KW - Earnings call transcript Q1 2021 | Kennedy-Wilson Holdings, Inc.

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Operator

Good day. And welcome to the Kennedy-Wilson First Quarter 2021 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to of conference Investor like Bhavsar, to now President Vice Relations. would turn over the Daven I Please go ahead.

Daven Bhavsar

Chairman webcast Kennedy-Wilson; Thank webcast will replay. you The Matt Enbody, us more one McMorrow, Chief joining Daven Windisch, live Bhavsar, CEO replay and will good Kennedy-Wilson; three by the available see for income. Kennedy-Wilson. by call, morning. and information. we for today This for Executive be week will Vice Financial certain phone are Investor and adjusted will and including refer adjusted of Officer, archived Ricks, be measures, EBITDA for this President website Mary net is Please President, months. to and and Kennedy-Wilson; be of Justin Bill Relations financial and call non-GAAP On Today’s

other You and results the Bill a Statements Investor financial XXXX this indicated with filings now may on is forward-looking information these differ reconciliation comparable from and include this reports McMorrow. CEO, the our on made call due in like the items Exchange call Securities Commission. and posted of earnings materially our turn can along GAAP description number I our website. directly quarter risks, section with of Actual fourth which measure and to uncertainties discussed most the find to and of during to of release, Chairman Relations statements. the may call forward-looking factors would over the

Bill McMorrow

earnings that today. thank for yesterday. us QX pleased morning, I’m with and everybody, Daven, reported the good you and Thanks, we joining

drive the that had start QX our the investment growth well to global year. continue anticipate for carried built will that leasing rebound strong for markets of pipeline extremely estate existing the for into our And robust momentum from an real for our recover in and and active strategic us These to fundamentals we the financial growth continue loss corporate million. initiatives. the demand balance include portfolio last economy the We year and strong a the debt the an the one-time for will of bodes pandemic, in related by extinguishment located assets $XX diluted had into beyond. on well and have we result institutional QX. to of $XX million QX to early We results share with GAAP Adjusted per savings. $X.XX, the X% of will $X.XX of impact QX Starting net compared loss our income of a loss $XX year. of results a in to annual grew of refinance bonds, in interest the which in As XXXX million our

$X.XX million. loss Excluding this would diluted would share have and income have per net GAAP adjusted been net income $XX one-time been

XX% to grew EBITDA Finally, million. by adjusted $XXX

Our In quarter due high These rents. $XXX of off the two multifamily was in largely rent total results annual favorably stabilized annual which X.X% portfolio our up multifamily and remain estimated were suburban the to our free our same-store once of office in QX, and compare burn office our again of collected XX% apartments States out portfolio. against very and Mountain strong NOI million results accounts across maintain continue -- to The our deal portfolio, platform. estimated as XX% Both high and of NOI. of new pipelines, for of we was we totals investments occupancy new many Growth strong NOI our the which end operational $X.X by last $XXX performance office our fee-bearing urban investments our platform our grown investment detail strong via of expansion continue has million billion. of by completed X% million beginning capital, $XXX of XXXX loan and to and launched QX, management our peers. we grow in was a new now in moment. In since which platforms the we the and in quarter new our primarily we’ll debt XX% logistics QX, of year. In platforms driven of in platform have

sub-market In Bridge of program completed sale quality advantage disposition nature we a pipeline market NOI in and add our million to and assets fee-bearing cap transactions. disposition estimated $XXX estate million of XX% strong office investments, square million portfolio. long-term generated capital the and in continued of Kennedy-Wilson. to institutional build a real actively has $XXX harvesting the our million and million to QX already successfully million foot rate, our of sale located is accounting was for was properties these of proceeds leases. closed. selectively South approximately a the QX we are office in wholly-owned on net gain estate a from XXX,XXX been us of approximately at expected $XXX demand London. sub to $X a again, the Court, real annual XX%. which our was of of Friars The created after end gross to capital, our million approximately into X% sale which Our property of the sold in We portfolio total, $XXX pipeline post-quarter our NOI continued KW $X.X The And annual high recycling $XX investments take a The once billion new well-located value QX, in illustrates and Bank $XXX estimated our for existing QX of and bring key fee-bearing a share for which another would we’re sales

form remaining $X.X XXXX. maturities billion continue debt we in our liquidity at Looking sheet, in pro maintain balance minimal with to

