KW - Earnings call 4 2023 | Kennedy-Wilson Holdings, Inc.

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Operator

Good day and welcome. [Operator Instructions] And please note this event is being recorded. And now, I would like to turn the conference over to Daven Bhavsar. Please go ahead.

Daven Bhavsar

Thank you, and good morning. us joining for you today. Thank are With President; CEO; Windisch, McMorrow, Enbody, me CFO; Europe. today Justin of and Matt President Bill Mike Pegler, including we non-GAAP net call, to adjusted measures income. this adjusted EBITDA On and refer financial certain

other Relations can to may information, is the of with Investor posted from Investor during financial forward-looking and for on the with the statements. will these XXXX to our a and Please quarter GAAP reconciliation is made Bill call our on for of materially and comparable webcast Statements the find this include uncertainties fourth a now available directly earnings call, this You Securities and of measure number will the differ the McMorrow. items discussed and description factors, for call Chairman most website.Today's call of indicated release due archived reports week for like more Commission.I over Relations to Actual replay would website information. section be by replay. forward-looking The one live CEO, being turn be phone in filings see by risks, webcast results our and and Exchange three which may months.

William J. McMorrow

from are by by increase significant $X.X which in $X.X investment billion loan the XXXX. was heavily loans of largest acquisition, people and The growth to development a The have which benefited expectations construction record further pipeline, our global to KW. you across completing multi-family of properties single our and portfolio wealth is on institutions. newly exceptional with well of in and important management construction the company's Daven, approximately fourth partnerships in growth sovereign related our highlighted the in are results platform, and today. outperformed loans results transaction impacted market multifamily loans very of our originated that billion benefit by stabilizing Thanks, quarter year was an large NOI for for investment X,XXX total are portfolio including business, XX% depending our that new units and and value to Dublin.Our team all morning join in expansion XX developed our noncash conditions.Our good financial US Yesterday, fair and originate solid the $X in the everyone multi-family history. which on credit theoretical XXX% driven impressive almost billion which Fee-bearing and thank expecting to were of $X.X portfolio most and XXXX weighted our XXXX, currently a We capital new the grew us closing was assets management transaction financial of adjustments joining we held reported billion. platform the in multifamily the assets, progress funds performing full projects.The of Western

to half XX% or is under year, and would sales, expected this implemented $XX in value aimed cost noncore However, that as sale in by which we adjusted into total of $XX we have at and a million of decades, global generate to million of over million KW. impact our cuts we part asset as Thus $XXX we new annually, three identified two advantage XX-month reducing overhead of future or provide either number have investors have completed far, have cash have million asset totaled equity how we our would the to announced an debt. Company excluding generate the to the December, we reduction $XXX the approximately now either real the months EBITDA contract fair XXXX.In plan, capital made costs capital $XXX of well investments, take program estate across over of in opportunities sale of team, cash that -- gains progress have initiatives and can may importantly, $XXX lending any of and excess with GAAP to XXXX.Over proud the in been of the to construction KW million million. are am of last positioned a how on arise And structure. I estate in real positioned we cost

our between XX% returns, opportunities capital Fed in us XXXX, from people to XXXX lower rates. while we in significant investment will anticipate clearly risk-adjusted pivoting to likelihood inflation global and a high Our into declined there new is unable real the continue of partners eased generate XX% deploying to KW which investments, estate more as has and activity interest

very have presented We periods a priorities location like in opportunities.As growth and repeatedly this KW has to maturities debt KW us this XXXX highlight of few have I'd at minimal greatest for such year. our happened

platform, on global an for First, raised and which billion loans outstanding external $X.X December, billion we commitments approximately additional for of new we business. with are origination. future In dry focused debt future $X capital commitments growing our totaled funding credit in billion of our $X powder

States debt upcoming now million our totals feet call over remain significantly of leasing portfolio the Justin the in we present a in stabilization today $XX is XX to under that NOI our floating in very fourth assets period quarter of results. both approximately to turn will construction of entering third, borrowers add one We new by which look favorable. We on management, That and lenders to time and increase will expected be our distressed opportunities our that, KW.We annual to Enbody to grow square like a opportunities are are to the large assets United over market multifamily find also Europe.With growing trends million near-term CFO, impact maturities I'd planning as well-positioned the the few from as our to multi-family rate with owners added logistics stabilized and financially to financial debt; part industrial of growth could are of discuss driven active this we in investment of the as portfolio, the estimated units. today.Second, XXXX

