KW - Earnings call transcript Q3 2024 | Kennedy-Wilson Holdings, Inc.

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Operator

Hello, and welcome to the Kennedy-Wilson Third Quarter 2024 Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call to Daven Bhavsar, Head of Investor Relations. Please go ahead.

Daven Bhavsar

Good morning, and thank you for joining us today. Today's call will be webcast live and will be archived for replay. available X for months. be by week will for webcast replay for X phone and The Windisch, CFO; Please income. adjusted more Europe. On non-GAAP are Matt financial information. With the this me Justin see Investor refer adjusted today Bill Relations call, we measures, McMorrow, to President including Mike net Pegler, and website will for President; of Enbody, certain CEO; and EBITDA

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

William J. McMorrow

thank portfolio, you, our management the highlighted you, non-core our third business operating further program. which for our call today. joining and of Yesterday, results we quarter, thank Devin, improving in progress on fundamentals for continued the growth reported multifamily our everybody, and investment asset sale

Since interest credit on development has in Estimated $X grew billion. Rental NOI we affordable an $XXX our management of X,XXX in we to units approximately or multifamily our Housing X,XXX KW financing XXXX, housing we $X our capital communities. focus, invested approximately Generally, $XX focused grown through XX,XXX ground-up units, record either annual partner. Today, $X.X across assets to venture. Since billion to stages development remaining properties are our of final the We've and has Vintage be our billion that to of housing multifamily and NOI. capital only at million platform. Starting $XX market comprised housing program, under have metrics, today we annual X are portfolio spent. $XX XX-XX at have portfolio billion XXXX, rate we QX, are be largely multifamily a Looking ownership an XX/XX/XX. AUM, or institutional million equity units key our on completed $XXX that major in, to with versus program, including equity of a continues fee-bearing grown X,XXX embarked in million to with developments, of additional million partners with we units in have these then, developments. adding through total estimated completing a student stabilized

lease-up. The to hit the detail, history, the see momentum business. XXXX. Matt track our generated in growth was credit continue $XX our million $XXX this fees years. approximately by time first by but for last driven the QX in XXX% more to are in to $XX from investment undergoing our over to grown year, us. have NOI Year-to-date annual in we of fees have assets stabilizing units, from to million by approximately we the XX% currently a million investment focus management added stabilization XXXX, has X,XXX grown the of expect For remains business an estimated multifamily $XX capital incremental management $XX from our million. Fee-bearing key and solid discuss million our compared topic X expansion for XXXX on will And in we

closing. process a new over $X.X are origination XXXX, loan loan pipeline originations with new strong the billion $X.X of completed opportunities have in in billion in We we of of

planned sales, our asset of $XX bringing of final to that to We from additional has the an on have of track total are our of in we us important and of generation for million assets. to million KW, QX, generate expected assets, cash last out another year. million in we QX, Another through puts In completion cash million. In $XXX asset achieve non-core excess generated the million cash including which to focus been million wholly-owned sales of QX of $XXX disposed the KW to us selling laid $XXX we target our $XXX $XXX year-to-date cash Spain. to

strategic Now, to of in the like highlight October, X important spend housing single-family on moment and the I'd a rental new past the In we focused we announced platform Kingdom quarter made this market. United recent launch announcements end. a

one a there structural at in create to decade, what an address At Plan million projects undersupply platform was Pension using outstanding the of Investment we XXX opportunity $XXX report The time, the growth funded with redemption We partnering purchases, United with management. In of more the and Ireland a global have and the the to are assets population residential we're partnering will our than growing U.S. By CPPIB, billion GBP planned of of to pipeline the for double of XX% number completed and balance to which from asset rental U.K. almost last similar sales. largest initially pleased announced we proceeds the high-quality we experience same is X the have remaining U.S., in EUR world's saw and first November demand that the be the in is of meaningful Kingdom, redemption also Board, of new next U.K., platform a our The the with opportunities. Yesterday, KWE our represents approximately on in asset new million housing. X Canadian a scale mature targeting we bonds, with the closed year. or of investors in and leveraging built. combined CPPIB, seen homes under homes

the was only this million, retired million us XXX EUR a As was as in bonds EUR unsecured leverage our KWE until XX represent reminder, which maturity help of issuance This our XXXX. unsecured will redemption XXXX. overall originally lower

market We've the overall an conditions. investment real to turning sentiment. Now, seen in improvement estate

cutting rate of cycle long-awaited the beginning by banks. in QX, central As we saw

