Kennedy-wilson Holdings Inc. · NYSE:KW
Kennedy-wilson — FY2015 Earnings Presentation
74 slides from Kennedy-wilson's earnings presentation, Feb 26, 2016
Slide 1: Year-end results for the year ended 31 December 2015
Year-end results For the year ended 31 December 2015 26 February 2016 Exhibit 99.2
Slide 2: Agenda
Overview Financial review Portfolio review Summary Q&A Mary Ricks, CEO Fraser Kennedy, Head of Finance Peter Collins, COO Mary Ricks, CEO Agenda
Slide 3: Overview
~~ ed Overview ‘ Mary Ricks il [a <= =I KENNEDY WILSON 2 Kennedy Wilson Europe Real Estate Ple / Years
Slide 4: Completed redevelopment of Lochside Avenue
Completed redevelopment of Lochside Avenue Lochside Avenue, Edinburgh (Artemis portfolio) Before After Overview Financial review Portfolio review Summary Appendix
Slide 5: KWE investment proposition
KWE investment proposition Unlocking value of under-resourced real estate Growing income through asset management +15.3% NOI growth on re-letting and lease renewals1 Creating value through asset management and selective investing +11.5% 2015 valuation uplift (like-for-like) 7.3 / 9.2 2015 WAULT (yea
Slide 6: Highlights
Highlights Financial Net investments £1,136m 7.1% Acquisitions YOC (2015) 35p +480% DPS paid (2015) 2.9% Cost of debt (2015) 47.9p +85% Adjusted earnings per share (2015) 14.6% 1,175p Adjusted NAVPS growth (2015) 4.1% NOI growth (like-for-like) (2015) £157.1m +11.5% Valuation uplift (like-for-like)
Slide 7: Operational achievements
Operational achievements 2015: including 20 loan collateral assets; 2014: including 29 loan collateral assets Notes 1 Portfolio AM transactions £7.6m +69% Incremental NOI from AM 2014: £4.5m 96.0% +5.1pp Occupancy 2014: 90.9% 1.3m sq ft AM transactions area 2014: 0.5m sq ft 233 +82% Number of AM tra
Slide 8: Finance review
Finance review Fraser Kennedy
Slide 9: Strong NAV and earnings growth
Strong NAV and earnings growth Adjusted NAV per share growth +14.6% 2014-15 Total accounting return +18.0% 2014-15 Dividend return +3.4% 2014-15
Slide 10: Financial highlights
Financial highlights Overview Financial review Portfolio review Summary Appendix Adjusted earnings are defined as EPRA earnings adding back performance fee expense (capital in nature) Adjusted NAV is defined as EPRA NAV deducting performance fee (accounted for in share-based payments reserve) 1 2 No
Slide 11: Strong investment activity growing earnings
Strong investment activity growing earnings 65.0 +130.1 -10.9 -15.2 -36.2 -7.6 47.5 NOI Admin costs1 Investment management fee Dividends paid Adjusted earnings Net finance costs Tax Dividend Cover: 1.4x 2015 adjusted earnings (£m) 35p/share +43.3 +86.8 2015 part period acquisition NOI 2014 acquisiti
Slide 12: 20% quarter-on-quarter dividend increase for Q1 2016
20% quarter-on-quarter dividend increase for Q1 2016 Cumulative dividend cover Quarterly dividend paid 12.0p 10.0p 8.0p 7.0p 10.0p Dividend (p per share) 1.5x 1.4x 1.4x 1.7x 2016 2015 Dividend cover on adjusted earnings (x) Overview Financial review Portfolio review Summary Appendix
Slide 13: Strong adjusted NAV per share growth driven by valuation uplift
Strong adjusted NAV per share growth driven by valuation uplift Adjusted NAV per share growth +14.6% 2014-15
Slide 14: 14.6% adjusted NAV per share growth
