Kennedy Wilson Reports Second Quarter 2023 Results
“In Q2 we achieved significant growth in our investment management business and made considerable progress at all of our developments, including completing Kona Village in
Financial Results
|
Q2 |
|
YTD |
||||||||||
(Amounts in millions, except per share data) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
GAAP Results |
|
|
|
|
|
|
|
||||||
GAAP Net Income (Loss) to Common Shareholders |
$ |
39.0 |
|
($ |
9.0 |
) |
|
($ |
1.8 |
) |
|
$ |
25.8 |
Per Diluted Share |
|
0.28 |
|
|
(0.07 |
) |
|
|
(0.01 |
) |
|
|
0.19 |
|
|
|
|
|
|
|
|
||||||
Non-GAAP Results |
|
|
|
|
|
|
|
||||||
Adjusted EBITDA |
$ |
195.1 |
|
$ |
118.4 |
|
|
$ |
286.0 |
|
|
$ |
278.5 |
Adjusted Net Income |
|
86.0 |
|
|
41.4 |
|
|
|
91.3 |
|
|
|
126.8 |
-
Adjusted EBITDA Increases by
65% to (vs.$195 million in Q2-22):$118 million -
KW's share of recurring property NOI, loan income and fees totaled
in Q2-23 (vs.$131 million in Q2-22)$130 million -
KW's share of gains from the sale of real estate, changes in fair values and performance allocation totaled
in Q2-23 (vs$71 million in Q2-22) and includes the following:$24 million -
Realized gains on sale from real estate, net totaled
in Q2-23 (vs$94 million from Q2-22)$16 million -
Unrealized losses in fair value and net accrued performance allocation totaled a net loss of
in Q2-23 (vs. a net gain of$23 million in Q2-22).$8 million
-
Realized gains on sale from real estate, net totaled
-
Other income totaled
in Q2-23 (vs$24 million in Q2-22) and primarily related to the change in the value of the Company's interest rate hedging derivative contracts during the quarter.$4 million
-
KW's share of recurring property NOI, loan income and fees totaled
-
Loan Acquisition from Pacific Western Bank: The Company and certain controlled affiliates of its partner, Fairfax Financial Holdings Limited (collectively "Fairfax"), acquired 65 construction loans, including four loans acquired in July, totaling$4.1 Billion in loan commitments from Pacific Western Bank ("PacWest") (collectively, the "Loan Portfolio"). The Company's investment in the Loan Portfolio was$4.1 billion 5% , and the acquisition increased the Company's Fee-Bearing Capital by in Q2-23. The PacWest employees that originated and managed the loan portfolio joined Kennedy Wilson in Q3.$1.9 billion -
The Loan Portfolio was acquired for
, including$2.1 billion in outstanding principal balance and$2.3 billion in future funding obligations$1.8 billion -
The Loan Portfolio has an
8.5% weighted average interest rate, a 1.7 year weighted average maturity, and is secured by approximately80% multifamily and student-housing properties. -
The Company received an arrangement fee of
($8 million recognized in Q2-23) in connection with this transaction.$7.3 million
-
The Loan Portfolio was acquired for
- Record Levels of Estimated Annual NOI and Fee-Bearing Capital:
|
Est. Annual NOI To KW ($ in millions) |
|
Fee-Bearing Capital ($ in billions) |
||||
As of Q2-22 |
$ |
479 |
|
|
$ |
5.3 |
|
As of Q4-22 |
$ |
491 |
|
|
$ |
5.9 |
|
As of Q1-23 |
$ |
496 |
|
|
$ |
6.0 |
|
Gross acquisitions and loan investments |
|
11 |
|
|
|
2.0 |
|
Gross dispositions and loan repayments |
|
(10 |
) |
|
|
— |
|
Assets stabilized/unstabilized |
|
1 |
|
|
|
— |
|
Operations |
|
(2 |
) |
|
|
— |
|
FX and other(1) |
|
3 |
|
|
|
(0.1 |
) |
Total as of Q2-23 |
$ |
499 |
|
|
$ |
7.9 |
|
(1) See further discussion of foreign currency hedging strategy below |
- Multifamily Same Property Performance(1) :
|
Q2 - 2023 vs. Q2- 2022 |
YTD - 2023 vs. YTD - 2022 |