we weighted weighted will further from on QX, remaining. we million $XX our across nine with average a two April, X.X% our offering with X.XXX% weighted XXXX due $X.X unsecured Pro year last unsecured reduce $XXX and call, X.X billion X.X million, within transactions bond years. and maturity average KWE at of of to years I interest bond forma all progress bonds, X.X% in our new on discussed In $XXX bonds a end to maturity improved separate refinanced another for by made coupon annual of of million. approximately two expense tranches, repaid pay extended As years. our our our from downs, debt both average and XXXX These cost in

as Kennedy-Wilson Now begin the important to look few beyond efforts we model. pandemic, our to last it’s the the over highlight simplify to years business

a of to focused Our divisions headcount dry and XX%, coming continue divestiture we business. and more non-core down through COVID company leaner of with out powder is ample our are growing much two

revenue. significant in-place include our for Our NOI recurring and both strategic property our initiatives fee growth income

platform U.S. grown considerably U.S. launch its debt is secured the billion since estate focused platform quality XXXX. loans This in high May markets. in our Over has investment existing by last our real $X year, on

have We this in number advantages our of space. against a competitors

First, a than our investments lender. the of we approach loan purely owner operator through lens rather an

the teams, our decades. of past have estate underwriting real KW well Our expertise over network debt our relationship the we that platform as leverages three as cultivated at

portfolio large Finally, well institutional backed our capitalized sponsors. by loan is

to grew We to X% ownership interest continue $X.X in loan KW. pipeline platform XXXX. that allow platform us we a billion unlevered will generating and strong our have our debt have growing this a in returns end, is approximately portfolio, Post-quarter to which double-digit

city to million smaller last as of class need levels months of assets close than by is opportunities positive, centers. platform are Spain focusing start. to XX% of interest ownership and logistics facilities less asset The $XXX pipeline chains. off continues European million U.K., $XXX KW as we the billion e-commerce mile has remain supply the which and located platform robust in end Ireland evaluating. $X for of higher and of old efficient a The an to another on this six demand be across has fast of and quarter a This Our fundamentals driven extremely is platform

of Given our we have incremental additional add to have $X.X to in the our to another potential of and detail. turn like Mary discuss existing call platforms, the multifamily $X in billion. all more office to fee-bearing With our President I’d capital the to Ricks, over capacity that, announced the portfolios we billion

Mary Ricks

assets $X,XXX from multifamily of for and average month. year our end, stood In suburban per NOI Bill. steady remained multifamily at our portfolio rents monthly XX% occupancy at XX% account Thanks, our

Our in job Idaho, continue living, to to Nevada, lower continued access multifamily region cost as attract States Utah, Colorado year be very to new in residents strong. of largest States. more such region Mountain this in round performance and the continues Arizona positive and The a trends. outdoors is market space, the migration growth rate due to resulting

force approximately Meridian, highest in growth State percentage the market mile, Salt NOI In labor are its trends Post-quarter the had in our of with fact, loss unit of we XX up same million. X.X% and a Mountain sub-market community XXX positively off in property country. quarter NOI in X.X%. a $X another revenue strong end impacting results, These had fast the which Lake up is the loss Boise. wholly-owned at growing XXXX, acquired

We are XXXX Mountain again In we market over are of brings quarter. to our exceeded multifamily back that full lease-up. XX.X% was continued at during entire become in the development XX.X% Boise particularly State once occupancy since to our end. excited considering city. up portfolio in This the in These made largest rent to units, Dublin, expand improve, and encouraging, and owners increasing portfolio of under investment acquisition first rated one results the X,XXX collections where XX% units had to in including year and multifamily in from Dublin has our lockdown

very seeing office to the growth improving, return. and are of we are may Dublin things signs some up left early as begin picks resuming, have As return who good rapidly especially employees to and activity

global across Journey Our high multifamily amenity stabilized can at with the expectation as XX.X%, portfolio, the continue our quality weighted is lease our our office portfolio. portfolio. average term reopens, occupancy occupancy that believe a Dublin increasing to rich in of years and break to stable we QX X.X we remained economy throughout

quarter to remain again collected the referenced XX% office strong very For your level acquisition since collections Bill once industrial our of And strong end. of the we as rents. rent continue

