Kennedy-Wilson Holdings, Inc. Q4 FY2024 earnings call

• Bill McMorrow discussed strategic initiatives like increasing baseline EBITDA, growing investment management, disposing non-core assets, reducing unsecured debt, and deploying new capital. • Justin Enbody reviewed financial results, noting GAAP EPS of $0.24 in Q4 2024 vs loss in Q4 2023, and discussed balance sheet, including repaying $262 million of unsecured debt in Q4. • Matt Windisch reviewed real estate portfolio, with stabilized portfolio generating estimated annual NOI of $467 million, shift away from office and retail, strong performance in Mountain West, Pacific Northwest, California, Vintage Housing, Irish apartment, and office portfolios, and growth in investment management business with $8.8 billion in fee-bearing capital.

In Q4 2024, investment management revenue grew 83% to $30 million. Adjusted EBITDA totaled $191 million. Real estate equity and credit investments amount to $28 billion in assets under management. The rental housing segment has 60,000 units, with 95% occupancy at quarter end, and same-property NOI grew 5.6% in Q4. Investment management fees grew by 60% year-over-year in 2024 to approximately $100 million, with credit platform seeing $3.5 billion in loan originations for the year, including $1.4 billion in Q4.

• Expect to generate over $400 million of cash in 2025 through asset sales, recapitalizations, etc. • Anticipate growing investment management fees by approximately 20% to 25% per annum. • $1.5 billion in new loan originations in 2025 already in closing or complete year-to-date. • Intend to deploy capital into higher return opportunities, particularly investment management platforms, while reducing unsecured debt.

• Market conditions could change, affecting transaction volume and debt markets. • Interest rate volatility could impact the company's exposure. • Competition in construction lending and other property types could affect capital deployment. • Changes in regulations in international markets (e.g., rent caps in Ireland) could impact operations.

Q: Clarify on $400 million incremental proceeds from dispositions in 2025 and areas of focus.

A: Focus on core competencies like housing-related investments and investment management, selling non-core assets like wholly-owned office retail, using proceeds to pay down unsecured debt and fund co-investment platforms.

Q: About debt platform and construction lending environment competitiveness.

A: Committed capital loans already made, construction lending space still compelling, but evaluating other product types and financing.

Q: Importance of adding equity capital with longer duration.

A: Cultivating institutional partners, seeing more equity opportunities with realistic pricing, growing construction management capabilities to earn fees.

Q: Refinancing debt in Ireland.

A: Closing $500 million financing in April, replacing debt with mid-4s fixed rate, ability to float down if rates come down.

Q: SFR platform yields, margins, and operating platform.

A: Yields expected in high 5s to 6% over time, in-house asset management team with outsourced property management initially.

Q: Debt platform origination run rate and funding.

A: Aiming to exceed $3.5 billion origination in 2025, with strong demand from investors for continued growth.

Q: Irish rent caps and U.K. office demand.

A: Rent caps in Ireland to be evaluated, U.K. office demand improving with best-in-class offices seeing rising rents.

Q: Co-investment portfolio fair value marks.

A: Hopeful for continued positive fair value marks if rates stabilize and operational improvements continue, promoting carried interest growth.

Q: Global institutional interest in U.S. real estate.

A: Strong interest from around the world, particularly Japan in U.S., focusing on markets with real expertise like U.S., U.K., Ireland.

Q: Exiting office and retail, return to office impact.

A: Not deploying balance sheet capital into office and retail, but opportunistically using investment management platform, seeing benefits from return to office in Northwest.

Q: Apartment supply in Sunbelt markets.

A: Supply volumes and starts below previous years, best-in-class developers building, need for construction costs and interest rates to come down for supply to be an issue.