Kennedy Wilson(US:KW)2022-02-26 00:57Financial Data and Key Metrics Changes - The company reported a 53% increase in adjusted EBITDA to a record $928 million for 2021 [6] - GAAP EPS for Q4 was $0.27 per diluted share, with adjusted net income of $86 million and adjusted EBITDA of $187 million [19] - For the year, GAAP EPS was $2.24 per share, adjusted net income was $509 million, and adjusted EBITDA was $928 million [19] Business Line Data and Key Metrics Changes - The global multifamily portfolio grew from 29,840 units at the beginning of 2020 to over 35,000 units at quarter end, with over 5,100 units under development [11] - Same property NOI growth for the global multifamily portfolio was 14% in Q4 [23] - The office portfolio saw same property NOI growth of 4% in Q4, driven by strong rent collections and lower bad debt [29] Market Data and Key Metrics Changes - In the U.S., apartment revenue growth exceeded inflation, with double-digit NOI growth across all regions [9] - The U.K. logistics platform experienced record-breaking take-up, with vacancies at an all-time low of 4% [40] - The company noted strong demand for rental housing in Dublin, with occupancy increasing to 96% [26] Company Strategy and Development Direction - The capital deployment strategy focuses on growing the Western U.S. multifamily footprint and the European office portfolio [15] - The company aims to grow estimated annual NOI at a rate of 10% to 15% per year and fee-bearing capital by 15% to 20% over the next three years [48] - The investment management platform saw fee-bearing capital grow to $5 billion, increasing by 28% in 2021 [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the robust deal flow in 2022, driven by high institutional demand for certain real estate assets [8] - The company is confident in its ability to generate attractive returns for shareholders and partners, coming out of the pandemic in a stronger position [51] - Management highlighted the importance of maintaining a vigilant eye on interest rates and locking in spreads during acquisitions [56] Other Important Information - The company completed $1.5 billion of investment transactions in Q4, bringing the total for 2021 to a record $5.9 billion [7] - The co-investment portfolio generated $175 million in income in Q4, compared to $36 million in Q4 of 2020 [20] - A $300 million preferred equity investment from Fairfax Financial was announced, strengthening the company's financial position [50] Q&A Session Summary Question: What are the biggest opportunities in the investment environment? - The focus is on the multifamily business in the Western U.S. and Dublin, the debt platform, and European logistics [54] Question: What are the potential headwinds for fee-bearing capital growth? - The company is patient in deploying capital and estimates deploying $4.5 billion over the next 18 to 24 months [58][59] Question: Can you provide details on the preferred equity and warrants sale? - The relationship with Fairfax has been strong, and the preferred equity deal was evaluated as the best option for raising permanent capital [64][66] Question: How are the lease-up dynamics in the U.S. compared to Ireland? - Newer properties are stabilizing quickly, with significant leasing success in both regions [72][76] Question: What are the prevailing cap rates for stabilized assets in multifamily? - Stabilized cap rates in Dublin are sub 3.5%, while in the U.S., they vary by geography, with a project in Boise stabilized at close to a 7% cap rate [82][88]