Earnings call transcript: Kennedy-Wilson Q4 2024 shows strong earnings beat

Kennedy-Wilson Holdings Inc (NYSE:KW) reported robust financial results for Q4 2024, significantly surpassing earnings expectations. The company posted a GAAP earnings per share (EPS) of $0.24, outperforming the forecast of -$0.51. Revenue reached $135.5 million, exceeding the anticipated $100.74 million. Following the announcement, Kennedy-Wilson’s stock surged by 6.43%, closing at $9.76, reflecting investor confidence in the company’s performance and future prospects. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, with analysts setting price targets ranging from $9 to $13.

Key Takeaways

• Kennedy-Wilson’s Q4 2024 EPS of $0.24 beat expectations by $0.75.
• Revenue of $135.5 million surpassed forecasts by 34.5%.
• Stock price increased by 6.43% post-earnings announcement.
• Investment management revenue grew 83% year-over-year.
• The company reduced unsecured debt by $262 million in Q4.

Company Performance

Kennedy-Wilson demonstrated significant improvement in its financial performance during Q4 2024. The company’s EPS rose from a loss of $1.78 in the same quarter last year to a positive $0.24. This turnaround highlights effective management strategies and strong market positioning, particularly in the investment management and real estate sectors. The company also reported an adjusted EBITDA of $191 million, underscoring its operational efficiency. InvestingPro data reveals management has been actively buying back shares, and the company maintains a solid current ratio of 1.21, indicating strong liquidity management. Subscribers to InvestingPro can access 10+ additional exclusive insights about Kennedy-Wilson’s financial health and growth prospects.

Financial Highlights

• Revenue: $135.5 million, up from $100.74 million forecasted.
• Earnings per share: $0.24, a significant improvement from -$1.78 in Q4 2023.
• Adjusted EBITDA: $191 million in Q4 2024.
• Investment management revenue: $30 million, an 83% increase year-over-year.
• Total (EPA:TTEF) assets under management: $28 billion.

Earnings vs. Forecast

Kennedy-Wilson’s Q4 2024 results exceeded expectations, with a surprise EPS of $0.75 above the forecast. This performance marks a notable recovery from previous quarters, where the company faced challenges. The revenue beat of $34.76 million underscores the effectiveness of Kennedy-Wilson’s strategic initiatives and market adaptability.

Market Reaction

Following the earnings release, Kennedy-Wilson’s stock price rose by 6.43% to $9.76, reflecting positive investor sentiment. This increase positions the stock closer to its 52-week high of $11.88, indicating strong market confidence. The broader market has shown similar trends, with real estate and investment management sectors experiencing renewed interest.

Outlook & Guidance

Looking ahead, Kennedy-Wilson aims to grow its investment management fees by 20-25% annually. The company plans to target $400 million in asset sales and recycling in 2025 and anticipates deploying more equity in strategic markets, including the US, UK, and Ireland. Additionally, Kennedy-Wilson is targeting over $3.5 billion in loan originations, highlighting its growth ambitions. InvestingPro forecasts support this optimistic outlook, with analysts anticipating sales growth in the current year. The company has also maintained dividend payments for 14 consecutive years, currently offering a 5.23% yield. For detailed analysis of Kennedy-Wilson’s growth potential and comprehensive financial metrics, investors can access the exclusive Pro Research Report, available to InvestingPro subscribers.

Executive Commentary

CEO Bill McMorrow stated, "We saw great momentum in our earnings this quarter with improvements across all key components of adjusted EBITDA." He also highlighted the company’s successful launch of a new platform, noting, "We are off to a strong start in this new platform with total committed capital of $361 million."

Risks and Challenges

• Potential interest rate hikes could impact borrowing costs and investment returns.
• Market volatility in the US and UK real estate sectors may affect asset valuations.
• Economic uncertainties, including inflation and geopolitical tensions, could pose challenges.
• Competition in the real estate and investment management sectors remains intense.

Q&A

During the earnings call, analysts focused on Kennedy-Wilson’s expansion plans in the UK single-family rental market and the potential for continued positive fair value marks. Executives addressed questions about the company’s strategic focus, emphasizing strong institutional interest in US real estate and the positive outlook for construction lending.

