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Kennedy Wilson Reports Third Quarter 2013 Earnings



  Kennedy Wilson Reports Third Quarter 2013 Earnings

         Adjusted EBITDA increases 142% from same period of last year

Business Wire

BEVERLY HILLS, Calif. -- November 5, 2013

Kennedy-Wilson Holdings, Inc. (NYSE:KW), an international real estate
investment and services company, today reported third quarter 2013 Adjusted
EBITDA of $42.3 million, a 142% increase from $17.5 million for the same
period in 2012. For the nine months ended September 30, 2013, Adjusted EBITDA
was $111.3 million, a 101% increase from $55.5 million for the same period in
2012.

Adjusted Net Income for the third quarter 2013 was $14.4 million or $0.20 per
basic share compared to Adjusted Net Income of $2.8 million for the same
period in 2012, or $0.05 per basic share. U.S. GAAP net loss attributable to
common shareholders for the third quarter 2013 was $4.1 million, or $0.06 per
basic and diluted share, compared to a loss of $6.2 million, or $0.11 per
basic and diluted share, for the same period in 2012.

"Kennedy Wilson and its equity partners acquired $1 billion of real estate
investments this quarter and we raised approximately $120 million in equity
further strengthening our balance sheet," said William McMorrow, chairman and
CEO of Kennedy Wilson. "We continue to focus on sourcing attractive investment
opportunities, improving the operating performance of our properties, and
executing on select asset realizations."

Kennedy Wilson Recent Highlights

Investments business

Investment account

  * As of September 30, 2013, our gross investment account was $1.1 billion,
    compared to $908.9 million as of December 31, 2012. The net investment
    account was $1.0 billion as of September 30, 2013 compared to $837.6
    million at December 31, 2012, after accumulated depreciation and
    amortization of $114.6 million and $71.3 million, respectively. The change
    in the net investment account was comprised of $387.1 million of cash
    contributed to and income earned on investments offset by $209.3 million
    of cash distributed from investments. During the nine months ended
    September 30, 2013, the Company and its equity partners received
    approximately $940 million in distributions from their investments.
  * As of September 30, 2013, the Company and its equity partners owned 22.9
    million rentable square feet of real estate, including investments in
    16,511 apartment units and 79 commercial properties. Additionally, as of
    September 30, 2013, the Company and its equity partners owned in excess of
    $1.6 billion in unpaid principal balance of loans secured by real estate.

Operating metrics

  * During the nine months ended September 30, 2013, our investments business
    achieved an EBITDA of $99.5 million, a 111% increase from $47.2 million
    for the same period in 2012.
  * During the nine months ended September 30, 2013, based on our investments
    in 11,755 same property multifamily units, rental revenues increased 5%,
    net operating income increased 7% and occupancy increased 1% at the
    property level from the same period in 2012. In addition, based on our
    investments in 2.8 million square feet of same property commercial real
    estate, rental revenues increased 15%, net operating income increased 18%
    and occupancy increased 4% at the property level from the same period in
    2012.

Acquisition/disposition program

  * From January 1, 2010 through September 30, 2013, the Company and its
    equity partners acquired approximately $10.6 billion of real estate
    related investments (including unpaid principal balance of loan
    purchases). During the nine months ended September 30, 2013, the Company
    and its equity partners acquired $2.6 billion of real estate related
    investments, in which the Company invested $368.5 million of equity. Our
    investments were directed 71% to the United Kingdom and Ireland and 29% to
    the Western U.S.
  * During the fourth quarter of 2012, the Company and one of its equity
    partners acquired the mortgage on The Rock, a premier retail, residential
    and entertainment center in Manchester, United Kingdom. During the third
    quarter, the Company and its equity partner converted their mortgage note
    to a 100% equity ownership in the property resulting in a $28.8 million
    acquisition related gain. The Company's portion of the gain was $14.4
    million and was recognized in equity in joint venture income.
  * During the nine months ended September 30, 2013, the Company and its
    equity partners sold a total of $177.4 million of real estate, which
    resulted in a gain of $41.3 million, of which our share was $13.2 million
    ($29.9 million of our equity invested) including nine commercial
    buildings, two multifamily properties and 52 condos.