||||||||||||
|
Occupancy |
|
Revenue |
|
Expenses |
|
NOI |
Occupancy |
|
Revenue |
|
Expenses |
|
NOI |
Multifamily - Market Rate |
(1.1)% |
|
|
|
|
|
|
(0.9)% |
|
|
|
|
|
|
Multifamily - Affordable |
(0.2)% |
|
|
|
|
|
|
(0.8)% |
|
|
|
|
|
|
Total |
(0.9)% |
|
|
|
|
|
|
(0.9)% |
|
|
|
|
|
|
(1) Excludes minority-held investments and assets under going development or lease-up |
-
U.S. Multifamily - Market Rate:-
Mountain West and Pacific Northwest: The Company's Mountain West and Pacific Northwest portfolio, which represents
74% of its U.S. market-rate same-property portfolio, generated same-property revenue growth of5.6% and NOI growth of6.3% in Q2-23 (vs. Q2-22). -
California : Same Property results inCalifornia continue to be impacted by higher delinquencies related to the expiration of governmental rental assistance programs. The Company received and$1.3 million in Q2-22 and YTD-22, respectively, in rental assistance payments. This compares to$2.1 million and$68,000 in Q2-23 and YTD-23, respectively.$135,000
-
Mountain West and Pacific Northwest: The Company's Mountain West and Pacific Northwest portfolio, which represents
- Office Same Property Performance(1):
|
Q2-2023 vs. Q2-2022 |
YTD - 2023 vs. YTD - 2022 |
||||||||||||
|
Occupancy |
|
Revenue |
|
Expenses |
|
NOI |
Occupancy |
|
Revenue |
|
Expenses |
|
NOI |
Office |
|
|
(0.9)% |
|
|
|
(2.2)% |
|
|
|
|
|
|
|
(1) Excludes minority-held investments and assets under going development or lease-up |
-
Development and Lease-Up Portfolio Update:
- In Q2-23, the Company completed construction of the 82-acre Kona Village resort, which opened on July 1, 2023. The Company also stabilized the 180-unit Springview by Vintage community and has started leasing at initial phases of its Dovetail and Oxbow Mountain West apartment communities, which are expected to total 508 units at completion.
-
The development and lease-up portfolio is expected to add
of Estimated Annual NOI,$99 million of which is expected to stabilize by YE-24.$69 million - The Company expects to fund its share of remaining development costs primarily with cash from non-core asset sales and proceeds from property-level financing.
Investment Activity
-
in Gross New Investments ($2.0 billion at share):$99 million -
Co-Investment Acquisitions: In addition to the Loan Portfolio acquisition from PacWest Bank discussed above, the Company completed
in loan originations (KW share$106 million 2.5% ).
-
Co-Investment Acquisitions: In addition to the Loan Portfolio acquisition from PacWest Bank discussed above, the Company completed
-
in Gross Dispositions and Loan Repayments ($392 million at share):$205 million -
Consolidated Portfolio:
-
Multifamily Dispositions: Sold a
49% interest in two previously wholly-owned market-rate multifamily properties totaling 790 units for a gross valuation of ($228 million at share) into an existing joint-venture platform managed by the Company. The properties are located in$112 million Las Vegas, Nevada , andAuburn, Washington . The Company also sold a previously wholly-owned 293-unit multifamily property inReno, Nevada into its Vintage Housing joint-venture for a gross valuation of .$49 million -
Further Progress On Non-Core Asset Sales: Sold four
UK retail assets and one office asset inItaly for .$16 million
-
Multifamily Dispositions: Sold a
-
Co-Investment Dispositions: Sold
in industrial and other assets from its funds and joint-ventures. KW's average ownership interest in these assets was$54 million 29% . The Company also had loan repayments totaling (KW share$155 million 6% ).
