Slide 1: Investor Presentation October 2009
Investor Presentation October 2009
Slide 2: Important information for stockholders and warrant holders
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: Auction Starting Bids From $80,000
sae STARTING BIDS FROM $80,000 isl / By Hanes Prevost ied From KENNEDY WILSON
Slide 4: Recent transaction updates: third party capital commitments, reduced share count, vote date
3 New Third Party Capital Commitments(1) Kennedy-Wilson disclosed two joint venture agreements with third party capital providers totaling $550 million of committed capital. Management remains highly confident in its ability to continue to secure significant additional third party committed capital
Slide 5: Management biographies
4 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 6: Transaction Overview
5 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 7: 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 8: Distressed Acquisition Opportunities
8 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 esta
Slide 9: Market Opportunity: Core Investment Markets
9 Honolulu, HI Kennedy Wilson will initially target investments in its core markets, which include the West Coast of the continental US, Hawaii and Tokyo MARKET OPPORTUNITY CORE INVESTMENT MARKETS (I) 1. Regional office is dedicated towards Japan separate accounts. 2. Based on management estimates.
Slide 10: Business Model: Third Party Deal Flow
10 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 – B
Slide 11: Business Model: Overview of Investments Business
11 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 investmen
Slide 12: 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 12
Slide 13: Business Model: Current Investments
13 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 14: Business Model: Selected Past Investments
14 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 15: Business Model: Overview of Services Business Line
15 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 16: Services case studies
16 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 17: Management team
17 William McMorrow Chairman of the Board Chief Executive Officer Years in real estate: 33 Years with KW: 21 Rhett Winchell President Auction Group Years in real estate: 27 Years with KW: 25 Robert Hart CEO & President Multifamily Investment Group Years in real estate: 22 Years with KW: 9 Mary Ricks
Slide 18: Track Record Overview
39% 51% 30% 32% 78% 0% 20% 40% 60% 80% 100% Total Japan Other Multifamily Office 18 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 capital since 1999, including over $2 billio
Slide 19: Track Record: Historical Growth
$1,260 $1,044 $1,420 $1,674 $2,298 $2,348 $241 $527 $559 $559 $350 $1,028 $428 $765 $113 $5 $0 $200 $400 $600 $800 $1,000 $1,200 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2004 2005 2006 2007 2008 2009 U.S. Transaction Value Japan Transaction Volume Asset Sales ($ in millions) 19 Aggregate Tr
Slide 20: 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 21: Growth Strategy: Investment Plan
21 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 22: Growth Strategy: Illustrative Economics, Investments
GROWTH STRATEGY ILLUSTRATIVE ECONOMICS SUMMARY BUILD-UP 22 ($ 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 $30 Property management
Slide 23: Growth Strategy: Illustrative Economics, Services
GROWTH STRATEGY ILLUSTRATIVE ECONOMICS SUMMARY BUILD-UP 23 ($ 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 24: Theoretical Equity Returns: Kennedy Wilson vs. REIT
Levered Return 16% 24 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 16.
Slide 25: Adjusted 6/30/09 Pro Forma Balance Sheet
Pro Forma with 0% redemption Pro Forma with 20% redemption Assets Cash(2,3) $219 $169 Receivables 10 10 Investments in RE(4) 49 49 Investment in JVs(3) 149 149 Other 11 11 Goodwill 24 24 Total Assets $462 $412 Liabilities and Equity Accruals $26 $26 Notes payable(2,5) 22 22 Line of credit(2,5) 0 0 P
Slide 26: Strong Balance Sheet
26 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 27: Pro forma equity capitalization, sources and uses
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 $9.87 on 10/23/2009. 4. Assumes 20% redemptions. 5. Assumes 100% redemption. Re
Slide 28: Appendix
APPENDIX KENNEDY WILSON
Slide 29: Comparable company categories
29 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 30: Pending CRE Debt Maturities
30 Pending CRE Debt Maturities Source: Intex, Mortgage Bankers Association and Federal Reserve 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
Slide 31: Sources of Deal Flow
31 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