we our improved just assets. The markets supportive for today strengthen trend estate Additionally, investment global in into debt deployed QX, real business, credit borrowing our and and robust deployment. industrial million our platform, the billion and a of remains for expect primarily describe and have $X.X purchases $XXX and as management in equity our Justin business short-term seen capital rental lower in next originations we liquidity, will of XXXX, total of a acquisitions. a over improving liquidity Through to through spreads including have continued have combination year. Across high-quality capital moment, momentum we loan of housing are rates $X.X new billion platform, of

and seek of housing housing affordable lack opportunities and the all we both our the rental credit in with equity ahead, affecting markets, space. high-quality continue Looking to

a real rate investments occupancy and mentioned, and Our estate rental in which the level as our housing direct I property generate ownership, quarter NOI XX% include over with XX,XXX ended affordable of $XXX of strong market million. communities,

units We platform. our X,XXX U.K. also have additional formed an newly through for single-family capacity

or country. Since across all us new us the our of communities allows loan July period housing on the completed credit housing invested construction development. lenders billion of development either joining to has the in originations, lending solid multifamily U.S.'s a student In largest platform Our $X.X generate short we've of become related for capital. to returns year, team in rental last one of time,

of as commitments, in few. A&M universities at $XXX totals the today Berkeley, million of University and housing a $X to with Michigan California developments student in including University loans name total billion Our Texas platform such credit near

We have close loans, origination billion of which pipeline, strong mentioned, in we a to $X year-end. to as over I expect new prior

base the with call growth tailwinds Our CFO, a our sector, to a that, engines for remains including Enbody, different of liquidity stable, we a to as estate growing the partners our over real I'd of Justin in business stable rates and see today to and great turn financial discuss continuing -- with normalizing results. well-capitalized institutional to position improve. With like positive

Justin Enbody

balance I'll Bill. and by financial discuss our then Thanks, our results start sheet. reviewing

initiatives and key our grew Management Bill QX, progress results. year-to-date $XX driven XX% another drive assets. in a QX completing has our $XXX Investment overall of As despite net of $XXX fee-bearing million $XXX by revenue by mentioned, higher million million being totaled in continue debt to EBITDA levels on originations million to X% seller to capital. Baseline in by and our increased new

share, unconsolidated doubled the X% million to in in changes assets $XXX includes by Our increased in year. million for minor has which billion at $XX and portfolio, total, EBITDA approximately adjusted gross to quarter valuation. In $X saw the

profile. Turning sheet debt and to our balance

able has increased $XXX to we now $XXX were end. in of revolving our position with During strengthen a fully our which XX% to capacity by XXXX. Total renewing million QX, maturity at was successfully by of quarter drawn million credit, liquidity September extended line

a X.X%. is with years or fixed share XX% average X.X maturity total Our average weighted a of weighted of and rate of interest debt hedged

our rate million also of reflected our QX, X.X% interest to the cash to $XX rate points interest result rate as to Our cash collected generate an quarter company. of total to KW, XX strategy. not by contractual cash, a is interest reflected At hedging over basis hedging of in as of offset our $XX we million received which our savings year-to-date our end, effective bringing continues expense. In

Looking at our debt maturities.

$XXX by So level and million of total we basis debt XXXX, only of the of points. far property XX in have paydowns with only changing refinanced million debt cost $X

to next KWE November. our of year, by out maturing represented are bonds Looking half roughly in maturities our

of announced multifamily program well of from Dublin, the which mentioned, as maturity, assets our to sale maturities our KWE bonds, portfolio, the by capital Bill in secured proceeds strong. liquidity. Outside remains availability relate again as cash announced XX% was almost primarily satisfy will this XX% next As using yesterday our previously debt of where existing redemption funded our high-quality asset year

over expected maturity now turn low investment quality that, our to Matt We with and Windisch, President, be portfolio. this Xs. And to call have our the in of discuss underway this XX portfolio. addressing speaks are costs received All-in are to already like the proposals, at I'd which to to over the

Matthew Windisch

in million. annual $XXX for grew QX stabilized Thanks, portfolio Justin. to Estimated NOI our

of Our and multifamily, sectors capital and non-core assets of portfolio high credit. multifamily with our and conviction in we continues older to stabilized newly XX% recycle portfolio replace investments our strengthen comprised communities. Today, of is industrial as stabilized simplify

the of focus. to XX,XXX-unit rental stabilized our multifamily As portfolio. to housing mentioned quarter, business earlier, continues And a our XX% be grown has thematic in

