Kennedy Wilson(KW) - 2025 Q2 - Quarterly Results

Earnings Release News Release Kennedy Wilson reported strong Q2 2025 results, with Adjusted EBITDA at $147.1 million and AUM reaching $30 billion, driven by asset sales and fee growth Q2 2025 Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 (USD) | Q2 2024 (USD) | | :--- | :--- | :--- | | GAAP Net Loss to Common Shareholders | ($6.4 million) | ($59.1 million) | | GAAP EPS (Diluted) | ($0.05) | ($0.43) | | Adjusted EBITDA | $147.1 million | $79.3 million | | Adjusted Net Income (Loss) | $34.5 million | ($16.8 million) | - CEO William McMorrow attributed the strong financial results to the execution of the asset sale program and strengthening fundamentals, highlighting that Assets under Management (AUM) grew to a record $30 billion, leading to a 39% increase in investment management fees to a quarterly record of $36 million[6] - Key operational achievements in Q2 2025 include: Baseline EBITDA grew by 12% YoY to $117 million; Fee-Bearing Capital increased to a record $9.2 billion; and the Debt Investment Platform originated $1.2 billion in new construction loans and grew to $10.1 billion[7][8][11] Multifamily Same Property NOI Growth (Q2-2025 vs. Q2-2024) | Portfolio | Revenue Growth (%) | Expense Growth (%) | NOI Growth (%) | | :--- | :--- | :--- | :--- | | Market Rate | 2.0% | (0.2)% | 3.1% | | Affordable | 6.2% | 8.6% | 4.9% | | Total | 2.9% | 1.6% | 3.5% | - The company generated $250 million in cash from dispositions and recapitalizations, including the sale of $409 million in non-core consolidated assets, also repaying $170 million on its revolving credit facility and repurchasing 0.4 million shares[13][15] - Subsequent to the quarter's end, the company announced the full redemption of its €300 million 3.25% notes due November 2025, to be completed on October 3, 2025[14] Consolidated Financial Statements Consolidated Balance Sheet shows total assets of $6.80 billion and total liabilities of $5.20 billion as of June 30, 2025, with Q2 2025 net loss at $6.4 million Consolidated Balance Sheets Balance Sheet Summary (as of June 30, 2025) | Account | Amount (in millions USD) | | :--- | :--- | | Assets | | | Cash and cash equivalents | $309.1 | | Real estate, net | $4,078.8 | | Unconsolidated investments | $2,034.7 | | Total Assets | $6,796.9 | | Liabilities & Equity | | | Mortgage debt | $2,385.2 | | Total unsecured debt | $2,237.1 | | Total Liabilities | $5,200.6 | | Total Equity | $1,596.3 | Consolidated Statements of Operations Q2 2025 Statement of Operations Summary (vs. Q2 2024) | Line Item | Q2 2025 (in millions USD) | Q2 2024 (in millions USD) | | :--- | :--- | :--- | | Total Revenue | $135.7 | $132.0 | | Gain on sale of real estate, net | $55.1 | $0.2 | | Total Expenses | $110.4 | $110.2 | | Interest Expense | ($62.5) | ($63.8) | | Net Income (Loss) | $5.6 | ($48.3) | | Net Loss to Common Shareholders | ($6.4) | ($59.1) | Non-GAAP Metrics Q2 2025 Adjusted EBITDA significantly increased to $147.1 million, with Adjusted Net Income at $34.5 million, reversing a prior-year loss Adjusted EBITDA Reconciliation Summary (Q2 2025) | Item | Amount (in millions USD) | | :--- | :--- | | Net loss to common shareholders | ($6.4) | | Add back: Interest expense (KW Share) | $95.2 | | Add back: Depreciation & amortization (KW Share) | $34.4 | | Add back: Provision for income taxes | $4.4 | | Add back: Preferred dividends | $10.9 | | Add back: Share-based compensation | $6.5 | | Adjusted EBITDA | $147.1 | Adjusted Net Income Reconciliation Summary (Q2 2025) | Item | Amount (in millions USD) | | :--- | :--- | | Net loss to common shareholders | ($6.4) | | Add back: Depreciation & amortization (KW Share) | $34.4 | | Add back: Share-based compensation | $6.5 | | Adjusted Net Income (Loss) | $34.5 | Supplemental Financial Information Capitalization and Value Summary As of June 30, 2025, Kennedy Wilson's total enterprise value was $8.33 billion, primarily from income-producing assets generating $467.7 million in NOI and $9.2 billion in fee-bearing capital Capitalization Summary (as of June 30, 