Full transcript - Kennedy-Wilson Holdings Inc (KW) Q4 2024:

Conference Operator: Good day, and welcome to the Kennedy Wilson Fourth Quarter and twenty twenty four Earnings Conference Call and Webcast. All participants will be in a listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Devin Bovsar, Head of Investor Relations.

Please go ahead.

Devin Bovsar, Head of Investor Relations, Kennedy Wilson: Thank you. Thank you and good morning. 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 Embody, 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 of the most directly comparable GAAP financial measure and our fourth quarter twenty twenty four 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, Chairman and CEO, Kennedy Wilson: Thank you, Devin, and thank you everybody for joining the call today. Yesterday, we reported our results for the fourth quarter, which represented a strong ending to solid year of executing on our strategic initiatives, including increasing our baseline EBITDA, growing our investment management business, disposing of non core assets, reducing unsecured debt and finding meaningful ways to deploy new capital with our many institutional partners. We saw great momentum in our earnings this quarter with improvements across all key components of adjusted EBITDA, which nearly tripled from $190,000,000 in 2023 to $540,000,000 in 2024. On today’s call, I’ll start by reviewing the progress made on our key initiatives in ’24, followed by a discussion of our priorities for 2025 before turning it over to Justin Henbody to discuss our financial results. The overall market environment is showing steady improvement.

Debt markets are strengthening with lower base rates and tighter spreads, while transaction volume is clearly rebounding. Against this backdrop, our investment activity accelerated in 2024 with over $4,000,000,000 of capital deployed, including $3,500,000,000 in our debt originations and $800,000,000 in rental housing and industrial acquisitions, an increase of over 50 from 2023 levels. Strengthening liquidity and improving market sentiment supports the continued expansion of our investment management business. Investment management fees grew by 60% year over year to approximately $100,000,000 in 2024, reaching a major milestone for the company. Fees have grown from $25,000,000 in 2019 to the previously mentioned $100,000,000 in 2024.

Significant driver of this growth has been our credit platform, which has seen huge momentum in the last year. We completed a record $1,400,000,000 of new loan originations in Q4 and $3,500,000,000 for the year, all focused on construction of high quality market rate multifamily and student housing. This momentum has carried over into 2025 with $1,500,000,000 in new originations in closing or already completed year to date. Additionally, we have seen meaningful growth in the interest to deploy capital into real estate equity from our institutional partners. A prime example of this is the launch of the new UK single family rental strategy with the Canadian pension plan CPP, one of the world’s largest global investors with approximately $500,000,000,000 in assets under management.

We are off to a strong start in this new platform with total committed capital of $361,000,000 or approximately 30% of the strategy’s current target of $1,300,000,000 Further highlighting our growth in investment management, we successfully closed fundraising on our seventh discretionary commingled fund securing $400,000,000 discretionary capital for U. S. Investments. We remain focused on attracting capital from leading institutional investors across North America, Asia, Europe and The Middle East, who we expect to be increasingly active in the equity markets. In total, we believe we continue to grow our investment management fees by approximately 20% to 25% per annum.

The second important initiative has been recycling capital through our non core asset sales. In Q4, we generated $122,000,000 in cash proceeds from non core sales, bringing our 2024 total to $475,000,000 of cash and $200,000,000 of gains generated from asset sales. With our Q4 activity, we have successfully achieved our $550,000,000 asset sale target set last year. Looking ahead, capital recycling remains a core focus with an expected generation of over $400,000,000 of cash in 2025 through asset sales, recapitalizations or using assets we currently own to seed new investment platforms. We intend to deploy this capital into higher return opportunities, particularly within our investment management platform, while we continue to reduce the company’s unsecured debt, which is our third key initiative for the year.

In December, we repaid $185,000,000 of our KWE bonds, leaving $310,000,000 maturing in November, the only remaining unsecured maturity until 2028. We also made significant progress on our revolving credit facility, repaying $78,000,000 in Q4. Turning to our portfolio, our real estate equity and credit investments totaled $28,000,000 in assets under management, producing an estimated annual NOI of $467,000,000 for the company. Our fee bearing capital stands at a record $8,800,000,000 Over the last several years, we have meaningfully repositioned our portfolio with approximately two thirds of our stabilized assets now concentrated in rental housing, comprising the 60,000 units we either own or are currently financing. The outlook for our apartment portfolio, which ended the quarter with 95% occupancy continues to improve.