Our $XXX has by million, over increased of the years. share NOI multifamily which is over last X XX%

estimated and X,XXX development pipeline, vintage We our through venture, add NOI expect housing at to in units we lease-up to our primarily which stabilization. $XX million annual have

as drove demand leasing healthy strong X%. in across for portfolio resulted of in growth growth occupancy. XX%. Overall the see X.X% high and and growth of occupancy was of NOI cost to of continue These volume, revenue combined QX our levels with apartments same-property portfolio X%, occupancy healthy at We drivers approximately traffic of homeownership

leasing totaling market driving regional sharply and rate and spreads quarter of fallen portfolio, new high XX-year we by eviction over from outlook XXXX our supply, the blended a saw of U.S., our ago. QX, In the significantly major a NOI to that although new lease of X%, year California saw have faced is X%, X%. the highlights. represented starts suburban. In Northern less we which delivery, a challenges positive Turning in X%. In near-term our XX% the ended recovery Same-property a and apartment delinquency we portfolio, for to a loss growth occupancy with grew strong California shows

debt and believe plan. X%, region, Arizona Southern portfolio bad grew growing of are which leading recent around will came respectively. revenue QX of saw strongest of to West our by Nevada of in impact NOI revenue we growth mandates in X%, which XX% that at improve we've of California return and contain portfolio X%. In and our X.X%, and seen Mountain and assets Mexico, X% from Northwest, X% NOI the approximately in of Nevada Arizona, grew New our of saw finishing resulting all in the Occupancy X.X%. The growth to by we growth occupancy growth business office and occupancy. In NOI supported growth Pacific NOI value-add lower growth levels Seattle. by and positively XX%,

Our portfolio have Colorado Idaho by supply. in levels been elevated Utah, and of impacted

income, as resulting outlook growth with our Housing in in rates are of worst changes rental Vintage the line the behind However, in favorable were area NOI of remains X.X%. portfolio, growth now the us. In affordable the median pressures supply

remains Moving Demand and healthy. to The majority overwhelming remains there for in over large apartments are housing. non-institutionally structural a apartments Dublin new shortage Dublin. owned, of of

units XXXX. XXX one of total currently property a early track stabilized have to complete in with additional on far lease-up thus We

approximately anticipate of due XX%, trends professionally our to lack occupied, XX% demand at tenant Our our regards portfolio remained and managed Europe lease break. Fundamentals portfolio, to our U.S. same-property portfolio derived office our which seen XX% we are is throughout portfolio X%. Occupancy NOI the continue of X.X communities X.X different our amenity-rich weighted our supply. With growth much years from stabilized drawing to NOI new to revenue term of average healthy years than to the and portfolio Europe, stabilized in some of with in office saw in and office for for a Europe expiration is

properties For X% X our Dublin, less than are example, in almost with end. stabilized availability quarter full, at

in tenant uptick transactions the have XXX,XXX demand continue to offer a properties an quality. several currently additional Similarly, in under QX as seen flight high-quality activity with We totaling benefit our to seen U.K., we've leasing in square feet. from sustainable

Europe we industrial look to e-commerce portfolio, continued Our U.S., in leasing, square where believe investment we've a to adding feet, below And square totals supply and management in occupied. which XX market, to resilience our continues continue in gears XX% rise of demand. delivered XX% will our Europe, us drive strong the XX% now portfolio, remain value chain completed see demand. Switching rents portfolio million which is feet our enhancing to XXX,XXX In the rent. In-place of We which mature. long-term business. global continue to leases allows increase as

a $X talked on we've capital. quarter, simplifying business business. of continue our $X.X growing billion balance grew the through we new a incremental previous sales, non-core future fee-bearing deployment in non-discretionary investment and about fundings end focus an and from at record That As to on capital sheet management the the our billion with look our to through of asset platforms calls,

a also over conviction us capital-light as Our generate past the adding high on rental the of great another to while returns housing is $XX months. roster, in investor a XX million one our totaled housing our it single-family in while new equity growing U.K. allows management institutional of manner, example our fees attractive platform high-quality focus, rental to areas space. Investment

Our capital. last management driver a been fee-bearing the $X for billion business growth XX% investment our of over years, credit our today accounting platform large of few has

estate volume, expand ways markets private rapidly continue combination our we with credit look over progress time coupled liquidity short, borrowing challenging and As solutions. In continue the transaction ideal with of business. In real to institutional setup for made well-capitalized Investment short-term potential our the several have navigating for more Management years. past and grow for closing, a an the to improved credit period of we costs for provides great few higher to partners,

for made in sets years I as company However, believe the we we always last solid opportunities, approach in growth as XXXX beyond. improvements these the and periods a few have and us up

we can open up that, with Q&A, to please. it So

Operator

Anthony [Operator first Instructions] Today's with question comes from Paolone JPMorgan.