-
Consolidated Portfolio:
Investment Management
-
32% Quarterly Growth in Fee-Bearing Capital to billion: Record quarterly growth in Fee-Bearing Capital with approximately$7.9 in additional non-discretionary capital with certain strategic partners that is currently available for investment:$3.3 billion -
86% Growth in Debt Investment Platform: The Company's debt investment platform grew to driven by the Loan Portfolio acquisition from PacWest (as discussed above), resulting in$6.5 billion 86% growth from Q1-23. The Company has a6% weighted average ownership in this platform, which totals of outstanding loans (including$6.5 billion of future funding commitments) and$1.9 billion of Fee-Bearing Capital at quarter-end.$4.3 billion
-
Balance Sheet and Liquidity
-
Cash and Line of Credit Availability: As of June 30, 2023, Kennedy Wilson had a total of
(1) in cash and cash equivalents and$387 million drawn on its$149 million revolving credit facility. In Q2-23, the Company paid down its line of credit by$500 million .$99 million -
Debt Profile: Kennedy Wilson's share of debt had a weighted average effective interest rate of
4.3% per annum and a weighted average maturity of 5.5 years as of June 30, 2023. Approximately99% of the Company's debt is either fixed or hedged with interest rate hedges. - Interest Rate Hedging Strategy: The Company hedges its floating rate exposure through the usage of interest rate caps and swaps. The Company's interest rate hedges have a weighted average maturity of 1.7 years.
-
Foreign Currency Hedging Strategy: Kennedy Wilson hedges its exposure to foreign currency fluctuations by borrowing in the currency in which it invests and using foreign currency hedging instruments. As of June 30, 2023, the Company has hedged approximately
92% of the carrying value of its foreign currency investments, using local currency debt and hedging instruments with a weighted average term of 2.4 years. -
Preferred Stock and Warrants: As previously announced, the Company received a
investment from affiliates of Fairfax. Under the terms of the investment, Fairfax purchased$200 million in cumulative perpetual preferred stock carrying a fixed$200 million 6.00% annual dividend rate and is callable by Kennedy Wilson at any time. Additionally, Fairfax acquired 7-year warrants for approximately 12.3 million common shares with an initial strike price of per share.$16.21
Footnotes
(1) |
Represents consolidated cash and includes |
Conference Call and Webcast Details
Kennedy Wilson will hold a live conference call and webcast to discuss results at 9:00 a.m. PT/ 12:00 p.m. ET on Thursday, August 3. The direct dial-in number for the conference call is (844) 340-4761 for
The webcast will be available at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=ovP6xzdV. 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 across the
Kennedy-Wilson Holdings, Inc. Consolidated Balance Sheets (Unaudited) (Dollars in millions) |
||||||||
|
|
June 30,
|
|
December 31,
|
||||
Assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
387.0 |
|
|
$ |
439.3 |
|
Accounts receivable |
|
|
40.0 |
|
|
|
40.8 |
|
Real estate and acquired in place lease values (net of accumulated depreciation and amortization of |
|
|
4,982.0 |
|
|
|
5,188.1 |
|
Unconsolidated investments (including |
|
|
2,320.9 |
|
|
|
2,238.1 |
|
Other assets |
|
|
219.9 |
|
|
|
216.1 |
|
Loan purchases and originations |
|
|
244.1 |
|
|
|
149.4 |
|
Total assets |
|
$ |
8,193.9 |
|
|
$ |
8,271.8 |
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
||||
Accounts payable |
|
$ |
16.2 |
|
|
$ |
16.2 |
|
Accrued expenses and other liabilities (including |
|
|
642.4 |
|
|
|
658.2 |
|
Mortgage debt |
|
|
2,887.0 |
|
|
|
3,018.0 |
|
KW unsecured debt |
|
|
1,931.3 |
|
|
|
2,062.6 |
|
KWE unsecured bonds |
|
|
516.4 |
|
|
|
506.4 |
|
