investment, asset management, and development team, and operating and reporting systems.

“Residential has long been a crucial part of Kennedy Wilson’s investment strategy, and our JV with CPP Investments, a leading global institutional investor, will propel our efforts to deliver much-needed rental homes for local families,” said Mike Pegler, President, Kennedy Wilson Europe. “The structural challenges facing institutionally managed rental housing in the UK provides a clear investment rationale to enter the market and leverage our deep experience in the sector. We are actively seeking opportunities to grow our portfolio, which offers substantial scalability potential in the UK, driving consistent risk adjusted returns in this high-conviction subsector.”

About CPP Investments

Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 22 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At June 30, 2024, the Fund totalled C$646.8 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Instagram or on X @CPPInvestments.

About Kennedy Wilson

Kennedy Wilson (NYSE: KW) is a leading real estate investment company with over $27 billion of assets under management in high growth markets across the United States, the UK and Ireland. Drawing on decades of experience, our relationship-oriented team excels at identifying opportunities and building value through market cycles, closing more than $50 billion in total transactions across the property spectrum since going public in 2009. Kennedy Wilson owns, operates, and builds real estate within our high-quality, core real estate portfolio and through our investment management platform, where we target opportunistic investments alongside our partners. For further information, please visit www.kennedywilson.com.

Special Note Regarding Forward-Looking Statements

Statements in this press release that are not historical facts are “forward-looking statements” within the meaning of U.S. federal securities laws. These forward-looking statements are estimates that reflect our management’s current expectations, are based on our current estimates, expectations, forecasts, projections and assumptions that may prove to be inaccurate and involve known and unknown risks. Accordingly, our actual results, performance or achievement, or industry results, may differ materially and adversely from the results, performance or achievement, or industry results, expressed or implied by these forward-looking statements, including for reasons that are beyond our control. Some of the forward-looking statements may be identified by words like “believes”, “expects”, “anticipates”, “estimates”, “plans”, “intends”, “projects”, “indicates”, “could”, “may” and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. We assume no duty to update the forward-looking statements, except as may be required by law.

KW-IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20241024686182/en/

CPP Investments

Steve McCool

Public Affairs & Communications

+44 7780 224 245

smccool@cppib.com

Kennedy Wilson

Investors

Daven Bhavsar, CFA

Head of Investor Relations

+1 (310) 887-3431

dbhavsar@kennedywilson.com

European Media

Dido Laurimore and Eve Kirmatzis

+44 20 3727 1000

kennedywilson@fticonsulting.com

U.S. Media

Emily Heidt

Vice President, Communications

+1 (310) 887-3499

eheidt@kennedywilson.com

Source: Kennedy Wilson

FAQ

What is the size of the new UK rental housing joint venture between Kennedy Wilson (KW) and CPP Investments?

The joint venture targets approximately £1 billion in asset value, including leverage, with CPP Investments committing £500 million and Kennedy Wilson committing £56 million initially.

What is Kennedy Wilson's (KW) ownership percentage in the new UK joint venture?

Kennedy Wilson (KW) holds a 10% ownership interest in the joint venture, while CPP Investments holds 90%.

How many housing units does Kennedy Wilson (KW) plan to develop through this joint venture?

Kennedy Wilson has an active pipeline of 1,100 units with the capacity to reach 4,000 units at full capital deployment.

Where are the initial properties located in Kennedy Wilson's (KW) new UK joint venture?

The initial properties are located in Norwich, where the first phase is being leased, and in Stevenage, which will deliver completed houses from Q2 2025.