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 September30, 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 September30, 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 September30, 2013, the Company and its equity partners received approximately $940 million in distributions from their investments. *As of September30, 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 September30, 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 September30, 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 September30, 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 September30, 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 September30, 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 September30, 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 September30, 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 September30, 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 September30, 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 September30, 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 September30, 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 September30, 2013, from $35.5 million for the same period in 2012. *During the nine months ended September30, 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 Section27A of the Securities Act of 1933, as amended and Section21 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 Item1A. "Risk Factors" section of our Annual Report on Form 10-K for the year ended December31, 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 firstname.lastname@example.org www.kennedywilson.com
Kennedy Wilson Reports Third Quarter 2013 Earnings
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