• Assets Under Management (AUM): Increased to $28 billion from $25 billion.
• Estimated Annual Net Operating Income (NOI): Grew to $492 million.
• Fee Bearing Capital: Reached a record $8.8 billion.
• Investment Management Fees: Increased by 51% year-to-date to $69 million.
• New Loan Originations: Completed $2.1 billion in 2024 with a pipeline of over $1.2 billion.
• Cash Generated from Asset Sales: $63 million in Q3, totaling $375 million year-to-date.
• Planned Asset Sales: Expected to generate over $150 million in Q4.
• Investment Management Revenue: Grew by 39% to $22 million in Q3.
• Baseline EBITDA: Totaled $102 million in Q3, increased by 4% year-to-date to $309 million.
• Total Adjusted EBITDA: Doubled in the quarter to $66 million, increased by 9% to $349 million for the year.
• Interest Rate Hedging Cash Received: $10 million in Q3, totaling $33 million year-to-date.
• Effective Interest Rate: 4.6%, reflecting 37 basis points savings due to hedging.
• Same Property NOI Growth: 3% in Q3.
• Overall Portfolio Occupancy: 94%.
• Multifamily NOI: $305 million, increased by over 60% over the last five years.
• Same Property Revenue Growth: 3.3% in Q3.
• Office Portfolio NOI Growth in Europe: 2%.
• Industrial Portfolio Occupancy in the US: 99%.
• Investment Management Business Fee Bearing Capital: $8.8 billion at the end of the quarter.
• Investment Management Fees Over Past 12 Months: $85 million.

• Warning! GuruFocus has detected 10 Warning Signs with KW.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kennedy-Wilson Holdings Inc (NYSE:KW) reported a significant growth in assets under management, reaching $28 billion, up from $25 billion.
• The company has seen a 51% increase in investment management fees year-to-date, with fees on track to hit approximately $100 million in 2024.
• KW has successfully completed $2.1 billion in new loan originations in 2024, with a strong pipeline of over $1.2 billion in new loan opportunities.
• The company has generated $375 million in cash from asset sales year-to-date, with additional planned sales expected to generate over $150 million in Q4.
• KW's multifamily portfolio has shown strong performance, with a 94% occupancy rate and an estimated annual NOI growth of $29 million from stabilizing approximately 2,000 units.

Negative Points

• Despite growth in various areas, Kennedy-Wilson Holdings Inc (NYSE:KW) has been a net seller of assets, which may impact future revenue streams.
• The company's unconsolidated portfolio saw minor changes in valuation, indicating potential challenges in asset appreciation.
• KW's portfolio in Utah, Idaho, and Colorado has been impacted by elevated levels of supply, affecting occupancy and revenue growth.
• The office portfolio in the US faces challenges, with the company noting differences in market conditions compared to Europe.
• The company's effective interest rate savings from hedging strategies may not be sustainable long-term, potentially affecting future interest expenses.

Q & A Highlights

Q: Can you discuss the fee revenue projections for next year and what needs to happen in terms of originations or capital raised to achieve that? A: Matthew Windisch, President, explained that they have $6 billion in capital not included in fee-bearing capital, which relates to future funding commitments. Based on the current pipeline in both credit and equity businesses, they are confident in growing the investment management business at a good pace. They expect to end this year with close to $100 million in fees and feel comfortable continuing this growth trajectory.

Q: Is there a significant maturity cliff next year that would require a higher bar of originations? A: Matthew Windisch stated that maintaining the current pace of originations should suffice. However, increasing debt originations or growing the investment management business through equity platforms could lead to outperforming current projections.

Q: Can you provide more details on the new UK Single Family Rental (SFR) strategy, including cash yields and operational plans? A: Mike Pegley, President of the European Business, expressed excitement about partnering with CPP to scale the business in the UK. They plan to invest $500 million of equity in a 90/10 split, targeting over a billion in initial deployment. They project initial cash yields in the high fives to six percent, stabilizing above six percent with rental growth. The properties will be managed by a team leveraging Kennedy-Wilson's expertise in other markets.

Q: Who will operate the UK SFR properties, and is a billion dollars enough for scale and efficiency? A: Mike Pegley mentioned that they have assembled a team with residential expertise and will outsource property management and rent collection. They believe the initial billion provides a first-mover advantage and credible platform scale, with potential to expand further if opportunities arise.

Q: Are there any further questions? A: Seeing no further questions, William Mcmorrow, CEO, thanked participants and reiterated their availability for any additional inquiries.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.