Earnings call transcript: Kennedy Wilson reports Q1 2025 loss, stock dips 3.56%

Kennedy Wilson Holdings Inc. reported a greater-than-expected loss for the first quarter of 2025, with earnings per share (EPS) at a negative $0.30, missing the forecasted loss of $0.19. The company’s revenue exceeded expectations, coming in at $128.3 million against the projected $97.46 million. Following these results, Kennedy Wilson’s stock fell by 3.56% to $6.37 in after-hours trading. According to InvestingPro data, the company maintains a significant 7.26% dividend yield and has consistently paid dividends for 15 consecutive years, despite recent challenges.

Key Takeaways

• Kennedy Wilson’s Q1 2025 EPS was a loss of $0.30, missing the forecast.
• Revenue surpassed expectations, reaching $128.3 million.
• Stock price declined by 3.56% after earnings announcement.
• Assets under management increased by 26% over two years.
• Company focuses on expanding credit solutions and rental housing sector.

Company Performance

Kennedy Wilson reported a significant year-over-year decline in earnings for the first quarter of 2025, transitioning from an income of $0.19 per share in Q1 2024 to a loss of $0.30 per share. Despite this, the company noted a 5% increase in Baseline EBITDA, reaching $108 million. The firm’s assets under management have grown by 26% over the past two years, now totaling $29 billion. InvestingPro analysis indicates the company’s overall financial health score is currently rated as ’WEAK’, though analysts expect profitability to improve this year.

Financial Highlights

• Revenue: $128.3 million, above the forecast of $97.46 million.
• EPS: Loss of $0.30, compared to a forecasted loss of $0.19.
• Baseline EBITDA: $108 million, a 5% increase year-over-year.
• Assets under management: $29 billion, a 26% increase over two years.

Earnings vs. Forecast

Kennedy Wilson’s actual EPS of -$0.30 was below the forecasted -$0.19, representing a significant miss. Despite this, revenue figures were strong, exceeding expectations by approximately 31.5%. This mixed performance reflects challenges in profitability despite robust revenue growth.

Market Reaction

In response to the earnings announcement, Kennedy Wilson’s stock dropped by 3.56%, closing at $6.37. This decline positions the stock closer to its 52-week low of $6.13, reflecting investor concerns over the unexpected earnings miss despite higher-than-anticipated revenue. InvestingPro data shows the stock has declined over 41% in the past six months, though analyst price targets range from $9 to $13, suggesting potential upside. The stock currently trades near its Fair Value, based on InvestingPro’s comprehensive valuation model.

Want deeper insights? Access Kennedy Wilson’s full Pro Research Report, part of InvestingPro’s coverage of 1,400+ US stocks, for detailed analysis and actionable investment intelligence.

Outlook & Guidance

Looking ahead, Kennedy Wilson is targeting asset sales between $400 million and $450 million in 2025 and expects a 20-25% annual growth in fee revenue. The company is concentrating on expanding its credit solutions and rental housing sectors, with a Q2 capital deployment pipeline of $2.5 billion.

Executive Commentary

CEO Bill McMorrow highlighted the company’s strategic focus, stating, "We expect this sector to grow to over 80% of our assets under management over the next three years." CFO Matt Windisch added, "We continue to make progress on our initiatives, including executing our non-core asset sale plan."

Risks and Challenges

• Economic uncertainties could impact real estate market dynamics.
• Rising interest rates may affect refinancing and debt management.
• Competitive pressures in the rental housing sector could influence market share.
• Currency fluctuations could impact international operations.
• Regulatory changes in key markets may pose additional challenges.

Q&A

During the earnings call, analysts inquired about Kennedy Wilson’s loan origination rates and competitive pressures. Discussions also covered the company’s disposition strategy and market opportunities, as well as potential impacts on its affordable housing portfolio.

Full transcript - Kennedy-Wilson Holdings Inc (KW) Q1 2025:

Conference Operator: Good afternoon, and welcome to the Kennedy Wilson First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Devin Bofsar, Head of Investor Relations. Please go ahead.

Matt Windisch, CFO, Kennedy Wilson: Thank you, and good morning.

Devin Bofsar, Head of Investor Relations, Kennedy Wilson: Thank you for joining us today. Today’s call will be webcast live and will be archived for replay. The replay will be available by phone for one week and by webcast for three months. Please see the Investor Relations website for more information. With me today are Bill McMorrow, CEO Matt Windisch, President Justin Enbodie, CFO and Mike Pegler, President of Europe.

