Kennedy Wilson Reports First Quarter 2021 Results
Kennedy-Wilson Holdings, Inc. (NYSE: KW) reported its 1Q-2021 results, showing a GAAP net loss of $5.6 million, improved from a loss of $9.9 million in 1Q-2020. Adjusted EBITDA increased by 14% to $128 million, with share of gains from real estate sales at $70 million. Fee-bearing capital rose 5% to $4.1 billion, and the U.S. debt platform grew 17%, while European logistics assets saw an 89% increase. The company completed $377 million in property acquisitions, generating significant cash flow from recent dispositions, including a $220 million sale in London.
- 14% increase in Adjusted EBITDA to $128 million from $112 million in 2020.
- 5% growth in Fee-Bearing Capital to $4.1 billion since year-end 2020.
- 17% growth in U.S. debt platform, totaling $928 million in assets.
- 89% growth in European logistics platform with $209 million in acquisitions.
- $175 million in net cash proceeds from dispositions, including a $220 million sale in London.
- GAAP net loss increased to $5.6 million from $9.9 million in 1Q-2020.
- Decrease in recurring property NOI by $12 million, impacted by planned asset sales and COVID-19.
- One-time loss of $15 million on early extinguishment of debt.
Kennedy-Wilson Holdings, Inc. (NYSE: KW) today reported results for 1Q-2021:
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1Q |
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(Amounts in millions, except per share data) |
2021 |
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2020 |
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GAAP Results |
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GAAP Net Loss to Common Shareholders1 |
( |
) |
|
( |
) |
Per Diluted Share |
(0.04 |
) |
|
(0.07 |
) |
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|
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Non-GAAP Results |
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|
|
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Adjusted EBITDA |
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|
|
|
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Adjusted Net Income1 |
47.0 |
|
|
44.8 |
|
1 Includes |
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"The first quarter was highlighted by a
1Q Highlights
-
14% Increase to 1Q-21 Adjusted EBITDA to$128 million (vs.$112 million in 1Q-20):-
KW's share of gains from the sale of real estate1, increases in fair values and promotes totaled
$70 million in 1Q-21 , an increase of$30 million from 1Q-20. -
KW's share of recurring property NOI, loan income, and fees1 totaled
$97 million in 1Q-21, a decrease of$12 million from 1Q-20, primarily due to planned asset sales and the COVID-19 impact to hotel operations and reserves for bad debt.
-
KW's share of gains from the sale of real estate1, increases in fair values and promotes totaled
-
5% Growth in Fee-Bearing Capital: Fee-Bearing Capital totaled$4.1 billion as of March 31, 2021, a5% increase from YE-20 and an86% increase from 4Q-18. Fee-Bearing Capital increased by$245 million due to new investments and commitments, offset by$94 million primarily due to asset dispositions. In addition, as of March 31, 2021, the Company has approximately$2.0 billion in additional non-discretionary capital with certain strategic partners that is available for investment. If invested, these amounts will be added to Fee-Bearing Capital.-
17% Growth in U.S. Debt Platform: Completed loan investments totaling$137 million in 1Q-21, resulting in17% growth of our debt platform. The Company has a9% ownership in its debt platform, which totals$928 million of assets and$846 million of Fee-Bearing Capital as of quarter-end. -
89% Growth in European Logistics Platform: Acquired$209 million in logistics assets in 1Q-21, resulting in an additional$67 million in Fee-Bearing Capital. The Company has a20% ownership in its logistics platform, which totals$444 million of assets and$142 million of Fee-Bearing Capital as of 1Q-21.
-
-
In-Place Estimated Annual NOI of
$389 Million ;82% of which is Multifamily and Office:-
Stabilized The Clara Phase 1, 38° North Phase 1, 400/430 California, and The View by Vintage, which added approximately
$6 million in Estimated Annual NOI. -
Post quarter-end, the Company has
$640 million in gross investment transactions that have either closed or are under contract. If completed, these transactions are expected to add a net$9 million of Estimated Annual NOI to KW in 2Q-21, resulting in a pro-forma Estimated Annual NOI of$398 million . - The Company's development and lease-up portfolio now totals 3,938 multifamily units, 2.3 million commercial square feet, and one hotel.
