Exhibit 99.1
Kennedy-Wilson Holdings, Inc.
Third Quarter 2013
Earnings Release and Supplemental Financial Information
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Premiere Ichibancho Tokyo | The Ritz Carlton, Lake Tahoe Lake Tahoe | State Street Building Dublin |
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Kennedy-Wilson Holdings, Inc. and Subsidiaries
Supplemental Financial Information
For the Quarter Ended September 30, 2013
TABLE OF CONTENTS
| Earnings Release | ||
| Supplemental Financial Information | ||
Note about Non-GAAP financial information included in this presentation
In addition to the results reported in accordance with U.S. generally accepted accounting principles ("GAAP") included within this presentation, Kennedy-Wilson Holdings, Inc. ("Kennedy Wilson") has provided certain information, which includes non-GAAP financial measures (pro forma consolidated statements of operations, EBITDA, earnings before interest, taxes, depreciation, amortization and stock-based compensation ("Adjusted EBITDA"), net income attributable to common shareholders, adjusted for depreciation, amortization and stock-based compensation expense ("Adjusted Net Income"), and Basic Adjusted Net Income Attributable to Kennedy Wilson Common Shareholders Per Share). Such information is reconciled to its closest GAAP measure in accordance with the rules of the Securities and Exchange Commission and is included within this presentation. Management believes that these non-GAAP financial measures are useful to both management and Kennedy Wilson's shareholders in their analysis of the business and operating performance of Kennedy Wilson. Management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measures. Additionally, non-GAAP financial measures as presented by Kennedy Wilson may not be comparable to similarly titled measures reported by other companies.
Common Definitions
Kennedy Wilson refers to its net investment account and gross investment account throughout this release. Kennedy Wilson's equity in real estate, joint ventures, acquired in-place leases and loan investments, net of depreciation and amortization comprises the "net investment account," the "gross investment account" is the net investment account presented before accumulated depreciation and amortization.
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Contact: Christina Cha
Vice President of Corporate Communication
Kennedy Wilson
(310) 887-6294 9701 Wilshire Blvd. Suite 700
ccha@kennedywilson.com Beverly Hills, CA 90212
www.kennedywilson.com
NEWS RELEASE
KENNEDY WILSON REPORTS THIRD QUARTER 2013 EARNINGS
Adjusted EBITDA increases 142% from same period of last year
BEVERLY HILLS, CA. (November 5, 2013) - Kennedy-Wilson Holdings, Inc. (NYSE: KW), an international real estate investment and services company, today reported third quarter 2013 Adjusted EBITDA of $42.3 million, a 142% increase from $17.5 million for the same period in 2012. For the nine months ended September 30, 2013, Adjusted EBITDA was $111.3 million, a 101% increase from $55.5 million for the same period in 2012.
Adjusted Net Income for the third quarter 2013 was $14.4 million or $0.20 per basic share compared to Adjusted Net Income of $2.8 million for the same period in 2012, or $0.05 per basic share. U.S. GAAP net loss attributable to common shareholders for the third quarter 2013 was $4.1 million, or $0.06 per basic and diluted share, compared to a loss of $6.2 million, or $0.11 per basic and diluted share, for the same period in 2012.
"Kennedy Wilson and its equity partners acquired $1 billion of real estate investments this quarter and we raised approximately $120 million in equity further strengthening our balance sheet," said William McMorrow, chairman and CEO of Kennedy Wilson. "We continue to focus on sourcing attractive investment opportunities, improving the operating performance of our properties, and executing on select asset realizations."
Kennedy Wilson Recent Highlights
Investments business
Investment account
| • | As of September 30, 2013, our gross investment account was $1.1 billion, compared to $908.9 million as of December 31, 2012. The net investment account was $1.0 billion as of September 30, 2013 compared to $837.6 million at December 31, 2012, after accumulated depreciation and amortization of $114.6 million and $71.3 million, respectively. The change in the net investment account was comprised of $387.1 million of cash contributed to and income earned on investments offset by $209.3 million of cash distributed from investments. During the nine months ended September 30, 2013, the Company and its equity partners received approximately $940 million in distributions from their investments. |
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| • | As of September 30, 2013, the Company and its equity partners owned 22.9 million rentable square feet of real estate, including investments in 16,511 apartment units and 79 commercial properties. Additionally, as of September 30, 2013, the Company and its equity partners owned in excess of $1.6 billion in unpaid principal balance of loans secured by real estate. |
Operating metrics
| • | During the nine months ended September 30, 2013, our investments business achieved an EBITDA of $99.5 million, a 111% increase from $47.2 million for the same period in 2012. |
| • | During the nine months ended September 30, 2013, based on our investments in 11,755 same property multifamily units, rental revenues increased 5%, net operating income increased 7% and occupancy increased 1% at the property level from the same period in 2012. In addition, based on our investments in 2.8 million square feet of same property commercial real estate, rental revenues increased 15%, net operating income increased 18% and occupancy increased 4% at the property level from the same period in 2012. |
Acquisition/disposition program
| • | From January 1, 2010 through September 30, 2013, the Company and its equity partners acquired approximately $10.6 billion of real estate related investments (including unpaid principal balance of loan purchases). During the nine months ended September 30, 2013, the Company and its equity partners acquired $2.6 billion of real estate related investments, in which the Company invested $368.5 million of equity. Our investments were directed 71% to the United Kingdom and Ireland and 29% to the Western U.S. |
| • | During the fourth quarter of 2012, the Company and one of its equity partners acquired the mortgage on The Rock, a premier retail, residential and entertainment center in Manchester, United Kingdom. During the third quarter, the Company and its equity partner converted their mortgage note to a 100% equity ownership in the property resulting in a $28.8 million acquisition related gain. The Company's portion of the gain was $14.4 million and was recognized in equity in joint venture income. |
| • | During the nine months ended September 30, 2013, the Company and its equity partners sold a total of $177.4 million of real estate, which resulted in a gain of $41.3 million, of which our share was $13.2 million ($29.9 million of our equity invested) including nine commercial buildings, two multifamily properties and 52 condos. |
Property level debt financing
| • | As of September 30, 2013, the Company and its equity partners had approximately $3.2 billion of property level debt with a weighted average interest rate of 5.1% and a weighted average maturity of 6.1 years. |
| • | As of September 30, 2013 the Company and its equity partners property level debt was 54% at fixed interest rates, 31% floating with interest rate caps and 15% at floating interest rates. |
Key investment updates
UK Loan Pool
| • | Our book equity in this investment is $11.4 million; we own 12.5% before carried interest. |
| • | In December 2011, the Company and its equity partners acquired a loan pool secured by real estate located in the United Kingdom with an unpaid principal balance of $2.1 billion. As of September 30, 2013, the unpaid principal balance was $189.1 million due to loan resolutions of approximately $1.9 billion, representing approximately 91% of the pool. During the nine months ended September 30, 2013, the Company received $53.4 million in distributions related to resolutions. |
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Japan multifamily
| • | Our book equity in this investment is $72.2 million; we own 40.9% before carried interest. |
| • | We maintained 96% occupancy in 50 apartment buildings as of September 30, 2013 with a total of 2,410 units. |
| • | Since Fairfax Financial became our partner in the Japanese multifamily portfolio in September 2010, we have distributed a total of $104.4 million, of which our share was $49.1 million. |
Services business
| • | Management and leasing fees and commissions increased by 52% to $54.0 million for the nine months ended September 30, 2013, from $35.5 million for the same period in 2012. |
| • | During the nine months ended September 30, 2013, our services business achieved an EBITDA of $22.6 million, a 102% increase from $11.2 million for the same period in 2012. |
Corporate financing
| • | In September 2013, the Company issued and sold 6.9 million shares of common stock primarily to institutional investors, resulting in gross proceeds of $127.7 million. A portion of the proceeds were used to pay off the outstanding balance on our line of credit. |
| • | In September 2013, the Company increased the availability on its line of credit to $140.0 million from $100.0 million and extended the line's maturity to October 1, 2016. |
Subsequent events
| • | In October 2013, Meyers Research, a wholly owned subsidiary, launched Zonda, a mobile application designed to provide market insight for the homebuilding industry by combining interactive tools and real-time data on approximately 300 metrics impacting housing. |
Conference Call and Webcast Details
The Company will hold a live conference call and webcast to discuss results at 7:00 a.m. PT/ 10:00 a.m. ET on Wednesday, November 6.