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

Bill McMorrow, CEO and Chairman, Kennedy Wilson: Thanks, Devin, and thank you everybody for joining the call. Yesterday, we reported our results for the first quarter of twenty twenty five, reflecting a solid start to the year and continuing the momentum we saw in 2024. Justin will discuss our results in detail in just a moment. We deployed or committed approximately $1,000,000,000 of new capital in Q1, driven primarily by originations within our credit platform. Activity has picked up in Q2 with our current committed pipeline totaling $2,500,000,000 of loan originations and real estate equity acquisitions, all within the rental housing sector that should drive our total capital deployment to 3,500,000,000 for the first half of twenty twenty five compared to $4,000,000,000 for all of 2024.

During the quarter, we saw strong fundamentals within our rental housing business and continued growth of our investment management fees, while making progress on a number of non core asset sales a meaningful portion of which should be completed in Q2. I will discuss this in further detail in just a moment. On today’s call, I’ll review our portfolio and the progress we’ve made across our 2025 strategic initiatives and in particular our asset sales and unsecured debt reductions. Starting with our portfolio, assets under management have grown by 26% in the past two years to $29,000,000,000 producing approximately $575,000,000 in estimated annual NOI and fees to KW. Rental housing, our core sector represents 66% of our assets under management comprised of approximately 65,000 units that we either have an equity ownership interest in or are financing.

We expect this sector to grow to over 80% of our assets under management over the next three years. Real estate market fundamentals continue to see an improvement in Q1. In The U. S, real estate transaction volumes increased by 23% and we have not seen any material changes in sentiment in Q2. We believe the best risk adjusted returns are found in the rental housing sector given the demand tailwinds driven by a housing shortage across all KW markets, single family affordability issues and declining new supply that began in 2024 through a combination of absorption and fewer new construction SARPs.

This healthy backdrop was evident in our Q1 results where we were able to increase our same property multifamily occupancy to 95% and grew same property revenue by 3% and same property NOI by 4.3%. Capital deployment in Q1 was focused primarily on rental housing credit. We completed an additional $725,000,000 of new loan originations, 100% of which relate to construction of new multifamily or student housing projects. Our debt business is on track to surpass $6,000,000,000 in new loan originations since we completed the purchase of the Regional Bank portfolio in the summer of twenty twenty three, making KW one of the top construction lenders and multifamily in the student housing sector. We also completed approximately $200,000,000 of real estate acquisitions, which related to the expansion of our U.

S. Apartment and European single family rental and industrial platforms. Investment management growth continues to be a key initiative for KW. Fees grew by 17% in Q1 to $25,000,000 Over the last fifteen years, we have extensively grown our group of strategic partners to include some of the world’s largest institutional investors spanning North America, Asia, The Middle East and Europe. Our longtime partners who are very well capitalized are actively looking to deploy capital with KW across both equity and debt investment opportunities at an increasing rate.

Given our strong Q2 pipeline, I’m confident of our ability to reach our fee revenue growth targets of 20% to 25% annually. As market volatility has increased this year, we’re also seeing corresponding increase in attractive investment opportunities. With our own capital base and the support of our major global strategic partners, we are well positioned to capitalize on any opportunities that may emerge. This approach has served us well over the last thirty five years where we have demonstrated our ability to navigate periods of uncertainty similar to what we see today. Shifting to our asset management sale our asset sale program.

The disposal of identified assets is an important focus in the near term. In Q1, we progressed a number of sale and recap initiatives keeping us on track to generating between 400,000,000 to $450,000,000 of cash from asset sales and recaps by year end, including 150,000,000 to $200,000,000 we currently expect to close by the end of Q2. These proceeds will be used to reduce our unsecured debt, including our KWE bonds due in November, which we have already paid down by $250,000,000 over the last two years. We will also look to reduce our line of credit balance, while also recycling capital into higher return opportunities in our investment management platform. We are entering the second quarter with an existing portfolio that is well positioned, a strong pipeline of activity centered around rental housing, simplifying our business through asset sales, delevering the balance sheet and increasing free cash flow.

Importantly, we believe we have a best in class team that is well equipped to drive growth across our core platforms in rental housing, credit and industrial. With that, I’ll turn the

Justin Enbodie, CFO, Kennedy Wilson: call over to Justin Anamboni. Thanks, Bill. I’ll begin with a review of our Q1 financial results and then discuss our balance sheet.