-
Stabilized The Clara Phase 1, 38° North Phase 1, 400/430 California, and The View by Vintage, which added approximately
- Multifamily and Office Same Property Performance1:
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1Q - 2021 vs. 1Q - 2020 |
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Occupancy |
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Revenue |
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NOI |
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Multifamily - Market Rate |
0.6 |
% |
|
(2.1 |
)% |
|
(4.6 |
)% |
Multifamily - Affordable |
— |
% |
|
2.0 |
% |
|
1.2 |
% |
Office |
(1.2 |
)% |
|
10.3 |
% |
|
12.9 |
% |
Total |
|
|
2.0 |
% |
|
2.1 |
% |
|
1 Excludes minority-held investments and includes |
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- 1Q-21 Rent Collections: The following is a summary of KW's share of contractual cash rent collections for 1Q-21:
Asset Class |
1Q-21 Rent Collections |
% of Billed Rents |
||
Multifamily |
96 |
% |
57 |
% |
Office |
99 |
% |
31 |
% |
Retail |
71 |
% |
11 |
% |
Industrial |
88 |
% |
1 |
% |
Total |
94 |
% |
100 |
% |
1Q-21 Investment Activity
-
Capital Investment: Invested
$129 million of cash, allocating52% to capex and development initiatives,39% to new investments, and9% to share repurchases. -
New Investments: Completed
$377 million of property acquisitions and loan originations, of which KW's share was$56 million . -
Disposition Activity: Completed
$556 million of dispositions, of which KW's share was$270 million . The dispositions generated net cash proceeds of$175 million to KW. The following key disposition was completed in 1Q-21:-
The Company sold Friars Bridge Court, a wholly-owned 103,000 square foot office property located in London, UK, for
$220 million (£160 million ), generating a net gain on sale of$65 million (including a one-time$8 million reduction to rental income)1.
-
The Company sold Friars Bridge Court, a wholly-owned 103,000 square foot office property located in London, UK, for
Balance Sheet and Capital Markets
-
$1.1 billion in Cash and Lines of Credit: Pro forma for the two unsecured debt paydowns described below, Kennedy Wilson had total pro forma consolidated cash and cash equivalents of$644 million (2) and$450 million of capacity on its$500 million revolving line of credit. -
Unsecured Debt Transactions Result in
$18 million of Annual Interest Savings:-
During the quarter, the Company issued
$1.2 billion of principal amount of unsecured notes. The bonds were issued in two separate tranches,$600 million aggregate principal amount of4.75% senior notes due 2029 and$600 million aggregate principal amount at5.00% due 2031, with a combined effective interest rate of4.826% . The proceeds were used to fully redeem all of the Company's$1.15 billion in principal amount of its5.875% unsecured notes due April 2024, including$573 million of principal repaid in 2Q-21. -
Post quarter-end, the Company completed a redemption of
$207 million (£150 million ) of its3.95% sterling-denominated Kennedy Wilson Europe unsecured bonds due 2022 ("KWE notes"), with$303 million remaining. In total, the Company has redeemed$387 million (£280 million ) or56% of the initial$690 million (£500 million ) KWE notes. -
As a result of these two transactions, the Company expects to save
$18 million in annual interest. The Company used total cash of$794 million in Q2 in connection with the redemption of the 2024 notes and the KWE notes. The Company recognized a one-time loss on early extinguishment of debt of$15 million in 1Q-21 and with a further$21 million expected in 2Q-21, composed of prepayment penalties and the non-cash write-off of unamortized deferred financing costs and debt discounts.