The direct dial-in number for the conference call is (888) 895-5479 for U.S. callers and (847) 619-6250 for international callers. The confirmation number for the live call is 35911843.
A replay of the call will be available for one week beginning two hours after the live call and can be accessed by (888) 843-7419 for U.S. callers and (630) 652-3042 for international callers. The passcode for the replay is 35911843#.
The webcast will be available at: http://edge.media-server.com/m/p/68ekhgu8/lan/en. A replay of the webcast will be available two hours after the original webcast on the Company’s investor relations web site for one year.
About Kennedy Wilson
Founded in 1977, Kennedy Wilson is an international real estate investment and services company headquartered in Beverly Hills, CA with 24 offices in the U.S., U.K., Ireland, Spain and Japan. The Company offers a comprehensive array of real estate services including auction, conventional sales, property services, research and investment management. Through its fund management and separate account businesses, Kennedy Wilson is a strategic investor of real estate investments in the U.S., U.K., Ireland and Japan. For further information on Kennedy Wilson, please visit www.kennedywilson.com.
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Forward-Looking Statements
Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21 of the Securities Exchange Act of 1934, as amended. These forward-looking statements are necessarily estimates reflecting the judgment of our senior management based on our current estimates, expectations, forecasts and projections and include comments that express our current opinions about trends and factors that may impact future operating results. Disclosures that use words such as "believe," "anticipate," "estimate," "intend," "could," "plan," "expect," "project" or the negative of these, as well as similar expressions, are intended to identify forward-looking statements. These statements are not guarantees of future performance, rely on a number of assumptions concerning future events, many of which are outside of our control, and involve known and unknown risks and uncertainties that could cause our actual results, performance or achievement, or industry results, to differ materially from any future results, performance or achievements, expressed or implied by such forward-looking statements. These risks and uncertainties may include the factors and the risks and uncertainties described elsewhere in this report and other filings with the Securities and Exchange Commission (the "SEC"), including the Item 1A. "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2012, as amended by our subsequent filings with the SEC. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in the context of the various disclosures made by us about our businesses including, without limitation, the risk factors discussed in our filings with the SEC. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise.
Non-GAAP Financial Information
In addition to the results reported in accordance with U.S. generally accepted accounting principles (GAAP) included within this press release, Kennedy Wilson has provided certain information, which includes non-GAAP financial measures (Pro Forma Statements of Operations, Adjusted Net Income Attributable to Kennedy Wilson Common Shareholders, Basic Adjusted Net Income Attributable to Kennedy Wilson Common Shareholders Per Share, EBITDA and Adjusted EBITDA). Additionally, there are certain revenue and expense line items in our pro forma consolidated statements of operations or income that would otherwise be classified as discontinued operations on a GAAP statement. Such information is reconciled to its closest GAAP measure in accordance with the SEC rules and is included in the attached supplemental tables. Management believes that these non-GAAP financial measures are useful to both management and the Company's shareholders in their analysis of the business and operating performance of the Company. Management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measures. Additionally, non-GAAP financial measures as presented by Kennedy Wilson may not be comparable to similarly titled measures reported by other companies.
Tables Follow
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Kennedy-Wilson Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| September 30, 2013 | December 31, 2012 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 181,371,000 | $ | 120,855,000 | ||||
| Short term investments | — | 10,000,000 | ||||||
| Accounts receivable | 6,051,000 | 3,647,000 | ||||||
| Accounts receivable - related parties | 31,433,000 | 22,393,000 | ||||||
| Notes receivable | 22,444,000 | 136,607,000 | ||||||
| Notes receivable - related parties | 5,785,000 | — | ||||||
| Real estate, net of accumulated depreciation | 518,047,000 | 289,449,000 | ||||||
| Investments in joint ventures | 742,221,000 | 543,193,000 | ||||||
| Investments in loan pool participations | 58,774,000 | 95,601,000 | ||||||
| Other assets | 51,103,000 | 38,079,000 | ||||||
| Goodwill | 23,965,000 | 23,965,000 | ||||||
| Total assets | $ | 1,641,194,000 | $ | 1,283,789,000 | ||||
| Liabilities | ||||||||
| Accounts payable | $ | 1,735,000 | $ | 1,762,000 | ||||
| Accrued expenses and other liabilities | 37,220,000 | 29,417,000 | ||||||
| Accrued salaries and benefits | 20,081,000 | 24,981,000 | ||||||
| Deferred tax liability | 16,937,000 | 22,671,000 | ||||||
| Mortgage loans and notes payable | 340,366,000 | 236,538,000 | ||||||
| Senior notes payable | 409,196,000 | 409,640,000 | ||||||
| Junior subordinated debentures | 40,000,000 | 40,000,000 | ||||||
| Total liabilities | 865,535,000 | 765,009,000 | ||||||
| Equity | ||||||||
| Cumulative Preferred stock: | ||||||||
| 6.00% Series A, 100,000 shares | — | — | ||||||
| 6.45% Series B, 32,550 shares | — | — | ||||||
| Common stock | 8,000 | 6,000 | ||||||
| Additional paid-in capital | 792,449,000 | 512,835,000 | ||||||
| Accumulated deficit | (32,049,000 | ) | (5,910,000 | ) | ||||
| Accumulated other comprehensive income | 5,553,000 | 12,569,000 | ||||||
| Shares held in treasury | — | (9,856,000 | ) | |||||
| Total Kennedy-Wilson Holdings, Inc. stockholders’ equity | 765,961,000 | 509,644,000 | ||||||
| Noncontrolling interests | 9,698,000 | 9,136,000 | ||||||
| Total equity | 775,659,000 | 518,780,000 | ||||||
| Total liabilities and equity | $ | 1,641,194,000 | $ | 1,283,789,000 | ||||
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Kennedy-Wilson Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenue | ||||||||||||||||
| Management and leasing fees | $ | 4,462,000 | $ | 4,015,000 | $ | 13,925,000 | $ | 11,272,000 | ||||||||
| Management and leasing fees - related parties | 10,649,000 | 6,320,000 | 27,962,000 | 18,036,000 | ||||||||||||
| Commissions | 836,000 | 1,477,000 | 2,296,000 | 3,513,000 | ||||||||||||
| Commissions - related parties | 5,025,000 | 668,000 | 9,865,000 | 2,652,000 | ||||||||||||
| Sale of real estate | 1,546,000 | 1,275,000 | 10,060,000 | 1,275,000 | ||||||||||||
| Rental and other income | 10,690,000 | 1,485,000 | 27,452,000 | 4,432,000 | ||||||||||||
| Total revenue | 33,208,000 | 15,240,000 | 91,560,000 | 41,180,000 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Commission and marketing expenses | 1,011,000 | 1,371,000 | 2,845,000 | 3,676,000 | ||||||||||||
