Kennedy Wilson(US:KW)2022-11-05 18:23Financial Data and Key Metrics Changes - The company reported GAAP EPS of $0.12 for Q3 2022, with adjusted net income totaling $69 million or approximately $0.50 per share, and adjusted EBITDA of $166 million [19] - Year-to-date, GAAP EPS reached $0.31, adjusted net income was $196 million (approximately $1.43 per share), and adjusted EBITDA totaled $444 million [20] - Consolidated quarterly revenue increased by 22% year-over-year and almost 3% sequentially, with share of recurring NOI, loan income, and fees rising by 17% to $130 million [21] Business Line Data and Key Metrics Changes - The multifamily portfolio now comprises 56% of estimated annual NOI, up from 42% in 2018, with same-property NOI growth of 9% in Q3 [26] - The logistics portfolio maintained a 99% occupancy rate, with rental growth driven by low vacancy rates in the U.K. [10][38] - The investment management business saw $320 million in new fundings at an average spread of 430 basis points, with minimal repayments of $30 million in Q3 [35] Market Data and Key Metrics Changes - The Mountain West portfolio experienced a revenue increase of 13%, driven by strong demand for rental housing [27] - In Dublin, same-property occupancy improved by 5% to over 98%, resulting in same-property NOI growth of 7% [33] - The U.K. logistics market saw prime rental growth of 13% in 2022, with vacancy rates at 3.7% [38] Company Strategy and Development Direction - The company is focused on growing its multifamily debt and logistics sectors, which accounted for 100% of $700 million in investments during the quarter [11] - A $3 billion development pipeline is expected to produce $92 million of incremental NOI, with 83% anticipated to be stabilized by the end of 2024 [8] - The company aims to leverage relationships with strategic institutional partners to capitalize on new opportunities in the next 12 to 18 months [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning and growth opportunities across various sectors, including multifamily, debt, and logistics [48] - The company remains patient with capital deployment, particularly in the equity investing side, anticipating opportunities to arise in the following year [53] - Management noted that normalized property operations currently provide sufficient cash flow to sustain the dividend [57] Other Important Information - The company has $720 million in liquidity, including $420 million in consolidated cash and $300 million available on its line of credit [24] - The effective interest rate stood at 4%, with a weighted average maturity of 5.9 years [23] Q&A Session Summary Question: Can you comment on cap rates or values year-to-date and your appetite for deploying capital? - Management indicated a patient approach to capital use, seeing growth opportunities in the debt business, while equity opportunities may not materialize until next year [53][54] - There is a perception that investors are willing to accept lower cap rates for higher quality properties, with costs for new projects significantly higher than previous levels [55][56] Question: Will normalized property operations provide enough cash flow to maintain the dividend? - Management confirmed comfort with the current dividend level, supported by cash flow and sales in the pipeline [57] Question: How do trends like return-to-office impact multifamily demand, particularly in the Mountain West? - Demand in the Mountain West remains strong, with significant job creation and affordability continuing to attract renters [60] - In California, occupancy is expected to recover, leading to improved performance in the region [61]