Kennedy Wilson(KW)2024-11-09 17:35Financial Data and Key Metrics Changes - Assets under management (AUM) increased to $28 billion from $25 billion at the end of 2023, with estimated annual net operating income (NOI) growing to $492 million and fee-bearing capital reaching a record $8.8 billion [7][10][11] - Adjusted EBITDA doubled in Q3 to $66 million, with a year-to-date increase of 9% to $349 million [28] - Baseline EBITDA totaled $102 million in Q3, reflecting a 4% year-to-date increase to $309 million [28] Business Line Data and Key Metrics Changes - Investment management fees grew by 51% year-to-date in 2024 to $69 million, with a total of $85 million over the past 12 months [10][47] - The multifamily business now comprises 62% of the stabilized portfolio, with NOI from multifamily increasing by over 60% over the last five years [35] - The credit platform has completed $2.1 billion in new loan originations in 2024, with a strong pipeline of over $1.2 billion [12][20] Market Data and Key Metrics Changes - The overall real estate investment sentiment has improved, with the beginning of a rate-cutting cycle by central banks and robust liquidity for high-quality real estate assets [18][19] - The U.S. apartment delivery reached a 40-year high, but new starts have sharply declined, positively impacting the market rate portfolio [37] Company Strategy and Development Direction - The company is focusing on expanding its investment management business and has launched a new platform in the UK targeting the single-family rental housing market [14][15] - A strategic partnership with the Canadian Pension Plan Investment Board (CPPIB) aims to address the structural undersupply of housing in the UK, with an initial target of £1 billion in asset purchases [15][16] - The company plans to continue simplifying its balance sheet through non-core asset sales while growing its investment management business [45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving liquidity and lower borrowing costs, which are expected to strengthen the business over the next year [19][25] - The company anticipates solid growth in 2025 and beyond, leveraging improvements made during challenging periods [49] Other Important Information - The company disposed of $234 million in assets in Q3, generating $63 million in cash, with additional planned asset sales expected to generate over $150 million in Q4 [13][14] - A EUR 175 million redemption of KWE bonds was announced, representing almost 40% of the remaining balance, funded by asset sale proceeds [17] Q&A Session Summary Question: Fee revenue expectations for next year - Management indicated that $6 billion of capital not included in fee-bearing capital relates to future funding commitments, which should support continued growth in the investment management business [52][53] Question: Details on the new single-family rental strategy in the UK - The UK platform is expected to yield between high-5s to 6% initially, with rental growth anticipated to stabilize above 6% [58] - The company plans to leverage its existing expertise and has a strong pipeline for deploying the initial $1 billion commitment [56][57]