| Compensation and related expenses | 20,956,000 | 11,364,000 | 52,840,000 | 30,658,000 | ||||||||||||
| Cost of real estate sold | 883,000 | 1,275,000 | 7,885,000 | 1,275,000 | ||||||||||||
| General and administrative | 5,760,000 | 5,014,000 | 17,574,000 | 13,571,000 | ||||||||||||
| Depreciation and amortization | 4,531,000 | 989,000 | 12,003,000 | 2,903,000 | ||||||||||||
| Rental operating expenses | 4,167,000 | 847,000 | 11,852,000 | 2,638,000 | ||||||||||||
| Total operating expenses | 37,308,000 | 20,860,000 | 104,999,000 | 54,721,000 | ||||||||||||
| Equity in joint venture income | 9,379,000 | 1,848,000 | 20,955,000 | 12,472,000 | ||||||||||||
| Interest income from loan pool participations and notes receivable | 3,983,000 | 3,712,000 | 10,209,000 | 7,126,000 | ||||||||||||
| Operating income (loss) | 9,262,000 | (60,000 | ) | 17,725,000 | 6,057,000 | |||||||||||
| Non-operating income (expense) | ||||||||||||||||
| Interest income | 205,000 | 179,000 | 444,000 | 2,503,000 | ||||||||||||
| Acquisition-related gain | 1,668,000 | — | 11,127,000 | — | ||||||||||||
| Acquisition-related expenses | — | — | (510,000 | ) | — | |||||||||||
| Gain on sale of marketable securities | — | — | — | 2,931,000 | ||||||||||||
| Interest expense | (13,141,000 | ) | (6,755,000 | ) | (37,104,000 | ) | (19,979,000 | ) | ||||||||
| Other | — | (6,000 | ) | — | (80,000 | ) | ||||||||||
| Loss from continuing operations before benefit from income taxes | (2,006,000 | ) | (6,642,000 | ) | (8,318,000 | ) | (8,568,000 | ) | ||||||||
| (Provision for) benefit from income taxes | (726,000 | ) | 2,500,000 | 1,446,000 | 5,121,000 | |||||||||||
| Loss from continuing operations | (2,732,000 | ) | (4,142,000 | ) | (6,872,000 | ) | (3,447,000 | ) | ||||||||
| Discontinued Operations | ||||||||||||||||
| (Loss) income from discontinued operations, net of income taxes | (291,000 | ) | — | (294,000 | ) | 2,000 | ||||||||||
| Gain (loss) from sale of real estate, net of income taxes | 338,000 | — | 555,000 | (212,000 | ) | |||||||||||
| Net loss | (2,685,000 | ) | (4,142,000 | ) | (6,611,000 | ) | (3,657,000 | ) | ||||||||
| Net loss (income) attributable to the noncontrolling interests | 652,000 | (64,000 | ) | 2,550,000 | (2,990,000 | ) | ||||||||||
| Net loss attributable to Kennedy-Wilson Holdings, Inc. | (2,033,000 | ) | (4,206,000 | ) | (4,061,000 | ) | (6,647,000 | ) | ||||||||
| Preferred stock dividends and accretion of issuance costs | (2,036,000 | ) | (2,036,000 | ) | (6,108,000 | ) | (6,108,000 | ) | ||||||||
| Net loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders | $ | (4,069,000 | ) | $ | (6,242,000 | ) | $ | (10,169,000 | ) | $ | (12,755,000 | ) | ||||
| Basic and diluted earnings per share | ||||||||||||||||
| Earnings (loss) per basic and diluted share - continuing operations | $ | (0.06 | ) | $ | (0.11 | ) | $ | (0.15 | ) | $ | (0.23 | ) | ||||
| Earnings (loss) per basic and diluted share - discontinued | — | — | — | — | ||||||||||||
Earnings (loss) per share - basic and diluted(a) | $ | (0.06 | ) | $ | (0.11 | ) | $ | (0.15 | ) | $ | (0.24 | ) | ||||
| Weighted average shares outstanding for basic and diluted | 72,643,080 | 58,043,357 | 68,486,876 | 53,551,708 | ||||||||||||
| Dividends declared per common share | $ | 0.07 | $ | 0.05 | $ | 0.21 | $ | 0.15 | ||||||||
————————————————
(a) EPS amounts may not add due to rounding
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Kennedy-Wilson Holdings, Inc. and Subsidiaries
Adjusted Net Income Attributable to Kennedy Wilson Common Shareholders
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders | $ | (4,069,000 | ) | $ | (6,242,000 | ) | $ | (10,169,000 | ) | $ | (12,755,000 | ) | ||||
| Non-GAAP adjustments: | ||||||||||||||||
| Add back: | ||||||||||||||||
| Depreciation and amortization | 4,531,000 | 989,000 | 12,003,000 | 2,903,000 | ||||||||||||
| Kennedy Wilson's share of depreciation and amortization included in investment in joint ventures | 11,871,000 | 5,085,000 | 31,348,000 | 12,985,000 | ||||||||||||
| Stock-based compensation | 2,035,000 | 2,922,000 | 5,466,000 | 5,000,000 | ||||||||||||
| Adjusted Net Income Attributable to Kennedy-Wilson Holdings, Inc. Common Shareholders | $ | 14,368,000 | $ | 2,754,000 | $ | 38,648,000 | $ | 8,133,000 | ||||||||
| Basic weighted average number of common shares outstanding | 72,643,080 | 58,043,357 | 68,486,876 | 53,551,708 | ||||||||||||
| Basic Adjusted Net Income Attributable to Kennedy-Wilson Holdings, Inc. Common Shareholders Per Share | $ | 0.20 | $ | 0.05 | $ | 0.56 | $ | 0.15 | ||||||||
Kennedy-Wilson Holdings, Inc. and Subsidiaries
EBITDA and Adjusted EBITDA
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net loss | $ | (2,685,000 | ) | $ | (4,142,000 | ) | $ | (6,611,000 | ) | $ | (3,657,000 | ) | ||||
| Non-GAAP adjustments: | ||||||||||||||||
| Add back: | ||||||||||||||||
| Interest expense | 13,141,000 | 6,755,000 | 37,104,000 | 19,979,000 | ||||||||||||
Kennedy Wilson's share of interest expense included in investment in joint ventures and loan pool participations | 12,688,000 | 8,364,000 | 33,405,000 | 23,364,000 | ||||||||||||
| Depreciation and amortization | 4,531,000 | 989,000 | 12,003,000 | 2,903,000 | ||||||||||||
Kennedy Wilson's share of depreciation and amortization included in investment in joint ventures | 11,871,000 | 5,085,000 | 31,348,000 | 12,985,000 | ||||||||||||
| Provision for (benefit from) income taxes | 726,000 | (2,500,000 | ) | (1,446,000 | ) | (5,121,000 | ) | |||||||||
| EBITDA | 40,272,000 | 14,551,000 | 105,803,000 | 50,453,000 | ||||||||||||
| Stock-based compensation | 2,035,000 | 2,922,000 | 5,466,000 | 5,000,000 | ||||||||||||
| Adjusted EBITDA | $ | 42,307,000 | $ | 17,473,000 | $ | 111,269,000 | $ | 55,453,000 | ||||||||
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Kennedy-Wilson Holdings, Inc. and Subsidiaries
Capitalization Summary
(Unaudited)
| September 30, 2013 | December 31, 2012 | |||||||
| Market Data | ||||||||
| Common stock price per share | $ | 18.56 | $ | 13.98 | ||||
| Common stock and convertible preferred stock: | ||||||||
Basic shares outstanding (1) | 81,389,879 | 63,772,598 | ||||||
Series A mandatory convertible preferred (2) | 8,058,018 | 8,058,018 | ||||||
Series B mandatory convertible preferred (3) | 3,042,056 | 3,042,056 | ||||||
| Total common stock and convertible preferred stock | 92,489,953 | 74,872,672 | ||||||
| Equity Market Capitalization | $ | 1,716,613,528 | $ | 1,046,719,955 | ||||
Corporate Debt (4) | ||||||||
| Senior notes payable | 405,000,000 | 405,000,000 | ||||||
| Junior subordinated debentures | 40,000,000 | 40,000,000 | ||||||
| Total debt | 445,000,000 | 445,000,000 | ||||||
| Noncontrolling interest | 9,698,000 | 9,136,000 | ||||||
| Total Capitalization | 2,171,311,528 | 1,500,855,955 | ||||||
| Less: cash and cash equivalents and short term investments | (181,371,000 | ) | (130,855,000 | ) | ||||
| Total Enterprise Value | $ | 1,989,940,528 | $ | 1,370,000,955 | ||||
Warrants outstanding (5) | 5,018,093 | 5,822,744 | ||||||
(1) Basic share count and common stock price per share as of September 30, 2013 and December 31, 2012, respectively
(2) $100 million of Series A mandatory convertible preferred with a mandatory conversion date of May 19, 2015 and a conversion rate of $12.41 per share.