14.6% adjusted NAV per share growth Valuation surplus Retained earnings Dividends paid FX/other Adjusted NAV 31 Dec 15 ≈ Adjusted NAV 31 Dec 14 Performance fee Movement in adjusted NAV (£m) or 1,025.2p Adjusted earnings £65.0m Realised gains £14.6m Overview Financial review Portfolio review Summary
Slide 15: Valuation surplus components
Valuation surplus components LFL £157m1 +11.5% 2015 acquisitions £55m +4.5% over 7 months Total £212m +8.2% On constant currency basis 1 Notes
Slide 16: LFL valuation surplus
LFL valuation surplus Total valuation surplus +8.2% or £212m Portfolio value 31 Dec 14 Net disposals LFL portfolio value 31 Dec 14 LFL portfolio value 31 Dec 15 Net acquisitions Portfolio value 31 Dec 15 Acquisition valuation surplus Portfolio value contributors (£m) Overview Financial review Portfo
Slide 17: Long term fixed rate debt raised
Long term fixed rate debt raised Total cost of debt 3.2% Term to maturity 7.5 years Debt raised in 2015 Fixed debt 88%
Slide 18: Unsecured BBB bonds
Unsecured BBB bonds 41% of total debt 32% 31% 37% £946.0m debt raised UK unsecured bond Euro unsecured bond Secured debt Post cross currency swap 2 TTM = term to maturity Notes 1 £351.2m Secured debt TTM1: No. of facilities: Wtd average cost: Fixed interest cost: 5.8 years 4 2.96% 67% €400m (£294.8m
Slide 19: Ensuring an efficient capital structure
Dec 2015 Term to maturity 5.9 years Dec 2015 Total cost of debt 2.9% Dec 2015 LTV 39.7% Ensuring an efficient capital structure
Slide 20: Well staggered debt maturities
Well staggered debt maturities Unsecured bond – Fixed Secured - Floating Secured - Fixed Debt expiry (£m) 161.7 Secured – Floating with option extension 2 year extension options 211.2 ≈ 2.2 2037 Facilities £m Margin Total cost Term (years) Fixed 58% 829.5 Na 319bps 7.7 Floating 42% 606.6 209bps 245b
Slide 21: Efficient hedging programme
Dec 2015 Efficient hedging programme Dec 2015 Fixed interest debt 85% Euro balance sheet FX hedging 83%
Slide 22: Hedging reduces volatility
Hedging reduces volatility Total Euro assets €1,497m Total Euro debt & derivatives €1,235m Investments (properties + loans) Working capital 62% natural hedges 21% FX derivatives Euro balance sheet at Dec 15 (€m) 58% 27% 15% 85% debt fixed or hedged Fixed Hedged via Interest rate cap Floating 85% fix
Slide 23: Pro forma financing capacity
Pro forma financing capacity £672.2m (£m) 31 Dec 2015 PPE disposals Pro forma Cash 326.5 120.7 447.2 Undrawn facilities 225.0 225.0 Financing capacity 551.5 120.7 672.2 Total drawn debt 1,436.1 (16.8) 1,419.3 Net debt 1,109.6 (137.5) 972.1 Portfolio value 2,792.7 (137.5) 2,655.2 LTV (%) 39.7 36.6 Ov
Slide 24: Portfolio review
Portfolio review Peter Collins
Slide 25: Four target markets, four target sectors
Four target markets Four target sectors
Slide 26: 93% of portfolio in our core sectors
93% of portfolio in our core sectors 65% 24% 5% 6% £2,792.7m 49% 7% 25% 6% 7% 6% 93% core sectors £2,792.7m Overview Financial review Portfolio review Summary Appendix Office Retail Residential Industrial UK Ireland Spain Italy Other1 Loans Includes hotel and leisure assets 1 Notes
Slide 27: 2015 acquisitions
£2,792.7m portfolio 2015 acquisitions (direct real estate and loans) £1,135.5m
Slide 28: Portfolio assembly in 2015: 7.1% YOC