Anthony Paolone

revenue that My like like first originations. see we you're it other picture with curious, Because question you next year kind $X Can this probably to over to And $XXX just looks number? raised worth like that to get going of debt billion just of year what to hit fee or relates maybe to what to being finish that revenue? level about look has of the terms brackets originations you put year, to need talk around capital of for fee million. about in next

Matthew Windisch

Yes. Yes. Tony. Good question,

included as as commitments, capital we've platforms. such in to partners our billion not mentioned, got commitments as that fee-bearing our that's in CPPIB future funding well I from relates capital So various of $X as

at And a so to the pipeline, grow clip. the the very the business, management seeing alone based us on raised equity capital allow credit we to both investment we've the feel continue is in like business we're going just business, to deploying good and

think at as we're $XXX close going And the in fees to for mentioned so, year. million remarks, to we up in this we end

plans, years continuing at the business comfortable couple pace. So a grow we've to good of over seen feel based growth the and our rates, we on past that

Anthony Paolone

have next that where sort cliff you'll that like pushed a clip be the of have there? may a is you maturities back is of just get of -- you such Or you will large bar you're bit that getting higher year? there at any originations to like So, keeping out still

Matthew Windisch

the will there. think clip keeping I us at we're get

at same continue the numbers kind through can originations, management this certainly to outperform equity you think there. debt we I increase sure. get either can did certainly, doing for platforms, us pace, there's there just if or year the it investment out laid the grow we would of these we But -- the business

Anthony Paolone

on Can you look color over operators what then little there like Okay. just the us there? experienced running And a the there more give help and platform around single-family? U.K. economics cash yields more one, assets? the second around SFR are just maybe strategy. detail of Maybe any new to kind for with you like And these

Michael Pegler

I'll to take excited CPPIB, to Pegler, partner I scale Mike as a great business. with of President I want am mean, just Tony. the Okay. how such this I Thanks, about firstly, European say, that. which finding business.

at Matt of in And our key part opportunity has housing really always Kennedy-Wilson's and we've looking going our of find to great to to this as the split. of committed expertise. and on partner We're story, portfolio venture million a XX-XX scale got we've to rental part an And equity here. They've something Bill key to a $XXX initial part this that we said, been been As of a an is a think business scale key U.K. a investing for while. a be commitment.

co-investing So alongside be we'll them.

U.K. have decades, $X market a got in confident pipeline to billion a houses that, over leverage, mismatch that, for -- various a period built this with and and between year is U.K. landlord work excess been such changes deploying the in not the years, rental commitment. demand there next putting year. I extending we We've supply fundamentally, being if under plus housing not for as real great enough have to other in the expect in as part for private a in So deploy this initial really we're of of going mean, productive to we're

for rental well think the we set conditions growth. So are really

that the we're those to blocks these new of U.K. with be going of large X% cash cities, initially cohesive projecting we're house houses, yields, England. We're are terms something between yields. initial growth, buying brand it of primarily which we're pushing towards on the we north high-Xs, builders leasing to in in expect we up edge from South mainly of projecting rental And key X%. to yield going In stabilize

Anthony Paolone

is will in have you be And scale business? do that And enough billion the think who efficient and $X them? operate to

Michael Pegler

and we've off lot a clearly got got we've and We've Really the with Kennedy-Wilson we the be Yes. put taking We've Ireland, we've to be proud we're expertise portfolio going significant in managing together the and it. in put U.S. a that to very U.K. expertise team together this across leveraging team, the going other business. market. venture to in residential who are great markets. the a lessons that We're of got of learned the

platform a it say, are be that of, think go think that, there existing terms way the even going got thing, could expect property to this opportunity as think be could bigger in that an of expressed to has do to. how an we we're does the if first over And unlocks time. let's scale. But build an of We doing we U.K. outsource we beyond team We to evaluate We've give a to that. us this a credible think platform advantage. interest the works type opportunity that opportunities is platform the partner And collection, our in not people best-in-class of and In grows. lot that market. management, a we'll first-mover billion $X this there, that. rent There

Operator

questions, closing would no like the turn I any Seeing McMorrow Instructions] for Bill call back further to remarks. to [Operator

William J. McMorrow

always to time Well, And that always might as you, us. I come questions any to everybody, any for say, answer joining mind. we're available thank

very you thank So much.

Operator

concluded. Thank Thank now you. you conference participation. your has for The

now may You lines. your disconnect

Kennedy-Wilson (KW) 7 Nov 242024 Q3 Earnings call transcript