(3) $32.5 million of Series B mandatory convertible preferred with a mandatory conversion date of November 3, 2018 and a conversion rate of $10.70 per share.
(4) Excludes $340.4 million and $236.5 million of consolidated property level debt at September 30, 2013 and December 31, 2012, respectively.
(5) The warrants carry an exercise price of $12.50 and expire on November 14, 2014.
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Kennedy-Wilson Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Operations (Non-GAAP)
(Unaudited)
The following statement of operations represents the sum of Kennedy Wilson's consolidated operations and a pro rata portion of Kennedy Wilson's unconsolidated investments:
| Three months ended September 30, | ||||||||||||||||||||||||
| 2013 | 2012 | |||||||||||||||||||||||
| Consolidated | Pro Rata Unconsolidated Investments | Pro Forma Total | Consolidated | Pro Rata Unconsolidated Investments | Pro Forma Total | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Management and leasing fees | $ | 15,111,000 | $ | — | $ | 15,111,000 | $ | 10,335,000 | $ | — | $ | 10,335,000 | ||||||||||||
| Commissions | 5,861,000 | — | 5,861,000 | 2,145,000 | — | 2,145,000 | ||||||||||||||||||
| Sale of real estate | 1,546,000 | 34,686,000 | 36,232,000 | 1,275,000 | — | 1,275,000 | ||||||||||||||||||
| Rental and other income | 10,690,000 | 35,945,000 | 46,635,000 | 1,485,000 | 20,572,000 | 22,057,000 | ||||||||||||||||||
| Interest income | — | 4,387,000 | 4,387,000 | — | 4,549,000 | 4,549,000 | ||||||||||||||||||
| Total revenue | 33,208,000 | 75,018,000 | 108,226,000 | 15,240,000 | 25,121,000 | 40,361,000 | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Commission and marketing expenses | 1,011,000 | — | 1,011,000 | 1,371,000 | — | 1,371,000 | ||||||||||||||||||
| Compensation and related expenses | 20,956,000 | 134,000 | 21,090,000 | 11,364,000 | 198,000 | 11,562,000 | ||||||||||||||||||
| Cost of real estate sold | 883,000 | 26,493,000 | 27,376,000 | 1,275,000 | — | 1,275,000 | ||||||||||||||||||
| General and administrative | 5,760,000 | 692,000 | 6,452,000 | 5,014,000 | 229,000 | 5,243,000 | ||||||||||||||||||
| Depreciation and amortization | 4,531,000 | 11,871,000 | 16,402,000 | 989,000 | 5,085,000 | 6,074,000 | ||||||||||||||||||
| Rental operating expenses | 4,167,000 | 14,868,000 | 19,035,000 | 847,000 | 7,055,000 | 7,902,000 | ||||||||||||||||||
| Total operating expenses | 37,308,000 | 54,058,000 | 91,366,000 | 20,860,000 | 12,567,000 | 33,427,000 | ||||||||||||||||||
| Equity in joint venture income | 9,379,000 | (9,379,000 | ) | — | 1,848,000 | (1,848,000 | ) | — | ||||||||||||||||
Interest income from loan pool participations and notes receivable | 3,983,000 | (3,983,000 | ) | — | 3,712,000 | (3,712,000 | ) | — | ||||||||||||||||
| Operating income (expense) | 9,262,000 | 7,598,000 | 16,860,000 | (60,000 | ) | 6,994,000 | 6,934,000 | |||||||||||||||||
| Non-operating income (expense) | ||||||||||||||||||||||||
| Interest income | 205,000 | (205,000 | ) | — | 179,000 | (179,000 | ) | — | ||||||||||||||||
| Gain on sale of interest in joint venture investments | — | — | — | — | 2,352,000 | 2,352,000 | ||||||||||||||||||
| Acquisition-related gain | 1,668,000 | 14,679,000 | 16,347,000 | — | — | — | ||||||||||||||||||
| Acquisition-related expenses | — | (9,207,000 | ) | (9,207,000 | ) | — | (440,000 | ) | (440,000 | ) | ||||||||||||||
| Interest expense | (13,141,000 | ) | (12,688,000 | ) | (25,829,000 | ) | (6,755,000 | ) | (8,364,000 | ) | (15,119,000 | ) | ||||||||||||
| Other | — | (177,000 | ) | (177,000 | ) | (6,000 | ) | (363,000 | ) | (369,000 | ) | |||||||||||||
| Loss before benefit from income taxes | (2,006,000 | ) | — | (2,006,000 | ) | (6,642,000 | ) | — | (6,642,000 | ) | ||||||||||||||
| (Provision for) benefit from income taxes | (726,000 | ) | — | (726,000 | ) | 2,500,000 | — | 2,500,000 | ||||||||||||||||
| Net loss from continuing operations | $ | (2,732,000 | ) | $ | — | $ | (2,732,000 | ) | $ | (4,142,000 | ) | $ | — | $ | (4,142,000 | ) | ||||||||
| Discontinued Operations | ||||||||||||||||||||||||
| Loss from discontinued operations, net of income taxes | (291,000 | ) | — | (291,000 | ) | — | — | — | ||||||||||||||||
| Loss from sale of real estate | 338,000 | — | 338,000 | — | — | — | ||||||||||||||||||
| Net loss from continuing operations | $ | (2,685,000 | ) | $ | — | $ | (2,685,000 | ) | $ | (4,142,000 | ) | $ | — | $ | (4,142,000 | ) | ||||||||
11
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Operations (Non-GAAP)
(Unaudited)
The following statement of operations represents the sum of Kennedy Wilson's consolidated operations and a pro rata portion of Kennedy Wilson's unconsolidated investments:
| Nine months ended September 30, | ||||||||||||||||||||||||
| 2013 | 2012 | |||||||||||||||||||||||
| Consolidated | Pro Rata Unconsolidated Investments | Pro Forma Total | Consolidated | Pro Rata Unconsolidated Investments | Pro Forma Total | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Management and leasing fees | $ | 41,887,000 | $ | — | $ | 41,887,000 | $ | 29,308,000 | $ | — | $ | 29,308,000 | ||||||||||||
| Commissions | 12,161,000 | — | 12,161,000 | 6,165,000 | — | 6,165,000 | ||||||||||||||||||
| Sale of real estate | 10,060,000 | 45,889,000 | 55,949,000 | 1,275,000 | 58,800,000 | 60,075,000 | ||||||||||||||||||
| Rental and other income | 27,452,000 | 95,002,000 | 122,454,000 | 4,432,000 | 54,496,000 | 58,928,000 | ||||||||||||||||||
| Interest income | — | 15,398,000 | 15,398,000 | — | 12,687,000 | 12,687,000 | ||||||||||||||||||
| Total revenue | 91,560,000 | 156,289,000 | 247,849,000 | 41,180,000 | 125,983,000 | 167,163,000 | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Commission and marketing expenses | 2,845,000 | — | 2,845,000 | 3,676,000 | — | 3,676,000 | ||||||||||||||||||
| Compensation and related expenses | 52,840,000 | 589,000 | 53,429,000 | 30,658,000 | 698,000 | 31,356,000 | ||||||||||||||||||
| Cost of real estate sold | 7,885,000 | 34,851,000 | 42,736,000 | 1,275,000 | 50,100,000 | 51,375,000 | ||||||||||||||||||
| General and administrative | 17,574,000 | 1,124,000 | 18,698,000 | 13,571,000 | 529,000 | 14,100,000 | ||||||||||||||||||