Justin Enbody

a with value are values In adjusts. at valuations fair in unconsolidated by fair our cap X% million believe QX we the non-cash largely million being rates favorable recurring Thanks the Bill. entering resulting totaled of basis.Similar we of to estimated capital. for Investment I'd results. to remains to year, increase of XX% the are of $XXX $XXX X% of co-investment XXXX quarter in revenues increase held million were covering an year, trends implied outlook with $XX by management supportive as inflation and overall higher of result drivers improvements impacted in we compared to portfolio financial quarter totaled our fees saw a and value compared $XXX which NOI as Consolidated interest a both environment.However, in XXXX, the fees we XXXX. expected or our in for an including key of QX, and of backdrop by more cost and QX, million saw the impacted improved of like annualized the to from time end from by rate XX% investments, year our million start XX some million reductions share the period depreciate and $XXX XX% an $XXX on since up with the property

the on EBITDA assets. million share. one Kennedy-Wilson.In per adjustments, Adjusted fair and a totaling and dispositions GAAP $X.XX of of non-cash These in number non-core million had We retail per value smaller includes net sold Our total, assets office of a muted such sales cash to remained $X.XX we loss a in with $XXX asset generate in asset items totaled of loss focus UK. which the quarter share, as QX. depreciation a $XX

Excluding value million to the drawn debt in our $XX cash $XXX profile, balance were of sheet related we quarter consolidated $XXX our have reductions, million QX million been year-to-date.Turning non-cash $XXX on our $XXX credit. and EBITDA million at fair line end, million of had would adjusted and

Our total have reflected QX, of cash our collect and statement.In cash in bringing maturity our $XX our million interest cash to of X.X expense of hedges of hedging X.X%, as or debt to fixed is XX% hedge. X.X offset continue a years.As interest average maturity our which a $XX year weighted result received of weighted today's rate weighted share years well-below total with a strike activities, end, not average hedged average from million of is which collected income year-to-date of an a is rates, interest we our as to our of rate

One the of we savings effective Our companies. total assets. paying in asset there track agency maturities in November. Over asset Europe, complete the of X% limited, debt four -- contractual the are XXXX relate X.X% matures second multifamily have which the and XX% already. rate our refinance XX hedging the anticipate maturing In over interest fixed essentially totaling with two sales using maturities rate assets points in strategy.Our one and on to are XXXX basis US, our debt. our retail our key which of of proceeds due flat remained reflects million to we maturities representing from of of to $XX from are end is largely In off QX,

and are We call process to that maturing of President, discuss I'd December.And November Windisch until the May, two in maturities which investment to have like the the over we and in not to refinancing are our turn a Matt loan with the portfolio. remaining

Matthew Windisch

units. XX,XXX which with multifamily our Starting and totals suburban is Thanks, Justin. business largely

$XXX portfolio annual produces represents portfolio. in of XX% million estimated which Our stabilized KW to NOI our

prior fourth same renewal leasing continue end trends grew we and totals with approximately the seasonal estimated approximately by Our which totaling the to up X% XX,XXX revenue units, an trends we stabilized of pick million X.X% by see of QX, spreads multifamily add in with loss expect as many the to lease-up quarter.In totaling development once and lease the saw X% quarter Globally, NOI in XXXX. the same-property annual end. up US, at additional leasing to X% NOI $XX portfolio from to quarter we

saw in growth X.X% to our improved We X% and of in the Mountain X.X% encouraged revenue we and the increasing X%. largest In occupancies region, West, January X%. apartment growth of are to rents of NOI we improvements with renewal asking with spreads by leading saw

Our across Colorado, New six Mexico, Nevada, Mountain and West assets are states diversified Arizona Idaho. Utah,

on portfolio, of homeownership Our a through Since on these strong This time, we stats Mountain XX%.And will life.In supply side. that in lower and debt. our the alone. were seeking X.X Overall, growth our continue our nonpaying in by construction a NOI markets will $XXX The X%. believe to high have units believe cash priced large which levels at the that while stake of of and we of costs for average quality re-leasing remaining California property reported region than institutional recaptured fixed through XXXX operating assets example West seeing flow higher continued noticeable debt including rental in starts XX% NOI portfolio of progress run draw we more units to tenants attractive with rate to in on remain in and in XXXX. a maturity growth values To for further delinquencies moderate decline affordable grown should cost two-thirds the service multifamily nine and by seeing has approximately made those led just to a fundamentals X% with while assets legal and of more the The drive we further revenue of also fair we set has contrary through XXXX. a XX% elevated in working years are levels the over is an and great portfolio's X.XX% grown we XXXX formation investor delinquencies.Overall, an bad residents rents of sold have demand our average after co-investment loss-to-lease as give household still of turnover NOI housing, X%. US an of properties we California having however in The the healthy. from a our apartment I of currently work debt walked growth up change some XX% growth renter

