Fairfax Financial Partners With Kennedy Wilson to Acquire Loan Portfolio From Pacific Western Bank, Makes Additional Equity Investment in Kennedy Wilson

(Unless otherwise provided herein, all dollar amounts in this announcement are expressed in U.S. dollars.)

TORONTO, June 05, 2023 (GLOBE NEWSWIRE) -- Fairfax Financial Holdings Limited (TSX:FFH and TSX:FFH.U) is pleased to announce that it has agreed with Kennedy-Wilson Holdings, Inc. (“Kennedy Wilson”) (NYSE:KW) that, through certain of its subsidiaries (collectively, “Fairfax”), it will acquire an interest of approximately 95% in certain of the real estate construction loans (collectively, the “Loans”) that Kennedy Wilson has agreed to acquire from Pacific Western Bank (the “Transaction”), a bank holding company headquartered in California.

The total purchase price for the Loans is approximately $2.1 billion, of which Fairfax will fund 95% (approximately $2.0 billion). The aggregate principal balance currently outstanding under the Loans is approximately $2.3 billion. Fairfax will also assume approximately 95% of all future funding obligations under the Loans, subject to customary conditions to disbursement, which future funding obligations attributable to Fairfax total approximately $1.7 billion. The aggregate principal balance of the Loans, which are floating rate, currently carries an average interest rate of approximately 8.6%, and Fairfax has entered into interest rate swap arrangements to effectively fix this rate over the life of the Loans. The weighted-average remaining term to maturity for the Loans based on gross commitments is approximately 1.7 years, with some Loans subject to customary extension rights by the borrower up to a maximum of two additional one-year terms. Taking into account the discount at which Fairfax acquired the principal balances of the Loans, Fairfax expects the average annual return on the capital deployed by Fairfax in connection with the Loans to exceed 10%. All of the Loans are secured by real property located in the United States with an average loan-to-value ratio of approximately 51% and are supported by completion guarantees issued by the project equity sponsors. More than 70% of the Loans relate to multifamily or student housing development projects with the balance being a mix of industrial, hotel and life science office property development projects.