| Depreciation and amortization | 12,003,000 | 31,348,000 | 43,351,000 | 2,903,000 | 12,985,000 | 15,888,000 | ||||||||||||||||||
| Rental operating expenses | 11,852,000 | 40,060,000 | 51,912,000 | 2,638,000 | 18,855,000 | 21,493,000 | ||||||||||||||||||
| Total operating expenses | 104,999,000 | 107,972,000 | 212,971,000 | 54,721,000 | 83,167,000 | 137,888,000 | ||||||||||||||||||
| Equity in joint venture income | 20,955,000 | (20,955,000 | ) | — | 12,472,000 | (12,472,000 | ) | — | ||||||||||||||||
Interest income from loan pool participations and notes receivable | 10,209,000 | (10,209,000 | ) | — | 7,126,000 | (7,126,000 | ) | — | ||||||||||||||||
| Operating income | 17,725,000 | 17,153,000 | 34,878,000 | 6,057,000 | 23,218,000 | 29,275,000 | ||||||||||||||||||
| Non-operating income (expense) | ||||||||||||||||||||||||
| Interest income | 444,000 | (444,000 | ) | — | 2,503,000 | (2,503,000 | ) | — | ||||||||||||||||
| Carried interest on realized investment | — | — | — | — | 2,400,000 | 2,400,000 | ||||||||||||||||||
| Gain on sale of interest in joint venture investment | — | — | — | — | 2,352,000 | 2,352,000 | ||||||||||||||||||
| Acquisition-related gain | 11,127,000 | 29,723,000 | 40,850,000 | — | — | — | ||||||||||||||||||
| Acquisition-related expenses | (510,000 | ) | (12,001,000 | ) | (12,511,000 | ) | — | (1,246,000 | ) | (1,246,000 | ) | |||||||||||||
| Gain on sale of marketable securities | — | — | — | 2,931,000 | — | 2,931,000 | ||||||||||||||||||
| Interest expense | (37,104,000 | ) | (33,405,000 | ) | (70,509,000 | ) | (19,979,000 | ) | (23,364,000 | ) | (43,343,000 | ) | ||||||||||||
| Other | — | (1,026,000 | ) | (1,026,000 | ) | (80,000 | ) | (857,000 | ) | (937,000 | ) | |||||||||||||
| Loss before benefit from income taxes | (8,318,000 | ) | — | (8,318,000 | ) | (8,568,000 | ) | — | (8,568,000 | ) | ||||||||||||||
| Benefit from income taxes | 1,446,000 | — | 1,446,000 | 5,121,000 | — | 5,121,000 | ||||||||||||||||||
| Loss from continuing operations | $ | (6,872,000 | ) | $ | — | $ | (6,872,000 | ) | $ | (3,447,000 | ) | $ | — | $ | (3,447,000 | ) | ||||||||
| Discontinued Operations | ||||||||||||||||||||||||
| (Loss) income from discontinued operations, net of income taxes | (294,000 | ) | — | (294,000 | ) | 2,000 | — | 2,000 | ||||||||||||||||
| Gain (loss) from sale of real estate | 555,000 | — | 555,000 | (212,000 | ) | — | (212,000 | ) | ||||||||||||||||
| Net loss from continuing operations | $ | (6,611,000 | ) | $ | — | $ | (6,611,000 | ) | $ | (3,657,000 | ) | $ | — | $ | (3,657,000 | ) | ||||||||
12
Kennedy-Wilson Holdings, Inc. and Subsidiaries
EBITDA by Segment
(Unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Investments | ||||||||||||||||
| Rental income and sale of real estate | $ | 12,236,000 | $ | 2,760,000 | $ | 37,512,000 | $ | 5,707,000 | ||||||||
| Operating expenses (including cost of real estate sold) | (17,891,000 | ) | (10,184,000 | ) | (56,085,000 | ) | (22,008,000 | ) | ||||||||
| Equity in joint venture income | 9,379,000 | 1,848,000 | 20,955,000 | 12,472,000 | ||||||||||||
| Income from loan pool participations and notes receivable | 3,983,000 | 3,712,000 | 10,209,000 | 7,126,000 | ||||||||||||
| Operating income (expense) | 7,707,000 | (1,864,000 | ) | 12,591,000 | 3,297,000 | |||||||||||
| Acquisition-related gain | 1,668,000 | — | 11,127,000 | — | ||||||||||||
| Acquisition-related expenses | — | — | (510,000 | ) | — | |||||||||||
| Gain on sale of marketable securities | — | — | — | 2,931,000 | ||||||||||||
| Other | — | (6,000 | ) | — | (80,000 | ) | ||||||||||
| Interest income - related party | 136,000 | 139,000 | 208,000 | 2,408,000 | ||||||||||||
| Interest expense | (2,876,000 | ) | (160,000 | ) | (7,435,000 | ) | (477,000 | ) | ||||||||
| Income (loss) from continuing operations | 6,635,000 | (1,891,000 | ) | 15,981,000 | 8,079,000 | |||||||||||
| (Loss) income from discontinued operations, net of income taxes | (291,000 | ) | — | (294,000 | ) | 2,000 | ||||||||||
| Gain (loss) from sale of real estate, net of income taxes | 338,000 | — | 555,000 | (212,000 | ) | |||||||||||
| Net income (loss) | 6,682,000 | (1,891,000 | ) | 16,242,000 | 7,869,000 | |||||||||||
| Add back: | ||||||||||||||||
| Interest expense | 2,876,000 | 160,000 | 7,435,000 | 477,000 | ||||||||||||
| Kennedy Wilson's share of interest expense included investment in joint ventures and loan pool participation | 12,688,000 | 8,364,000 | 33,405,000 | 23,364,000 | ||||||||||||
| Depreciation and amortization | 4,153,000 | 856,000 | 11,084,000 | 2,538,000 | ||||||||||||
| Kennedy Wilson's share of depreciation and amortization included in investment in joint ventures | 11,871,000 | 5,085,000 | 31,348,000 | 12,985,000 | ||||||||||||
| EBITDA | $ | 38,270,000 | $ | 12,574,000 | $ | 99,514,000 | $ | 47,233,000 | ||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Services | ||||||||||||||||
| Management and leasing fees and commissions | $ | 20,972,000 | $ | 12,480,000 | $ | 54,048,000 | $ | 35,473,000 | ||||||||
| Operating expenses | (13,473,000 | ) | (7,678,000 | ) | (31,992,000 | ) | (24,411,000 | ) | ||||||||
| Operating income | 7,499,000 | 4,802,000 | 22,056,000 | 11,062,000 | ||||||||||||
| Net income | 7,499,000 | 4,802,000 | 22,056,000 | 11,062,000 | ||||||||||||
| Add back: | ||||||||||||||||
| Depreciation and amortization | 234,000 | 40,000 | 501,000 | 107,000 | ||||||||||||
| EBITDA | $ | 7,733,000 | $ | 4,842,000 | $ | 22,557,000 | $ | 11,169,000 | ||||||||
13
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Investment Account
(Unaudited)
($ in millions)
| September 30, 2013 | ||||
| Investment in joint ventures | $ | 742.2 | ||
| Real estate, net of depreciation | 518.0 | |||
| Mortgage debt | (340.4 | ) | ||
| Notes receivable | 28.2 | |||
Acquired in-place lease values, net of amortization(1) | 8.6 | |||
| Loan pool participations | 58.8 | |||
| Total net investment account | 1,015.4 | |||
| Add back: | ||||
| Accumulated depreciation and amortization | 24.0 | |||
| Kennedy Wilson's share of accumulated depreciation and amortization included in investment in joint ventures | 90.6 | |||
| Total gross investment account | $ | 1,130.0 | ||
(1) Included in other assets.