pipeline at of provide management asset Orbital remains sale the our this the XXX,XXX we signed example seeing Bridge new Bridge loan like some entire I’d term a off We’ve represented with foot the as had and of this terms European market This tenant. the deals business We lease rapid in In is adding This via asset information. strength million. asset for the square a growth business, within through early legals which acquired experience signed this very Friars the for value industrial from by through solid. a we’re completed asset provider forward a plants, culminated primarily sold a disposition north activity the for XX,XXX to our team’s deals. enhancing Court after Services, quarter. CMBS occupational management to QX, Buzzard Both loan rental in fund Laboratory strategies. XXXX value-add in building largest Court Friars to XX broad London, In in XX-year enforcement. miles to certain our profitable square of development, in QX are lease originally growth. Motorway. a the for LG pre-let depth negotiating new delivering office double-digit We background our which foot successfully, our with a the great by own $XXX strategy property own Related deal our to business with a lease, executed and of ability the is to existing we wins our and leading XX and to core Leighton largest in Government, for complex we demonstrated plan the the to strategic asset Kennedy-Wilson the of demand and as surrender portfolio within outperforming transaction. in London’s certains years sits space main markets acquisitions, us management class strong for execute in Europe term Looking is U.K. testament fund of backed Diagnostic conjunction completing In

activity quarter are a QX of we feet We’re of in opportunities higher evaluating leases the square leasing a completed saw looking extensions We in from of proceeds to the number XXX,XXX returning the of Globally, first the years. and currently wealth XX.X sale U.K. and in recycle XXXX. new strong with

square In transactions. feet completed addition, post-quarter lease another XXX,XXX end, we’ve of already

of on also leases legals over across feet paper square XXX,XXX Europe. leases significant and trading We U.S. have the number of and our a in

office either or the NOI are and XX% from buildings an portfolio office of and occupied low by reminder, tenant in our mid-rise office of a generated comes predominantly in from are properties, As is located our park. a XX% NOI single that

gradually continued into XXXX the A rebooked June. XXXX. to significant took XXXX. be that Shelbourne we’ll COVID restrictions, which beginning Finally, has since it having in amount been previously, Hotel, of currently I closed and XXXX, into able reported at March brunt the as have International Business reopen of expect XXXX We effectively of

summer, hotel fully that, welcome EU I’d optimistic for near-term the to over very call the looks turn forward to As outlook the look international this iconic and in Shelbourne we travelers Bill. open to this like soon. to With the getting are back

Bill McMorrow

discuss and projects. like at lease-up the now progress were our to I’d making development Mary. Thanks, we

by over Our is our focus completion end development stabilized In initiatives NOI building commercial for projects Once and estimated one given a Phase portfolio. Idaho, the hotel to Rosa, degrees X% where of four to in of we trading the KW. pipeline million yield. important KW. NOI the these and be lower units, significantly estimated multifamily in North feet, add In phase feet majority strategic construction XXX Vantage. total, including cap completed finished estimated average separate in square first Boise, of units of annual lease-up is added California X.X are us of development to XX The stabilize the XXX quarter, stabilization square X The XXXX. and projects View spread million these $XXX X,XXX by Santa in an Francisco San on and our million assets costs this in yield these projects we scheduled XXX,XXX of of to to is $X The in Clara are of rates. have on markets totaling commercial annual at and

X be delivered QX in of Looking totaling ahead, the Phase by in stabilized Boise units Clara the XXX will end and QX.

communities property River the that stabilizing Housing Pointe which venture, Vintage another Springview, We project XXX in development a at will also our our add the XXX will is XX in and is totaling Within one progress unit addition of States. a joint pipeline View another are making added in occupancy. to Mountain new units, the which great adjacent complete XX% This to we early to in the Boise XXXX. quarter in units called averaging

$X in In KW. X,XXX from Vintage of with increased from Since operating average be in in quarterly per distribution over Vintage. have minimal affordable XXXX, our will we’ve equity received we development XX% which million including the completed our back recent We units acquiring have required distributions quarter. total, pipeline, million stake to by occasions $XXX

the projects, Quay Hanover square Kildare of Finally, feet on XXX,XXX and track in two Dublin, are our totaling office near-term. to complete in

it our the X, totals our indicator largest estimated the the is annual to is high good share a making Dublin the and one exciting Phase market market have progressing pandemic, assets for NOI recover Quay, of which these demand of of units phases quality As from which is XXX we’re -- well Clancy million offering. is multifamily in confident of expected to totals $XX and three rate XXX in across lease-up stabilization, XX%, continues expected have which Leasing at to units two this at reopen $XX a the developments. million portfolio.