-
During the quarter, the Company issued
-
Improving Debt Profile: Pro forma for the two unsecured debt transactions described above, Kennedy Wilson's share of debt had a pro forma weighted average interest rate of
3.5% per annum vs.3.7% in 4Q-20 and a pro forma weighted-average maturity of 5.9 years vs. 4.1 years as of 4Q-20. -
Share Repurchase Program(3): In 1Q-21, Kennedy Wilson repurchased 0.7 million shares for
$12 million at a weighted-average price of$17.73 per share. As of March 31, 2021, the Company had$245 million remaining available under its$500 million share repurchase plan. Since the launch of the plan in March 2018, the Company has repurchased 14.3 million shares for$255 million at a weighted-average price of$17.90 per share.
Subsequent Events
The Company has either closed or is under contract on the following investment transactions:
-
Completed 7 real estate acquisitions and loan originations for
$368 million ($112 million at KW share) -
Under contract to acquire 5 real estate and loan investments for
$146 million ($61 million at KW share) -
Under contract to sell 3 real estate investments for
$126 million ($9 million at KW share). -
If completed, these transactions are expected to add
$9 million of Estimated Annual NOI to KW in 2Q-21, resulting in a pro-forma Estimated Annual NOI of$398 million .
Subsequent to quarter-end, the Company drew
| Footnotes | ||
(1) |
|
In 1Q-21, the Company recognized a one-time |
(2) |
|
Represents consolidated cash and includes |
(3) |
|
Future purchases under the program may be made in the open market, in privately negotiated transactions, through the net settlement of the company's restricted stock grants or otherwise, with the amount and timing of the repurchases dependent on market conditions and subject to the Company's discretion. The program does not obligate the Company to repurchase any specific number of shares and, subject to compliance with applicable laws, may be suspended or terminated at any time without prior notice. |
Conference Call and Webcast Details
Kennedy Wilson will hold a live conference call and webcast to discuss results at 7:00 a.m. PT/ 10:00 a.m. ET on Thursday, May 6. The direct dial-in number for the conference call is (844) 340-4761 for U.S. callers and (412) 717-9616 for international callers. A replay of the call will be available for one week beginning one hour after the live call and can be accessed by (877) 344-7529 for U.S. callers and (412) 317-0088 for international callers. The passcode for the replay is 10154188.
The webcast will be available at: https://services.choruscall.com/links/kw210506uS6eIgBe.html. A replay of the webcast will be available one hour after the original webcast on the Company’s investor relations web site for three months.
About Kennedy Wilson
Kennedy Wilson (NYSE:KW) is a leading global real estate investment company. We own, operate, and invest in real estate through our balance sheet and through our investment management platform. We focus on multifamily and office properties located in the Western U.S., U.K., and Ireland. For further information on Kennedy Wilson, please visit: www.kennedywilson.com.
Kennedy-Wilson Holdings, Inc. Consolidated Balance Sheets (Unaudited) (Dollars in millions) |
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March 31,
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December 31,