Total liabilities |
|
|
5,993.3 |
|
|
|
6,261.4 |
|
Equity |
|
|
|
|
||||
Cumulative perpetual preferred stock |
|
|
790.5 |
|
|
|
592.5 |
|
Common stock |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
1,710.5 |
|
|
|
1,679.5 |
|
Retained earnings |
|
|
53.4 |
|
|
|
122.1 |
|
Accumulated other comprehensive loss |
|
|
(400.0 |
) |
|
|
(430.1 |
) |
Total Kennedy-Wilson Holdings, Inc. shareholders’ equity |
|
|
2,154.4 |
|
|
|
1,964.0 |
|
Noncontrolling interests |
|
|
46.2 |
|
|
|
46.4 |
|
Total equity |
|
|
2,200.6 |
|
|
|
2,010.4 |
|
Total liabilities and equity |
|
$ |
8,193.9 |
|
|
$ |
8,271.8 |
|
Kennedy-Wilson Holdings, Inc. Consolidated Statements of Operations (Unaudited) (Dollars in millions, except share amounts and per share data) |
||||||||||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
|
|
|
|
|
||||||||
Rental |
|
$ |
106.6 |
|
|
$ |
109.3 |
|
|
$ |
213.2 |
|
|
$ |
213.5 |
|
Hotel |
|
|
15.5 |
|
|
|
12.7 |
|
|
|
26.1 |
|
|
|
19.2 |
|
Investment management fees |
|
|
19.1 |
|
|
|
11.0 |
|
|
|
30.1 |
|
|
|
22.3 |
|
Property services fees |
|
|
0.6 |
|
|
|
0.4 |
|
|
|
0.9 |
|
|
|
0.8 |
|
Loans and other |
|
|
4.7 |
|
|
|
2.7 |
|
|
|
8.4 |
|
|
|
5.0 |
|
Total revenue |
|
|
146.5 |
|
|
|
136.1 |
|
|
|
278.7 |
|
|
|
260.8 |
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from unconsolidated investments |
|
|
|
|
|
|
|
|
||||||||
Principal co-investments |
|
|
6.3 |
|
|
|
39.4 |
|
|
|
22.7 |
|
|
|
117.6 |
|
Performance allocations |
|
|
(7.7 |
) |
|
|
(8.7 |
) |
|
|
(18.4 |
) |
|
|
18.5 |
|
Total (loss) income from unconsolidated investments |
|
|
(1.4 |
) |
|
|
30.7 |
|
|
|
4.3 |
|
|
|
136.1 |
|
|
|
|
|
|
|
|
|
|
||||||||
Gain on sale of real estate, net |
|
|
89.0 |
|
|
|
11.9 |
|
|
|
108.2 |
|
|
|
13.8 |
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses |
|
|
|
|
|
|
|
|
||||||||
Rental |
|
|
38.7 |
|
|
|
36.4 |
|
|
|
75.3 |
|
|
|
72.1 |
|
Hotel |
|
|
9.7 |
|
|
|
7.6 |
|
|
|
17.6 |
|
|
|
11.9 |
|
Compensation and related (including |
|
|
37.0 |
|
|
|
33.8 |
|
|
|
67.6 |
|
|
|
69.9 |
|
Performance allocation compensation |
|
|
(1.1 |
) |
|
|
(2.0 |
) |
|
|
0.5 |
|
|
|
9.8 |
|
General and administrative |
|
|
8.7 |
|
|
|
9.4 |
|
|
|
17.1 |
|
|
|
17.3 |
|
Depreciation and amortization |
|
|
40.1 |
|
|
|
43.3 |
|
|
|
79.5 |
|
|
|
86.6 |
|
Total expenses |
|
|
133.1 |
|
|
|
128.5 |
|
|
|
257.6 |
|
|
|
267.6 |
|
Interest expense |
|
|
(66.0 |
) |
|
|
(53.2 |
) |
|
|
(128.3 |
) |
|
|
(103.7 |
) |
Loss on early extinguishment of debt |
|
|
(1.7 |
) |
|
|
(1.1 |
) |
|
|
(1.6 |
) |
|
|
(1.1 |
) |
Other income |
|
|
24.3 |
|
|
|
3.6 |
|
|
|
21.3 |
|
|
|
9.4 |
|
Income (loss) before provision for income taxes |
|
|
57.6 |
|
|
|
(0.5 |
) |
|
|
25.0 |
|
|
|
47.7 |
|
Provision for income taxes |
|
|
(10.3 |
) |
|
|
(0.4 |
) |
|
|
(6.4 |
) |
|
|
(8.6 |
) |
Net income (loss) |
|
|
47.3 |
|
|
|
(0.9 |
) |
|
|
18.6 |
|
|
|
39.1 |
|
Net loss (income) attributable to noncontrolling interests |
|
|
0.1 |
|
|
|
(0.3 |
) |
|
|
(4.1 |
) |
|
|
(0.2 |
) |
Preferred dividends |
|
|
(8.4 |
) |
|
|
(7.8 |
) |
|
|
(16.3 |
) |
|
|
(13.1 |
) |
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders |
|
$ |
39.0 |
|
|
$ |
(9.0 |
) |
|
$ |
(1.8 |
) |
|
$ |
25.8 |
|
Basic earnings (loss) per share |
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share |
|
$ |
0.28 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.01 |
) |
|
$ |
0.19 |
|
Weighted average shares outstanding |
|
|
139,389,170 |
|
|
|
136,840,417 |
|
|
|
138,674,109 |
|
|
|
136,828,876 |
|
Diluted earnings (loss) per share |
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share |
|
$ |
0.28 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.01 |
) |
|
$ |
0.19 |
|
Weighted average shares outstanding |
|
|
139,545,944 |
|
|
|
136,840,417 |
|
|
|
138,674,109 |
|
|
|
137,115,950 |
|
Dividends declared per common share |
