Kennedy Wilson(KW) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA nearly tripled from $190 million in 2023 to$ 540 million in 2024 [6] - GAAP EPS totaled $0.24 per share for Q4, compared to a loss of$ 1.78 in Q4 2023 [19] - Investment management revenue grew by 83% to $30 million in Q4, driven by$ 1.4 billion in new debt originations [20] Business Line Data and Key Metrics Changes - Investment management fees grew by 60% year-over-year to approximately $100 million in 2024 [8] - The credit platform completed a record$ 1.4 billion of new loan originations in Q4 and $3.5 billion for the year [9] - Same-property NOI grew by 5.6% in Q4, with the apartment portfolio ending the quarter at 95% occupancy [15][30] Market Data and Key Metrics Changes - The overall market environment is showing steady improvement, with debt markets strengthening and transaction volume rebounding [7] - In the U.S., renter fundamentals continue to strengthen, driven by high homeownership costs [29] - The Irish apartment portfolio ended the quarter at a strong 97% occupancy, with ongoing structural undersupply in the Dublin market [35] Company Strategy and Development Direction - The company focuses on increasing baseline EBITDA, growing the investment management business, and reducing unsecured debt [6] - Capital recycling through non-core asset sales is a key initiative, with an expected generation of over$ 400 million in 2025 [12][13] - The company aims to deploy capital into higher return opportunities, particularly within investment management platforms [13] Management's Comments on Operating Environment and Future Outlook - Management anticipates a very active year in 2025, committed to executing key initiatives while strengthening the balance sheet [17] - The company is well-positioned to capitalize on new opportunities in rental housing and industrial assets as market conditions recover [16] - Management expressed confidence in the business environment in the U.S. and the attractiveness of investing in U.S. real estate [95] Other Important Information - The company successfully closed fundraising on its seventh discretionary commingled fund, securing $400 million for U.S. investments [11] - The company has a record$ 8.8 billion in fee-bearing capital, with expectations to grow investment management fees by approximately 20% to 25% per annum [11] Q&A Session Summary Question: Clarification on $400 million of incremental proceeds from dispositions in 2025 - Management confirmed the figure and indicated a focus on non-core assets, particularly in housing-related investments [44][45] Question: Concerns about the competitive construction lending environment - Management believes the construction lending space remains compelling and expects a successful year in that area [50][51] Question: Expected yields and margins on the single-family rental platform - Management anticipates stabilizing yields in the high 5s towards 6% and has a strong operational team in place [70] Question: Implications of rent caps in Ireland and U.K. office demand - Management noted that the current rent cap regime in Ireland is due to expire at the end of 2025 and expressed confidence in the demand for quality offices in the U.K. [82][83] Question: Positive fair value marks on the co-investment portfolio - Management hopes for continued positive trends in fair value and carried interest, assuming stable long-term rates [86][88]