Property level debt financing

  * As of September 30, 2013, the Company and its equity partners had
    approximately $3.2 billion of property level debt with a weighted average
    interest rate of 5.1% and a weighted average maturity of 6.1 years.
  * As of September 30, 2013 the Company and its equity partners property
    level debt was 54% at fixed interest rates, 31% floating with interest
    rate caps and 15% at floating interest rates.

Key investment updates

UK Loan Pool

  * Our book equity in this investment is $11.4 million; we own 12.5% before
    carried interest.
  * In December 2011, the Company and its equity partners acquired a loan pool
    secured by real estate located in the United Kingdom with an unpaid
    principal balance of $2.1 billion. As of September 30, 2013, the unpaid
    principal balance was $189.1 million due to loan resolutions of
    approximately $1.9 billion, representing approximately 91% of the pool.
    During the nine months ended September 30, 2013, the Company received
    $53.4 million in distributions related to resolutions.

Japan multifamily

  * Our book equity in this investment is $72.2 million; we own 40.9% before
    carried interest.
  * We maintained 96% occupancy in 50 apartment buildings as of September 30,
    2013 with a total of 2,410 units.
  * Since Fairfax Financial became our partner in the Japanese multifamily
    portfolio in September 2010, we have distributed a total of $104.4
    million, of which our share was $49.1 million.

Services business

  * Management and leasing fees and commissions increased by 52% to $54.0
    million for the nine months ended September 30, 2013, from $35.5 million
    for the same period in 2012.
  * During the nine months ended September 30, 2013, our services business
    achieved an EBITDA of $22.6 million, a 102% increase from $11.2 million
    for the same period in 2012.

Corporate financing

  * In September 2013, the Company issued and sold 6.9 million shares of
    common stock primarily to institutional investors, resulting in gross
    proceeds of $127.7 million. A portion of the proceeds were used to pay off
    the outstanding balance on our line of credit.
  * In September 2013, the Company increased the availability on its line of
    credit to $140.0 million from $100.0 million and extended the line's
    maturity to October 1, 2016.

Subsequent events

  * In October 2013, Meyers Research, a wholly owned subsidiary, launched
    Zonda, a mobile application designed to provide market insight for the
    homebuilding industry by combining interactive tools and real-time data on
    approximately 300 metrics impacting housing.

Conference Call and Webcast Details

The Company will hold a live conference call and webcast to discuss results at
7:00 a.m. PT/ 10:00 a.m. ET on Wednesday, November 6.

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 35911843.

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 35911843#.

The webcast will be available at:
http://edge.media-server.com/m/p/68ekhgu8/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 an international real estate investment and
services company headquartered in Beverly Hills, CA with 24 offices in the
U.S., U.K., Ireland, Spain and Japan. The Company offers a comprehensive array
of real estate services including auction, conventional sales, property
services, research and investment management. Through its fund management and
separate account businesses, Kennedy Wilson is a strategic investor of real
estate investments in the U.S., U.K., Ireland and Japan. 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 ended
December 31, 2012, 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.

Non-GAAP Financial Information

In addition to the results reported in accordance with U.S. generally accepted
accounting principles (GAAP) included within this press release, Kennedy
Wilson has provided certain information, which includes non-GAAP financial
measures (Pro Forma Statements of Operations, Adjusted Net Income Attributable
to Kennedy Wilson Common Shareholders, Basic Adjusted Net Income Attributable
to Kennedy Wilson Common Shareholders Per Share, EBITDA and Adjusted EBITDA).
Additionally, there are certain revenue and expense line items in our pro
forma consolidated statements of operations or income that would otherwise be
classified as discontinued operations on a GAAP statement. Such information is
reconciled to its closest GAAP measure in accordance with the SEC rules and is
included in the attached supplemental tables. Management believes that these
non-GAAP financial measures are useful to both management and the Company'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.