Improve. Same property NOI grew by a solid 5.6% in Q4. Supply headwinds in most of our markets are easing, which will allow us to continue to grow our NOI. This dynamic should provide a very favorable backdrop for rental housing fundamentals going forward. As market conditions continue to recover, we remain well positioned to capitalize on new opportunities with a continued focus on rental housing and industrial assets.

With over three decades of experience navigating various interest rate environments, we have the flexibility now to deploy capital across the entire real estate capital structure. We anticipate a very active year and remain committed to executing on our previously mentioned key initiatives in 2025, while continuing to strengthen our balance sheet and growing our recurring cash flow. I’d now like to turn the call over to our CFO, Justin Anemati.

Justin Embody, CFO, Kennedy Wilson: Thanks, Bill. I’ll start by reviewing our financial results and then discuss our balance sheet. GAAP EPS totaled $0.24 a share for Q4 compared to a loss of $1.78 in Q4 ’twenty three. Investment management revenue grew by 83% to $30,000,000 in Q4, driven by completing another $1,400,000,000 in new debt originations. Adjusted EBITDA totaled $191,000,000 in Q4 with improvements across the board in all key components.

Includes baseline EBITDA, which totaled $98,000,000 in Q4 and has increased by 4% year to date to $4.00 $7,000,000 We also saw a meaningful improvement in the results from our co investment real estate portfolio. This portfolio totals roughly $14,000,000,000 in assets in which we have an ownership of approximately 35%. Valuations in that portfolio saw a slight increase in Q4. Additionally, estimated annual NOI from our co investment portfolio totaled $217,000,000 of which 90 percent is comprised of either multifamily, industrial or loan investments. Turning to our balance sheet and debt profile, an important priority for us has been to reduce our unsecured debt, as Bill mentioned.

During Q4, we repaid a total of $262,000,000 of unsecured debt, including repaying $184,000,000 of KWE bonds or €175,000,000 as Bill mentioned and $78,000,000 on our revolving credit facility. With that, we ended the quarter with $218,000,000 of consolidated cash and $452,000,000 of undrawn availability on our $550,000,000 line of credit. We also continue to monitor our exposure to potential interest rate volatility. Our share of total debt is 97% fixed or hedged with a weighted average maturity of four point nine years and a weighted average effective interest rate of 4.6%. The effective rate includes the benefit from our interest rate hedging strategy, which produced cash benefits of $8,000,000 in Q4 and $41,000,000 in 2024.

It’s worth noting this is not shown as an offset to interest expense on our P and L. Our interest rate hedges on average have a strike rate that is approximately 100 basis points below today’s rates as well. Looking at our debt maturities in ’twenty five, as we mentioned earlier, we have million remaining on our KWE bonds, which represents the final legacy tranche of what was originally €1,300,000,000 of unsecured debt at KWE across two separate bond issuances. On the secured side, we have €535,000,000 of debt at share that matures in ’twenty five with approximately 70% relating to our high quality assets in Ireland. In particular, our Irish apartment portfolio has approximately $210,000,000 of debt that we’re in the process of refinancing and with rates expected in the mid-4s.

The balance of our remaining 25 maturities largely relate to our U. S. Apartment and commercial properties. With that, I’d now like to turn the call over to Matt Windisch to discuss our investment portfolio.

Matt Windisch, President, Kennedy Wilson: Thanks, Justin. I’d like to take a moment to review the key components of our real estate portfolio before diving into our investment management business. Today, our stabilized portfolio generates estimated annual NOI of $467,000,000 with an additional $65,000,000 expected from our lease up and development portfolio upon stabilization. The shift in our portfolio away from office and retail has continued to progress with our current stabilized portfolio 72% concentrated in our high conviction sectors of rental housing, both equity and credit, as well as industrial. This is up from forty nine percent five years ago.

Our apartment portfolio is the cornerstone of this strategy, contributing $300,000,000 of NOI to KW with another $16,000,000 expected from assets that are currently in development and lease up. In The U. S, renter fundamentals continue to strengthen. Demand for our apartment portfolio remains strong, driven in part by the high cost of homeownership, which continues to push many towards rental options. At the same time, we’re seeing a reduction in supply pressures in many of our markets, a trend we expect to ease further in the second half of the year and into 2026.

