Kennedy-wilson Holdings Inc. · NYSE:KW
Kennedy-wilson — FY2014 Earnings Presentation
59 slides from Kennedy-wilson's earnings presentation, Feb 26, 2015
Slide 1: 2014 Results for the period ended 31 December 2014
2014 Results for the period ended 31 December 2014 EXHIBIT 99.2
Slide 2: Disclaimer
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 Disclaimer This presentation is being provided to you for information purposes only. This presentation does not constitute an offering of securities or otherwise constitute an offer or invitation or inducement to any person to un
Slide 3: The KWE team
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 2 The KWE1 team Expert local presence Wider KWE Team Total employees: 74; Asset Management: 29; Investments: 11; Finance & Operations: 34 Notes: Kennedy Wilson Europe Real Estate Plc (LSE: KWE) 1 Peter Hewetson Head of UK Direct
Slide 4: Agenda
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 Agenda 3 Overview Financials UK Ireland 2015 Strategic objectives Q&A
Slide 5: Overview
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 OVERVIEW 4
Slide 6: Our strategy
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 5 Our strategy Strong shareholder alignment through significant ownership stake Generate superior shareholder returns by unlocking value of under- resourced real estate SYNERGIES BETWEEN DEBT & EQUITY PROFESSIONALS REPEAT BUSINES
Slide 7: Significant 2014 achievements
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 6 Significant 2014 achievements Successfully raised £1.35bn1 Attractive acquisition metrics £170 CAPITAL VALUE PSF 2 6.6% YIELD ON COST 3 7.7 years WAULT 4 Accretive debt terms £545.9m DEBT OUTSTANDING 2.36% AVG INTEREST RA
Slide 8: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 8 Notes: Includes £351m raised from secondary offering in October 2014 Calculated on Commercial and Residential assets only and excludes Hotels, Loans and Development properties At the time of acquisition, based on actual purchas
Slide 9: Financial highlights
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 7p per share 28p or 2.6% 7 Financial highlights1 Period ended 31 December 2014 PORTFOLIO VALUE £1,489.0m EPRA EARNINGS 25.9p per share EPRA NET ASSETS 1,021.8p per share LOAN TO VALUE (LTV) 7.0% PORTFOLIO VALUE £2,063.7m 4,5 LOAN
Slide 10: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 1 0 Notes: GBP equivalent based on €/GBP exchange rate of 0.7825 as at 31 December 2014 Dividends of 2p per share were paid on 29-Aug-14 over 100,225,215 shares (£2.0m) and 4p per share were paid on 28-Nov-14 over 135,283,293 sha
Slide 11: Operational highlights
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 £133.4m 8 Operational highlights1 Period ended 31 December 2014 ANNUALISED NOI £90.6m YIELD ON COST 6.6% 3 ANNUALISED NOI Today OCCUPANCY 90.9% 4 2 OCCUPANCY 94.5% 5 VALUATION UPLIFT £57.9m YIELD ON COST 6.7% WAULT 7.7 years 6 WA
Slide 12: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 1 2 Notes: 2 1 3 4 5 6 GBP equivalent based on €/GBP exchange rate of 0.7825 as at 31 December 2014 As at 25-Feb-15, pro forma post period end acquisitions including the completion of the Aviva/Gatsby portfolio (30-Jan-15), the c
Slide 13: Portfolio approach: Unlocking value in under-resourced real estate
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 9 Portfolio approach: Unlocking value in under-resourced real estate Long term leases to credit tenants Positioned to capture market rental growth CORE Undermanaged or undercapitalised Significant asset management upside
Slide 14: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 Notes: 1 4
Slide 15: Portfolio assembly
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 10 Portfolio assembly1 Investment programme delivered ahead of plan OPERA & THE MARSHES REFINANCING (IE) GARDNER HOUSE NPL (IE)5 TIGER & ARTEMIS FINANCING (UK) THE MARSHES SHOPPING CENTRE (IE) ELLIOTT LOAN PORTFOLIO (IE) FAIRMONT
Slide 16: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 1 6 Notes: 2 1 3 Based on transaction date of completion On 23 April 2014, KWE acquired the Fordgate Jupiter B-note for £36.5m; on 26 June 2014 KWE purchased the property portfolio for £296.3m and the B-note was repaid Joint vent