Portfolio assembly in 2015: 7.1% YOC Gatsby portfolio UK: £498.1m Park Inn loans portfolio UK: £61.9m 9 Puerta del Sol Madrid, Spain: £22.0m Pioneer Point loan London, UK: £68.5m Postigo Madrid, Spain South East office portfolio UK: £211.0m Carrefour/Dia portfolio, Spain: £60.7m Italian office portf
Slide 29: Secure cash flows
Secure cash flows Diversified c.550 Long term cash flows 7.3 years Strong occupancy 96.0% Dec 2015 WAULT (to first break) No. of tenants
Slide 30: Secure income with upside
Secure income with upside Under-rented portfolio Top 10 tenants 29% of total rent Well staggered lease breaks and expiries 7% Under-rented portfolio Total rent (£m) Under/ (over) rented1 Office 77.9 11% Retail 45.5 -2% Industrial 11.8 6% Residential 7.7 13% Other2 8.3 18% TOTAL 151.2 7% Based on 31
Slide 31: NOI progression from asset management
Over next 2 years NOI progression from asset management Target incremental NOI £19.4m
Slide 32: Target incremental NOI
Target incremental NOI Overview Contracted NOI Contracted uplifts Incremental AM NOI 2016-17 Annualised NOI 31 Dec 15 PPE disposals Total PPE pro-forma NOI Completed PPE disposals Planned PPE disposals to complete £300m programme Annalised NOI (£m) -5.6 Overview Financial review Portfolio review Sum
Slide 33: Selected asset management NOI drivers
Over next 2 years Selected asset management NOI drivers Target incremental NOI £11.2m
Slide 34: Target incremental NOI
Target incremental NOI Overview Pioneer Point Friars Bridge Court BPR Block K +£11.2m AM activity 2016-17 Overview Financial review Portfolio review Summary Appendix
Slide 35: 90% of LFL uplift delivered
90% of LFL uplift Dublin, Central London & South East delivered
Slide 36: Delivering like-for-like gains
Delivering like-for-like gains LFL valuation growth (%) Office Retail Industrial Residential +8.0% +16.4% +15.2% +6.4% LFL ERV growth (%) Residential Retail Office Industrial +5.0% +8.5% +8.0% +2.8% +11.5% LFL valuation uplift +6.9% LFL ERV growth Office Retail Residential Industrial Other1 Loans Ov
Slide 37: Significant reversion opportunity across office portfolio
OFFICE Significant reversion opportunity across office portfolio Potential reversion +11%, £8.8m LFL valuation uplift +15% 2014-15
Slide 38: 90% of office portfolio in institutional markets
90% of office portfolio in institutional markets ITALY IRELAND UK 12 Dublin Rome Milan Florence 3 Aberdeen Edinburgh 4 Manchester Leeds 2 Sheffield Birmingham 2 2 Bristol Newbury London 15 3 SOUTH EAST £141m 11% Valuation 1,068 Area (‘000 sq ft) 9 Assets £371m 27% Valuation 568 Area (‘000 sq ft) 12
Slide 39: KWE office portfolio summary
KWE office portfolio summary 71% Dublin, C. London & SE 10% 24% Dublin Central London 27% 20% £1,354m 19% South East Other UK Italy 2015 office asset management wins Via Carcani, 61, Rome Re-gear New lease Total No. of transactions 8 17 25 Area (000 sq ft) 101.7 233.4 335.1 NOI uplift (£m) 0.1 6.0 6
Slide 40: Office value add projects
£80.00 psf Prime Victoria rent £47.00 psf Passing rent €50.00 psf ERV Dec 15 €47.50 psf Passing rent Value add projects BPR: significant reversions €39.0m 2015 valuation uplift 70% Rent roll reviewed in 2016 10.3% 2015 Victoria rental growth Baggot Plaza: on time and budget with 100% pre-let to BOI
Slide 41: Retail: diversified, high occupancy and secure income