During the fourth quarter, we maintained a sharp focus on occupancy, which increased by 1.1% to 95% on a same property basis. Leasing spreads totaled 50 basis points with renewal spreads remaining strong at approximately 4%. As a result, same property revenue grew by 2.7% with NOI up 6.2%. These results underscore the strong operational execution by our asset management team. Turning to our regional highlights.

Our strongest performance in Q4 came from the Mountain West, which remains our largest apartment region. Occupancy grew by 1%, while revenue grew by a solid 3% on a same property basis. In addition to the top line growth, we benefited from a decline in operating expenses, driven by favorable adjustments in real estate taxes in Idaho and lower delinquencies. These factors combined to deliver impressive same property NOI growth of 7.3%. In the Pacific Northwest, occupancy grew by 1.5% with revenues up 3.9, while operating expenses remained flat, leading to 6.6% NOI growth.

We remain optimistic about our Pacific Northwest portfolio in 2025 as return to office mandates have started this year for many large employers in the region. Our California apartment portfolio has recovered from the delinquency challenges we saw a year ago. We saw solid occupancy growth and lower delinquency related legal expenses, which resulted in NOI growth of 2% in Southern California and 4% in Northern California. Our Vintage Housing Affordable portfolio delivered strong performance this quarter, generating an impressive 10.5 growth in NOI. This growth was driven primarily by revenue increases that closely aligned to changes in area median income and with improved levels of bad debt, reflecting the strength and resilience of our affordable housing strategy.

As our vintage portfolio approaches 13,000 stabilized affordable units, we remain focused on identifying opportunities to scale our affordable housing footprint, ensuring we continue to meet the growing demand for high quality accessible housing. Turning to our Irish apartment portfolio, demand remains robust with our assets ending the quarter at a strong 97% occupancy. We have one remaining apartment asset currently in lease up, which is on track to reach stabilization by this summer. The significant and ongoing structural undersupply of housing in the Dublin market, combined with continued employment growth, reinforces the sustained demand we expect for our high quality rental communities. Now turning to our office portfolio, of which approximately 80% of the estimated annual NOI is derived from our investments in Europe.

We saw 2% same property NOI growth in 2024. Stabilized occupancy remains healthy at 93% with a weighted average lease term of seven years to expiration and four point four years to break. In The UK, our stabilized office portfolio remains well leased at 88% with a waltz of five point four years to expiration and four point one years to break. In Q4, we completed leasing transactions across 123,000 square feet with both existing and new tenants representing a 49% increase above previous in place rents. In Dublin, where our stabilized occupancy exceeds 96%, our high quality sustainable properties continue to benefit from a flight to quality.

Dublin saw a strong recovery in leasing demand with gross leasing activity in the last two quarters of twenty twenty four, surpassing the total leasing activity for all of 2023. This positive momentum is an encouraging sign for our Cooper’s Cross asset, which recently welcomed Wells Fargo (NYSE:WFC) as its first tenant and where we see a healthy pipeline of continued leasing interest. Switching gears over to our investment management business, reaching nearly $100,000,000 in fees and a record $8,800,000,000 in fee bearing capital were major milestones for KW in 2024. We believe we have laid the foundation to continue deploying capital on behalf of our institutional partners across both equity and debt opportunities with a goal of continuing to grow our fees at over 20% per year. The expansion of our credit team in 2023 and the rise of private credit investment has allowed us to scale our fee bearing capital.

In Q4, we completed $1,400,000,000 of originations as our platform continues to gain momentum. We also completed over $300,000,000 in new fundings and received approximately $500,000,000 of repayments in the quarter. Our credit business has $4,100,000,000 of future fundings, which we anticipate to start picking up within the next twelve months as an offset to future repayments. As the private credit markets continue to remain very active, we are evaluating a number of ways to capitalize on this dynamic and grow our credit platform. In The UK, we see a compelling opportunity through our single family rental platform to acquire housing in bulk from UK Homebuilders and create vibrant new rental communities.

