fairfax financial has moved to buy most of the realestate construction loans that kennedywilson holdings has agreed to buy from californias pacific western bank in a 21 billion deal the canadian insurer said it would buy a 95 interest in certain of the loans the realestate investment company is acquiring and would fund about 2 billion of the purchase price while also making an equity investment in kennedy wilson the principal balance currently outstanding under the loans is about 23 billion and fairfax said it would assume roughly 95 of all future funding obligations under the loans which total about 17 billion the aggregate principal balance of the loans which are floating rate currently carries an average interest rate of about 86 fairfax said it entered into interest rate swap arrangements to effectively fix this rate over the life of the loans the weightedaverage remaining term to maturity for the loans based on gross commitments is about 17 years with some loans subject to extension rights by the borrower up to a maximum of two additional oneyear terms fairfax said that taking into account the discount at which it acquired the principal balances of the loans it expects the average annual return on the capital deployed to exceed 10 all of the loans are secured by property located in the us with an average loantovalue ratio of about 51 the canadian company said 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 fairfax said it additionally agreed to make a 200 million preferred equity investment in kennedy wilson buying perpetual preferred stock that carries a 6 annual dividend rate and is callable by kennedy wilson at any time fairfax also bought sevenyear warrants for about 123 million shares with an initial strike price of 1621 apiece the last closing price for kennedy wilson shares