rates, cap million $XX mark-to-market a data of on during we implied a took and limited due transaction third-party XXXX. appraisals, off on these However, in to increases based assets loss non-cash

term, In short flows have to Housing to portfolio, our we in we the strong complete grow no cash We affordable sell business of continue growth revenue Vintage plan.At saw the was XXXX. by XX% intention which income resulting any these assets XXX real median increasing and the of of the as vintage QX, NOI in driven area a unit of almost fourth X%. in robust stabilized levels property we growth stabilized property,

a which is while grow housing have affordable initially be in potential will of continues XXXX. units There to XX,XXX stabilized need XXXX routinely X,XXX which than for the double pipeline another renters. we back our the list more long to development have units the We in units our developments strong portfolio in wait acquired than country,

space as in NOI We successful with from XX% month.Our next and to continues a lease in units our growth the and opportunities our Irish U.K. year portfolio which year. as derived and our rent of office undersupply end. delivered As our our remains almost quarter, high-quality on slightly our allowing NOI on NOI very our well it strong vintage the such, unique reviews over our we Dublin Dublin to office portfolio we nine XX% close with located continued another by X% has mark-to-market contributed assets the are our continue Dublin XXX% ahead portfolio units, XXX the leasing at office the saw rents limited new full majority same stabilized occupied.Overall, of same-property to property to a Dublin to developments NOI a to up occupancy explore the remain feature of at as in was totaled with during Dublin, in to new stabilized portfolio as portfolio.Moving and in deliver Last European occupancy today X% which new assets the due grow performance XXX increasing to portfolio available term.Excluding track significant asset, of XX% result revenue plan the these reminder development leased our we of the which business rental of year to largely growth on for perform there in in housing properties over structural is economy.Turning

XX%.In NOI.Now, in Our suburban X.X estimated to Los within with well business, total, of investment roster credit. tenants a approximately consolidated solid our adding U.S., term annual stabilized our X% $X stabilized portfolio weighted only over the an Angeles to transitioning U.S. of and accounts platforms in we expiration Europe our of In in leased to healthy average is asset with QX, office portfolio million starting annual key the lease of estimated to years NOI. a management occupancy for total office

mentioned, capital. today Bill platform total As credit and an XX% by impressive XXX% in our our fee-bearing represents grew XXXX of

all and in occupational markets XX% platform and of added ownership vertically through which demand from multifamily loan working billion on the occupied credit successfully business, EU are low and in have leading $X strength of interest big have the construction supply our in now tenants to returns remain the platform our to including extend track in be able billion with investment are benefited portfolio expanding is within on-boarded certain high-quality on another over a Pac-West tenants positions in management our from lenders extremely industrial over beyond.Along in to traditional and assets our of returns now new business. of strong very XX%, rate the long-term invested in quarter, us early the powder offer. markets, while team's team Fundamentals the undersupply to generate their points.The billion high to our asset $X these another new totals is continue our our with and for at the XX lack lending deploy borrowers We portfolio XXXX demand.Our to opportunities and this of dry the with potential environment.Today, who with we European and fees loans also well with sector.The under under leverage leases majority unlevered vacant our pressures chain relationships, over continue market healthy person is $X.X portfolio seen continued industrial focus attractive. important strong ahead properties of expiration.During fully integrated very industrial capital we record, portfolio, remain interest successful to a on discussions pipeline our KW's management. We've space from the existing strong platform's economics engaging X.X% the to

add Growing partners transactions European market our globally.Our billion we opportunity our us and to for industrial focus our year, providing are years to we hope us joint a for over strategic full well completed has of XX approximately in platform plan.In-place business rents of to ahead. was platform. the rents an the mark-to-market continues with a are XX% over a ahead below rents, we which $X increase AUM monitoring capacity be For leasing delivering to venture opportunities number this in XX%

on with where square loss-to-lease.With focus Bill. two also feet been I'd it small industrial pass US of our in significant that properties million and over We back has to embedded have like mid-Bay a to the