XX% we XX% end of to plan. now rents the this on We remain stabilize February, to with you in up in of We’re total QX. asset ahead leased, reported from at track business

Investment as activity volumes And to business. off start our I’m summarize, very to and to a the and optimistic about up. we’re ahead, are look year, I picking so solid leasing

continue capacity of platforms Our have to plenty growing.

and continued management thank continued organic two, grow key who partnerships construction calls, us and new and like company like capital. the a So leveraging number our employees for well-positioned lease-up projects, NOI fee-bearing -- the I’ve Board for co-investment strategic to our growth. completion of our I’d investment I’d shareholders finally, institutional are of to through two partners prior or our our of said our And recurring platform have is -- their support our stronger NOI on of to emerge out and meaningfully growing to KW. allowed pandemic one, that our growth prior our three our thank priorities two, our acquisitions,

any So, I’d it open like that, to Daven, up questions. to with

Operator

Anthony first The question will be go Instructions] of JPMorgan. ahead. Please [Operator from Paolone

Anthony Paolone

a Great. apartments for of are Can Thank on rates We’ve for all where your affordable of have footprint. about you rates country. more product? Mountain where States, you comment perhaps, in cap But you. anecdotes heard lot the a fairly are across cap some Dublin also and unique your

Bill McMorrow

competitive think, we’re finance that, into to that which caused it’s relationships And Well, together. real has effect we’re estate a markets Bridge the hundreds capital created And sense have very today got I all Yeah. the these an the know, is, the time the cap footprints as did us there’s out, dollars Tony these very for I of globally, from and fortunate we’ve there. we say been Court. side think, that class, that you buy that in as interest has on can in can the sale of over rates billions as three would of is an see you think, so been but decades I in good have rates side that I we overview, -- decline. also also, strength, course, long that it we most an low real very, and looking asset our have ago act had today most of that buy as of on Friars of we

in fill speak, projects -- construction bought we have other Clancy then off far seven we’re today pipeline, as said we the And sell there almost have part we’re there. the years in We And to at units a well find to new so it although, and finish, remarks, as brand And in Quay rate, I of particular and to Quay. opportunity. rate a new ago. like, my to now as that it sell have to Clancy and Clancy case started that And units. the long X% a would market really made cap But always trying XXX were think, it to time so below stabilizing takes at to cap we’re -- close decisions we’re XXX going no only I plans that property, that X%. XXXX

markets levels that to come many at good -- to construction that get proven so great, has to to new decisions cap get and the business stay are markets going level, XX the rights to is have going before going we’ve said, the of most do XXXX, still and we’re we the you we’re is in footprint then today. made, I these But -- everybody the XXXX try into have decisions opportunities. as here you to a And that a at made saying end our is these of the these some a online But into finding where at construction be these So early, business be this out to and of rates continue to we are doing in great plus. XXXX. we’re really which

on buy side We on are the and in both construction the new side.

We’re land to new what Santa calling we’re starting X, X. to projects. adjacent which Phase next Santa Rosa One Phase Rosa our Rosa, project in two Santa

XXX have So zone out. that project will X units

Boise, is XXX going to a land We that and next which to summer. Idaho start called But Jasper. next units, to that for -- another property on it’s that in this we’re projects just also XXX bought

has of I’d United that generally about that actually my take also finding think winner remote. us to Mary, we’re went unless to in we’re our and XXXX, five-year when March a here the them, a make in really fixed was sense still and for asset term at we’re rents of and and -- lot a horizon, in say, short-term it’s more last competitive, last locking vehicle using critiquing and as opportunities there to than But is by very, is in we seven-year thing answer, rates. peers, demonstrated So the the we’re And a on in is the And it’s the management in that we capability. your of while a that Europe But hold starting then rent that level got our last States spreads uncertainty opinion longwinded buy. spreads advantage piece collect that key markets not very a XX-year term. the rolls debt, you’ve it lock in. the the that that And rate try we’ve high we’ve of of not had and lot unlike all I’m markets a

I combination with the confidence in it’s of an that me competition of these cap So factors, lot lower all the give these a think, awful future, rates. of even and

Anthony Paolone

how adjusting raising an that you your are investor down amount adjusting does as to there’s or are partners, And conversation return liquidity they an you’re it. where expectations Got enormous capital? environment of work with or

Bill McMorrow

returns Yeah. on cost I I that the parts I to nine started or -- three think, that ago or calls, that eight certain gotten have these when or years of basically yields of you’ve debt XX% the may ago to four fool’s saying actually got XX% was in a of years years initial mean, game. world, years we underwriting, of zero the underwriting days days XX%

And so separated. But their expectations. has adjust to return everybody had it’s

player. value-add a We’re

whether find through side. that just lower that, we building others have the or that’s DNA That’s things that their We’re we value management to. can is add satisfy have own expectations to and we -- or to better to Having yield add insurance particularly industry their our to, needs. the said can always in buy things trying value buy on partners,

allowed that’s fee-bearing where a to core us get into I world, what in capital doing we’re to would consider returns. space, be so particularly more And the

limb has might the lowered on out risk going taking. expectation seeking the not they where they’re risks terms more that returns. a returns the investment there’s their adjusted in of of core clearly, core institutional So, But segment be to world way

to capital Kennedy-Wilson we’ve we in returns, we work got and capital we’ve at can So capital can and can put news every and put we’ve core good that to returns capital, that put value-add the work the we’ve we platform. got got is debt work got in of to flavor