RETAIL Dec 2015 Occupancy 94.6% Dec 2015 WAULT 9.1 years 2014-15 LFL valuation uplift +8% Diversified, high occupancy and secure income
Slide 42: KWE retail portfolio by location
KWE retail portfolio by location x% SPAIN IRELAND UK £145m 21% Valuation 897 Area (‘000 sq ft) 18 Assets £148m 21% Valuation 451 Area (‘000 sq ft) 8 Assets £399m 58% Valuation 2,200 Area (‘000 sq ft) 126 Assets 4 SCOTLAND 3 WALES 14 SOUTH WEST 14 MIDLANDS 62 29 NORTH SOUTH EAST GREATER LONDON CENTRA
Slide 43: KWE retail portfolio summary
KWE retail portfolio summary 13% 10% 21% 29% 16% £692m 11% Other UK Dublin Ireland regions London & SE Spain UK North 61% London/SE, Dublin, Spain Marshes shopping centre Dundalk, Co Louth Carrefour Barcelona UK Ireland Spain Italy Total Passing rent (£m) 45.5 NOI (£m) 43.9 Portfolio valuation (£m)
Slide 44: La Moraleja Green shopping centre, Madrid
La Moraleja Green shopping centre, Madrid Significant value enhancing asset management opportunities 80+ Retailers €4.5m NOI at purchase 1.8 WAULT (years) 3.5m Visitors p.a 303,500 Area (sq ft) 6.3% Yield on cost €71m Real estate value Key tenants 7.0% Target yield on cost Post capex and leasing ini
Slide 45: Delivering on £300m of non-core disposals
Delivering on £300m of non-core disposals Includes PPE disposals Return on cost 23% Disposals since Jan 2015 £262m
Slide 46: Sale of assets completed
Sale of 50 assets completed Overview Financial review Portfolio review Summary Appendix No. of assets Net sale proceeds (£m) Premium to book value Return on cost (%) Hold period (months) Deals completed to date TOTAL 50 262 5.8% 23% 17 Pipeline and future disposal targets (all figures are estimates)
Slide 47: Asset management achievements driving disposals
Asset management achievements driving disposals Avon, UK loan portfolio (PPE) Neal St, London (Artemis portfolio) Gatsby, 17 UK assets (PPE:6) £813 £psf Achievements over 18 months Amended lease covenant Improved income security £93.5m Purchase price 14.6% ROC £100.3m Sale proceeds £1,596 £psf Achie
Slide 48: Summary
KENNEDY WILSON a Kennedy Wilson Europe Real Estate Ple / ¥
Slide 49: Great progress meeting our goals
Great progress meeting our goals Overview Financial review Portfolio review Summary Appendix 2015 goals 35p/share 2015 dividend paid 11.5% LFL valuation surplus 23.1% ROC on disposals to date 18.0% Total accounting return 2.9% Total cost of debt €9.0m Baggot Plaza & Block K NOI to come £262m Disposa
Slide 50: 2016 delivering on our investment proposition
2016 delivering on our investment proposition Overview Financial review Portfolio review Summary Appendix 1 Income growth £19.4m Target incremental NOI from selected asset management £200m further sales June 2016 – June 2017 48p/share +37% 2016 annualised dividend Solid dividend Recycling capital 2
Slide 51: Questions
Questions 0 Kennedy Wilson Europe Real Estate Plc / Year-end results 2015,
Slide 52: Appendix
Appendix 31 Kennedy Wilson Europe Real Estate Ple / Year-end results 2015,
Slide 53: Adjusted earnings
Adjusted earnings From note 16 in the financials Adjusted EPS 47.9p, (Dec 14: 25.9p) Overview Financial review Portfolio review Summary Appendix Year to 31 Dec 2015 Period to 31 Dec 20141 (£m) (p) (£m) (p) Profit for the period after taxation 259.0 191.0 78.5 88.0 Net change in fair value (213.1) (1