| Net Investment Account Detail as of September 30, 2013 | |||||||||||||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||||||||||
| Loans Secured by | |||||||||||||||||||||||||||||||||
| Multifamily | Commercial | Real Estate | Residential, Hotel, and Other | Total | |||||||||||||||||||||||||||||
| Western U.S. | $ | 214.5 | $ | 199.5 | $ | 84.8 | $ | 112.5 | $ | 611.3 | |||||||||||||||||||||||
| Other U.S. | 0.1 | 4.3 | — | 7.9 | 12.3 | ||||||||||||||||||||||||||||
| Japan | 72.2 | 6.9 | — | — | 79.1 | ||||||||||||||||||||||||||||
| United Kingdom | — | 99.9 | 57.7 | — | 157.6 | ||||||||||||||||||||||||||||
| Ireland | 48.5 | 98.6 | 8.0 | — | 155.1 | ||||||||||||||||||||||||||||
| Total | $ | 335.3 | $ | 409.2 | $ | 150.5 | $ | 120.4 | $ | 1,015.4 | |||||||||||||||||||||||
| Loans Secured by | |||||||||||||||||||||||||||||||||
| Multifamily | Commercial | Real Estate | Residential, Hotel, and Other | ||||||||||||||||||||||||||||||
| Units | Properties | Rentable Sq Ft | Properties | Rentable Sq. Ft | Current UPB | # of Loans | Acres | Units | Lots | Hotel Rooms | # of Inv. | ||||||||||||||||||||||
| Western U.S. | 13,144 | 35 | 11,576,551 | 27 | 4,319,601 | $ | 126.5 | 24 | 3,406 | 29 | 877 | 170 | 17 | ||||||||||||||||||||
| Other U.S. | 208 | 2 | 165,276 | 2 | 355,925 | — | — | 38 | — | — | — | 4 | |||||||||||||||||||||
| Japan | 2,410 | 50 | 936,000 | 1 | 9,633 | — | — | — | — | — | — | — | |||||||||||||||||||||
| United Kingdom | — | — | — | 33 | 4,017,666 | 1,106.8 | 61 | — | — | — | — | — | |||||||||||||||||||||
| Ireland | 749 | 3 | 606,711 | 16 | 896,853 | 403.7 | 126 | — | — | — | — | — | |||||||||||||||||||||
| Total | 16,511 | 90 | 13,284,538 | 79 | 9,599,678 | $ | 1,637 | 211 | 3,444 | 29 | 877 | 170 | 21 | ||||||||||||||||||||
14
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Investment Account
(Unaudited)
($ in millions)
| December 31, 2012 | ||||
| Investment in joint ventures | $ | 543.2 | ||
| Real estate, net of depreciation | 289.4 | |||
| Mortgage debt | (236.5 | ) | ||
| Notes receivable | 136.6 | |||
Acquired in-place lease values, net of amortization (1) | 9.3 | |||
| Loan pool participations | 95.6 | |||
| Total net investment account | 837.6 | |||
| Add back: | ||||
| Accumulated depreciation and amortization | 12.0 | |||
| Kennedy Wilson's share of accumulated depreciation and amortization included in investment in joint ventures | 59.3 | |||
| Total gross investment account | $ | 908.9 | ||
(1) Included in other assets.
| Net Investment Account Detail as of December 31, 2012 | |||||||||||||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||||||||||
| Multifamily | Commercial | Loans Secured by Real Estate | Residential and Other | Total | |||||||||||||||||||||||||||||
| Western U.S. | $ | 171.7 | $ | 167.9 | $ | 69.0 | $ | 106.9 | $ | 515.5 | |||||||||||||||||||||||
| Other U.S. | 0.4 | 3.3 | — | 10.5 | 14.2 | ||||||||||||||||||||||||||||
| Japan | 102.7 | 8.6 | — | — | 111.3 | ||||||||||||||||||||||||||||
| United Kingdom | — | — | 120.4 | — | 120.4 | ||||||||||||||||||||||||||||
| Ireland | 22.4 | 9.5 | 44.3 | — | 76.2 | ||||||||||||||||||||||||||||
| Total | $ | 297.2 | $ | 189.3 | $ | 233.7 | $ | 117.4 | $ | 837.6 | |||||||||||||||||||||||
| Multifamily | Commercial | Loans Secured by Real Estate | Residential and Other | ||||||||||||||||||||||||||||||
| Units | Properties | Rentable Sq. Ft | Properties | Rentable Sq. Ft. | Current UPB | # of Loans | Acres | Units | Lots | # of Inv. | |||||||||||||||||||||||
| Western U.S. | 11,649 | 31 | 10,123,838 | 24 | 3,976,041 | $ | 126.6 | 33 | 3,337 | 44 | 935 | 16 | |||||||||||||||||||||
| Other U.S. | 376 | 3 | 294,984 | 4 | 478,450 | — | — | 50 | 43 | — | 5 | ||||||||||||||||||||||
| Japan | 2,410 | 50 | 936,000 | 1 | 9,633 | — | — | — | — | — | — | ||||||||||||||||||||||
| United Kingdom | — | — | — | — | — | 1,481.5 | 48 | — | — | — | — | ||||||||||||||||||||||
| Ireland | 329 | 2 | 230,160 | 1 | 45,105 | 634.9 | 140 | — | — | — | — | ||||||||||||||||||||||
| Total | 14,764 | 86 | 11,584,982 | 30 | 4,509,229 | $ | 2,243 | 221 | 3,387 | 87 | 935 | 21 | |||||||||||||||||||||
15
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Investment Level Estimated Balance Sheets
(Unaudited)
The following estimated investment level balance sheets represent the estimated combined balance sheets of investments in which Kennedy Wilson has an ownership interest:
| September 30, 2013 | December 31, 2012 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 123,019,000 | $ | 86,659,000 | ||||
| Real estate, net | 5,400,259,000 | 3,569,003,000 | ||||||
| Loan Pools | 675,816,000 | 1,070,303,000 | ||||||
| Other assets | 370,644,000 | 293,769,000 | ||||||
| Total assets | $ | 6,569,738,000 | $ | 5,019,734,000 | ||||
| Liabilities and equity | ||||||||
| Liabilities | ||||||||
| Accounts payable, accrued and other | 138,288,000 | 109,203,000 | ||||||
| Notes payable | 7,943,000 | 39,710,000 | ||||||
| Mortgage loans payable | 3,233,347,000 | 2,396,600,000 | ||||||
| Total liabilities | 3,379,578,000 | 2,545,513,000 | ||||||
| Equity | ||||||||
| Total equity | 3,190,160,000 | 2,474,221,000 | ||||||
| Total liabilities and equity | $ | 6,569,738,000 | $ | 5,019,734,000 | ||||
16
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Investment Level Estimated Income Statement
(Unaudited)
The following estimated investment level income statements represent the estimated combined income statements of investments in which Kennedy Wilson has an ownership interest:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenue | ||||||||||||||||
| Rental and other income | $ | 113,902,000 | $ | 75,177,000 | $ | 301,192,000 | $ | 207,742,000 | ||||||||
| Sale of real estate | 112,994,000 | 4,603,000 | 177,407,000 | 255,444,000 | ||||||||||||
| Interest income | 29,919,000 | 19,613,000 | 82,048,000 | 37,334,000 | ||||||||||||
| Total revenue | 256,815,000 | 99,393,000 | 560,647,000 | 500,520,000 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Compensation and related expenses | 328,000 | 429,000 | 1,442,000 | 1,740,000 | ||||||||||||
| Cost of real estate sold | 83,176,000 | 3,882,000 | 136,122,000 | 221,517,000 | ||||||||||||
| General and administrative | 2,230,000 | 413,000 | 3,241,000 | 2,067,000 | ||||||||||||
| Depreciation and amortization | 36,113,000 | 21,926,000 | 94,550,000 | 62,526,000 | ||||||||||||