And in all don’t not And would built these years relationships that categories on last that so, to, is assets relationships take they’re capital have the or each nothing those built, to of that, build, piece I we’ve for. trust. there’s really Mary, decades that say we and the because

just so institutional strong very, fulfill that very return. got bucket partner relationships we’ve And of will every

Mary Ricks

Yeah. No. That’s going ourselves would also to a we’re of industrial Europe say might that pipeline that have really all X, but of in -- that off evaluating. that and core of that new say, right in immensely. leverage. returns plus million think band we’re really is X be sort assets And I industrial throughout in Tony, to and those growing at X we’re now and And a the right I vehicle at the Europe we’re we fields space And and I’m -- the of have market. sourcing looking class and asset we just seeing understand our demand lot that we in going now of XX that worth $XXX markets a tremendous our growing in a partners

excited that really yeah, growth So, about in platform. the

Anthony Paolone

for context Yeah. Great. Thanks there. the all

Mary Ricks

Okay.

Operator

of question next is Johnston Deutsche Bank. from The Derek

Derek Johnston

or gotten more do competitive go did office, government see of of distressed been deals having There morning. which from been here? multifamily a the elusive where cycle, Do expect KW core delayed is seem eliminate to really more if specialist banks? to sectors have your have has source it the industry raised you these that you I distress mean, distress opportunities so out lot lot a this some and of stand a target to cycle Good and opportunities across other and far. explicitly likely is really Hi. just to expertise situations funds scenarios. be more still bit intervention this

Bill McMorrow

and think, except retail. really I really they’re the and hasn’t, hotel clearly two -- market sectors, Well, Yeah.

also those of other on asset of you’re But of classes, system the distress any geographically think classes, other low. just the banking it intervention course, down being of. But rent. And there best in the collect I to really came hasn’t frankly, where combination restrictions to at been not a I’ve rates and ever it’s has the It’s really and two government kept financial your that speak All of and been governmental condition, seen. what than asset to factors. in the ability has depends been terms

tolerance And having capitalized challenges. the we’re banks were, so, distressed driven well markets, in don’t banks at markets But and the least that know, if and good are I very most are so in generally, you’re globally, the they by going shape a work were years. issues. in the had right may think couple the word, to over next of market don’t willing but of to that other with lot borrowers have I see all distress this here they

you you rates going want I you depends any where and interest of you can with think interest what kind what’s think based are happen inflation. but that, on your going for rates think I’ve can very expectations wage an awful today you lot to and -- never been good take forecasting or at

to the in our already be businesses United and And job tech that. large where real any in have footprint fortunate growth all significant so just there’s so, near-term markets. driven we’re I growth that’s in real on, Western distress see don’t States, the opportunity part the ancillary very that is by And to the we sector going and

a the terms entitlements of is United You positive land. true of that view in high on in entry and we really very very really in Kingdom. to that’s same going have thing place I think we’re to and recovery And have in the scarcity the take Ireland in most barriers good markets

foot capital Friars And Bridge so, sale cap some square we’re at -- as of rates and Mary per from the said remarks, in the very redeploying we’re her attractive prices.

except I the So much that’s a asset I on classes two see distress. just that but mentioned, for I longwinded don’t see don’t the near-term, answer,

Derek Johnston

sense mean, And a No. into my a it I it’s of segue second kind actually. question. of lot all makes good

basis the points yield. So are you mean, to costs like, as in the you I developments XXX inflation, opinion. X% your is basis well material labor So, targeting What a XXX points impact, underwriting? and mentioned compression or due highly elevated

yields? As yield a feel multifamily historically could? just compression to sense develop Thank trying higher you get development at of if possible you would I Really you.

Bill McMorrow

It’s that anybody news cop across good commodity saying Very increase Board question. steel, to the oil, no prices you’re to everything. and

And so, but we’re lucky.

really And before our have our on projects is -- construction construction of these that always we’ve extremely our lock costs really done we run construction. start in We what two side business. teams capable

very terms little cases, materials. of the or in on very, and very, ordering there a lot just costs of in warehouses. a We raw them of we in bit fixed. has so And percentage locked sitting our is of ahead get the site some And key underway, construction high might in ourselves have already of a

we’re the right very we’re shape doing everything in that cost side So good of on now.

