Company announces record levels of quarterly revenue, Adjusted
EBITDA, and net income
BEVERLY HILLS, Calif.
--(BUSINESS WIRE)--Aug. 6, 2014--
Kennedy-Wilson Holdings, Inc.
(NYSE: KW)
today reported record results for the second quarter of 2014.
For the three months ended
June 30, 2014:
- Adjusted EBITDA was $122.2 million
, up 237% from $36.3 million
for the
same period in 2013.
- Adjusted Net Income was $64.2 million
or $0.72
per basic share
compared to $14.8 million
or $0.21
per basic share for the same period
in 2013.
- GAAP net income to common shareholders was $36.3 million
or $0.39
per
basic and $0.38
per diluted share compared to a loss of $2.5 million
or $0.03
per basic and diluted share for the same period in 2013.
For the six months ended
June 30, 2014
:
- Adjusted EBITDA was $191.5 million
, a 182% increase from $68.0 million
for the same period in 2013.
- Adjusted Net Income was $98.5 million
or $1.11
per basic share
compared to $26.7 million
or $0.40
per basic share for the same period
in 2013.
- GAAP net income to common shareholders was $46.8 million
or $0.51
per
basic and $0.50
per diluted share compared to a loss of $6.1 million
or a $0.09
loss per basic and diluted share for the same period in
2013.
"We had an extremely active first half globally with approximately
$2.2
billion
in new acquisitions, including substantially investing all of
the proceeds from the
$1.7 billion
IPO of
Kennedy Wilson Europe Real
Estate Plc," said William McMorrow, chairman and CEO of Kennedy Wilson.
"At the same time, we have been able to realize significant gains in our
existing portfolio through strategic asset management and selective
investment realization."
Financial Highlights
- During the second quarter, the Company and its equity partners sold a
portfolio of commercial properties located primarily in
Dublin,
Ireland, to
Kennedy Wilson Europe Real Estate Plc
(LSE:KWE). As a
result of the sale, the Company collected fees totaling $26.2 million
in addition to a profit of $26.6 million
on its 25% interest in the
investment. This transaction was approved by the independent
shareholders of KWE.
- During the second quarter, as a result of amending an existing
operating agreement with one of our equity partners, the Company
gained control of an unconsolidated subsidiary that owns the majority
of the Company's investments in Japan
. This subsidiary holds
approximately 2,400 multi-family units in 50 properties located
primarily in
Tokyo, Japan
and its surrounding areas. The Company has
an approximate 41% ownership interest in these investments. As a
result of gaining control of this investment, the Company was required
to consolidate the assets and liabilities at fair value and recognized
an acquisition-related gain of $66.7 million
of which $22.9 million
was allocated to noncontrolling equity partners.
- Shareholder equity increased $207.8 million
or 27% to $976.1 million
at June 30, 2014 from $768.3 million
at December 31, 2013.
Investments business
For the three months ended
June 30, 2014
, the Company's Investments
segment reported the following results:
- Adjusted EBITDA was $97.4 million
, a 215% increase from $30.9 million
for the same period in 2013.
- For same property multifamily units, total revenues increased 7%, net
operating income increased 10% and occupancy remained at 95% at the
property level from the same period in 2013.
- For same property commercial real estate, total revenues increased 3%,
net operating income increased 2% and occupancy remained at 85% at the
property level from the same period in 2013.
- The Company and its equity partners acquired $1.5 billion
of real
estate related investments. These acquisitions include $1.3 billion
of
real estate related investments acquired by KWE.
For the six months ended
June 30, 2014
, the Company's Investments
segment reported the following results:
- Adjusted EBITDA was $165.5 million
, a 187% increase from $57.6 million
for the same period in 2013.
- For same property multifamily units, total revenues increased 7%, net
operating income increased 10% and occupancy remained at 95% at the
property level from the same period in 2013.
- For same property commercial real estate, total revenues increased 4%,
net operating income increased 2% and occupancy increased 2% to 85% at
the property level from the same period in 2013.
- The Company and its equity partners acquired approximately $2.2
billion
of real estate related investments, in which the Company
invested $364.3 million
of equity. These acquisitions include $1.7
billion
of real estate related investments acquired by KWE.
- The Company's investments year-to-date were directed 87% to the
United
Kingdom
and
Ireland
and 13% to the Western U.S.