2025) | Metric | Value (in millions USD) | | :--- | :--- | | Equity Market Capitalization | $1,192.6 | | Total Kennedy Wilson's share of debt | $7,577.9 | | Total Capitalization | $8,770.5 | | Less: Kennedy Wilson's share of cash | ($440.1) | | Total Enterprise Value | $8,330.4 | Components of Value (KW's Share) | Category | Key Metric | Value (in millions USD) | | :--- | :--- | :--- | | Income Producing Assets | Est. Annual NOI | $467.7 | | Lease-up, Development, etc. | KW Gross Asset Value | $1,627.0 | | Investment Management | Fee-Bearing Capital | $9,200 | | Net Debt | Total Net Debt | $7,137.8 | Stabilized Portfolio Analysis The stabilized portfolio generates $467.7 million in Estimated Annual NOI, primarily from Multifamily and Office segments, with Mountain West, Ireland, and the UK as major geographic contributors - The stabilized portfolio's Estimated Annual NOI of $467.7 million is primarily driven by Multifamily ($298.1 million) and Office ($119.2 million) assets[49] - Geographically, the largest contributors to NOI are the Mountain West ($116.9 million), Ireland ($88.3 million), and the UK ($74.8 million)[46] Segment Investment Summary Stabilized Portfolio by Segment (KW Share) | KW Segment | Est. Annual NOI (USD) | Fee Bearing Capital (USD) | KW Gross Asset Value (USD) | Avg. KW Own. % (%) | | :--- | :--- | :--- | :--- | :--- | | Consolidated | $234.6 million | $0 | $4,381.6 million | 97% | | Co-investment | $233.1 million | $9.2 billion | $4,125.7 million | 23% | | Total | $467.7 million | $9.2 billion | $8,507.3 million | 37% | Multifamily Portfolio - The total stabilized multifamily portfolio consists of 37,736 units with a 94.2% occupancy rate (KW Share) and generates $298.1 million in Estimated Annual NOI[51] - The Western U.S. portfolio (34,226 units) generates $249.2 million in NOI, while the Ireland portfolio (3,510 units) generates $48.9 million[51] Office Portfolio - The stabilized office portfolio comprises 7.1 million rentable square feet with a 91.4% occupancy rate (KW Share), generating $119.2 million in Estimated Annual NOI[53] - The European office portfolio (2.7 million sq. ft.) is the primary contributor with $91.1 million in NOI, compared to the Western U.S. portfolio (4.4 million sq. ft.) which generates $28.1 million in NOI[53] Industrial Portfolio - The stabilized industrial portfolio consists of 11.5 million rentable square feet with a high 98.3% occupancy (KW Share), generating $19.5 million in Estimated Annual NOI[56] Loan Investment Portfolio - The loan portfolio includes 125 loans with a total KW share balance of $215.4 million, generating $18.5 million in annual interest income at an average interest rate of 8.6%[58] - In Q2 2025, the company originated 13 new loans with a gross commitment of $1.24 billion and realized $321.3 million in repayments[58] Other Investments - Other investments include a retail portfolio generating $12.4 million in NOI and a residential/other portfolio with a KW Gross Asset Value of $274.5 million, which includes the UK Single Family Rental platform[60] Lease-up and Development Portfolio The lease-up portfolio has a gross asset value of $700.5 million and is expected to generate $46-$49 million in stabilized NOI, with 1,870 units in the affordable housing pipeline Lease-up Portfolio Summary (KW Share) | of Assets | Commercial Sq. Ft. | Leased % (%) | Est. Stabilized NOI (USD) | KW Gross Asset Value (USD) | | :--- | :--- | :--- | :--- | :--- | | 7 | 1,392,000 | 22% | $46 million - $49 million | $700.5 million | - The Vintage Housing affordable platform has 1,870 units in its lease-up and development pipeline, which are expected to generate $9.6 million in stabilized NOI (KW Share) upon completion[71] Debt and Liquidity Kennedy Wilson's total debt is $7.58 billion with net debt of $7.14 billion, a 4.6-year weighted average maturity, and 4.7% effective interest rate, with 98% of debt fixed or hedged Debt Summary (KW Share as of June 30, 2025) | Metric | Value (USD) | | :--- | :--- | | Total Debt | $7,577.9 million | | Net Debt | $7,137.8 million | | Weighted Avg. Effective