The California cost had is unit than of we’ve the other that building example, for are lower. in advantage land the much they are per structures are, better States and in particularly here that costs Mountain there the

so, which and individual the as X%, very units just said, is project target. then Ireland, XXX we’re when largest cognizant I I is mean, that talking the in I Clancy, And almost -- issues about. a But you’re multifamily of that which say that’s now.

at quality super there high We’re stabilizing X%. a property

we conservative outperform conditions when know we’re expectations, hopefully, so… And And rent with start of own and to to we’ve market number tried then, do underwriting can we these us a achieve. so what is conditions things our always kind allow even that

Mary Ricks

let, units budget. a -- mentioned We’re actually, Bill week Clancy ahead doing seeing are at seven remarks III, his in that we’re that we XX% of

around really space. said, of the to think So the own supply/demand professional given But as and that the are given dynamics A locations product the that is numbers. Bill we amenities are bringing I and we’re market, and critical. outdoor lot management, what the with target those

dog kids to parks providing We’re play. and areas

So for that. I people really market willing are these the think, pay things really to that all needs,

Bill McMorrow

to Yeah. ahead months, we just we what of units And And I that one our had she those initial think the March to in -- an to mean, all of of Derek example made. in can’t leases point remember leased Mary’s underwriting I you in Boise, month. XX done one was. April, thought those with those I we Clara whether or give were

buildings class. you a I the be are super amenitized if ground could point, help mean, on and the in Mary’s the project. and highly to the terms Clara, just so, centers, first main the saw, you see And fitness clubhouse, it’s pools if of a

and And extremely of I we my decades. with took amenitized of a properties cases just for case to I to, we Europe, do to our across what Ireland lot but for needed so level. period us, together relearn to long say that management that just thing again, of I’ve both team I are been fantastic this, had the asset a not together management same what comp, teams day. a we’ve the mystery high in with here many that of construction having remotely, in in teams, pandemic, advantage really going time. really but to biggest that’s people asset here we’re of In said that are ourselves, three needed And our Mary and into couple the tried each it have is where And all would these complimenting been classes working both teams, all and decades, every do this not out that the

So, okay, that’s about it.

Mary Ricks

I think, thing Derek, Bill, asset giving that returns. one is value-add just last us those what is management

distress not our we’re So seeing necessarily what markets. in

a something So seem returns a putting money in adding say, up we’re when and but the value-add would value you we’re would the we’re not making not deal, distressed let’s we’re be get that a market. kind really discount, and/or at buying what to buying of big

by return finding -- putting and those being the is then sell IRR. these and cases to income really particular driven and assets buyer growing the really spot a up many in right So that’s XX% finding at

asset really our adding teams. to say where that’s would management values we’re I So

Derek Johnston

Mary. Thank you, Bill Great. and

Mary Ricks

you. Thank

Operator

The of from is Evercore Sheila next ISI. question McGrath

Sheila McGrath

morning. Good

has multifamily challenged. significantly State Mountains more Your outperformed and is California

the Just some wondering more out lightening migration once you given up States? exposure re-stabilize California in allocating California and the you Mountain multifamily, and capital consider businesses. multifamily the of business California Would the climate on just to

Bill McMorrow

very question, a That’s Yeah. good Sheila.

the it think comeback. see, a back and make a come we’ve the worth back. are speech always to some in But about. come and a I reasons political of I will California will not that that getting faced going has I lot big it issues you’re there’s think It think will that of into here California that,

last really was biggest in have put extremely of jurisdictions clearly away What California different biggest in here terms But of our down You made over and California in at issues. in strong were we the impact that I it, sometimes ourselves those the made was in was XX so, that, an state was in plus overlay XX decision confusing jurisdictions almost ago. diversify the made the, that California. that were level but years, and collections I XX call here then rent California, jobs decision think, rent was base you’re from years would decisions collection to operate one rules of the XX that

They’re where you properties own for both apartments, in look in so XX the owners various Seattle. that Very sound now market, that But example, be and we’re years decision Seattle. our vehicles. were when turned the we Seattle to foothold, the was few largest generally that suburban in market in Vintage Downtown our extremely portfolio an office Seattle made market ago, of property our the rate in at decision. And in out we one

as years around think, in I made, first probably Salt we ago, the decision was bought we Lake XX City there. Just deal the

we’ve XXX we And have you fortune that had so companies this companies. where of saw to purchased always had But state what being was away South California, California. wanted in by out Southern around driven -- going diversification idea primarily by we from saw

project of going in Rosa that here today have that what would Seattle say located a kind was and Los I that headquarters so Angeles we as fortune two more you’ve so we’re And here in drove decisions. we’re these on build got to companies California. the than -- XXX we Santa do in

the at business We assets Mary you assets, our here Mary, that And been continue to have comment most but fund of on. runs. might look California we’ve been in California buying in

Mary Ricks

going centric -- are Yeah. in California like, really surrounding, California we’re that really focused tech on buy we to I markets, are what if mean, areas.