With the ongoing demand and supply imbalance in The UK residential market, particularly in the single family rental sector, we believe there is a significant opportunity to build an institutional quality portfolio of scale in a market that has historically been highly fragmented. We’re excited about the growth potential of this platform and the value it can deliver over the long term. We also anticipate further growth from our European industrial platform, which totals 9,000,000 square feet and is 98% occupied. We completed 390,000 square feet of leasing, which delivered a 23% increase in rents in Q4, and we are evaluating a number of ways to continue to grow this platform. Thus, it is the expansion of these as well as our other initiatives underway that will support further growth in our investment management business.

In closing, I believe the improvements we made as a company during these last few years have positioned KW for solid growth in 2025 and beyond. We remain confident in our strategy, our portfolio and our team’s ability to deliver long term value for all of our stakeholders. So with that, operator, we can open it up to any questions.

Conference Operator: Thank you. We will now begin the question and answer session. And your first question today will come from Anthony Paolone with JPMorgan. Please go ahead.

Anthony Paolone, Analyst, JPMorgan: Yes, thanks and hi, everybody. My first question is maybe just clarify. I think maybe Billy mentioned $400,000,000 of incremental proceeds from some dispositions in 2025. I guess, did I hear that right? Yes.

Okay. Any areas where there’s a particular shift or group of assets that are to be sold or is this just pretty broad continued recycling?

Matt Windisch, President, Kennedy Wilson: Tony, this is Matt. So I think it will be a similar strategy to what we deployed in ’twenty four. So in particular, we really want to focus in on our core competencies, which are really housing related investments as well as our investment management business. So assets that don’t fit in those parameters, so whether it’s wholly owned office, retail assets, we’ve talked about exiting markets like Italy and Spain, Spain of which we now

Devin Bovsar, Head of Investor Relations, Kennedy Wilson: have exited. Those will continue to be

Matt Windisch, President, Kennedy Wilson: the focus for us on our non core disposition strategy. Then in terms of how we use those proceeds, we’re going to continue to pay down unsecured debt and we’re going to fund some of these co investment platforms where we get really great return on equity for our investments.

Anthony Paolone, Analyst, JPMorgan: Okay, great. And then with regards to the debt platform, you have a lot of commitments. And just wondering if a lot of committed capital to that, I guess. If that construction lending environment gets more competitive, particularly in the residential space, like what’s the latitude you all have to call in those commitments and just go elsewhere either for existing mortgages, other property types, etcetera?

Matt Windisch, President, Kennedy Wilson: Yes, Tony. So I think some of those commitments we’re talking about, we’ve already made the loans and we just have future funding obligations under those. So those obviously aren’t going anywhere. Those are loans we’ve already signed up. Look, we think the construction lending space within the areas we operate right now continue to be extremely compelling.

We’re a market leader in the space, both for apartment construction as well as student housing construction. The pipeline remains robust. So we think we’re going to have a very successful year in that space. That being said, there are other opportunities that we’re evaluating for different product types and other types of financing that our existing team can execute on. And so we do expect over time here to different ways.

Anthony Paolone, Analyst, JPMorgan: Okay. And if we think about fee bearing AUM and the growth of that as we look ahead, how important do you think it is to also add just more equity capital into the mix that maybe has a bit longer duration to it?

Bill McMorrow, Chairman and CEO, Kennedy Wilson: Yes. That’s a really good question, Tony. I think what might not be completely evident is the amount of institutional partners we’ve been cultivating over the last couple of years that primarily want to invest in The United Kingdom (TADAWUL:4280) and The United States, and they want to invest in the asset classes that we have the most expertise in, which is the rental housing and the credit business and the industrial business. But we have very, very significant institutional capital partners that aren’t really yet reflected. As you well know, the biggest piece of our capital we use to deploy really comes from separate accounts, not necessarily discretionary funds.

And as you saw in The United Kingdom, Mike put together the partnership with CPP, but there’s a big number of those going on that aren’t yet finished. And so when you think about this year, as I said in my part of the formal part of this, we expect to deploy more capital this year than we did last year. And when you look at last year, roughly 80% to 85% of the capital that we deployed was in the credit space. But I expect that this year, although the credit space will continue to be a big portion of it, we’re going to see more equity opportunities. And the reason we didn’t invest in the equity opportunities the last couple of years is we just didn’t see anything that we thought was really compelling.