|
$ |
0.24 |
|
|
$ |
0.24 |
|
|
$ |
0.48 |
|
|
$ |
0.48 |
|
Kennedy-Wilson Holdings, Inc. Adjusted EBITDA (Unaudited) (Dollars in millions) |
||||||||||||||
The table below reconciles net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders to Adjusted EBITDA, using Kennedy Wilson’s pro-rata share amounts for each adjustment item. |
||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||
|
|
June 30, |
|
June 30, |
||||||||||
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders |
|
$ |
39.0 |
|
$ |
(9.0 |
) |
|
$ |
(1.8 |
) |
|
$ |
25.8 |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||
Add back (Kennedy Wilson's Share)(1): |
|
|
|
|
|
|
|
|
||||||
Interest expense |
|
|
88.7 |
|
|
67.7 |
|
|
|
170.2 |
|
|
|
128.9 |
Loss on early extinguishment of debt |
|
|
1.7 |
|
|
1.1 |
|
|
|
1.6 |
|
|
|
1.1 |
Depreciation and amortization |
|
|
39.7 |
|
|
43.1 |
|
|
|
78.7 |
|
|
|
86.6 |
Provision for income taxes |
|
|
10.3 |
|
|
0.4 |
|
|
|
6.6 |
|
|
|
8.6 |
Preferred dividends |
|
|
8.4 |
|
|
7.8 |
|
|
|
16.3 |
|
|
|
13.1 |
Share-based compensation |
|
|
7.3 |
|
|
7.3 |
|
|
|
14.4 |
|
|
|
14.4 |
Adjusted EBITDA |
|
$ |
195.1 |
|
$ |
118.4 |
|
|
$ |
286.0 |
|
|
$ |
278.5 |
(1) See Appendix for reconciliation of Kennedy Wilson's Share amounts. |
Adjusted Net Income (Unaudited) (Dollars in millions, except share data) |
||||||||||||||
The table below reconciles net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders to Adjusted Net Income, using Kennedy Wilson’s pro-rata share amounts for each adjustment item. |
||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||
|
|
June 30, |
|
June 30, |
||||||||||
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders |
|
$ |
39.0 |
|
$ |
(9.0 |
) |
|
$ |
(1.8 |
) |
|
$ |
25.8 |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
||||||
Add back (Kennedy Wilson's Share)(1): |
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
39.7 |
|
|
43.1 |
|
|
|
78.7 |
|
|
|
86.6 |
Share-based compensation |
|
|
7.3 |
|
|
7.3 |
|
|
|
14.4 |
|
|
|
14.4 |
Adjusted Net Income |
|
$ |
86.0 |
|
$ |
41.4 |
|
|
$ |
91.3 |
|
|
$ |
126.8 |
|
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding for diluted |
|
|
139,545,944 |
|
|
136,840,417 |
|
|
|
138,674,109 |
|
|
|
137,115,950 |
(1) See Appendix for reconciliation of Kennedy Wilson's Share amounts. |
Forward-Looking Statements
Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are necessarily estimates reflecting the judgment of our senior management based on our current estimates, expectations, forecasts and projections and include comments that express our current opinions about trends and factors that may impact future operating results. Disclosures that use words such as "believe," "anticipate," "estimate," "intend," "may," "could," "plan," "expect," "project" or the negative of these, as well as similar expressions, are intended to identify forward-looking statements. These statements are not guarantees of future performance, rely on a number of assumptions concerning future events, many of which are outside of our control, and involve known and unknown risks and uncertainties that could cause our actual results, performance or achievement, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties may include the factors and the risks and uncertainties described elsewhere in this report and other filings with the Securities and Exchange Commission (the "SEC"), including the Item 1A. "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2021, as amended by our subsequent filings with the SEC. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in the context of the various disclosures made by us about our businesses including, without limitation, the risk factors discussed in our filings with the SEC. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise.