Services business
For the three months ended
June 30, 2014
, the Company's Services segment
reported the following results:
- Fees increased by 100% to $39.0 million
from $19.5 million
for the
same period in 2013.
- Fees earned from investments that were eliminated in consolidation
totaled $6.1 million
compared to $0.7 million
for the same period in
2013. In accordance with U.S. GAAP, these fees were excluded from
total fees of $39.0 million
and $19.5 million
for 2014 and 2013,
respectively.
- Adjusted EBITDA was $32.7 million
, a 217% increase from $10.3 million
for the same period in 2013.
For the six months ended
June 30, 2014
, the Company's Services segment
reported the following results:
- Fees increased by 57% to $52.1 million
from $33.1 million
for the same
period in 2013.
- Fees earned from investments that were eliminated in consolidation
totaled $7.7 million
compared to $1.6 million
for the same period in
2013. In accordance with U.S. GAAP, these fees were excluded from
total fees of $52.1 million
and $33.1 million
for 2014 and 2013,
respectively.
- Adjusted EBITDA was $38.3 million
, a 132% increase from $16.5 million
for the same period in 2013.
Kennedy Wilson Europe Real Estate Plc
(LSE: KWE)
- Since its launch in
February 2014
, KWE has acquired 74 direct real
estate assets with approximately 5.9 million square feet and two loan
portfolios secured by 25 real estate assets totaling $1.7 billion
in
purchase price.
- Kennedy Wilson owns 13.2% of KWE’s total share capital as of
June 30,
2014
and one of our wholly-owned subsidiaries serves as KWE's external
manager, in which capacity we receive certain management and
performance fees.
Subsequent events
- In
July 2014
, Kennedy Wilson increased its unsecured corporate line of
credit from $140 million to $300 million
; the line of credit currently
has no outstanding balance.
- In
July 2014
, the Company acquired a multifamily portfolio comprised
of three properties located across southern submarkets of
Seattle,
Washington
. The portfolio consists of 1,212 units and was purchased
for $127 million
. Kennedy Wilson invested $45 million
of equity in the
transaction and assumed $85 million
of financing, fixed at 4.25%, from
Freddie Mac
.
- In
August 2014
, the Company converted its note secured by the landmark
Shelbourne Hotel
located in
Dublin, Ireland
into a direct 100%
ownership interest in the property.
Conference Call and Webcast Details
Kennedy Wilson will hold a live conference call and webcast to discuss
results at
7:00 a.m. PT
/
10:00 a.m. ET
on
August 7, 2014
.
The direct dial-in number for the conference call is (888) 895-5479 for
U.S. callers and (847) 619-6250 for international callers. The
confirmation number for the live call is 37774650.
A replay of the call will be available for one week beginning two hours
after the live call and can be accessed by (888) 843-7419 for U.S.
callers and (630) 652-3042 for international callers. The passcode for
the replay is 37774650#.
The webcast will be available at: http://edge.media-server.com/m/p/fwonigrx/lan/en.
A replay of the webcast will be available two hours after the original
webcast on the Company’s investor relations web site for one year.
About Kennedy Wilson
Founded in 1977, Kennedy Wilson is a vertically integrated global real
estate investment and services company headquartered in
Beverly Hills,
CA
, with 25 offices in the U.S.,
U.K.
,
Ireland
,
Spain
, Jersey and
Japan
.
The company, on its own or with partners, invests opportunistically in a
variety of real estate related investments, including multi-family,
commercial, loan purchases and originations, residential, and hotels.
Kennedy Wilson offers a comprehensive array of real estate services
including investment management, property services, auction,
conventional sales, brokerage and research. For further information on
Kennedy Wilson, please visit www.kennedywilson.com.
Forward-Looking Statements
Statements made by us in this report and in other reports and statements
released by us that are not historical facts constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21 of the Securities Exchange Act of 1934,
as amended. These forward-looking statements are necessarily estimates
reflecting the judgment of our senior management based on our current
estimates, expectations, forecasts and projections and include comments
that express our current opinions about trends and factors that may
impact future operating results. Disclosures that use words such as
"believe," "anticipate," "estimate," "intend," "could," "plan,"
"expect," "project" or the negative of these, as well as similar
expressions, are intended to identify forward-looking statements. These
statements are not guarantees of future performance, rely on a number of
assumptions concerning future events, many of which are outside of our
control, and involve known and unknown risks and uncertainties that
could cause our actual results, performance or achievement, or industry
results, to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements.
