Kennedy-wilson ((KW)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Kennedy-Wilson’s recent earnings call was marked by a generally positive sentiment, highlighting the company’s strategic achievements and growth. Despite reporting a GAAP EPS loss, the call emphasized strong capital deployment, successful asset sales, and significant growth in assets under management. The expansion in rental housing and investment management fee growth further underscored the company’s robust performance, with positive developments outweighing the challenges faced in certain regions and sectors.
Record Capital Deployment
Kennedy-Wilson reported a record capital deployment, having deployed or committed $1.7 billion of new capital in the second quarter. This brings the total capital deployment for the first half of 2025 to $2.6 billion, with the company on track to exceed $4.3 billion deployed in 2024. This strategic move underscores the company’s aggressive growth and investment strategy.
Successful Asset Sales
The company successfully executed over $600 million in noncore asset sales, generating $250 million in cash proceeds. This achievement surpassed the $200 million target set in the previous earnings call, demonstrating Kennedy-Wilson’s effective asset management and sales strategy.
Record Assets Under Management
Kennedy-Wilson’s assets under management (AUM) grew to a record $30 billion, marking a 70% increase since the beginning of 2021. This significant growth reflects the company’s successful expansion and strategic asset acquisitions.
Expansion in Rental Housing
The company directed 96% of its capital deployment for the first half of the year toward the rental housing sector, achieving significant growth in fee-bearing capital to a record $9.2 billion. This focus on rental housing highlights Kennedy-Wilson’s strategic emphasis on this growing sector.
Strong Investment Management Fee Growth
Investment management fees grew by 39% in the second quarter, reaching a quarterly record of $36 million. The year-over-year increase of 30% for the first half of 2025 highlights the company’s strong performance in this area.
Debt Reduction
Kennedy-Wilson made significant progress in debt reduction by paying off $170 million on its line of credit and planning to repay EUR 300 million in KWE bonds by October 3. This strategic debt management is crucial for the company’s financial health.
GAAP EPS Loss
The company reported a GAAP EPS loss of $0.05 per share for the quarter, an improvement from a loss of $0.43 per share in the same quarter last year. This reduction in losses indicates a positive trend in the company’s financial performance.
Flat Performance in Northern California Portfolio
Kennedy-Wilson’s Northern California portfolio experienced largely flat results, with higher rents being offset by higher delinquency rates. This highlights the challenges faced in this specific regional market.
Decline in European Office NOI
The European office portfolio saw a 3% decline in same-property NOI, primarily due to a decline in occupancy at two U.K. assets. This reflects the occupancy challenges in the European office market.
Forward-Looking Guidance
Kennedy-Wilson provided robust forward-looking guidance, indicating strong performance and strategic progress. The company expects to exceed $4.3 billion in capital deployment for 2024 and anticipates rental housing to grow to over 80% of AUM within two years. The credit team is closing in on surpassing $6 billion in new loans, focusing on high-quality market-rate multifamily and student housing developments. Additionally, the company plans to fully repay $350 million in KWE bonds by October, highlighting its commitment to debt reduction.
In conclusion, Kennedy-Wilson’s earnings call reflected a positive sentiment with strategic achievements in capital deployment, asset sales, and growth in assets under management. Despite some regional challenges, the company’s forward-looking guidance and strategic focus on rental housing and debt reduction position it well for continued growth. Investors and stakeholders can take confidence in the company’s strategic direction and financial health.