Slide 17: Portfolio assembly (cont'd)
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 11 Portfolio assembly (cont’d) JAN-15 FEB-15 PARK INN NPL PORTFOLIO (UK) GARDNER HOUSE LOAN CONVERSION TO DIRECT PROPERTY (IE)5 AVIVA/GATSBY PORTFOLIO (UK) AVIVA PORTFOLIO FINANCING (UK) Good pace continues into 2015 £800m+ inves
Slide 18: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 Notes: 1 8
Slide 19: KWE portfolio today
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 12 KWE portfolio today1 60% of value across Dublin, London & the South East2 Geographic spread UK Ireland 73% 27% 0% Asset mix 88% Sector mix Office Real Estate loans 40% 12% 31% Retail 4% Industrial 8% Residential 3% 2% Other Sp
Slide 20: Financials
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 FINANCIALS 13
Slide 21: Contributors to EPRA NAV growth
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 972p 1,022p 39p 4p 17p -6p -4p 850 900 950 1,000 1,050 1,100 14 Contributors to EPRA NAV growth N A V per s hare (p ) NAV from share issues Revaluation of properties Revaluation of loans Retained earnings Dividends paid FX loss E
Slide 22: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 2 2 Notes: 2 1 3 Refer to slide 37 for details; represents the net equity proceeds from the IPO (Feb-14) and secondary offering (Oct-15) including shares issued to the Investment Manager in respect of 50% of its fees Net change i
Slide 23: EPRA NAV progression
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 15 EPRA NAV progression Quarterly EPRA NAV EP R A N A V per s hare (p ) £969.4m £992.9m £999.8m £1,382.4m 968.4p 991.8p 998.7p 1021.8p - 200 400 600 800 1,000 1,200 1,400 1,600 940 950 960 970 980 990 1,000 1,010 1,020 1,030 Q1-1
Slide 24: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 Notes: 2 4
Slide 25: Components of EPRA EPS
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 25.9p 7.4p -8.9p -9.4p -4.0p -4.4p - 10 20 30 40 50 60 16 Components of EPRA EPS Period to 31 December 2014 E a rn in g s p e r s h a re ( p ) Investment property NOI Loan NOI Office 27.6p Retail 8.8p 45.2p Industrial 6.6p Other
Slide 26: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 2 6 Notes: 2 1 3 Investment and development property and hotel net operating income Interest income from loans secured by real estate Professional fees including audit, accounts, tax services and administrator and legal fees, etc
Slide 27: NOI growth
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 17 NOI growth Annualised NOI movements since IPO 94.2 90.6 133.4 3.2 -1.6 -2.9 -1.2 -1.1 42.0 1.3 -0.5 60 80 100 120 140 ≈ Acq’n NOI AM uplift Ann u a lis ed N O I (£m ) Tenant incentives Baggot Street NOI 31-Dec-14 NOI 25-Feb-15
Slide 28: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 Notes: 2 8
Slide 29: Debt profile
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 117 545 71 165 225 - 100 200 300 400 500 600 2015 2016 2017 2018 2019 2020 2021 2022 2023 18 Debt profile1 Weighted average interest rate 2.6%2 DEB T EXPI R Y (£m ) RCF – UNDRAWN – FLOATING SECURED – FLOATING SECURED – FIXED FACI
Slide 30: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 3 0 Notes: 2 1 3 As at 25-Feb-15 including post period end acquisitions; Includes drawn and undrawn facilities. £897.4m of secured debt will be fully drawn on completion of the remaining conditional transfers of assets in the Avi
Slide 31: UK
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 UK 19
Slide 32: UK regional market rebounding
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 20 UK regional market rebounding 2004-14 SOUTH EAST & REGIONAL TAKE-UP 0% 2% 4% 6% 8% 10% 12% 14% 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: Chatham Financials 1 0- Y E A R CON S T A N T M A T U
Slide 33: KWE UK portfolio
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 21 KWE UK portfolio At 31 December 2014 34% 30% 15% 6% Office Retail Industrial Real Estate Loans Other Central London Greater London South East South West Midlands Wales Scotland 10% 2% 3% Today 23% 19% 17% 6% 7% 0% 18% North 9%