| Rental operating expenses | 46,989,000 | 30,710,000 | 128,125,000 | 83,721,000 | ||||||||||||
| Total operating expenses | 168,836,000 | 57,360,000 | 363,480,000 | 371,571,000 | ||||||||||||
| Operating income | 87,979,000 | 42,033,000 | 197,167,000 | 128,949,000 | ||||||||||||
| Non-operating income (expense) | ||||||||||||||||
| Interest expense | (38,130,000 | ) | (23,324,000 | ) | (96,375,000 | ) | (66,876,000 | ) | ||||||||
| Other non-operating expense | (7,898,000 | ) | (5,712,000 | ) | (22,059,000 | ) | (11,834,000 | ) | ||||||||
| Gain on sale of interest in property | — | 19,218,000 | — | 21,177,000 | ||||||||||||
| Acquisition related expenses | (37,667,000 | ) | (1,432,000 | ) | (48,635,000 | ) | (4,600,000 | ) | ||||||||
| Acquisition related gain | 29,358,000 | — | 59,447,000 | — | ||||||||||||
| Net income | $ | 33,642,000 | $ | 30,783,000 | $ | 89,545,000 | $ | 66,816,000 | ||||||||
17
Kennedy-Wilson Holdings, Inc. and Subsidiaries
2013 Acquisition Activity
(Unaudited)
($ in millions)
| Acquisitions | |||||||||||||||||||||||||||||||
| Three months ended September 30, 2013 | Nine months ended September 30, 2013 | ||||||||||||||||||||||||||||||
| Real Estate | Multifamily | Commercial | Residential & Other | Total Real Estate | Multifamily | Commercial | Residential & Other | Total Real Estate | |||||||||||||||||||||||
| Investment | $ | — | $ | 894.3 | $ | — | $ | 894.3 | $ | 608.6 | $ | 1,100.6 | $ | 19.2 | $ | 1,728.4 | |||||||||||||||
| KW Equity Invested | — | 139.7 | — | 139.7 | 96.9 | 194.2 | 4.4 | 295.5 | |||||||||||||||||||||||
26 properties 3.9 million Sq Ft | 6 properties 2,530 units | 58 properties 5.2 million Sq Ft | 16 lots | ||||||||||||||||||||||||||||
| Three months ended September 30, 2013 | Nine months ended September 30, 2013 | ||||||||||||||||||||||
| Loans | Discounted Loan Purchases | Loan Originations | Total Loans | Discounted Loan Purchases | Loan Originations | Total Loans | |||||||||||||||||
| Investment | $ | 131.3 | $ | 23.9 | $ | 155.2 | $ | 865.2 | $ | 23.9 | $ | 889.1 | |||||||||||
| KW Equity Invested | 7.4 | 14.0 | 21.4 | 59.0 | 14.0 | 73.0 | |||||||||||||||||
| 72% Discount | 10.1% Avg Interest Rate | 3 underlying properties | 46% Avg Discount | 10.1% Avg Interest Rate | 146 underlying properties | ||||||||||||||||||
18
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Investment Summary: Real Estate
(Unaudited)
($ in millions)
| Multifamily | |||||||||||||||||||||||
| Net Operating Income (NOI) | |||||||||||||||||||||||
| # of Properties | # of Units | Occupancy (1) | YTD Annualized (2) | Debt (3) | Pre-Promote Ownership % | KW Book Equity (1) | |||||||||||||||||
| Western U.S. | 35 | 13,144 | 94.1 | % | $ | 129.6 | $ | 1,493.0 | 38.1 | % | $ | 214.5 | |||||||||||
| Other U.S. | 2 | 208 | 88.0 | 0.3 | 1.5 | 5.0 | 0.1 | ||||||||||||||||
Japan (4) | 50 | 2,410 | 95.8 | 22.9 | 292.5 | 40.9 | 72.2 | ||||||||||||||||
Ireland (4) (6) | 3 | 749 | 92.0 | 9.7 | 109.3 | 50.0 | 48.5 | ||||||||||||||||
| Total | 90 | 16,511 | 94.2 | % | $ | 162.5 | $ | 1,896.3 | 39.1 | % | $ | 335.3 | |||||||||||
| Commercial | |||||||||||||||||||||||
| Net Operating Income (NOI) | |||||||||||||||||||||||
| # of Properties | Rentable Sq Ft | Occupancy (1) | YTD Annualized (2) | Debt (5) | Pre-Promote Ownership % | KW Book Equity (1) | |||||||||||||||||
| Western U.S. | 27 | 4,319,601 | 82.2 | % | $ | 47.6 | $ | 542.8 | 49.2 | % | $ | 199.5 | |||||||||||
| Other U.S. | 2 | 355,925 | 74.9 | 2.2 | 23.0 | 33.5 | 4.3 | ||||||||||||||||
Japan (4) | 1 | 9,633 | 100.0 | 0.2 | — | 82.0 | 6.9 | ||||||||||||||||
United Kingdom (4) | 33 | 4,017,666 | 87.5 | 55.3 | 340.8 | 39.3 | 99.9 | ||||||||||||||||
Ireland (4) (7) | 16 | 896,853 | 98.5 | 37.3 | 341.0 | 32.8 | 98.6 | ||||||||||||||||
| Total | 79 | 9,599,678 | 85.7 | % | $ | 142.6 | $ | 1,247.6 | 40.9 | % | $ | 409.2 | |||||||||||
| Residential, Hotel, and Other | |||||||||||||||||||||
| # of Investments | ResidentialUnits | Total Acres | Residential Lots | Hotel Rooms | Pre-Promote Ownership% | KW Book Equity (1) | |||||||||||||||
| Western U.S. | 17 | 29 | 3,406 | 877 | 170 | 64.6 | % | $ | 112.5 | ||||||||||||
| Other U.S. | 4 | — | 38 | — | — | 95.8 | 7.9 | ||||||||||||||
| Total | 21 | 29 | 3,444 | 877 | 170 | 66.6 | % | $ | 120.4 | ||||||||||||
(1) As of September 30, 2013.
(2) Represents year to date NOI on an annualized basis.
(3) Debt represents 100% debt balance against properties as of September 30, 2013.
(4) Estimated foreign exchange rates are ¥98 = $1 USD, €0.74 = $1 USD and £0.62 = $1 USD, related to NOI and debt.
(5) Debt represents 100% debt balance against properties as of September 30, 2013, excluding $5.9 million of partner loans.
(6) Includes the 8.5 acre site and 65 units that are in the process of being completed at Clancy Quay.
(7) Includes the 3.5 acre site adjacent to the State Street building.
19
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Investment Summary: Discounted Loan Purchases and Loan Originations
(Unaudited)
($ in millions)
Discounted Loan Purchases
Initial # of Loans (1) | Initial UPB (2) | # of Unresolved Loans | Total Collections | Current UPB | Pre-Promote KW Share of Current UPB (net of venture-level debt) (5) | Venture-level Debt (3) | Pre-Promote Ownership% | KW Book Equity | ||||||||||||||||||||||||
| Western U.S. | 79 | $ | 460.5 | 12 | $ | 323.2 | $ | 67.6 | $ | 35.0 | $ | 4.4 | 58.2 | % | $ | 25.9 | ||||||||||||||||
United Kingdom (4) | 113 | 3,677.3 | 61 | 2,148.0 | 1,106.8 | 135.9 | 47.8 | 14.4 | 57.7 | |||||||||||||||||||||||
Ireland (4) | 151 | 488.2 | 126 | 52.3 | 403.7 | 40.3 | — | 10.0 | 8.0 | |||||||||||||||||||||||
| Total | 343 | $ | 4,626.0 | 199 | $ | 2,523.5 | $ | 1,578.1 | $ | 211.2 | $ | 52.2 | 15.2 | % | $ | 91.6 | ||||||||||||||||
Loan Originations
| # of Loans | Current UPB | WAV Interest Rate | Venture-level Debt (3) | Pre-Promote Ownership% | KW Book Equity | |||||||||||||||
| Western U.S. | 12 | $ | 58.9 | 10.0 | % | $ | — | 100.0 | % | $ | 58.9 | |||||||||
| Total | 12 | $ | 58.9 | 10.0 | % | $ | — | 100.0 | % | $ | 58.9 | |||||||||
(1) Represents total number of loans at initial acquisition of respective pools.
(2) Unpaid Principal Balance.
(3) Venture-level debt represents 100% debt balance against loans as of September 30, 2013.
(4) Estimated foreign exchange rate is £0.62 = $1 USD and €0.74 = $1 USD.
(5) Represents the amount of cash we would receive if the loans are resolved at par, excluding our promoted interests.
