Kennedy-Wilson Holdings Inc. (NYSE:KWN) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 10:00 am ET


Kennedy-Wilson Holdings Inc. (NYSE:KWN) Q2 2020 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the Kennedy-Wilson Second Quarter 2020 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would now like to turn the conference over to Daven Bhavsar, Vice President of Investor Relations. Please go ahead.

Daven Bhavsar

Thank you and good morning. This is Daven Bhavsar and joining us today are Bill McMorrow, Chairman and CEO of Kennedy-Wilson; Mary Ricks, President of Kennedy-Wilson; Matt Windisch, Executive Vice President of Kennedy-Wilson; and Justin Enbody, Chief Financial Officer of Kennedy-Wilson. Today's call will be webcast live and will be archived for replay. The replay will be available by phone for one week and by webcast for three months. Please see the Investor Relations website for more information.

On this call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. You can find a description of these items along with the reconciliation of the most directly comparable GAAP financial measure and our second quarter 2020 earnings release, which is posted on the Investor Relations section of our website. Statements made during this call may include forward-looking statements. Actual results may materially differ from forward-looking information discussed on this call due to a number of risks, uncertainties and other factors indicated in reports and filings with the Securities and Exchange Commission.

I would now like to turn the call over to our Chairman and CEO, Bill McMorrow.

William J. McMorrow

Thanks, Daven and good morning, everybody, and thank you for joining us today. From all of us here at Kennedy-Wilson, we hope everyone on this call and your families are doing well and have remained healthy. I'm very grateful to report that everyone at KW has maintained good health, and our communication and execution has never been better. As it was for all businesses globally, the second quarter was a very unique one in the global real estate industry as a whole, as investment volumes declined significantly due to the pandemic. Transactions fell 68% across all property types in Q2 according to the Real Estate Capital Analytics Group.

At KW, given our strong liquidity profile, we were in a great position of being able to temporarily pause our asset sale program during Q2. However, given the ultra-low interest rate environment, the amount of capital sitting on the sidelines and the global search for yield, we have seen transactional activity in our markets start to pick up, and we expect an active third and fourth quarter.

I'd like to start by touching on the key highlights of the quarter. In Q2, we saw strong rent collection and high occupancy across our multifamily and office portfolio, which, together, comprises 81% of our estimated annual NOI. We continued growth in our investment management platform and the launch of a new $2 billion debt platform and the great progress we made on our development and lease-up initiatives.

So turning to our financial results in Q2. We produced adjusted EBITDA of $73 million and adjusted net