Common Definitions
-
“KWH,” "KW," “Kennedy Wilson,” the "Company," "we," "our," or "us" refers to Kennedy-Wilson Holdings, Inc. and its wholly-owned subsidiaries.
-
“Adjusted EBITDA” represents net income before interest expense, loss on early extinguishment of debt, our share of interest expense included in unconsolidated investments, depreciation and amortization, our share of depreciation and amortization included in unconsolidated investments, provision for (benefit from) income taxes, our share of taxes included in unconsolidated investments, share-based compensation, and excludes EBITDA attributable to noncontrolling interests.
Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com. Our management uses Adjusted EBITDA to analyze our business because it adjusts net income for items we believe do not accurately reflect the nature of our business going forward or that relate to non-cash compensation expense or noncontrolling interests. Such items may vary for different companies for reasons unrelated to overall operating performance. Additionally, we believe Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations. However, Adjusted EBITDA is not a recognized measurement under GAAP and when analyzing our operating performance, readers should use Adjusted EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not remove all non-cash items (such as acquisition-related gains) or consider certain cash requirements such as tax and debt service payments. The amount shown for Adjusted EBITDA also differs from the amount calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.
-
"Adjusted Fees" refers to Kennedy Wilson’s gross investment management and property services fees adjusted to include Kennedy Wilson's share of fees eliminated in consolidation, Kennedy Wilson’s share of fees in unconsolidated service businesses and performance fees included in unconsolidated investments. Our management uses Adjusted fees to analyze our investment management and real estate services business because the measure removes required eliminations under GAAP for properties in which the Company provides services but also has an ownership interest. These eliminations understate the economic value of the investment management and property services fees and makes the Company comparable to other real estate companies that provide investment management and real estate services but do not have an ownership interest in the properties they manage. Our management believes that adjusting GAAP fees to reflect these amounts eliminated in consolidation presents a more holistic measure of the scope of our investment management and real estate services business.
-
“Adjusted Net Income” represents net income (loss) before depreciation and amortization, Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments, share-based compensation, and excluding net income attributable to noncontrolling interests, before depreciation and amortization and preferred dividends. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
-
“Annual Return on Loans” is a metric that applies to our real estate debt business that represents the sum of annual interest income, transaction fees and the payback of principal for discounted loan purchases, amortized over the life of the loans and divided by the principal balances of the loans.
-
"Cap rate" represents the net operating income of an investment for the year preceding its acquisition or disposition, as applicable, divided by the purchase or sale price, as applicable. Cap rates set forth in this presentation only includes data from income-producing properties. We calculate cap rates based on information that is supplied to us during the acquisition diligence process. This information is not audited or reviewed by independent accountants and may be presented in a manner that is different from similar information included in our financial statements prepared in accordance with GAAP. In addition, cap rates represent historical performance and are not a guarantee of future NOI. Properties for which a cap rate is provided may not continue to perform at that cap rate.
-
"Equity partners" refers to non-wholly-owned subsidiaries that we consolidate in our financial statements under
U.S. GAAP and third-party equity providers.