Slide 34: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 3 4 Notes: 2 1 Based on UK direct real estate portfolio excluding loans; portfolio market value based on the independent valuation by CBRE as at 31-Dec-14 Based on total UK portfolio including loans; portfolio market value based
Slide 35: KWE UK: Greater London portfolio
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 22 KWE UK: Greater London portfolio Appendix Financials Overview UK Ireland 2015 Objectives 18 17 22 26 20 23 9 33 32 25 2 4 11 7 24 30 13 3 28 36 35 12 16 29 27 31 14
Slide 36: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 3 6 Notes: 2 1 3 4 5 6 11 Bolt Court, Fleet Street, London, EC4A 110 Manor Road, Wallington, SM6 111 Buckingham Palace Road, Victoria, London, SW1 112/116 High Street, Sutton, SM1 115-131 High Street, Barkingside, IG1 116 High Ro
Slide 37: Asset management achievements
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 23 Asset management achievements Significant level of occupier engagement leading to income growth Re-gear New lease Total No. of transactions 12 26 38 Area (000 sq ft) 252.5 258.4 510.9 NOI uplift (£m) Rental income 1.2 1.5 2.7
Slide 38: Case study: Buckingham Palace Road
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 24 Case study: 111 Buckingham Palace Road Existing reception Acquired November 2014, 227k sq ft Acquisition for £207.5m; cap value £913 psf Current prime market rents in Victoria are £80 psf+ vs in place average rents at BPR
Slide 39: Case study: Aviva/Gatsby portfolio
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 25 Convenience, 9% London & the SE 17 convenience stores let to Tesco, Sainsbury, M&S Simply Food, Waitrose and Budgens Significant competition for this format provides robust rental evidence Case study: Aviva/Gatsby portfoli
Slide 40: Ireland
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 IRELAND 26
Slide 41: Irish economic recovery driving growth in key sectors
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 800 900 1,000 1,100 1,200 1,300 1,400 Sep-07 Feb-09 Jun-10 Nov-11 Mar-13 Jul-14 27 Irish economic recovery driving growth in key sectors 80 85 90 95 100 105 110 115 120 2005M01 2007M01 2009M01 2011M01 2013M01 12 CONSECUTIVE MONTH
Slide 42: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 Notes: 4 2
Slide 43: KWE Ireland: Dublin CBD portfolio
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 38%1 17% 13% 26% 1% 28 KWE Ireland: Dublin CBD portfolio KWE Ireland 86% in Greater DublinA Dublin Dublin County Regions 51% 14% 35% £456m DIRECT REAL ESTATE PORTFOLIO EXCLUDING LOANSA Office Retail Residential Real Estate Loans
Slide 44: Notes
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 4 4 Notes: 1 3 4 5 6 Based on Irish direct real estate portfolio excluding loans; portfolio market value based on the independent valuation by CBRE as at 31-Dec-14 Based on total Irish portfolio including loans; portfolio market
Slide 45: Ireland: Case studies
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 29 Vantage Central Park Acquired June 2014 Prime rented apartment sector; Phase 1 (272 units) substantially complete; Phase 2 (166 units) at podium level Phase 1: 73 units refurbished; rents typically up 25% 31,000 sq ft of
Slide 46: Ireland: Development pipeline
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 30 Ireland: Development pipeline COMMITTED PIPELINE DEVELOPMENTS Block K, Central Park, Co. Dublin (single asset purchase) Baggot Building, Dublin 2 (Opera portfolio) Rented apartments Office Site 91,000 sq ft Onsite Pre-construc
Slide 47: Strategic objectives over 2015
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 STRATEGIC OBJECTIVES OVER 2015 31
Slide 48: Strategic objectives over 2015
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 32 Strategic objectives over 2015 Unlocking value of under-resourced real estate 1. Focus on delivering total returns for shareholders where a dividend forms an important component 2. Ensure efficient capital structure within the
Slide 49: Questions?