Slide 54: Summary balance sheet
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 IFRS NET ASSETS EPRA adjustments EPRA NET ASSETS Performance fee Investment management fee ADJUSTED NAV 31 Dec 2015 (£m) 2,613.5
Slide 55: December 2015 portfolio: top tenants and assets
December 2015 portfolio Tenant Total rent (£m) % of total rent Italian Government 10.2 6.7 Telegraph Media Group 5.8 3.8 British Telecommunications Plc 4.8 3.2 Carrefour 3.8 2.5 UK Government 3.6 2.4 Bank of Ireland 3.4 2.3 KPMG 3.3 2.2 Conoco (UK) Ltd 3.0 2.0 Wincanton Ltd 2.8 1.9 HSBC Plc 2.8 1.9
Slide 56: Ireland and UK portfolio summary
IRELAND portfolio summary Sector Area (m sq ft) No. of assets Portfolio value1 (£m) NOI (£m) EPRA NIY (%) Acq'n YOC (%) WAULT (years) EPRA Occup'y (%) Office 0.6 11 307.9 14.4 4.5% 5.6% 9.3 98.5% Retail 0.5 8 147.4 9.3 6.0% 6.4% 15.4 98.7% Industrial - - - - - - - - Leisure 0.0 1 2.7 0.1 4.5% 6.9% 1
Slide 57: December 2015 sector break down (cont'd)
December 2015 sector break down (cont’d) Third party valuations (RICS Red Book) have been undertaken by CBRE on direct property assets (other than FIP which was completed by Colliers); loan portfolios have been fair valued by Duff & Phelps in each case at 31 December 2015 Notes 1 SPAIN portfolio sum
Slide 58: Secure income with upside
Secure income with upside Total rent (£m) % of total rent Under/ (over) rented1 WAULT break WAULT expiry Office 77.9 52% 11% 5.9 6.9 Retail 45.5 30% -2% 9.1 12.4 Industrial 11.8 8% 6% 5.8 7.0 Residential 7.7 5% 13% N/A N/A Leisure 8.3 5% 18% 12.3 16.1 TOTAL 151.2 100% 7% 7.3 9.2 1 Based on 31 Dec 20
Slide 59: 2015 portfolio assembly
2015 portfolio assembly Gatsby portfolio UK Purchase date No. of assets Purchase price (£m) YOC (%) Cap value (£ psf) WAULT (years) Occupancy (%) 30 Jan 171 480.7 6.9 147 9.3 98.2 Park Inn loans portfolio UK Purchase date No. of collateral Purchase price (£m) YOC (%) Cap value (£ psf) WAULT (years)
Slide 60: Delivering our disposals target
Delivering our disposals target £262m completed since Jan 15, ROC 23% in 17 months No. of assets Area (000 sq ft) Net sale proceeds (£m) Premium to book value Return on cost (%) Hold period (months) Deals completed Office 13 896 74 5% 44% 17 Retail 10 100 30 16% 39% 15 Industrial 1 407 16 3% 37% 21
Slide 61: Key 2016 capex of £96m including £35m development
Key 2016 capex of £96m including £35m development Scheme name Completed area (sq ft) ERV (£m) CTC1 (£m) Total Asset cost incl. Capex (£m) Target profit on cost (%) Target stabilised YOC (%) PC timing2 Baggot Plaza 129,300 4.5 19.9 52.2 71.5 8.6 Q2-16 Block K, CP +166 units 2.5 14.8 44.6 11.1 5.6 Q3-
Slide 62: £61.4m of value enhancing refurbishments
£61.4m of value enhancing refurbishments Overview Financial review Portfolio review Summary Appendix 1 Estimated cost to complete Projected completion date 2 Scheme name Location Sector Current area (sq ft) New area (sq ft) CTC 1 (£m) Description PC timing 2 Occ’y (%) Pioneer Point Ilford PRS 294 un
Slide 63: Strong foothold in PRS market in Dublin and London
Strong foothold in PRS market in Dublin and London PRS PRS UK PRS units purchased 294 2015 LFL valuation uplift +6% 2014-15
Slide 64: KWE PRS portfolio by location