Matt Windisch, CFO, Kennedy Wilson: GAAP EPS for the first quarter totaled a loss of $0.30

Justin Enbodie, CFO, Kennedy Wilson: per share compared to income of $0.19 per share in Q1 of twenty twenty four, which included $0.47 per share related to the sale of the Shelburne Hotel. Baseline EBITDA for Q1 came in at $108,000,000 a 5% increase year over year. This brings our trailing twelve month baseline EBITDA to $412,000,000 Our consolidated our co investment portfolio is now 90% comprised of multifamily, industrial and credit investments that we own with partners. In Q1, this portfolio saw minor valuation increases, primarily as a result of positive cash flow growth from our multifamily assets. Turning to our balance sheet.

As Bill mentioned, we anticipate reducing our unsecured debt in the near term as we execute our asset sale plan. In particular, we have three thirty million dollars remaining on our final tranche of our KWE Eurobonds, which mature in November. Additionally, we have $200,000,000 of cash expected from Q2 asset sales and recap activity that is well underway. We also have $163,000,000 of consolidated unrestricted cash and $277,000,000 of undrawn availability on our $550,000,000 credit facility. Looking at our twenty twenty five secondured maturities.

In Q2, as previously announced, we successfully completed a $510,000,000 refinance of our Irish apartment portfolio with a rate today of 4.1. As a reminder, our Irish apartment portfolio is owned in a partnership that’s fifty-fifty with AXA. The strong demand received for this financing reflects the underlying strength and asset quality of our best in class portfolio of apartments in Dublin. This maturity represented approximately 40% of our twenty twenty five secondured mortgage maturities entering the year. We are actively working through the remaining twenty five secondured maturities, which represent only 3.5% of our total debt.

Our total debt is 96% fixed or hedged with a weighted average maturity of 4.8 and a weighted average effective interest rate of 4.7%. Interest rate hedges generated $5,000,000 of cash received during Q1, which as a reminder are not included as an offset to interest expense. And with that, I’d now like to turn it over to Matt Windisch for a portfolio update.

Matt Windisch, CFO, Kennedy Wilson: Thanks, Justin. Our stabilized portfolio generates estimated annual NOI of $473,000,000 and remains highly concentrated in rental housing and industrial, which together account for 72% of our stabilized NOI. We anticipate that these two sectors will grow as a percentage of our overall NOI as we look to expand within these two asset classes through both our real estate and credit platforms, while also disposing of non core assets. Our apartment investments continue to be the foundation of our portfolio. Since 2010, we have completed over 15,000,000,000 of apartment transactions.

In The U. S, strong apartment demand was apparent in Q1 as seen through growth in both occupancy and rents. Blended leasing spreads increased to 1.5%, including 3% growth on renewals. Importantly, on new leases, the change in rent flipped from being negative in Q4 to positive in Q1, with an improvement of over 300 basis points. Our apartment portfolio is well positioned as we head into the strong summer leasing months due to a number of factors.

The loss to lease totals 3.3%. We continue to see solid leasing traffic at our properties and the challenges of the availability and affordability of single family homes is creating strong tenant retention. In fact, in Q1, turnover was some of the lowest on record with an annualized rate of 28% compared to 35% in Q1 of twenty twenty four. Let me highlight a few regional stats. Our Pacific Northwest portfolio saw the strongest NOI growth of 6.6%, with our assets in and around Seattle benefiting from return to office mandates from the likes of Amazon and others.

We also saw declining real estate taxes in the quarter. The Mountain West has seen the strongest population supply pressures, I should say, in our portfolio over the last two years. The majority of the supply has now been delivered, while new starts have fallen to a decade low in many markets, which should be supportive of future rental growth. In California, our portfolio continues to recover with our Q1 results driven by reduced delinquencies and the highest same property occupancy growth across our portfolio. Complementing our market rate portfolio is our 13,000 unit vintage housing affordable portfolio.

As a reminder, this portfolio utilizes low income housing tax credits for the development of high quality rental housing for families and seniors below median income levels in their respective counties. In Q1, we achieved 5.5% NOI growth, primarily as a result of higher median incomes as well as lower levels of bad debt. We continue to actively look for opportunities to expand our affordable housing portfolio, given the growing need for accessible housing across all of our markets. In Ireland, same property NOI in our apartment portfolio was up 3.5%, driven by occupancy growth and strong operating expense management. Our stabilized portfolio is 99% occupied with our one remaining lease up asset, which is 75% leased as of today and on track to stabilize in Q2.

