Kennedy-Wilson Holdings, Inc. (KW) Q2 2025 Earnings Call Transcript

Capital Deployment in Q2 $1.7 billion deployed or committed, driving total capital deployment to $2.6 billion for the first half of 2025. This is on track to exceed the $4.3 billion deployed in 2024. The increase is attributed to improving transaction levels within the commercial real estate space.

Noncore Asset Sales Over $600 million in noncore asset sales generating $250 million in cash proceeds to KW, exceeding the $200 million target. The proceeds were used to reduce unsecured line of credit by $170 million and allocate remaining capital to new investments.

Assets Under Management (AUM) Grew to a record $30 billion, a 70% increase since the beginning of 2021. Growth attributed to strong activity across markets and demand for rental housing and real estate credit solutions.

Investment Management Fees Grew by 39% in Q2 to a quarterly record of $36 million. Fees for the first half of 2025 increased by 30% year-over-year, reaching the levels generated in all of 2023 ($62 million). Growth driven by higher levels of capital deployment and strong momentum in fee-related earnings.

GAAP EPS for Q2 Loss of $0.05 per share compared to a loss of $0.43 per share in Q2 of last year. Improvement attributed to better financial performance and asset sale gains.

Baseline EBITDA for Q2 $117 million, a 12% increase year-over-year. Trailing 12-month baseline EBITDA reached $425 million. Growth driven by improved operational performance.

Adjusted EBITDA for Q2 $147 million, up significantly from $79 million in Q2 of last year. Increase attributed to higher asset sale activity and operational improvements.

Consolidated Asset Dispositions in Q2 Resulted in $55 million of gains on sale. Activity included sales of European office assets and a Northern California multifamily asset.

Debt Reduction in Q2 Reduced unsecured debt by $170 million on the line of credit, leaving $100 million as of the end of the quarter. Announced repayment of EUR 300 million KWE unsecured bonds by October 3.

Share Repurchase in Q2 Repurchased approximately 400,000 shares at an average price of $6.21. $100 million remains on the $500 million share repurchase plan.

Stabilized Real Estate Portfolio NOI Estimated annual NOI of $468 million to KW, with 70% related to rental housing or industrial. U.S. same-store NOI grew by 3.3% in Q2, driven by leasing spread improvements.

Pacific Northwest Portfolio NOI Growth 5.6% growth in Q2, driven by return-to-office mandates and favorable real estate tax savings.

Mountain West Portfolio NOI Growth 7.2% growth in Idaho, driven by higher rents, lower real estate taxes, and lower insurance costs.

Southern California Portfolio NOI Growth 5% growth, benefiting from occupancy growth, rental growth, and lower bad debt.

Northern California Portfolio NOI Largely flat, with higher rents offset by higher delinquency. Sale of a 90% stake in the largest asset in the region generated $40 million in cash.

Vintage Housing Affordable Portfolio NOI Growth 5% growth, driven by rising area median incomes. 1,900 units under development and lease-up expected to add $10 million of NOI.

Ireland Apartment Portfolio NOI Growth 2.4% growth, driven by occupancy growth. Stabilized final remaining Irish lease-up apartment asset in Q2.

European Office Portfolio NOI Declined by 3% in Q2, impacted by a decline in occupancy at 2 U.K. assets. Pro forma for new leases, NOI would have increased by 2.7%.

Investment Management Fee Revenue in Q2 $36 million, with fee-bearing capital growing to a record $9.2 billion. Future debt fundings of $5.2 billion expected to impact fee-bearing capital base.