KWE PRS portfolio by location IRELAND PRS UK PRS Stratford Canary Wharf City Airport Greenwich Tower of London PIONEER POINT £72m 40% Valuation LONDON £108m 60% Valuation 659 Potential units 294 Potential units DUBLIN VANTAGE HERBERTON LIFFEY TRUST Phoenix Park Sandyford Ilford Station BLOCK K Overv
Slide 65: KWE PRS portfolio summary
KWE PRS portfolio summary Vantage, Central Park Leopardstown, Co.Dublin Liffey Trust Dublin 1 Total Dec-15 lettable units 516 No. of units once fully developed 953 1 NOI (£m) 5.5 Portfolio valuation (£m) 180.2 Valuation (£ per lettable unit) 221,000 Valuation uplift (£m) 8.6 Occupancy of lettable (%
Slide 66: New lettable units to drive PRS rent growth
New lettable units to drive PRS rent growth 2.3% Current YOC 5.5% Target YOC +3.2% Feb 2016 took title Obtain planning for amenity space Complete asset management plan in Q1 2017 5.6% Target YOC 10.5% Rental growth last year for 2 bed in Vantage Block K, Dublin 18 Pioneer Point, London Block K: capi
Slide 67: Strong industrial capital growth
Strong industrial capital growth 2014-15 INDUSTRIAL LFL valuation uplift +16%
Slide 68: 87% located in institutional markets
87% located in institutional markets x% Glasgow 3 Manchester 2 Leeds Wednesbury Middlewich Wellingborough Swindon London 12 4 SOUTH EAST UK £179m 100% Valuation 2,775 Area (‘000 sq ft) 33 Assets LONDON SOUTH EAST M25 Newbury Wokingham Mertsham Sittingbourne Chelmsford Luton Wolverton Banbury Benflee
Slide 69: KWE industrial portfolio summary
KWE industrial portfolio summary Other UK Dublin Ireland regions London & SE Spain UK North Dublin Central London South East Other UK Italy Re-gear New lease Total No. of transactions 3 1 4 Area (000 sq ft) 456.2 10.1 466.4 NOI uplift (£m) 0.1 0.1 0.2 Term (years) 12.1 10.0 11.9 Total Passing rent (
Slide 70: Melton Enterprise Park, Hull
Melton Enterprise Park, Hull Successful re-gear of challenging asset £2.7m Purchase price Re-gear with strong covenant Melton Enterprise Park Hull 11.5 years Additional term certain for 4 months rent free Part of Jupiter portfolio June 14 +247% Since acquisition +40% On re-gear £357k Rent before re-
Slide 71: Summary of Investment Management Agreement
Annual fee Payment Base fee 1% of EPRA NAV Paid quarterly in arrears 50% in shares 50% in cash Performance fee 20% of total shareholder return above 10% hurdle rate Subject to annual high watermark 100% in shares 3-year lock-up, 1/3 each year Contract Minimum 3 years Post 3 years, termination subjec
Slide 72: Performance fee calculation
Performance fee calculation Total hurdle £1,527.4m Total performance £1,675.8m Dec 2014 EPRA NAV 10% hurdle £m Dec 2015 EPRA NAV Dividends paid during the year £148.4m outperformance Performance fee calculation (£m) 2014 EPRA NAV 1,388.6 Add: 10% hurdle 138.8 TOTAL HURDLE (A) 1,527.4 2015 EPRA NAV 1
Slide 73: Shareholder alignment
Shareholder alignment + KW: Kennedy-Wilson Holdings, Inc. (NYSE: KW) 1 Notes 18.2% Shareholding 100% of performance fee paid in shares 50% of management fee paid in shares KWE Growing Shareholding from fees KW Overview Financial review Portfolio review Summary Appendix Single largest investment for
Slide 74: Disclaimer
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 underwrite, subscribe for or otherwise acquire or dispose of securities i
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