These risks and uncertainties may include the factors and the risks and
uncertainties described elsewhere in this report and other filings with
the
Securities and Exchange Commission
(the "
SEC
"), including the
Item 1A. "Risk Factors" section of our Annual Report on Form 10-K for
the year end December 31, 2013, as amended by our subsequent filings
with the
SEC
. Any such forward-looking statements, whether made in this
report or elsewhere, should be considered in the context of the various
disclosures made by us about our businesses including, without
limitation, the risk factors discussed in our filings with the
SEC
.
Except as required under the federal securities laws and the rules and
regulations of the
SEC
, we do not have any intention or obligation to
update publicly any forward-looking statements, whether as a result of
new information, future events, changes in assumptions, or otherwise.
Common Definitions
"Kennedy Wilson," the "Company," "we," or "us" refer to
Kennedy-Wilson
Holdings, Inc.
and its consolidated subsidiaries. Kennedy Wilson refers
to its consolidated investment account and investment account throughout
this release. Kennedy Wilson's equity in cash held by consolidated
investments, real estate and acquired in-place leases, unconsolidated
investments and loans gross of accumulated depreciation and amortization
comprises the "consolidated investment account." The "investment
account" is the consolidated investment account presented after
noncontrolling interests on invested assets gross of accumulated
depreciation. "Same property units" refer to properties in which we have
an ownership interest during the entire span of both periods being
compared.
Non-GAAP Financial Information
In addition to the results reported in accordance with U.S. generally
accepted accounting principles ("GAAP") included within this
presentation, Kennedy Wilson has provided certain information, which
includes non-GAAP financial measures (Consolidated EBITDA, Adjusted
EBITDA, Consolidated Adjusted Net Income, Adjusted Net Income and
Adjusted Net Income Per Basic Share). Such information is reconciled to
its closest GAAP measure in accordance with the rules of the
Securities
and Exchange Commission
and is included within this presentation. These
measures may contain cash and non-cash acquisition-related gains and
expenses and gains and losses from the sale of real-estate related
investments. Consolidated non-GAAP measures discussed throughout this
report may contain gains or losses attributable to non-controlling
interests. Management believes that these non-GAAP financial measures
are useful to both management and Kennedy Wilson's shareholders in their
analysis of the business and operating performance of the Company.
Management also uses this information for operational planning and
decision-making purposes. Non-GAAP financial measures are not and should
not be considered a substitute for any GAAP measures. Additionally,
non-GAAP financial measures as presented by Kennedy Wilson may not be
comparable to similarly titled measures reported by other companies.
Kennedy-Wilson Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in millions) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2014 |
|
2013 |
| Assets |
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
349.5 |
|
|
$ |
170.2 |
|
| Cash held by consolidated investments |
|
292.8 |
|
|
8.0 |
|
| Accounts receivable |
|
36.8 |
|
|
16.6 |
|
| Real estate and acquired in place lease values, net of accumulated
depreciation and amortization |
|
3,553.4 |
|
|
688.1 |
|
| Loans |
|
402.3 |
|
|
56.8 |
|
| Unconsolidated investments |
|
532.2 |
|
|
786.1 |
|
| Other assets |
|
187.7 |
|
|
73.0 |
|
| Total assets |
|
$ |
5,354.7 |
|
|
$ |
1,798.8 |
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
| Accounts payable, accrued expenses and other liabilities |
|
285.7 |
|
|
129.1 |
|
