Kennedy-wilson Holdings Inc. · NYSE:KW
Kennedy-wilson — Prospect Acquisition — SPAC Merger (October 2009)
30 slides from Kennedy-wilson's SPAC merger presentation, Oct 2, 2009
Slide 1: Investor Presentation October 2009
Investor Presentation October 2009
Slide 2: Important information for stockholders and forward-looking statements
1 This presentation is intended for stockholders and bondholders of Kennedy Wilson, Inc. (OTC: KWIC; “Kennedy Wilson”), stockholders and warrant holders of Prospect Acquisition Corporation (NYSE AMEX: PAX; “PAX” or “Prospect”), as well as other persons who might be interested in purchasing Prospect
Slide 3: Kennedy Wilson Presenter Biographies
2 The architect of Kennedy Wilson’s expansion into real estate brokerage, property management, and investment services, joining in 1988 More than 17 years of banking experience, in addition to real estate experience Formerly Executive Vice President and Chairman of the Credit Policy Committee at Imp
Slide 4: Transaction Overview
3 Business combination between Kennedy Wilson, Inc. (“Kennedy Wilson”) and Prospect Acquisition Corp. (NYSE AMEX: PAX) (“Prospect”) a Special Purpose Acquisition Company, with approximately $248 million of cash Transaction Description Prospect will issue 26.0 million shares of common stock to Kenned
Slide 5: Investment Highlights
4 Market Opportunity: Distressed-driven real estate investing Business Model: Vertically-integrated, diversified and complementary Management: Experienced, tested through cycles and cohesive Track Record: Top quartile returns(1) Pipeline: Substantial immediate investment opportunities Growth Strateg
Slide 6: Investment Rationale
INVESTMENT RATIONALE Kennedy Wilson is a preeminent real estate asset manager and service company that is uniquely positioned to take advantage of the current market opportunity Investments Business Auction Property management Services Business Equity Capital Raising Condo Multifamily Office Loan-to
Slide 7: Distressed Acquisition Opportunities
6 Distressed Acquisition Opportunities Simultaneous de-leveraging from banks and borrowers should clear the way for re-pricing of real estate assets Near-term debt maturities for over-financed assets should lead to distressed sales Rising cap rates / asset re-pricing should lead to solid real estate
Slide 8: Market Opportunity: Core Investment Markets
7 MARKET OPPORTUNITY CORE INVESTMENT MARKETS Kennedy Wilson will initially target investments in its core markets, which include the West Coast of the continental US, Hawaii and Tokyo Opportunity size(2) Seattle 450 condo projects in California alone Washington – includes 37,000 unsold units with ap
Slide 9: Business Model: Vertically-Integrated Platform
8 Kennedy Wilson Investments Third Party Deal Flow Kennedy Wilson generates meaningful proprietary deal flow and services revenue from its vertically-integrated platform Property & Asset Management Third party property management, landlord and tenant leasing representation and brokerage sales Bank R
Slide 10: Business Model: Overview of Investments Business Line
9 Fully-integrated real estate investments platform Nearly $6 billion in aggregate transactions since 1999 30+ investment professionals Targets West Coast of US, Hawaii and Japan Strong historical financial performance Gross IRRs of 39% on 92 realized investments(1) Top quartile investment performan
Slide 11: Business Model: Capital Partners
BUSINESS MODEL CAPITAL PARTNERS Lenders Equity Partners Lenders / Equity Partners Note: The lenders and equity partners listed herein reflect a partial list of Kennedy Wilson’s historical relationships and activities. Kennedy Wilson Capital Partners 10
Slide 12: Business Model: Current Investments
11 Investment Location Method Size Rationale Projected Gross Returns Acq. / Disp. Date Sector BUSINESS MODEL CURRENT INVESTMENTS The Shores and the Cove Richmond, CA June 2008 Partially sold condo project Acquired 516 unsold units for $184,000 per door 32 units were sold for an avg. price of ~$245,0
Slide 13: Business Model: Realized Investments
12 Investment Location Method Size Rationale Gross Returns(1) Acq. / Disp. Date 9701 Wilshire Los Angeles, CA April 2006 / June 2007 Upgraded lobbies, corridors and parking levels Signed leases above pro forma rents Sold building early in business plan to realize profit Leased up 52,000 rsf, impleme
Slide 14: Business Model: Overview of Services Business Line
13 BUSINESS MODEL OVERVIEW OF SERVICES BUSINESS LINE Kennedy Wilson Services $10 billion of commercial and residential real estate sold since inception 40+ auction services employees On-line, live and sealed bid sales Near-term growth driven by REO and distressed situations Clients include banks, in
Slide 15: Services Business Examples
14 Division Property / Company Source Size Services Provided Location Auction The Dalton Pasadena, CA Successful sale of all 34 units on day of auction 410 registered bidders Avg. sales price per unit of over $390,000, exceeding expectations Majority of units have closed Successful sale of all 11 un