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 QUESTIONS? 33
Slide 50: Appendix
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 APPENDIX 34
Slide 51: Shareholder alignment
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 35 Shareholder alignment KW3 c. 15% owner Majority of fees paid in stock Largest investment for KW3 KWE2 KW3 Growing SHAREHOLDING FROM FEES KW3 SENIOR MANAGEMENT 21.0% SHAREHOLDING 100% OF PERFORMANCE FEE PAID IN SHARES 50%
Slide 52: Summary balance sheet
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 36 Summary balance sheet EPRA net assets Investment property1 Loans secured by real estate PORTFOLIO VALUE Cash and cash equivalents Bank borrowings NET DEBT Other net assets EPRA NET ASSETS Notes: Including hotels, under propert
Slide 53: Shares issued
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 37 Shares issued At 31 December 2014 IPO1 Secondary offering2 Issue of shares for IM fee3 TOTAL No. of shares (m) Date Issue price (p) Gross proceeds (£m) Issue costs (£m) Net proceeds (£m) NAV per share (p) 28-Feb-14 08-Oct-14 1
Slide 54: Summary income statement
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 38 Summary income statement EPRA EPS 25.9p, up from 4.3p in June 2014 Basic and diluted EPS Net change in fair value of: Investment properties Loans secured by real estate Hotels1 Loss on interest rate caps Gain on sale of invest
Slide 55: KWE portfolio at December
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 39 KWE portfolio at 31 December Geographic spread UK Ireland 63% 37% 0% Asset mix 86% 14% Sector mix Office Real Estate loans 52% 14% 17% Retail 7% Industrial 5% Residential 4% 1% Other Spain Direct real estate Real estate loans
Slide 56: Economic indicators improving
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 40 Economic indicators improving Economy in much better place than 12 months ago 0 1 2 3 Italy France Netherlands Germany Spain Ireland ANNUAL AVERAGE GDP GROWTH (%) 2015-19 Source: Oxford Economics 0 1 2 3 4 Russia Eurozone Nord
Slide 57: Ireland: office fundamentals remain strong
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 41 Ireland: office fundamentals remain strong Office rents expected to grow 22% to €55 psf in 2015 Source: CBRE 11.8% 19.2% 7.9% 10.3% 6.9% 10.3% 14.6% 7.9% 16.4% 2.1% 3.7% 3.3% 5.1% 0% 5% 10% 15% 20% 25% Overall Grade A Dublin D
Slide 58: European non-performing loan (NPL) market
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 42 European non-performing loan (NPL) market €21.7bn of live sales, and predictions are for €60-70bn of volume in 2015 2014 sales by geography UK Ireland Spain Germany Italy Other Europe CRE loans Residential loans REOs Corporate
Slide 59: Spain & Italy
Kennedy Wilson Europe Real Estate Plc 2014 Results to 31 December 2014 43 Spain & Italy Spain Italy Positive reforms for real estate o New Italian REITs (SIIQ) o New Provisions on lease agreements o New rules on financing o Labour reforms New sources of capital from the Middle East and Asia Re
Kennedy-Wilson Holdings — FY2014 Earnings Presentation on 6ix