Our portfolio here is comprised of 3,500 high quality, highly amenitized Class A units that continue to benefit from the long term structural undersupply of housing. Moving over to our office portfolio. Our stabilized assets remain resilient with an occupancy of 90%. Same property NOI grew at almost 1% in Q1. ’70 ’5 percent of our portfolio is located in Europe, primarily in The UK and Ireland, where office dynamics are healthier than The U.

S, with stabilized occupancy totaling 92%. In Dublin, office leasing saw the strongest Q1 activity in the last three years. The Irish economy was once again the fastest growing economy in the Eurozone in Q1. Our high quality Irish stabilized office portfolio has a robust occupancy of 96%. At our Coopers Cross asset, momentum remains strong after signing Wells Fargo as our first tenant in January.

We anticipate continued demand for modern, well located sustainable space driven by return to office mandates and limited new supply. In The UK, viewings for our available office space continue to pick up with leasing completed in Q1 resulting in a 17% increase from previous rents. We continue to remain confident in the continued demand for our high quality space with our largest two London assets essentially with no vacant space. Turning to our Investment Management business. Q1 saw $25,000,000 in fee revenue, which is an increase of 17% from the prior year, reflecting strong performance in our credit platform and continued growth in our equity platforms.

Fee bearing capital currently stands at $8,700,000,000 and is positioned to grow meaningfully as we have capital that has already been raised or committed that we expect to deploy during the balance of 2025. For example, in our credit platform, we have $4,500,000,000 in future fundings. We expect that capital to be funded over the next couple of years. And as we put it to work, it will be reflected in our fee bearing capital base. During the second quarter, we expanded our credit solutions to include mezzanine debt and preferred equity investments through a partnership with a large Japanese developer, Tokyo Land, in which our ownership in the platform is 10%.

This strategic expansion enhances our ability to capture growing opportunities within the credit space, particularly within our key core sectors, and supports the continued growth of our investment management platform. We also have incremental investment capacity in our new U. K. Single family rental platform, which we launched in Q4. Alongside our partner CPPIB, this platform is currently targeting $1,300,000,000 in assets.

We have a strong pipeline in advanced stages totaling $375,000,000 which would bring the platform to over 40% committed in a few short months. We are already seeing strong demand from our initial delivered units and look forward to scaling this platform and providing much needed high quality housing in the quarters ahead. In closing, we continue to make progress on our initiatives, including executing our non core asset sale plan, reducing leverage and simplifying our company by focusing in on our core sectors of rental housing and industrial. We have also laid the groundwork to continue scaling our capital light investment management platform. With that operator, we can open it up to Q and A.

Conference Operator: We will now begin the question and answer session. Our first question today comes from Anthony Paolone with JP Morgan. Please go ahead.

Anthony Paolone, Analyst, JP Morgan: Thank you. First question relates to fee bearing capital. I think you mentioned that you still feel strongly about the 20%, twenty five %, I think it is annual growth. So just wondering about your conviction level of achieving that this year when you kind of look out and you talked a bit about the pipeline of capital to be deployed, but not sure what you’re also getting paid back on to kind of net to that growth?

Matt Windisch, CFO, Kennedy Wilson: Yes, Tony. I think in terms of the number that Bill put out there on fees, that’s really a growth in fees as opposed to specifically fee bearing capital. And so we grew at 17% quarter over quarter here from Q1 to Q1. And we do believe, based on the pipeline we have and the future fundings, that we will be able to achieve that growth in fees. As we mentioned before, the future funding commitments don’t show up in fee bearing capital, so there can be timing differences on payoffs and when money is funded.

But between the recurring investment management fees, origination fees, etcetera, we do feel comfortable with that number we put out there.

Anthony Paolone, Analyst, JP Morgan: Okay. Got it. And then just as liquidity comes back to CRE, just can you comment on just your partner capital costs or required returns and just the ability to continue to lend if it gets competitive, like do their capital costs come down as well? Do you feel like you can move with the market if things get more competitive?

Matt Windisch, CFO, Kennedy Wilson: Yes. I mean we have a healthy pipeline of deals we’ve already signed up. Some of those at lower spreads than we were able to achieve a year ago. So we definitely have certainly in Q1, we saw more competition from life insurance companies, banks and some other private lenders. Think that’s where the relationships come into play.

There’s a lot of repeat business we’re doing with existing sponsors and borrowers. We do have some flexibility. We have moved pricing down somewhat, and we still think we’ll be competitive in the space. But it is a fair point. There has been a bit more competition.