20
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Same Property Analysis - Multifamily by Region
(Unaudited)
($ in millions)
Same property amounts are calculated as the amounts attributable to properties which have been owned by us directly or through joint ventures during the entire span of both periods compared.
| Three Months Ended September 30, | Same Property Units | Average % Leased | Rental Revenues | Net Operating Income | ||||||||||||||||||||||||||||||
| 2013 vs. 2012 | 2013 | 2013 | 2012 | % Change | 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||||||||||
| Region: | ||||||||||||||||||||||||||||||||||
| Western U.S. | 10,728 | 94.5 | % | 94.5 | % | — | % | $ | 37.5 | $ | 35.1 | 6.8 | % | $ | 25.3 | $ | 23.6 | 7.2 | % | |||||||||||||||
| Other U.S. | 208 | 88.5 | 75.0 | 18.0 | 0.3 | 0.2 | 50.0 | 0.1 | — | — | ||||||||||||||||||||||||
Japan (1) | 2,410 | 95.1 | 95.0 | 0.1 | 7.8 | 7.4 | 5.4 | 5.9 | 5.5 | 7.3 | ||||||||||||||||||||||||
| Ireland | 210 | 95.3 | 94.8 | 0.5 | 1.3 | 1.2 | 8.3 | 1.0 | 0.8 | 25.0 | ||||||||||||||||||||||||
| Same Property Total | 13,556 | 94.5 | % | 94.3 | % | 0.2 | % | $ | 46.9 | $ | 43.9 | 6.8 | % | $ | 32.3 | $ | 29.9 | 8.0 | % | |||||||||||||||
| Nine Months Ended September 30, | Same Property Units | Average % Leased | Rental Revenues | Net Operating Income | ||||||||||||||||||||||||||||||
| 2013 vs. 2012 | 2013 | 2013 | 2012 | % Change | 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||||||||||
| Region: | ||||||||||||||||||||||||||||||||||
| Western U.S. | 9,247 | 94.7 | % | 94.4 | % | 0.3 | % | $ | 94.1 | $ | 88.2 | 6.7 | % | $ | 63.8 | $ | 58.5 | 9.1 | % | |||||||||||||||
| Other U.S. | 98 | 90.5 | 87.9 | 3.0 | 0.4 | 0.3 | 33.3 | 0.2 | 0.2 | — | ||||||||||||||||||||||||
Japan (1) | 2,410 | 95.3 | 94.3 | 1.1 | 23.1 | 23.2 | (0.4 | ) | 17.2 | 16.9 | 1.8 | |||||||||||||||||||||||
| Ireland | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Same Property Total | 11,755 | 94.8 | % | 94.3 | % | 0.5 | % | $ | 117.6 | $ | 111.7 | 5.3 | % | $ | 81.2 | $ | 75.6 | 7.4 | % | |||||||||||||||
(1) Estimated foreign exchange rate is ¥98 = $1 USD and €0.74 = $1 USD.
21
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Same Property Analysis - Commercial by Region
(Unaudited)
($ in millions)
Same property amounts are calculated as the amounts attributable to properties which have been owned by us directly or through joint ventures during the entire span of both periods compared.
| Three Months Ended September 30, | Same Property Square Feet | Average % Leased | Rental Revenues | Net Operating Income | ||||||||||||||||||||||||||||||
| 2013 vs. 2012 | 2013 | 2013 | 2012 | % Change | 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||||||||||
| Region: | ||||||||||||||||||||||||||||||||||
| Western U.S. | 2,549,898 | 85.5 | % | 82.9 | % | 3.1 | % | $ | 14.2 | $ | 12.4 | 14.5 | % | $ | 8.3 | $ | 7.3 | 13.7 | % | |||||||||||||||
| Other U.S. | 355,925 | 75.6 | 69.6 | 8.6 | 1.3 | 1.2 | 8.3 | 0.6 | 0.5 | 20.0 | ||||||||||||||||||||||||
Japan (1) | 9,633 | 100.0 | 100.0 | — | 0.1 | 0.1 | — | 0.1 | 0.1 | — | ||||||||||||||||||||||||
| Same Property Total | 2,915,456 | 84.3 | % | 81.3 | % | 3.7 | % | $ | 15.6 | $ | 13.7 | 13.9 | % | $ | 9.0 | $ | 7.9 | 13.9 | % | |||||||||||||||
| Nine Months Ended September 30, | Same Property Square Feet | Average % Leased | Rental Revenues | Net Operating Income | ||||||||||||||||||||||||||||||
| 2013 vs. 2012 | 2013 | 2013 | 2012 | % Change | 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||||||||||
| Region: | ||||||||||||||||||||||||||||||||||
| Western U.S. | 2,434,850 | 83.9 | % | 80.7 | % | 4.0 | % | $ | 41.2 | $ | 35.7 | 15.4 | % | $ | 24.8 | $ | 21.0 | 18.1 | % | |||||||||||||||
| Other U.S. | 355,925 | 74.2 | 69.8 | 6.3 | 3.8 | 3.4 | 11.8 | 1.7 | 1.4 | 21.4 | ||||||||||||||||||||||||
Japan (1) | 9,633 | 100.0 | 100.0 | — | 0.2 | 0.2 | — | 0.2 | 0.2 | — | ||||||||||||||||||||||||
| Same Property Total | 2,800,408 | 82.7 | % | 79.4 | % | 4.2 | % | $ | 45.2 | $ | 39.3 | 15.0 | % | $ | 26.7 | $ | 22.6 | 18.1 | % | |||||||||||||||
(1) Estimated foreign exchange rate is ¥98 = $1 USD
22
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Debt Schedule
(Unaudited)
($ in millions)
| Consolidated Debt | Unconsolidated Asset Level Debt | Total Consolidated Debt + KW Share of Unconsolidated Asset Level Debt | ||||||||||||||||||||||||||
| Maturity | Unsecured Corporate Debt | Asset Level Debt (3) | Total | Total | KW Share | Amount Due at Maturity Date (2) | ||||||||||||||||||||||
| 2013 | $ | — | $ | 0.9 | $ | 0.9 | $ | 62.9 | $ | 40.0 | $ | 40.9 | $ | 42.2 | ||||||||||||||
| 2014 | — | 11.1 | 11.1 | 196.9 | 110.6 | 121.7 | 105.5 | |||||||||||||||||||||
| 2015 | — | 19.5 | 19.5 | 241.6 | 97.8 | 117.3 | 90.7 | |||||||||||||||||||||
| 2016 | — | 42.3 | 42.3 | 249.2 | 90.3 | 132.6 | 111.6 | |||||||||||||||||||||
| 2017 | — | 32.6 | 32.6 | 563.3 | 241.8 | 274.4 | 253.2 | |||||||||||||||||||||
| 2018 | — | 22.8 | 22.8 | 747.1 | 231.8 | 254.6 | 238.2 | |||||||||||||||||||||
| 2019 | 350.0 | (1 | ) | 6.1 | 356.1 | 143.5 | 34.4 | 390.5 | 379.2 | |||||||||||||||||||
| 2020 | — | 122.1 | 122.1 | 147.5 | 62.5 | 184.5 | 174.7 | |||||||||||||||||||||
| Thereafter | 95.0 | 83.0 | 178.0 | 540.9 | 121.5 | 299.4 | 286.4 | |||||||||||||||||||||
| Total | $ | 445.0 | $ | 340.4 | $ | 785.4 | $ | 2,892.9 | $ | 1,030.7 | $ | 1,815.9 | $ | 1,681.7 | ||||||||||||||
(1) Represents principal balance of senior notes.
(2) Amount does not reflect extension options.
(3) Includes $5.5 million of debt premium.
Weighted average interest rate (KW Share): 5.1%
Weighted average remaining maturity in years (KW Share): 6.1 years
Kennedy Wilson has exposure to fixed and floating rate debt through its consolidated properties and its joint venture investments. The table below details Kennedy Wilson's total consolidated and unconsolidated asset level debt by interest rate type.
| Fixed Rate Debt | Floating with Interest Rate Caps (4) | Floating without Interest Rate Caps | Total Asset Level Debt (5) | ||||||||||||
| Asset Level Debt | $ | 1,750.7 | $ | 989.6 | $ | 493.0 | $ | 3,233.3 | |||||||
(4) Includes purchase of interest rate cap in October 2013 on $181.6 million of debt.
(5) Represents $340.4 million of consolidated asset level debt and $2.9 billion of unconsolidated asset level debt. 98% of such asset level debt is non-recourse to the Company.
23