Slide 16: Management: Experienced Team
15 MANAGEMENT EXPERIENCED TEAM Kennedy Wilson’s seasoned management team has extensive real estate and public markets experience Investment committee has over 250 years of combined real estate experience Strong cross-disciplinary management team that is designed for scalability Collectively acquired
Slide 17: Track Record Overview
16 TRACK RECORD OVERVIEW Kennedy Wilson has a long history of delivering superior returns across market cycles, geographies and asset classes Kennedy Wilson has deployed nearly $6 billion of total Kennedy Wilson has achieved a 39% gross IRR on 92 capital since 1999, including over $2 billion of equi
Slide 18: Track Record: Historical Growth
17 Aggregate Transaction Value of Owned Assets and Asset Sales TRACK RECORD HISTORICAL GROWTH Equity Under Management and Equity Distributions 1. Total investment at cost including undrawn loan balances and excluding depreciation and partial sales as of 9/30/2009. 2. As of 9/30/09. 3. Reflects cost
Slide 19: Pipeline: Deal Sourcing
Through proprietary deal sourcing, Kennedy Wilson has identified several billion dollars of near term investment opportunities PIPELINE DEAL SOURCING Platform Strategy Expected Launch Fund Value-add and opportunistic strategies across asset classes focused in core Kennedy Wilson markets On-going Con
Slide 20: Growth Strategy: Investment Plan
19 Kennedy Wilson should achieve revenue growth through fees earned on new funds under management GROWTH STRATEGY INVESTMENT PLAN Investment Structure Target Fund / JV Leverage 60% - 70% Kennedy Wilson Equity Co-investment Funds - 5.0% Joint Venture / Separate Accounts - 7.5% Asset Management Fees F
Slide 21: Growth Strategy: Illustrative Economics Build-Up
20 GROWTH STRATEGY ILLUSTRATIVE ECONOMICS SUMMARY BUILD-UP ($ in millions) Illustrative New Investments Total AUM(1) $2,000 $4,000 $6,000 Debt(2) $1,300 $2,600 $3,900 Third Party Equity $652 $1,304 $1,955 Kennedy Wilson Co-Investment $48 $96 $145 Asset management fees $10 $20 $30 Property management
Slide 22: Growth Strategy: Illustrative Services Economics
21 GROWTH STRATEGY ILLUSTRATIVE ECONOMICS SUMMARY BUILD-UP ($ in millions) Illustrative Services AUCTION SERVICES Auction volume $400 $600 $800 Net commissions 3.00% $12 $18 $24 THIRD PARTY PROPERTY MANAGEMENT SERVICES Property revenues $300 $400 $500 Third party property management fees 3.00% $9 $1
Slide 23: Theoretical Equity Returns: Kennedy Wilson vs. REIT
22 Levered Return 16% 22 Current income Capital appreciation Acquisition fee Property management fee Asset management fee Promote Leverage (LTV): 65.0% Cost of Debt: 7.0% Initial Cap Rate: 7.5% Annual Cash Flow Growth Rate: 3.0% Hold Period (Years): 5.0 Exit Cap Rate 7.5% Gross Property Levered IRR
Slide 24: Adjusted 6/30/09 Pro Forma Balance Sheet
23 GROWTH STRATEGY ADJUSTED 6/30/09 PRO FORMA BALANCE SHEET(1) 23 Capital $383 6/30/09 combined pro forma balance sheet in S-4 is adjusted only for the following events described below in notes 2-5 that occurred or are expected to occur after 6/30/09. $28 million of notes payable used to increase ca
Slide 25: Strong Balance Sheet: Pro Forma Debt Maturity
24 Pro forma debt maturity schedule(1) Summary debt review Revolver Facility A Facility B Notes Payable Mortgage Loans Trust Preferred Convertible Subordinated Notes Kennedy Wilson’s well managed balance sheet enables it to put new capital to work for opportunistic purposes Kennedy Wilson is support
Slide 26: Pro Forma Equity Capitalization and Sources and Uses
25 Pro forma equity capitalization Sources and Uses 1. Includes public shares and founders shares and assumes 20% redemptions. 2. Includes merger consideration and management incentive shares. 3. Based on PAX share price of $9.79 on 9/8/2009. 4. Assumes 20% redemptions. 5. Assumes 100% redemption. R
Slide 27: Appendix
APPENDIX KENNEDY WILSON
Slide 28: Publicly Listed Comparable Categories
27 While there is no perfect publicly listed comparable for Kennedy Wilson, there are three categories of companies that share similar characteristics Source: FactSet, SNL Financial, Company filings Commentary Traditional Asset Managers are valued using traditional metrics such as EV/EBITDA or P/E T
Slide 29: Appendix: Debt Maturities
28 APPENDIX DEBT MATURITIES The limited availability of financing coupled with dramatically more conservative underwriting standards should force selling as borrowers are unable to recapitalize Over a trillion dollars of real estate debt is maturing in the next five years Pending CRE Debt Maturities
Slide 30: Appendix: Sources of Deal Flow
29 Source: Holliday Fenoglio Fowler, L.P., FDIC, Foresight Analytics and SEC Commercial banks, who have traditionally been a significant source of deal flow for Kennedy Wilson, will likely be forced to liquidate meaningful amounts of real estate Commercial banks with assets greater than $10 billion