Kennedy Wilson(US:KW)2025-08-07 17:00Financial Data and Key Metrics Changes - The company reported a GAAP EPS loss of $0.05 per share compared to a loss of $0.43 per share in Q2 of the previous year [15] - Baseline EBITDA for Q2 was $117 million, a 12% increase year over year, bringing the trailing twelve-month baseline EBITDA to $425 million [15] - Adjusted EBITDA totaled $147 million, significantly up from $79 million in Q2 of the previous year [15] Business Line Data and Key Metrics Changes - Assets under management grew to a record $30 billion, increasing by 70% since the beginning of 2021 [6] - The rental housing sector, representing 65% of assets under management, comprises approximately 70,000 units [7] - The company originated $1.3 billion in new rental housing construction loans, marking the second-largest quarter in originations to date [7] Market Data and Key Metrics Changes - The U.S. apartment sector is experiencing strong rental demand due to a persistent housing shortage and declining new supply, setting the stage for rental growth [12][13] - In the Pacific Northwest, NOI growth was the strongest across the portfolio at 5.6%, driven by demand from companies like Amazon and Starbucks [22] - The Mountain West region, particularly Idaho, saw impressive NOI growth of 7.2% due to higher rents and lower real estate taxes [23] Company Strategy and Development Direction - The company is focused on increasing its exposure to rental housing, aiming for this sector to grow to over 80% of assets under management over the next two years [7] - The strategy includes expanding the multifamily and affordable housing sectors while disposing of non-core assets [20] - The company plans to continue recycling capital into higher return investment opportunities within its investment management platform [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the real estate fundamentals strengthening and the compelling risk-adjusted opportunities in the rental housing sector [12] - The company anticipates a record level of new capital deployment in the remainder of 2025, supported by strong partnerships and a robust pipeline of activity [14] - Management highlighted the importance of maintaining a diversified investment management business to enhance shareholder value [14] Other Important Information - The company generated $275 million from asset sales for the year, keeping it on track to meet its goal of $400 million by year-end [11] - The company has $113 million of consolidated unrestricted cash and $450 million of undrawn availability on its credit facility [19] - The company began utilizing its share repurchase plan, repurchasing approximately 400,000 shares at an average price of $6.21 [19] Q&A Session Summary Question: Can you discuss the UK single-family rental business and its attractiveness? - The UK single-family rental market is in its early stages, with significant growth potential and a focus on a build-to-rent strategy [34][36] - Targeted returns are mid-teens at the asset level, potentially reaching the 20s with fees included [37] Question: How does the company view competition in the debt platform? - The company will continue to focus on residential construction lending, with potential expansion into bridge lending and permanent solutions [42] - The company has expertise in other property types but will primarily focus on housing [43] Question: What are the plans for non-core asset sales for the remainder of the year? - The company is on track to exceed its goal of $400 million in asset sales, having already generated $275 million [44] Question: What are the preferences between affordable versus market-rate multifamily investments? - The company is interested in expanding exposure to both affordable and market-rate sectors, with a focus on the U.S. market [47][48] - The company aims to increase the number of units it manages to between 90,000 and 100,000 over the next few years [51] Question: How is the company addressing upcoming debt maturities? - The company plans to continue disposing of non-core assets to free up capital for debt maturities and refinancing [63] - The average rate on maturing debt is close to 6%, which is above the current borrowing cost [65]