Historically, some of these lenders are more active in the first half of the year and then they run out of allocations. And so if you look at last year, for example, we had a lot more in terms of closings in Q3 and Q4 when some of these lenders were stepping away from the market. So we feel confident given the relationships and the platform that we can continue to grow this business.

Anthony Paolone, Analyst, JP Morgan: Okay. And then just last one if I can. Where does the stock buyback fit in right now, if at all, just especially given that it sounds like going to have a pickup in dispositions here in the next couple of quarters?

Bill McMorrow, CEO and Chairman, Kennedy Wilson: Well, I think, Tony, it’s a good point. I mean, we still have capacity left in that program. The but the focus of our cash usage right now is to focus on paying back our unsecured debt and particularly the twenty twenty five bond. And when you think about it in totality, we will have continued to grow the company and we will have paid back close to $800,000,000 worth of unsecured debt by the time we get that done, the line of credit. And so I think that is where we’re planning on using most of our cash.

We’ll just have to see if the stock continues to behave like it has and we’ve gotten through the 2025 payoffs, then that’s clearly something that we would reconsider, because we obviously think that the stock is highly undervalued at the current prices.

Matt Windisch, CFO, Kennedy Wilson: I would just add to that Bill that I agree that the discount seems significantly overdone given that two thirds of our portfolio fits in multifamily and the private market valuations remain at in the low fives. Certainly, in the private market, we’ve seen no movement over the past couple of months even with all the public market volatility. And then if you think about the NAV gap that we see out there, I think as we continue to simplify the business, reduce leverage, grow the fee business and grow the recurring cash flow, we hope to see that gap shrink. And as Bill said, depending on the size of the disposition program, if we can get above our targets, think there’ll be some excess liquidity to potentially utilize the stock buyback.

Anthony Paolone, Analyst, JP Morgan: Okay. Thank you.

Conference Operator: The next question is from Jonah Galen with Bank of America. Please go ahead.

Jonah Galen, Analyst, Bank of America: Hi. Thank you. Just going back to the dispositions for the 150,000,000 to $200,000,000 expected to close this quarter, can you let us know how much already is closed or a little bit more around timing? Any color around kind of potential cap rates? And then is you mentioned you may be looking to do even more than $400,000,000 this year.

Just curious if that’s already being marketed or putting put out in the sales process?

Bill McMorrow, CEO and Chairman, Kennedy Wilson: Good question. The I will start by answering it slightly differently. The as I said in my remarks, the capital deployment piece of that, that’s the loan originations and the particularly the multifamily assets that we’re purchasing right now. Those are all contractually obligated right now. So you’re going to see all of that close here in the second quarter, which was somewhere around $2,500,000,000 which I think to the point that Matt made, some of that although it’s unfunded, there’s some portions of this that will immediately become fee bearing capital.

On disposition side, I would answer that by just telling you we’re well down the road on the Q2 dispositions, but almost all of those are going to close in the June.

Jonah Galen, Analyst, Bank of America: Thank you. And anything around kind of the cap rates on that?

Bill McMorrow, CEO and Chairman, Kennedy Wilson: I’d rather not really comment on that. Because until they’re a reality and they’re done, it’s really not appropriate to comment on that. But I would say that in general, I think that particularly in the apartment sector, there is plentiful global capital that is chasing multifamily. And like us, most people see the supply declining particularly here in The United States and in other markets. We all see the issue of housing affordability on the purchasing side, particularly with the Fed making the decision that they’re going to continue to maintain this level of interest rates, which is actually very surprising to many of us.

And so you’ve got car loans, interest rates at a historic high, you’ve got housing interest rates at pretty much historical high, you’ve got credit card rates at a historical high. And so it’s forcing people to make a decision to rent rather than buy. So we think there’s really, really good tailwinds around our multifamily business.

Matt Windisch, CFO, Kennedy Wilson: And I would just add one thing to that. Part of the disposition plan relates to European assets and the interest rate environment, The UK just cut rates. They’ve cut rates in the Eurozone a couple of times now. So we are dealing with a slightly different interest rate environment for some of the assets that we have on our plan. And our hope, which we think will prove out is that you’ll see favorable cap rates on those when we exit just given the different interest rate dynamics in some of those markets.