-
"Estimated Annual NOI" is a property-level non-GAAP measure representing the estimated annual net operating income from each property as of the date shown, inclusive of rent abatements (if applicable). The calculation excludes depreciation and amortization expense, and does not capture the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements, and leasing commissions necessary to maintain the operating performance of our properties. For assets wholly-owned and fully occupied by KW, the Company provides an estimated NOI for valuation purposes of
, which includes an assumption for applicable market rents. Any of the enumerated items above could have a material effect on the performance of our properties. Also, where specifically noted, for properties purchased in 2023, the NOI represents estimated Year 1 NOI from our original underwriting. Estimated year 1 NOI for properties purchased in 2023 may not be indicative of the actual results for those properties. Estimated annual NOI is not an indicator of the actual annual net operating income that the Company will or expects to realize in any period. Please also see the definition of "Net operating income" below.$4.3 million
-
"Fee-Bearing Capital" represents total third-party committed or invested capital that we manage in our joint-ventures and commingled funds that entitle us to earn fees, including without limitation, asset management fees, construction management fees, acquisition and disposition fees and/or promoted interest, if applicable.
-
"Gross Asset Value” refers to the gross carrying value of assets, before debt, depreciation and amortization, and net of noncontrolling interests.
-
"Net operating income" or "NOI” is a non-GAAP measure representing the income produced by a property calculated by deducting certain property expenses from property revenues. Our management uses net operating income to assess and compare the performance of our properties and to estimate their fair value. Net operating income does not include the effects of depreciation or amortization or gains or losses from the sale of properties because the effects of those items do not necessarily represent the actual change in the value of our properties resulting from our value-add initiatives or changing market conditions. Our management believes that net operating income reflects the core revenues and costs of operating our properties and is better suited to evaluate trends in occupancy and lease rates. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
-
"Noncontrolling interests" represents the portion of equity ownership in a consolidated subsidiary not attributable to Kennedy Wilson.
-
"Performance allocations” relates to allocations to the general partner, special limited partner or asset manager of Kennedy Wilson's co-investments it manages based on the cumulative performance of the fund and are subject to preferred return thresholds of the limited partners.
-
"Performance allocation compensation” - the compensation committee of the Company’s board of directors approved and reserved between twenty percent (
20% ) and thirty-five percent (35% ) of any performance allocation earned by certain commingled funds and separate account investments to be allocated to certain non-NEO employees of the Company.
-
"Principal co-investments” consists of the Company’s share of income or loss earned on investments in which the Company can exercise significant influence but does not have control. Income from unconsolidated investments includes income from ordinary course operations of the underlying investment, gains on sale, fair value gains and losses.
-
"Pro-Rata" represents Kennedy Wilson's share calculated by using our proportionate economic ownership of each asset in our portfolio. Please also refer to the pro-rata financial data in our supplemental financial information.
-
"Property NOI" or "Property-level NOI" is a non-GAAP measure calculated by deducting the Company's Pro-Rata share of rental and hotel property expenses from the Company's Pro-Rata rental, hotel and loans and other revenues. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
-
"Real Estate Assets under Management" ("AUM") generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures. Our AUM is principally intended to reflect the extent of our presence in the real estate market, not the basis for determining our management fees. Our AUM consists of the total estimated fair value of the real estate properties and other real estate related assets either owned by third parties, wholly-owned by us or held by joint ventures and other entities in which our sponsored funds or investment vehicles and client accounts have invested. Committed (but unfunded) capital from investors in our sponsored funds is not included in our AUM. The estimated value of development properties is included at estimated completion cost.
-
"Return on Equity" is a ratio calculated by dividing the net cash distributions of an investment to Kennedy Wilson, after the cost of leverage, if applicable, by the total cash contributions by Kennedy Wilson over the lifetime of the investment.
- “Same property” refers to properties in which Kennedy Wilson has an ownership interest during the entire span of both periods being compared. The same property information presented throughout this report is shown on a cash basis and excludes non-recurring expenses. This analysis excludes properties that are either under development or undergoing lease up as part of our asset management strategy.
Note about Non-GAAP and certain other financial information included in this presentation
In addition to the results reported in accordance with
KW-IR
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802766333/en/
Daven Bhavsar, CFA
Vice President of Investor Relations
(310) 887-3431
dbhavsar@kennedywilson.com
www.kennedywilson.com
Source: Kennedy-Wilson Holdings, Inc.