Tables Follow

                                                            
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
                                                              
                                      September 30, 2013     December 31, 2012
Assets
Cash and cash equivalents             $  181,371,000         $ 120,855,000
Short term investments                —                      10,000,000
Accounts receivable                   6,051,000              3,647,000
Accounts receivable - related         31,433,000             22,393,000
parties
Notes receivable                      22,444,000             136,607,000
Notes receivable - related            5,785,000              —
parties
Real estate, net of accumulated       518,047,000            289,449,000
depreciation
Investments in joint ventures         742,221,000            543,193,000
Investments in loan pool              58,774,000             95,601,000
participations
Other assets                          51,103,000             38,079,000
Goodwill                              23,965,000             23,965,000       
Total assets                          $  1,641,194,000       $ 1,283,789,000  
                                                              
Liabilities
Accounts payable                      $  1,735,000           $ 1,762,000
Accrued expenses and other            37,220,000             29,417,000
liabilities
Accrued salaries and benefits         20,081,000             24,981,000
Deferred tax liability                16,937,000             22,671,000
Mortgage loans and notes              340,366,000            236,538,000
payable
Senior notes payable                  409,196,000            409,640,000
Junior subordinated debentures        40,000,000             40,000,000       
Total liabilities                     865,535,000            765,009,000      
Equity
Cumulative Preferred stock:
6.00% Series A, 100,000 shares        —                      —
6.45% Series B, 32,550 shares         —                      —
Common stock                          8,000                  6,000
Additional paid-in capital            792,449,000            512,835,000
Accumulated deficit                   (32,049,000      )     (5,910,000      )
Accumulated other comprehensive       5,553,000              12,569,000
income
Shares held in treasury               —                      (9,856,000      )
Total Kennedy-Wilson Holdings,        765,961,000            509,644,000
Inc. stockholders’ equity
Noncontrolling interests              9,698,000              9,136,000        
Total equity                          775,659,000            518,780,000      
Total liabilities and equity          $  1,641,194,000       $ 1,283,789,000  
                                                                              

                                                             
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
                                                               
                          For the Three Months Ended          For the Nine Months Ended
                          September 30,                       September 30,
                          2013             2012               2013              2012
Revenue
Management and            $ 4,462,000      $ 4,015,000        $ 13,925,000      $ 11,272,000
leasing fees
Management and
leasing fees -            10,649,000       6,320,000          27,962,000        18,036,000
related parties
Commissions               836,000          1,477,000          2,296,000         3,513,000
Commissions -             5,025,000        668,000            9,865,000         2,652,000
related parties
Sale of real estate       1,546,000        1,275,000          10,060,000        1,275,000
Rental and other          10,690,000       1,485,000          27,452,000        4,432,000      
income
Total revenue             33,208,000       15,240,000         91,560,000        41,180,000     
Operating expenses
Commission and            1,011,000        1,371,000          2,845,000         3,676,000
marketing expenses
Compensation and          20,956,000       11,364,000         52,840,000        30,658,000
related expenses
Cost of real estate       883,000          1,275,000          7,885,000         1,275,000
sold
General and               5,760,000        5,014,000          17,574,000        13,571,000
administrative
Depreciation and          4,531,000        989,000            12,003,000        2,903,000
amortization
Rental operating          4,167,000        847,000            11,852,000        2,638,000      
expenses
Total operating           37,308,000       20,860,000         104,999,000       54,721,000
expenses
Equity in joint           9,379,000        1,848,000          20,955,000        12,472,000
venture income
Interest income
from loan pool            3,983,000        3,712,000          10,209,000        7,126,000      
participations and
notes receivable
Operating income          9,262,000        (60,000      )     17,725,000        6,057,000
(loss)
Non-operating
income (expense)
Interest income           205,000          179,000            444,000           2,503,000
Acquisition-related       1,668,000        —                  11,127,000        —
gain
Acquisition-related       —                —                  (510,000      )   —
expenses
Gain on sale of
marketable                —                —                  —                 2,931,000
securities
Interest expense          (13,141,000  )   (6,755,000   )     (37,104,000   )   (19,979,000   )
Other                     —                (6,000       )     —                 (80,000       )
Loss from
continuing
operations before         (2,006,000   )   (6,642,000   )     (8,318,000    )   (8,568,000    )
benefit from income
taxes
(Provision for)
benefit from income       (726,000     )   2,500,000          1,446,000         5,121,000      
taxes
Loss from
continuing                (2,732,000   )   (4,142,000   )     (6,872,000    )   (3,447,000    )
operations
Discontinued
Operations
(Loss) income from
discontinued              (291,000     )   —                  (294,000      )   2,000
operations, net of
income taxes
Gain (loss) from
sale of real              338,000          —                  555,000           (212,000      )
estate, net of
income taxes
Net loss                  (2,685,000   )   (4,142,000   )     (6,611,000    )   (3,657,000    )
Net loss (income)
attributable to the       652,000          (64,000      )     2,550,000         (2,990,000    )
noncontrolling
interests
Net loss
attributable to           (2,033,000   )   (4,206,000   )     (4,061,000    )   (6,647,000    )
Kennedy-Wilson
Holdings, Inc.
Preferred stock
dividends and             (2,036,000   )   (2,036,000   )     (6,108,000    )   (6,108,000    )
accretion of
issuance costs
Net loss
attributable to
Kennedy-Wilson            $ (4,069,000 )   $ (6,242,000 )     $ (10,169,000 )   $ (12,755,000 )
Holdings, Inc.
common shareholders
Basic and diluted
earnings per share
Earnings (loss) per
basic and diluted         $ (0.06      )   $ (0.11      )     $ (0.15       )   $ (0.23       )
share - continuing
operations
Earnings (loss) per
basic and diluted         —                —                  —                 —              
share -
discontinued
Earnings (loss) per
share - basic and         $ (0.06      )   $ (0.11      )     $ (0.15       )   $ (0.24       )
diluted^(a)
Weighted average
shares outstanding        72,643,080       58,043,357         68,486,876        53,551,708     
for basic and
diluted
Dividends declared        $ 0.07           $ 0.05             $ 0.21            $ 0.15         
per common share
 