But we’re starting to see, I’d say, more realistic pricing that we the kind of pricing that we like to see to generate the kind of returns that we want to see. So you’re going to see more equity deployed into that business. And the other part of it is that we are very focused on growing our construction management capabilities where we’re a smaller part of the capital structure. In the past, if you remember, in Ireland, for example, we’re fiftyfifty partners with AXA. But we’ve got great expertise in the construction management business, both here in The United States and in Europe.

And we expect over time that we’re going to find more opportunities to build new multifamily assets, but where we’re a smaller part of the capital structure and earning construction management fees. So, I think the point that Matt made was really important that when you talk about selling these non core assets, it’s really with the intent to increase our exposure to the asset classes that we really like, the rental housing business, both equity and credit in the industrial business. And I think over time, you’re going to see that grow up to 85% to 90% of our investment activity every year.

Anthony Paolone, Analyst, JPMorgan: Okay, great. That’s real helpful. Just one last one, if I can. I’m curious, you mentioned refinancing some of the debt in Ireland in the mid-4s. What’s the in place that it will be replacing?

I’m just trying to get a sense as to where those debt markets are now versus kind of what was in place before?

Bill McMorrow, Chairman and CEO, Kennedy Wilson: I’m going to let Matt answer part of the question. But I think the interesting thing and I think it kind of validates what we’re talking about, we’re closing the financing, which is almost $500,000,000 in April. We had 35 banks and lenders that proposed to us on that. And we’ve selected two financial institutions to do the $500,000,000 that as we mentioned is going to be around in the mid-4s at the end of the day for five year fixed rate debt. But I’ll let Matt now talk about the differential in interest rates.

Matt Windisch, President, Kennedy Wilson: Yes. So the in place rate was just under 3% and we’re going to be like we said in the mid-4s, but we will have the ability to float down on that. So if rates do come down, we will have an ability to participate, but we will be locked in. So the rates will not go much higher than the mid-4s.

Bill McMorrow, Chairman and CEO, Kennedy Wilson: Yes. I think too, Matt, and you got to correct me here, but last year, Tony, when you look at it, we either financed or refinanced on our existing assets almost $1,300,000,000 of property level debt. And the differential in interest rates, the actual whole dollar differential was very, very minimal.

Anthony Paolone, Analyst, JPMorgan: Right. Okay. Thank you for the color.

Conference Operator: And your next question today will come from Tayo Okusanya with Deutsche Bank (ETR:DBKGn). Please go ahead.

Tayo Okusanya, Analyst, Deutsche Bank: Yes, good afternoon everyone. The SFR platform, could you talk a little bit about what you expected kind of yields and margins are on that business and also around the operating platform you will have in place to run it?

Matt Windisch, President, Kennedy Wilson: Mike, do you want to take that one?

Mike Pegler, President of Europe, Kennedy Wilson: Yes, I’ll take that one. Look, we’re really excited about growing this platform. We’ve got a really good pipeline of hazards that we’ve got that we’re trying to acquire at discounts from the house builders and create these new rental communities. We think the yields that we can set up to are probably a little bit higher than we’ve seen in UK residential in recent years. We’re probably talking about we’re stabilizing in the high fives towards 6% over the course of our whole period.

In terms of the operations, we’ve got a great team in place with a lot of experience that we can capture from around the world where we’ve been doing this in Ireland and The U. S. So we think this is absolutely part of Kenny Wilson’s core skill set of how to manage and optimize these homes and create great communities and place for people to live. So we’re really excited about the prospect of growing this platform with a fantastic partner such as CPPIB.

Tayo Okusanya, Analyst, Deutsche Bank: Got it. So is it a third party property management platform or it’s actually in house?

Mike Pegler, President of Europe, Kennedy Wilson: We’ve got our in house asset management team, but we support that with an outsourced property management solution where appropriate. And that’s the scale, we’ll reevaluate how that how best to operate that, but initially we’d be looking at third party proxy management just to supplement our own internal resources.

Tayo Okusanya, Analyst, Deutsche Bank: Got you. And then on the debt platform, again, really strong origination this quarter, really strong pipeline places over the $1,000,000,000 How should we be thinking about what a run rate could look like for that business in terms of originations? And also future funding, just given you probably at some point we need more capital to keep growing at the current pace you’re growing at?