We’re seeing California, science. now. those asset is an We public certain Fremont, sub-markets looking continue one to tenant grow. And right in life we’re life that also to science bought just go seeing

life lot going we’re science still being selective what So around definitely we’re in and great really with on positive technology of there’s a But buying. stories California. and

Matt Windisch

I’m if… just going ask to

Sheila McGrath

Okay.

Matt Windisch

say going was to I just that…

Sheila McGrath

Okay.

Matt Windisch

is NOI pipeline, XX% …as of if today and the or roughly that’s look roughly from in of California back six over down you years XX% years. it’s go California. development five our Then XX% if you at

So for down pro to going that, forma to be XX%. we’re

have into So, capital redeploying do of Pacific those Northwest said, in believe but and Mary been California in States out we we the Mountain past markets, Bill the the strongly like, years. XX over

Bill McMorrow

-- environment or I XX I really -- with California XX that made it year ago, and Matt’s Right. the these Matt is, or pandemic. think, do making political nothing And… to had decisions in the were point Sheila, were the years

Sheila McGrath

Okay.

Bill McMorrow

mentioned And not And me or United in States -- about went people the earlier addition still think Western that as that we’ve And with us or -- markets a the other but more start I to I good in than what development that that Sheila, months, Western partner that XX learned, United we convinced well. And I clearly sized it than crisis that, we convincing in pretty earlier, really, around call more think still said are we at product are through would we our Kennedy-Wilson call see I it -- geographic smaller having needed they’re this we’re divert, diverse a locations I Bozeman, in California. having opportunities, served Montana. attractive really diversity, States. to about, I not attractive last other here there all the markets in

Sheila McGrath

touched And helpful. did That’s you adventure. double investments industrials I there. on Okay. your the the know then size you just But portfolio

of invest property it U.S. able kind to any class? KW’s you were how in that Europe, source the that funds on that your Just is talk history in asset Also, volume like sought about industrial type. thoughts most in segment your of when and after were

Mary Ricks

last locations. we just the the really A we has that been relationships space. just a began deep the in connected smaller Good been No. assets doing relationships all really a of in since those what sight low space off-market. Yeah. It buying deals question, think is part of Sheila. are distribution was We’ve team’s focus But Europe. and have really established great our really, have I industrial well markets our And we in lot mile business. job. that we with done cover, in

to we’re executing do. very say quickly, We’re doing exactly we going what

we in to continue see space. a logistics demand So huge the

was of X up. feet I think, square in QX million there in take the U.K.

our And And growth underwrote. markets. just and major, existing deals. So we major new doing those that in we’re it are we we’re seeing oftentimes redoing as our continue that we’re with tenants leases what see to signing above

that’s a distribution logistics U.S., just, that of deals in Again, is deals growth fashion, going in States boxes, offer. at to and the we’ll couple grow So think space. I’m really continue portfolio, a Europe, those of under right the value-add really where fund sure as are kind Mountain now similar we’re U.S., it, well, our I and we’re the in to we in a where business, smaller the then of we are in looking booming focused in sort that have of looking do assembling markets

excited. we’re So

Sheila McGrath

all first and Last opening it when question, Okay. quarter? fully is shut the was of Shelbourne for

Mary Ricks

Sheila, close staycations. lot year, for and the on of basically a focused we’re Irish count later It be going have you you, to effectively this year that XXXX. the We’ve can I the travel always of for traveler year was on asked over a all love and rebook that. are Shelbourne. lot quarter international about shut really doing first we and reopening. been I had ask to into we a But of this

this about Europe been it XXXX we’re then we’re of excited year, on reopening a at international then the So up, we staycations. later lot see have And and room spoken XX% for to already for we’ve hearing total going said, Ireland opens currently really, which travelers. as pre-COVID will be we I like And are think the about, beginning nights and rates. of focused more

Sheila McGrath

Thank you. Okay.

Mary Ricks

you. Thank

Operator

be will of Lynch. [Operator Instructions] The of from next Feldman Jamie question America Merrill Bank

Jamie Feldman

seeing we’re going little while you. kind apologize return specifically? back, maybe step got has addressed your big to the on really forward, bit. be picture to cut a for to office. if up, leasings think of I will picking just of U.S. of on the kind headlines want Thank get what just you different views I I this focused take But been off a

Bill McMorrow

office, as Jamie, far you As mean?

