Making the Most of Financial Collapse

That's possibly my most optimistic title yet.

It was reported last week that Beverly Hills-based commercial real estate firm Kennedy Wilson (NYSEARCA: KW) completed the final stage of its deal to acquire a $1.8 billion UK-based loan portfolio from Bank of Ireland. This transaction brings the estimated value of the assets under Kennedy Wilson's management to upwards of $12 billion. As PERE News reported,

The purchase occurred in two phases, with $1.4 billion closed on 21 October and $400 million closed on 5 December. Most of the loans in the portfolio are secured by Class A office, multifamily and retail properties in London.

This is consistent with the recent news that, for the first time, international investors outnumber local investors in London's commercial real estate market.

Even while the European economy is in a state of panic (and this includes the Bank of Ireland, whose collapse has proven a great opportunity for Kennedy Wilson), we see that parts of Europe (and I'm very sorry, UK, but I'm lumping you in with the rest of the Continent) are still viable markets for commercial real estate investment.

Indeed, Patrick Parkinson of Jones Lang LaSalle (NYSE: JLL) believes Italy, too, is showing promise for international investment in its retail and other CRE sectors, especially in cities like Turin and Milan. Yes, Italy–the country that's joined Greece at the center of this ongoing financial crisis.

The enormity of Kennedy Wilson's transaction–and the timid market in which it's taken place–make it seem a little hard to believe. Yet such an acquisition is far from unprecedented. Just recently, Blackstone (NYSE: BX) inked a deal with Morgan Stanley (NYSE: MS) to acquire a distressed portfolio of 16 office buildings in major U.S. markets. This deal was for a reported $800 million (not quite as massive as the Kennedy Wilson acquisition), but it too demonstrates the opportunities available to (certain) CRE investment firms.

For firms with the resources, a climate of collapsing banks, failing national economies, and distressed properties is not the doomsday that some may say. There's always money to be made–only by different means.

#CRE #economy