Matt Windisch, President, Kennedy Wilson: Yes. So last year, we did $3,500,000,000 of originations and I think we certainly would like to exceed that this year, assuming the opportunity set presents itself, which as of now feels like it is. And then in terms of funding sources, we obviously have some great partners in this business, but there’s a lot of demand from other investors we’ve been talking to who want to continue to grow with us. So we feel very, very strong strongly that we’ve got the capital we need to continue to grow this platform over the long run and assuming the opportunity set remains attractive.

Tayo Okusanya, Analyst, Deutsche Bank: That’s helpful. And then two questions on some of the international portfolio. Again Dublin, the current rent caps on multifamily, they have about 2%. Curious how you think that ultimately evolves with the new Irish government? And then also on The UK side with the autumn budget from late last year, any implications for kind of office demand in 2025 since some of the budget calls for higher kind of costs of employees according to some of the new law?

Matt Windisch, President, Kennedy Wilson: Mike, do you want to take that?

Mike Pegler, President of Europe, Kennedy Wilson: Okay. Yes, I’ll pick up both of those. So, firstly, on rent caps, in Ireland, the existing regime is due to expire at the end of twenty twenty five. Now, we know the government are looking at that. It’s a little bit too early to say exactly what form any changes we’ll make, but there remains a demand supply imbalance in the Irish market.

And so we know the government is looking at the overall rent regime and will comment more when we know more. But it obviously is an interesting development for our portfolio. In terms of UK office demand, we haven’t seen any weakness coming off of that. I mean, the national insurance changes come in place a little bit later this year. We’ve seen the take up for good quality offices in London be improving.

We’ve seen that general trend of people coming back to the offices, particularly good quality offices. And indeed, we’ve been seeing rents rising across most major submarkets for best in class offices. So we have strong belief that for best in class offices, there remains a really strong occupational market. And we think our offices are really well positioned to take advantage of that and to capture rental growth over the medium and long term.

Tayo Okusanya, Analyst, Deutsche Bank: That’s helpful. One more if you could indulge me. The core investment portfolio again positive fair value marks this quarter, that’s the first time this has happened in a long time. If we think about a world where long term rates are stabilizing, let’s not even call for them to decline, but if you’re just kind of stabilizing over the next year or so, should we kind of expect that continued trend of positive fair value marks on the core investment portfolio and positive implications for carried interest?

Matt Windisch, President, Kennedy Wilson: Yes, I mean, it’s always hard to predict the future. But I think if rates stay kind of where they are and stabilize, given the operational improvements we’re seeing at our assets, I mean, I certainly our hope is certainly that values will continue to go up and that will be reflected in the fair value and promotes assuming that happens. And I think it feels that will be the case, but again, it’s you can’t predict the future on these things.

Justin Embody, CFO, Kennedy Wilson: And Tayo, I would just add that I think that the landscape around the carried interest or promotes will continue to grow as we grow our investment management business and deploy new capital. And so I think you’re going to get both headwinds hopefully from what exists, but more importantly as we meaningfully grow that business and we have more promote and carried interest structures.

Tayo Okusanya, Analyst, Deutsche Bank: Sounds good. Really solid execution this quarter. Well done, guys.

Matt Windisch, President, Kennedy Wilson: Thank you.

Devin Bovsar, Head of Investor Relations, Kennedy Wilson: Thank you.

Conference Operator: And your next question today will come from Jeff Spector with Bank of America. Please go ahead.

Jeff Spector, Analyst, Bank of America: Great. Thank you. First question, given you have such a great pulse on global institutional interest in U. S. Real estate and in other parts of the world, but specifically U.

S. Real estate. I just want to confirm from your recent conversations, are you seeing, hearing from any of your relationships, any change in tone, whether it’s concerns over tariffs or other various initiatives proposed by the new administration? Are you seeing any change in interest in U. S.

Real estate and maybe even other parts of the world? Thank you.

Devin Bovsar, Head of Investor Relations, Kennedy Wilson: It’s a

Bill McMorrow, Chairman and CEO, Kennedy Wilson: good interesting question. Look, I just came back from a week in Asia. I can tell you that people are very, very interested in investing in The United States. And I’m not passing any judgment, I’m just telling you that people have a very strong belief that the business environment in The United States is going to be really good over the next three to four years. And when you look at the size of the market here with almost three fifty million people, the capital markets, the capitalizations of the big companies here is just really, really attractive place to put capital.

