Kennedy Wilson(US:KW)2019-02-28 21:11Financial Data and Key Metrics Changes - For Q4 2018, GAAP EPS was $0.21 per share, down from $0.69 a year ago. For the full year, GAAP EPS reached a record $1.04, a 25% increase from $0.83 in 2017 [9] - The company achieved a record annual adjusted EBITDA of $713 million, which is 56% higher than the $456 million produced in 2017. Adjusted net income totaled a record $397 million in 2018, compared to $243 million last year, marking a 63% increase [10] Business Line Data and Key Metrics Changes - Same property revenue grew by 4% and NOI increased by 7% across the global same property portfolio for the quarter. For the year, same property revenue and NOI grew by 5% [11] - The market rate multi-family portfolio saw same property revenue up 5% and NOI growth of 6%, outperforming other public real estate companies that averaged 2.5% NOI growth for the quarter [11] - The Mountain State portfolio, which includes properties in Salt Lake City, Boise, Seattle, and Reno, experienced same property revenue and NOI growth of over 7% each [12] Market Data and Key Metrics Changes - The stabilized assets had an estimated annual NOI of $407 million, with 48% from the Western U.S. and 52% from Europe, primarily in Ireland and the UK [10] - In Europe, the company completed 195 commercial leasing transactions across 3.1 million square feet, adding $13 million of annual rent, representing a 12% increase on previous rents [18] Company Strategy and Development Direction - The company focuses on three key strategic initiatives: growing property NOI, expanding investment management and fee business, and executing capital recycling and asset sale programs [19] - The development pipeline includes over 4,100 market rate and affordable multifamily units, 2.9 million square feet of commercial property, and a 150-room hotel, expected to add $100 million to annual NOI by the end of 2023 [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising significant new fee-bearing capital in 2019 without meaningful changes in overhead, resulting in high-margin growth [48] - The Irish economy is performing strongly with an estimated GDP growth of almost 9% for 2018 and a forecast of 4.5% for 2019, supporting sustained job creation [43] Other Important Information - The company sold $313 million of assets in the quarter, with its share being $264 million. Europe accounted for 86% of asset sales [50] - The company returned a record $290 million of capital to shareholders in 2018 through dividends and share repurchases, equating to approximately $2 per share [52] Q&A Session Summary Question: Will rent controls in London impact the business? - Management does not expect rent controls to impact their single asset in London, as the multifamily market is undersupplied [60][61] Question: Will asset sales reduce leverage? - Management indicated that asset sales will not increase leverage points, as they plan to pay down existing debt [68] Question: Is the strong apartment same-store growth sustainable? - Management aims to outperform the market, targeting 4% revenue growth assuming market growth remains around 2% [75] Question: How is cost inflation affecting development in Dublin? - Management noted that they have fixed-price contracts with contractors, mitigating risks of cost overruns [80] Question: What is the outlook for cap rate spreads in different regions? - Management highlighted attractive cap rate spreads in the U.S., Ireland, and the UK, with strong job growth supporting real estate investments [98]