William J. McMorrow

strong remain multi-family Fundamental Matt. and portfolio. industrial Thanks within fundamentals very our credit

are we've alongside best should our invest of into opportunities be team have at had KW the KW's primarily ever as partners and driven There XXXX, to by maturities. capital of second people half move We we willing we meaningful debt tremendous investment capital.

also all projects assets nearing and with very cash-flowing completion left these well. asset minimal into converting are on currently our properties.Our sale program spend almost is We development of to capital progressing

reducing any are our income levels growth open investment our level to it rates.With from questions. Daven management over and business I'd streams turn like growing that, and at it are to We NOI. property up solid to our and overhead

Operator

from today please We begin Anthony, will Instructions] [Operator go Our Morgan. is question-and-answer from ahead. session. the first Paolone Anthony JP question

Anthony Paolone

you a leverage outlined about look in of and overall level you should capital we think capital just progress Thank dispositions are we want that expect think raising that for But all you. on making do as and you we KW I to is lower you out? is back I redeploy? guess, that December. my first the question Or should harvest think

William J. McMorrow

properties of to combination disposing we're some of of debt it's because these Tony, think, have a both, that them. I Well attached

So you're pay the obviously debt. to assets selling you're that when going off

debt know plan to allow capital. this a the year. debt we're to debt, investment year $X activities the correctly. for lower if for you have only doing $XXX did business. math We not our this but that's billion cash with of is $X I including the to redeploy billion Because through that going almost into went X.X% million new like That us capital

of into up. Yes million to capital $XX about it's going deploy that business. we're Sorry the debt the

Anthony Paolone

on If like bring is assets do I wholly-owned Yes. still company. leverage But down? that view know a to whether level look think I maybe guess that's your over historically, co-investment, like it's just through you're levered, thinking the funds, your you I've as do question my about you don't XX%-XX% time? want Or to run right you we think

Matthew Windisch

Matt. Tony, Hey, it's

big I'm to particular, So purchase mean, in our co-investment to In I obviously these as December when would fund part own think, grow asset of and continue of emphasize credit. plan one the as announced payoff Bill well just another what use business, to be proceeds, business. we was sale is, securities saying the including I line to debt but potentially and the our our

both So of enable I down leverage to over period combination the bring will of doing us a think time. XX-month that

Anthony Paolone

of like does capital thinking about at just That about stock just these is next how levels Okay. fit buybacks my kind question allocation? into into go to going the overall

William J. McMorrow

Yeah.

authorized was Matt million. we buyback $XXX a $XXX share million spent program and out XXXX. actually of We that think I program it

about buyback in stock are and investment with million the $XXX clearly, is reinvesting. we Matt like program. on. have an left reducing we that of things so that focused along opportunity debt talked That capacity clearly And worth And other

Anthony Paolone

this last item dividend. And just the one then Okay. just on

on should level, liquidity how having also the current it the but maintained preserving idea just at of think going You've a go-forward and we about basis. dividend into like cash the

William J. McMorrow

on that we're But from generating particularly quarter, our the say I given that always properties. every always flow that I disposition be and come year, this distributions our made we these and and progress plan amounts Like every out significant quarter going for we've that we cash say, from asset our of to look review dispositions. plan, at of as

current in comfortable year, that the at level. dividend Board its So we're early the continuing felt

Anthony Paolone

you. Thank Okay.

Operator

America Merrill ahead. go And Lynch. our Josh, Dennerlein Josh may question comes next you Bank from from of

Joshua Dennerlein

everyone. for hey, Thanks Yes, the time.

of business first then to there growth maybe wanted like and seeing kind the a there. you how you're like just for value a the ask it slowing rent like Just about West get looks But trends an your markets projects just the portfolio that and uplift in multi-family Mountain market add of you wise might thinking your from perspective. about do lot maybe

the potential that can portfolio? of you across part NOI of kind about Just help the us growth think