| Investment debt |
|
1,528.7 |
|
|
401.8 |
|
| Senior notes payable |
|
706.0 |
|
|
409.0 |
|
| Junior subordinated debentures |
|
40.0 |
|
|
40.0 |
|
| Total liabilities |
|
2,560.4 |
|
|
979.9 |
|
| Equity |
|
|
|
|
|
|
| Cumulative preferred stock |
|
— |
|
|
— |
|
| Common stock |
|
— |
|
|
— |
|
| Additional paid-in capital |
|
986.3 |
|
|
801.3 |
|
| Retained earnings (accumulated deficit) |
|
(11.8 |
) |
|
(42.2 |
) |
| Accumulated other comprehensive income |
|
1.6 |
|
|
9.2 |
|
| Total Kennedy-Wilson Holdings, Inc. shareholders’ equity |
|
976.1 |
|
|
768.3 |
|
| Noncontrolling interests |
|
1,818.2 |
|
|
50.6 |
|
| Total equity |
|
2,794.3 |
|
|
818.9 |
|
| Total liabilities and equity |
|
$ |
5,354.7 |
|
|
$ |
1,798.8 |
|
|
|
|
|
|
|
|
|
|
Kennedy-Wilson Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions, except share amounts and per share data) |
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
| Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
| Investment management, property services and research fees |
|
$ |
39.0 |
|
|
$ |
19.5 |
|
|
$ |
52.1 |
|
|
$ |
33.1 |
|
| Rental and hotel |
|
42.6 |
|
|
10.3 |
|
|
67.8 |
|
|
8.5 |
|
| Sale of real estate |
|
6.1 |
|
|
6.1 |
|
|
17.4 |
|
|
16.8 |
|
| Loans and other |
|
4.3 |
|
|
0.5 |
|
|
6.0 |
|
|
0.9 |
|
| Total revenue |
|
92.0 |
|
|
36.4 |
|
|
143.3 |
|
|
59.3 |
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Commission and marketing |
|
0.9 |
|
|
1.3 |
|
|
1.8 |
|
|
1.8 |
|
| Rental and hotel operating |
|
17.9 |
|
|
4.6 |
|
|
32.1 |
|
|
7.7 |
|
| Cost of real estate sold |
|
3.9 |
|
|
5.1 |
|
|
13.5 |
|
|
7.0 |
|
| Compensation and related |
|
32.2 |
|
|
18.3 |
|
|
52.8 |
|
|
31.9 |
|
| General and administrative |
|
8.4 |
|
|
6.4 |
|
|
16.5 |
|
|
11.8 |
|
| Depreciation and amortization |
|
25.3 |
|
|
4.4 |
|
|
32.6 |
|
|
7.5 |
|
| Total operating expenses |
|
88.6 |
|
|
40.1 |
|
|
149.3 |
|
|
67.7 |
|
| Income from unconsolidated investments, net of depreciation and
amortization |
|
31.0 |
|
|
14.8 |
|
|
33.8 |
|
|
16.9 |
|
| Operating income |
|
34.4 |
|
|
11.1 |
|
|
27.8 |
|
|
8.5 |
|
| Non-operating income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
| Acquisition-related gains |
|
86.0 |
|
|
— |
|
|
170.3 |
|
|
9.5 |
|
| Acquisition-related expenses |
|
(7.6 |
) |
|
(0.5 |
) |
|
(11.6 |
) |
|
(0.5 |
) |
| Interest expense-investment |
|
(11.1 |
) |
|
(2.8 |
) |
|
(16.4 |
) |
|
(4.6 |
) |
| Interest expense-corporate |
|
(14.7 |
) |
|
(9.7 |
) |
|
(25.2 |
) |
|
(19.4 |
) |
| Other income |
|
2.1 |
|
|
0.1 |
|
|
2.9 |
|
|
0.4 |
|
| Income (loss) before (provision for) benefit from income taxes |
|
89.1 |
|
|
(1.8 |
) |
|
147.8 |
|
|
(6.1 |
) |
| (Provision for) benefit from income taxes |
|
(25.4 |
) |
|
0.5 |
|
|
(34.2 |
) |
|
2.2 |
|
| Net income (loss) |
|
63.7 |
|
|
(1.3 |
) |
|
113.6 |
|
|
(3.9 |
) |
| Net (income) loss attributable to the noncontrolling interests |
|
(25.3 |
) |
|
0.9 |
|
|
(62.7 |
) |
|
1.9 |
|
| Preferred stock dividends and accretion of issuance costs |
|
(2.1 |
) |
|
(2.1 |
) |
|
(4.1 |
) |
|
(4.1 |
) |
| Net income (loss) attributable to Kennedy-Wilson Holdings, Inc
common shareholders |
|
$ |
36.3 |
|
|
$ |
(2.5 |
) |
|
$ |
46.8 |
|
|
$ |
(6.1 |
) |
| Basic earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) per basic |
|
$ |
0.39 |
|
|
$ |
(0.03 |
) |
|
$ |
0.51 |
|
|
$ |
(0.09 |
) |
| Weighted average shares outstanding for basic |
|
89,140,498 |
|
|
70,976,247 |
|
|
88,645,002 |
|
|
66,432,823 |
|
| Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) per diluted |
|
$ |
0.38 |
|
|
$ |
(0.03 |
) |
|
$ |
0.50 |
|
|
$ |
(0.09 |
) |
| Weighted average shares outstanding for diluted |
|
102,115,350 |
|
|
70,976,247 |
|
|
101,435,250 |
|
|
66,432,823 |
|
| Dividends declared per common share |
|
$ |
0.09 |
|
|
$ |
0.07 |
|
|
$ |
0.18 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kennedy-Wilson Holdings, Inc.
