Kennedy-Wilson Holdings, Inc. Q1 FY2025 earnings call

• Portfolio growth: Assets under management grew 26% in 2 years to $29 billion, with rental housing representing 66% and generating significant NOI and fees.
• Capital deployment: Deployed/committed ~$1 billion in Q1, with current committed pipeline $2.5 billion, aiming for $3.5 billion in H1 2025 capital deployment.
• Asset sales: Progressing sale and recap initiatives, expecting $400-$450 million cash from asset sales by year-end, including $150-$200 million in Q2.
• Investment management: Fees grew 17% in Q1 to $25 million, with fee-bearing capital at $8.7 billion and future fundings in credit and U.K. single-family rental platforms.
• Balance sheet: Anticipates reducing unsecured debt, with $330 million remaining on KWE Eurobonds, $200 million cash expected from Q2 asset sales, and significant cash and undrawn credit facility.

Assets under management have grown by 26% in the past 2 years to $29 billion, producing approximately $575 million in estimated annual NOI and fees to KW. Rental housing, representing 66% of assets under management, has approximately 65,000 units and $6 billion in new loan originations since summer 2023. Investment management fees grew by 17% in Q1 to $25 million, with fee-bearing capital at $8.7 billion. The stabilized portfolio generates estimated annual NOI of $473 million, with rental housing and industrial accounting for 72% of stabilized NOI. The apartment portfolio saw strong leasing metrics, affordable housing portfolio had 5.5% NOI growth in Q1, and the office portfolio had 90% occupancy with same-property NOI growth.

• Fee revenue growth target of 20%-25% annually.
• Total capital deployment to reach $3.5 billion in H1 2025.
• Expecting $400-$450 million cash from asset sales by year-end, including $150-$200 million in Q2.

• Market volatility impacting investment opportunities.
• Uncertainty around Trump administration changes affecting affordable housing exposure (15% of tenants using Section 8).
• Interest rate fluctuations and their impact on debt and financing.

Q: First question relates to fee-bearing capital. Wondering about conviction in achieving 20%-25% annual fee growth.

A: Matt Windisch states fees are growth in fees, not specifically fee-bearing capital, and they feel confident based on pipeline and future fundings.

Q: Just going back to the dispositions for $150 million to $200 million expected to close this quarter. Any color on timing and cap rates?

A: Bill McMorrow says Q2 dispositions almost all close in latter part of June, and avoids commenting on cap rates but notes plentiful global capital chasing multifamily.

Q: First question around loan originations. Rates and prepayments.

A: Matt Windisch says rates have downward pressure, some pricing pressure but spreads still strong; one large office loan prepayment landed in Q1 pushing payoffs up.

Q: The affordable housing piece of your business on the vintage side, exposure to Trump admin changes?

A: Matt Windisch says little concern about private activity bonds and tax credits, 15% of tenants use Section 8, no short-term/medium-term concerns but monitoring closely.