Kennedy-Wilson Holdings, Inc. Q2 FY2024 earnings call

• Deployed $2 billion of new capital in the first half of 2024, including $1.7 billion through the credit platform for construction of multifamily and student housing, and $300 million on multifamily and industrial acquisitions. • Stabilized 5 multifamily communities in Q2, adding $16 million to estimated annual NOI. • Development and lease-up portfolio expected to add $70 million in annual NOI upon stabilization; capital spend on development dropped from $150M per year to $10M remaining in H2 2024. • Investment management platform growth with track record spanning over three decades, focusing on rental housing, credit platform, and industrial portfolio. • Asset sale plan: sold a retail center in Spain in July, with year-to-date cash from asset sales, non-core assets, and loan repayments at $330 million. • Balance sheet: $367 million of consolidated cash at quarter end, paid down line of credit by $67 million, $172 million drawn on $500 million line of credit, 98% of debt fixed or hedged with weighted average maturity of five years.

Investment Management revenue grew by 37% to $26 million in Q2. The stabilized portfolio's estimated annual NOI was $485 million, up 5%. Assets Under Management (AUM) grew to $27 billion, annualizing at a 16% growth rate. Fee-bearing capital reached a record $8.7 billion. The multifamily portfolio includes approximately 60,000 units. The credit platform deployed $1.7 billion in the first half, and the industrial portfolio has 12 million square feet. The development and lease-up portfolio is expected to add $70 million in estimated annual NOI upon stabilization.

• Continued growth in investment management platform, confident in raising further third party capital. • Expect further expansion of credit platform with strong pipeline of $600M-$700M signed up. • Plan to continue building on existing industrial portfolio with evaluated new opportunities. • Disposition pipeline for H2 2024 with proceeds used for reducing unsecured debt and future co-investment opportunities. • Anticipated benefits from improving market conditions and potential rate decreases, which should support valuations and transaction volumes.

• Market conditions and interest rate fluctuations could impact real estate valuations and transaction volumes. • Economic uncertainties may affect the demand for real estate assets, potentially impacting the company's portfolio performance. • Changes in regulatory environments could pose challenges to the company's operations and growth plans.

Q: Anthony Paolone asked about the debt platform prospects for longer duration debt deals and development starts.

A: Matthew Windisch said there's opportunity to expand beyond construction lending with experienced team, and William McMorrow mentioned re-purposing teams into construction management for new projects.

Q: Joshua Dennerlein inquired about fair value adjustment in adjusted EBITDA and rationale for Japan office.

A: William McMorrow said baseline EBITDA is a recurring metric, and Matthew Windisch added the Japan office reopening is due to long-term relationships and no significant G&A change.

Q: Tayo Okusanya asked about credit platform profitability with rate declines.

A: William McMorrow said lower rates could lead to more starts and new entrants, and Matthew Windisch noted Kennedy-Wilson earns fees on origination, asset management, and servicing, so return impact is not significant.

Q: Alan Parsow asked about Japan fund development and Spain property sale.

A: William McMorrow said early stages in Japan fund raising with $100M from Japan, and Matthew Windisch said Spain sale's gain impact is negligible, with annual cost savings of $1M-$1.5M from closing the office.