Adjusted Net Income
(Unaudited)
(Dollars in millions, except share amounts and per share data) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
| Net income (loss) |
|
$ |
63.7 |
|
|
$ |
(1.3 |
) |
|
$ |
113.6 |
|
|
$ |
(3.9 |
) |
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
| Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
25.3 |
|
|
4.4 |
|
|
32.6 |
|
|
7.5 |
|
| Kennedy Wilson's share of depreciation and amortization included in
unconsolidated investments |
|
12.4 |
|
|
10.2 |
|
|
27.2 |
|
|
19.5 |
|
| Share-based compensation |
|
1.7 |
|
|
1.7 |
|
|
3.4 |
|
|
3.4 |
|
| Consolidated Adjusted Net Income |
|
103.1 |
|
|
15.0 |
|
|
176.8 |
|
|
26.5 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net (income) loss attributable to the noncontrolling interests,
before depreciation and amortization(1) |
|
(38.9 |
) |
|
(0.2 |
) |
|
(78.3 |
) |
|
0.2 |
|
| Adjusted Net Income |
|
$ |
64.2 |
|
|
$ |
14.8 |
|
|
$ |
98.5 |
|
|
$ |
26.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic weighted average number of common shares outstanding |
|
89,140,498 |
|
|
70,976,247 |
|
|
88,645,002 |
|
|
66,432,823 |
|
| Basic Adjusted Net Income per share |
|
$ |
0.72 |
|
|
$ |
0.21 |
|
|
$ |
1.11 |
|
|
$ |
0.40 |
|
(1)
$13.6 million
and
$1.1 million
of depreciation and
amortization for the three months ended
June 30, 2014
and 2013 and
$15.6
million
and
$1.7 million
for the six months ended
June 30, 2014
and 2013
Kennedy-Wilson Holdings, Inc.
Consolidated EBITDA and Adjusted EBITDA
(Unaudited)
(Dollars in millions) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
| Net income (loss) |
|
$ |
63.7 |
|
|
$ |
(1.3 |
) |
|
$ |
113.6 |
|
|
$ |
(3.9 |
) |
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
| Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense-investment |
|
11.1 |
|
|
2.8 |
|
|
16.4 |
|
|
4.6 |
|
| Interest expense-corporate |
|
14.7 |
|
|
9.7 |
|
|
25.2 |
|
|
19.4 |
|
| Kennedy Wilson's share of interest expense included in
unconsolidated investments |
|
9.5 |
|
|
10.1 |
|
|
20.5 |
|
|
20.7 |
|
| Depreciation and amortization |
|
25.3 |
|
|
4.4 |
|
|
32.6 |
|
|
7.5 |
|
| Kennedy Wilson's share of depreciation and amortization included in
unconsolidated investments |
|
12.4 |
|
|
10.2 |
|
|
27.2 |
|
|
19.5 |
|
| Provision for (benefit from) income taxes |
|
25.4 |
|
|
(0.5 |
) |
|
34.2 |
|
|
(2.2 |
) |
| Consolidated EBITDA |
|
162.1 |
|
|
35.4 |
|
|
269.7 |
|
|
65.6 |
|
| Add back (less): |
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation |
|
1.7 |
|
|
1.7 |
|
|
3.4 |
|
|
3.4 |
|
| EBITDA attributable to noncontrolling interests(1) |
|
(41.6 |
) |
|
(0.8 |
) |
|
(81.6 |
) |
|
(1.0 |
) |
| Adjusted EBITDA |
|
$ |
122.2 |
|
|
$ |
36.3 |
|
|
$ |
191.5 |
|
|
$ |
68.0 |
|
(1)
$16.3 million
and
$1.7 million
of depreciation,
amortization and interest for the three months ended
June 30, 2014
and
2013 and
$18.9 million
and
$2.9 million
for the six months ended
June
30, 2014
and 2013
Source: Kennedy Wilson
Kennedy Wilson
Christina Cha
Vice President of Corporate
Communication
(310) 887-6294
[email protected]
www.kennedywilson.com