Bill McMorrow, CEO and Chairman, Kennedy Wilson: Yes. That’s really an important point Matt just made. And I think when you think about the AXA transaction, to keep repeating this, the significance of it, there were 35 banks and lending institutions that bid on that financing in Europe. And to his point, we closed that financing with two banks, but the interest rate is 4.1, which is at least 100 basis to 150 basis points below what you would be doing similar financing here in The U. S.

And so the given the uncertainty, it’s very interesting. I think that The United Kingdom and Ireland, which is performing so exceptionally well, the country of Ireland, they are being viewed really in Europe as a safe place to park capital.

Jonah Galen, Analyst, Bank of America: Great. Thank you for the time, Bill and Matt.

Conference Operator: The next question is from Omotayo Okusanya with Deutsche Bank. Please go ahead.

Omotayo Okusanya, Analyst, Deutsche Bank: Yes. Good afternoon. First question around loan origination. Could you just give us a sense of like that what rates you’re originating loans at right now and whether that has changed at all over the past few quarters?

Matt Windisch, CFO, Kennedy Wilson: Yes. The rates so we’ve seen the past few quarters have been pretty steady. But if you kind of look at where rates were maybe a year ago, and in particular kind of coming into the beginning of this year, we’ve seen definitely some downward pressure on spreads, to the tune of 30 to 40 basis points on average. What we have seen though is the quality of the projects that are being built, the quality of the sponsorship, all of those things remain at the very, very high level. But just given a bit more competition, there is some pricing pressure.

We do think the spreads we’re achieving in this business are still very strong relative to alternatives in the credit space. And obviously, we’re very wholly focused on residential side of things, so student housing and rental apartments. So we feel very, very strong about the business, but there has been some pricing pressure, but we still find it very attractive.

Omotayo Okusanya, Analyst, Deutsche Bank: Got you. That’s helpful. And then this quarter, just the loan prepayments as well just seemed like a little bit higher than I think we’re typically used to. So just kind of curious why you’re kind of sort of increasing prepayment fees, which was a little bit dramatic going on there?

Matt Windisch, CFO, Kennedy Wilson: Yes. There was I’d say that from the construction lending business, the prepayments were as expected. We did have one pretty large payment on an actually an office loan that we had originated several years ago that we got paid off on, which was about $200,000,000 So that was, I’d say, somewhat out of the ordinary in terms of the what we see going forward. So that landed in Q1, pushed the payoffs up a bit. But in terms of the construction lending side, it was as it is kind of what we anticipated in terms of payoffs.

Omotayo Okusanya, Analyst, Deutsche Bank: That’s helpful. The affordable housing piece of your business on the vintage side, is there any exposure to things like Section eight housing, Section eight vouchers or things that may ultimately get impacted by some of these changes being made by the Trump administration?

Matt Windisch, CFO, Kennedy Wilson: Yes, good question. So there’s really two parts to, I’d say, the reliance on government benefits in this business. The first relates to the financing of the projects themselves. So this really has to do with private activity bonds and tax credits. There was some initial concern that this could be in play, but our understanding now is there’s very little to no concern around the availability of private activity bonds in this space.

So we feel very comfortable with tax credits and the bonds being available in the markets we operate in. The second part relates to rental assistance payments through HUD. So there is a portion of the portfolio, it’s a relatively small portion of the portfolio where our tenants are using Section eight housing. And from our understanding, there could be we haven’t seen anything, any impact to date, none. There’s a potential for some slowness in payments given cuts to the employment at some of these agencies.

We don’t have any short term or medium term concerns about the capital coming into our tenants and their ability to pay rent. So we’re not overly concerned about this, but it is something we’re monitoring very closely.

Omotayo Okusanya, Analyst, Deutsche Bank: Could you size the exposure by any chance?

Matt Windisch, CFO, Kennedy Wilson: It’s about 15% of the tenants have some sort of HUD backing.

Omotayo Okusanya, Analyst, Deutsche Bank: Okay, on that side of the business. Okay. Yes. Thank you very much.

Matt Windisch, CFO, Kennedy Wilson: Just in the affordable space we’re talking about, yes.

Bill McMorrow, CEO and Chairman, Kennedy Wilson: That’s out of 13,000 units, right? Correct. Yes.

Matt Windisch, CFO, Kennedy Wilson: That’s right.

Omotayo Okusanya, Analyst, Deutsche Bank: Thank you.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Bill McMorrow for any closing remarks.

Bill McMorrow, CEO and Chairman, Kennedy Wilson: Thank you everybody for joining the call. And as always, we’re always available to talk to anybody offline. So thank you very much.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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