Interest Rate | 4.7% | | Weighted Avg. Years to Maturity | 4.6 years | - The company's debt is largely insulated from interest rate volatility, with 74% being fixed-rate and 24% hedged, leaving only 2% exposed to floating rates[77] - Secured investment-level debt totals $5.32 billion, with the largest allocations to the Multifamily ($3.62 billion) and Office ($1.23 billion) sectors[77] Investment Management Platform The investment management platform had $30 billion in Real Estate AUM as of June 30, 2025, with Q2 2025 total adjusted fees increasing to $34.9 million Adjusted Fees (Q2 2025 vs Q2 2024) | Fee Description | Q2 2025 (in millions USD) | Q2 2024 (in millions USD) | | :--- | :--- | :--- | | Investment Management — Base | $15.9 | $16.2 | | Investment Management — Transaction | $20.7 | $10.1 | | Investment Management — Carried Interests | ($2.0) | ($12.3) | | Total Adjusted Fees | $34.9 | $14.1 | - The company's accrued net carried interests receivable stood at $13.4 million as of June 30, 2025[78] Same Property Analysis For Q2 2025, multifamily same-property NOI grew 3.5%, while office NOI declined 5.7%, primarily due to an 8.3% revenue drop in Western U.S. assets Same Property - Multifamily Multifamily Same Property Performance (Q2 2025 vs Q2 2024) | Portfolio | Revenue Change (%) | Expense Change (%) | NOI Change (%) | | :--- | :--- | :--- | :--- | | Market Rate | +2.0% | -0.2% | +3.1% | | Affordable | +6.2% | +8.6% | +4.9% | | Total | +2.9% | +1.6% | +3.5% | Same Property - Office Office Same Property Performance (Q2 2025 vs Q2 2024, incl. straight-line rents) | Region | Revenue Change (%) | Expense Change (%) | NOI Change (%) | | :--- | :--- | :--- | :--- | | Western U.S. | -8.3% | +5.6% | -19.3% | | Europe | -0.7% | +37.0% | -2.7% | | Total | -2.7% | +13.3% | -5.7% | Real Estate Investment Transactions In Q2 2025, Kennedy Wilson was a net seller of real estate, acquiring $490.8 million of assets at a 5.2% cap rate and disposing of $618.0 million at a 6.5% cap rate Q2 2025 Transaction Summary (100% Value) | Transaction Type | Aggregate Price (USD) | Cap Rate (%) | | :--- | :--- | :--- | | Acquisitions | $490.8 million | 5.2% | | Dispositions | $618.0 million | 6.5% | Segment Detail For Q2 2025, the Consolidated segment generated $96.4 million in Segment Adjusted EBITDA, with the Co-Investment segment contributing $58.3 million, indicating strong growth Segment Adjusted EBITDA (Q2 2025 vs Q2 2024) | Segment | Q2 2025 (in millions USD) | Q2 2024 (in millions USD) | | :--- | :--- | :--- | | Consolidated | $96.4 | $48.4 | | Co-Investment | $58.3 | $33.5 | | Total | $154.7 | $81.9 | Pro-rata Financial Information KW's share of unconsolidated investments included $4.85 billion in net real estate assets and $2.98 billion in mortgage debt as of June 30, 2025, generating $77.8 million in rental revenue KW Share of Unconsolidated Investments (as of June 30, 2025) | Account | Amount (in millions USD) | | :--- | :--- | | Cash and cash equivalents | $134.3 | | Real estate, net | $4,854.2 | | Mortgage debt | $2,977.6 | Appendix Reconciliation of Non-GAAP Measures The appendix provides detailed reconciliations for non-GAAP and supplemental metrics like Estimated Annual NOI, Adjusted Fees, Baseline EBITDA, and Same Property NOI, ensuring transparency - The Estimated Annual NOI of $467.7 million is reconciled from Q2-25 Property-Level NOI of $114.7 million, after adjustments for transactions, lease-up, and other items[126] - Detailed tables reconcile Kennedy Wilson's Share of interest expense, depreciation, and taxes from consolidated figures by adjusting for noncontrolling interests and adding the share from unconsolidated investments[128] - Same Property NOI is reconciled to GAAP Net Income, detailing adjustments for non-same-property assets, unconsolidated investments, and various non-cash or non-recurring items[132][141] - Baseline EBITDA of $117.0 million for Q2 2025 is reconciled from GAAP Net Income by adjusting for non-core items like gains on sale, taxes, interest, and depreciation, and including NOI from unconsolidated investments[147]