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Assets |
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|
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Cash and cash equivalents(1) |
|
$ |
1,438.6 |
|
|
|
$ |
965.1 |
|
|
Accounts receivable |
|
46.3 |
|
|
|
47.9 |
|
|
||
Real estate and acquired in place lease values (net of accumulated depreciation and amortization of |
|
4,562.7 |
|
|
|
4,720.5 |
|
|
||
Unconsolidated investments (including |
|
1,311.0 |
|
|
|
1,289.3 |
|
|
||
Other assets |
|
191.4 |
|
|
|
199.1 |
|
|
||
Loan purchases and originations |
|
98.5 |
|
|
|
107.1 |
|
|
||
Total assets |
|
$ |
7,648.5 |
|
|
|
$ |
7,329.0 |
|
|
|
|
|
|
|
||||||
Liabilities |
|
|
|
|
||||||
Accounts payable |
|
$ |
15.6 |
|
|
|
$ |
30.1 |
|
|
Accrued expenses and other liabilities |
|
479.3 |
|
|
|
531.7 |
|
|
||
Mortgage debt |
|
2,555.3 |
|
|
|
2,589.8 |
|
|
||
KW unsecured debt(1) |
|
1,799.8 |
|
|
|
1,332.2 |
|
|
||
KWE unsecured bonds(1) |
|
1,152.2 |
|
|
|
1,172.5 |
|
|
||
Total liabilities |
|
6,002.2 |
|
|
|
5,656.3 |
|
|
||
Equity |
|
|
|
|
||||||
Cumulative perpetual preferred stock |
|
295.2 |
|
|
|
295.2 |
|
|
||
Common stock |
|
— |
|
|
|
— |
|
|
||
Additional paid-in capital |
|
1,718.6 |
|
|
|
1,725.2 |
|
|
||
(Accumulated deficit) retained earnings |
|
(18.9 |
) |
|
|
17.7 |
|
|
||
Accumulated other comprehensive loss |
|
(377.1 |
) |
|
|
(393.6 |
) |
|
||
Total Kennedy-Wilson Holdings, Inc. shareholders’ equity |
|
1,617.8 |
|
|
|
1,644.5 |
|
|
||
Noncontrolling interests |
|
28.5 |
|
|
|
28.2 |
|
|
||
Total equity |
|
1,646.3 |
|
|
|
1,672.7 |
|
|
||
Total liabilities and equity |
|
$ |
7,648.5 |
|
|
|
$ |
7,329.0 |
|
|
(1) During April 2021, the Company paid down |
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Kennedy-Wilson Holdings, Inc. Consolidated Statements of Operations (Unaudited) (Dollars in millions, except share amounts and per share data) |
||||||||||
|
|
Three Months Ended March 31, |
||||||||
|
|
2021 |
|
|
2020 |
|
||||
Revenue |
|
|
|
|
||||||
Rental |
|
$ |
88.9 |
|
|
|
$ |
107.7 |
|
|
Hotel |
|
0.8 |
|
|
|
7.2 |
|
|
||
Investment management and property services fees |
|
8.1 |
|
|
|
8.4 |
|
|
||
Loans and other |
|
1.6 |
|
|
|
— |
|
|
||
Total revenue |
|
99.4 |
|
|
|
123.3 |
|
|
||
Expenses |
|
|
|
|
||||||
Rental |
|
33.0 |
|
|
|
36.7 |
|
|
||
Hotel |
|
1.6 |
|
|
|
6.0 |
|
|
||
Commission and marketing |
|
0.3 |
|
|
|
0.7 |
|
|
||
Compensation and related (includes |
|
34.7 |
|
|
|
31.4 |
|
|
||
General and administrative |
|
6.8 |
|
|
|
9.5 |
|
|
||
Depreciation and amortization |
|
44.4 |
|
|
|
45.5 |
|
|
||
Total expenses |
|
120.8 |
|
|
|
129.8 |
|
|
||
Income from unconsolidated investments, net of depreciation and amortization |
|
18.4 |
|
|
|
10.9 |
|
|
||
Gain on sale of real estate, net |
|
73.5 |
|
|
|
44.2 |
|
|
||
Transaction-related expenses |
|
— |
|
|
|
— |
|
|
||
Interest expense |
|
(51.6 |
) |
|
|
(48.8 |
) |
|
||
Loss on early extinguishment of debt |
|
(14.8 |
) |
|
|
— |
|
|
||
Other (loss) income |
|
(3.0 |
) |
|
|
— |
|
|
||
Income (loss) before provision for income taxes |
|
1.1 |
|
|
|
(0.2 |
) |
|
||
Provision for income taxes |
|
(2.7 |
) |
|
|
(5.7 |
) |
|
||
Net loss |
|
(1.6 |
) |
|
|
(5.9 |
) |
|
||
Net loss attributable to noncontrolling interests |
|
0.3 |
|
|
|
0.3 |
|
|
||
Preferred dividends |
|
(4.3 |
) |
|
|
(4.3 |
) |
|
||
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| ||||||||||