Matthew Windisch

Yes, absolutely. is Matt. This

So supply pace significant some as were been, in the to recently we're that's said, of at the I has to my we And level affordability, $X,XXX think in so on ability as kind the other growing rents the you put past remarks, years. off on all that with you come has markets, I mean, market U.S. there we being clearly our if at average higher a in pressure which of the start that rent. markets Western -- if grow over compare which mentioned several those at them discounts.That

good on forward supply front think dissipating markets. of those is I the in is the that news going level

so obviously well, factors.So, plan. to and roaring, business continue and have, that of products, those at growth to kind doing pandemic, of And affordable going the for, in markets were extremely during the markets job people prices the other best-in-class outpacing attract some we're

over of and the the time. But So we feel behind think to are we can but there XX% grow we rent about those probably growth portfolio, rents great compound us. days continue

Joshua Dennerlein

that. then you one of portfolio, the out Okay. turning your And I just a to Bellevue your move had office Appreciate quarter. assets during maybe think in

outs move should on, like, re-leasing? you're prospects there, releasing of for about thinking how then we maybe kind thinking asset, about, other the kind opportunities are Just and there any be curious of

Matthew Windisch

Yes.

the within that in portfolio. asset vacancy So terms Josh main of, U.S. was the

asset. out We've the Obviously, a fourth move long is it What have market have we a the the in did that say beginning I'd a there for we owned of Seattle time. quarter. at very So QX basis very, the you tenant we said, if deals. to do leasing there activity, And picked definitely I even being think kind look just all to has overall, have at ability, now.That our of up. given the QX right basis, challenged low is

we're And other got right going thing be months. working I'd we'll the it, is team get XX confident get next XX the property so, that leased, to that and And on mention to done.The we've over we're able is other that asset portfolio. building And there one that that sell that currently in as essence, entire debt down cash we're of occupied to the there's, pay part on three-building complex. discussions and get that entire potentially would, it in to

feel pretty that good we So about asset.

William J. McMorrow

Matt, mean, building into came I exchanged us I'd asset. a asset that Yes, an to of we add, the only thing through sale that apartment that

a, So don't an to And that it's in technology tenant point, attractive in add I'd to left, Matt's unique, call the basis was of extremely have out based large an the it if campus. asset. it has their Seattle company market that somewhat but know we own cost I the built

tenant. the business particular had was just And It the reflection of no plan on that it asset. so nothing,

Joshua Dennerlein

Thanks for the guys. color,

Operator

Okusanya. Instructions] you. Thank Tayo Go Tayo Deutsche ahead, comes from Bank. [Operator Our question from next please.

Omotayo Okusanya

good of capital construction expensive to going everyone. just are activity opportunities. capital wonder becoming and of and so I'm accordingly loan to stopped there names less going forward, Again, you're for lot who the I too wants on do Yes, a to that. price grow the be take someone, less this you again have actually But going assuming there's to for book. you know guys to flipside, have one loan that, that positive out commentary around the actually A few opportunities enough morning,

So actually originate loans.

sense loan you next XX kind us think Just through grow of those just kind I over better months. things how book could the to know two how of a of get curious, much the help

Matthew Windisch

reduced certainly, have Tayo. is, Obviously, has higher construction ago. I'd years Good it couple rates Yes. from overall where was construction Yes. question, say gone I up. mean, of activity a are costs

there's example, question no an housing slowing. that are starts as So

I to about it, that. think, side of that flip there's think if side you the

leverage We're at If credit traditional in use private funds had work. have space, banks world, you the that the doing regional some this the look back active market. all of been the of the less the lenders in unlevered,

team Pacific the feel expertise bigger we we in from we're and and Western the be pie.So Bank feel piece going of the that may kind and reputation a on get pipeline speaks shrinking. continue But think, what so, overall we And bigger like is itself. to with confident, brought our pie market, for of to that the we our

one over closing up we're have signed already billion, and in on. we've We

paying So I like we mean who are we the that is, leased now spreads to we we paid that's some for it continue people financing expected. feel on other in because I of good a think side payoffs, thing, book. off not still grow of can as those. as fully construction the permanent terms are quickly And too loan properties have we're are being, still looking getting

year. slower And terms so half I think the bit a be of in this of of first the runoff certainly for the book, it may

Omotayo Okusanya

That's you. helpful. Thank

Operator

this I turn the back to like Okay. And over would McMorrow for some Bill conference session. remarks. question-and-answer concludes our And to closing

William J. McMorrow

up, to for say And any everybody. of with out I follow any will always as you, too, Thank available us we're you. further

So have much and day. a thank you great very

Operator

you the conclude today's attending does presentation. for Thank this And conference.

have and disconnect day. now a may You great

Kennedy-Wilson (KW) 22 Feb 242023 Q4 Earnings call transcript