^(a) EPS amounts
may not add due to
rounding
                                                                                               

                                                            
Kennedy-Wilson Holdings, Inc. and Subsidiaries
Adjusted Net Income Attributable to Kennedy Wilson Common Shareholders
(Unaudited)
                                                              
                     Three Months Ended                      Nine Months Ended
                     September 30,                           September 30,
                     2013               2012                 2013                2012
Net loss
attributable
to
Kennedy-Wilson       $ (4,069,000 )     $ (6,242,000 )       $ (10,169,000 )     $ (12,755,000 )
Holdings, Inc.
common
shareholders
Non-GAAP
adjustments:
Add back:
Depreciation
and                  4,531,000          989,000              12,003,000          2,903,000
amortization
Kennedy
Wilson's share
of
depreciation
and                  11,871,000         5,085,000            31,348,000          12,985,000
amortization
included in
investment in
joint ventures
Stock-based          2,035,000          2,922,000            5,466,000           5,000,000      
compensation
Adjusted Net
Income
Attributable
to                   $ 14,368,000       $ 2,754,000          $ 38,648,000        $ 8,133,000    
Kennedy-Wilson
Holdings, Inc.
Common
Shareholders
Basic weighted
average number
of common            72,643,080         58,043,357           68,486,876          53,551,708     
shares
outstanding
Basic Adjusted
Net Income
Attributable
to
Kennedy-Wilson       $ 0.20             $ 0.05               $ 0.56              $ 0.15         
Holdings, Inc.
Common
Shareholders
Per Share
                                                                                                

                                                            
Kennedy-Wilson Holdings, Inc. and Subsidiaries
EBITDA and Adjusted EBITDA
(Unaudited)
                                                              
                     Three Months Ended                      Nine Months Ended
                     September 30,                           September 30,
                     2013               2012                 2013                2012
Net loss             $ (2,685,000 )     $ (4,142,000 )       $ (6,611,000  )     $ (3,657,000 )
Non-GAAP
adjustments:
Add back:
Interest             13,141,000         6,755,000            37,104,000          19,979,000
expense
Kennedy
Wilson's share
of interest
expense
included in          12,688,000         8,364,000            33,405,000          23,364,000
investment in
joint ventures
and loan pool
participations
Depreciation
and                  4,531,000          989,000              12,003,000          2,903,000
amortization
Kennedy
Wilson's share
of
depreciation
and                  11,871,000         5,085,000            31,348,000          12,985,000
amortization
included in
investment in
joint ventures
Provision for
(benefit from)       726,000            (2,500,000   )       (1,446,000    )     (5,121,000   )
income taxes
EBITDA               40,272,000         14,551,000           105,803,000         50,453,000
Stock-based          2,035,000          2,922,000            5,466,000           5,000,000     
compensation
Adjusted             $ 42,307,000       $ 17,473,000         $ 111,269,000       $ 55,453,000  
EBITDA
                                                                                               

Contact:

Kennedy Wilson
Christina Cha, 310-887-6294
Vice President of Corporate Communication
ccha@kennedywilson.com
www.kennedywilson.com
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