And you’ve also got particularly in Canada, where we’ve got some great relationships and in Asia where we’ve been now for thirty years and in The Middle East, you’ve got these very, very large institutional partners that are growing their own capital base, but they don’t they can’t deploy all of that capital in the markets that they’re headquartered in. So all of the major Japanese companies want to take some portion of their capital and invest it to here primarily here in The United States. And it’s pretty much true everywhere around the world. And I would say that the particularly Asia, the other the secondary market that they feel very, very comfortable with is The United Kingdom. And so one of the things that Matt said was we were selling non core assets in Spain and Italy and the whole idea behind all of that was really to focus our management team and our energy in the markets where we really have real expertise, The United States, The United Kingdom and Ireland.

And so we’re really well positioned in all of these markets. And I would say the other great thing that’s happened to us over the last couple of years is because our credit business is a national business, it’s given us an information base outside of the Western United States to look at other equity opportunities in other markets. We’re currently under contract right now to buy five apartment communities in the Arizona market and the Texas market where we really haven’t had equity investments in the past. I’m not ready to talk about it yet, but we’re also looking at another opportunity that is well advanced in the Southern Part Of The United States. And so the biggest issue was asset managing what we own, getting out of these non core assets, particularly the office assets, in some cases that we own 100% of, which we’ve been doing in The United States and we’ll focus on that primarily in Europe this year.

And then finding new ways to deploy capital, not new ways, but new markets to deploy capital into. We’ve got significant amounts of capital that our reputation is really, really strong. A lot of people trust us to invest their money. And so capital deployment really is really one of the key ways that we’re going to continue to grow the business, particularly the investment management business.

Jeff Spector, Analyst, Bank of America: Thank you. Very helpful. A follow-up to your continuing to exit office. You did mention that you’re seeing some benefits from return to office in the Northwest. So just to confirm, nothing would change your view on office?

And I think also retail is the other area you’re shifting away from.

Matt Windisch, President, Kennedy Wilson: Yes. I think in terms of our balance sheet investments, we’re not looking to deploy balance sheet capital into those areas. That’s not to say we wouldn’t opportunistically look at things in that space using our investment management platform. There could be opportunities there. But for our balance sheet investments where we’re deploying our capital, we think it’s better served focusing on rental housing and industrial.

Justin Embody, CFO, Kennedy Wilson: Right. I would just add that the idea of growing the investment management business gives you a lot more flexibility around the return thresholds, right? Obviously, we have used our own balance sheet, but in that business, you have partners that have different return thresholds that they can invest at different interest, different product types. So it really allows us to expand what we look at.

Jeff Spector, Analyst, Bank of America: Thank you. And then just my last question on supply apartment supply and you just were talking about some of the Texas, Arizona, Sunbelt or Southern markets. There is some concern that we could suddenly walk into ’26 where supply is picking up. One of your apartment peers believes there’s visibility through ’26 that there’s really not going to be an increase in supply. What are your views there on supply in the Sunbelt as you’re looking at these Southern markets?

Thank you.

Matt Windisch, President, Kennedy Wilson: Yes. We’ve definitely seen it really from our credit business because we haven’t invested to date our equity in the Sunbelt markets to speak of. But through our credit business, we’re seeing it. And what we’re finding is only the really the best in class developers are able to put together the capital stacks right now to build. And so what you’re seeing is very high the stuff that’s being built is best in class, but the volumes and the starts continue to be significantly below where they were several years ago.

So it doesn’t feel like it from what we’re seeing in our credit pipeline that volumes are substantially picking up and they’re certainly not getting back to anywhere near where they were a few years ago. I think you’ll need to see construction costs come down, interest rates come down further to have supply become a significant issue in these markets over the next few years. That being said, there’s still supply coming and finishing, like projects that were financed two or three years ago. There’s still some of that finishing up. But if you kind of look eighteen months ahead, it starts to definitely have a significant ramp down on deliveries.

Jeff Spector, Analyst, Bank of America: Great. 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, Chairman and CEO, Kennedy Wilson: Well, thank you very much, everyone. And we’re going to be next week at the Citigroup (NYSE:C) Conference in Miami. And so if there’s anybody there, we’ll look forward to that’s on this call, we’ll look forward to seeing you there. Thank you.

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

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