Jamie Feldman

living I costs mean, maybe that side, on lower the have Mountain think flight as more become cities interesting residential guess Estates, so about Midwestern and or certain curious from percent? I and of see living morning that then where at I the U.S. saw that’s to or in do like cost for can seen anywhere should you clear. the this you Google’s of least have -- does people there’s much? markets the that other Office look they I What Yeah. to in to a do we’ve work head Yeah. release Do their permanent? been press the lower yesterday article people Google’s you journal more is given Just also your markets? usage think

Bill McMorrow

last just long-term. personal look, it’s mean, working remote never I a will that Well, belief

are succeeding. together -- just any you’re business things critical people the You without being missing to

our So time, than company different no office is I reopening full June. mean of we’re June, beginning any, the

have opportunities. need with Wednesday, and and need Tuesday, we the need you that peer policy. know start be to businesses Tuesday, you that with in on to office conversations it’s are still going relationships a Thursday little we lead and that or you that call travel people a to be anecdotal we actually But one to we with outside to all this -- all Monday We’re to

long-term better going week locations. of rise, is know. to high over. the I’m I’m of But of don’t or box rise be people but XX types go storey these, there city back I talking the line, eventually JPMorgan, people day, a And And center tech say, that’s trend And on the kinds in have that I over say, to those that suburban, and will have there type near-term market going office when way out work to And don’t time building confident remotely, than think the even completely like work. a of I and mean, only So together. perform yes, the to to being might under companies. I go not, done seen the others. the or are are rise, going where from highly all you Sachs that see can ones two made not and a people be than highly, whether I clearly offices kind low do low are are better comments certain the I remote. announcements week the a would down Goldman then on you’ve days and of long-term need perform

office, As I low far rise. And the in United as, so as other markets. States, suburban mean, into as I’m as for outlook -- particularly office Western positive, anyway, markets the we’ve far far gone as other

in couple We too, that the I myself that you ones say opportunities. have would real, in that couple have But have California, there’s I best are think some general, a get our rather eyes markets there expected. State real And on of keep a the others like to to not now. of first. might we always for We

market, we that a in Maria, have which example, own has for is performed properties of We well. market but coastal extremely Santa kind

the going these see vote and do to lower to multifamily with quality to tax the I to continue and a long-term XX-year XX see of after there’s you’re --people these it well, I and olders individual to in you’re of XX-year State And affordable markets got wallets think, of a moving though, to million markets the mind the even income basis, somewhere. have in suburban California. in do rents, you’re and moving the so have trend higher more They’ve all going lower have And going to of think them that to basis California, people the live State is that living. tax more olds and their XX see

opinion, my long-term. in are, in grow continue are we’re that markets to the So to going

Jamie Feldman

ways a general and impact never you happen. But may how ever Okay. think helpful. of would business? in it’s in That’s your XXXX I do real repeal the And estate very then a know off

Bill McMorrow

I that’s XXXX. idea. this to XXXX’s -- I been tax debating bill. out, lot it’s going were There’s anybody, turn we again, this to have negotiation existence no morning. entire How mean, like, of all The that have on a going I since go in on

kinds around a industries lot you’ve lot that got a -- The it of there’s farm industries industry, all it. of farmers, Although, XXXX’s discussion the impacts. impact real of got the besides you’ve estate

up and to what ends to what outcome about never what is I so are going be. -- things the that try And going know, think happening, what’s I don’t --

wait I going obviously time on. to know. But been and and don’t around just we’ll see. are for We it’s have It’s an long mindful awful that

that I have or stays stay with invest going wants in think whether of the around. on It’s the though values. capital -- XXXX is big to estate, doesn’t that real a impact around to not the amount

Jamie Feldman

I your Thank appreciate Okay. you. thoughts.

Operator

it turn any And I McMorrow this concludes for question-and-answer closing session. would remarks. to back like our over Bill to now

Bill McMorrow

get listen, any appreciate questions of Justin, at of as us Well, you say, the are follow-up, remarks, I and interest the you. said we beginning prepared the here myself, that that we think a have from I to Okay. my Matt, of all the Mary, support any always dialogue. as Daven, continue And

thank you and day great a have time today. for So your

Operator

you The attending now concluded. you. conference for today’s all Thank presentation. Thank is

now Have You lines. a great disconnect may your day.

Kennedy-Wilson (KW) 9 May 212021 Q1 Earnings call transcript